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Wall Street higher as Red Sea incident lifts energy prices, BOJ in focus

Oil shipment

Macro Scenes:  

  • Wall Street higher and oil climbed: The US stock markets finished higher to kick off the week as the Fed-induced rally continued. While big techs remained robust, energy stocks were also boosted by rising oil and gas prices amid BP’s decision to pause shipments through the Red Sea due to Houthi attacks.
  • The inflation outlook gets blurry: Government bond yields rose slightly as the incident over the Red Sea can potentially put upside pressure on inflation again. The disruption at the transportation hub, Suez Canal, is restraining shipments between Europe and Asia, not only for energy but also for food and other goods.     
  • Crude oil on a four-day winning streak: The Red Sea incident sent oil prices higher for the fourth straight trading day, with the WTI futures up 1.7% to US$73 per barrel at a two-week high.
  • USD/JPY rebounded ahead of the BOJ decision: USD/JPY rose 84 points to just under 143 after hitting 141 last week. While the BOJ is not expected to change its policy stance, and hawkish tweaks could take the pair higher.
  • Asian markets to open mixed:ASX 200 futures were up 0.29%, the Hang Seng Index futures slipped 0.59%, and Nikkei 225 futures rose 0.1%.

Chart of the Day:

WTI (Cash), daily – WTI found support around US$67 per barrel as crude may have been oversold, as indicated by the RSI. The rebounding momentum could take it further higher to test the key resistance of the 200-day moving average of about US$78 per barrel. However, a breakdown below this level could sink WTI further.

Source: CMC Markets as of 19 December 2023

Company News:    

  • Apple (NDX: AAPL) fell 0.7% after the tech giant announced that it would pause sales on Apple Watches due to a patent dispute over their Blood Oxygen feature. This is caused by a disagreement between Apple and Masimo over intellectual property. Apple Watch is in the company’s third-largest segment, wearables, home, and accessories, generating US$9.3 billion in the September quarter.
  • Adobe (NDX: ADBE) and Figma called off a US$20 billion merger due to regulatory hurdles from the European Commission and the UK Competition and Markets Authority. Adobe will pay Figma a US$1 billion fee because of the breakup.

Today’s Agenda:

  • New Zealand Trade Balance for November
  • New Zealand Business Confidence for December
  • BOJ Policy Rate Decision

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