Mixed sentiment dominated today's session in Europe. The FRA 40 index gained 0.42%, while the German DE30 gained nearly 0.2%. Sectors that did well today were primarily the stocks of luxury goods companies (due to the situation in China).
China's currency strengthened on Tuesday after Beijing announced it would scrap isolation measures related to Covid-19 for visiting travelers. The new guidelines are set to take effect starting in early January, raising hopes for a wider opening of the economy. Health authorities also announced that China's Covid management system will be downgraded to the less stringent Category B from the current highest Category A.
Vladimir Putin has given notice of a state decree banning the sale of Russian crude to countries imposing a price cap on Russian crude. Brent crude oil prices are gaining nearly 2%, while WTI is up nearly 0.9%.
The bullish momentum sustained during the European session was negated after the reading of Trade in Goods balance. A huge drop in the US goods deficit, the largest since 2009, triggered a deterioration in market bullishness. Better goods deficit data could support U.S. GDP in Q4 2022, which could herald the Fed's maintaining a more hawkish stance. The US500 loses 0.3%, the US100 slips below 11,000 points and is trading 1.25% below the bar.
Tesla (TSLA.US) shares are losing nearly 10% amid concerns about demand for electric cars. Reuters reported that the automaker will suspend production of the Model 3 and Model Y, at its Shanghai plant from January 20 to 31, 2023, despite the easing of Covid restrictions in China. The reasons for Tesla's decision and whether the restriction will also extend to the production lines of other car models are not clear. Analysts remain cautious on the company's shares in the face of Elon Musk's involvement on Twitter.
The best performing currencies during today's session were the Canadian dollar and the Swiss franc. The Japanese yen and the British pound performed poorly. Currencies of developing countries are under downward pressure today.
Gold prices are gaining more than 1.2% today and breaking above the $1,800 barrier on the back of another lifting of Covid restrictions in China. The decision of the Chinese authorities, although debatable on the one hand in the face of rumors of a huge surge in disease in the country, put pressure on the US dollar, which is losing dynamically. All this is combined with growing expectations for a dovish turn in FOMC policy.
Cryptocurrencies replicate the sentiment prevailing in the regular market and are losing on a daily basis. Bitcoin is trading near $16,600. The shares of Coinbase (COIN.US) are losing nearly 7.2% today and going down to record lows.
The largest percentage changes of selected instruments during today's trading session. Source: Bloomberg
A heatmap showing the largest changes in listings among US companies. Source: xStation 5
