Market Commentary – December 12, 2022

Kevin Jock

12th December 2022

U.S. equity market ended lower on Friday on mixed economic data, as investors now await a potential 50bps rate hike by the Fed this week. The Dow, S&P 500 and Nasdaq indices fell 0.9%, 0.7% and 0.73% respectively, with the energy sector recorded a seventh straight session of losses, the longest losing streak since Dec 2018.

Across the Atlantic, European shares fared marginally better on Friday, with both the industrial and financial sectors led the way. London’s FTSE 100 remained flat on the day, while both the CAC 40 and DAX indices gained 0.46% and 0.74% respectively. Mirroring the Fed, the ECB may also raise interest rate by 50bps this week.

Elsewhere in Asia, Japan’s Nikkei 225 index retreated today by 0.29% at the mid-day break, after achieved a week high. Likewise, HK’s Hang Seng index also dropped on the day, with investors focused on a rapid wave of COVID-19 infection which could possibly disrupt the economy. Meanwhile, the Chinese president Xi Jinping wrapped up a three-day stay in Saudi Arabia, saying they would seek to boost technology cooperation and import more oils from the Arab states.

In terms of commodities, price of Brent crude recorded their biggest weekly declines in months, due to weak economic data from various regions. Bullion also dropped on Monday, currently trading at around $1,787.52 per ounce, while U.S. dollar gained marginally ahead of a crucial week of central bank meetings.

GBPUSD Daily (2022.12.12)

Figure 1 (Source: IS Prime) GBPUSD daily: The recent upside momentum of the British Pound seems to subside against the greenback, however, any surprise rate hike announcement from either of the central bank may act as a potential catalyst for the movement of the pair.

Headliner to Review

  • U.S. PPI data rose slightly more than expected in November, at 0.3% v.s. 0.2% month-to-month.
  • The U.S. preliminary UoM consumer sentiment index also rose very modestly, bouncing from 56.9 in November to 59.1.

Headliner to Watch

  • U.S. CPI for November is due to release on Tuesday, projected to have risen 0.3% last month.

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Authors:
Kerry Man