Daily Market Commentary 17th January 2023

Markets continued the positive start to the year in Europe, while US markets celebrated the MLK holiday. There was little in the way of data releases overnight, although the WEF kicked off in Davos, with all of the world elites gathering to discuss climate change and digitisation. European equity markets continued to post gains, boosted by the precipitous fall in energy prices, perhaps due to demand and a mild Northern Hemisphere winter? Bond Yields remained low and the US Dollar soft, with the EUR holding above 1.0800, while the GBP trades around 1.2200.

Asian markets look ahead, with China re-opening and a slew of Chinese economic data releases before the Chinese New Year. Japanese PPI numbers edged higher (10.2%p.a.), which confirms the incremental rises in inflation, that the Bank of Japan is beginning to notice. Australian Building Permits plunged 9% for the year, reflecting the dire state of the housing sector, one of the major reasons for the RBA’s inaction on monetary policy. The AUD trades around 0.6950, while the NZD holds above 0.6350, ahead of key Business Confidence data, set to be released later today. Markets will be watching key Chinese data, in the form of GDP, Retail Sales and Industrial Production.