2 Dec 2022

Last night, the three major U.S. stock indexes continued to fluctuate. Gold stocks and WSB concept stocks were the top gainers, while airline stocks and popular Chinese concept stocks mostly retreated. As of the close, the Dow fell 0.56%, the Nasdaq rose 0.13%, and the S&P fell 0.09%. The yield on the 10-year U.S. Treasury bond fell 2.743% to close at 3.51%, a difference of -73 basis points compared to the yield on the two-year Treasury bond. The fear index VIX fell 3.6%. Brent crude oil settled up 0.38%. Spot gold closed up 1.95% at $1,802.78 an ounce, the first time it has topped $1,800 an ounce since August 15. The U.S. dollar index remained high and closed at 104.71, its lowest level since August.

The core PCE price index in the United States recorded a monthly rate of 0.2% in October, the smallest increase since July 2022. It is expected to be 0.30% and the previous value is 0.50%. Expectations for (rate hikes) were lowered after the CPI announcement, and the PCE report showed that was no accident. Core PCE rose 0.2% m/m, "in line" with inflation of 2-3% ahead, although only this month fell to this level, and September rose 0.5% m/m, but this is a positive development.

In the United States, the number of initial jobless claims for the week ending November 26 was 225,000, compared with 235,000 expected and 240,000 previously. The number of U.S. jobless claims fell, while continuing claims rose to the highest level since February, suggesting that Americans who have lost their jobs are having a harder time finding new ones in a cooling labor market. Economists have been watching continuing claims more closely in recent weeks as an indicator of how hard it is for people to find work after losing their jobs. They are also thought to hint at an impending recession. Although the index has been rising for the past two months, it remains near record lows.

According to shipping intelligence company Kpler: OPEC output fell by 550,000 barrels per day in November to 28.15 million barrels per day. The Indian government ordered the reduction of crude oil windfall tax to 4,900 rupees per tonne, with the change set to take effect on December 2. Officials at the G7 price cap coalition said they were "very, very close" to an agreement on a $60/barrel price cap for Russian oil exports.

JPMorgan Chase lowered its 2023 EPS forecast for the S&P 500 from $225 to $205. It is expected that the Fed's hawkish policy will turn in the second half of next year, which will drive the stock market recovery; the S&P 500 is expected to rise by the end of 2023 With a target of 4,200, the S&P 500 is expected to retest the 2022 low in the first half of 2023. The US Senate voted to pass legislation (without the 7-day paid leave clause) to avert a freight rail strike.

Federal Reserve Governor Bowman said that headline inflation and core inflation have slowed slightly, but they are still unacceptably high, but the pace of interest rate hikes should still be slowed down. Fed Williams said that seeing forward-looking indicators that inflation is turning, it will take several years to reach the inflation target, but the Fed will need to continue to raise interest rates. The Fed's vice chairman for financial supervision, Barr, said the Fed may shift to a slower pace of rate hikes at its next meeting. Asked about the December Fed meeting, he said a 50 basis point hike was justified.

Apple rose 0.19%, increasing the research and development of the upcoming AR/VR headset; in October, the monthly market share in China reached 25%, the highest level in history; Apple lost another executive, and the 23-year veteran was Roblox poached.

Amazon fell 1.08%, Amazon US holiday sales hit a record high.

Tesla closed flat at 0% and recalled some domestic Model 3 and Model Y electric vehicles, involving 430,000 vehicles; Semi semi-trailer trucks are about to be delivered.

Salesforce fell 8.27%, Q3 revenue increased by 14% year-on-year; net profit fell 55% year-on-year, and the co-CEO announced his resignation.

Sources from: Investing.com; Reuters.com

Louis Yap

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