FUNDAMENTAL AND TECHNICAL ANALYSIS REPORT

29 Nov

FUNDAMENTAL AND TECHNICAL ANALYSIS REPORT – 29 November 2022

/ CSFX Analytics

Dow wobbles as China unrest rattles stocks

Asian stock market continues to fall and closes in red on Monday. The Shanghai Composite is up 0.75% at 3078.55 Overall, the Singapore MSCI is down 0.07% at 293.10. Over in Hong Kong, the Hang Seng Index is down 1.57% at 17297.94. In Japan, the Nikkei 225 is down 0.42% at 28162.83, while the Topix index is down 0.68% at 2004.31 South Korea’s Kospi is down 1.21% at 2,408.27. Australia S&P/ASX 200 is down 0.42% at 7229.10.

Top News of the Day:

The Dow fell sharply Monday, as investor sentiment was hurt by Federal Reserve officials reiterating a stance for rates to remain higher for longer at a time when the impact of civil unrest in China stoked fears about slowing global growth.

Federal Reserve Bank of St. Louis President James Bullard said markets were “under-pricing risk that the FOMC will have to be more aggressive rather than less aggressive in order to tame the substantial inflation in the U.S.”

Bullard has previously said the Fed may need to lift rates to within a 5% to 7% range. The remarks arrived on the heels of the comments from John Williams, president of the Federal Reserve Bank of New York, who echoed that inflation was “far too high.”

The remarks soured investor sentiment further, pushing the broader market deeper into the red following a tepid start to the week amid reports of social unrest in China over Covid restrictions.

Market Summary as per 28/11/2022:

European equities Monday closing. The DAX futures contract in Germany traded down 1.09% at 14383.36, CAC 40 futures down 0.70% at 6665.20. UK 100 futures contract in the U.K. up 0.17 at 7474.02.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 1.45% at 33849.46. The S&P 500 down 1.54% at 3963.94 and the Nasdaq 100 down 1.58% at 11049.50, NYSE closes 1.51% down at 15370.44.

Top Market News Today:

In the Forex market, GBPUSD down 1.10% at 1.1960. The USDJPY down 0.13% at 138.92 The USDCHF down 0.01 at 0.9491. EURUSD down 0.52% at 1.0340. EUR/GBP up 0.06% at 0.8650. The USD/CNY flat 0.00% at 7.2086 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.74% $1,741.62. Elsewhere, Silver futures down 2.40% at $20.938 per ounce, Platinum flat 0.00% at $992.47 per ounce, and Palladium flat 0.00% at $1848.78.

Brent Crude Oil down 0.53% at $83.27 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16201.50 down 1.33%, Ethereum down 1.84% at 1171.56, Litecoin at 73.17 down 2.26%, at the time of writing.

Top Market Segment to Watch Out Today:

Nestle: – Nestle has tweaked its 2022 sales outlook higher, it said ahead of an investor seminar on Tuesday.

“We now expect organic sales growth between 8% and 8.5%. The underlying trading operating profit margin is expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase,” it said after forecasting in October organic sales would rise around 8%.

Economic News:

US: The Democratic leader of the U.S. Senate urged lawmakers on Monday to back his proposal to bar the U.S. government from doing business with companies that use semiconductors made by producers the Pentagon considers Chinese military contractors.

“If American business wants the federal government to buy their products or services, they shouldn’t be using the kind of Chinese-made chips that, because of Chinese government involvement, put our national security at risk,” Senator Chuck Schumer said in remarks opening the Senate after its Thanksgiving holiday recess. “We need our government and our economy to rely on chips made right here in America.”

Schumer and Republican Senator John Cornyn introduced their proposal as an amendment to the National Defence Authorization Act, or NDAA, an annual bill setting policy for the Department of Defence expected to pass the Senate and House of Representatives in December.

As one of the only major pieces of legislation Congress passes every year, the NDAA is closely watched by a broad swath of industry and other interests because it determines everything from purchases of ships and aircraft to pay increases for the troops and how to address geopolitical threats.

Lawmakers also use the bill as a vehicle for a wide range of policy measures. The proposal from Schumer and Cornyn would broaden an existing ban on government use of Chinese chips.

The 2023 NDAA authorizes more than $800 billion in spending.

“We need to stay tough on the Chinese government and its actions,” Schumer said.

Euro Zone: –

Euro zone inflation has not peaked, and it risks turning out even higher than currently expected, European Central Bank President Christine Lagarde said on Monday, hinting at a series of interest rate hikes ahead.

Her comments, along with remarks by Dutch central bank chief Klaas Knot earlier, were likely to dampen speculation that the ECB was about to take a gentler path with future rate increases.

Inflation in the euro zone hit a record 10.6% on an annualised basis last month, but economists polled by Reuters expect it to edge down to 10.4% in a flash reading for November due to be published this week.

Contrary to some investors and even her own deputy, Luis de Guindos, Lagarde pushed back on expectations the high watermark for price growth had been reached.

“We do not see the components or the direction that would lead me to believe that we’ve reached peak inflation and that it’s going to decline in short order,” Lagarde told the European Parliament.

She added that ECB economists still saw clear “upside” risks – financial jargon for the risk that inflation readings could come in higher than expected.

Economists polled by Reuters see euro zone inflation at 8.5% this year, 6.0% next year and 2.3% in 2024 before finally hitting the ECB’s 2% target in 2025.

Top Economic Releases Today:

EUR: CFTC EUR Speculative Net Positions, Actual 123.1K, Previous 112.7K at 01:00
GBP: BoE Gov Bailey Speaks at 20:30
USD: CB Consumer Confidence (Nov) Forecast 100.0, Previous 102.5 at 20:30
EUR: German CPI (YoY) (Nov) Forecast 10.4%, Previous 10.4% at 18:30
CAD: GDP (MoM) (Sep) Forecast 0.1%, Previous 0.1% at 19:00