Financial Markets Today: Quick Take – October 27, 2022 Financial Markets Today: Quick Take – October 27, 2022 Financial Markets Today: Quick Take – October 27, 2022

Financial Markets Today: Quick Take – October 27, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Market sentiment is choppy after a boost yesterday as the Bank of Canada decided to only hike 50 basis points rather than the 75 basis points expected, encouraging the narrative that peak central bank hawkishness may be in the rear-view mirror. Alas, equities closed weaker in the US and after hours, a dire earnings report from Meta dented sentiment further and crumpled Meta stock nearly 20%. Elsewhere, the USD remains weak on retreating treasury yields.

What is our trading focus?


Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)

With weak technology earnings from Microsoft, Alphabet, and especially Meta last night the focus is currently on Nasdaq 100 futures. Despite a falling Nasdaq 100 yesterday, the index futures are attempting a rebound this morning, which is quite surprising given the lackluster outlook on technology earnings. Nasdaq 100 futures are trading around the 11,485 level with the natural resistance at around 11,713. If downside momentum continues, which could happen after potentially weak outlook from Apple and Amazon tonight, then the 11,000 level is the natural support level to watch.

Euro STOXX 50 (EU50.I)

Rallied yesterday to the 3,600 level and the index futures are currently hovering around this level in early morning trading. European equities are enjoying tailwind from easing energy and electricity prices due to wild weather and better than expected earnings showing more relative strength than US equities that are heavily impacted by the technology sector. Interest rate pressures and the strong USD are also easing, reducing the pain from financial conditions. If upside momentum continues the 200-day moving average at 3,685 is the next natural resistance level to watch.

FX: USD remains down for the count, USDJPY nearing important support

The drop in treasury yields has trumped choppy risk sentiment in driving USD weakness over the last couple of sessions, as key USD pairs saw the USD breaking down through key support: parity fell in EURUSD, the 1.1500 level in GBPUSD fell, and the 0.6400 area in AUDUSD likewise gave way. Interesting to note that even CAD managed to stabilize versus the greenback despite the smaller than expected hike from the Bank of Canada (more below). The next important USD support level to watch is perhaps 145.00 in USDJPY, which was an important line of resistance on the way up for the pair. A significant test below that level would likely require that US treasury yields continue lower – with 4.00% in the US 10-year benchmark a key focus over the next batches of data and the FOMC meeting next Wednesday.

Gold (XAUUSD) and silver (XAGUSD)

Both have steadied after receiving a boost from a weaker dollar and continued decline in US bond yields on speculation the US economy is getting close to rolling over. The attention is now turning to next week’s FOMC interest rate decision on November 2. While another bumper 75 basis points hike is expected, the FOMC may tilt towards slowing the pace at future meetings while assessing the impact of their rate and quantitative tightening actions. As a minimum gold needs to break above $1730 before an end to the month-long downtrend can be called. Until then watch the dollar and yields for inspiration, while silver needs a break above $20.

Crude oil (CLZ2 & LCOZ2)

Crude oil trade higher for a third day near a two-week high supported by a softer dollar and tightening product markets due to a post-pandemic reduction in refinery capacity and buyers avoiding Russian barrels. Developments that saw US exports of crude fuel hit a record 11.4 million b/d last week at a time where domestic fuel supplies already are at a historic seasonal low. Fuel market tightness has seen refinery margins and not least diesel prompt futures spreads in NY and Europe trade sharply higher, thereby underpinning the price of crude while at the same time highlighting the ineffectiveness of releasing strategic reserves of crude when its products that are needed. Look out for additional technical upside in WTI above $89.25 while Brent’s next level of resistance is the October high at $98.75.

High Grade Copper (HGc1)

Broke higher on Wednesday and out of the narrowing range that has prevailed since July. While a tight supply outlook, both in London and Shanghai, has been lending support in recent weeks, the latest upside attempt was driven by the weaker dollar, especially against the yuan which reversed sharply higher on Wednesday after China’s central bank and foreign exchange regulator said they would maintain the healthy development of stock and bond markets while calling for a stable yuan. Speculators hold a neutral to bearish view on copper and for that to change the technical outlook needs further improvement. Support at  $3.50 with resistance being the recent highs at $3.59 and $3.69.

US treasuries (TLT, IEF)

US treasury yields fell again yesterday, with the US 10-year treasury yield benchmark eyeing the important 4.00% level that was an important support level for the market as yields rose. The 2-year yield also eased lower, closing at a 2-week low near 4.40% as the market slowly unwinds forward tightening expectations from the Fed. The smaller than expected Bank of Canada hike yesterday was a contributor to that move (more below). An auction of 5-year  US Treasuries yesterday saw strong demand, also from foreign bidders.

What is going on?


 Meta shares plunge on huge losses on ‘Metaverse’ bet

Meta shares were down 5.6% in yesterday’s primary equity sessions dragged down by Alphabet’s Q3 results showing significant slowdown in the global advertising market. However, the losses intensified in after-market trading down 20% as Q3 earnings showed a sharp decline in operating income and –5% y/y revenue growth. But as we wrote yesterday investors are sending the signal to Mark Zuckerberg that he should slow down the ambitions and cost associated with the Metaverse, but he is doubling down increasing the losses for next year and with revenue in its metaverse division missing big against expectations the growth profile of the company is coming down hard. This was a very ugly earnings release.

