Market Analytics and Technical Considerations
After three major US benchmark indices closed mixed on Friday as market participants shied away from risk and focused on Black Friday sales and COVID-19 cases in China, December S&P 500 futures (ESZ22) are trending down -0.87% this morning. Investors showed optimism despite the possibility of fewer interest rate hikes from the Federal Reserve, and three major U.S. stock indexes finished the holiday-shortened week in the green.
Apple (AAPL) lost about -2 percent during Friday’s trading session due to concerns regarding decreased iPhone shipments in November from a Foxconn plant in China due to COVID-related worker unrest.
After increasing its benchmark rate by 0.75 percentage points at each of its previous four meetings, the Federal Reserve will meet next month to decide the course of interest rates. In the meantime, U.S. rate futures have priced in a 74.7% chance of raising the rate by 50 basis points and a 25.3% chance of raising it by 75 basis points at the monetary policy meeting in December.
Investors are hoping that the Federal Reserve will soon slow the rate of increase, so the most important data for the coming week will be the nonfarm payrolls data for November in the United States. Market participants will also be keeping an eye on U.S. CB Consumer Confidence, ADP Nonfarm Employment Change, ISM Manufacturing PMI, JOLTs Job Openings, Pending Home Sales, Crude Oil Inventories, the Core PCE Price Index, the PCE Price Index, Unemployment Rate, and Personal Spending data.
Investors will also pay close attention to Fed Chair Jerome Powell’s Wednesday speech at the Brookings Institution.
On Monday, the list of U.S. economic data is mostly empty. Investors, on the other hand, will likely concentrate on speeches delivered by John Williams, president of the New York Fed, and James Bullard, president of the St. Louis Fed.
Rates on 10-year bonds in the United States currently stand at 3.663%, a decrease of -1.06%.
Global investors are keeping a close eye on the unrest in China as protests against strict COVID curbs and lockdowns intensified over the weekend. As a result, the Euro Stoxx 50 futures are down -0.83% this morning. After the German chemicals distribution company announced over the weekend that it held preliminary discussions with U.S. rival Univar Solutions regarding a potential acquisition, the more than -8 percent drop in Brenntag Se (BNR.D.DX) is another negative factor for European equities.
Investors are anticipating the release of preliminary Eurozone inflation data for November on Wednesday, so today’s focus in Europe will be on ECB President Christine Lagarde’s speech at the European Parliament.
The November CPI is expected to rise by 10.4% year-over-year, up from the previous reading of 10.6%.To combat high inflation, the ECB raised rates by 75 basis points to 1.5% at its meeting in October. It is widely anticipated that it will raise rates by another 50 or 75 basis points on December 15.
Eurozone M3 cash supply and Eurozone private area advances information were delivered today.
The Eurozone’s October M3 money supply was reported at 5.1% y/y, which was lower than the 6.2% y/y that was anticipated.
Private sector loans in the Eurozone increased by 4.2% annually, below expectations of 4.5 percent.
In the midst of intensifying protests in China against the government’s stringent zero-COVID policy, Asian stock markets closed today in the red. China’s Shanghai Composite Record (SHCOMP) shut down – 0.75%, and Japan’s Nikkei 225 Stock List (NIK) shut down – 0.42%.
Today, investors were more concerned about the growth implications for the world’s second-largest economy after rare protests in major Chinese cities against the country’s severe zero-COVID restrictions. ver the weekend, civilians and police in China clashed in a number of cities, including Beijing and Shanghai. At the same time, the country reported 40,052 new COVID-19 infections on Monday, marking the fifth day in a row of daily records. Any support for investor sentiment provided by the central bank’s announcement on Friday of a 25 basis point cut to the reserve requirement ratio was overshadowed by the stringent zero-COVID measures.
It is evident that the severe lockdowns in China have had an effect on consumer and business sentiment for some time. In addition, the persistent downgrades of China’s GDP have been consistent for well over a year, with further downgrades anticipated.
Rubber, electrical/machinery, and steel sector losses weighed on Japan’s Nikkei 225 stock index, which closed lower at the same time. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility Index, which ended the day at 17.49, down 0.11 percent.
