PMIs Drive Euro Lower, U.S. Home Sales, Saudi Oil Talk – What’s Moving Markets

– The dollar charges to a new high as the euro weakens again. New home sales data for July are due, and the Federal Reserve’s Neel Kashkari will speak after the market close. Elon Musk wants to know what Jack Dorsey has on file about Twitter’s spams and bots, and crude oil prices rise after Saudi Arabia’s oil minister warns of a supply cut to stop what he sees as unjustified weakness in futures markets. Here’s what you need to know in financial markets on Tuesday, 23rd August.

1. Euro hits new 20-year low as PMIs point to recession

The dollar marched to a new 20-year high as the euro slumped again with the prospect of an energy-driven recession in the second half of the year looming ever larger.

The euro fell as low as $0.9902 before paring losses, after figures suggesting that the key German manufacturing sector held up better than expected in August as supply chain bottlenecks eased.

However, that didn’t stop the composite purchasing managers indices of both Germany and France slipping into contraction territory. S&P’s manufacturing PMI for Japan also fell to its lowest level since February 2021.

2. U.S. New Home Sales due; Fed’s Kashkari to speak later

The dollar’s strength owes much to the fading of hopes for a dovish pivot on monetary policy from the Federal Reserve. Instead, expectations are mounting that Chairman Jerome Powell will use his keynote speech at Jackson Hole on Friday to ram home the message that the Fed will keep tightening policy.

If any of Powell’s colleagues feel like dissenting as the economy shows signs of cooling off, it’s likely to be Neel Kashkari, head of the Minneapolis Fed, one of the most dovish members of the Fed’s policymaking committee. He’s due to speak at 19:00 ET (23:00 GMT).

Redbook Research’s latest update on the economy and New Home Sales data for July are due before that at 08:55 ET and 10:00 ET respectively.

3. Stocks set for a weak bounce as Zoom outlook weighs

U.S. stock markets are expected to open with a weak bounce, after suffering their worst daily loss in eight weeks on Monday.

By 06:15 ET, Dow Jones futures were up 47 points, or 0.1%, while S&P 500 futures and Nasdaq 100 futures were both up 0.2%. The main cash indices had lost between 1.9% and 2.6% on Monday.

Sentiment is not being helped by a sharp cut in guidance from Zoom Video (NASDAQ:ZM) after hours on Thursday which exposed the extent of its struggle to grow beyond its basic videoconference offering.

Medtronic (NYSE:MDT) is the big name reporting earnings before the open, while Intuit (NASDAQ:INTU) headlines after the bell. Chinese e-commerce company JD.com (NASDAQ:JD) is also due to report.

4. Musk subpoenas documents from Dorsey to bolster Twitter fight

Elon Musk subpoenaed documents from Twitter (NYSE:TWTR) founder and former CEO Jack Dorsey, aiming to bolster his arguments about the social media company’s spam and bot users as he tries to fend off Twitter’s attempts to force him to buy it.

Twitter sued Musk for failing to proceed with his binding takeover offer earlier in the summer, while Musk countersued, claiming Twitter had withheld information about spam accounts.

Prior to that, Musk had counted on support from Dorsey and others to help him take the company private, encouraged by Dorsey’s supportive (but non-binding) comments on social media. Dorsey would stand to realize around $1 billion from a sale of his stake in the company to Musk, however.

A five-day trial is due to start on October 17th.

5. Oil rises as Saudi Minister threatens supply cut; natgas continues its LNG-driven surge

Crude oil prices bounced after Saudi Arabia’s oil minister tried to jawbone the market higher with warnings of a possible cut in output.

In interviews with Energy Intelligence and Bloomberg, Prince Abdulaziz bin Salman said that futures prices, which have fallen over 25% from their peaks earlier in the summer, are failing to reflect the tightness of the physical market, and that the OPEC+ group of producers may need to cut supply to end that ‘disconnect’. The American Petroleum Institute’s weekly inventory data are due at 16:30 ET as usual.

By 06:25 ET, U.S. crude futures were up 1.8% at $92.00 a barrel, while Brent futures were up 1.5% at $95.97 a barrel. Natural gas futures continued to push to new 14-year highs as demand from Europe ahead of the coming winter kept the Atlantic LNG market acutely tight.