FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 02- FEBRUARY-2023

02 Feb 2023

BoE is expected to raise rates to a 14-year high and may provide hints as to what will happen next

Asian stock market closes in green on Wednesday. The Shanghai Composite is green 0.90% at 3284.92. Overall, the Singapore MSCI is down 0.24% at 304.74. Over in Hong Kong, the Hang Seng Index is up 1.05% at 22072.18. In Japan, the Nikkei 225 is up 0.07 at 27346.88. While the Topix index is down 0.15% at 1972.23, South Korea’s Kospi is up 1.02% at 2449.80. Australia S&P/ASX 200 up 0.57% at 7544.70.

Top News of the Day: –

The Bank of England is poised to raise interest rates for the 10th time in a row on Thursday to keep up its fight against rampant inflation, but it might also drop a hint about when the steep climb in borrowing costs will end.

With Britain’s economy already forecast to go into recession and fare worse than its peers in 2023, Governor Andrew Bailey and his colleagues must judge how much of a delayed impact their run of rate hikes so far, starting in December 2021, will have.

Unemployment is close to its lowest since 1974 but the housing market is cooling fast and confidence among consumers and employers is weak.

Strikes by public service workers have added to the sense of gloom in an economy still struggling to adjust to Brexit and the coronavirus pandemic.

Bailey has said there are hopes that the surge in prices was turning a corner after consumer price inflation dipped from a 41-year high of 11.1% in October to 10.5% in December.

Market Summary as per 01/02/2023:

European equities Wednesday closing. The DAX futures contract in Germany traded up 0.35% at 15180.74, CAC 40 futures down 0.07% at 7077.11. UK 100 futures contract in the U.K. down 0.14 at 7761.11.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.02% at 34092.96. The S&P 500 up 1.05% at 4119.21 and the Nasdaq 100 up 2.00% at 11816.32, NYSE 0.53% closes at 16121.25.

Top Market News Today:

In the Forex market, GBPUSD up 0.16% at 1.2392. The USDJPY down 0.24% at 128.58, The USDCHF down 0.09 at 0.9069. EURUSD up 0.21% at 1.1010. EUR/GBP up 0.05% at 0.8884. The USD/CNY down 0.42% at 6.7118 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.37% $1,957.78. Elsewhere, Silver futures up 0.86% at $24.16 per ounce, Platinum up 0.80% at $1012.00 per ounce, and Palladium up 0.84% at $1679.50.

Brent Crude Oil up 0.76% at $83.47 per barrel.

In the Cryptocurrency Markets, Bitcoin at 23810.70 up at 0.32%, Ethereum up 1.67% at 1669.54, Litecoin at 100.41 up 0.08%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold prices rose to a nine-month high on Thursday after rallying sharply in the prior session as the Federal Reserve’s commitment to keep raising interest rates dented the dollar and pushed up fears of a potential economic slowdown this year

The yellow metal largely outperformed its peers this week, with the Fed meeting serving to increase gold’s appeal as a safe haven. Gold prices surged over 1% after the Fed hiked interest rates by a relatively smaller 25 basis points (bps) and acknowledged its progress against inflation. But the central bank also expressed uncertainty over where interest rates will peak.

Economic News:

US: – The United States on Wednesday imposed sanctions on 22 individuals and entities in multiple countries that it accused of being tied to a global sanction’s evasion network supporting Russia’s military-industrial complex.

The sanctions, which come as Washington looks to increase pressure on Moscow over its invasion of Ukraine, is part of U.S. efforts to target the evasion of its punitive measures around the world and limit Russia’s access to revenue it needs for the war, the U.S. Treasury Department said in a statement.

The action targeted a sanctions evasion network that the Treasury said is led by Russia and Cyprus-based arms dealer Igor Zimenkov, who, along with his son, Jonatan, were hit with sanctions on Wednesday.

The network has engaged in projects connected to Russian defence capabilities, including supplying high-technology devices after Russia’s invasion of Ukraine, Treasury said. Washington also accused certain members of the network of supporting state-owned Russian defence entities under sanctions.

Zimenkov has also supported the Belarusian military-industrial complex by facilitating sales efforts in Latin America for a Belarusian Défense entity under U.S. sanctions, Treasury said.

Members of the network targeted included Singapore-based Asia Trading & Construction PTE Limited and its director, which Treasury accused of having sold helicopters on behalf of U.S.-sanctioned Rostec to a government in Latin America.

GBD Limited, another company in the network targeted in the sanctions, has attempted to supply weapons systems to an African government, Treasury said.

Companies in Cyprus, Bulgaria and Israel, as well as several people, were also targeted for sanctions.

The Russian Embassy in the United States said such “illegal steps” taken by Washington would not achieve their goal.

“The Russian economy remains far from being ‘in tatters’, as some in the West hope,” it said.

The action, which freezes any U.S. assets of those added to the sanctions list and generally bars Americans from dealing with them, marks the latest round of U.S. sanctions on Russia over the war in Ukraine, which has killed or wounded thousands and reduced cities to rubble.

Euro Zone: – The European Central Bank is set to raise interest rates again on Thursday and pencil in more hikes for the next few months, with the only open question being how big these will be.

The ECB has been increasing rates at a record pace to fight a sudden bout of high inflation in the euro zone – the by-product of factors including the aftermath of the COVID-19 pandemic and an energy crisis that followed Russia’s invasion of Ukraine.

The central bank for the 20 countries that share the euro is seen raising its deposit rate by another half a percentage point to 2.5% on Thursday, in line with what it said in December.

This would take the rate the ECB pays on bank deposits to the highest level since November 2008, after a steady climb from a record low of -0.5% in July.

But ECB President Christine Lagarde is certain to face questions about smaller rises from next month after the U.S. Federal Reserve slowed the pace of its own hikes on Wednesday and some data pointed to a bleaker outlook for the euro zone.

So far Lagarde has pushed back on any suggestion that the ECB is relenting in its fight against inflation and investors generally expect her and her policymaking colleagues to reaffirm that line on Thursday.

“We suspect the ECB will reiterate its hawkish message in February as there are still uncertainties regarding underlying inflationary pressures and a change of tone would undermine the ECB’s credibility,” Annalisa Piazza, a fixed-income research analyst at MFS Investment Management, said.

Top Economic Releases Today:

USD: Fed Interest Rate Decision Actual 4.75%, Forecast 4.75%, Previous 4.50% at 00:30
USD: FOMC Statement 00:30
USD: Initial Jobless Claims Forecast 200K, Previous 180K at 19:00
EUR: ECB Interest Rate Decision (Feb) Forecast 3.00%, Previous 2.50% at 18:45
EUR: ECB Monetary Policy Statement at 18:45
EUR: ECB President Lagarde Speaks at 20:45