On Friday (December 16), Beijing time, the U.S. dollar traded around 104.60; the U.S. dollar rose on Thursday, as investors worried that the Fed may continue to raise interest rates next year and lead to the risk of a recession; both the European Central Bank and the Bank of England raised interest rates by 50% on Thursday 3 basis points, sterling fell sharply against the dollar, as investors believed that the Bank of England was close to the end of the rate hike; gold prices fell, hitting the lowest level in about a week; Traders are concerned about the outlook for fuel demand.
Commodity closing situation:The settlement price of Brent crude oil futures fell 1.8% to $81.21 a barrel, the settlement price of U.S. crude oil futures fell 1.5% to $76.11 a barrel; the settlement price of U.S. gold futures fell 1.7% to $1787.80.
U.S. stocks closed:The Dow Jones Industrial Average fell 2.25% to 33202.22 points; the S&P 500 Index fell 2.49% to 3895.75 points; the Nasdaq Index fell 3.23% to 10810.53 points.
friday preview
Global Market Overview
U.S. stock indexes closed sharply lower on Thursday, with all three major indexes posting their biggest one-day percentage losses in weeks, as concerns grew that aggressive rate hikes by the Federal Reserve could lead to a recession.
The Fed raised interest rates by 50 basis points as expected on Thursday, slowing the pace of rate hikes after raising interest rates by 75 basis points in four consecutive meetings, but Fed Chairman Jerome Powell warned that recent signs of inflation were not enough to convince the central bank that the battle against inflation was over. win.
The Fed is expected to keep raising rates above 5% in 2023, a level not seen since the sharp economic downturn in 2007. Melissa Brown, global head of applied research at Qontigo, said: “It’s not just what they do, it’s what they say, and there’s no question that it looks like they’re still worried about inflation and that’s not going to be the end of the rate hikes. Really. It’s hard to foresee what will turn things around until we start to see more data, it may be corporate earnings reports, it may be the next inflation data, or the Fed statement next year. The good news is that next year is coming soon gone.”
The Bank of England and the European Central Bank also continued to signal on Thursday that the rate hike cycle will last for a longer period, adding to fears of a global recession. Most major central banks have adopted a strategy of raising interest rates to control inflation.
The S&P 500 and Nasdaq posted their biggest one-day percentage losses since Nov. 2, while the Dow posted its biggest one-day drop since Sept. 13. All three major indexes hit their lowest closing levels since Nov. 9.
Stocks have rallied since hitting lows for the year in mid-October, with signs of cooling inflation stoking optimism that the Federal Reserve’s drive to raise interest rates may be coming to an end. But the rally faded in December, with investors betting that mixed economic data and a steadfast Federal Reserve increased the chances of a recession.
Money market participants expect at least two quarter-point rate hikes in the U.S. next year, with borrowing costs peaking at about 4.9% by mid-year before falling to around 4.4% by the end of 2023.
Investors also assessed economic data on Thursday. Data showed U.S. retail sales fell more than expected in November and the number of Americans filing new claims for unemployment benefits also fell last week, pointing to a tight labor market. The labor market will need to loosen up to help ease inflation. All 11 major sectors of the S&P 500 were wiped out, with communications services and technology stocks falling nearly 4 percent, the worst performers.
precious metal
Gold prices fell as much as 2 percent on Thursday, hitting their lowest in about a week, while the dollar climbed after the Federal Reserve said it would raise interest rates further next year. Spot gold fell 1.6 percent to $1,777.88 an ounce, having fallen as low as $1,771.89 earlier.
Daniel Ghali, commodity strategist at TD Securities, said: “Despite the weakening growth outlook, the Fed has maintained its hawkish tone for the time being. If no interest rate cut is expected in the short term, it will be difficult for speculators to shift funds to gold.”
The Federal Reserve raised interest rates by 50 basis points on Thursday, as expected, but gold fell as much as 0.8% after Fed Chairman Jerome Powell said he expected rates to remain elevated for longer. “Inflation data for October and November showed a moderation in the pace of price increases, which is welcome, but a lot of evidence is needed to be convinced that inflation is on a sustained downward trajectory,” Powell said.
The European Central Bank and the Bank of England also raised their key interest rates by 50 basis points on Thursday and said more hikes were likely. Silver fell 3.4% to $23.07 an ounce, platinum fell 2.8% to $1,000.01 and palladium slumped 7.4% to $1,775.89.
