Daily Market Commentary 19th January 2023

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European markets continued to post gains on equity markets, boosted by plunging inflation and an easing in the energy crises. US Share markets are headed in the opposite direction, down, despite falling energy prices. US Retail Sales plunged into negative territory, as did Industrial and Manufacturing Production, while the US Dollar remained soft. The EUR has held above 1.0800, while the GBP jumped to 1.2340, boosted by the second successive month of falls in inflation. A mild winter in Europe has curbed energy demands, allowing an easing to the energy crises, but supply remains a serious problem.

The Japanese Tankan report fell into negative territory, reflecting continued depression in business confidence, encouraging the Bank of Japan to leave interest rates at unprecedented historical lows. The Yen crashed to 131.50, following the BoJ news, but recovered in overnight trade. The weaker reserve allowed commodity currencies to post gains, with the NZD rising above 0.6500, while the AUD blew through 0.7000, but both suffered severe setbacks as US equity markets tumbled. US equities are starting to burst the enthusiasm and confidence bourses had been experiencing in the first couple of weeks of 2023, as reality bites hard.

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