JASPER’S MARKET SQUAWK 23-11-2022

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JASPER'S MARKET SQUAWK 23-11-2022

Renewed risk sentiment sends appetite soaring

The greenback fell on Tuesday on the back of upbeat earnings reports and renewed sentiment around inflation expectations as we head to Thanksgivings day and a short trading Friday.

S&P and Nasdaq rose 1.36% while DJIA 1.18% as the dollar slid 0.50%, offering EUR/USD a helping hand towards $1.03. USD/CHF and USD/JPY closed more than 0.60% lower.

Key factors for today:

• Dollar falls on renewed sentiment as we head to Thanksgiving


• Euro and pound get a lift higher on dollar decline


• Oil holds position ahead of EIA following API draw


• RBNZ sends Kiwi t0 $62c after historical 75bps hike


• FTSE boosted by oil majors after cut rumours evaporate

Dollar weakens on renewed sentiment

On top of certain stocks flying, leading a sentiment change, US speciality retailers reported earnings above expectations, resulting in improved risk sentiment and a weakening of the dollar. The long end of the yield curve slipped, somewhat supported by Fed President Loretta Mester’s comments on inflation, as she said she would back up lower rate hikes in the future. That, despite comments from Fed officials (Mester, George) affirming that interest rate hikes were still coming.

Euro and pound rose while the former broke a 3-day losing streak cable remains somewhat mixed, albeit 0.55% higher. On other movers, the dollar’s demise saw the yen rising to 141.18 and the franc to 0.95, recording losses of 0.70 and 0.78% -respectively.

FTSE to 2-month highs on oil majors

The UK benchmark saw substantial gains pulled higher by Shell and BP, reaching a 2-month high of 7460. The index recovered losses from Monday due to the rumour that OPEC might consider raising output near the end of the session. The rumour was denied after the session closed, giving the two (and more) stocks a boost in early trading on Tuesday. 7515 is major resistance, while Tuesday’s open at 7400 remains a critical short-term base.

Kiwi 0.85% higher on RBNZ hawkishness

New Zealand’s central bank hiked rates by 75bps as expected, and the accompanying statement was even more hawkish, raising the peak OCR to 5.5% next year. RBNZ Governor Adrian Orr insisted that CPI was still too high and warned that a mild recession was coming. Projections from the RBNZ showed a GDP of -0.3% next year. Kiwi distanced itself from $0.61 as it rallied 0.85% higher, with sentiment still offering bids as the pair hit significant resistance at $0.62 this morning.

Oil firms above $80/bbl

WTI drifted to $83/bbl through the session due to concerns about tight suppliers from OPEC+ as further denials that OPEC would be raising output changed the dynamics. That was in addition to yet another larger-than-expected crude draw reported by the API of 5.8M barrels instead of 2.2M. The EIA is due today, with a corresponding print, a potential price-positive for oil prices. After closing near $81.50/bbl, the commodity appears to be squeezed into a tight range, with a breakout imminent.

Movers/shakers

• Abercrombie & Fitch, +22% after the top and bottom line beat, had the most robust sales since 2014


• Burlington Stores +20% despite missing earnings estimates, but gross margin improved, and management saw an improvement to the value mix


• Manchester United +7% Reportedly Glazer family is looking to sell the club


• Dycom Industries -18% after noting continuing weakness in the 5G network and fibre, as well as providing disappointing guidance for the rest of the year


• American Eagle +18% after beating on the top and bottom line, inventory rose less than the prior quarter, comments on rationalising inventory

On the docket

• Global PMI figures from EA, UK and US


• Durable Goods Orders and New Home Sales ahead of FOMC minutes


• EIA crude stocks following APIU draw

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