GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS)

The Dow rose more than 300 points on Friday, while the S&P 500 and Nasdaq 100 gained about 1.9 percent and 2.7 percent, respectively, with gains in technology and other high-growth stocks underpinning some of the week's losses. Large-cap companies, including Meta, Amazon, Microsoft, and Tesla, rose between 1% and 5%. Meanwhile, Google (Alphabet ) rose 5.3% after announcing it would cut 12,000 jobs. Netflix surged 8.5% on weak earnings after reporting stronger-than-expected subscriber numbers. Earlier Friday, Fed President Waller backed a 25 basis point hike at the next meeting. Comments from Fed officials suggest interest rates are expected to climb to at least 5% this year to curb high inflation. For the week, the Dow fell 2.1 percent, while the S&P 500 and Nasdaq 100 gained roughly 0.3 percent and 2.9 percent. Next week, investors' eyes will be on Microsoft's Tuesday and Tesla and IBM's earnings reports on Wednesday. 

The Canada S&P/TSX Composite rose to near 20,500 on Friday as investors digested domestic retail sales data while tracking gains after a choppy morning on Wall Street. Preliminary data showed retail sales rose 0.5% in December, although November's figure was revised to show a 0.1% contraction despite higher consumer prices. Consumer discretionary stocks reacted positively to the data, with the Toronto stock market gaining an average of nearly 1%. In terms of sectors, healthcare was broadly up 2.4%, base metals traded up 1.1%, financials were up 0.7%, and energy was up 0.3%. For the week, the index rose 0.3%.

European stock markets closed higher on Friday, recouping some of the previous session's losses. The Stoxx 600 rose 0.4% on Friday and was little changed for the week. Domestically, Germany's DAX recorded a 0.4% loss for the week but was up 0.7% on Friday. Optimism over China's reopening ahead of the Lunar New Year holiday, easing inflation, and expectations of a slower pace of central bank policy tightening supported sentiment. Still, several ECB policymakers pushed back against market bets the central bank would raise interest rates modestly as inflation eases. Additionally, disappointing U.S. economic data last week and hawkish comments from Federal Reserve officials fueled fears of an impending recession. On the macro front, December is a crucial Christmas month, with UK retail sales down 1%, below market expectations of 0.5%. The France CAC 40 index rose about 0.6 percent on Friday to close at 6,996 points, tracking gains in European peers as investors focused on prospects for recovery ahead of the Chinese New Year. At the same time, the outlook for the global economy remains a concern. The year ahead looks better than expected for the global economy but remains fraught with risks, including an escalating conflict in Ukraine, the final panel of the World Economic Forum concluded. At home, France's main trade unions are calling for a second day of strikes on Jan. 31 to force Macron and his government to abandon a pension reform plan that would see most people working two years longer until they turn 64. On the corporate side, Essilorluxottica (+2.1%) and Thales (+1.9%) were the best performers, followed by Carrefour (+1.8%), Safran (+1.7%) and Airbus (+1.7). In contrast, Michelin (-2.%) and Dassault Systèmes (-1.6%) lost the most. For the week, the CAC 40 was down about 0.4%. The Italy FTSE MIB rose 0.7% to close at 25,775 on Friday, rebounding from yesterday's steep losses to end the week flat as investors continued to assess the latest economic data on how the ECB's tightening of monetary policy will affect growth. Banks and insurers were among the biggest gainers in the corporate sector, with UniCredit, BPER Banca, and Generali each up 2%. Meanwhile, Saipem shares extended choppy momentum, surging 8.6 percent after the Italian offshore engineering and construction company confirmed it had secured two contracts worth a combined $900 million. On the other hand, heavyweight utilities closed in the red as European gas prices rebounded. The Spanish  IBEX35 was up 1.4% to 8918 on Friday, recovering from a 1.6% loss in the previous session, as sentiment improved on China reopening ahead of the Lunar New Year holiday. The index finished the week up 0.4%, but investors continued to weigh recession risks after hawkish comments from central bankers. Among individual shares, Cellnex Tel lifted market optimism with a rise of 9.84%, as rumors circulated of the company's acquisition by American Tower and the US fund Brookfield. The tourism and financial sectors also recorded significant gains, led by Melia Hotels (3.22%), CaixaBank (2.54%), and Bankinter (2.42%). The most significant declines were Fluidra, Acciona Energia, and Inmobiliaria, respectively, by 1.16%, 0.84%, and 0.64%.

The Baltic Exchange's dry bulk shipping index, which measures the cost of shipping cargo around the world, fell for a fourth consecutive session on Friday, falling about 4.7% to a more than 2-year low and a half by 764 points, as shipping activity remains low and amid subdued demand ahead of China's Lunar New Year holiday. The Capesize index, which tracks iron ore and coal cargoes of 150,000 tons, fell about 11.9% to a four-month low of 783 points; and the Panamax index, which tracks about 60,000-70,000 tons of coal and grain cargoes, fell 11 points to 1,060 points. Among smaller vessels, the supramax index recorded a 21st consecutive day of declines, losing 2 points to 652 points, the lowest since mid-June 2020. The benchmark index lost about 19.3% in the third week of January, marking its fourth consecutive weekly drop.

London stocks fell for a third straight session on Friday, driven by gains in technology and materials, with the benchmark FTSE 100 rebounding to around 7,770. 3i Group rose nearly 3 percent to lead the benchmark, while big miner Glencore rose more than 2 percent to top the list. On the data front, consumer confidence fell in January for the first time in three months, near record lows. Meanwhile, British consumers unexpectedly cut back on spending in December, fueling fears that tight financial conditions will tip the economy into recession this year. In addition, persistent inflation took hold last week as optimism over China’s reopening faded, and concerns grew over the direction of the global economy. For the week, the FTSE 100 fell more than 1%.

