Market Overview:
The global markets faced substantial headwinds on November 29, 2022, influenced by a mix of geopolitical tensions, economic policy updates, and commodity price shifts. Uncertainty pervaded, as ongoing protests in China over stringent COVID-19 restrictions coupled with hawkish stances from U.S. Federal Reserve officials added layers of concern.

U.S. Bond Market Stability:
The U.S. 10-year Treasury yield held steady at 3.68 percent. Despite the calm in the bond market, Federal Reserve officials’ signals towards further rate hikes cast a shadow over investor sentiment. St. Louis Fed President James Bullard and New York Fed President John Williams emphasized the need for aggressive monetary policy to manage U.S. inflation, projecting that restrictive policies might extend through 2023.

Equity Market Response:
Wall Street responded with a downturn across all major indices, reflecting the market’s sensitivity to the tightening monetary environment and international unrest. The S&P 500 saw declines across all sectors, particularly real estate, which led the downturn with significant losses.

Commodity Market Fluctuations:
In commodities, iron ore prices dipped slightly, with S&P Global Commodity Insights pointing to weak market confidence and uncertain demand forecasts. Portside liquidity remained stable, but the varying strategies of Chinese steel mills regarding inventory levels ahead of year-end contributed to market volatility.

Cryptocurrency and Currency Markets:
The cryptocurrency market was not immune to the pressures, with Bitcoin falling by 2.3% to $16,191. The Australian dollar also depreciated by 1.45%, showcasing the broader impact of global tensions and economic policies on currency valuations.

Global Equities and Commodities:
European stock markets mirrored the downtrend with notable declines in major indices such as the Stoxx 50 and DAX. Commodity prices were equally affected; spot gold dropped by 0.8% to $1741.64 per ounce, and Brent crude saw a minor decrease to $83.53 per barrel.

Potential OPEC+ Actions:
With the upcoming OPEC+ meeting, the Eurasia Group speculated on the likelihood of a production cut, especially if crude prices continue to fall. This anticipation adds another layer of complexity to the global oil market dynamics.

Market Outlook:
Looking ahead, the markets are expected to encounter heightened volatility, influenced by the evolving situation in China, the impending Russian oil price cap, the rollout of EU sanctions, and the critical OPEC+ deliberations.

Investor Strategy:
Investors are advised to maintain vigilance and consider diversifying their portfolios to mitigate risks associated with geopolitical tensions and policy uncertainties. The coming weeks will be crucial in shaping market trajectories as global leaders and policymakers respond to the unfolding economic challenges. 

Market movements

• Bitcoin fell 2.3% to US$16,191
• Australian dollars fell 1.45% to 66.53 cents
• The Dow fell 1.5% on Wall Street. S&P -1.5% Nasdaq fell 1.6%
• Stoxx 50 in Europe fell by 0.7% FTSE -0.2% CAC -0.7% DAX -1.1%
• Iron ore fell by 0.8% to US$98.90 a tonne,
• spot gold fell by 0.8% to US$1741.64/oz, and
• Brent crude fell by 0.1% to US$83.53/b.
• The 10-year yield was US$3.68%. Germany 1.98% Australia 3.51 percent

Today’s agenda

No local data

Overseas data: November consumer confidence index, US September FHFA and S&P CL CS home prices, and November economic and consumer confidence for the Eurozone