Market Analytics and Technical Considerations
Key Points
Three major US benchmark indices ended the regular session sharply higher as investors considered Federal Reserve Chair Jerome Powell’s signal that the central bank might slow the pace of its interest rate hikes as early as December.
This morning, December S&P 500 futures (ESZ22) are trending down -0.16%. Gains in the areas of technology, consumer goods, and consumer services were the main drivers of three important U.S. stock indices.
The amount of restraint needed to lower inflation, according to Powell, is getting closer for rates. The Fed chair did emphasize that rates were still far below their peak levels and that the struggle with inflation was not yet over.
In the meanwhile, December’s monetary policy meeting is expected to result in a 79.4% likelihood of a 50 basis point rate increase and a 20.6% possibility of a 75 basis point increase, according to U.S. rate futures.
In a note released before Powell’s speech, Goldman Sachs stated, “We continue to forecast the FOMC to decrease the pace of raising rates to 50bp in December as well as to 25bp in February, March, and May, lifting the funds rate to a top of 5-5.25%.”
According to data released on Wednesday, private employment increased in November at a slower rate than anticipated, indicating a cooling of labor demand in light of high interest rates.
According to a different reading, economic expansion in the United States exceeded expectations in the third quarter.
Today, the U.S. Core PCE Price Index data in a few hours is the focus of all attention. The Core PCE Price Index is expected to rise by 0.3% month-over-month and 5.0% year-over-year in October, up from the previous readings of 0.5% month-over-year and 5.1% year-over-year.
Investors will likely also pay attention to the ISM Manufacturing PMI data, which showed a reading of 50.2 in October. The new number, according to economists, should be 49.8.
Today’s Manufacturing PMI data will be released. This number is expected to reach 47.6 in November, down from 50.4 in October, according to economists.
Today will see the release of Personal Spending in the United States data. In comparison to the previous reading of +0.6% m/m, economists anticipate a figure of +0.8% m/m in October.
Additionally, U.S. Initial Jobless Claims data will be released today. Compared to last week’s value of 240K, economists estimate this number to be 235K. Bond markets in the United States have 10-Year rates at 3.616 percent, down -2.23%.
The Euro Stoxx 50 prospects are up +0.33% toward the beginning of today, with risk hunger expanding after Central bank Seat Jerome Powell said the national bank is set to slow its speed of loan fee climbs not long from now.
The Eurozone CPI perusing likewise showed a surprisingly great fall in November, supporting expectations for a lull in European National Bank rate increments not long from now. The sentiment was also improved by the relaxation of some COVID-19 restrictions in a number of Chinese cities.
Today, data on the United Kingdom’s Nationwide HPI, Germany’s Retail Sales, Switzerland’s CPI, Switzerland’s procure.ch PMI, Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone Manufacturing PMI, Eurozone Unemployment Rate, and United Kingdom Manufacturing PMI were made public.
In contrast to expectations of -0.3% m/m and +5.8% y/y, the November Nationwide HPI in the United Kingdom was reported at -1.4% m/m and +4.4% y/y.
In contrast to expectations of -0.6% m/m and -2.8% y/y, German retail sales in October fell by -2.8% m/m and -5.0% y/y.
Expectations were met when Switzerland’s CPI for November came in at +3.0% year-over-year.
The procure.ch PMI for Switzerland in November was 53.9, which was lower than the expected 54.0.
The Manufacturing PMI for November in Spain came in at 45.7, exceeding expectations of 45.6.
The Italian Manufacturing PMI for November came in at 48.4, exceeding expectations of 47.0.
The French Manufacturing PMI for November came in at 48.3, which was lower than the 49.1 that was expected.
The German Manufacturing PMI for November was reported at 46.2, which was lower than the expected 46.7.
The November Manufacturing PMI for the Eurozone was 47.1, below expectations of 47.3.
The Eurozone’s October unemployment rate was 6.5%, higher than anticipated at 6.6%.
The UK Manufacturing PMI for November came in at 46.5, exceeding expectations of 46.2.
Today, Asian stock markets ended in the black. The Shanghai Composite Index (SHCOMP) in China and the Nikkei 225 Stock Index (NIK) in Japan both ended the day in positive territory.
In anticipation of a complete reopening, the Shanghai Composite in China closed higher today. After a series of protests against the government’s severe zero-COVID measures, some anti-COVID restrictions were relaxed in Guangzhou and Chongqing, which improved investor sentiment toward China.
At the same time, data released on Thursday indicated that factory activity in China decreased in November, highlighting the country’s widening economic gaps. However, in recent sessions, the Chinese stock markets largely ignored economic data in the hope that the government would relax its strict zero-COVID strategy as economic growth worsened.
Due to higher-than-expected third-quarter capital spending numbers, Japan’s Nikkei 225 Stock Index ended higher. Shipbuilding, real estate, and textiles sector gains fueled the index’s upward momentum. The implied volatility of Nikkei 225 options is taken into account in the Nikkei Volatility, which ended the day at 18.93, up 1.18 percent.
