Market Drivers – US Session 11/11/2022

Mohamed Abdelhamid 12 November, 2022 3:23 am Commodities, Market Update

Global stocks rallied on Friday for a second day on hopes cooler US inflation would lead to less aggressive interest rate hikes by the Federal Reserve, an outlook that pushed the dollar to its biggest two-day drop in 13 years.

Economic Data

MSCI’s all-country world index rose 1.91%, lifting it to its highest levels since mid-September, as the market repriced expectations for the Fed’s target rate to peak below 5%, or about 20 basis points lower than recent highs. The MSCI emerging markets index jumped 5.19%, in its biggest single-day surge since March.

Consumer confidence in the US deteriorated in early November. US Dollar Index stays deep in negative territory below 107.00.

Consumer sentiment in the US weakened in early November with the University of Michigan’s (UoM) Consumer Confidence Index falling to 54.7 (flash) from 59.9 in October. This reading came in below the market expectation of 59.5.

Other Developments

Crypto exchange FTX filed for US bankruptcy and founder Sam Bankman-Fried stepped down as chief executive, while oil prices jumped after health authorities in top global crude importer China eased some of the country’s heavy COVID-19 curbs.

Gold prices rose to a near three-month high and headed to at least their best week since July 2020 after Thursday’s better-than-expected report on US consumer prices bolstered bets that the Fed would be less hawkish about hiking rates.

Market bets that the Fed will raise rates by 50 basis points at its next meeting in December increased, while the probability of a 75 basis points hike decreased.

In Europe, euro zone yields firmed and the EU’s executive European Commission said it sees a bigger euro zone slowdown in 2023, though only slightly affecting jobs or public finances.

Britain’s economy shrank in the three months to September at the start of what is likely to be a lengthy recession.

The yield on benchmark US 10-year paper slipped below 4% on Thursday. US bond markets are closed on Friday for Veterans Day.

In China, health authorities on Friday eased the country’s heavy COVID curbs, including shortening by two days the quarantine times for close contacts of cases and inbound travelers. The country’s blue-chip CSI 300 index rose 2.8% and the Hang Seng Index surged 7.7%.

Oil prices rose after the US inflation data but were on track for weekly declines of more than 4% due to COVID-related worries in China. US crude futures settled up $2.49 at $88.96 a barrel, while Brent rose $2.32 to settle at $95.99.

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