Oil prices slid about 2 percent on Thursday as a stronger dollar and further interest rate hikes by major central banks around the world kept traders concerned about the outlook for fuel demand. Edward Moya, senior market analyst at data and analytics firm OANDA, said, “Crude oil prices traded lower as risk aversion rapidly increased as risks of a global recession increased following another round of strong policy tightening actions by several central banks. The recent rally in the oil market has lost momentum.”Federal Reserve Chairman Jerome Powell said on Thursday that interest rates will be raised further next year, even though the economy may slip into recession. On Thursday, the Bank of England and the European Central Bank also raised interest rates to fight inflation.
U.S. stocks fell sharply as the Federal Reserve’s guidance that policy tightening would last longer dashed hopes that the rate-hike cycle would soon end.
U.S. retail sales fell more than expected in November, but consumer spending remained supported by a tight labor market, with the number of Americans filing new claims for unemployment benefits falling last week by the most in five months.
foreign exchange
The U.S. dollar surged on Thursday, gaining strongly against the yen, sterling and commodity currencies, as investors worried that the Federal Reserve may continue to raise interest rates next year and lead to the risk of recession. The dollar’s appeal has increased amid a sharp sell-off in equities that has soured risk appetite.
Like the Fed, the European Central Bank raised interest rates for the fourth time in a row on Thursday, but by a smaller margin than at the previous two meetings, with the central bank promising further hikes and laying out plans to drain money from the financial system as a way to combat runaway conditions. part of the inflation effort. European Central Bank President Christine Lagarde said at a news conference that there is still an upward risk of inflation, which will require further tightening of policy.
The Bank of England raised its key interest rate by 50 basis points on Thursday and said further hikes were likely, but investors bet the central bank may be nearing the end of its drive to raise rates. Joe Manimbo, senior market analyst at Convera, said: “Both the Fed and the European Central Bank have given more hawkish interest rate guidance, which has exacerbated recession fears. The Fed’s boost to the dollar comes from the fact that the Fed has not completed raising interest rates and Chairman Powell It sets the bar high for a rate cut.”
The Fed expects borrowing costs to rise by at least another 75 basis points by the end of 2023. Policymakers forecast the federal funds target rate would hit 5.1 percent in 2023, slightly higher than investors had expected.
Powell also made a very hawkish statement, arguing that it would be appropriate to continue raising rates in order for policy to be sufficiently restrictive. In a research note, JPMorgan Asset Management raised the probability of a recession to 60% from an initial forecast of 50%.
“The Fed is raising rates at the fastest rate since 1980, the rest of the world is following suit, quantitative tightening is in its early stages, and inflation remains painfully high, assuming all It seems like a wild idea that this could all end in a soft landing.”
In afternoon trade, the dollar rose to a two-week high against the yen and was last up 1.6% at 137.665. The euro hit $1.0737 earlier after the European Central Bank’s rate decision, its highest since June 9, before retreating to $1.0629, down 0.5 percent on the day. The dollar index rose 0.9 percent to 104.53.
The dollar briefly pared gains after data showed U.S. retail sales fell more than expected in November, while the labor market remained tight, with initial jobless claims falling last week.
Sterling also fell sharply against the dollar, and was last down nearly 2 percent at $1.2183 as investors bet the Bank of England is nearing the end of rate hikes.
The Norwegian krone was also lower against the dollar after Norges Bank on Thursday raised its benchmark interest rate by 25 basis points to a 13-year high of 2.75%, as economists expected, and said it was “likely” to raise it again in the first quarter of 2023. interest.
The Swiss franc was also lower against the dollar after Swiss National Bank Chairman Michael Jordan said it was too early to declare a “warning lift” on high inflation, raising interest rates again on Thursday and signaling further hikes were still possible. The Swiss National Bank raised its policy rate by 50 basis points to 1%, its third hike this year, as it stepped up efforts to curb rising prices.
The Australian and New Zealand dollars fell sharply against the greenback. The Australian dollar fell 2.3% to $0.6702, while the New Zealand dollar slipped 1.8% to $0.6345.
market news
ICE may withdraw from EU gas market due to gas price cap measures
Intercontinental Exchange (ICE) has warned that the European Union may withdraw from the Dutch Title Transfer Facility (TTF) gas trading market if it goes ahead with its controversial plan to cap gas prices. Imposing the gas cap quickly would give customers no time to adapt and market operators to test the resilience of the system and the functioning of the risk management system, ICE said. Setting a price ceiling could force traders to immediately recalculate prices, risks and costs, putting more pressure on the market. It is therefore incumbent on ICE as the market operator to consider all options, including whether an efficient market in the Netherlands is still feasible.
