FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 09 FEBRUARY 2023

09 Feb 2023

Top China Economist Expects Interest Rate Cuts in the Upcoming Quarter

Asian stock market closes in green on Wednesday. The Shanghai Composite is in red 0.49% at 3232.11. Overall, the Singapore MSCI is up 0.28% at 307.55. Over in Hong Kong, the Hang Seng Index is down 0.07% at 21285.52. In Japan, the Nikkei 225 is down 0.29 at 27606.46. While the Topix index is up 0.29% at 1983.97, South Korea’s Kospi is up 1.30% at 2483.64. Australia S&P/ASX 200 up 0.35% at 7530.10.

Top News of the Day: –

China’s central bank may have more room to cut interest rates in the second quarter as the risk of another Covid wave looms in coming months and the US Federal Reserve ends its interest rate hikes, according to a prominent Chinese economist.

The People’s Bank of China could face less constraints on easing policy in the next quarter, said Zhong Zhengsheng, chief economist at Ping A Securities Co., adding that domestic inflation will likely stay weak. Zhong has previously consulted with Premier Li Keqiang on government policy.

The rapid rebound in economic activity since China dropped its Covid Zero policy and infections began easing means there’s less need for additional monetary stimulus in the short term, he said.

“The second quarter will be a window to cut the medium-term lending facility rate if a second wave of Covid infections take place in three to six months and brings an outsize shock to the economy,” Zhong said in an interview.

Market Summary as per 08/02/2023:

European equities Wednesday closing. The DAX futures contract in Germany traded up 0.60% at 15412.05, CAC 40 futures down 0.18% at 7119.83. UK 100 futures contract in the U.K. up 0.26 at 7885.17.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 0.61% at 33949.01. The S&P 500 down 1.11% at 4117.86 and the Nasdaq 100 down 1.68% at 11910.52, NYSE 0.54% closes down at 15934.07.

Top Market News Today:

In the Forex market, GBPUSD up 0.24% at 1.2097. The USDJPY down 0.05% at 131.28, The USDCHF down 0.19 at 0.9191. EURUSD up 0.23% at 1.0734. EUR/GBP up 0.02% at 0.8870. The USD/CNY down 0.05% at 6.7854 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.30% $1,880.89. Elsewhere, Silver futures up 0.68% at $22.45 per ounce, Platinum up 1.14% at $979.50 per ounce, and Palladium up 1.22% at $1663.00.

Brent Crude Oil up 0.12% at $85.19 per barrel.

In the Cryptocurrency Markets, Bitcoin at 22665.90 down at 1.29%, Ethereum down 1.19% at 1630.99, Litecoin at 96.75 down 2.48%, at the time of writing.

Top Market Segment to Watch Out Today:

OIL– Oil prices were broadly steady on Thursday as the prospect of higher fuel demand in China as it reopens post-COVID curbs was offset by fears that U.S. crude stocks hitting their highest for months may signal weakening demand in the world’s no. 1 economy.

“U.S. crude oil … inventories have continued to exceed expectations, which to some extent erodes the bullish sentiments brought from China’s demand recovery hopes,” said analysts from Haitong Futures.

Economic News:

US: – President Joe Biden said he did not believe the U.S. economy will fall into recession either this year or next year, his most confident prediction on the fate of an economy that is still rattled by fears of a downturn.

Asked in an interview on the PBS NewsHour program whether he thought there would be a recession this year, Biden responded: “No, or next year. From the moment I got elected, how many of the experts are saying within the next six months there’s goanna be recession?”

Economists for months have been warning of a possible recession as the U.S. Federal Reserve raised interest rates in order to tame decades-high inflation.

Biden himself has said a recession was possible, and earlier this week he told reporters that the risk was very low.

On the whole, economic data in recent months has moved in the president’s Favor, particularly after inflation spiked to a 40-year high last summer and government reports showed the U.S. economy could be heading into a recession.

Strong job numbers last week, which occurred despite layoffs in the technology sector as well as in interest-rate-sensitive sectors like housing and finance, poured cold water on market expectations that the U.S. central bank was close to pausing its monetary policy tightening cycle.

Euro Zone: – Britain’s housing market suffered the most widespread price falls since 2009 last month as the run of interest rate increases over the past year weighed on would-be buyers, according to a survey published on Thursday.

The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the gap between the percentage of surveyors seeing rises and falls in house prices, fell to -47, the lowest since April 2009, from -42 in December.

A measure of interest from buyers also fell to -47, its lowest since October last year.

Simon Rubinson, chief economist at RICS, said the overall mood of the market as measured by surveyors remained subdued.

“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year,” Rubinson said.

The BoE last week said Britain’s economy would probably fall into recession in early 2023 and would only come out of it in early 2024, a shorter period of contraction than in its previous set of forecasts.

The RICS report showed surveyors were less pessimistic about the outlook than in December with a measure of expected sales over the next 12 months improving to -20 from -42.

Other housing market measures have also recently shown a loss of momentum following the surge in demand seen during the coronavirus pandemic.

A Reuters poll of economists and analysts in November predicted house prices would fall around 5% this year having surged by 28% since the start of the pandemic in 2020.

RICS said the rental market continued to show strong interest from tenants with limited availability of stock.

Top Economic Releases Today:

USD: Initial Jobless Claims, Forecast 190K, Previous 183K at 19:00
EUR: German CPI (YoY) (Jan) Actual 8.7%, Forecast 8.9%, Previous 8.6% at 12:30
GBP: BoE MPC Treasury Committee Hearings at 15:15
EUR: EU Leaders Summit at 15:30
AUD: Building Approvals (MoM) Actual 18.5%, Forecast –8.8%, Previous 18.5% at 06:00