Financial Markets Today: Quick Take – April 25, 2022 Financial Markets Today: Quick Take – April 25, 2022 Financial Markets Today: Quick Take – April 25, 2022

Financial Markets Today: Quick Take – April 25, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  White knuckle markets after an ugly close Friday on Wall Street spilled into the Monday session in Asia, with concerns of new strict covid lockdowns in Beijing driving an ugly move lower in Chinese equities and a steep drop in crude oil. As well, the sudden Chinese decision to weaken its currency at a blistering pace last week has unsettled currency markets, driving an sharp acceleration lower in EM currencies in particular.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equity futures saw a sharp sell-off into the close on Friday taking the S&P 500 back to levels not seen since early March. The risk-off has extended overnight in China with more risk coming into the market over potentially more lockdowns in China causing disruptions to the global economy. S&P 500 futures are trading around the 4,235 level this morning and could likely test the 4,200 level and then maybe the March lows this week.

Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) - China’s CSI300 Index and Shanghai Stock exchange Composite Index fell more than 3% below their March 16 intraday lows. The markets were pressured by worries about the Chinese economy heading for a sharp deceleration in growth in Q2. Mining and energy stocks were sold off. Hang Seng Index and Hang Seng TECH Index were both down more than 3%. The Chinese renminbi continued to weaken and USDCNH was at 6.58 at the time of writing. US Treasury Secretary, Janet Yellen told Bloomberg that the Biden administration was considering the benefit of scaling back the Trump-era tariffs on Chinese goods to the reduction in US.inflation and she did not think China was undermining the sanctions on Russia. Both of these favorable remarks failed to catch much of the attention of the market.

Stoxx 50 (EU50.I) - despite a sigh of relief in Europe over Macron’s reelection in yesterday’s French election European equity futures are trading lower this morning carrying over risk from the Chinese session. The risk-off move is driven by fears over Covid spreading in China risking more lockdowns across China disrupting both demand in the Asia region but more importantly exports to key consumer markets in Europe and the US risking more supply-driven inflation. Stoxx 50 futures have broken below the important 3,711 level that three times recently has been a key support level where the market found strength. If Stoxx 50 futures break below the 3,684 level (the 12 April low) then the 3,600 level is likely in play this week on the downside.

GBPUSD and USD/commodity currency and USD/EM pairs – the US dollar has rallied very sharply over the last few sessions, possibly sparked more broadly into EM by the sudden Chinese decision to allow the sharpest weakening move in the renminbi since at least 2018. The pound sterling has been hit especially hard as weak UK data was reported late last week, including ugly Retail Sales and confidence data. This, combined with GBPUSD dropping through the key 1.3000 support level drove one of the worst single daily losses for that pair in recent memory on Friday, possibly opening for a move to 1.2500 and even the huge 1.2000 level.

EURUSD Macron’s victory in French Presidential election prompted only short-term gains in EUR.  President Emmanuel Macron won a second five-year term in office after facing his far-right rival Marine Le Pen in a runoff election on Sunday by a projected 58-42 percent margin. EURUSD popped up to 1.085 at the open in Asia but the rally was fully reversed overnight, with the pair trading close to the recent cycle lows near 1.0760 this morning. The next chart levels are the 2020 low of 1.0636 and then the low since late 2002 of 1.0341. ECB President Christine Lagarde gave an interview over the weekend, saying that inflation is a “different beast” between the US and Europe. With Eurozone inflation mainly energy-driven and the labor market not as hot as the US, it is hard to imagine gains in EUR sustaining against the USD.

Gold (XAUUSD) led by silver (XAGUSD) has joined the weakness seen across metals and commodities in general on concerns a succession of aggressive rate US hikes will boost the dollar while sending real yields higher as inflation is being brought under control. Gold is challenging support at $1915, a two-week low, while silver has fallen out of bed to hit a two-month low as weakness from the industrial metal sector triggers a renewed reduction of longs. The XAUXAG ratio trades near a two-month high at 80.80 with gold finding some relative support given a still favorable backdrop. The Fed is currently on a collision course with the PBoC which needs to add stimulus on mounting growth fears, and it raises the question of whether the FOMC will be able to hike rates as aggressively as it has been priced in by the market, thereby raising the risk of a gold supportive policy mistake. Support: $1915 and $1890

Crude oil (OILUKJUN22 & OILUSJUN22) trades weak with worsening China lockdowns and US release of strategic reserves, reducing the focus on supply risks. With Beijing and Shanghai both in lockdown, the world’s biggest crude importer is heading for the worst oil demand shock since early 2020. Supply worries have not suddenly disappeared with Libyan supply disruptions as well as sanctions and a potential widening ban against Russian crude oil import also lingering. For now, however, the market is in risk-off mode with the risk of longs getting squeezed. 