French research institute expects inflation to peak in early 2023
On December 15, local time, according to the French National Institute of Statistics and Economics, due to high energy prices, France’s gross domestic product (GDP) will drop by 0.2% in the fourth quarter of 2022. Meanwhile, French inflation is set to hit a new high of 7% by early 2023. Consumer price increases will then moderate in the spring of 2023, with inflation expected to fall to 5.5% in June 2023. The research institute said that the energy crisis has seriously affected the economic activity of France. (CCTV)
Source: Lagarde proposes consecutive 50 basis point rate hikes to gain support
After facing backlash on Thursday, ECB President Christine Lagarde offered policymakers a 50-basis-point rate hike in a row to secure majority support, the sources said; if the inflation outlook fails to improve, it could mean The ECB will carry out three 50 basis point rate hikes.
EU leaders call on energy ministers to finalize gas price cap
Following the conclusions adopted by the European Council, EU leaders called for a meeting of EU energy ministers to finalize work on a gas price mechanism next Monday. “Considering the next storage filling and heating season”, the European Council stressed the importance of coordination; while also calling for a swift conclusion of discussions on renewable energies, energy efficiency and building-unit energy consumption.
WHO says on track to declare coronavirus no longer a global health emergency next year
World Health Organization Director-General Tedros Adhanom Ghebreyesus said on the 14th that it is expected that the new crown epidemic will no longer constitute a global health emergency sometime next year. Tan Desai announced at a press conference that day that the WHO Emergency Committee will meet in January 2023 to discuss the criteria for judging that the new crown epidemic no longer constitutes an emergency. On January 30, 2020, WHO announced that the new crown epidemic constituted a “public health emergency of international concern”, which is the highest level of alert that WHO can issue in accordance with the International Health Regulations. Tan Desai also said that the new crown virus will not disappear. COVID-19 is here to stay, he said, and all countries need to learn to manage it alongside other respiratory illnesses, including influenza and those caused by respiratory syncytial virus, which are also currently circulating intensively in many countries.
UK finance minister appears to ease pressure on central bank
As the Bank of England raised interest rates for the ninth time, British finance minister Hunt appeared to ease the pressure on the central bank. Bank of England Governor Bailey said in a letter with Hunt that the majority of the Bank’s Monetary Policy Committee believes that if the economy develops as predicted in the November Monetary Policy Report, further interest rate hikes may be needed. Hunt’s first exchange of letters with the governor as chancellor appeared to be aimed at easing pressure on the Bank of England to raise interest rates, with his predecessor urging the central bank to take “forceful” action to tackle rising inflation. Hunt expressed his understanding that the central bank will continue to take necessary actions.
Shanghai Data Exchange: It is estimated that the cumulative number of data products listed in the whole year will exceed 800
The third 1024 International Asset Management Technology Developer Conference – Data Asset Pricing and Asset Management Forum was held in Shanghai. “Data assetization is a key engine for the release of the value of data elements.” Wei Zhilin, deputy general manager of the Shanghai Data Exchange, introduced that more than 800 data products will be listed this year, most of which belong to enterprise data, accounting for 38%. Financial data products accounted for about 12%.
Wang Chunying, Deputy Director and Press Spokesperson of the State Administration of Foreign Exchange: my country’s foreign exchange market operated more smoothly in November, and domestic foreign exchange supply and demand remained basically balanced
In November, the bank’s foreign exchange settlement and sales deficit narrowed by 47% month-on-month. Considering other supply and demand factors in the foreign exchange market, domestic foreign exchange supply and demand have become more balanced. From the perspective of main channels, the net inflow of cross-border funds under trade in goods in November was 34.3 billion US dollars, an increase of 4% from the previous month; the net inflow of foreign direct investment capital in China increased rapidly from the previous month, and foreign investment in the domestic securities market showed a net increase in holdings. It is expected that cross-border funds such as trade in goods and foreign direct investment will continue to flow in steadily in the future, and will continue to play a fundamental role in stabilizing the foreign exchange market.
Recently, the international economic and financial situation and the monetary policy expectations of major developed economies have undergone marginal changes. The exchange rate of the US dollar has fallen from its high level, and the related spillover impact has eased. With my country better coordinating epidemic prevention and control and economic and social development, a package of economic stabilization policies and subsequent measures have been fully implemented and effective, and the economy is expected to continue to stabilize and increase, which will further boost market expectations and confidence. At the same time, my country’s balance of payments structure is stable and the internal resilience of the foreign exchange market is enhanced, which will also help my country’s foreign exchange market to maintain a stable operation. (PBOC)