Market Analytics and Considerations
Key notes
This morning, the March S&P 500 futures are trending lower by 0.08% after the 3 primary U.S. indexes closed lower for a fourth successive session, with the Nasdaq declining the most as market participants’ appetite for risk decreased amid ongoing concerns that the Federal Reserve’s tough stance could dispatch the U.S. economy into a recession. Decline in the consumer services, technology, and telecommunications sectors contributed significantly to the decline of 3 primary U.S. stock indices.
Shares of Meta Platforms Inc. (META) fell more than 4% during Monday’s trading period, leading the decline in big tech, after the European Union accused the business of violating antitrust laws by restricting competition in the platforms for online classifieds. If found to be guilty, the tech company could be fined up to $11.8 billion. Also among the worst performing sectors was consumer luxury, which was hurt by falling casino and tourism stock prices and a recent spike in COVID infestations in China.
Energy prices are following oil prices, everyone is concerned about a recession and rising interest rates, and there isn’t much news to change the trajectory, which is quite identical to what we witnessed last week. As a result, negativity feeds off itself and becomes stronger.
In the meantime, February’s monetary policy meeting is expected to result in a 65.0% likelihood of a 25 basis point rise in interest rates as well as a 35.0% possibility of a 50 basis point hike, according to U.S. rate futures.
All attention are on the initial U.S. Building Permits data that will be released in a few hours. According to analysts’ estimates, the number of building permits will be 1.485 million in November, down from 1.512 million in October.
Traders also are likely to pay particular attention to the October 1.425M U.S. Housing Starts data. According to experts, November’s number would be 1.400M.
Statistics on Canada’s Core Retail Sales will also be released today. According to experts, this number will increase by 1.4% m/m in October from the prior reading ( -0.7% m/m.)
United States 10-Year rates are at 3.658% in the bond markets, up +2.10%.
Today morning, investors are evaluating the interest rate forecast for 2023 after the Bank of Japan abruptly modified its ultra-dovish posture and presented a less supportive attitude than markets anticipated. As a result, the Euro Stoxx 50 futures are higher +0.05%. The week before, the U.S. Federal Reserve, the Bank of England, and the Swiss National Bank all increased their interest rates by 50 basis points.
The European Union’s energy ministers also resolved their months-long disagreement over how to cope with the expense of skyrocketing energy costs following Russia cut off gas supplies to Europe on Monday by agreeing on a ceiling on price of gas of 180 euros ($191.11) per megawatt hour.
Today saw the release of Germany Producer Price Index (PPI) statistics.
In contrast to predictions of -2.5% m/m and +30.6% y/y, the German November PPI was announced at -3.9% m/m & +28.2% y/y.
Asian stock markets ended the day in the negative. The Nikkei 225 Stock Index (NIK) of Japan and the Shanghai Composite Index (SHCOMP) of China both experienced declines at the market’s closing bell.
After the Bank of Japan expanded the spectrum for yield variations in the flagship government bond as the nation battles skyrocketing inflation, the Nikkei 225 Stock Index in Japan fell over 2% to a two-month low. The 10-year Japanese Government Bond yield fluctuation band would indeed be increased from with a range of negative 0.25% to 0.25% to somewhere between minus 0.5% and 0.5%, based on the central bank. On Tuesday, the BoJ reaffirmed both its quantitative easing initiatives and its 2% yearly growth objective. The implied volatility of Nikkei 225 options is factored into the Nikkei Volatility, which increased by 6.25% to settle at 18.87.
