☆ 23:00 U.S. ISM Manufacturing PMI for December
☆The next day 03:00 the Federal Reserve releases the minutes of the December monetary policy meeting
☆The next day 05:30 U.S. API crude oil inventories for the week ending Dec. 30
Market Overview
Review of Global Market Trend
On Tuesday, January 3, U.S. economic data worsened to cloud the outlook, market risk aversion resurfaced, the dollar index once rose to 104.86, closing up 1% at 104.7; 10-year U.S. bond yields fell to more than 10 basis points, falling from near 3.879% to 3.752% during the day; 2-year U.S. bond yields fell, falling as low as 4.345%, as of the close of U.S. stocks, trading near 4.3906%.
U.S. bond yields down boosted gold prices, spot gold extended the rally, once approaching the $ 1850 mark, refreshing more than six months since mid-June last year, closing up 0.89% at $ 1838.98 per ounce; spot silver fell back to a high, closing up 0.29% at $ 23.99 per ounce.
Crude oil suffered heavy losses as the global economic outlook and a stronger U.S. dollar also increased the downward pressure on oil prices. WTIcrude oil once fell more than 4%, falling below the $77 mark before rebounding slightly; by the close of trading, the decline narrowed to 4.03% at $77.18 perbarrel; Brent crude oil fell below $82 before rebounding slightly, closing down 4.22% at $82.34 per barrel. European natural gas fell nearly 3%late in the session, falling as deep as 8%and pushing down to the round figure of 70 euros per megawatt-hour as warm winter gas in the northern hemisphere weakened heating demand. U.S. natural gas futures plunged 9%in the first trading day of 2023, falling below $4 for the first time since last February. The reason is that warmer weather is expected to reduce demand for heating fuels while production recovers quickly from winter storms.
U.S. stocks opened lower on the first trading day of the New Year, the Dow closed basically flat, the Nasdaq, which rose more than 1% at the beginning of the session, closed down 0.76%, and the S&P 500 fell 0.41%. Tesla plunged 12.2%, continuing to set a new low in August of the previous year; Apple's market value fell below $2 trillion for the first time in 18 months, closing down 3.6%. Some Chinese stocks bucked the trend and closed higher, with the Nasdaq China Golden Dragon Index closing up 3.7% and Beili Beili jumping 14%, with its market cap back among the $10 billion. Futu and Upward Rongke extended their declines, both down more than 6%.
European stocks closed up collectively, Germany's DAX30 index closed up 0.8%, the U.K. FTSE 100 index closed up 1.42%, France's CAC40 index closed up 0.44%, the European Stoxx 50 index closed up down 0.7%, Spain's IBEX35 index closed up 0.33%, Italy's FTSE MIB index closed up 1.16%.
Market Focus
1. Japan and five other countries formally became non-permanent members of the Security Council.
2. The Baltic Dry Index recorded the biggest one-day drop in nearly 40 years as demand for all ship traffic weakened.
3. Greenspan: The most likely outcome for the U.S. is a recession, but the Fed will not cut interest rates as a result.
4. OPEC crude oil production rose to 29.14 million barrels per day in December, survey data showed.
5. ECB Governing Council member Kazaks: expects significant rate hikes in the next two meetings.
6. Atlanta Fed GDPNow model: U.S. Q4 economic growth rate revised upward to 3.9%.
7. South Korea Ministry of Finance: South Korea will provide tax breaks of up to 35% for domestic investment in semiconductors and other key industries.
8. Republican McCarthy hit a snag within his party as the U.S. House of Representatives failed to elect a speaker in the first round of voting for the first time since 1923. After three rounds of voting, the House agreed to adjourn until noon on Wednesday.
9. The U.S. Markit Manufacturing PMI recorded a final reading of 46.2 in December and the U.K. Manufacturing PMI recorded 45.3 in December, both new lows since May of the previous year; U.S. natural gas futures prices fell below $4 for the first time since February last year.
Geopolitical Situation
1. Russian Defense Ministry: the number of Russian troops killed in Makhiavka, Donetsk region rose to 89, the main reason for this “tragedy” was the frequent use of cell phones despite the ban, exposing the location of Russian troops.
2. the Russian Defense Ministry: destroyed several “Haimas” systems, eliminating more than 200 Ukrainian soldiers and mercenaries.
3. Ukrainian troops repelled Russian attacks near 13 settlements in Donetsk and Luhansk, the Ukrainian side said.
4. Ukraine's national power grid company said that an emergency blackout is still in effect in the capital city of Kiev.
5. Putin plans to speak with Turkish President Recep Tayyip Erdogan on Jan. 4, Interfax reported, citing the Kremlin.
6. The State Department said the new U.S. ambassador to Russia will start working in Moscow in the coming days.
7. Russian Foreign Ministry: Japan openly carries out unfriendly policy towards Russia and cannot sign peace treaty with Japan under existing conditions; Russian Deputy Foreign Minister warns: Russia will take appropriate countermeasures to stop Japanese military threats.
8. British Prime Minister Sunak told Zelensky that Ukraine can count on the fact that the UK will continue to support Ukraine in the long term.
9. The Netherlands has provided 987 million euros in military aid to Ukrainesince February 24 last year.
Institutional Perspective
1. Goldman Sachs：We see Brent crude oil prices between $80 per barrel and $100 per barrel as a realistic range. Oil prices are expected to strengthen further as demand recovers and the market takes advantage of OPEC's idle capacity. We remain confident that oil prices will strengthen from current levels.
2. SOCIETE GENERALE：German government bond yields are expected to rise in the first quarter.
Societe Generale interest rate analysts said in a report that investors should consider continuing to short German government bonds. They noted that central banks will raise rates further and yields are expected to continue to rise, “The sharp rate hikes are over, but we are far from a monetary policy turn.” Given the stronger-than-expected supply of government bonds and the firm stance on central bank rate hikes, Societe Generale analysts remain bearish on the bond market. They expect the 10-year German bund yield to approach the 3.00% level in the first quarter of this year, which is their upside expectation for the 2023 outlook.
3. MUFG：The 10-year fixed mortgage rate will increase to 3.7%from 3.52%.
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