Fundamental News And Technical Analysis Report – 29 December 2022
29 Dec 2022
After reopening, China’s services sector hopes to revive, but difficulties still exist
Asian stock market closes in red on Wednesday. The Shanghai Composite is down 0.30% at 3087.40. Overall, the Singapore MSCI is down 1.06% at 289.75. Over in Hong Kong, the Hang Seng Index is down 1.12% at 19898.91. In Japan, the Nikkei 225 is down 1.05% at 26340.50. While the Topix index is down 0.87% at 1909.02 South Korea’s Kospi is down 1.47% at 2280.45. Australia S&P/ASX 200 down 0.97% at 7086.40.
Top News of the Day
Jordan Li, a restaurant owner in the southwestern Chinese city of Chengdu, hopes desperately that next month’s Lunar New Year holidays will help him make up for business lost this year because of COVID-related travel and other restrictions.
Although infections have risen sharply since the central government lifted most of its pandemic-control curbs this month, Li thinks people will still travel to Chengdu. He envisions a different problem: a lack of workers to handle the demand.
Li says he is preparing for a worst-case scenario in which he single-handedly keeps his restaurant open as he “can be the boss, the chef, the waiter and handle the finances all at the same time.”
Stung by the repeated pandemic-related disruptions to his business in the past three years, he does not want to hire staff until operations return to normal.
Li’s predicament underscores challenges for China’s economically crucial services sector as it bets on a post-COVID revival.
With the virus spreading unchecked across the country now, representatives from the services sector say frequent lockdowns have left them without money to expand.
They also must deal with a growing number of sick workers, especially ahead of and during the Lunar New Year next month, a peak travel period in China, when millions of head home to celebrate with families.
Market Summary as per 28/12/2022:
European equities Wednesday closing. The DAX futures contract in Germany traded down 0.50% at 13925.60, CAC 40 futures down 0.61% at 6510.49. UK 100 futures contract in the U.K. up 0.32 at 7497.19
In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 1.10% at 33875.71. The S&P 500 down 1.20% at 3783.22 and the Nasdaq 100 down 1.35% at 10213.29, NYSE closes 1.19% down at 15037.32.
Top Market News Today:
In the Forex market, GBPUSD up 0.20% at 1.2040. The USDJPY down 0.58% at 133.67, The USDCHF down 0.16 at 0.9270. EURUSD up 0.14% at 1.0626. EUR/GBP down 0.05% at 0.8823. The USD/CNY down 0.09% at 6.9712 at the time of writing.
In the Commodity market U.S. Gold futures up at 0.26% $1,808.61. Elsewhere, Silver futures up 0.71% at $23.70 per ounce, Platinum up 0.50% at $1010.50 per ounce, and Palladium up 0.14% at $1789.00.
Brent Crude Oil down 0.36 at $83.69 per barrel.
In the Cryptocurrency Markets, Bitcoin at 16550.60 up at 0.07%, Ethereum up 0.39% at 1194.00, Litecoin at 66.43 up 0.20%, at the time of writing.
Top Market Segment to Watch Out Today:
OIL: – Oil prices dipped on Thursday as surging COVID-19 cases in China dimmed hopes of a recovery in fuel demand for the world’s largest crude oil importer.
The scale of the latest outbreak and doubts over official data prompted some countries to enact new travel rules on Chinese visitors, even as China began dismantling the world’s strictest COVID regime of lockdowns and testing.
“The lack of clarity over the virus situation in China has prompted some new travel rules from various countries, which could serve as some dampener for previous optimism,” said Jun Rong Yeap, market strategist at IG.
US: – Contracts to buy U.S. previously owned homes fell far more than expected in November, diving for a sixth straight month in the latest indication of the hefty toll the Federal Reserve’s interest rate hikes are taking on the housing market as the central bank seeks to curb inflation.
