Morning Brew November 2 2022
Senior Relationship Manager
Summary: And Nothing Else Matters
Ahead of the FOMC rate decision tonight, higher than expected job openings in the US – a number normally not closely watched – spooked traders hoping for dovish tones. US 10 Year Yields rose to above 45 again and the USD Index gained while equities gave up gains. US Indexes closed lower, with the Dow Jones slipping 0.24%, the S&P 500 0.41% and the Nasdaq 0.89%.
The overall expectation among analysts polled by Reuters is that we are likely to retest the USD Highs again, only 32% expect the Dollar to decline from here.
There seems to be some expectation for an intervention out of the BoJ around the FOMC so the Yen is on the move.
Looking at the FOMC, the expectation for a 75 BPS hike stands at 99%, takin the implied rate to 3.8%. The peak rate at the moment is seen at 5% in May 23 and any shift there will have a significant impact on market sentiment.
The rate decision is at 19:00 tonight due to the daylight savings time difference and the Press conference by Jerome Powell at 19:30.
Uber up 12% on good results
Reports that China may be considering loosening Covid restrictions boosted sentiment
HKEX has issue a notice that HKEX, including Stock Connect and its derivatives market will be suspended at 13:55 local time and there is no After-Hours Trading Session.
Oil prices rose more than 1% on Wednesday after industry data showed a surprise drop in U.S. crude inventories
Germany is likely to decide on subsidies to industry and households to deal with high energy costs
Wednesday: EU PMI, DE unemployment, FOMC Rate decision
Thursday: UK PMI and Rate decision, EU Unemployment, US PMI,
Friday; EU PMI, US Nonfarm Payrolls
Wednesday: Novo Nordisk, GSK, Booking, Qualcom, CVS,
Thursday: ConocoPhillips Cigna Corp, Amgen, Paypal, Starbucks, EOG, DBS,
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.