VOT Research Desk
Market Analytics and Considerations
After three major US benchmark indices closed higher on last Friday as market participants weighed up hawkish remarks from Federal Reserve officials and digested the latest wave of quarterly results from retailers, December S&P 500 futures (ESZ22) are trending down -0.49% this morning. Gains in the Utilities, Healthcare, and Financials sectors were the primary drivers of three major stock indexes in the United States.
In a volatile trading session on Friday, gains in defensive shares outweighed losses in energy, causing three major US benchmark indices to inch up. At the same time, Susan Collins, head of the Federal Reserve Bank of Boston, said that the Fed might need to raise rates another 75 basis points in order to get inflation back to the 2% target.
Today, (Monday). The market is evidently is and all stocks are being driven by Fed policy and the gravitational influence of increasing interest rates on the asset complex as a whole. For a few more weeks, there is little chance that any concrete evidence of potentially decreasing wage pressure or inflation pressure will emerge.
U.S. rate futures have priced in a 75.8 percent chance of a 50 basis point rate increase and a 24.2% chance of a 75 basis point rate increase at the monetary policy meeting in December following Fed officials’ hawkish remarks last week.
Building permits, core durable goods orders, durable goods orders, initial jobless claims, manufacturing PMI (preliminary), S&P global composite PMI (preliminary), services PMI (preliminary), Michigan consumer sentiment, and crude oil inventories will all be made available to investors in the coming week.
00:37 01:36 Additionally, investors are likely to focus on a series of speeches from FOMC members Mester, George, and Bullard for additional clues regarding the path that the Fed will take with rate hikes.
The U.S. monetary information record is generally unfilled on Monday.
Rates on 10-year bonds in the United States currently stand at 3.836%, a rise of +0.48%.
Investors are worried about the likelihood of future monetary tightening and how it will affect future economic growth, which is why the Euro Stoxx 50 futures are down -0.59% this morning
.Although a number of Fed policymakers attempted to temper those expectations, the recent soft U.S. inflation reading had raised expectations of a Fed pivot.In addition, European Central Bank President Christine Lagarde stated on Friday that interest rates would need to be raised to a level that limits economic expansion, indicating a subsequent increase at the meeting in December. Consequently, the minutes of the ECB and Fed meetings later this week will provide additional clues regarding the magnitude of the December interest rate hike.
Today saw the release of data for the Producer Price Index (PPI) in Germany. In contrast to expectations of +0.9% m/m and +41.5% y/y, the German October PPI was reported at -4.2% m/m and +34.5% y/y.
Today’s close on Asian stock markets was mixed. The Shanghai Composite Index (SHCOMP) of China ended the day down -0.39%, while the Nikkei 225 Stock Index (NIK) of Japan ended up +1.16 percent.
As a result of record-high spikes in daily COVID-19 cases in several Chinese cities, including Beijing and Shanghai, new COVID-19 restrictions were imposed. Today, China’s Shanghai Composite closed lower. Concerns about a resumption of the country’s slowdown were bolstered by the rising number of COVID cases and a string of weak Chinese economic data last week.
The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.62% to 18.31 today. At the same time, Warren Buffet’s Berkshire Hathaway raised its stake in the country’s top trading houses, including Mitsubishi Corp., Mitsui & Co., Ltd., Itochu Corp., Marubeni Corp., and Sumitomo Corp., boosting Japan’s Nikkei 225 Stock
