Financial Markets Today: Quick Take – July 19, 2022 Financial Markets Today: Quick Take – July 19, 2022 Financial Markets Today: Quick Take – July 19, 2022

Financial Markets Today: Quick Take – July 19, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  US stocks turned sharply lower on Monday after Apple, just like Alphabet did last week, announced plans to slow hiring, thereby adding strength to concerns about the direction of the US economy as the Federal Reserve aggressively hike rates to combat inflation at the expense of economic growth. The Atlanta Fed GDPNow estimate is -1.5%, and this will get a final update today before the GDP data is released next week. The dollar regained some ground following a minor bout of profit-taking while US 10-year Treasury yields held steady just below 3%. Crude oil prices jumped the most since May as tightness continues to support.

Note: The Saxo Market Daily Podcast will return on Monday July 25

What is our trading focus?

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

US equity futures trade slightly higher after slumping on Monday, reversing an earlier rally fueled by solid reports from Goldman Sachs and Bank of America. Prices turned sharply lower towards the end of the session on a report that Apple, just like Alphabet last week, will slow hiring and spending on growth next year to prepare for a potential economic downturn. Despite beating earnings and revenue estimates IBM moved on to drop by more than 4% in after-hour trading. Ahead of today’s US housing starts and permits reports for June, a monthly homebuilder sentiment index plunged to the lowest level since the start of the pandemic. Key corporate earnings today include Johnson & Johnson, Netflix and Lockheed Martin

EURUSD upside remains capped

The EURUSD turned back lower after finding resistance at €1.0205, the 38.2% retracement of the recent slump from €1.0615. This week is key for euro with three key catalysts. EU gas supplies remain under threat with Gazprom declaring force majeure on flows to a number of European buyers. This will further boost inflation in the coming months and drag on growth. Meanwhile, the ECB remains stuck between a hard and a rock place as a 25bps rate hike which the consensus expects this week will be too little too late. Eurozone June CPI is due today and a new fresh high will likely be printed at 8.6% y/y from 8.1% y/y previously. Moreover, now Italy's political uncertainty is also adding to the mix of headwinds for the EUR.

USDJPY remains rangebound ahead of the BOJ

The yen is seen in range amid caution over monetary policy meeting in Japan this week, but also as the USD has softened and recession concerns eased. USDJPY bounced off 138 level overnight but traded below 138.50 in Asia. While the Bank of Japan will likely maintain its stimulus at this week’s meeting, the BoJ's Outlook Report will garner greater attention as it is expected to show a downgrade in its growth forecast for FY2022 and an increase in its inflation forecast.

Crude oil (OILUKSEP22 & OILUSAUG22)

Oil prices jumped the most since May after the market concluded that continued tightness in the physical market does not support recent short-selling attempts, especially after President Biden left the Middle East with no promise of additional barrels to help suppress record high US gasoline prices. On top of Russian sanctions already making oil and fuel products unavailable for some buyers, US TC Energy Corp has been forced to declare force majeure on some pipeline supplies from Canada after a heatwave in South Dakota knocked out the power supply. Spot crude from the North Sea meanwhile continues to be bought at a near record premium over Brent futures while near months spread trade at levels that reflect a very tight market. The next level of resistance in Brent at $108 per barrel.  

What is going on?

EU gas supply uncertainty lingers

Russia's Gazprom has told customers in Europe it cannot guarantee gas supplies because of 'extraordinary' circumstances. The letter from the Russian state gas monopoly said it was retroactively declaring ‘force majeure’ on supplies dating from June 14. The news comes as NordStream 1, the key pipeline delivering Russian gas to Germany and beyond, is undergoing annual maintenance meant to conclude on Thursday, and reports suggest that supplies are unlikely to be restored. Force majeure is standard in business contracts and spells out extreme circumstances that excuse a party from their legal obligations. Meanwhile, demand is picking up as EU faces a heatwave.

China’s real estate support measures continue

Chinese authorities have announced more measures to support the ailing property sector after reports suggested that homebuyers were boycotting mortgage payments. Authorities are providing emergency funding for uncompleted residential construction projects, or even "buy" the projects to make sure completion will be faster. In addition, past due mortgage payments for uncompleted projects could avoid paying interest penalties for a period of time (to be decided by banks and local governments). This is aimed to calm down mortgage borrowers.

