dollar dollar dollar

APAC Daily Digest: What's happening in the markets and what to consider next – August 1, 2022

APAC Research

Summary:  Last week was a solid show of strength in US equities as the two key risk events, Fed meeting and a host of corporate earnings, turned out to be better than feared. A weaker dollar into the month end brought gains to the Japanese yen and the commodity markets. However, a miss in China’s manufacturing PMI over the weekend may bring some caution back in Asia. Friday’s US PCE data reaffirmed that inflationary pressures are here to stay, and the US ISM surveys and jobs market report this week will shed further light on the recession vs. Inflation argument.


What is happening in the markets?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) gained as tech and consumer discretionary surged

Nasdaq 100 surged 1.8% and S&P500 climbed 1.4%. Amazon (AMZN:xnas) and Apple (APPL:xnas) led the benchmark indices higher after Amazon reported better than expected revenue growth and margins and Apple came with a solid bit on iPhone sales. Amazon ended the session more than 10% higher and Apple gained 3%. Consumer discretionary overall outperformed. Tesla (TLSA:xnas) jumped 5.8%. On the other hand, consumer staples lagged, with Procter & Gamble (PG:xnys) having plunged 6.2%.  For the week, utilities are the best performing sector in the S&P500 as bond yields plunged and the rising expectations of a less hawkish Fed tightening path ahead. The downbeat sentiment earlier in the month contributed to rallies on better-than-feared earnings, however US index futures turned negative in the Asian morning as August begins with a China PMI miss and US jobs report ahead. 

Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) fell on policy disappointment and regulatory woes

Shares in the Hong Kong and mainland bourses fell last Friday as investors were disappointed about the lack of additional calls for aggressive economic stimulus from the Politburo meeting but focusing on stability of the property market and the banking sector.  Consumer, property and technology dragged the markets lower. Hang Seng Index fell 2.3% on Friday to end July 7.8% lower for the month. CSI300 was 1.3% lower on Friday and 7.0% lower for the month of July.  Hang Seng TECH Index (HSTECH.I) plunged nearly 5% on Friday, and lost more than 12% for the month of July. The Hangzhou municipal market supervision bureau summoned the management of Meituan (03690:xhkg/MPNGY:xnas) and Other food delivery e-platformers for alleged “vicious price-cutting”. Meituan fell 6.2%.  Alibaba’s (09988:xhkg/BABA:xnas) Ma was said to give up his control over the Ant Group in the midst of regulatory pressures.  Alibaba’s shares fell 6.1% on Friday during Hong Kong hours and then plunged another 6% from the closing price of Hong Kong trading in New Your hour trading following the US Securities and Exchange Commission’s decision to add the internet giant to list of Chinese ADRs potentially being forced to delist from U.S. exchanges.  

Crude oil prices (OILUKSEP22 & OILUSSEP22) reverse gains

After gains last week, the focus in crude oil is shifting to the OPEC+ meeting this week where expectations of a significant increase in output for September are minimal. Supply side issues also continue to underpin but focus short-term has shifted to China’s manufacturing PMI miss and the resulting demand contraction. WTI futures slid back to $98/barrel in the Asian morning hours, while Brent futures were below $104. 

Metals stronger last week on weaker dollar and China stimulus

Industrial metals had a comeback week with broad-based declines across the space as weaker dollar, supply constraints and China stimulus measures underpinned. Zinc rallied sharply on Friday amid further signs that Europe’s energy crisis is putting smelters under pressure. Aluminum stockpiles have also plunged to a 31-year low. A surprise miss in China’s manufacturing PMI to contraction zone may however dent the rally in industrial metals.

Gold (XAUUSD) up over 2% last week

Gold had its biggest weekly gain since March amid speculation that the Fed will slow the pace of interest rates rises as the US economy slows. The decline in the US dollar also prompted safe-haven buying. The high-than-expected PCE data in the US on Friday further reaffirmed inflation pressures are here to stay, and the ISM survey data will be on watch next. The support-turned-resistance at $1780 remains key to confirm an uptrend. 

