Fundamental News And Technical Analysis Report – 18 January 2023

18 Jan 2023

As the BOJ maintains its stance, Japan’s yields fall well below the policy cap

Asian stock market closes in red on Tuesday. The Shanghai Composite is down 0.10% at 3224.24. Overall, the Singapore MSCI is up 0.74% at 298.85. Over in Hong Kong, the Hang Seng Index is down 0.78% at 21577.64. In Japan, the Nikkei 225 is up 1.23 at 26138.68. While the Topix index is up 0.88% at 1902.89 South Korea’s Kospi is down 0.85% at 2379.39. Australia S&P/ASX 200 is down 0.26% at 7386.30.

Top News of the Day:

Japanese government bond yields tumbled, falling the most in two decades at one point on Wednesday, retreating sharply from the central bank’s 0.5% ceiling after policymakers decided to keep yield curve controls in place.

The 10-year yield plunged as much as 14 basis points to 0.36% at its lowest point, which would have been the biggest one-day decline since September 2003, before edging back up to 0.41% as of 0733 GMT. The yield was at 0.51% prior to the Bank of Japan decision.

Anticipation had been high that BOJ Governor Haruhiko Kuroda and his colleagues would change tack at Wednesday’s meeting, with expectations ranging from further tweaks to yield curve control (YCC) to complete abandonment.

Market Summary as per 17/01/2023:

European equities Tuesday closing. The DAX futures contract in Germany traded up 0.35%% at 15187.07, CAC 40 futures up 0.48% at 7077.16. UK 100 futures contract in the U.K. is down 0.12 at 7851.03

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 1.14% at 33910.85. The S&P 500 down 0.20% at 3990.97 and the Nasdaq 100 up 0.14% at 11095.11, NYSE closes 0.22% down at 15883.56.

Top Market News Today:

In the Forex market, GBPUSD up 0.35% at 1.2328. The USDJPY up 1.68% at 130.19, The USDCHF down 0.37 at 0.9187. EURUSD up 0.36% at 1.0827. EUR/GBP up 0.14% at 0.8789. The USD/CNY up 0.02% at 6.7735 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.02% $1,907.53. Elsewhere, Silver futures up 0.71% at $24.09 per ounce, Platinum up 0.10% at $1039.00 per ounce, and Palladium up 0.34% at $1746.50.

Brent Crude Oil up 0.90% at $86.77 per barrel.

In the Cryptocurrency Markets, Bitcoin is at 21310.90 up by 0.83%, Ethereum is up 1.12% at 1583.18, and Litecoin at 87.48 up by 0.55%, at the time of writing.

Top Market Segment to Watch Out for Today:

OIL- Oil prices extended early gains to rise around 1% on Wednesday, on optimism that the lifting of China’s strict COVID-19 curbs will lead to a recovery in fuel demand in the world’s top oil importer.

Both crude futures surged by more than $1 a barrel to hit fresh 2023 highs around midday in Asia.

Economic News:

US: – U.S. federal prosecutors will have greater leeway to decline to prosecute companies that self-report criminal matters and cooperate with government investigations, the Justice Department said on Tuesday.

The policy aims to boost incentives for companies to disclose any misconduct they uncover to authorities, Assistant Attorney General Kenneth Polite said at Georgetown University.

Polite’s remarks mark a further softening of tone from the Biden administration’s more aggressive stance with Corporate America initially outlined in October 2021 and detailed in more balanced terms in September 2022.

“This demonstrates that the Department is looking to strike a balance between ‘tough on corporate crime’ rhetoric and giving companies a reason to disclose conduct,” said former prosecutor Justin Weitz, now a partner with Morgan, Lewis & Bockius LLP.

Previous use of such so-called declinations applied in foreign corruption matters and prosecutors was limited when there were aggravating circumstances, such as the involvement of key executives and a significant profit from the wrongdoing.

Now the policy will apply to a greater variety of white-collar matters, and the Justice Department can decide against prosecuting even under such aggravating circumstances if companies meet certain guidelines.

The guidelines include the immediate disclosure of issues when they are uncovered, and “extraordinary” cooperation and remediation, Polite said.

Even if a criminal resolution is warranted, companies can earn discounts of 50% to 75% off the low end of prosecutors’ sentencing guidelines for penalties. But Polite cautioned that steep discounts would not be the norm.

Euro Zone: – British consumer price inflation fell to a three-month low of 10.5% in December, offering some comfort to the Bank of England and households, but food and drink prices continued to accelerate, rising at the fastest pace since 1977.

The drop in the headline rate of inflation from 10.7% in November was in line with economists’ forecasts in a Reuters poll, and moves CPI further away from the 41-year high of 11.1% struck in October.

However, while lower prices for petrol and clothing bore down on the headline rate, the cost of food and non-alcoholic beverages was 16.8% higher than a year earlier, the biggest increase since September 1977.

“Food costs continue to spike with prices also rising in shops, cafes, and restaurants,” ONS chief economist Grant Fitzner said.

Core CPI – which excludes energy, food, alcohol, and tobacco, and which some economists view as a better guide to underlying inflation trends – was unchanged at 6.3% in December.

The Bank of England forecast in November that headline CPI would drop to around 5% by the end of 2023 as energy prices stabilized, but policymakers have warned of ongoing upward pressure on inflation from a tight job market and other factors.

Financial markets expect the BoE to raise its main interest rate to 4% from 3.5% on Feb. 2, when it will also publish a quarterly update to its growth and inflation forecasts.

The sterling rose slightly against the U.S. dollar after the data.