Daily Market Commentary 23rd November 2022

Asian markets suffered some concerns over the rise in Chinese covid restrictions, and the Chinese Central Bank left rates unchanged. Malaysian elections signaled further political upheaval, following marked and tectonic changes in Europe, with the ‘Right’ surging to be the biggest party in Malaysia. The move to the right, is in line with recent results in Italy and Sweden, and could signal a political revolution spreading around the globe reacting to the economic and social crises. European markets were flat, as CPI/PPI numbers are reflecting an easing in inflationary pressures, as energy costs dip (at least temporarily?). A huge cold snap is hitting the USA and Northern Europe, breaking record lows, which welcomes winter and puts further pressure on energy demand. US equity markets rallied and the US Dollar took a breather. The GBP regained 1.1850, while the Yen rallied to 141.00.

Australian RBA Governor had dire warnings for the Australian consumer, forecasting cost-of-living shocks, as inflation hits 8%. He warned of international pressures, supply chain issues and weather events. He did not mention his failure to address surging inflation, early in the piece, nor did he mention the monetary expansionism, funding record fiscal deficits and debt. NZ Trade deficit ballooned to over NZD $2 Billion for just October, as imports surged to more than NZD $8 Billion, for the October month. These numbers are shocking and extremely dangerous for a trade dependent economy. All eyes now focus on the RBNZ and their solutions to the many problems the NZ economy is facing. The Central Bank is expected to raise rates by 75 basis points, to address the immediate inflation crises, but the narrative and tone will be far more important. Markets will also be watching the latest Australian flash PMI data, set to be released today, for a guide to market sentiment . The softer reserve allowed the AUD to stabilise above 0.6600, while the NZD regained 0.6100. It could be a very big day’s trade on domestic markets today.