The ruble-based MOEX Russia index closed at 2,167 on Friday, just below the benchmark, falling for a fourth straight session and down 1.5% for the week, as energy producers continued to underperform. Oil majors Lukoil and Rosneft fell 0.7% each as Russia's economic isolation limited the number of customers available to bid and pushed Urals' discount to Brent to a barrel of $30+. Meanwhile, shares in Gazprom fell more than 1% as a reported reduction in gas supplies to Europe via Ukraine and low gas prices further limited the company's revenue. The energy sector has largely underperformed its peers over the past month, down 3% year-to-date compared with a 0.6% gain for the broad index. On the other hand, solid corporate results from Sberbank in December lifted the financial sector by 5% since early January.

On Friday, the Nikkei 225 rose 0.56% to close at 26,553. In comparison, the broader Topix gained 0.59% to close at 1,927, recouping some of the previous session's losses as investors braced for another strong Inflation data, which bolstered the case for the Bank of Japan's policy shift, was dismissed. The country's annual core inflation hit a 41-year high of 4% in December, topping the central bank's 2% target for the ninth month and challenging its view that near-term cost-push inflation will prove transitory. Benchmarks also rose for a second straight week, as the reopening of China boosted the outlook for the global economy while easing inflationary pressures in other major economies raised hopes of a slower pace of central bank policy tightening. All sectors were higher on Friday, with index heavyweights such as Mitsubishi UFJ (1.1%), Fast Retailing (0.9%), Nippon Steel (2.9%), Japan Yusen (2.1%) and Toyota Motor (1%) notable gains.

Hong Kong shares rose 393.67 points, or 1.82 percent, to close at a nearly seven-month high of 22,044.65 on Friday, marking a third straight weekly gain, boosted by reports that the People's Bank of China injected 1.97 trillion yuan into the banking system ahead of the Lunar New Year last  week. boost. Meanwhile, the central bank left its key lending rate on hold at the January level for the fifth straight month amid optimism that policymakers will continue to take further steps to boost market confidence and help the private sector as the economy fully reopens. . Sentiment was also supported by gains in U.S. stock futures, as the federal debt limit took a hit but the Treasury Department began taking extraordinary steps to avoid any default on payments. Meituan (5.0%), Kuaishou Technology (3.1%), JD.com (2.9%), Li Ning (2.5%) and Tencent Holdings rose across the board. The Hang Seng Index will be closed from Monday to Wednesday for the Lunar New Year holiday.

The China Shanghai Composite rose 0.6% to close around 3,260, while the Shenzhen Composite rose 0.3% to 11,950, its highest level in four months after the People's Bank of China kept its key lending rate unchanged for the fifth straight month. changes as authorities aim to boost market confidence and support the economy. Benchmarks were also on track for a fourth consecutive week of gains, with the economic outlook improving after China quickly lifted COVID-19 restrictions. Meanwhile, investors remained cautious ahead of the week-long Lunar New Year holiday as unexpected events could occur while markets are closed. Nevertheless, almost all sectors rose on Friday, with heavyweights such as LONGi Green Energy (3.4%), China National Software (10%), China United Network (6.2%), China Telecom (6.4%), and China Rare Earth (9.4%) substantial rise.

The Australia S&P/ASX 200 traded around 7,435 on Thursday. Still, it remained on track for a third straight weekly gain, as the reopening of China boosted the outlook for the global economy while easing inflationary pressures boosted central bank policy tightening at a slower pace hope. The benchmark index also closed at a nine-month high on Thursday after weaker-than-expected employment data in Australia prompted traders to trim expectations for the pace of future rate hikes by the Reserve Bank of Australia. Commodity-related stocks were mostly higher on Friday, including Woodside Energy (1.1%), South32 (0.6%), and Newcrest Mining (2%). Whitehaven Coal rose 3% after its expected record earnings in the first half of 2023. Meanwhile, tech stocks were mostly down, with the tech-heavy Nasdaq down.

Around noon on Friday, the New Zealand ANZ 50 rose 72 points, or 0.61%, to 11,958, hovering at a more than nine-month high and up 1.7% for the week, as China, New Zealand's largest trading partner, accelerates reopening. It was the third consecutive rise since. Based on current COVID infection trends, China could see a sharp recovery from the second quarter of 2023, the International Monetary Fund's Gita Gopinath said on Wednesday. Meanwhile, a senior Chinese official mentioned on Thursday that virus cases in China had dropped to "relatively low" levels before the holiday season. Domestically, Jacinda Ardern announced on Thursday that she did not have the energy to continue as leader and would leave in early February, with New Zealand's new prime minister to be appointed as soon as next week. In terms of data, the number of tourists from New Zealand surged by 4,257% year-on-year in November, mainly from Australia, the United States, and the United Kingdom. Frontrunners include Fisher & Paykel (5.6%), Summerset Group (1.4%), and Infratil Limited (0.8%).

The India BSE Sensex fell 230 points in early trade on Friday to close at 60,620, extending losses from the previous session under pressure from private banks and consumer goods brands, as investors avoided risky positions ahead of a batch of earnings reports next week. Bajaj Finance and Bajaj Finserv led the way among financial firms, down 2.5 percent and 1.6 percent, respectively. Meanwhile, shares in Hindustan Unilever tumbled nearly 4% after the company announced an 80 basis point hike in the royalties it pays to parent Unilever PLC, jeopardizing its profitability. Meanwhile, Asian paint companies continued to fall 2.7 percent after missing their third-quarter profit targets, largely due to the impact of the monsoon on demand. Still, the index ended the week up 0.6%.

