Market Talk – December 16, 2022

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ASIA:

Uncertainty facing the global economy next year will exacerbate challenges at home for China, economists in Beijing say, while urging swift support to help counter external headwinds. As the risk of global recession looms, China should stay alert to turbulence in international markets and the potential of another financial crisis, said former vice-finance minister Zhu Guangyao at a forum organized by web portal Sina on Wednesday. Zhu predicted rate hikes among developed countries will not stop until mid-2023, highlighting the need for international macroeconomic policy coordination.

India’s central bank, The Reserve Bank will issue two tranches of Sovereign Gold Bonds, which will open for public subscription in December and March. Sovereign Gold Bonds (SGBs) 2022-23-Series III will open for subscription during the December 19-December 23 period and the 2022-23-Series IV during March 06-10, 2023, the Finance Ministry said in a statement on Thursday. These bonds are issued by the Reserve Bank of India (RBI) on behalf of the government. The maximum limit of subscription is 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal year. The bonds can be used as collateral for loans.

 

 

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 524.58 points or -1.87% to 27,527.12
  • Shanghai decreased 0.79 points or -0.02% to 3,167.86
  • Hang Seng increased 82.08 points or 0.42% to 19,450.67
  • ASX 200 decreased 56.10 points or -0.78% to 7,148.70
  • Kospi decreased 0.95 points or -0.04% to 2,360.02
  • SENSEX decreased 461.22 points or -0.75% to 61,337.81
  • Nifty50 decreased 145.90 points or -0.79% to 18,269.00

 

 

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00110 or -0.16% to 0.66901
  • NZDUSD increased 0.00250 or 0.39% to 0.63687
  • USDJPY decreased 1.206 or -0.88% to 136.554
  • USDCNY decreased 0.00880 or -0.13% to 6.98128

 

Precious Metals:

  • Gold increased 13.61 USD/t oz. or 0.77% to 1,790.27
  • Silver increased 0.066 USD/t. oz or 0.29% to 23.116

 

Some economic news from last night:

Japan:

Services PMI increased from 50.3 to 51.7

New Zealand:

Business NZ PMI (Nov) decreased from 49.3 to 47.4

 

Some economic news from today:

India:

Bank Loan Growth increased from 17.2% to 17.5%

Deposit Growth increased from 9.6% to 9.9%

FX Reserves, USD increased from 561.16B to 564.07B

Hong Kong:

Unemployment Rate (Nov) decreased from 3.8% to 3.7%

 

 

EUROPE/EMEA:

 

U.K. inflation came in slightly below expectations at 10.7% in November, as cooling fuel prices helped ease price pressures, though high food and energy prices continued to squeeze households and businesses. Economists polled by Reuters had projected an annual increase in the consumer price index of 10.9% in November, after October saw an unexpected climb to a 41-year high of 11.1%. On a monthly basis, the November increase was 0.4%, down from 2% in October and below a consensus estimate of 0.6%. The Bank of England will announce its next monetary policy move on Thursday. It is widely expected to raise interest rates by 50 basis points, as it juggles sky-high inflation and an economy that policymakers say is already in its longest recession on record.

 

The major Europe stock markets had a negative day:

 

  • CAC 40 decreased 70.14 points or -1.08% to 6,452.63
  • FTSE 100 decreased 94.05 points or -1.27% to 7,332.12
  • DAX 30 decreased 93.16 points or -0.67% to 13,893.07

 

The major Europe currency markets had a mixed day today:

  • EURUSD decreased 0.00124 or -0.12% to 1.06136
  • GBPUSD decreased 0.00015 or -0.01% to 1.21745
  • USDCHF increased 0.00407 or 0.44% to 0.93217

 

Some economic news from Europe today:

UK:

Core Retail Sales (YoY) (Nov) increased from -6.4% to -5.9%

Core Retail Sales (MoM) (Nov) decreased from 0.7% to -0.3%

Retail Sales (YoY) (Nov) remain the same at -5.9%

Retail Sales (MoM) (Nov) decreased from 0.9% to -0.4%

Composite PMI increased from 48.2 to 49.0

Manufacturing PMI decreased from 46.5 to 44.7

Services PMI increased from 48.8 to 50.0

France:

