Key Market Insights December 29

9 min read

US Markets

Stock futures are up this morning as investors prepare to end the losing trading year and look forward to opportunities in 2023.

  • Manufacturing and home sales data in the U.S. will be released later today, which could provide a positive boost to markets if figures show the U.S. economy could improve in 2023.
  • Yesterday, Tesla fell more than 11% after it was reported that the company would keep its production facility in Shanghai closed for the week.
  • The S&P 500 has fallen for seven consecutive trading sessions.
  • The current 10 Year U.S. Treasury yield is set at 3.82690%
Market Price Move
Dow Jones 32,849.74 0.28%
S&P 500 3,821.62 0.10%
Nasdaq 10,547.11 0.01%
Russell 2000 1,747.99 0.54%

 

Canadian Markets

A new survey by Leger in Canada shows that 81% of Canadians are concerned about the possibility of a recession in 2023.

  • 56% of Canadians say they are already preparing for a recession, with 38% saying they are proactively cutting spending to save funds for an impending recession.
  • Canadians claim they are preparing for a recession by paying down debt to counteract the effect of higher interest rates, keeping savings liquid, and asking for a raise/working more.
  • People with an income under $60,000 were the most concerned, with 63% preparing for a recession, while only 47% of those with an income over $60,000 reported preparing for a recession.
Market Price Move
TSX 19,306.89 0.00%

 

European Markets

European markets rose on Tuesday and are also up overall on Wednesday morning, with China’s reopening being the major factor impacting markets.

  • Yesterday, China announced it would end its quarantine for passengers entering the country on Jan. 8.
  • U.K. markets are performing best today after being closed on Tuesday since national holidays were pushed back due to Christmas being on a Sunday.
  • EU markets remain in flux, balancing numerous geopolitical and macroeconomic factors, including inflation, interest rate increases, the war in Ukraine, and Covid-19.
Market Price Move
Euro STOXX 50 3,811.24 0.19%
UK (FTSE 100) 7,361.31 0.40%
Germany (DAX) 13,942.87 0.36%
France (CAC 40) 6,473.29 0.32%

 

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Asian Markets

Stocks in Asia were mixed based on local news in each region.

  • Stocks in Hong Kong soared after Chief Executive John Lee announced further easing of COVID-19 restrictions that have been in place for three years.
  • The United States and other countries are considering new rules for travelers coming from China as it reopens despite a high infection rate and a lack of effective vaccines. Japan and Taiwan have already announced that negative tests will be required for all travelers from China. The U.S. is considering similar restrictions, but some analysts predict it would be difficult for the Biden administration to impose given President Trump’s imposition of targetted restrictions against China was a major political issue that garnered significant attention and support for Biden. Imposing the same restrictions today could come at a high political cost.
  • Stocks in South Korea had outsized losses as chipmakers and battery manufacturers fell after issuing dividends to their shareholders.
Market Price Move
S&P Asia 50 4,436.44 -0.07%
Japan (Nikkei 225) 27,237.64 -1.05%
South Korea (KOSPI) 2,352.17 -0.33%
China (Hang Seng) 19,352.81 -0.50%
India (SENSEX) 61,806.19 0.76%

 

Insights

There are three major stories that all investors should be aware of this morning.

  • Tesla shares are down 69% this year and more than 70% from their all-time high. Musk is no longer the world’s richest person, and his acquisition of Twitter has caused Tesla’s core consumer base (left-leaning middle-class environmentally conscious consumers) to flee the brand, with many celebrities publicly ditching their Teslas for other alternatives. Tesla has been offering $7,500 discounts in the U.S. and $5,000 discounts with free supercharging in Canada to try and unload its extra inventory by the end of 2023. It has now decreased production in Shanghai and could face more issues as China grapples with reopening its economy. How the company, Musk, and investors respond to the current situation of the company is a major story at the end of 2022 and the start of 2023. This could be a major opportunity to lose or make money.
  • The U.S. Supreme Court has allowed Title 42 to stay in force until it rules on the entire case on the constitutionality in the summer. The rule was introduced under President Trump in 2020 and allowed for accelerated deportations at the Mexican border as a health precaution. Since then, over 2 million people have been deported under the act. Interestingly, Neil Gorsuch voted against the continued use of Title 42, supporting the liberal justices in their minority vote.
  • According to Reuters, the Russian Military has increased its attacks in Ukraine. Specifically, there are new military incursions in Kherson in southern Ukraine, including bombings of the recently liberated city. It has now been 11 months since Russia first took aggressive action against Russia. The Kremlin recently rejected a peace plan proposed by Ukraine. There is currently no clear path to peace as the United States refuses to stop growing NATO, which is the primary condition for peace that Russia has outlined.

Currency Exchange Rates

The U.S. dollar is down slightly but has no major movement this week.

  • The U.S. dollar index, which measures its value against the top 6 major fiat currencies, is down 0.1%.
  • The Japanese Yen was down despite bond yields in the country hitting a 7.5-year high.
  • The Japanese Yen is currently on track to gain 8.1% against the U.S. dollar in Q4, which would be the largest gain since 2008.
Market Price Move
UK(GBP) £0.82 -0.22%
Europe (EURO) €0.94 -0.40%
Canada (Canadian Dollar) $1.36 -0.64%
Japan (Yen) ¥131.95 -3.37%

 

Cryptocurrency

Cryptocurrency prices have been falling slightly over the holiday season.

  • Kraken has announced that it will be deregistering in Japan effective Jan. 31.
  • Argo Blockchain has agreed to a restructuring, including selling a major facility in Texas to avoid bankruptcy.
  • Sam Bankman-Fried and Gary Wang provided an affidavit to the courts stating that they borrowed more than $546M from Alemeda to purchase a 7.6% stake in Robinhood last spring.
Market Price Move
Bitcoin $16,895.90 0.92%
Ethereum $1,217.93 4.30%
Litecoin 65.93 4.11%
Bitcoin Cash $102.33 0.38%

 

Good trading,
Chris Svorcik

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