Brazil's Ibovespa stock index closed around the 112,000 level on Friday after three consecutive sessions of gains, mainly driven lower by industrials, consumer cyclical, and resource-related stocks. The Brazilian real has lost 2% last week on concerns about central bank independence. Meanwhile, fears of possible government interference on various fronts of the Brazilian economy continued to weigh on investor sentiment. In addition, Institutional Relations Minister Alexandre Padilha said on Thursday that the Brazilian government does not intend to make any changes to the country's central bank, seeking to appease markets after leftist President Luiz Inácio Lula da Silva's public criticism of the institution. Americanas (-29%), Alpargatas (-5.9%), and Cosan (-4.5%) were among the worst performers, while Petrobras added about 3.5%. 

 

REVIEWING THE LAST ECONOMIC DATA:

Reviewing the latest economic  news, the most important data is:

- US: U.S. existing home sales (including completed single-family homes, townhomes, condominiums, and co-ops) fell 1.5% to a seasonally adjusted annual sales rate of 4.02 million units in December 2022, slightly ahead of the market. The forecast is 3.96 million units. It marked the eleventh straight month of declines in home sales, the longest stretch since 1999 and the lowest since November 2010, as buyers continued to face limited inventory and high mortgage lending interest rates. Total housing inventory was 970,000 units, down 11.4% from last November but up 10.2% from a year ago. The median existing-home price for all housing types was $366,900, an increase of 2.3 percent compared to December 2021, as prices increased in all regions. "However, sales are expected to pick up soon as mortgage rates have fallen significantly after peaking late last year," said Lawrence Yun, chief economist at NAR.

- TR: The yield on the benchmark 10-year Turkish government bond traded around 9.9% in January, holding close to the lows seen in April 2015, as inflation in the country remained high and interest rates low. However, tightening measures are introduced to support the bond market, discouraging banks from holding inflation-linked bonds as collateral for central bank funding and encouraging lenders to purchase longer-term government bonds. Furthermore, the Turkish central bank kept its interest rate steady at 9% for the second time in January, marking the end of its rate-cutting cycle. As a result, while the country's inflation remains high, it fell to a 9-month low of 64.3% in December 2022 from 84.4% in November.

- CA: Preliminary estimates suggest that in December 2022, Canadian retail sales may increase by 0.5% month-on-month. In November, retail sales were down 0.1% from a month earlier, compared with a downwardly revised 1.1% gain in October and a preliminary estimate of a 0.5% increase. Retail sales fell in six of the 11 subsectors, with sharp falls in food and beverage stores (-1.6%), building materials and garden stores (-3.8%), and department stores (-0.8%). Meanwhile, sales at gas stations rose 2.2% during the period, even as gasoline prices fell 3.6% due to the reopening of several U.S. refineries. Keeping costs unchanged, retail turnover fell 0.4% from the previous month. Retail sales rose 5.2 percent in November from a year earlier, the weakest since March.

- IT: Italian construction output rose 5.3% year-on-year in November 2022, the weakest since August 2021, easing from a downwardly revised 6.3% growth in the previous month. On a monthly basis, construction edged up 0.5% in November, rebounding from an upwardly revised 1% contraction in the last period. Even so, the Italian construction industry grew by 12.5% when considering the first 11 months of the year.

- HK: Hong Kong's annual inflation rate rose to 2% in December 2022 after holding steady at 1.8% for the past two months, slightly higher than the market forecast of 1.9%. Price increases were largely due to food (3.8 percent versus 3.5 percent in November), electricity and utilities (14.7 percent versus 14.3 percent), transportation (2.7 percent versus 1.6 percent), miscellaneous goods (0.5 percent versus 0.4 percent), and services (1.9 percent % to 1.6%. In 2022, the Composite CPI rose 1.9 percent from the previous year, while the underlying CPI inflation averaged 1.7 percent. The CPI rose 0.3 percent on a monthly basis after increasing 0.1 percent in November.

- HK: In the first quarter of 2023, Hong Kong's business confidence index was 6, up from 4 in the previous period. The proportion of respondents expecting better business conditions was 19% (16% in Q4 2022), while the proportion expecting worse business conditions increased slightly to 11% (12%). Sentiment improved in manufacturing (+23 vs. -11), accommodation and food services (+39 vs. +37), finance and insurance (+25 vs. +4), and real estate (+4 vs. -2). At the same time, the construction industry (-7 vs-5), transportation, warehousing, and express service industry (-5 vs+8), import and export trade and wholesale industry (-8 vs+9), information and communication industry (-1 vs.- 4) Sentiment remains weak as well as professional and business services (-3 vs. +2).

- GE: Germany's annual producer inflation rate fell to 21.6% in December 2022 from 28.2% in November, compared with market forecasts of 20.8%, the lowest since November 2021. Energy prices remained the most significant contributor (41.9% vs. 65.8% in November), namely the distribution of natural gas (52%) and electricity (46.8%). Excluding energy, producer prices rose 12% year over year. Other notable increases were also seen in the prices of intermediate goods (12.3%), notably wood (143.2%), basic chemicals, fertilizers and nitrogen (23%), and metals (10.8%); non-durable consumer goods (18.1%) such as food (23.5%); consumer durables (11.9%); capital goods (7.7%), led mainly by machinery (9.8%) and motor vehicles (5.6%). On a month-on-month basis, producer prices fell 0.4%, the third straight monthly decline. Consider that for 2022, producer prices rose 32.9%, the highest price increase since the survey began in 1949.

