Market Analytics and Considerations
Key Points
Three main US benchmark indices concluded the regular session in the negative as market players worried about Federal Reserve rate increases and additional speculation of an impending recession. This morning, December S&P 500 futures are trending down -0.16%. Losses in the Oil & Gas, Technology, and Consumer Services sectors were mostly to blame for the decline of three major U.S. stock indices.
Following a decision by European Union regulators that the company should not compel consumers to consent to tailored adverts based on their digital activities, Meta Platforms Inc. (META) had a more than 6% decline during Tuesday’s trading session amid greater regulatory scrutiny.
Following remarks from the major U.S. banks about the future being uncertain, the chances for future economic development were in the spotlight on Tuesday. According to the CEO of Bank of America (BAC), three quarters of next year will see mildly negative growth. In addition, Jamie Dimon, chief executive of JPMorgan Chase and Co. (JPM), predicted that inflation would deplete consumer discretionary income and trigger a moderate or severe recession that people are worried over.
According to Hugh Johnson, chief economist of Hugh Johnson Economics in Albany, New York, “there is a broad anticipation of a slowdown in the economy in first couple months and it’s going to have an effect on profitability, which is what investors are focusing on.”
In the meantime, U.S. rate futures have priced in a 77.0% likelihood of a 50 basis point rate increase and a 23% likelihood of a 75 basis point increase at the monetary policy meeting in December.
Today, all eyes will be on the preliminary U.S. Nonfarm Productivity data in a few hours. In comparison to the figure of -4.1% q/q in the second quarter, economists anticipate that nonfarm productivity will rise by 0.6% q/q in Q3 on average.
Additionally, investors are likely to focus on the Bank of Canada’s decision regarding interest rates. The BoC is anticipated to raise the key interest rate by 50 basis points to 4.25 percent.
Today, preliminary U.S. Unit Labor Costs data will be released. In contrast to the figure of +10.2% q/q in the second quarter, economists anticipate this figure to rise to +3.1% q/q in the third quarter.
Additionally, data on U.S. crude oil inventories will be reported today. The United States 10-Year rate is currently at 3.529%, up +0.47% from the previous week’s value of -12.580M, as estimated by economists.
As investors digested China’s further easing of COVID restrictions and recessionary concerns in the region, the Euro Stoxx 50 futures fell -0.28% this morning. Anemic growth and tightening monetary policy to combat high inflation are currently the primary concerns of European investors. Even though interest rates are currently “very close” to their neutral level, it is widely expected that the European Central Bank will raise them once more next week.
The Unemployment Rate in Switzerland n.s.a., Today, preliminary data on the Eurozone’s GDP, the U.K. Halifax House Price Index, Germany’s Industrial Production, France’s Trade Balance, Italy’s Retail Sales, and other countries were made available.
Switzerland’s Joblessness Rate n.s.a. remained at 2.0% in November, which met expectations.
In contrast to expectations of -0.2% m/m, the November Halifax House Price Index in the United Kingdom came in at -2.3% m/m.
In contrast to expectations of -0.6% m/m, the German industrial production rate in October was -0.1% m/m.
The Italian Retail Sales in October were -0.4% m/m, which was higher than the expectations of -0.6% m/m. The French Trade Balance was at -12.2B, which was higher than the expectations of -16.0B.
GDP growth in the third quarter of the Eurozone was reported at +0.3% q/q and +2.3% y/y, which was higher than anticipated at +0.2% q/q and +2.1% y/y.
Today, Asian stock markets closed in the red. The Shanghai Composite Index (SHCOMP) in China and the Nikkei 225 Stock Index (NIK) in Japan both closed lower by -0.72%.
In the meantime, U.S. rate futures have priced in a 77.0% likelihood of a 50 basis point rate increase and a 23% likelihood of a 75 basis point increase at the monetary policy meeting in December.
Today, all eyes will be on the preliminary U.S. Nonfarm Productivity data in a few hours. In comparison to the figure of -4.1% q/q in the second quarter, economists anticipate that nonfarm productivity will rise by 0.6% q/q in Q3 on average.
Additionally, investors are likely to focus on the Bank of Canada’s decision regarding interest rates. The BoC is anticipated to raise the key interest rate by 50 basis points to 4.25 percent.
Today, preliminary U.S. Unit Labor Costs data will be released. In contrast to the figure of +10.2% q/q in the second quarter, economists anticipate this figure to rise to +3.1% q/q in the third quarter.
Additionally, data on U.S. crude oil inventories will be reported today. The United States 10-Year rate is currently at 3.529%, up +0.47% from the previous week’s value of -12.580M, as estimated by economists.
As investors digested China’s further easing of COVID restrictions and recessionary concerns in the region, the Euro Stoxx 50 futures fell -0.28% this morning. Anemic growth and tightening monetary policy to combat high inflation are currently the primary concerns of European investors. Even though interest rates are currently “very close” to their neutral level, it is widely expected that the European Central Bank will raise them once more next week.
Today, as worries about a global recession and the Federal Reserve raising interest rates diminished sentiment, the Shanghai Composite closed lower. However, losses were reduced as a result of China’s relaxation of some COVID restrictions.
On Wednesday, the Chinese government announced a further easing of COVID-related restrictions, including loosening on travel and business activities. The economy continued to be impacted by the zero-COVID policy at the same time, as Chinese exports and imports fell to their lowest level since mid-2020.
Today, the Nikkei 225 Stock Index in Japan ended lower. Losses in the Mining, Transportation Equipment, and Precision Instruments sectors fueled the index’s downward momentum. The implied volatility of Nikkei 225 options is taken into account in the Nikkei Volatility, which closed at a new one-month high of 22.43.