China’s continues to trade within a narrowing range around $107 in Brent and $102.5 in WTI. Beneath the surface, however, the market is anything but calm with supply disruptions from Libya and Russia currently being offset by lower demand in China where officials are struggling to eradicate a wave of Covid-19 in key cities. In addition, the market is on growth alert with the US Federal Reserve signaling an aggressive tightening mode in order to curb inflation, a process that most likely will reduce growth and eventually demand for crude oil. US refinery margins hit a record earlier this week before falling by more than 10% yesterday. Developments still reflecting the high prices US and other buyers are forced to pay while cutting reliance on Russian oil.

US Treasuries (IEF, TLT) have finally found a modest bid on the weight of weak risk sentiment hitting risky assets, with the yield curve flattening slightly as treasuries find a bid. The 10-year US Treasury benchmark twice shied away from the 3.00% level last week. The move higher in yield looks technically massively over-done by traditional metrics as bond funds have suffered their worst drawdown in modern history. The next key test looks like the May 4 FOMC meeting and how the Fed guides on its policy intentions from here, particularly in quantitative tightening. Could Fed policy guidance soften ever so slightly due to the avalanche of treasury selling in recent weeks and if equity markets have been marked even lower by then?

What is going on?

China lockdown concerns widen as rising cases in the capital Beijing are driving concerns that China could lock the capital down as it recently did in Shanghai. Many residential compounds in the capital have been sealed, with efforts most concentrated in an eastern portion of the city Chaoyang. These concerns helped drive a worsening in risk sentiment in today’s Asian session after a very weak close on Friday in the US, with the Chinese currency again lower and crude oil selling off sharply to begin the week.

Commodities across all sectors, led by metals are under pressure as the focus shifts from Russia sanctions-led supply angst to demand destruction due to already high prices, expectations for an aggressive US rate hike cycle killing growth, and not least continued lockdowns in China which have spread from Shanghai to Beijing. The Bloomberg Commodity Spot index jumped an unprecedented 24.5% during the first quarter and after hitting a fresh record last week, the shift in focus may trigger an oversized correction. Positions held by investors and speculators are mostly geared towards higher prices, something we may not see until China gets on the other side of the outbreak and the impact of central bank rate hikes are being analyzed. 

Key crops at risk of a correction with spec length near record: The risk of a global food crisis caused by weather worries and the risk of a sharp reduction in this year’s Ukraine production, has recently given the grains sector a strong boost. Overall, the sector net long, which includes six crop futures, reached a ten year high at 819k lots with buying concentrated in soybean oil and corn. The bullish belief in higher prices can be seen in the long/short ratio with readings of 43 longs to 1 short in soybeans (SOYBEANSJUL22) and 33 to 1 in corn (CORNJUL22) highlighting a sector with literally no short positions left.

Iron ore (SCOA) is having a meltdown. Iron ore futures were down close to 12% in Singapore to 2-month lows, before recovering half of the initial losses. Rich valuations are coming to haunt, after steel output dropped over 10% in Q1. But key miners Rio Tinto (XXRIO), BHP (BHP) and Vale (VALE) have confirmed their guidance for full-year production. Fortescue Metals (FMG) will be reporting output data on Thursday.

Indonesia’s palm oil ban to aid inflation fears. Indonesia has announced plans to ban all exports of palm oil, which is a key ingredient of cooking oil, packaged food products, cosmetic, and other household items. Indonesia exports almost half of the global palm oil supply, suggesting further risks to Asia and global inflation outlook.

No great news on the state of the UK consumer. Retail sales were down again in March (minus 1.4 % month-over-month). They are still 2.2 % above their pre-pandemic level. But the trend is really not looking good. In addition, UK GfK consumer confidence plunged in April more than expected, at minus 38 versus expected minus 33 and previous minus 31. Confiance is only slightly above all-time lows. This is hard to see how the UK economy could avoid at least a modest downturn in the coming months. We believe a 50 basis point interest hike by the Bank of England is now off the table in May. It would have negative ripple effects on the overall economy.