Bank of Canada surprises with smaller than expected rate hike

 The BoC only hiked 50 basis points, a surprise as the market had mostly priced a 75-bp move on the back of the most recent September CPI data surprising to the upside. The Bank’s statement still committed to further tightening in an “overheated” economy but was cautious on how much the rate tightening regime is already impacting growth, noting the increasing evidence of a slowdown in the interest rate sensitive parts of the economy, like housing. The Bank expects growth to be “close to zero” in the next few quarters. Canadian 2-year rates plunged some 25 basis points in the wake of the decision. Interestingly, while USDCAD jumped well over a figure higher on the back of the decision, much of that move was erased in the ensuing hours as the BoC caution encourages the notion that the Fed may also be set to wax more cautious at next week’s FOMC meeting.

 UK Budget Statement delayed until November 17

The government was set to deliver a budget statement next Monday, October 31, but that has been delayed to give new Prime Minister Rishi Sunak and the reappointed Chancellor Jeremy Hunt time to assess how to cut spending some £35 billion to further improve the fiscal deficit trajectory after the recent wipeout in the UK gilt market and sterling on fears of spiraling deficits.

What are we watching next?


 ECB meeting up today

The ECB is set to hike rates 75 basis points today, taking the deposit rate to 1.50%. The central bank is already in hot water with Italy’s new Prime Minister Giorgia Meloni, who weighed in against the ECB hiking rates in pointed comments in her first speech as PM yesterday. The ECB is also seen likely to grapple with preventing banks from profiting from rising rates and with its awkward message on eventual quantitative tightening, as the central bank deals with the unique issue of “fragmentation”, the uneven transmission of policy due to multiple sovereign bond markets across the Eurozone.  The bank is expected to hike 50 basis points more in December.

Bank of Japan meeting tonight – will the cracks begin to show?

No sign that Governor Kuroda and company are set to surrender on YCC policy, and the easing lower of yields this week has given the JPY enough of a boost that the BoJ is under less pressure tactically to cave on its commitment to easing. USDJPY 145.00 an important focus technically for JPY traders.

The final US macro data points ahead of Nov 2. FOMC meeting

The market is clearly leaning for more cautious guidance from the Fed on its tightening regime after the market had recently finally capitulated and accepted that the Fed is likely to take rates as high as, or higher than forecast in the September FOMC meeting (the peak was slightly above 5.00% by next March, now having retreated to 4.81%), with low probability that 2023 will see any rate cuts. But will the crystallization of that view at the FOMC meeting next Wednesday feed further risk-on and a weaker US dollar? And then there is the next US data, of which we haven’t seen enough for the Fed to draw any strong conclusions. The December 14 FOMC meeting will come after two more inflation prints and will offer a new set of forecasts. Perhaps the Fed will prefer to stay as quiet as possible next week, also given the mid-term elections on Nov. 8? Further out, stubbornly strong core inflation and/or activity surveys could spoil the plot and take yields back higher. The next important data points include today’s Q3 GDP estimate and weekly jobless claims, and we’ll have a look at the Fed’s preferred inflation gauge tomorrow – the PCE inflation data for September, followed by the October ISM Manufacturing survey next Tuesday.

Earnings to watch

Today’s US earnings focus is Apple, Amazon, Intel, and Caterpillar. The latest round of weak earnings from technology companies driven by margin pressure from input costs, such as energy and wages, and weaker advertising demand is likely to hurt Apple and Amazon tonight. The recent price hikes announced by Apple should mitigate some of the expected weakness in the outlook while Amazon will face triple pressure points in its e-commerce, advertising, and cloud business. Intel is likely going to report a weak earnings report and with an outlook negatively impacted by slowing PC sales and significant capital expenditures to reshore some of its chip production. Caterpillar is the beacon in construction and mining activity, and analysts expect revenue growth to remain high at 13% y/y with unchanged margin telling the story again that the physical world is right now enjoying an advantage over the digital world.

  • Today: ANZ, Anheuser-Busch InBev, Argenx, Shopify, Teck Resources, Neste, Kone, TotalEnergies, EDF, STMicroelectronics, PetroChina, China Life Insurance, CNOOC, Oriental Land, Shin-Etsu Chemical, Takeda Pharmaceuticals, Hoya, FANUC, Shell, Lloyds Banking Group, Universal Music Group, Repsol, Ferrovial, Hexagon, Evolution, Credit Suisse, Apple, Amazon, Mastercard, Merck & Co, McDonald’s, Linde, Intel, Honeywell, Caterpillar, Gilead Sciences, Pioneer Natural Resources
  • Friday: Macquarie Group, OMV, ICBC, China Merchants Bank, LONGi Green Energy Technology, Midea Group, Imperial Oil, Danske Bank, Sanofi, Airbus, Volkswagen, China Construction Bank, Agricultural Bank of China, Bank of China, BYD, China Shenhua Energy, Eni, Keyence, Hitachi, Denso, Equinor, CaixaBank, Wilmar International, Swiss Re, Exxon Mobil, Chevron, AbbVie, NextEra Energy, Colgate-Palmolive, Royal Caribbean Cruises

Economic calendar highlights for today (times GMT)

1000 – UK Oct. CBI Reported Sales

1215 – ECB Rate Announcement

1230 – US Q3 GDP Estimate

1230 – US Sep. Durable Goods Orders

1230 – US Weekly Initial Jobless Claims

1245 – ECB President Lagarde Press Conference

1430 – US Weekly Natural Gas Storage Change

1500 – US Oct. Kansas City Fed Manufacturing

1530 – Bank of England’s Woods to speak

1700 – US Treasury auctions 7-year notes

2100 – New Zealand Oct. ANZ Consumer Confidence

2330 – Japan Tokyo Oct. CPI

2330 – Japan Sep. Jobless Rate

0030 – Australia Q3 PPI

Bank of Japan meeting

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.