FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 13 JANUARY 2023

13 Jan 2023

November saw a rise in U.K. GDP, and European stock futures rose

Asian stock market closes in green on Thursday. The Shanghai Composite is up 1.01% at 3163.45. Overall, the Singapore MSCI is up 0.56% at 292.18. Over in Hong Kong, the Hang Seng Index is up 0.89% at 21514.10. In Japan, the Nikkei 225 is up 1.25 at 26449.82. While the Topix index is down 0.27% at 1908.18 South Korea’s Kospi is up 0.89% at 2365.10. Australia S&P/ASX 200 up 0.66% at 7280.40.

Top News of the Day:

European stock markets are expected to open slightly higher Friday, with investors focusing on a deluge of important economic data, including U.K. growth data for November, as well as earnings from the U.S. banking sector.

European equities closed higher Thursday, continuing the positive start to the new year, helped by U.S. inflation data showing that the Fed’s aggressive rate increases are having the desired impact. This suggests that the U.S. central bank could slow its rate hikes further in early February.

Optimism is growing that the widely-anticipated slowdown in the Eurozone in 2023 may not be as severe as first feared, helped by increased optimism over an economic recovery in China, after the world’s second largest economy, and key export market for Europe’s companies, reopened its international borders for the first time in three years.

That said, it’s clear the global economy isn’t out of the woods just yet.

The World Bank earlier this week cut its growth forecast for the global economy to just 1.7% this year, after estimating last June that it would grow at a 3% rate.

Data released earlier Friday showed that U.K. gross domestic product rose 0.1% on the month in November, a better result than expected, but industrial production fell 0.2% and manufacturing production slumped 0.5%.

Market Summary as per 12/01/2023:

European equities Thursday closing. The DAX futures contract in Germany traded up 0.74%% at 15058.30, CAC 40 futures up 0.74% at 6975.68. UK 100 futures contract in the U.K. up 0.89 at 7794.04

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.64% at 34189.97. The S&P 500 up 0.34% at 3983.17 and the Nasdaq 100 up 0.64% at 11001.10, NYSE closes 0.70% up at 15859.54.

Top Market News Today:

In the Forex market, GBPUSD down 0.04% at 1.2201. The USDJPY down 0.47% at 128.61, The USDCHF up 0.11 at 0.9277. EURUSD down 0.11% at 1.0839. EUR/GBP down 0.01% at 0.8881. The USD/CNY down 0.25% at 6.7190 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.01% $1,896.53. Elsewhere, Silver futures down 0.35% at $23.68 per ounce, Platinum down 0.38% at $1062.50 per ounce, and Palladium down 0.64% at $1779.00.

Brent Crude Oil up 0.06% at $84.09 per barrel.

In the Cryptocurrency Markets, Bitcoin at 18811.80 down at 0.19%, Ethereum down 0.68% at 1407.59, Litecoin at 84.46 down 1.90%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold price yearns for acceptance above $1,900 after US CPI.

Gold price is retreating from near eight-month highs of $1,902 reached following the release of the United States Consumer Price Index (CPI) data on Thursday. Gold bulls take a breather this Friday, as the US Dollar is attempting a minor recovery in tandem with the US Treasury bond yields, as the dust settles after volatile trading seen during Thursday’s American session.

Economic News:

US: – The U.S. government’s December budget deficit quadrupled from a year earlier to $85 billion as receipts shrank slightly and outlays grew to a new December record, the Treasury Department said on Thursday as it neared the $31.4 trillion federal debt limit.

The results confirmed forecasts that revenues would start to ease as a red-hot economy cool, and showed that reductions in pandemic relief spending have faded. Underlying costs for healthcare, Social Security and interest on a growing pool of public debt are rising, the Treasury data showed.

A Treasury official declined to estimate when the debt ceiling may be nominally reached – an event outside analysts predict could happen in coming days or weeks. Treasury data showed that the debt on Tuesday was $58.5 billion below the limit with an operating cash balance of $368 billion.

