FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 16 JANUARY 2023

16 Jan 2023

China’s economy is predicted to recover to 4.9% in 2023, and additional stimulus is expected

Asian stock market closes in green on Friday. The Shanghai Composite is up 1.01% at 3195.31. Overall, the Singapore MSCI is up 1.05% at 297.20. Over in Hong Kong, the Hang Seng Index is up 1.04% at 21738.66. In Japan, the Nikkei 225 is down 1.25 at 26119.52. While the Topix index is down 0.27% at 1903.08 South Korea’s Kospi is up 0.89% at 2386.09. Australia S&P/ASX 200 up 0.66% at 7380.10.

Top News of the Day:

China’s economic growth is likely to rebound to 4.9% in 2023, before steadying in 2024, a Reuters poll showed, as policymakers pledge to step up support for the COVID-ravaged economy.

Gross domestic product (GDP) likely grew just 2.8% in 2022 as lockdowns weighed on activity and confidence, according to the median forecasts of 49 economists polled by Reuters, slower than a 3.2% rise seen in October’s forecast and braking sharply from 8.4% growth in 2021.

Chinese leaders have pledged to spur the world’s second-largest economy this year while addressing some key drags on growth – the “zero-COVID” policy and a severe property sector downturn.

Strict COVID curbs were abruptly lifted in December, but surging infections are causing some near-term pains.

“We expect economic activities and consumption to rebound strongly from March-April onwards, helped by post-COVID re-opening and release of excess savings,” Tao Wang, chief China economist at UBS, said in a research note.

“The lack of large-scale income- and consumption-stimulus will likely limit the rebound.”

The expected 2022 growth rate would be far below the official target of a round of 5.5%. Excluding the 2.2% expansion after the initial COVID hit in 2020, it would also be the worst showing since 1976 – the final year of the decade-long Cultural Revolution that wrecked the economy.

Market Summary as per 13/01/2023:

European equities Friday closing. The DAX futures contract in Germany traded up 0.19%% at 15086.52, CAC 40 futures up 0.69% at 7023.50. UK 100 futures contract in the U.K. up 0.64 at 7844.07

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 0.33% at 34302.61. The S&P 500 up 0.40% at 3999.09 and the Nasdaq 100 up 0.71% at 11079.16, NYSE closes 0.37% up at 15918.04.

Top Market News Today:

In the Forex market, GBPUSD down 0.02% at 1.2222. The USDJPY up 0.13% at 128.02, The USDCHF down 0.06 at 0.9257. EURUSD up 0.01% at 1.0831. EUR/GBP up 0.06% at 0.8857. The USD/CNY up 0.13% at 6.7091 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.21% $1,916.68. Elsewhere, Silver futures up 0.10% at $24.28 per ounce, Platinum down 0.08% at $1062.93 per ounce, and Palladium down 1.23% at $1767.19.

Brent Crude Oil down 0.82% at $84.59 per barrel.

In the Cryptocurrency Markets, Bitcoin at 21109.20 up at 1.10%, Ethereum up 0.88% at 1566.68, Litecoin at 87.16 down 0.24%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold prices steadied around recent peaks on Monday as investors locked in profits and exercised some caution ahead of a slew of major economic readings and central bank meetings from across the globe this week.

The yellow metal rallied sharply in recent weeks on an increasing number of bets that the U.S. Federal Reserve will raise interest rates at a slower pace in the coming months, taking some pressure off non-yielding assets.

Economic News:

US: – House of Representatives Speaker Kevin McCarthy said on Sunday he believes Democrats would agree to cap government spending to avoid a U.S. debt default and he wants to discuss the idea with President Joe Biden.

Republicans now in control of the House have threatened to use the debt ceiling as leverage to demand spending cuts from Biden’s Democrats, who control the U.S. Senate.

This has raised concerns in Washington and on Wall Street about a bruising fight that could be at least as disruptive as the protracted battle of 2011, which prompted a brief downgrade of the U.S. credit rating and years of forced domestic and military spending cuts.

“I want to sit down with him now so there is no problem,” McCarthy said in an interview with Fox News, referring to Biden. “I’m sure he knows there’s places that we can change that put America on a trajectory that we save these entitlements instead of putting it into bankruptcy the way they have been spending.”

McCarthy pointed to the Trump-era agreement by U.S. lawmakers in 2019 to suspend the statutory debt limit on Treasury Department borrowing until a later date as evidence that such compromise is possible.

“I believe we can sit down with anybody who wants to work together. I believe this president could be that person,” he said.

House Oversight Committee Chairman James Comer said on Sunday he hoped debt default could be avoided but put the onus on Democrats to agree to spending cuts.

“Republicans were elected with a mandate from the American people in the midterm elections. We campaigned on the fact that we were going to be serious about spending cuts,” Comer said in an interview with CNN’s “State of the Union.”

“So, the Senate is going to have to recognize the fact that we’re not going to budge until we see meaningful reform with respect to spending.”

U.S. Treasury Secretary Janet Yellen said on Friday the United States will likely hit the $31.4 trillion statutory debt limit on Jan. 19, forcing the Treasury to start extraordinary cash management measures that can likely prevent default until early June.

Congress created the debt ceiling in 1917 to give the government greater borrowing flexibility, and must approve each increase to ensure that the United States meets its debt obligations and avoids a catastrophic default.

Euro Zone: –

Prime Minister Rishi Sunak’s government will on Monday announce new proposals to clamp down on protests, broadening the range of situations in which police are able to act to prevent serious disruption.

In recent years, protests, usually on environmental issues, have shut down large parts of central London and blocked traffic on key highways, leading to calls for the police to have more power to stop the disturbance.

The government passed legislation to address this in 2022, but is planning to go further with a new set of laws known as the Public Order Bill.

The bill was published last year and is currently in the final stages of debate in parliament. It has drawn heavy criticism from civil rights groups who say it is anti-democratic and gives police too much power.

The government wants to amend the Public Order Bill before it becomes law to broaden the legal definition of ‘serious disruption’, give police more flexibility, and provide legal clarity on when the new powers could be used.

“The right to protest is a fundamental principle of our democracy, but this is not absolute,” Sunak said in a statement late on Sunday.

“We cannot have protests conducted by a small minority disrupting the lives of the ordinary public. It’s not acceptable and we’re going to bring it to an end.”

The government says the new laws, if passed, will mean police can shut down disruptive protests pre-emptively.

The bill already includes the creation of a criminal offence for those who seek to lock themselves to objects or buildings, and allows courts to restrict the freedoms of some protesters to prevent them causing serious disruption.

It builds on the Police, Crime, Sentencing and Courts Act, passed in April 2022, which sparked several large ‘kill the bill’ protests.