Global Market Quick Take: Europe – August 21, 2023 Global Market Quick Take: Europe – August 21, 2023 Global Market Quick Take: Europe – August 21, 2023

Global Market Quick Take: Europe – August 21, 2023

Macro 5 minutes to read
Saxo Strategy Team

Summary:  Concerns on the trajectory of China’s economy and financial system and less-robust than anticipated response continues to dog sentiment in Asia. Elsewhere, the continued ratcheting higher of US treasury yields is driving liquidity concerns and weighing on equity markets, even if US equities managed a modest comeback from session lows on Friday. The week ahead focus will be on policy signals from the Fed’s annual Jackson Hole symposium.

What is our trading focus?

US equities (US500.I and USNAS100.I): Focus on China, Nvidia, and energy markets

S&P 500 futures rebounded on Friday after initially breaking below the 4,370 level, but sentiment in equities is still weak going into the new week with focus on China which today did another surprise cut to the loan prime rate to bolster the weakening economy. Nvidia’s earnings report on Wednesday will also be important for sentiment in technology stocks and especially around the outlook which in the negative scenario is driven mostly by Chinese technology companies playing catchup (no structural demand) and in the positive case is raised even further as the AI boom is real. Finally, energy markets are starting the weak on a strong note with natural gas prices on the rise in Europe which is not on central banks’ wish list.

Hong Kong & Chinese equities (HK50.I & 02846:xhkg): China's underwhelming Loan Prime Rate cut disappoints

The Hang Seng Index and the CSI300 Index dropped for the 7th consecutive day, Financials were notably weak as investors were worried about the spillover damages from the property and shadow banking sectors to commercial banks and insurance companies. The Hang Seng Index tumbled 1.5% while the CSI300 shed 0.7%. Chinese banks cut 1-year Loan Prime Rate by 10bps to 3.45%, less than the 15bp reduction anticipated. Contrary to the expectation of a 15bp cut, the 5-year Loan Prime Rate stayed unchanged.

FX: China and Jackson Hole remain in focus

There have been narrow ranges across G-10 FX in Asia today, as moves have had little follow through. The USD firmed off early session lows after China held the 5-Year LPR steady at 4.20%, a cut of 15bps had been expected. The 1-Year LPR was cut 10 bps when a cut of 15bps was expected Focus remains on JPY and CNH into the new week amid sustained intervention concerns, less so now for JPY. But the dollar trajectory could be faced with some volatility as Jackson Hole is eyed. China’s rate cuts today could add further weakness to yuan, but measures to support the currency may be ready with USDCNH still above 7.30. USDJPY is now below 145.50, and no reaction was seen to the wage increase report. GBPUSD was the only G10 currency to end in green for the week and is near 1.2740. EURUSD at 1.0870 and PMIs will be eyed this week.

Crude oil and gas: tight supply and LNG strike action in focus

Crude oil prices trade up for a third day, supported by tightness in the physical market as supply curbs from OPEC+ continue to support prices. In addition, a softer dollar has also helped offset growing demand risks in China and the US and a general loss of risk appetite as global stock markets continue to lose altitude. The focus of this week turns to PMIs and Powell’s speech at Jackson Hole on Friday. EU natural gas prices meanwhile trades back above €40/MWh as strike action at major LNG export facilities in Australia could begin as early as Sept. 2 if new talks between Woodside Energy Group Ltd. and union officials on pay and conditions fail to resolve disputes. Ballots are also taking place on potential walkouts by workers at Chevron Corp. facilities

Gold and silver: hedge funds exodus amid peak rate delay

Gold prices remain on the defensive amid recent dollar and not least yield strength as the FOMC fight against sticky inflation raise the prospect of more rate hikes to come. Spot gold dropped to a fresh five-month low overnight at $1885 with focus this week turning to Fed Chair Powell’s Jackson Hole speech on Friday. Silver meanwhile receiving a helping hand from a recovering copper price with the XAUXAG ratio falling to a two-week low. As long additional rate hikes remain the focus asset managers and other large investors will likely avoid bullion amid the current high opportunity/funding cost for holding gold relative to short-term money market products. Hedge funds cut their gold long by 38% to a six-month low in the week to August 15, while the silver net short jumped 78%.

Jackson Hole and Treasury auctions will weigh on US Treasury yields (2YYU3, 10YU3, 30YU3).

Before the anticipated Jackson Hole at the end of the week, the U.S. Treasury will sell 30-year TIPS on Wednesday and 20-year bonds on Thursdays. Both maturities are usually disliked by investors, especially the 20-year notes, which have been re-introduced recently after the pandemic. The focus is going to be on both auctions’ bidding metrics and whether demand remain strong despite an increase in supply. US Treasury yields remain in an uptrend, and as explained here, higher yields may be in the cards.

What is going on?

Japan considering large minimum wage increase

A subcommittee of Japan's Central Minimum Wages Council (an advisory body to the minister of Health, Labor, and Welfare) has decided to raise Japan’s weighted average minimum hourly wage by ¥41 in fiscal 2023 amid inflation concerns. It is the largest increase since the current method was adopted of indicating wages on an hourly basis, and is well above the ¥31 increase the previous fiscal year, bringing the minimum wage to ¥1,002

China policy response underwhelms

Chinese banks cut 1-year Loan Prime Rate by 10bps to 3.45%, less than the 15bp reduction anticipated. Contrary to the expectation of a 15bp cut, the 5-year Loan Prime Rate stayed unchanged.

Commitment of Traders on commodities

The weekly Commitment of Traders report, released last Friday with data covering the week to August 15 showed hedge fund selling extend to a third week with all sectors under pressure, led by gold, copper and WTI. Broad selling continued across the agriculture sector led by corn, soybeans and coffee. More on the web and platform later

What are we watching next?

Zoom earnings on tap today

Zoom Video reports Q2 results today after the close, and enterprise sales revenue will be key amid concerns of a slowing economy. Total revenue was up 3% in Q1 and expected to come in just 1% higher in Q2. Adjusted EPS is expected to come in at $1.05 from $0.41 Updates on AI investments will also be key.

Focus shifting to Jackson Hole this week

The Federal Reserve’s Economic Policy Symposium in Jackson Hole, Wyoming, is scheduled for August 24-26. This year’s theme is "Structural Shifts in the Global Economy" and Fed Chair Jerome Powell is expected to speak on August 25 at 10am ET. Other central bank heads will also be likely on the agenda. From recent commentaries, it appears that central bankers will keep the flexibility to hike rates further, while clearly avoiding committing to cut rates soon. Still, thoughts on economic momentum could be key and rising credit risks may warrant some dovishness

Earnings to watch

Today’s US earnings focus is Zoom Video which is expected to report FY24 Q2 (ending 31 July) revenue growth of 1% y/y and EBITDA of $434mn compared to $158mn as the tailwinds from work-from-home during the pandemic have ended.

  • Today: BHP Group, KE Holdings, Zoom Video
  • Tuesday: Woodside Energy, Kuaishou Technology, ANTA Sports, Lowe’s, Medtronic, Baidu
  • Wednesday: Nvidia, Analog Devices, Snowflake, Autodesk, Splunk
  • Thursday: Royal Bank of Canada, Toronto-Dominion Bank, Meituan, CRH, Intuit, NetEase, Workday, Marvell Technology

Economic calendar highlights for today (times GMT)

  • 0600 – Germany Jul PPI
  • 2000 – US Crop Conditions Report

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 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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. 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 Markets 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 Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

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 such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

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 website 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 intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.