FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 23 JANUARY 2023

23 Jan 2023

Oil prices decline in light trading as markets consider China’s reopening

Asian stock market closes in green on Friday. The Shanghai Composite is up 0.76% at 3264.81. Overall, the Singapore MSCI is up 1.15% at 299.41. Over in Hong Kong, the Hang Seng Index is up 1.82% at 22044.65. In Japan, the Nikkei 225 is up 0.56 at 26553.53. While the Topix index is up 0.59% at 1926.87 South Korea’s Kospi is up 0.63% at 2395.26. Australia S&P/ASX 200 up 0.23% at 7452.20.

Top News of the Day:

Oil prices edged lower from a recent rally on Monday, as traders awaited more cues on an economic recovery in China and a potential U.S. recession, although Asian trading volumes were slim amid a slew of market holidays in the region.

China and other major Asian markets were closed for the Lunar New Year holiday, which is expected to keep volumes slim for the remainder of the week.

Still, markets are positioning for a strong boost to the Chinese economy from the week-long holiday, especially after the country withdrew most anti-COVID measures and reopened its international borders this year.

The prospect of a recovery in Chinese demand boosted oil prices in recent weeks, with major industry bodies also forecasting a big rebound in demand this year as China reopens.

But given that the country is also grappling with its worst yet COVID-19 outbreak, markets remain uncertain over the timing of such a recovery.

Market Summary as per 20/01/2023:

European equities Friday closing. The DAX futures contract in Germany traded up 0.76% at 15033.56, CAC 40 futures up 0.63% at 6995.99. UK 100 futures contract in the U.K. up 0.30 at 7770.59

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed up 1.00% at 33375.49. The S&P 500 up 1.89% at 3972.61 and the Nasdaq 100 up 2.66% at 11140.43, NYSE 1.34% closes at 15777.55.

Top Market News Today:

In the Forex market, GBPUSD up 0.06% at 1.2404. The USDJPY up 0.42% at 130.09, The USDCHF down 0.17 at 0.9185. EURUSD up 0.49% at 1.0908. EUR/GBP up 0.43% at 0.8790. The USD/CNY up 0.13% at 6.7820 at the time of writing.

In the Commodity market U.S. Gold futures down at 0.28% $1,920.6. Elsewhere, Silver futures down 0.50% at $23.80 per ounce, Platinum up 0.10% at $1042.50 per ounce, and Palladium up 0.78% at $1743.54.

Brent Crude Oil down 0.35% at $87.29 per barrel.

In the Cryptocurrency Markets, Bitcoin at 22697.70 down at 0.08%, Ethereum up 0.44% at 1635.18, Litecoin at 87.88 up 0.32%, at the time of writing.

Top Market Segment to Watch Out Today:

GOLD– Gold prices rose slightly on Monday, trading close to a nine-month high as markets awaited more U.S. data this week to gauge whether the world’s largest economy was facing a potential recession in 2023.

Trading volumes in metal markets were also relatively smaller at the beginning of the week, amid market holidays in several Asian countries, most notably China, for the Lunar New Year. Chinese markets will be closed for the remainder of the week.

Economic News:

US: – U.S. Treasury Secretary Janet Yellen on Sunday said the United States wanted to see quicker progress on the World Bank’s plans for expanding its lending capacity to address climate change and other global crises.

The World Bank’s “evolution roadmap”, reported by Reuters earlier this month, calls for the bank to negotiate with shareholders ahead of April meetings on proposals that include a capital increase and new lending tools.

It calls for World Bank management to develop specific proposals to change its mission, operating model and financial capacity that could be approved by the joint World Bank and International Monetary Fund Development Committee in October.

The plan marks the start of a negotiation process to alter the bank’s mission and financial resources and shift it away from a country- and project-specific lending model used since its creation at the end of World War Two.

Yellen said the bank’s roadmap was a “constructive document” and formed a good basis for discussion, but more work was needed.

“We do have some concerns,” she told Reuters as she travelled to Zambia from Senegal. “We would like to see some progress on a quicker timeline. And think there are some things that could be done to expand lending given the current capital release.”

Yellen said working on the reforms – first of the World Bank and then other multilateral development banks – was one of her biggest priorities this year.

The United States, the bank’s largest shareholder, worked with other countries to push the World Bank to develop the reform plan, which was discussed by the bank’s board on Jan. 11.

“2023 is the year to reap specific progress in the short-term with the Spring Meetings (in April) … and lay the foundation for more fundamental/complex reforms by the October meetings,” a senior Treasury official said.

Euro Zone: –

Britain is falling behind its peers in the race to spur economic growth and Prime Minister Rishi Sunak must act now to boost investment, fix a lack of workers and avoid chaos over post-Brexit rules, the head of an employers group said on Monday.

Confederation of British Industry Director-General Tony Danker praised Sunak for defusing the mini-budget crisis of former leader Liz Truss last year but said he was not matching the growth reforms of the United States and the European Union.

Other countries were ahead of Britain in rolling out green investments in areas such as heat pumps, insulation, building retro-fits, electric vehicle charging infrastructure and carbon capture and storage, Danker said.

“We are behind them now and seem to be hoping for the best,” he said in excerpts of a speech he will make on Monday.

Finance minister Jeremy Hunt is expected to announce pro-growth measures in a budget statement in March. But Danker feared the government might temper its reforms as an election, expected in 2024, approaches.

“If the government wants to reject using economic migration to fill immediate vacancies – something business disagrees with – then their labour market interventions must be the boldest in the world,” he said.

Those reforms should include big changes to welfare and childcare to get people back into work, even if they put further strain on Britain’s already stretched public finances.

Danker repeated the CBI’s call for tax breaks to avoid another hit to Britain’s lagging business investment levels when a two-year incentive expires on March 31, shortly before firms are hit with a sharp increase in tax on their profits.

He also said the government’s plans to scrap all EU-generated laws by the end of 2023 risked “throwing the industry into some chaos” at a time when they also face a likely recession.

Top Economic Releases Today:

USD: US Leading Index (MoM) (Dec) Forecast –0.7%, Previous –1.0% at 20:30
EUR: ECB President Lagarde Speaks at 23:15
CAD: New Housing Price Index (MoM) (Dec) Forecast –0.2%, Previous –0.2% at 19:00
JPY: Monetary Policy Meeting Minutes at 05:20
EUR: ECB`s Panetta Speaks at 20:00