Senior Relationship Manager
Summary: Nervousness rises and stocks sell off
Good Morning
Nervousness is picking up with the focus on next weeks US rate decision, rising energy costs and tension around Ukraine while Omicron continues to rage.
U.S. Treasury yields jumped to two-year highs and two-year yields breached 1% and the 10 year is near 1.9%
US shares were under pressure yesterday with the Dow losing 1.51%, the S&P 1.84%, and the Nasdaq 2.6%. Over night the pressure remains and most Indexes fall further 0.5%.
Nasdaq ends down 9.7% from Nov 19 record, close to a 10% correction for the first time since early 2021, Reuters reports that a survey by BofA showed fund managers had cut their overweight positions to their lowest levels since December 2008 and a second by Deutsche Bank showed that an overwhelming majority believed U.S. technology shares are in a bubble territory. Shares in Goldman Sachs Group fell as 8% yesterday after missing expectations, Big tech lost between 1.8% and 4%
EURUSD fell from 1.1450 to 1.1330 and GBPUSD to 1.3600. The UK releases Inflation data at 8:00 this morning, expected at the almost a decade of 5.2% and Prime Minister Boris Johnson is on the brink of facing a leadership challenge, according to reports. 1.3550 is the next decent support ahead of the big figure at 1.35.
Silver jumped by 2% yesterday, Gold did not follow and we are currently trading at 1813 and 23.50. The Russian Ruble was under pressure and stocks fell on tensions over the Ukraine. German Foreign Minister Baerbock visited Moscow yesterday and the US Secretary of State is expected un Ukraine today.
Bitcoin remains near 42000
Oil prices hit their highest since 2014 an a pipeline outage near Turkey and worries about political tensions.
Germany reports more than 100k for the first time ever, France and Italy also report numbers at record levels.
Microsoft Corp is buying "Call of Duty" maker Activision Blizzard for $68.7 billion in the biggest gaming industry deal in history
The Biden administration is reviewing Alibaba's cloud business to determine whether it poses a risk to U.S. national security, stocks lost 2.2%.
The Swiss National Bank does currently not plan to issue a digital currency.
Key Events today are the UK and German CPI at 8:00, and the Canadian one at 14:30 and earnings by Bank of America, Morgan Stanley, Procter and Gamble, Alcoa, United and US Bancorp.
Expiries
Physically Settled Futures:
CLG2 will expire 20th January 2022 at 16:00 GMT.
ECOG2 will expire 23th January 2022 at 10:00 GMT.
NGG2G2 will expire 27th January 2022 at 10:00 GMT.
GCG2, MGCG2 will expire 28th January 2022 at 16:00 GMT.
Expiring CFDs:
NATGASUSFEB22 will expire 25th January 2022 at 16:00 GMT.
INDIA50JAN22 & TAIWAN95JAN22 will expire 27th January 2022 at 02:00 GMT.
GASOLINEUSFEB22, GOLDFEB22 & HEATINGOILFEB22 will expire 27th January 2022 at 16:00 GMT.
CHINA50JAN22, HK50JAN22 & SINGAPOREJAN22 will expire 28th January 2022 at 02:00 GMT.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.