- CN: As widely expected, the People's Bank of China (PBoC) left key lending rates unchanged at January's level for the fifth straight month. The decision was made on the last working day before China's week-long Lunar New Year holiday. The one-year loan prime rate (LPR), used for corporate and household loans, was left unchanged at 3.65 percent; while the five-year rate, which serves as a benchmark for mortgages, remained at 4.3 percent. Earlier last week, the central bank kept its medium-term policy rate steady at 2.75% while extending more lending to some banks ahead of the Lunar New Year. In early January, the People's Bank of China established a dynamic adjustment mechanism for mortgage interest rates for first-time home buyers. Meanwhile, PBOC vice-governor Xuan Changneng said that the board has committed to further boosting market confidence and increasing support for manufacturers and small companies, hoping the economy will rebound strongly this year.

- UK: UK GfK consumer confidence fell to -45 in January 2023 from -42 in December, defying expectations for a slight improvement to -40, as Brits continue to grapple with persistently high inflation and soaring energy bills. The January figure also snapped three straight months of gains, staying near the all-time low of -49 set in September. Joe Staton, director of client strategy at GfK, said: "With inflation continuing to eat up wage gains and the prospect of some staggering energy bills looming, the forecast for consumer confidence this year is not looking rosy."Consumer Confidence The index fell short of expectations, largely due to a deteriorating assessment of personal financial and economic conditions over the past year. The main purchasing index also fell notably, while perceptions of personal finances for the next year improved.

- JP: Food prices in Japan rose 7.0% year-on-year in December 2022, the highest increase since September 1980, after rising 6.9% in the previous month. It was the 16th month of rising food costs due to the yen's rapid fall. Increasing cost pressures came mainly from grains (9.6% vs. 8.9% in November), fish and seafood (15.1% vs. 11.1%), alcoholic beverages (6.1% vs. 5.9%), drinks (6.3% vs. 5.6%), meat Cakes (7.1% vs. 6.4%), dairy products and eggs (9.0% vs. 7.5%), cakes and confectionary (7.6% vs. 7.3%), oils, fats and seasonings (10.2% vs. 9.5%), outdoor meals (5.8% % vs. 5.3%) and cooked food (7.3% vs. 6.8%), fresh vegetable prices rose the least in three months (0.5% vs. 7.5%), while new fruit prices fell further (-1.0% vs. 1.1%).

- JP: Japan's core consumer price index (which excludes fresh food but includes fuel costs) jumped 4% in December 2022 from a year earlier, accelerating at the fastest pace since December 1981 as widening inflation Stress continues to creep through the economy. The December figure followed a 3.7 percent rise in November, in line with analysts' expectations. The core inflation reading also topped the central bank's 2 percent target for the ninth month, challenging the BOJ's view that recent cost-push inflation will prove temporary. The Bank of Japan recently defied market expectations for another policy adjustment by keeping interest rates ultra-low and its yield control policy unchanged. Still, speculators are doubling down on bets that the World Bank will need to change policy soon as inflationary pressures persist and interest rates continue to rise in other major economies.

- JP: Japan's annual inflation rate rose to 4.0% in December 2022 from 3.8% a month earlier, the highest level since January 1991, due to high prices for imported raw materials and a weak yen. Upward price pressure came from all components, namely food (7.0% vs. 6.9% in November); housing (1.2% vs. 1.2%); fuel, light, and water (15.2% vs. 20.1%) and gas bills (23.3% against 21.0%); transportation and communications (2.1% against 1.6%); health care (0.4% against 0.3%), furniture and household appliances (7.5% against 7.3%); clothing ( 2.9% vs. 2.7%), education (0.7% vs. 0.7%) and miscellaneous (1.1% vs. 0.9%). As a result, core consumer prices rose 4.0 percent year-on-year, the highest since December 1981, in line with market forecasts but above the Bank of Japan's 2 percent target for the ninth month. However, on a monthly basis, consumer prices rose 0.3 percent in December, the weakest in four months, after rising 0.4 percent in November.

- NZ: In December 2022, New Zealand's BusinessNZ manufacturing index fell to 47.2 from 47.4 in the previous month, the lowest level since May 2020. New orders continued to contract but improved from November (46.1 vs. 42.2), and production (49.7 vs. 49.5) rose slightly but was below no change. Inventories of finished goods (50.1 vs. 55.5) and deliveries of raw materials (48.4 vs. 49.6) both fell further, while employment (48.8 vs. 46.9) returned to October levels.

- NZ: In November 2022, the number of New Zealand tourists soared 4,257% year-on-year to 226,004. Tourists mainly came from Australia (+19647.2 to 105309), the United States (+5637.9 to 24976), the United Kingdom (+1894.5 to 14929), and Singapore (+4735.3 to 7908). Still, the November figure was down from the pre-COVID-19 figure of 283,800 in October 2019.

- SK: Producer prices in South Korea rose 6% year-on-year in December 2022, the lowest level since April 2021, moderating from a downwardly revised 7.2% gain in the previous month. Prices for manufactured goods rose more slowly (5.9% vs. 6.3% in November), while prices for electricity, electricity, natural gas, and wastewater rose faster (29.9% vs. 29.7%). At the same time, prices of agricultural, forestry, and marine products rose (+1.5% vs. -0.7%). On a monthly basis, the producer price index fell 0.2% from 0.3% in the previous month.

