US equity markets rounded off the last day of trading by closing lower, ending the worst year for markets in a decade.
United States
Chief of Market Strategy at B. Riley Wealth Art Hogan commented on the performance of the markets, “The good news is that we will soon put the year in the rearview mirror. The bad news is that 2023 could be a bumpy ride, at least for the first few months. Weaker economic trends will likely form heading into 2023 as the Fed battles inflation, but a mild recession may help set stocks up for a better second half of the year.”
The S&P 500 closed -0.25% lower on Friday paring larger losses for the session, declining 20% in 2022. The energy sector was the outlier closing 0.76% higher, while all others closed lower. Real estate declined -1%, utilities -0.96%, materials -0.75%. The Dow declined by -0.22%. the Nasdaq -0.11% and the Russell 2000 -0.25%. In US treasury bonds, the yield on the 2-year bond was 4.42%, the 10-year bond yield was 3.87% and the 30-year bond yield was 3.96%, while the VIX index rose to 21.67. Meanwhile, economic data in the US revealed the number of people who continue to be unemployed rose by 41k to 1,710k in the last week of the year compared to the prior week, higher than forecasts of 1,686k while initial claims ending December 24th were in line with estimates of 225k. Ahead for the week, in focus is the release of ISM manufacturing PMI for December overnight Wednesday along with the Federal Reserve’s latest policy minutes. Additionally, the December non-farm payroll figures are due to be released on Friday expected to show 200k jobs were added over the month with the unemployment rate remaining stable at 3.7%.
Europe
The Euro Stoxx 600 index rose 0.96% on Monday to start the year on a positive note with all sectors positive. The CAC also rose 1.87% along with the DAX 1.05% while the FTSE was closed for a public holiday. The UK announced travelers from China to test for COVID-19 upon arrival, adding on to global speculation of the Chinese economy slowing down due to their pandemic lockdown policies. In focus this week is German unemployment data for December tonight as well as Eurozone inflation for December overnight Thursday expected to show core inflation rose 5% over the year.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
The ASX is expected to open higher this morning with ASX200 futures up 31 points or 0.45% to 6,992 although futures finished trading prior to the US session which may instead see a relatively flat open. Stocks rallied on Friday, with the ASX 200 closing 0.27% higher at 7038.7. The index was boosted by information technology rising 1.5% and energy gaining 0.89%, while the biggest laggards were real estate down by -0.69% and materials -0.12%. Brainchip was the biggest winner rising 12% while Link plummeted -40%. Woodside Energy gained 0.9% while BHP Group rose 0.4%.
Commodities
Manufacturing data out of China revealed a decline in manufacturing output. In a statement for the new year, President Xi commented on the state of the economy, “The Chinese economy enjoys great resilience, tremendous potential and great vitality”. Oil prices were up with WTI and Brent jumping 2.37% and 2.94% to $80.26 and $85.91 respectively. In precious metals, spot gold gained 0.50% to $1,824.02 and spot silver 0.25% to $23.95. Industrial metals were mixed with copper falling 0.35% to $381, nickel -0.66% to $29,901, SGX Iron Ore, rose 1.78% to $117.15. The price of bitcoin fell by -64% in 2022 to end the year at $16,604.
Economic Data
- German Unemployment (MoM Dec) 19:55
- German Inflation (YoY Dec) 00:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
