FUNDAMENTAL AND TECHNICAL ANALYSIS REPORT – 30 November 2022

30 Nov 2022

J.P. Morgan predicts GDP to drop in the UK next year and issues another warning

Asian stock market had mixed signal but closes in green on Tuesday. The Shanghai Composite is up 2.31% at 3149.75 Overall, the Singapore MSCI is down 0.32% at 291.88. Over in Hong Kong, the Hang Seng Index is up 5.24% at 18204.68. In Japan, the Nikkei 225 is down 0.48% at 28027.84, while the Topix index is down 0.57% at 1992.97 South Korea’s Kospi is up 1.04% at 2,433.39. Australia S&P/ASX 200 up 0.33% at 7253.30.

Top News of the Day:

JPMorgan said it expects a contraction in the UK’s economy next year as it enters a lengthy period of stagnation in the face of soaring gas prices, slowing global growth and tighter economic conditions.

The brokerage sees the UK’s gross domestic product falling 0.6% in 2023, compared with a 4.3% rise this year.

Tighter monetary and fiscal policy amid scarring from both the pandemic and Brexit, which are already weighing on the UK’s growth, according to JPMorgan, will continue to impair supply and demand.

As the UK battles decades-high inflation, the Bank of England (BOE) raised its Bank Rate by 75 basis points earlier this month, with a Reuters poll showing a more modest 50 bps hike at its upcoming meeting in December, taking it to 3.50% by the end of this year.

Market Summary as per 29/11/2022:

European equities Tuesday closing. The DAX futures contract in Germany traded down 0.19% at 14355.45, CAC 40 futures up 0.06% at 6668.97. UK 100 futures contract in the U.K. up 0.51 at 7512.00.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.01% at 33852.53. The S&P 500 down 0.16% at 3967.63 and the Nasdaq 100 down 0.59% at 10398.78, NYSE closes 0.41% up at 15433.46.

Top Market News Today:

In the Forex market, GBPUSD down 0.07% at 1.1951. The USDJPY down 0.16% at 138.71 The USDCHF up 0.51 at 0.9539. EURUSD down 0.07% at 1.0330. EUR/GBP up 0.01% at 0.8645. The USD/CNY down 0.66% at 7.1608 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.22% $1,753.71. Elsewhere, Silver futures up 1.10% at $21.225 per ounce, Platinum up 0.28% at $1014.60. per ounce, and Palladium up 2.20% at $1875.28.

Brent Crude Oil up 0.70% at $84.85 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16853.10. up 2.53%, Ethereum up 4.22% at 1267.26, Litecoin at 78.32 up 3.37%, at the time of writing.

Top Market Segment to Watch Out Today:

Alibaba: – stock has jumped more than 5.2% in premarket to $80 after China’s National Health Commission said covid-related lockdowns should end as soon as possible. This announcement sent nearly all Chinese stocks higher as renewed covid lockdowns had pushed these same stocks into a slump over the past several weeks. Protests across China starting last week and seeming to die down on Monday had also weighed on sentiment, but now it appears that the Chinese Communist Party is listening to protestors concerns. If lockdowns do indeed end, then the reopening trade should ignite even further.

Economic News:

US: The U.S. dollar stuck close to a one-week high on Wednesday, holding on to gains from a three-day rally, as investors braced for comments from Federal Reserve Chair Jerome Powell later and a crucial monthly jobs report at the end of the week.

The euro hovered near a one-week low after German and Spanish consumer price figures came in weaker than expected, triggering a lowering of rate hike bets for the European Central Bank and pointing a spotlight at euro zone inflation due later Wednesday.

The U.S. dollar index, which measures the greenback against the euro and five other rivals, eased 0.13% to 106.72 after reaching 106.9 in early Asian trading for the first time since Nov. 23.

The index has dipped to around 105.3 twice since the middle of the month, amid bets the Fed would pivot from aggressive rate hikes after inflation showed signs it may be close to a peak.

Traders currently lay 63.5% odds that the Fed will slow to a half-point pace of rate rises on Dec. 14, and 36.5% chance for another 75-basis point hike.

Closely watched non-farm payrolls figures due Friday are due to show 200,000 new jobs added in November, economists project, down from 261,000 in the previous month.

However, recent Fed speakers have all pushed back on expectations of a pivot, with New York Fed President John Williams on Monday saying the central bank needs to press forward with rate rises and St. Louis Fed President James Bullard saying there is still “a ways to go” for policy tightening.

“We expect Powell to talk up the need for tighter financial conditions (which) may cause market participants to reassess the global economic outlook and further push the USD up,” Carol Kong, a strategist at Commonwealth Bank of Australia (OTC: CMWAY, wrote in a client note ahead of Powell’s address later Wednesday

Euro Zone: –

Eurozone government bond yields fell on after inflation in Germany and Spain eased this month, lifting investor hopes that the worst of the region’s price crisis may soon be over.

Yields, which move inversely to prices, dropped in morning trade in Europe as data showed inflation in Germany’s most populous state cooled sharply in November.

Data for the whole country later showed inflation slowed to 10% year-on-year in November, below October’s 10.4% reading and economists’ expectations. The harmonised figure, used to compare with other European Union countries, came in at 11.3%, in line with forecasts.

Yields retraced some of their falls when the data for the country was published at 1300 GMT, as some analysts warned that the figures were affected by seasonality and that price pressures remain strong.

German 10-year yields fell as much as 12 basis points (bps) to a session low of 1.876%. They were last down 6 bps at 1.929%, while those on the two-year Schatz were 9 bps lower at 2.088%.

A preliminary reading of Spanish consumer inflation came in at 6.8% in November, below forecasts for a rise of 7.4% and down from October’s 7.3% rate.

Spanish two-year yields dropped 7 bps to 2.336%, while the yield on the 10-year Bono also fell 7 bps to 2.924%.

Italian 10-year yields, meanwhile, fell 7 bps to 3.842%, leaving their premium to benchmark Bunds at 190 bps.

Italy’s 10-year borrowing costs fell to their lowest in three months at auction on Tuesday. The government sold a planned 4.25 billion euros ($4.41 billion) over two bonds, one of which was a 3-billion euro 10-year issue maturing in May 2033, which fetched 3.96% – the lowest yield since August.

Energy prices, which have soared since Russia, a major natural gas supplier to Europe, invaded Ukraine in February, are up heavily year-on-year in major consuming nations such as Germany and France.