The yen comeback

While the decline in USDJPY last week may just be the beginning of a larger trend to come, it may not necessarily happen this week. USDJPY traded lower from 139+ levels at the start of the week to lows of 135.55 on Friday amid a tumble in US yields as the Fed was less hawkish than expected. A fresh surge in Tokyo CPI may not move the needle by much on Bank of Japan’s rate hike expectations, but the oversold yen still have significant potential to recover is US data continues to point towards moderation in economic activity.


What to consider?

US PCE data was hotter than expected

The focus has shifted back to inflation last week despite the Fed’s lack of forward guidance, and the view was cemented end of the week with a hotter-than-expected PCE report, a data point that is closely watched by the Fed to tr4ack inflationary pressures. Core PCE M/M rose by 0.6% above expectations of 0.5% and accelerating from last month's 0.5% read. The Y/Y also accelerated to 4.8% from the prior and expected 4.7%. Headline PCE accelerated to 1.0% M/M from 0.6% while the Y/Y accelerated to 6.8% from 6.3%. These go to suggest that there are little signs of inflation cooling yet, and the market may have been too dovish in perceiving the Fed’s message. There is still scope for another 75bps rate hike at the September meeting if the PCE and CPI pressures accelerate, and the market’s terminal rate expectations will have to be revised higher. 

China manufacturing PMI fell back to contractionary territory in July

The official China NBS manufacturing PMI released on Sunday July 31 surprised to the downside and declined to 49.0 back to the contractionary territory (vs consensus: 50.3; June: 50.2). The manufacturing production component and manufacturing new order component were both in contraction, coming at 49.8 and 48.5 respectively.  Exports new orders fell 2.1 points to 47.4.  Oil and gas refinery and metal processing were in contraction and dragged the overall manufacturing PMI lower.  Non-manufacturing PMI came at 53.8 (vs consensus 53.9; June 54.7).  The services component decelerated 1.5 point to 52.8 but remained in the expansion territory.  Air transportation, catering and lodging came at above 60, indicating strong expansion. For more details, please click here

Energy companies report massive profits and buybacks

A slew of energy earnings reports last week surpassed expectations not just on profits, but also on shareholder returns, as high oil prices underpinned. Exxon, Chevron, Shell Plc and TotalEnergies SE all reported record profits. All of them expanded share buybacks except Exxon, which tripled repurchases earlier in the year. Exxon grew its quarterly profit by over $3 billion. Executives at Exxon and Chevron said they don’t see much evidence of fuel-demand destruction even as recession fears mount. The energy sector now accounts for 4.5% of the S&P 500 index, having come roaring back post-pandemic as focus shifted back to lack of energy sources. 

Eurozone growth and inflation came in above expectations

The Euro-area reported higher-than-expected inflation of 8.9% YoY in July vs consensus estimate of 8.7% and June’s 8.6% print. Rising food and energy prices continued to underpin, while the summer travel demand in the region also possibly helped price pressures to rise to a new all-time high. Growth, however, held up at 0.7% QoQ, smashing estimates of a 0.2% gain. While this may support the case for a bigger rate hike by the ECB again in September, Germany’s stagnation does add an element of caution. Still, there is enough reason to believe that a tough winter ahead means that the ECB’s window to hike rates is fast closing.

US ISM manufacturing on the cards today

The S&P flash manufacturing PMI moderated 0.4pp to 52.3 and regional Fed surveys were mixed. Bloomberg survey for July ISM manufacturing index – scheduled for release on Monday – has a median forecast from economists at 52.0, down from 53 a month ago, which means a further cooling is expected. While the supply side hurdles may be easing, weakening in demand is likely to cap increases in new orders and the overall headline

More earnings to come

While the busiest earnings week for the season may have passed without any major shocks, we have another heavy week ahead of us. In the week ahead, there are 148 S&P 500 companies reporting earnings in a variety of sectors including energy (Occidental, Cheniere Energy), travel (Uber, Airbnb, Booking Holdings, Expedia), semiconductors (Advanced Micro Devices), ecommerce (Starbucks, eBay) and healthcare (Moderna, Eli Lilly, Gilead Sciences, Amgen). Key themes to focus on will include consumer demand patters, supply chain issues and the impact from a stronger dollar.


For a week-ahead look at markets – tune into our Saxo Spotlight.

For a global look at markets – tune into our Podcast.



The Saxo Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 (
- Full disclaimer (

Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.