23 Nov

The RBNZ raised the interest rate by 0.75% and is not going to stop.

November 23, 2022

By JustMarkets

The US indices returned to growth on Tuesday, helped by a series of positive quarterly results from retailers. As the stock market closed, the Dow Jones Index (US30) increased by 1.18%, and the S&P 500 Index (US500) added 1.36%. The NASDAQ Technology Index (US100) gained 1.36% yesterday.

To summarize the comments from Fed officials over the past two weeks, the Central Bank is hinting at a slowdown in the pace of rate hikes at its December meeting, but the peak of rate hikes will likely be higher than previously expected. The prospect of a longer rate hike has investors worried that the Fed will not avoid a soft landing and that the economy will face a recession.

According to Statistics Canada, retail sales fell by 0.5% in September. Retail sales fell by 1% in the third quarter, the first quarterly decline since 2020. Lower-income Canadians will be hit the hardest as debt-service costs rise and purchasing power declines. According to analysts, the pain of the coming recession will not be shared equally between Canadian businesses and households. The manufacturing sector is likely to be among the first to suffer.

The OECD’s Global Economic Outlook report was also released Tuesday. According to the report, the global economy will slow down in the coming year due to the energy market shock caused by the Russian invasion of Ukraine and on the back of excessive inflation, low consumer confidence, and global risks. Nevertheless, the OECD believes the world will avoid a recession and predicts global economic growth of 3.1% in 2022, 2.2% in 2023, and 2.7% in 2024.

Stock markets in Europe were mostly up Tuesday. Germany’s DAX (DE30) gained 0.29%, France’s CAC 40 (FR40) added 0.35%, Spain’s IBEX 35 (ES35) increased by 1.67%, and the British FTSE 100 (UK100) closed up by 1.03% yesterday.

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The European Union softened its latest sanctions proposal on price caps on oil exports from Russia, postponing its full implementation. According to the document, the bloc proposed adding a 45-day transition period to the imposition of the cap. Allies had previously discussed setting an upper limit between $40 and $60 a barrel – a range from prewar production costs in Russia – but analysts said the price range would probably be a bit higher. The EU is also proposing a 90-day transition period in case of any future changes in the price cap level. Most G-7 countries and the EU plan to stop importing Russian oil this year. Petroleum product regulations, including the oil price cap, will take effect in February.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.61% on Tuesday, Hong Kong’s Hang Seng (HK50) decreased by 1.31%, while Australia’s S&P/ASX 200 (AU200) ended the day up by 0.59%.

The Central Bank of New Zealand raised interest rates by a record 75 basis points and hinted at the further tightening of policy. The RBNZ forecasts show that OCR will peak at 5.5% in the third quarter of 2023, up from the previous peak of 4.1%. The bank forecasts that the economy will contract for four consecutive quarters starting in the second quarter of next year, with inflation starting to decline in the first quarter of 2023.

Concerns are growing in Japan that supply and demand for electricity will be strained this winter. The Japanese government is asking households and companies across the country to start saving electricity from December 1 through March 31. Although no quantitative figures have been set, this is the first time in seven years that people are being asked to save electricity during winter.

S&P 500 (F) (US500) 4,003.58 +53.64 (+1.36%)

Dow Jones (US30) 34,098.10 +397.82 (+1.18%)

DAX (DE40) 14,422.35 +42.42 (+0.29%)

FTSE 100 (UK100) 7,452.84 +75.99  (+1.03%)

USD Index 107.17 0.67 (-0.62%)

Important events for today:
  • – Australia Manufacturing PMI (m/m) at 00:00 (GMT+3);
  • – Australia Services PMI (m/m) at 00:00 (GMT+3);
  • – New Zealand RBNZ Interest Rate Decision at 03:00 (GMT+3);
  • – New Zealand RBNZ Monetary Policy Statement at 03:00 (GMT+3);
  • – New Zealand RBNZ Press Conference at 04:00 (GMT+3);
  • – Singapore Consumer Price Index (m/m) at 07:00 (GMT+3);
  • – Eurozone France Manufacturing PMI (m/m) at 10:15 (GMT+3);
  • – Eurozone France Services PMI (m/m) at 10:15 (GMT+3);
  • – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
  • – US Services PMI (m/m) at 16:45 (GMT+3);
  • – US New Home Sales (m/m) at 17:00 (GMT+3);
  • – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US Natural Gas Storage (w/w) at 19:00 (GMT+3);
  • – US FOMC Meeting Minutes at 21:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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