Will brent crude jump above $100/bbl?
January 4, 2023
Analyst sees US non-farm payrolls increasing by 165K
January 5, 2023MARKET SNAPSHOT
U.S. stocks closed a choppy session higher as investors weighed mixed economic data and Federal Reserve minutes showing officials expect no rate cuts this year. The yield on the 10-year Treasury fell to 3.69%. The WSJ Dollar Index slipped to 97.05, helping gold prices climb. Oil prices tumbled on lingering worries over demand.
MARKET WRAPS
EQUITIES
U.S. stocks meandered back and forth before ending higher, as traders weighed fresh economic data that fanned fears of a looming recession.
The S&P 500 rose nearly 0.8% by the end of the trading day while the Dow Jones Industrial Average increased 0.4%. The tech-focused Nasdaq Composite Index climbed almost 0.7%.
All three opened in the green before briefly turning negative in midmorning trading after manufacturing activity dropped to its lowest level since May 2020. The Labor Department also said that job openings topped estimates in November, a sign that demand for labor remained strong in the final months of 2022.
Investors remain on edge as policy makers balance inflation-fighting goals against recession risks. Traders expect central banks to continue lifting borrowing costs to contain inflation that appears to have peaked-but that nonetheless remains well above targets.
“The equity rally is built on the idea that central banks can create something they’ve never done in the past: a soft landing,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “It still makes us worried that something could go wrong and that something could have a very detrimental impact on our portfolio. Cautiousness remains the key word going into this year.”
Earlier Wednesday, Chinese shares ended mixed, with the gains from property stocks and financials offsetting losses by chip makers and the energy sector. The Shanghai Composite Index closed 0.2% higher and the Shenzhen Composite Index edged up 0.1%. The ChiNext Price Index ended 0.9% lower.
Hong Kong stocks ended higher, building on the positive start to 2023. The benchmark Hang Seng Index jumped 3.2%, reaching its best closing level since July.
Japan’s Nikkei Stock Average lost 1.4% on the first trading day of 2023, dragged by falls in shipping and healthcare stocks, as uncertainty continues over policy tightening by central banks.
Australia’s S&P/ASX 200 closed 1.6% higher, rallying from its worst start to a calendar year since 2019 to post its largest one-day gain in almost two months. Ten of 11 sectors rose despite a soft lead from U.S. equities, with only the energy sector falling amid lower oil prices.
New Zealand’s NZX-50 closed 1.0% higher, starting 2023 with its strongest gain in five weeks. Shares of most large- and medium-size companies rose as the local market reopened from a four-day holiday weekend.
COMMODITIES
Oil futures settled at their lowest in more than three weeks, extending a slide that analysts tied to fears over the outlook for global economic growth and surging Covid cases in China.
West Texas Intermediate crude for February delivery fell 5.3% to settle at $72.84 a barrel on the New York Mercantile Exchange. March Brent crude declined 5.2% to $77.84 a barrel on ICE Futures Europe, with prices also ending at their lowest in more than three weeks.
“We continue to see lower prices in the first half of 2023 as negative economic activity grips the world economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Gold prices posted a fourth straight session climb, settling at their highest in nearly seven months, with gains driven in part by a weaker U.S. dollar.
Gold futures for February delivery advanced 0.7% to settle at $1,859 per ounce on Comex, with prices for the most-active contract marking their highest finish since June 10, FactSet data show.
Gold’s winning streak continued as the dollar and Treasury yields declined, while recession fears and hopes for more central-bank buying bolstered prices of the yellow metal.
“A macroeconomic landscape characterized by heightened recession risks and central banks concluding their tightening cycles bodes well for gold this year, with the next major barrier to watch on the upside being the $1,875 region,” said Marios Hadjikyriacos, senior investment analyst at XM.
TODAY’S TOP HEADLINES
Fed Minutes Show Officials Feared Markets’ Optimism Could Complicate Inflation Fight
WASHINGTON-Federal Reserve officials raised concerns at their meeting last month that investors’ optimism that the central bank might end its rate rises could make it more difficult to slow the economy and combat high inflation.
