Powell reiterates Hawkishness, First case of Omicron confirmed in US – Stocks tank again under key technical levels, Yields slip again, USD mixed. Erdogan sacks Fin Min – TRY new all-time lows, Apple iPhone 13 demand weakens, GSK anti-viral drug remains active vs. Omicron
- USD (USDIndex 96.08) rotates through 96.00 due to lack of firm data regarding Omicron, markets reamin on edge. Stocks fell significantly with USA100 down over -1.83% USA500 -1.18% (-54pts) 4513 (opened the day +1.1%) and broke 50-day MA first time since October 14 & USA30 off 461 pts and under 200-day MA first time since July 13 2020.
- US Yields 10-year rates were down over 7 bps to 1.40% before recovering to 1.434% now.
- Asian Markets – Asian markets have traded mixed. Topix and Nikkei are down -0.5% and -0.7% respectively. The ASX lost -0.1%, but Hang Seng and CSI 300 are up 0.2% and 0.3%. Shenzen and Shanghai Comp are slightly lower though as officials seem eager to close a loophole used by tech firms to list abroad.
- USOil – continues under pressure, down to $64.50 yesterday – recovered to test $66.35 today – awaiting OPEC+ meeting later.
- Gold Up day yesterday but remains pressured testing $1775 now
- FX markets – Yen rallied USDJPY dipped to 112.70, back to 113.31 now, EURUSD now 1.1312 & Cable pressured 1.3192 low yesterday – 1.3275 now.
European Open – The 10-year Bund future is up 30 ticks, outperforming versus Treasuries, which remain pressured by the hawkish turn at the Fed. The 10-year Treasury yield has lifted 3.0 bp overnight, but at 1.43% remains far below the levels seen ahead of the Omicron scare, which the WHO seemed to try and play down somewhat. DAX and FTSE 100 down -1.1% and -0.9% respectively in catch up trade with the slide on Wall Street yesterday, while US futures have found a footing and are posting gains of around 0.6-0.8%.
Today – EZ Unemployment Rate, US Weekly Claims, Fed’s Bostic, Quarles, Daly, ECB’s Panetta, JMMC/OPEC+ meetings.
Biggest FX Mover @ (07:30 GMT) CADJPY (+0.77%) Risk-sensitive currencies remain volatile, from a slide to 87.85 yesterday, today a rally to 88.60. Currently MAs aligned higher, MACD signal line & histogram under 0 but rising, RSI 56 & rising, OB. H1 ATR 0.188, Daily 0.98.
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Stuart Cowell
Head Market Analyst
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