Fundamental And Technical Analysis Report – 16 December 2022

16 Dec 2022

Bank of England raises rates to 3.5%, says inflation has peaked

Asian stock market closes in red on Thursday. The Shanghai Composite is down 0.02% at 3168.65 Overall, the Singapore MSCI is down 0.41% at 293.55. Over in Hong Kong, the Hang Seng Index is up 0.66% at 19368.59. In Japan, the Nikkei 225 is down 1.87% at 28051.70. While the Topix index is down 1.20% at 1950.21 South Korea’s Kospi is down 0.04% at 2360.97. Australia S&P/ASX 200 is down 0.78% at 7148.70.

Top News of the Day: –

The Bank of England on Thursday raised interest rates by a widely expected 50 basis points (bps) to 3.50%, in its ninth straight increase – and it’s eighth this year.

The BoE, which is battling double-digit inflation that has unleashed a cost-of-living crisis that is pushing the economy deeper into recession, has raised rates by a combined 325 bps in 2022 alone to their highest since late 2008.

UK rates began rising in December 2021, making the BoE the first of the world’s major central banks to kick off a monetary policy tightening cycle.

BoE Governor Andrew Bailey, in a letter to finance minister Jeremy Hunt accompanying the decision, said the BoE forecasts suggested British inflation, which dropped below October’s 41-year highs to 10.7% last month, had reached its peak.

Furthermore, a breakdown of votes by Monetary Policy Committee members showed policymakers divided.

Some voted for an outsized 75-bps rise, while others said now was the time to stop tightening monetary policy altogether.

Market Summary as per 15/12/2022:

European equities Thursday closing. The DAX futures contract in Germany traded down 3.28% at 13986.23, and CAC 40 futures were down 3.09% at 6522.77. UK 100 futures contract in the U.K. is down 0.93 at 7426.17

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 2.25% at 33202.22. The S&P 500 is down 2.49% at 3895.75 and the Nasdaq 100 is down 3.23% at 10810.53, NYSE closes 2.02% down at 15182.28.

Top Market News Today:

In the Forex market, GBPUSD is up 0.03% at 1.2179. The USDJPY is down 0.39% at 137.25, and The USDCHF is down 0.01 at 0.9283. EURUSD up 0.06% at 1.0632. EUR/GBP is up 0.08% at 0.8731. The USD/CNY is up 0.05% at 6.9751 at the time of writing.

In the Commodity market, U.S. Gold futures are up at 0.02% $1,776.58. Elsewhere, Silver futures are down 0.93% at $23.87 per ounce, and Platinum is down 0.59% at $1002.27. per ounce, and Palladium is up 1.42% at $1809.77.

Brent Crude Oil is down 0.53% at $80.77 per barrel.

In the Cryptocurrency Markets, Bitcoin is at 17503.20 up 0.83%, Ethereum is up 0.89% at 1277.83, and Litecoin at 74.86 up 1.10%, at the time of writing.

Top Market Segment to Watch Out for Today:

AMAZON: – Amazon will bring the popular fantasy game “Warhammer 40,000” to film and television screens, after the tech giant’s content unit reached an agreement with Games Workshop Group, the British game developer said on Friday.

UK-based Games Workshop said Amazon will develop its intellectual property into film and television productions, adding that it will also grant merchandising rights to the U.S. company, beginning with the “Warhammer 40,000” universe

Economic News:

US: The U.S. Senate passed by a 71-19 vote a weeklong stopgap funding bill on Thursday to avoid a partial government shutdown ahead of a midnight Friday deadline, sending the House-passed bill to President Joe Biden to sign it into law.

Next up is a sweeping measure expected to tally around $1.7 trillion that will keep federal agencies operating through the fiscal year ending Sept. 30, 2023.

“This is about taking a very simple, exceedingly responsible step to ensure we finish the year without hiccups and with minimal drama. A one-week CR will give us more time so we can keep working,” Senate Majority Leader Chuck Schumer said just before passage of the temporary funding bill.

Congressional negotiators announced earlier this week a framework for the full-year “omnibus” package, but did not provide details on the amount they had agreed on or specific program funding to be included.

However, it is expected to include aid for Ukraine’s fight against Russian forces and to reform the way Congress certifies U.S. presidential elections.

Senator Richard Shelby, the top Republican on the chamber’s Appropriations Committee, said the total amount of funding was being divided among 12 appropriations subcommittees. It will take four or five days for staffers to fill in details for all of the line items, he estimated.

Congress now has a Dec. 23 deadline to either pass this omnibus bill being written by Senate staffers or approve yet another temporary-funding bill – which would leave a contentious debate over budget priorities hanging over the new Congress convening on Jan 3.

Euro Zone: –

U.K. retail sales fell in real, seasonally-adjusted terms for the third time in four months in November, as promotions ahead of Black Friday failed to gain much traction with consumers hard-pressed by double-digit inflation.

The Office for National Statistics said that retail sales volumes fell 0.4% from October and were down 5.9% on the year, although it revised October’s data higher to show a bigger rebound from September when sales were depressed by official days of mourning for Queen Elizabeth II.

Excluding volatile auto and fuel, core sales volumes fell 0.3%. Analysts had expected both headline and core sales to grow by 0.3%.

Online retailers fared particularly badly, with sales falling 2.8%. However, they are still up over 18% from their level three years ago, just before the eruption of a pandemic which accelerated the long-term trend toward e-commerce.

Non-food stores posted a drop of 0.6% in sales on the month, while food stores fared better, rising 0.9%. The ONS said anecdotal evidence from retailers suggested that customers stocked up early for Christmas.

“Black Friday and holiday sales have failed to produce the expected sales uplift,” said Kevin Bright, global head of McKinsey’s Consumer Pricing Practice in e-mailed comments. While consumers are spending 4.2% more than a year ago, they are focusing on essentials like food and footwear.”

Bright noted that despite this month’s fall in online sales, online was still faring better than overall sales in year-on-year terms, down only 5%. “This suggests people are looking to stretch their spending power by accessing the lower prices we tend to see online.

Top Economic Releases Today:

USD: Manufacturing PMI (Dec) Forecast 47.7, Previous 47.7 at 20:15
EUR: CPI (YoY) (Nov) Forecast 10.0%, Previous 10.0% at 15:30
GBP: Service PMI Forecast 49.2, Previous 48.8 at 03:00
GBP: Retail Sales (MoM) (Nov) Actual –0.4%, Forecast 0.3%, Previous 0.6% at 12:30
EUR: German Manufacturing PMI (Dec) Actual 47.4, Forecast 46.3, Previous 46.2