Officials unanimously agreed to slow the pace of interest-rate increases by approving a 0.5-percentage-point rate rise, but they projected somewhat higher-than-anticipated rates this year in new projections released on Dec. 14.
Minutes of the gathering, released Wednesday, didn’t shed any light about what might prompt officials to raise rates by another 0.5 point at their meeting next month or to reduce the pace of increases once more, raising them instead by 0.25 point.
Job Openings Held Nearly Steady in November, Showing Still-Strong Labor Demand
Job openings held nearly steady at historically high levels in November, adding to evidence that the labor market remained strong heading into 2023 despite rising interest rates and concerns about an economic slowdown.
About 10.5 million jobs were available in November, essentially unchanged from October and well above prepandemic openings levels, the Labor Department said Wednesday. The report also showed layoffs stayed low and a larger share of workers quit their jobs in November than a month earlier, a sign Americans were still confident in their employment prospects.
The data point to a solid overall labor market as some well-known companies are announcing layoffs. Salesforce Inc. said in a filing Wednesday that it is laying off 10% of its workforce as many of its customers are taking a more cautious approach to spending.
ISM shows weakness in U.S. factory activity spreading in December
The numbers: A closely-watched index that measures U.S. manufacturing activity slipped to 48.4 in December from 49 in the prior month, according to the Institute for Supply Management on Wednesday. This is the lowest level since May 2020.
Any number below 50% reflects a shrinking economy.
Economists surveyed by the Wall Street Journal had forecast the index to inch down to 48.8.
Meta Fined Over $400 Million in EU for Serving Ads Based on Online Activity
A top European Union privacy regulator ruled that Meta Platforms Inc. can’t use its contracts with Facebook and Instagram users to justify sending them ads based on their online activity, delivering one of the bloc’s biggest blows yet to the digital-advertising industry.
The ruling, announced Wednesday by Ireland’s Data Protection Commission, also imposed fines of 390 million euros, or $414 million, on Meta, saying that the company violated EU privacy laws by saying such ads are necessary to execute contracts with users.
Meta, the parent of Instagram and Facebook, said it disagrees with the ruling and plans to appeal both it and the fines.
Salesforce to Lay Off 10% of Workforce, Reduce Offices
Salesforce Inc. is laying off 10% of its workforce and reducing its office space in certain markets, extending a brutal period for tech job cuts into the new year.
Salesforce Co-Chief Executive Marc Benioff said that the cuts come as many of the company’s customers are taking a more cautious approach to spending, a trend that a growing number of software companies said they have been facing lately.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Mr. Benioff said in a letter to employees.
GM Overtakes Toyota to Regain U.S. Auto-Sales Crown
The U.S. auto industry is poised for its worst year in more than a decade, as supply-chain snarls and poorly stocked dealerships dented sales for many car companies in 2022.
Among the American auto makers, General Motors Co. said Wednesday U.S. sales rose 2.5% to 2.74 million for 2022 as it was able to recover from factory shutdowns earlier in the year that were due to parts shortages.
The Detroit auto maker also retook its U.S. sales crown from Toyota Motor Corp., outselling its Japanese rival by about 165,630 vehicles last year.
Expected Major Events for Thursday
00:30/SIN: Dec Singapore Whole Economy PMI
01:00/AUS: Dec VFACTS vehicle sales
01:45/CHN: Dec China Services PMI
03:00/SKA: 3Q Non-financial company outstanding debt
03:30/THA: Dec CPI
05:00/JPN: Dec Auto sales
05:00/SIN: Nov Retail Sales
05:00/JPN: Dec Consumer Confidence Survey
08:20/TAI: Dec International Reserves
08:30/HK: Dec Hong Kong Whole Economy PMI
09:00/PHI: Dec CPI
All times in GMT. Powered by Onclusive and Dow Jones.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
January 04, 2023 17:04 ET (22:04 GMT)
Document DNCO20230104008207
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