DAILY MARKET NEWS - 19-01-2023

Ariff Azraei

The global market is facing uncertainty because of events such as a drop in Japan's Nikkei 225 index and a drop in retail sales and industrial production in the United States. Furthermore, Federal Reserve officials are divided on the future path of US interest rates. On the other side of the globe, Chinese brokerages are looking to raise up to $12.2 billion in capital to compete with Wall Street banks and meet risk management regulations. Since last month, the Chinese equity index has risen more than 10%, and multiple publicly traded brokerages are selling new shares.


Concerns about a recession in the United States have prompted investors to seek out safer assets such as bonds. Japan's Nikkei dropped 1.4%, and the yen rose 0.63% to 128.85 per dollar. The S&P 500 fell 1.6%, with Microsoft announcing 10,000 layoffs and Fed officials are predicting U.S. interest rates to be above 5% in 2023, further cementing feds determination to reach 2% inflation target.


Gold prices recovered slightly from a three-day decline as investors remained uncertain about the possibility of a global recession and U.S. monetary policy. Copper prices held steady, buoyed by optimism regarding a Chinese economic rebound. Silver declined by 1.94% on its second red day, halting its bullish trend into a sideways.


Oil prices dropped by as much as 2.46% on Wednesday due to concerns about a recession. A major decline in U.S. retail sales and manufacturing output, combined with an unexpected increase in U.S. crude stocks, all weighed on prices. Analysts believe that risk-off sentiment and profit-taking pushed oil prices down ahead of U.S. tech earnings.


The euro recovered from a three-day decline, while the Japanese yen rose 0.6% to 128.85. The Federal Reserve said rates still needed to rise beyond 5%, raising fears of a recession. A stronger U.S. dollar made the commodity more expensive for those holding other currencies. Long-term bond rate fell by more than 24 basis points as investor rush to buy safe haven assets.