FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT –02 JANUARY 2023

02 Jan 2023

The finance minister of Germany forecasts 7% inflation in 2023

Asian stock market closes in green on Friday. The Shanghai Composite is up 0.51% at 3073.70. Overall, the Singapore MSCI is flat 0.00% at 288.35. Over in Hong Kong, the Hang Seng Index is up 0.20% at 19741.14. In Japan, the Nikkei 225 is flat 0.00 at 26093.67. While the Topix index is down 0.19% at 1895.27 South Korea’s Kospi is down 0.48% at 2236.40. Australia S&P/ASX 200 up 0.26% at 7020.10.

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Germany’s finance minister expects inflation in Europe’s biggest economy to drop to 7% this year and to continue falling in 2024 and beyond, but believes high energy prices will become the new normal.

“The target remains 2%. This must be a top priority for the European Central Bank and the German government,” Christian Lindner said in an interview with Bild newspaper published on Sunday.

Pushed by spiking energy prices following Russia’s invasion of Ukraine and falling Russian energy exports, Germany’s year-on-year inflation has slowed slightly in November to 11.3% from a high of 11.6% the month prior.

Lindner said Germany needs an “unbiased” energy policy in order to keep industry ticking, adding that domestic gas and oil fracking and nuclear energy should be considered in the energy sources mix along with renewables.

Market Summary as per 30/12/2022:

European equities Friday closing. The DAX futures contract in Germany traded down 1.05% at 13923.59, CAC 40 futures down 1.52% at 6473.76. UK 100 futures contract in the U.K. down 0.81 at 7451.74

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 0.22% at 33147.25. The S&P 500 down 0.25% at 3839.50 and the Nasdaq 100 down 0.11% at 10466.48, NYSE closes 0.37% down at 15184.31.

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In the Forex market, GBPUSD up 0.27% at 1.2085. The USDJPY down 1.43% at 131.10, The USDCHF up 0.14 at 0.9241. EURUSD up 0.36% at 1.0699. EUR/GBP up 0.01% at 0.8841. The USD/CNY down 0.01% at 6.8967 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.04% $1,823.53. Elsewhere, Silver futures up 0.09% at $23.95 per ounce, Platinum up 0.05% at $1068.50 per ounce, and Palladium down 1.30% at $1789.00.

Brent Crude Oil up 3.04% at $86.00 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16648.20 up at 0.22%, Ethereum up 0.17% at 1202.01, Litecoin at 70.65 down 0.34%, at the time of writing.

Top Market Segment to Watch Out Today:

OIL: – West Texas Intermediate (WTI), futures on NYMEX, settled the last trading session of CY2023 on a solid note. The oil prices climbed above $80.00 after sensing firmer demand on every dip, which bolstered the expression of more upside shortly. The black gold is gaining attention as escalated supply worries led by the oil supply cease from Moscow have triggered the risk of equilibrium in the demand-supply mechanism ahead.

Economic News:

US: – Democratic U.S. President Joe Biden will join Republican Senate Minority Leader Mitch McConnell in a Wednesday event in Kentucky aimed at highlighting the effects of the $1 trillion 2021 infrastructure bill, a White House official said Sunday.

The pair, along with Republican Ohio Governor Mike DeWine and Democratic Kentucky Governor Andy Beshear, are to appear at a ceremony highlighting the $1.64 billion in funding awarded to for the Brent Spence Bridge Corridor Project connecting the two states across the Ohio River.

Funding for the crossing includes a new bridge and rehabilitation of the heavily congested 60-year-old one.

The new bridge is intended to rehabilitate a heavily congested 60-year-old span and add a second crossing.

McConnell, of Kentucky, was among the Republicans who voted for the infrastructure law, which was passed in November 2021, while many House Republicans including Representative Kevin McCarthy opposed it.

McConnell said last week in a statement that “building a new companion bridge on the Brent Spence Bridge corridor will be one of the bill’s crowning accomplishments.”

The event is set to take place the day after McCarthy’s Republicans take the majority in the House, breaking Democrats’ control of Congress and ushering in a period of divided government.

Kentucky and Ohio had sought funding for the project for years.

“This project will not only ease the traffic nightmare that drivers have suffered through for years, but it will also help ensure that the movement of the supply chain doesn’t stall on this nationally significant corridor,” DeWine said.

Then President Barack Obama visited the crossing in 2011 and urged Congress to pass a jobs bill costing billions of dollars that he said could include rebuilding the bridge, which by then had already been declared functionally obsolete.

During his 2016 run for the White House, Donald Trump backed funding for the project, but he failed during his four years in office to secure money for it or to pass the big infrastructure bill he repeatedly promised.

Euro Zone: –

Euro zone wages are growing quicker than earlier thought and the European Central Bank must prevent this from adding to already high inflation, ECB President Christine Lagarde told a Croatian newspaper.

The ECB has raised interest rates by a total of 2.5 percentage points since July in a bid to arrest a historic surge in inflation and has promised even more policy tightening over its next several meetings as longer-term price growth expectations have started moving above its 2% target.

“We know wages are increasing, probably at a faster pace than expected,” Croatian newspaper Jutarnji list quoted Lagarde as saying on Saturday. “We must not allow inflationary expectations to become de-anchored or wages to have an inflationary effect.”

Lagarde provided no new policy hint in the interview but said the bank must “take the necessary measures” to lower inflation to 2% from its current rate of near 10%.

Croatia will join the euro zone on Jan. 1 as the currency bloc’s 20th member, entering an elite club at a time of unusual turmoil as the ECB tries to tame inflation after spending the past decade unleashing unprecedented stimulus to rekindle price growth when it was exceptionally low.

“We need to be careful that the domestic causes that we are seeing, which are mainly related to fiscal measures and wage dynamics, do not lead to inflation becoming entrenched,” Lagarde said.

Lagarde added that the bloc’s expected winter recession, induced by soaring energy costs, is likely to be short and shallow, provided there are no additional shocks.