The National Association of Realtors (NAR) said on Wednesday its Pending Home Sales Index, based on signed contracts, fell 4% to 73.9 last month from October’s downwardly revised 77.0. Novembers was the lowest reading – aside from the short-lived drop in the early months of the pandemic – since NAR launched the index in 2001.
Economists polled by Reuters had forecast contracts, which become sales after a month or two, would fall 0.8%. Pending home sales dropped 37.8% in November on a year-on-year basis.
“Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said NAR Chief Economist Lawrence Yun. “Falling home sales and construction have hurt broader economic activity.”
Contracts declined in all four regions, led by a 7.9% drop in the Northeast. All four regions also recorded double-digit declines on a year-over-year basis, with contract signings in the West down by 45.7%, by far the largest regional drop.
The housing market has suffered the most visible effects of aggressive Fed interest rate hikes that are aimed at curbing high inflation by undercutting demand in the economy. By the Fed’s preferred measure, inflation is still running nearly three times its 2% goal, having risen earlier in 2022 at its fastest pace in 40 years.
Euro Zone: –
German companies expect only a mild recession next year despite headwinds from the energy crisis, raw material shortages and a tepid global economy, a survey of major associations published by Reuters on Tuesday showed.
“The last quarter of 2022 and the start of 2023 are likely to be accompanied by a decline in economic activity,” said Siegfried Russwurm, president of the Federation of German Industries (BDI). “However, we expect only a slight slump.”
There have been growing signs that the German economy could stave off the worst of an economic downturn triggered by a plunge in energy supply from Russia after the Ukraine invasion.
Inflation slowed slightly to 11.3% in November from a high of 11.6% the month prior as energy prices eased. The German government has predicted the economy will grow by 1.4% this year and contract by 0.4% next year.
Russwurm warned that growth would remain subdued until 2024 as weak demand around the world hits Germany’s export-dependent economy.
The Association of German Chambers of Industry and Commerce (DIHK) said there were many indications that supply chain disruptions were gradually easing.
“Freight rates for container prices are approaching long-term normal values again, and the congestion outside international ports is slowly easing,” said DIHK President Peter Adrian.
“If the announced relaxations of China’s zero-COVID policy are implemented, it would also be a positive signal for global supply chains,” he added.
However, the DIHK warned that soaring energy prices and easing consumer sentiment were still clouding the outlook for 2023.
Top Economic Releases Today:
- USD: Initial Jobless Claims Forecast 225K, Previous 216K at 19:00
- USD: Crude Oil Inventories Forecast –1.520M, Previous –5.894M at 21:30
- EUR: Private Sector Loans (YoY) Forecast 4.3%, Previous 4.2% at 14:30
- RUB: Central Bank Reserves (USD) Previous 581.7B at 18:30
- USD: 7-Year Note Auction Previous 3.890% at 23:30
GBPUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – SELL AT 1.20165, TAKE PROFIT AT 1.19575, SL AT 1.20797
EURUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – BUY AT 1.06353, TAKE PROFIT AT 1.06793, SL AT 1.05947
AUDUSD TECHNICAL ANALYSIS
TRADE SUGGESTION– BUY AT 0.67371, TAKE PROFIT AT 0.67931, SL AT 0.67153
USDJPY TECHNICAL ANALYSIS
TRADE SUGGESTION- SELL AT 133.750, TAKE PROFIT AT 132.891, SL AT 134.460
DAX40 INDEX TECHNICAL ANALYSIS
TRADE SUGGESTION – SELL AT 13880, TAKE PROFIT AT 13690.3, SL 14016.4
WTI CRUDE OIL TECHNICAL ANAYSIS
TRADE SUGGESTION– SELL AT 78.61 TAKE PROFIT AT 77.28, SL 79.77
SILVER TECHNICAL ANALYSIS
TRADE SUGGESTION– BUY AT 23.749, TAKE PROFIT AT 23.960, SL 23.442
ETHEREUM TECHNICAL ANALYSIS
TRADE SUGGESTION- SELL AT 1178.67, TAKE PROFIT AT 1155.01, SL AT 1204.50