French Manufacturing PMI (Dec) increased from 48.3 to 48.9

French Services PMI (Dec) decreased from 49.3 to 48.1

Germany:

German Manufacturing PMI (Dec) increased from 46.2 to 47.4

German Services PMI (Dec) increased from 46.1 to 49.0

Italy:

Italian CPI (MoM) (Nov) remain the same at 0.5%

Euro Zone:

Manufacturing PMI (Dec) increased from 47.1 to 47.8

S&P Global Composite PMI (Dec) increased from 47.8 to 48.8

Services PMI (Dec) increased from 48.5 to 49.1

Core CPI (YoY) (Nov) reman the same at 5.0%

CPI (YoY) (Nov) decreased from 10.6% to 10.1%

CPI (MoM) (Nov) decreased from 1.5% to -0.1%

Trade Balance (Oct) increased from -34.5B to -26.5B

 

US/AMERICAS:

 

The Dow continued its decline this Friday after falling over 280 points after a 764-point drop on Thursday. The week began on an optimistic note with a promising CPI reading. Recession fears resurfaced after the Federal Reserve noted they would not back down on their hawkish stance and raised rates by another 50 bps. Thursday’s weekly unemployment report suggests that the US labor market remains tight – a top concern for the Fed.

 

Christopher Harvey of Wells Fargo is predicting that jobs reports will become the new standard on which to gauge the falling inflation. Wage inflation has persisted despite a slight downturn in other areas. “As a result, we believe CPI could take a backseat to jobs reports in 2023 as the marginal driver of Fed hawkishness,” Harvey stated. “In this case environment, bad news is ‘good’ news – but how long will it take before we get the bad news, and how well will the market hold up while it waits?,” he added.

 

 

US Market Closings:

  • Dow declined 281.76 points or -0.85% to 32,920.46
  • S&P 500 declined 43.39 points or -1.11% to 3,852.36
  • Nasdaq declined 105.11 points or -0.97% to 10,705.41
  • Russell 2000 declined 11.19 points or -0.63% to 1,763.42

 

Canada Market Closings:

  • TSX Composite declined 157.35 points or -0.8% to 19,443.28
  • TSX 60 declined 10.33 points or -0.87% to 1,172.7

 

Brazil Market Closing:

  • Bovespa declined 881.99 points or -0.85% to 102,855.7

 

 

ENERGY:

 

The oil markets had a negative day today:

 

  • Crude Oil decreased 1.436 USD/BBL or -1.89% to 74.674
  • Brent decreased 2 USD/BBL or -2.46% to 79.210
  • Natural gas decreased 0.4132 USD/MMBtu or -5.93% to 6.5568
  • Gasoline decreased 0.0343 USD/GAL or -1.58% to 2.1325
  • Heating oil decreased 0.1122 USD/GAL or -3.42% to 3.1712

 

The above data was collected around 12:15 EST on Friday

 

  • Top commodity gainers: Palm Oil (1.03%), Lean Hogs (5.68%), Potatoes (2.21%) and Bitumen (1.15%)
  • Top commodity losers: Palladium (-3.73%), Lumber (-3.49%), Natural Gas (-5.93%) and Heating Oil (-3.42%)

 

The above data was collected around 12:21 EST Friday.

 

 

BONDS:

 

Japan 0.265%(+1bp), US 2’s 4.21% (-0.041%), US 10’s 3.4804% (+3.04bps); US 30’s 3.53% (+0.036%), Bunds 2.151% (+6.8bp), France 2.67% (+9bp), Italy 4.293% (+13.9bp), Turkey 10.48% (-22bp), Greece 4.317% (+17.3bp), Portugal 3.174% (+8.6bp); Spain 3.253% (+10.2bp) and UK Gilts 3.327% (+8.2bp).