The borrowing cap is coming into focus again in Washington as the new Republican majority in the House of Representatives threatens to use it as leverage to demand spending concessions from the Biden administration.

REVENUES PEAKED

The $85 billion December deficit compared to a $21 billion deficit a year earlier, a strong performance driven by then-record revenues and steep drops in unemployment aid as the economy recovered from the COVID-19 pandemic.

But there were calendar adjustments that shifted some January 2023 benefit payments into December. Without these, the December deficit would have been $59 billion compared to an $8 billion gap last year, the Treasury said.

The Treasury said unadjusted receipts for December shrank by 7% from December 2021 to $455 billion as individual withheld receipts fell $14 billion due to lower 2022 year-end bonus payments and Federal Reserve earnings fell to zero from $12 billion a year earlier as it paid higher interest on bank reserves.

December’s unadjusted outlays grew 6% to $540 billion as Treasury-paid interest on the public debt grew by $9 billion from a year earlier and Social Security outlays also rose $9 billion because of cost-of-living adjustments, a Treasury official said.

For the first three months of fiscal 2023, which began in October, the government reported a deficit of $421 billion, a 12% increase over the same period of fiscal 2022, with receipts down 3% to $1.026 trillion, and outlays up 1% to $1.447 trillion, also a record for the period.

Interest on the public debt for the year-to-date period totalled $210 billion, up 37% or $57 billion compared to a year earlier. The Treasury official said the increase was due to higher interest rates paid on conventional debt that had expanded by $1.8 trillion from a year earlier. Payments related to inflation-protected securities fell during the first three months of fiscal 2023.

Euro Zone: –

Mortgage costs for first-time home-buyers in Britain have risen to their highest since 2008, reflecting a surge in interest rates over the past year, Nationwide Building Society (LON: NBS) Said on Friday.

The average monthly mortgage payment for a new first-time buyer in the final quarter of 2022 was equivalent to 39% of a single full-time salary after tax, up from 34% the quarter before and the highest since mid 2008.

Mortgage costs have risen for first-time buyers despite what Nationwide estimates is a 2.5% fall in house prices between August and December, as well as private-sector wage growth that is running at an annual rate of 7%.

The Bank of England started to raise interest rates in December 2021 – when they were just 0.1% – and they reached 3.5% last month, the fastest tightening in decades.

Rents are also rising at their fastest pace since Nationwide’s records began in 2005, adding to an inflationary backdrop that makes it harder for people to save up to get on the housing ladder.

“The overall affordability situation looks set to remain challenging in the near term,” Harvey said.

Japanese bank Nomura forecast on Thursday that British house prices would fall 15% by mid 2024, after rising more than a quarter since the start of the COVID-19 pandemic.

Housing costs vary widely across Britain. While first-time buyers’ mortgage payments in northern England and Scotland cost just 24% of a local full-time worker’s after-tax salary, a Londoner would pay 67% of the salary.

House price-to-earnings ratios is down slightly from a year ago, reflecting falling house prices and faster wage growth.

London house prices in 2022 were 9.2 times the average local salary, below a record peak of 10.2 in 2016, while Scotland and northern England have the cheapest housing at 3.4 times earnings.

Top Economic Releases Today:

USD: Federal Budget Balance (Dec) Actual –85.0B, Forecast –70.0B, Previous –249.0B
GBP: GDP (MoM) Actual 0.1%, Forecast –0.3%, Previous 1.5% at 12:30
GBP: GDP (YoY) Actual 0.2%, Forecast 0.3%, Previous 1.5% at 12:30
GBP: Manufacturing Production (MoM) (Nov) Actual –0.5%, Forecast –0.2%, Previous 0.7% at 12:30
EUR: Industrial Production (MoM) (Nov) Forecast 0.5%, Previous –2.0% at 15:30