22/02/2023
Today’s Announcements & News
AU Westpac leading index January at 10.30am AEDT, Wage price index fourth quarter and Construction work done fourth quarter at 11.30am AEDT
NZ trade balance January at 8.45am AEDT, RBNZ policy decision at 12pm AEDT
Eurozone CPI January final at 6pm AEDT
Asia
The potential for higher and more prolonged interest rates has led to a sell-off in the Australian stock market, which is expected to follow Wall Street’s decline. Midday trading saw consumer discretionary stocks lead a drop in all 11 S&P 500 industry sectors. ASX futures are down by 45 points, or 0.62 percent, to 7214 around 8:30 am AEDT.
Meanwhile, the Reserve Bank of New Zealand is expected to make a decision on interest rates today, and it is anticipated that the bank will moderate its rate hike to a 50 bps increase, given the cooling inflation expectations. At the same time, Australian wage growth data is also due to be released, and if earnings increase again, it could exacerbate the country’s inflationary pressures, prompting the RBA to raise rates. These underlying economic factors could further impact the AUD/NZD cross-currency pairs.
United States
The US Supreme Court recently heard arguments in a significant case that could potentially weaken the legal protection that internet companies currently have against various lawsuits. This particular dispute involves YouTube and the family of an American student who was killed in a 2015 terrorist attack in Paris carried out by Islamist militants.
In another development, the sales of pre-owned homes in the US unexpectedly declined for the 12th consecutive month in January. This continues a record decline and highlights how high mortgage rates are continuing to hinder the housing market.
Furthermore, both the US 10-year and 2-year bond yields rose by more than 10 basis points, reaching their highest levels in over three months at 3.95% and 3.72%, respectively. This rise pushed up the US dollar and put pressure on commodity markets. The Volatility Index (VIX), which is used to measure investor sentiment, rose by 8% to 23, indicating a negative outlook among investors.
Commodities
According to a report by Reuters, the price of permits on the European Union’s carbon market reached 100 euros per tonne on Tuesday, marking the first time this has occurred. This milestone signifies the increased costs that factories and power plants must bear when they engage in polluting activities.
The EU Allowance (EUA) contract, which serves as the benchmark in the European Union’s Emissions Trading System (ETS), rose to a high of 101.25 euros per tonne and was trading at 100.49 euros per tonne as of 1549 GMT. The ETS compels manufacturers, power companies, and airlines to pay for each tonne of carbon dioxide they emit, as part of the bloc’s efforts to achieve its climate targets. EUAs serve as the primary currency within this system.
Gold futures have experienced a decline due to the strengthening of the US dollar and increased rates. As a result, gold prices fell by over 6% from the recent high earlier this month. However, it appears to have stabilized at a near-term support level of around 1,827.
Meanwhile, crude oil prices declined again following a brief rebound, as economic concerns outweighed China’s optimism regarding its reopening. The immediate reason for this selloff appears to be a shift towards risk-off sentiment. However, oil prices have remained relatively resilient throughout February, as undersupply concerns continue to be a significant bullish factor.
The above analysis is only for the views of market researchers and is for reference only and is not regarded as a specific investment suggestion.