Mixed company news and dimmer earnings season results

Goldman Sachs (GS) reported better than expected revenue, but it is the third major bank giving tepid signals ahead with the GS CFO saying the bank will slow hiring. Unlike JPMorgan, GS is not planning to pause buybacks. But it may bring in job cuts, like Wall Fargo and JPMorgan have laid off some home-lending workers. Apple (AAPL) added to concerns the Fed’s tightening will land the US in a recession with the company looking to limit spending and job growth at some divisions. This cautionary stance mimics Amazon, Alphabet and Microsoft, which are all reducing spending. Sor far this earnings season 40 of the S&P500 companies shared Q2 results/ guidance levels. Average earnings growth is negative, (-15%), while most companies are guiding for a slowdown in revenue and higher costs.

RBA says inflation is here for longer

The RBA made it clear it will make more hikes in the coming months, while making larger hikes and potentially hikes between meetings. The Australian economy has strong momentum; with record high retail sales and record low unemployment. However, the RBA now conceded it will need to play catch up. It sees inflation getting worser in the near term, before peaking later in 2022. Strong local demand and a tight labour market are also contributing upward pressure on prices, while Floods in Australia will also add to inflation persisting for a longer period of time according to the RBA. Governor Low previously warned the benchmark rate may go to 2.5%, but today, interest rate futures pricing implies the cash rate will be 3.2% at the end of the year. This raises the concern the economy may well slip into a recession. The AUDUSD responded to the minutes by jumping above 0.68 but with US rate hikes to accelerate as well and the continued pressure on commodity prices, the upside potential in our view remains limited.

What are we watching next?

US housing starts due today

While the Fed is in a blackout period ahead of the July 26-27 FOMC meeting, the consensus has settled for another 75bps hike to 2.5% and that will probably give room to the Fed to keep its future options open. But the doors for a 100bps rate hike are still not completely shut. US housing starts are due today and will be key as Fed's Waller mentioned it as a factor when considering whether tightening needs to be accelerated to 100bps. Also, the Atlanta Fed GDPNow estimate is -1.5%, and this will also get a final update today before the GDP data is released next week.

The Italian Prime minister Mario Draghi will tell lawmakers Wednesday if he’ll resign

We see at least five possible scenarios about what could happen next: 
1) Draghi remains in office with the same majority. But it seems unlikely as it would imply a massive turnaround of Giuseppe Conte’s Five-Star Movement – the largest political party within the coalition;
2) Draghi is successful in setting up a new government with a different majority. But it is a tricky task since there is no real alternative to the Five-Star Movement;
3) Draghi requests irrevocable resignations without asking a Parliament vote. This is unlikely at that stage;
4) Under pressure from the Italian president Sergio Mattarella and several political parties (such as Matteo Renzi’s Italia Viva), Draghi agrees to limp on for a little while longer in order to avoid a political crisis. He leads a technocratic government until the 2023 general elections. This could be a consensual approach among Italy’s political class and certainly the best scenario for the eurozone;
5) Draghi fails to form a new government or refuses to lead a transitional and temporary government until the next elections. The snap election takes place within 70 days (likely in September). A center-right tie-up led by Giorgia Meloni’s Brothers of Italy would win if its members stick together. This would be very bad news for the eurozone at the worst time ever.
Snap elections are far from certain in our view. What history teaches us is that each time we try to predict the outcome of an Italian government crisis, we get it wrong. What is certain is that Draghi’s national unity project has collapsed, however.

China holdings of U.S. debt fall below $1 trillion for the first time since 2010
Europe suffers from deadly heat wave as wildfires displace thousands of people
Russian Gas Supply Halt Risks 1.5% Cut to EU’s GDP in Worst Case Scenario

Earnings Watch

This coming week we will see results from a very diverse group of companies.  A preview of Q2 earnings releases can be read on the trading platform or here.

  • Tuesday: Johnson & Johnson, Netflix and Lockheed Martin
  • Wednesday: Tesla and United Airlines
  • Thursday: AT&T, Union Pacific and Travelers
  • Friday: American Express and Verizon

Economic calendar highlights for today (times GMT)

0900 – EC June CPI
1230 – US June Housing Starts and Permits
2030 – API's Weekly Report on US Oil and Fuel Inventories

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

Apple Sportify Soundcloud Stitcher

Latest Market Insights

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

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 (

Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, 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.