FUNDAMENTAL AND TECHNICAL ANALYSIS REPORT

01 Dec

FUNDAMENTAL AND TECHNICAL ANALYSIS REPORT – 01 December 2022

/ CSFX Analytics

Powell said there is still time before peak rates but that the December hike will be slower

Asian stock market closes in green on Wednesday. The Shanghai Composite is up 0.59% at 3151.34 Overall, the Singapore MSCI is up 0.15% at 299.75. Over in Hong Kong, the Hang Seng Index is up 2.16% at 18597.23. In Japan, the Nikkei 225 is up 1.43% at 28368.78, while the Topix index is up 0.61% at 1997.64 South Korea’s Kospi is up 1.08% at 2,499.13. Australia S&P/ASX 200 up 0.95% at 7353.60.

Top News of the Day:

Federal Reserve Chairman Jerome Powell said that the pace of rate hikes is likely to slow, but the peak level of rates will be higher than previously expected as there is a long way to go to curb above-trend inflation.

“Moderating the pace of rate increases may come as soon as the December meeting,” Powell said in a speech on Wednesday at the Brookings Institution event in Washington. He added that the Fed’s monetary policy was approaching “the level of restraint that will be sufficient to bring inflation down.”

About 70% of traders expect the Fed to slow rate hikes to 50 basis points in December, down from 75 basis points seen in the prior four Fed meetings.

“We continue to expect the FOMC to slow the pace of rate hikes to 50bp in December and to 25bp in February, March, and May, raising the funds rate to a peak of 5-5.25%,” Goldman Sachs said in a note ahead of Powell’s remarks.

Market Summary as per 30/11/2022:

European equities Wednesday closing. The DAX futures contract in Germany traded up 0.29% at 14397.04, CAC 40 futures up 1.04% at 6738.55. UK 100 futures contract in the U.K. up 0.81 at 7573.05.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 2.18% at 34589.77. The S&P 500 up 3.09% at 4080.11 and the Nasdaq 100 up 4.41% at 11468.00, NYSE closes 2.25% up at 15780.02.

Top Market News Today:

In the Forex market, GBPUSD up 0.35% at 1.2098. The USDJPY down 1.39% at 136.08 The USDCHF up 0.51 at 0.9539. EURUSD down 0.43% at 1.0449. EUR/GBP up 0.10% at 0.8636. The USD/CNY down 0.37% at 7.0603 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.67% $1,780.69. Elsewhere, Silver futures up 0.18% at $22.227 per ounce, Platinum up 0.56% at $1051.90. per ounce, and Palladium up 1.87% at $1914.53.

Brent Crude Oil down 0.30% at $86.71 per barrel.

In the Cryptocurrency Markets, Bitcoin at 17109.20 down 0.37%, Ethereum down 0.92% at 1282.17, Litecoin at 77.11 up 2.75%, at the time of writing.

Top Market Segment to Watch Out Today:

OIL: – The Biden administration is keeping to its promise of winding down its use of the U.S oil reserve, helping crude stockpiles in the country fall the most in a week since the highs of pre-pandemic demand as refiners pumped out fuel products to the hilt.

Crude prices jumped almost 3% on the day, continuing their recovery since the start of this week, after the U.S. Energy Information Administration, or EIA, reported a drawdown of 12.58 million barrels for the week ended Nov. 25.

It was the biggest crude drawdown since the outflow of 12.79M barrels during the week ended June 21, 2019, historical EIA data showed.

New York-traded West Texas Intermediate crude for January delivery was at $80.55 per barrel, up $2.35, or 3%, on the day. Just on Monday, the U.S. crude benchmark sank to $73.61, its lowest since December 2021.

Economic News:

US: A federal appeals court declined to put on hold a Texas judge’s ruling that said President Joe Biden’s plan to cancel hundreds of billions of dollars in student loan debt was unlawful.

The New Orleans-based 5th U.S. Circuit Court of Appeals rejected the Biden administration’s request to pause a judge’s Nov. 10 order vacating the $400 billion student debt relief program in a lawsuit pursued by a conservative advocacy group.

The decision by Fort Worth, Texas-based U.S. District Judge Mark Pittman was one of two nationally that has prevented the U.S. Department of Education under the Democratic president from moving forward with granting debt relief to millions of borrowers.

The administration has asked the U.S. Supreme Court to similarly lift an order by the St. Louis-based 8th U.S. Circuit Court of Appeals that, at the request of six Republican-led states, had barred it from cancelling student loans.

A three-judge panel of the 5th Circuit in Wednesday’s brief order declined to put Pittman’s ruling on hold while the administration appealed his decision, but the court directed that the appeal be heard on an expedited basis.

The White House had no immediate comment, but the administration has said that if the 5th Circuit declined to halt Pittman’s order it would ask the U.S. Supreme Court to intervene.

Biden announced in August that the U.S. government would forgive up to $10,000 in student loan debt for borrowers making less than $125,000 a year, or $250,000 for married couples. Students who received Pell Grants to benefit lower-income college students will have up to $20,000 of their debt cancelled.

Euro Zone: –

Euro zone bond yields rose as investors digested a fall in inflation in the single-currency bloc, after a sharp drop Tuesday on the back of local German and Spanish data.

The year-on-year inflation rate in the euro zone slowed to 10% in November, according to a preliminary reading, down from 10.6% in October and below expectations for 10.4%.

Yet the core inflation rate, which strips out volatile energy and food prices, stayed at a record high of 5%.

Germany’s 10-year government bond yield, seen as a benchmark for the bloc, was little changed after the data was released and was last up 3 basis points (bps) to 1.947%.

The yield fell 8 bps on Tuesday after German and Spanish inflation data came in below expectations, causing investors to expect a lower euro zone reading on Wednesday. Yields move inversely to prices.

With the headline inflation rate dropping but the core reading staying high, the euro zone data left a lot of questions unanswered, said Mauro Valle, head of fixed income at Generali (BIT: GASI) Investments Partners.

“There is no clear direction,” he said. “The (market) sentiment is quite mixed at the moment.”

Euro zone bond yields have shot up this year as the European Central Bank (ECB) has raised interest rates to tame inflation, causing investors to demand higher returns on government debt. Germany’s 10-year yield started the year at around -0.2% but hit an 11-year high of 2.532% in October.

Economists said signs that inflation is turning a corner could cause the ECB to raise rates by 50 bps in December, after two consecutive 75 bp increases.

Top Economic Releases Today:

USD: Fed Chair Powell Speaks at 00:00
USD: Core PCE Price Index (MoM) (Oct) Forecast 0.3%, Previous 0.5% at 19:00
EUR: German Manufacturing PMI (Nov) Forecast 46.7, Previous 45.1 at 14:25
GBP: Manufacturing PMI (Nov) Forecast 46.2, Previous 46.2 at 15:00
CNY: Caixin Manufacturing PMI (Nov) Actual 49.4, Forecast 48.9, Previous 49.2 at 07:15