Financial Markets Today: Quick Take – May 24, 2022 Financial Markets Today: Quick Take – May 24, 2022 Financial Markets Today: Quick Take – May 24, 2022

Financial Markets Today: Quick Take – May 24, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  The US equity market closed on an even keel yesterday only for Snap to report ugly earnings guidance in its quarterly report after hours, knocking sentiment and equity futures sharply lower, with other social media megacaps also feeling the heat. Elsewhere, Bitcoin is struggling as it slipped below 30k overnight, and the US dollar bounced after EURUSD closed at a four-week high yesterday.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - Nasdaq 100 futures closed above 12,000 yesterday in what looked like a strong session, but things have turned around overnight with Nasdaq 100 futures now trading around the 11,815 level. The 11,784 level (yesterday’s low) is naturally the first important support level followed by the much more important 11,700 level which if broken would solidify that market weakness will likely continue. Key macro events today are May preliminary PMI figures in Europe and the US providing the first broad-based signs of whether the economy is really slowing down.

Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) - fell 1.7% and 1.4% respectively. The attempt to rally in the opening hour in response to positive news of 33 incremental stimulus measures from China’s State Council failed to sustain. Overnight news that Biden will discuss with Treasury Secretary Yellen about reviewing tariffs on goods from China did not incur much excitement either. Among the 33 measures was reduction of RMB60 billion in the purchase tax on passenger cars.

EURUSD – the pair with the heaviest weighting in the overall USD index rushed higher yesterday, with order flow perhaps triggered by the price action rising above the 1.0642 pivot high from May 5. Headlines yesterday touted ECB President Lagarde’s specific guidance on coming ECB rate tightening, to start in July and reach zero percent by the end of Q3 (a rise overall of 50 basis points from the current –0.50% policy rate), this had already been priced into the forward curve. Bears will want a quick reversal below 1.0600 to suggest that this is a false dawn in the well-established bear trend that began back in late 2021, though the chart offers room for the squeeze higher into the 1.0800 area without threatening a change of trend.

USDJPY and JPY pairs – USDJPY continues to look heavy within the local range, with all eyes on the 127.00 area on whether a break lower will be set in motion, where the 125.00 area is a natural focus, but that level may not corral the action if the US 10-year Treasury benchmark, for example, punches back toward 2.50% (currently 2.84%), as yields are the dominant driver for JPY, given the Bank of Japan’s capping of 10-year JGB yields under its yield-curve-control (YCC) policy. Heavy speculative short JPY positioning is an additional consideration, given the spectacular move on the break of the old range capped by 116.35 to above 131.00.

Bitcoin and Ethereum are still strongly correlated with the sentiment in the stock market, and both slipped overnight and are now trading just below the key levels at $30k and $2k, respectively.

Crude oil (OILUKJUL22 & OILUSJUL22) remains rangebound with Brent currently struggling to mount a strong challenge at the key $115-area. Along with copper (COPPERUSJUL22) and iron ore (SCON2), crude oil traded lower in Asia overnight with the market underwhelmed by China’s efforts to cushion the impact of China’s increasingly controversial Covid Zero approach which has seen growth projections slump. On the supply side, the EU ban on Russian oil is going nowhere amid opposition from Hungary while US gasoline trades lower after imports from Europe soared to a six-month high last week. Until China gets its house reopened for business, the upside for crude oil seems limited, despite expectations elsewhere for a post-covid busy summer driving and travel season.

Gold (XAUUSD) is consolidating following four days of gains, and after finding resistance at $1868, the 38.2% retracement of the recent 210-dollar correction. The market has been supported by last week's recovery above $1840, the 200-day moving average, a break that is likely to have caused fresh buying from speculators after they cut bullish bets on COMEX gold futures to an eight-month low in the week to May 17. For now, however, the recovery has not been strong enough to seriously challenge those looking for lower gold prices driven by expectations for higher yields and a stronger dollar, hence the development in these two remains a key focus and driver.

Wheat futures (WHEATDEC22 & ZWZ2) rebounded from last week’s losses as unfriendly crop weather in the US and Europe continued to raise concerns about the availability of supply next winter. Drought has hurt the quality of the soon to be harvested US winter wheat with the latest survey from the USDA showing a good to excellent rating of just 29%, compared with 48% last year. After the recent rains, weather models point to a renewed period of hot and dry conditions in the southern Plains while in France, the crop continue to deteriorate amid extreme heat. Corn and soybeans meanwhile doing better with the pace of planting accelerating last week, thereby reducing the first major risk of not getting the seeds into the ground.

US Treasuries (TLT, IEF) - US treasuries sold off modestly yesterday as risk sentiment remained steady, but caught a bid late yesterday on the equity market turmoil after Snap’s profit forecast took down equity futures. The recent low in the 10-year yield was just above the 2.75% level and the major support to the downside is perhaps 2.50% if treasuries are bid again on concerns for the economic outlook and as inflation fears have cooled.

What is going on

German IFO unexpectedly improved in May. It was out at 93.0 versus the prior 91.9 in April. The increase is mostly explained by an improved current assessment. The expectations component is almost unchanged and close to levels last seen at the start of the pandemic. Several factors are pushing respondents to be careful regarding the future: supply chain frictions, the Shanghai lockdown, persistent inflationary pressures, and lower real disposable incomes of households etc. The German economy will not plunge as it did at the start of the pandemic, of course. But we think that the risks of stagflation are clearly tilted to the upside. We will watch closely the first estimate of the May PMIs this morning to have a better assessment of the economic situation in Germany and in the rest of the eurozone.

