Fundamental And Technical Analysis Report – 05 December 2022

05 Dec 2022

In November, global central banks continue to push for rate increases

Asian stock market closes in green on Friday. The Shanghai Composite is up 1.53% at 3156.14 Overall, the Singapore MSCI is down 0.78% at 299.14. Over in Hong Kong, the Hang Seng Index is up 3.56% at 18675.35. In Japan, the Nikkei 225 is up 0.15% at 27777.90, while the Topix index is down 0.31% at 1953.98 South Korea’s Kospi is up 0.62% at 2,419.32. Australia S&P/ASX 200 is up 0.33% at 7301.50.

Top News of the Day:

The pace and scale of rate hikes delivered by central banks in November picked up speed again as policymakers around the globe battle decade-high inflation.

Central banks overseeing six of the 10 most heavily traded currencies delivered 350 basis points (bps) of rate hikes between them last month.

The U.S. Federal Reserve, the Bank of England, the Reserve Bank of Australia, Norway’s Nudges Bank, Sweden’s Brisbane, and the Reserve Bank of New Zealand all raised interest rates in November.

The European Central Bank, the Bank of Canada, the Swiss National Bank, and the Bank of Japan did not hold rate-setting meetings in November.

The latest moves have brought total rate hikes in 2022 from G10 central banks to 2,400 bps.

“Interest rates will continue to rise,” said Alexandra Dimitrijevic at S&P Global (NYSE: SPGI) Ratings, looking ahead to 2023. “Central banks’ determination to bring down inflation suggests that policy rates need to go higher still.”

Market Summary as of 2/12/2022:

European equities Friday closing. The DAX futures contract in Germany traded up 0.27% at 14529.29, and CAC 40 futures were down 0.17% at 6742.25. UK 100 futures contract in the U.K. is down 0.03 at 7556.23.

In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 0.10% at 34429.88. The S&P 500 is down 0.12% at 4071.70 and the Nasdaq 100 up 0.18% at 11461.50, NYSE closes 0.037% up at 15767.02.

Top Market News Today:

In the Forex market, GBPUSD is up 0.35% at 1.2330. The USDJPY is up 0.27% at 134.66 The USDCHF is down 0.15 at 0.9353. EURUSD down 0.33% at 1.0572. EUR/GBP is up 0.06% at 0.8575. The USD/CNY is down 0.95% at 6.9566 at the time of writing.

In the Commodity market, U.S. Gold futures are up at 0.28% $1,802.70. Elsewhere, Silver futures up 0.12% at $23.175 per ounce, and Platinum up 0.08% at $1027.00. per ounce, and Palladium is up 0.95% at $1922.03.

Brent Crude Oil up 0.54% at $86.05 per barrel.

In the Cryptocurrency Markets, Bitcoin at 17297.60 up 1.12%, Ethereum up 1.24% at 1295.25, and Litecoin is at 83.03 up 7.75%, at the time of writing.

Top Market Segment to Watch Out for Today:

OIL: – Oil prices rose sharply on Monday as more Chinese cities began relaxing strict anti-COVID measures, ramping up hopes for a full reopening, while OPEC kept production steady at its latest meeting,

Several Chinese cities, including economic hubs Shanghai and Beijing, relaxed some movement and testing measures over the past week, drumming up hopes for a nationwide reversal. Reports also suggested that the government is planning to announce such a move in the coming weeks.

Such a scenario would be positive for crude markets, given China’s status as the world’s largest oil importer. Dwindling demand in the country due to its strict anti-COVID policies was a major source of selling pressure on oil markets this year.

Economic News:

US: The U.S. plans to work closely with Israel’s new government, Secretary of State Antony Blinked told a left-leaning Jewish group in Washington on Sunday and continues to support a two-state solution to end the decades-long conflict with Palestinians.

The U.S. administration expects “the new Israeli Government to continue to work with us to advance our shared values, just as we have previous governments,” Blinked told the non-profit J Street, a liberal advocacy group. “We will gauge the government by the policies it pursues rather than individual personalities,” he said.

“Security assistance to Israel is sacrosanct,” Blinked said, noting the more than $3 billion the U.S. provides to Israel in foreign military funding.

Last week, Israeli Prime Minister-designate Benjamin Netanyahu reached a coalition deal with the far-right Religious Zionism party, which opposes Palestinian statehood and supports extending Israeli sovereignty into the West Bank.

Itamar Ben-Gvir, who was convicted in 2007 of racist incitement against Arabs and backing a group considered by Israel and the United States to be a terrorist organization, is Israel’s new security minister, with responsibility for Border Police in the occupied West Bank.

President Joe Biden remains committed to “realizing the enduring goal of two states,” Blinken said. “We believe Palestinians and Israelis, like people everywhere, are entitled to the same rights and the same opportunities.”

Euro Zone: –

The European Central Bank should raise interest rates by 50 basis points (bp) on Dec. 15, French central bank chief Francois Villeroy de Gelhaus said on Sunday, reinforcing expectations for the ECB to slow the pace of monetary tightening.

The ECB has raised rates by a record 200 basis points since July, but a slowdown in euro zone inflation and more benign signals from the U.S. Federal Reserve has solidified the case for a 50 bp move after back-to-back 75 bp hikes.

While markets now largely price a 50 bp hike after a long list of policymakers have backed the move, comments from Villeroy, a centrist on the rate-setting Governing Council, suggest the step is all but a done deal.

In an interview with France’s LCI television, ECB Governing Council member Villeroy also said he expects rate hikes will continue after Dec. 15 and could not say when they would stop.

Villeroy said he expects inflation will peak in the first half of next year and then start easing off.

“I expect inflation will be beaten by around 2024-2025,” he said, adding that he thinks France and Europe will escape a tough economic landing and that a recession next year is unlikely.