- AN: The National Bank of Angola cut its key policy rate by 150 basis points to 18% at its January 2023 meeting after leaving it unchanged in November. This is the steepest rate cut since July 2018, based on the reduction in inflation observed throughout 2022 and inflationary pressures, as well as the alignment of monetary conditions with medium- to long-term inflation targets. Inflation has been declining since February, reaching a seven-year low of 11.86% in December 2022, largely due to the appreciation of the kwanza and the increased and regular supply of goods, especially food products. The central bank governor said he expects Angola to finish with 9%-11% inflation this year. “If the current situation remains unchanged, we can continue on this path,” Massano said.

- IR: Wholesale prices in Ireland rose 2.5% year-on-year in December 2022, the lowest since February, and down from a 3.8% increase in November. The prices of wholesale goods sold on the domestic market increased by 8.9%, while those sold on foreign markets increased by 3.2%. However, wholesalers faced a 10.4% increase in electricity prices, as the monthly cost of electricity increased by 93.2%.

- LX: Luxembourg's seasonally adjusted unemployment rate fell to 4.8% in December 2022 from 4.9% the previous month. The unemployed decreased by 111 from the last month to 14,816, while domestic employment increased by 1,950 to 510,299. Meanwhile, the number of active citizens in the workforce increased by 789 to 307,460.

- GR: Greece's current account deficit increased to EUR 3.9 billion in November 2022 from EUR 2.7 billion in the corresponding month of the previous year. It was the most significant monthly current account deficit since March 2008, as the goods deficit widened substantially to €3.8 billion from €2.9 billion in November 2021, with imports (from 22.6% to 8.4 billion EUR) which exceeded exports (from 16.7% to 4.6 billion EUR) billion). At the same time, the primary income gap increased slightly to €0.3 billion from €0.2 billion; the secondary income deficit was adjusted somewhat to around €0.2 billion. Meanwhile, the services surplus fell to €0.3 billion from €0.5 billion a year ago.

- GE: Annual producer price inflation in Germany fell to 21.6% in December 2022 from 28.2% in November, compared to market expectations of 20.8%, marking its lowest level since November 2021. energy continued to contribute more to the increase (41.9% against 65.8% in November), namely the distribution of natural gas (52%) and electricity (46.8%). Excluding energy, producer prices increased by 12% over the previous year. Other significant price increases were observed for intermediate goods (12.3%), especially wood (143.2%), basic chemicals, fertilizers and nitrogen (23%) and metals (10 .8%); non-durable consumer goods (18.1%), such as food (23.5%); durable consumer goods (11.9%); and capital goods (7.7%), mainly driven by machinery (9.8%) and motor vehicles (5.6%). On a month-on-month basis, producer prices fell 0.4%, the third consecutive month of declines.

- ES: Estonian producer prices rose 16.6% year-on-year in December 2022, down from 22.4% growth in November 2022 and marking the lowest level since August 2021. This was the 25th consecutive month of rising producer price inflation, mainly affected by food, wood products, and metal production costs. On a monthly basis, producer prices increased by 0.3%, following a 0.2% increase in November.

 

LOOKING AHEAD:

Week ahead:

- It will be a busy week in the US with releases including the fourth quarter GDP growth rate, durable goods orders, PCE price index, personal income and spending, and earnings reports. In addition, Flash PMI data for January will be released for the US, UK, Japan, and euro area countries. Investors will also follow the BoC's interest rate decision, Germany's IFO Business Climate and GFK Consumer Confidence, GDP growth rates for South Korea and the Philippines, and the inflation rate for Australia.

 

Today, investors should watch out for the following essential data:

- EUR: German Buba Monthly Report, Consumer Confidence, and ECB President Lagarde Speak.

- CNY: Bank Holiday.

- CAD: NHPI m/m.

- NZD: BusinessNZ Services Index.

- USD: CB Leading Index m/m.

- JPY: Monetary Policy Meeting Minutes.

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- US: Stock futures contracts tied to the blue-chip Dow were flat on Friday, while those tied to the S&P 500 and Nasdaq rose 0.3% and 0.7%, respectively, as investors reassessed monetary policy and growth prospects. So far, the fourth-quarter earnings season has painted a mixed picture of the health of the U.S. economy. Some companies, such as Netflix, have reported strong growth, while big banks, including JPMorgan, have set aside more funds for expected defaults. Meanwhile, recent data showed retail sales, producer prices, and industrial production fell more than expected in December, fueling fears of a slowdown in the world's largest economy. Dismal economic data has boosted speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. Money markets expect rates to peak at 4.85% in June and a quarter-point hike in February, which Fed officials have recently delayed.

- TR: The yield on the benchmark 10-year Turkish government bond traded around 9.9% in January, holding close to the lows seen in April 2015, as inflation in the country remained high and interest rates low. However, tightening measures are introduced to support the bond market, discouraging banks from holding inflation-linked bonds as collateral for central bank funding and encouraging lenders to purchase longer-term government bonds. Furthermore, the Turkish central bank kept its interest rate steady at 9% for the second time in January, marking the end of its rate-cutting cycle. As a result, while the country's inflation remains high, it fell to a 9-month low of 64.3% in December 2022 from 84.4% in November.

- FR: The French 10-year yield hovered around 2.5%, remaining near its lowest level since December 14, as investors digested remarks from top European Central Bank policymakers amid fears of a slowdown in the global economy and signs of easing of inflationary pressure. ECB President Lagarde warned that the central bank would keep raising interest rates until inflation returned to its 2% target, and Knot said markets could underestimate the central bank's planned rate hikes. block. Earlier in the week, policy council member Rehn said significant rate hikes were warranted in the near term to keep inflation expectations in check, while Francois Villeroy de Galhau said interest rates could peak within the summer. As a result, markets have priced at an interest rate peak of 3.2% by August 2023, below a previous forecast of 3.5%.

