Daily Market Commentary 1st December 2022

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Chinese ‘covid’-crises’ may be waning, as authorities forecast infection rates beginning to decline and restrictions may ease. This was a positive for markets as fears had spiked over supply-chain disruptions and weaker demand. This boosted Asian markets and lent some support to commodity currencies. The AUD regained 0.6700, while the NZD jumped back above 0.6200, despite a further catastrophic plunge in Business Confidence numbers. The news was positive leading into European markets, which opened strongly, further boosted by weaker inflation data, hinting inflation may have peaked? This lead to speculation that the ECB would be less aggressive on future rate hikes. The EUR drifted back to trade 1.0300, while the GBP fell back to 1.1940, not enthused by the interest rate differential prospects.

The US markets turned negative however, not enamoured with the latest labour market data. The ADP showed private sector jobs growth of only 127,000, much lower than the expected growth, of over 200,000. The Chicago PMI was heavily negative, while Pending Homes Sales collapsed, contracting by 37%. GDP estimates were higher, while markets await the Fed Chair’s address to the Brooking’s Institute. The Fed’s Beige Book is also set for release, which will clue analysts into the current view of economic conditions, through the eyes of the Federal Reserve.

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