Rather good eurozone PMI indicators in April. The flash PMI data pointed to a pick up in the eurozone growth in April (55.8 versus prior 54.9). This was mostly driven by the service sector. The manufacturing sector fell to a 22-month low mostly due to record inflationary pressures. In Germany, supply issues seriously intensified, pushing the manufacturing sector into a downturn. Finally, the French composite PMI skyrocketed to 57.5 versus 56.3 in March. Both the services and the manufacturing sector experienced strong growth, at 58.8 and 55.4, respectively.

What are we watching next?

Further Chinese Covid lockdowns. This is the key risk-off factor driving factors right now across both currencies, interest rates, and equities overnight. More lockdowns reduce demand for commodities in the short-term which is an easing factor for commodity inflation, but lockdowns also create bottlenecks in the world’s factory which causes more delays and potentially inflation in consumer markets in the US and Europe. The longer China is doing lockdowns the more stimulus China will unleash to offset the impact driving up inflation longer term. This is key to watch.

Technology earnings and their profit margins. Net profit margins are confirming their downtrend in Q1 according to preliminary earnings data, but technology companies measured by the Nasdaq 100 are seeing less impact on margins from rising input costs. As technology companies are the biggest constituents in the main indices it crucial how these companies perform on earnings this week, but also that they can demonstrate less impact from inflation.

Earnings Watch. This week the Q1 earnings season shifts into high gear with 558 major earnings releases that will impact sentiment in equity market. It is the big test of companies’ ability to pass on costs to their customers. The list below shows all the most important earnings releases, but our focus is on the biggest names such as Microsoft, Alphabet, UPS, Meta, Qualcomm, Boeing, PayPal, Apple, Amazon, Mastercard, Intel, Caterpillar, Exxon Mobil, and Chevron. Outside the big names we will focus on pure copper miners such as Southern Copper and First Quantum Minerals for guidance on copper which is seeing strong sentiment.

  • Today: Deutsche Boerse, Philips, Coca-Cola, Activision Blizzard, Cadence

  • Tuesday: Kweichow Moutai, Ganfeng Lithium, First Quantum Minerals, Tryg, FANUC, Canon, HSBC, Banco Santander, Iberdrola, Atlas Copco, Novartis, UBS Group, Kuehne + Nagel, Microsoft, Alphabet, Visa, PepsiCo, UPS, Texas Instruments, Raytheon Technologies, General Electric, Mondelez, Chubb, 3M

  • Wednesday: LONGi Green Energy, Teck Resources, DSV, Novozymes, Kone, Dassault Systemes, STMicroelectronics, Deutsche Bank, BYD, China Shenhua Energy, China Petroleum & Chemical, UniCredit, Keyence, GlaxoSmithKline, Lloyds Banking Group, Yara International, Iberdrola, Assa Abloy, SEB, Credit Suisse, Meta, Qualcomm, Amgen, Boeing, PayPal, ServiceNow, Ford, Southern Copper

  • Thursday: Nokia, Sanofi, TotalEnergies, Denso, Hitachi, Barclays, Nordea, Apple, Amazon, Mastercard, Eli Lilly, Thermo Fisher, Merck, Comcast, Intel, McDonald’s, Linde, Caterpillar, Hershey, Twitter

  • Friday: ICBC, China Yangtze Power, Midea Group, WuXi AppTec, TC Energy, Imperial Oil, Orsted, Neste Danske Bank, BASF, China Construction Bank, Agricultural Bank of China, Ping An Insurance, COSCO Shipping, Eni, AstraZeneca, BBVA, Hexagon, Exxon Mobil, Chevron, AbbVie, Bristol-Myers, Honeywell, Colgate-Palmolive

Economic calendar highlights for today (times GMT)

  • 0800 – Germany Apr. IFO Business Climate survey
  • 0800 – Switzerland Weekly SNB sight deposits
  • 1000 – UK Apr. CBI Trends in Total Orders/Selling Prices/Business Optimism
  • 1230 – US Mar. Chicago Fed National Activity Index
  • 1430 – US Apr. Dallas Fed Manufacturing Activity
  • 1500 – Canada Bank of Canada Governor Macklem before parliamentary committee
  • 1700 – ECB's Panetta to speak
  • 2300 – South Korea Q1 GDP
  • 2330 – Japan Mar. Jobless Rate

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


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.