Lithium producer Albemarle Corp. (ALB) upgrades outlook again. Albemarle Corp is the world’s largest lithium producer and has upgraded its outlook for the second time this month as it expects higher lithium prices and demand to further boost their sales. We have seen many EV companies sell out of some of their electric vehicles, and this highlights the lack of supply in battery metals, which is also pushing up the lithium price. Albemarle Corp, expects sales to now be as high as $6.2 billion this year, up from its previous estimate of up to $5.6 billion.

Fed speakers remain flexible. Fed’s Bostic backed a series of 50bps rate hike moves overnight but hinted at a pause in September if inflation comes down but also opened doors to more aggressive moves if inflation does not cool. The Fed’s George said she expects the central bank to raise interest rates to 2% by August (which would require a hike of 50 basis points and one of 62.5 basis points if the current 0.75-1% Fed funds rate is to reach an even 2.00% ). While the base effects may make headline inflation appear to be softening into the summer, real price pressures aren’t going anywhere, and Fed’s hiking pace is likely to continue to prove to be slow.

JPMorgan Chase pre-releases strong NII and credit outlook. Shares of the largest US bank rose 6% yesterday as JPMorgan Chase said that it sees a positive credit outlook and net interest income rising to $56bn vs previously $53bn. CEO Jamie Dimon said that he sees a strong US economy, but big storm clouds are visible on the horizon, and the company made an interesting comment on cyber security saying it is seeing a dynamic threat landscape.

US earnings recap (XPeng and Zoom Video). XPeng reported a larger than expected 153% y/y increase in revenues and a small 20 bps improvement in the gross margin, but the Q2 revenue outlook of CNY 6.8-7.5bn vs est. 8.3bn took the shares lower in extended trading. Zoom Video is one of those stocks that have been under enormous pressure the past year and sentiment was rock-bottom ahead of yesterday’s earnings release. However, Zoom delivered a big surprise with Q1 revenue in line with estimates and EPS of $1.03 vs est. $0.86, and the Q2 revenue outlook was in line with estimates. Zoom Video shares rose 5% in extended trading.

Snap outlook deteriorates. A month ago, Snap said that it expected 20-25% revenue growth in Q2 disappointing the market with sell-side consensus at 28%, but yesterday the company said Q2 revenue growth would fall below the low end of the guidance. That is a quick deterioration over just one month ago suggesting businesses are cutting back on online advertising relative previous plans.

What are we watching next?

Flash global and Eurozone PMIs in focus today. With forward inflation concerns cooling somewhat, according to measures like inflation breakevens, focus is now shifting to the possibility and extent of economic slowdown, and Eurozone likely faces a significant threat in that regard in coming months. Flash Eurozone PMIs will be on watch today to gauge the extent of damage to the economy, although despite concerns, the surveys for Germany, France and the Eurozone are generally expected to come in well above 50 for this month, with Services PMI expected several points higher than manufacturing PMI, suggesting a solid expansion continues despite all the headwinds.

New Zealand’s RBNZ to hike rates tonight. The RBNZ, one of the earliest G10 central banks out of the box with actual rate tightening last year after an early end was declared to its QE regime, is seen hiking 50 basis points tonight to take its Official Cash Rate to a 2.00%, the highest among G10 central banks. Forward guidance will be the focus as the central bank has declared that it would like to front load its rate tightening to get ahead of inflation risks.

Earnings Watch. Meituan ended up not reporting Q1 earnings yesterday making it the second postponement relative to expectations. Today’s Chinese earnings focus is Kuaishou and NetEase which are both expected to see revenue growth decline from the previous quarter. AutoZone is releasing its Q3 earnings (ending 7 May) today and is thus the timeliest earnings release in the world on the current activity. Analysts are expecting revenue growth to decline to just 2% y/y.

  • Today: Kuaishou Technology, Intuit, NetEase, AutoZone, Agilent Technologies
  • Wednesday: Bank of Nova Scotia, Bank of Montreal, SSE, Acciona Energias Renovables, Nvidia, Snowflake, Splunk
  • Thursday: Royal Bank of Canada, Canadian Imperial Bank of Commerce, Lenovo, Alibaba, Costco, Medtronic, Marvell Technology, Baidu, Autodesk, Workday, VMware, Dell Technologies, Dollar Tree, Zscaler, Farfetch
  • Friday: Singapore Telecommunications

Economic calendar highlights for today (times GMT)

  • 0715 – France Flash May Services and Manufacturing PMI
  • 0730 – Germany Flash May Services and Manufacturing PMI
  • 0800 – Eurozone Flash May Services and Manufacturing PMI
  • 0830 – UK Flash May Services and Manufacturing PMI
  • 1000 – UK May CBI Retailing Reported Sales
  • 1345 – US Flash May Services and Manufacturing PMI
  • 1400 – US May Richmond Fed Manufacturing Index
  • 1400 – US Apr. New Home Sales
  • 1620 – Fed Chair Powell makes opening remarks at event
  • 2030 – API's Weekly US Crude and Product stocks
  • 2345 – Australia RBA’s Ellis to speak
  • 0200 – New Zealand Official Cash 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.