- GE: The German 10-year yield hovered around 2%, remaining close to its lowest since December 14th. Investors digested comments from top central bankers as weaker-than-expected US economic data bolstered expectations that the US Fed will continue to ease its pace of tightening at upcoming meetings. In Europe, ECB President Lagarde warned that the central bank will continue to raise interest rates and keep them in familiar territory for long as long as it takes to bring inflation down to its 2% target, just hours after Knot said markets could underestimate the bloc's central bank's planned rate hikes. Earlier in the week, policy council member Rehn said significant rate hikes were warranted in the near term to keep inflation expectations in check. In contrast, Francois Villeroy de Galhau said interest rates could peak within the summer. As a result, investors now expect the ECB's primary interest rate to peak at 3.2% in August 2023, below a previous forecast of 3.5%.

 

LEADING MARKET SECTORS:

- Strong sectors: Communication Services, Information Technology, Financials, Consumer Discretionary.

- Weak sectors: --

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- OIL: Brent crude futures stabilized around $86 a barrel on Friday and are on course for a second consecutive weekly gain, supported by an improving demand outlook and lingering supply concerns. The International Energy Agency said global oil consumption would hit a record daily average this year as China, the top importer of crude oil, opened up its economy. At the same time, the IEA also warned that price cap sanctions on Russia could further dent supply.OPEC echoed a similar view in its monthly report released last week, saying demand for crude oil will rise by 2.22 million barrels per day (BPD), or 2.2%, supported by increasing Chinese consumption and a recovery in economic activity among advanced economies. On the supply side, OPEC+ decided to maintain its policy of reducing oil production in December.

- WTI: WTI crude futures stabilized around $81 a barrel on Friday and are on course for a second consecutive weekly gain, supported by an improving demand outlook and lingering supply concerns. The International Energy Agency said global oil consumption would hit a record daily average this year as China, the top importer of crude oil, opened up its economy. At the same time, the IEA also warned that price cap sanctions on Russia could further dent supply.OPEC echoed a similar view in its monthly report released last week, saying demand for crude oil will rise by 2.22 million barrels per day (BPD), or 2.2%, supported by increasing Chinese consumption and a recovery in economic activity among advanced economies. On the supply side, OPEC+ decided to maintain its policy of cutting oil production, limiting global supplies by 2 million barrels a day in December.

- WET: Chicago wheat futures extended losses to less than $7.3 a bushel in late January, the lowest since October 2021, following declines in other grains as rainfall in Argentina's top producer eased drought fears and added to strong supply expectations from other manufacturers. In Russia, industry research leader Sovecon has revised its shipment projections for the world's leading 200,000-ton exporter to 44.1 million for the current marketing year due to a record harvest and record inventories. Another major exporter, Australia, has also forecast its crop to reach a historic 42 million tons over the same period. Finally, the expansion of farmland in India has raised expectations that the current harvest would set a record and lead to the lifting of the ban on wheat exports from New Delhi.

 

CHART OF THE DAY:

The U.S. dollar index was steady near 102 on Friday after increased volatility in recent sessions, as traders assessed a slew of U.S. data on Thursday that suggested the Federal Reserve's sharp rate hikes were already impacting the economy. However, U.S. jobless claims fell short of expectations last week, indicating another month of strong job growth and continued tightness in the labor market. Meanwhile, a slew of Fed officials last week reiterated their pledge to tighten policy, with Vice Chairman Rael Brainard saying rates need to remain elevated for some time to further cool inflation. Still, slowing U.S. inflation has fueled expectations that the Fed will scale back to a modest rate hike of 25 basis points in February after raising rates by half a percentage point in December.

 

 

- U.S. dollar index (DXY) - chart (W1), downtrend, Resistance (consolidation) around ~ 104, Support (target zone) around  ~ 98.

 

GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS: Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS) The Dow rose more than 300 points on Friday, while the S&P 500 and Nasdaq 100 gained about 1.9 percent and 2.7 percent, respectively, with gains in technology and other high-growth stocks underpinning some of the week's losses. Large-cap companies, including Meta, Amazon, Microsoft, and Tesla, rose between 1% and 5%. Meanwhile, Google (Alphabet ) rose 5.3% after announcing it would cut 12,000 jobs. Netflix surged 8.5% on weak earnings after reporting stronger-than-expected subscriber numbers. Earlier Friday, Fed President Waller backed a 25 basis point hike at the next meeting. Comments from Fed officials suggest interest rates are expected to climb to at least 5% this year to curb high inflation. For the week, the Dow fell 2.1 percent, while the S&P 500 and Nasdaq 100 gained roughly 0.3 percent and 2.9 percent. Next week, investors' eyes will be on Microsoft's Tuesday and Tesla and IBM's earnings reports on Wednesday.  The Canada S&P/TSX Composite rose to near 20,500 on Friday as investors digested domestic retail sales data while tracking gains after a choppy morning on Wall Street. Preliminary data showed retail sales rose 0.5% in December, although November's figure was revised to show a 0.1% contraction despite higher consumer prices. Consumer discretionary stocks reacted positively to the data, with the Toronto stock market gaining an average of nearly 1%. In terms of sectors, healthcare was broadly up 2.4%, base metals traded up 1.1%, financials were up 0.7%, and energy was up 0.3%. For the week, the index rose 0.3%. European stock markets closed higher on Friday, recouping some of the previous session's losses. The Stoxx 600 rose 0.4% on Friday and was little changed for the week. Domestically, Germany's DAX recorded a 0.4% loss for the week but was up 0.7% on Friday. Optimism over China's reopening ahead of the Lunar New Year holiday, easing inflation, and expectations of a slower pace of central bank policy tightening supported sentiment. Still, several ECB policymakers pushed back against market bets the central bank would raise interest rates modestly as inflation eases. Additionally, disappointing U.S. economic data last week and hawkish comments from Federal Reserve officials fueled fears of an impending recession. On the macro front, December is a crucial Christmas month, with UK retail sales down 1%, below market expectations of 0.5%. The France CAC 40 index rose about 0.6 percent on Friday to close at 6,996 points, tracking gains in European peers as investors focused on prospects for recovery ahead of the Chinese New Year. At the same time, the outlook for the global economy remains a concern. The year ahead looks better than expected for the global economy but remains fraught with risks, including an escalating conflict in Ukraine, the final panel of the World Economic Forum concluded. At home, France's main trade unions are calling for a second day of strikes on Jan. 31 to force Macron and his government to abandon a pension reform plan that would see most people working two years longer until they turn 64. On the corporate side, Essilorluxottica (+2.1%) and Thales (+1.9%) were the best performers, followed by Carrefour (+1.8%), Safran (+1.7%) and Airbus (+1.7). In contrast, Michelin (-2.%) and Dassault Systèmes (-1.6%) lost the most. For the week, the CAC 40 was down about 0.4%. The Italy FTSE MIB rose 0.7% to close at 25,775 on Friday, rebounding from yesterday's steep losses to end the week flat as investors continued to assess the latest economic data on how the ECB's tightening of monetary policy will affect growth. Banks and insurers were among the biggest gainers in the corporate sector, with UniCredit, BPER Banca, and Generali each up 2%. Meanwhile, Saipem shares extended choppy momentum, surging 8.6 percent after the Italian offshore engineering and construction company confirmed it had secured two contracts worth a combined $900 million. On the other hand, heavyweight utilities closed in the red as European gas prices rebounded. The Spanish  IBEX35 was up 1.4% to 8918 on Friday, recovering from a 1.6% loss in the previous session, as sentiment improved on China reopening ahead of the Lunar New Year holiday. The index finished the week up 0.4%, but investors continued to weigh recession risks after hawkish comments from central bankers. Among individual shares, Cellnex Tel lifted market optimism with a rise of 9.84%, as rumors circulated of the company's acquisition by American Tower and the US fund Brookfield. The tourism and financial sectors also recorded significant gains, led by Melia Hotels (3.22%), CaixaBank (2.54%), and Bankinter (2.42%). The most significant declines were Fluidra, Acciona Energia, and Inmobiliaria, respectively, by 1.16%, 0.84%, and 0.64%. The Baltic Exchange's dry bulk shipping index, which measures the cost of shipping cargo around the world, fell for a fourth consecutive session on Friday, falling about 4.7% to a more than 2-year low and a half by 764 points, as shipping activity remains low and amid subdued demand ahead of China's Lunar New Year holiday. The Capesize index, which tracks iron ore and coal cargoes of 150,000 tons, fell about 11.9% to a four-month low of 783 points; and the Panamax index, which tracks about 60,000-70,000 tons of coal and grain cargoes, fell 11 points to 1,060 points. Among smaller vessels, the supramax index recorded a 21st consecutive day of declines, losing 2 points to 652 points, the lowest since mid-June 2020. The benchmark index lost about 19.3% in the third week of January, marking its fourth consecutive weekly drop. London stocks fell for a third straight session on Friday, driven by gains in technology and materials, with the benchmark FTSE 100 rebounding to around 7,770. 3i Group rose nearly 3 percent to lead the benchmark, while big miner Glencore rose more than 2 percent to top the list. On the data front, consumer confidence fell in January for the first time in three months, near record lows. Meanwhile, British consumers unexpectedly cut back on spending in December, fueling fears that tight financial conditions will tip the economy into recession this year. In addition, persistent inflation took hold last week as optimism over China’s reopening faded, and concerns grew over the direction of the global economy. For the week, the FTSE 100 fell more than 1%. The ruble-based MOEX Russia index closed at 2,167 on Friday, just below the benchmark, falling for a fourth straight session and down 1.5% for the week, as energy producers continued to underperform. Oil majors Lukoil and Rosneft fell 0.7% each as Russia's economic isolation limited the number of customers available to bid and pushed Urals' discount to Brent to a barrel of $30+. Meanwhile, shares in Gazprom fell more than 1% as a reported reduction in gas supplies to Europe via Ukraine and low gas prices further limited the company's revenue. The energy sector has largely underperformed its peers over the past month, down 3% year-to-date compared with a 0.6% gain for the broad index. On the other hand, solid corporate results from Sberbank in December lifted the financial sector by 5% since early January. On Friday, the Nikkei 225 rose 0.56% to close at 26,553. In comparison, the broader Topix gained 0.59% to close at 1,927, recouping some of the previous session's losses as investors braced for another