Morning wrap (07.12.2022)

• US indices have another poor session behind them with major Wall Street indices dropping over 1% for the second day in a row. S&P 500 dropped 1.44%, Dow Jones moved 1.04% lower and Nasdaq slumped 2.00%. Russell 2000 dropped 1.50%

• China announced easing of Covid restrictions. Asymptomatic cases will now be allowed to undergo home quarantine, high-risk zones will be more accurately defined and bans on movement in non high-risk zone has been lifted. Restrictions on domestic travel were also eased

• Chinese indices jumped following the announcement but gains were quickly pared. Currently, Chinese indices trade mixed with some dropping as much as 0.6% and some gaining as much as 0.7%

• Moods were downbeat in other parts of Asia-Pacific. Nikkei dropped 0.7%, S&P/ASX 200 moved 0.8% lower while Kospi and Nifty 50 traded around 0.3% down

• DAX futures point to a slightly lower opening of the European cash session today

• Fitch expects Chinese economy to grow 2.8% in 2022 and 4.1% in 2023 - well below pre-pandemic trend

• David Solomon, CEO of Goldman Sachs, estimates an over-60% possibility of US recession in 2023. Jamie Dimon, CEO of JPMorgan said that severe recession may ensue should high inflation persist

• NBC reports that Democratic candidate won a run-off election in Georgia, allowing Democrats to expand their power in the Senate

• Chinese exports in USD terms were 9.1% YoY higher in January-November period  while imports were 2.0% YoY higher. Exports in USD terms were 8.7% YoY lower in November alone and imports were 10.6% YoY lower

• Australian GDP grew at a pace of 0.6% QoQ in Q3 2022 (exp. 0.7% QoQ)

• API report pointed to a 6.43 million barrel draw in US oil inventories (exp. -3.5 mb)

• Cryptocurrencies trade lower as risk-aversion is picking up. However, major coins hold rather firm - Bitcoin trades flat, Ethereum gains 0.2% and Dogecoin adds 0.9%

• Oil trades a touch lower while US natural gas prices jump over 4%

• Precious metals trade higher with gold adding 0.1% and silver advancing 0.6%

• CAD and NZD are the best performing major currencies while JPY and CHF lag the most

CHNComp jumped after China announced easing of Covid curbs. However, advance was halted at 200-session moving average (purple line) and gains were quickly pared later on. Index is now trading lower on the day. Source: xStation5