The three US benchmark indices gained for the second straight week amid Fed’s softened stance on rate hikes, with the tech-heavy index, Nasdaq outperforming both Dow and S&P 500, up 2% for the week. This suggests that the hardest-beaten growth stocks are taking the strongest monetary policy tailwind as a sharp decline in bond yields offered dip-buying opportunities in these high multiple companies.
On the other hand, China’s stock markets continued their swift rebound since November as the country finally starts its easing progress on Covid curbs, sparking optimism toward its fast economic recovery in the new year.
This week, we continue to monitor influential economic data around the globe, including the US PPI and China’s international trade data. RBA and BOC are to decide on future interest rates, which have recently started a slowdown in rate hikes on economic growth concerns.Click to enlarge the table
What are we watching?
- Both US dollar and bond yields fall: The major markets’ bellwether, including the USD and the US bond yields, continued their declines since mid-October, offering a further rebound in risk assets, such as equities and commodities.
- Gold on the surge: Precious metals, including gold and silver, have both established bottom reversal patterns due to a softened US dollar and a drop in the US bond yields. The rebounding trend in gold may continue as gold futures price consolidated above the 200-day moving average.
- China rebound: The China-related rebound in Chinese shares and the Yuan may not just stop here, with the Hang Seng Index testing its pivotal resistance on the long-term downtrend line, and the Yuan also appreciating toward the key psychological level of 7 against the USD.
- Crude oil faces dilemma outlooks: The oil market face both bullish and bearish factors that steer its directions as China's reopening improved the demand outlook while global recession concerns continue to pressure energy prices. OPEC + is most likely to keep its output tight enough to hold prices up in the face of the EU recessionary risks.
- Cryptocurrencies’ bottoms in check: Though leading cryptocurrencies stabilised above their recent lows, FTX’s rippling effects on the digital world may not fade off. With several major players filing bankruptcy following the FTX's fallout, the bottoms in cryptocurrencies are still in check.