Stock Market Day Guide (December 18)


AGI – Markets are off to a calm and mixed start to the new week, awaiting the December 19th Boj meeting and doing quite well after last week’s close. “This week – comments Vincenzo Bova, chief analyst at MPS – there may be a small downward correction in the share price.”

The market is “becoming less liquid, with the holidays approaching and profit-taking after seven-eighths of consecutive increases is possible, although I don’t foresee any major shocks. Further, for bonds, I expect a slight increase in Treasury yields.” Now those 10 years have fallen below 4%. I think it will come back above 4% again at the beginning of the year, but not immediately, it will do so gradually as the flow of emissions resumes.”

Except for the Fights in the coming days a number of ECB and Fed bankers are expected to intervene and the most important macro data to watch will be PCE data, the Fed’s preferred price index, and UK inflation on Wednesday and Japan inflation data on Friday, all expected to slow. The Bank of Japan meets tomorrow and is expected to keep monetary policy unchanged, although traders will be anticipating any tightening for 2024.

The BOJ is the last major central bank to meet this year, after the Fed, which surprised markets by talking about a possible rate cut next year, and the ECB and BoE, which were more hawkish and did not comment on next year. cuts. Additionally, last Friday, New York Fed President John Williams tempered the markets’ enthusiasm a bit, assuring that “we’re not really talking about rate cuts at this point” at the Federal Reserve. His words came as traders became more optimistic after Jerome Powell’s words.

“We now expect three consecutive cuts of 25 basis points in March, May and June, followed by a slower pace of one cut per quarter until we reach a final rate of 3.25-3.5%, 25 basis points below originally expected,” Goldman Sachs analysts wrote in a note.

“That means – analysts add – five cuts in 2024 and three more cuts in 2025.” Meanwhile, in Asia today, the Tokyo Stock Exchange is off by more than half a percentage point and is in for a fight. “Since the last meeting in October, Japanese 10-year yields have fallen and only appreciated, giving Boja little incentive to revise policy at this stage,” comments Barclays economist Christian Keller.

Seoul is slightly higher and shows no concern about North Korea launching a ballistic missile off its east coast. China’s stock markets are falling, with Hong Kong falling nearly 1% and Shanghai losing around 0.3%. Wall Street futures are rising and so are those in Europewhile the German Ifo index is expected in the eurozone today, on business confidence and tomorrow the final data on eurozone inflation as well as some confidence indices in France (Thursday) and Italy (Friday).

On the central bank front, the ECB’s conference on fiscal policy begins today, which ends tomorrow, and will be addressed by Chief Economist Philip Lane and Germany’s Isabel Schnabel. More broadly, several ECB and Fed bankers will speak during the week, including Atlanta Fed President Raphael Bostic, who will discuss the economic outlook.

On the currency front, the dollar is strengthening slightly in Asia today, returning above 1.09 against the euro and above 142 against the yen after last week’s weakness. Gold is trading higher at $2,022 an ounce, though below its recent all-time high of $2,135.40. Oil prices are struggling to stabilize after hitting a five-month low last week amid uncertainty over OPEC+ output cuts. In Asia, WTI and Brent futures are both rising above $70 a barrel.

Reproduction is expressly reserved © Agi 2023


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