FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 22 DECEMBER 2022

22 Dec 2022

Greater than expected decline in the UK economy in Q3

Asian stock market closes in green on Wednesday. The Shanghai Composite is down 0.17% at 3068.41. Overall, the Singapore MSCI is up 1.26% at 292.20. Over in Hong Kong, the Hang Seng Index is up 0.34% at 19160.49. In Japan, the Nikkei 225 is down 0.68% at 26387.72. While the Topix index is down 0.64% at 1893.32 South Korea’s Kospi is down 0.19% at 2328.95. Australia S&P/ASX 200 u 1.29% at 7115.10.

Top News of the Day: –

Britain’s economy contracted by a little more than first estimated in the third quarter of this year, and business investment performed poorly, official data showed on Thursday.

Economic output fell by 0.3% in quarterly terms during the July-September quarter, compared with a previous estimate of 0.2%, the Office for National Statistics said.

Business investment fell by 2.5% in quarterly terms, compared with a previous first estimate of a 0.5% drop.

While the dominant services sector expanded 0.1% in the quarter, declines in manufacturing and construction dragged the headline gross domestic product figure down.

The ONS said the figures put Britain bottom of the Group of Seven nations in terms of quarterly economic growth.

Market Summary as of 21/12/2022:

European equities Wednesday closing. The DAX futures contract in Germany traded up 1.54% at 14097.82, and CAC 40 futures up 2.01% at 6580.20. UK 100 futures contract in the U.K. is up 1.72 at 7497.32

In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 1.60% at 33376.48. The S&P 500 is up 1.49% at 3878.44 and the Nasdaq 100 is up 1.54% at 10709.37, NYSE closes 1.46% at 15219.54.

Top Market News Today:

In the Forex market, GBPUSD is up 0.39% at 1.2127. The USDJPY is down 0.38% at 131.96, and The USDCHF is down 0.28 at 0.9240. EURUSD up 0.36% at 1.0642. EUR/GBP is down 0.08% at 0.8768. The USD/CNY is down 0.01% at 6.9806 at the time of writing.

In the Commodity market, U.S. Gold futures are up at 0.15% $1,816.89. Elsewhere, Silver futures are down 0.45% at $23.84 per ounce, and Platinum is up 0.55% at $1002.14. per ounce, and Palladium is up 1.39% at $1716.80.

Brent Crude Oil is up 0.04% at $82.27 per barrel.

In the Cryptocurrency Markets, Bitcoin is at 16826.80 up 0.14%, Ethereum is up 0.11% at 1213.78, and Litecoin is at 66.21 up 1.27%, at the time of writing.

Top Market Segment to Watch Out for Today:

GOLD: – Gold prices rose on Thursday as fears of a 2023 recession spurred some safe haven plays into the yellow metal, with the focus now turning to key readings on U.S. economic growth and inflation due this week. The yellow metal was trading up 1.5% for the week and was close to a five-month high.

Economic News:

US: – U.S. total new-vehicle retail sales are expected to decline in December as high vehicle prices and rising borrowing costs pushed consumers to cut back spending, a report from industry consultants J.D. Power-LMC Automotive showed on Wednesday.

“Elevated pricing, coupled with repeated interest rate increases, continue to inflate monthly loan payments,” said Thomas King, president of the data and analytics division at J.D. Power.

The average monthly payment for a new vehicle loan in December was $718, up $47 from a year ago, per the report.

Retail sales of new vehicles this month are expected to touch over 1.04 million units, down 2.8% from last year.

Total new vehicle sales in December, including retail and non-retail transactions, are likely to be over 1.25 million units, a 5.3% increase from last year, according to the report.

The consultants expect retail sales in the United States to increase next year, with improving inventory levels.

“Even with the probability of an economic downturn, pent-up consumer demand from the past two years will keep inventory levels relatively low,” King said.

Globally, vehicle sales are projected to end at 80.7 million units this year, a 1% contraction from 2021.

The project’s global sales are to grow 6% to 85.7 million units in 2023, even as markets grapple with the prospects of an economic recession.

“We expect 2023 to carry a high level of risk and uncertainty as several markets could be dealing with a recession,” Jeff Schuster, president, of global forecasts, at LMC Automotive said.

Euro Zone: –

The European Central Bank may raise interest rates at its current pace for a “period of time” to curb inflation, said Vice-President Luis de Guindos.

“We have no choice but to act,” he said in an interview with Le Monde paper published on Thursday. “Increases of 50 basis points may become the new norm in the near term.”

“If we do nothing, the situation would be worse because inflation is one of the factors behind the current recession,”

The steps the ECB had taken so far were going to have an impact on inflation, “but we still need to do more”.

The ECB last week eased the pace of its interest rate hikes but stressed that significant tightening remained ahead while laying out plans to drain cash from the financial system as part of a dogged fight against inflation.

De Guindos also said he was concerned that markets could underestimate the persistence of inflation and that they might consider the fiscal policy to be incompatible with monetary policy.

Banks have a solid capital position and can withstand a shock, de Guindos said, adding that he had more doubts about non-banks, notably hedge funds, which have highly illiquid assets and accumulated risky assets.