FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT –03 JANUARY 2023

03 Jan 2023

Oil declines following the year-end rally as growth worries increase

Asian stock market closes in green on Monday. The Shanghai Composite is up 0.88% at 3089.26. Overall, the Singapore MSCI is down 0.11% at 289.38. Over in Hong Kong, the Hang Seng Index is up 0.20% at 19781.41. In Japan, the Nikkei 225 is flat 0.00 at 26094.50. While the Topix index is down 0.19% at 1891.71 South Korea’s Kospi is down 0.48% at 2225.67. Australia S&P/ASX 200 up 0.26% at 7038.70.

Top News of the Day:

Oil prices fell on Tuesday, logging a soft start to 2023 as a warning on economic growth from the International Monetary Fund and increased concerns over China’s COVID-19 crisis brewed uncertainty over strength in demand.

Crude prices rallied sharply towards the end of 2022, closing the year higher as markets bet on resurgent demand and tighter supplies in 2023, especially as China reopens from COVID-19 restrictions and as Russia potentially faces more western sanctions.

But IMF Managing Director Kristalina Georgieva warned earlier this week that at least a third of the globe faces a recession in 2023, with the world’s largest economies set to see their growth slow sharply. She also warned that 2023 will be tougher than last year for major economies.

Chinese President Xi Jinping struck a more cautious tone than markets were expecting in his New Year’s address, warning of more challenges as the country enters a new phase of its COVID-19 response. Beijing had begun relaxing anti-COVID measures in December, following a year of strict restrictions on activity.

Market Summary as per 02/01/2023:

European equities Monday closing. The DAX futures contract in Germany traded down 1.05% at 14069.26, CAC 40 futures up 1.87% at 6594.57. 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.

Top Market News Today:

In the Forex market, GBPUSD up 0.18% at 1.2064. The USDJPY down 0.56% at 129.87, The USDCHF up 0.07 at 0.9249. EURUSD down 0.09% at 1.0654. EUR/GBP down 0.20% at 0.8830. The USD/CNY down 0.16% at 6.8855 at the time of writing.

In the Commodity market U.S. Gold futures up at 1.44% $1,849.40. Elsewhere, Silver futures up 2.23% at $24.48 per ounce, Platinum up 1.78% at $1088.00 per ounce, and Palladium up 0.84% at $1799.00.

Brent Crude Oil up 0.49% at $86.33 per barrel.

In the Cryptocurrency Markets, Bitcoin at 16708.80 up at 0.25%, Ethereum up 0.22% at 1216.32, Litecoin at 76.00 up 1.73%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD: – Gold price is challenging six-month highs while holding gains above the $1,825 key resistance level so far this Tuesday. Gold price is seeing a continuation of the recent uptrend at the start of 2023, despite the bounce in the US Dollar across the board.

Concerns over a potential global economic recession, China’s covid resurgence and higher inflation are weighing on the market sentiment, driving demand for the traditional safe-haven gold price. Expectations that the US Federal Reserve (Fed) will continue its fight against raging inflation this year, by continuing its tightening cycle, keep investors’ sentiment broadly undermined.

Economic News:

US: – just over half of the 50 U.S. states are exhibiting signs of slowing economic activity, breaching a key threshold that often signals a recession is in the offing, new research from the St. Louis Federal Reserve Bank report said.

That report, released, followed another report from the San Francisco Fed from earlier in the week that also delved into the rising prospect that the U.S. economy may fall into recession at some point in coming months.

The St. Louis Fed said in its report that if 26 states have falling activity within their borders, that offers “reasonable confidence” that the nation as a whole will fall into a recession.

Right now, the bank said that as measured by Philadelphia Fed data tracking the performance of individual states, 27 had declining activity in October. That’s enough to point to a looming downturn while standing short of the numbers that have been seen ahead of some other recessions. The authors noted that 35 states suffered declines ahead of the short and sharp recession seen in the spring of 2020, for example.

Meanwhile, a San Francisco Fed report, released Tuesday, observed that changes in the unemployment rate can also signal a downturn is on the way, in a signal that offers more near-term predictive value than the closely-watched bond market yield curve.

The paper’s authors said that the unemployment rate bottoms out and begins to move higher ahead of recession in a highly reliable pattern. When this shift occurs the unemployment rate is signalling the onset of recession in about eight months, the paper said.

The paper acknowledged its findings are akin to those of the Sahm Rule, named for former Fed economist Claudia Sahm, who pioneered work linking a rise in the jobless rate to economic downturns. The San Francisco Fed research, written by bank economist Thomas Mertens, said its innovation is to make the jobless rate change a forward-looking indicator.

Euro Zone: –

Millions of low-income households in Britain will receive cost-of-living support from the government of up to 900 pounds ($1,084) over the financial year, the country’s Department of Work and Pensions said on Tuesday.

The money will directly go to claimants’ bank accounts in three payments over the financial year, the department said in a statement.

The cash support was announced by Chancellor Jeremy Hunt in his Autumn statement along with a string of tax increases and tighter public spending. The government did not give details on the payment schedule at the time.

There will also be a separate 150 pounds for more than six million disabled people and 300 pounds for over eight million pensioners, the department said.

The latest support package follows a 1,200-pound cash support programme for low-income households last year as Britain struggles with a cost-of-living crisis amid a challenging economic environment.

Top Economic Releases Today:

USD: Manufacturing PMI (Dec) Forecast 46.2, Previous 47.7 at 20:15
EUR: German CPI (YoY) (Dec) Forecast 9.1%, Previous 10.0% at 18:30
GBP: Manufacturing PMI (Dec) Forecast 44.7, Previous 46.5 at 15:00
EUR: German Unemployment Change (Dec) Forecast 15K, Previous 17K at 14:25
CNY: Caixin Manufacturing PMI (Dec) Actual 49.0, Forecast 48.8, Previous 49.4 at 07:15