VOT Research Desk
Market Analytics and Considerations
After three major US benchmark indices finished the regular trading session in the red last week as investors digested comments from the Fed’s Brainard and Waller, December S&P 500 futures (ESZ22) are trending up +0.73% this morning. Losses in the Financials, Consumer Goods, and Utilities sectors accounted for the majority of the weighting in three major stock indexes in the United States.
As a result of market participants’ reactions to Federal Reserve Gov. Christopher Waller’s remarks regarding the Fed’s policy path, Wall Street ended Monday’s trading session lower, with the real estate and discretionary sectors leading broad declines. However, after Fed Vice Chair Lael Brainard stated on Monday that it probably would be “appropriate soon to move to a slower pace of increases,” but that the Fed still had more work to do, stocks briefly recovered their losses.
According to Eric Kuby, chief investment officer at North Star Investment Management Corp., “There is still a sensitivity to Fed speak… One was a little hawkish, one was a little dovish.” On the other hand, U.S. rate futures have priced in an 80.6% chance of a 50 basis point rate increase and a 19.4% chance of a 75 basis point rate increase at the monetary policy meeting in December.
In the coming hours, all eyes will be on the U.S. Producer Price Index (PPI) data. In comparison to the figure of +0.4% m/m recorded in September, economists anticipate that October’s U.S. PPI reading will be +0.4% m/m.
Additionally, market participants are likely to concentrate on a series of remarks made by Fed officials Harker, Cook, and Barr for additional clues regarding the plans that the Fed has for monetary policy.
According to Yung-Yu Ma, chief investment strategist at BMO Wealth Management, “It just makes sense the market wants to pause and really both try to make sense of the trajectory of Fed policy and what the next drivers are going to be.”
Additionally, U.S. Core PPI data will be reported today. In line with the previous value of +0.3% m/m, economists anticipate this figure to be +0.3% m/m in October.
Rates on 10-year bonds in the United States currently stand at 3.812%, a decrease of -1.41%.
This morning, a collection of economic data offered a view of the outlook for the region and the global economy, and the Euro Stoxx 50 futures are up +0.21%.Additionally, European equities were supported on Monday by dovish remarks made by European Central Bank policymaker Fabio Panetta and Cypriot policymaker Constantinos Herodotou. This resulted in a decrease in the yields on European bonds. However, in order to bring inflation back to the target, the ECB still has a long way to go with its rate hikes.
Today, preliminary data on Eurozone GDP, the U.K. Average Earnings Index +Bonus, Claimant Count Change, the U.K. Unemployment Rate, France CPI, Spain CPI, Germany ZEW Economic Sentiment, and other countries were made available.
The U.K. September Average Earnings Index +Bonus was reported at 6.0%, which was higher than the 5.9% expected.
The October claimant count change in the United States was 3.3K, higher than the 17.3K expected. The September unemployment rate in the United Kingdom was 3.6%, lower than the 3.5% expected.
In contrast to expectations of +7.1% y/y, the French CPI for October came in at +6.2% y/y.
Expectations were met when the Spanish CPI for October rose by 7.3% year-over-year.
The German ZEW Economic Sentiment for November was reported at -36.7, which was higher than the expected -50.0.
In line with expectations, quarterly GDP growth in the Eurozone was +0.2%.
and the Nikkei 225 Stock Index (NIK) of Japan closed up 0.10 percent.
The Shanghai Composite in China closed sharply higher today as investors sought additional government stimulus measures to withstand COVID-19 restrictions’ economic pressure.
On Tuesday, the People’s Bank of China kept interest rates the same, but it added a lot of liquidity to the market to help the Chinese economy. The data on retail sales and industrial production that were released on Tuesday also raised hopes that the government will implement additional spending measures to support growth.
Data revealed that the world’
The third-largest economy unexpectedly shrank in the third quarter, with Japan’s GDP standing at -0.3% q/q and -1.2% y/y in Q3. At the same time, Japan’s Nikkei 225 Stock Index closed slightly higher today. The implied volatility of Nikkei 225 options is taken into account in the Nikkei Volatility, which closed at a new one-month low of 19.87.
