Fundamental And Technical Analysis Report

13 Dec

Fundamental And Technical Analysis Report – 13 December 2022

/ CSFX Analytics

EU and Hungary reach an agreement on help to Ukraine, a tax strategy, and recovery funds

Asian stock market closes in red on Monday. The Shanghai Composite is down 0.87% at 3179.04 Overall, the Singapore MSCI is up 0.07% at 295.40. Over in Hong Kong, the Hang Seng Index is down 2.20% at 19463.63. In Japan, the Nikkei 225 is down 0.21% at 27842.33.01, while the Topix index is down 0.22% at 1957.33 South Korea’s Kospi is down 0.67% at 2373.02. Australia S&P/ASX 200 is down 0.45% at 7180.80.

Top News of the Day: –

European Union governments on Monday struck a deal with Hungary that sorts out financial aid for Ukraine in 2023 and gains Budapest’s approval for a global minimum corporate tax, all in exchange for EU flexibility about funds paid to Hungary.

The complex deal came after months of wrangling between EU institutions, member countries, and Hungary and was spelled out on Monday by the council that represents EU member governments and by diplomats speaking anonymously. It means Ukraine will get 18 billion euros from the EU budget next year.

Budapest had been vetoing making payments by that stable, predictable, and cheaper means, rather than by the bilateral loans that member countries have been extending to Kyiv.

It also agreed to drop its veto over the OECD-agreed global minimum corporate tax of 15% to be applied to large international corporations where they make money, rather than where they set up offices for tax purposes.

The OECD minimum tax will now become EU law if Poland by Wednesday withdraws an objection it has to the policy, one EU diplomat said.

In exchange for Budapest’s agreement, the EU will approve Hungary’s plan for how to spend 5.8 billion euros of EU recovery funds, even though no money will flow until Budapest meets many conditions.

EU approval was crucial because if the spending plan had not been settled by the end of the year Budapest would have irrevocably lost 70% of the total.

Market Summary as per 12/12/2022:

European equities Monday closing. The DAX futures contract in Germany traded down 0.45% at 14306.63, and CAC 40 futures were down 0.41% at 6650.55. UK 100 futures contract in the U.K. is down 0.41 at 7445.97

In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 1.58% at 34005.04. The S&P 500 is up 1.43% at 3990.56 and the Nasdaq 100 up 1.26% at 11143.74, NYSE closes 1.16% up at 15468.66.

Top Market News Today:

In the Forex market, GBPUSD up 0.19% at 1.2287. The USDJPY is down 0.09% at 137.53, The USDCHF is down 0.11 at 0.9351. EURUSD up 0.13% at 1.0550. EUR/GBP down 0.08% at 0.8586. The USD/CNY up 0.04% at 6.9800 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.31% $1,785.50. Elsewhere, Silver futures are up 0.54% at $23.43 per ounce, and Platinum up 0.23% at $1005.22. per ounce, and Palladium up 0.45% at $1888.00.

Brent Crude Oil up 1.32% at $79.00 per barrel.

In the Cryptocurrency Markets, Bitcoin at 17197.20 down at 0.09%, Ethereum is down 0.18% at 1273.45, and Litecoin at 76.57 up 0.45%, at the time of writing.

Top Market Segment to Watch Out for Today:

OIL: –

Oil prices rose on Tuesday, rebounding further from annual lows on the prospect of an extended outage in a key Canada-U.S. pipeline, although markets remained cautious ahead of U.S. inflation data and a Federal Reserve meeting due this week.

Easing COVID-19 curbs in major crude importer China also aided sentiment, albeit briefly, given that the country is also struggling with a record-high increase in infections.

Oil was largely supported by the prospect of tighter U.S. supplies due to an outage in the Keystone pipeline. Canada’s TC Energy Corp, which operates the pipeline, said it was uncertain over how long it would take to resume supplies following a major spill last week. The spill, which happened in Kansas and saw over 14,000 barrels of oil being leaked, was the largest U.S. oil spill in nearly a decade.

Economic News:

US: The November U.S. budget deficit jumped by $57 billion or 30% from a year earlier to $249 billion, a record for the month, as revenues fell and outlay for education, healthcare, and interest on the public debt rose sharply, the U.S. Treasury said on Monday.

Receipts for November fell 10% or $29 billion from a year earlier to $252 billion, while outlays rose 6% or $28 billion to $501 billion, also a November record.

Driving the revenue decline was a 4% drop in individual withheld tax receipts, a 64% increase in individual tax refunds and a 98% decline in Federal Reserve earnings.

The outlays were driven by a $14 billion, or 18% increase in Medicare costs, and an $11 billion, or 94% increase in education costs due to changes in direct student loan programs and public service loan forgiveness, a Treasury official said.

The Treasury’s interest costs on U.S. public debt grew 53% or $19 billion during November, but this was largely offset by a $17 billion decline in tax credits for children and low-income workers. For the first two months of fiscal 2023, the Treasury’s interest payments are up $48 billion, or 87%.

The Treasury’s deficit for the first two months of fiscal 2023 was down 6%, or $20 billion, to $336 billion, with outlays down 2% and revenues up 1% compared to the year-earlier period.

Euro Zone: –

According to real estate company Rightmove, the average price of a property coming to market dropped by £7,862 this month, a larger than usual decline for the time of year, as determined sellers priced aggressively in order to tempt hesitant buyers.

Rightmove said on Monday that 2022 will now end with new seller asking prices up 5.6% year-on-year, versus 6.3% annual growth in 2021, but also stated it reckons prices will drop by an overall average of 2% in 2023 as a “multi-speed hyper-local market” emerges

However, the report also stated that the number of views of homes for sale on Rightmove was up 11% compared to the same time a year ago, indicating that many potential movers were monitoring the market in detail and weighing up their options.

“As mortgage rates settle down, buyer demand over the past two weeks is 4% up on the same period in 2019. We predict that the market will settle into a more normal pre-pandemic level of activity as 2023 progresses,” said Rightmove.

Though we would always expect prices to drop in December, as motivated sellers try to capture the attention of a buyer before Christmas with a competitive price, this monthly dip is the largest we’ve seen for four years. It’s an understandable short-term reaction to the economic turmoil and unexpectedly rapid mortgage rate rises and reduction in availability of mortgage products that we saw in late September and October, before things began to settle down.

Top Economic Releases Today:

USD: CPI (YoY) (Nov) Forecast 7.3%, Previous 7.7% at 19:00
USD: Core CPI (MoM) (Nov) Forecast 0.3%, Previous 0.3% at 19:00
EUR: German CPI (YoY) (Nov) Forecast 10.0%, Previous 10.4% at 12:30
GBP: Average Earning Index+ Bonus (Oct) Forecast 6.2%, Previous 6.0% at 12:30
EUR: German ZEW Economic Sentiment (Dec) Forecast –26.4%, Previous –36.7% at 15:30