strong Inflation data, which bolstered the case for the Bank of Japan's policy shift, was dismissed. The country's annual core inflation hit a 41-year high of 4% in December, topping the central bank's 2% target for the ninth month and challenging its view that near-term cost-push inflation will prove transitory. Benchmarks also rose for a second straight week, as the reopening of China boosted the outlook for the global economy while easing inflationary pressures in other major economies raised hopes of a slower pace of central bank policy tightening. All sectors were higher on Friday, with index heavyweights such as Mitsubishi UFJ (1.1%), Fast Retailing (0.9%), Nippon Steel (2.9%), Japan Yusen (2.1%) and Toyota Motor (1%) notable gains. Hong Kong shares rose 393.67 points, or 1.82 percent, to close at a nearly seven-month high of 22,044.65 on Friday, marking a third straight weekly gain, boosted by reports that the People's Bank of China injected 1.97 trillion yuan into the banking system ahead of the Lunar New Year last  week. boost. Meanwhile, the central bank left its key lending rate on hold at the January level for the fifth straight month amid optimism that policymakers will continue to take further steps to boost market confidence and help the private sector as the economy fully reopens. . Sentiment was also supported by gains in U.S. stock futures, as the federal debt limit took a hit but the Treasury Department began taking extraordinary steps to avoid any default on payments. Meituan (5.0%), Kuaishou Technology (3.1%), JD.com (2.9%), Li Ning (2.5%) and Tencent Holdings rose across the board. The Hang Seng Index will be closed from Monday to Wednesday for the Lunar New Year holiday. The China Shanghai Composite rose 0.6% to close around 3,260, while the Shenzhen Composite rose 0.3% to 11,950, its highest level in four months after the People's Bank of China kept its key lending rate unchanged for the fifth straight month. changes as authorities aim to boost market confidence and support the economy. Benchmarks were also on track for a fourth consecutive week of gains, with the economic outlook improving after China quickly lifted COVID-19 restrictions. Meanwhile, investors remained cautious ahead of the week-long Lunar New Year holiday as unexpected events could occur while markets are closed. Nevertheless, almost all sectors rose on Friday, with heavyweights such as LONGi Green Energy (3.4%), China National Software (10%), China United Network (6.2%), China Telecom (6.4%), and China Rare Earth (9.4%) substantial rise. The Australia S&P/ASX 200 traded around 7,435 on Thursday. Still, it remained on track for a third straight weekly gain, as the reopening of China boosted the outlook for the global economy while easing inflationary pressures boosted central bank policy tightening at a slower pace hope. The benchmark index also closed at a nine-month high on Thursday after weaker-than-expected employment data in Australia prompted traders to trim expectations for the pace of future rate hikes by the Reserve Bank of Australia. Commodity-related stocks were mostly higher on Friday, including Woodside Energy (1.1%), South32 (0.6%), and Newcrest Mining (2%). Whitehaven Coal rose 3% after its expected record earnings in the first half of 2023. Meanwhile, tech stocks were mostly down, with the tech-heavy Nasdaq down. Around noon on Friday, the New Zealand ANZ 50 rose 72 points, or 0.61%, to 11,958, hovering at a more than nine-month high and up 1.7% for the week, as China, New Zealand's largest trading partner, accelerates reopening. It was the third consecutive rise since. Based on current COVID infection trends, China could see a sharp recovery from the second quarter of 2023, the International Monetary Fund's Gita Gopinath said on Wednesday. Meanwhile, a senior Chinese official mentioned on Thursday that virus cases in China had dropped to "relatively low" levels before the holiday season. Domestically, Jacinda Ardern announced on Thursday that she did not have the energy to continue as leader and would leave in early February, with New Zealand's new prime minister to be appointed as soon as next week. In terms of data, the number of tourists from New Zealand surged by 4,257% year-on-year in November, mainly from Australia, the United States, and the United Kingdom. Frontrunners include Fisher & Paykel (5.6%), Summerset Group (1.4%), and Infratil Limited (0.8%). The India BSE Sensex fell 230 points in early trade on Friday to close at 60,620, extending losses from the previous session under pressure from private banks and consumer goods brands, as investors avoided risky positions ahead of a batch of earnings reports next week. Bajaj Finance and Bajaj Finserv led the way among financial firms, down 2.5 percent and 1.6 percent, respectively. Meanwhile, shares in Hindustan Unilever tumbled nearly 4% after the company announced an 80 basis point hike in the royalties it pays to parent Unilever PLC, jeopardizing its profitability. Meanwhile, Asian paint companies continued to fall 2.7 percent after missing their third-quarter profit targets, largely due to the impact of the monsoon on demand. Still, the index ended the week up 0.6%. Brazil's Ibovespa stock index closed around the 112,000 level on Friday after three consecutive sessions of gains, mainly driven lower by industrials, consumer cyclical, and resource-related stocks. The Brazilian real has lost 2% last week on concerns about central bank independence. Meanwhile, fears of possible government interference on various fronts of the Brazilian economy continued to weigh on investor sentiment. In addition, Institutional Relations Minister Alexandre Padilha said on Thursday that the Brazilian government does not intend to make any changes to the country's central bank, seeking to appease markets after leftist President Luiz Inácio Lula da Silva's public criticism of the institution. Americanas (-29%), Alpargatas (-5.9%), and Cosan (-4.5%) were among the worst performers, while Petrobras added about 3.5%.    REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most important data is: - US: U.S. existing home sales (including completed single-family homes, townhomes, condominiums, and co-ops) fell 1.5% to a seasonally adjusted annual sales rate of 4.02 million units in December 2022, slightly ahead of the market. The forecast is 3.96 million units. It marked the eleventh straight month of declines in home sales, the longest stretch since 1999 and the lowest since November 2010, as buyers continued to face limited inventory and high mortgage lending interest rates. Total housing inventory was 970,000 units, down 11.4% from last November but up 10.2% from a year ago. The median existing-home price for all housing types was $366,900, an increase of 2.3 percent compared to December 2021, as prices increased in all regions. "However, sales are expected to pick up soon as mortgage rates have fallen significantly after peaking late last year," said Lawrence Yun, chief economist at NAR. - TR: The yield on the benchmark 10-year Turkish government bond traded around 9.9% in January, holding close to the lows seen in April 2015, as inflation in the country remained high and interest rates low. However, tightening measures are introduced to support the bond market, discouraging banks from holding inflation-linked bonds as collateral for central bank funding and encouraging lenders to purchase longer-term government bonds. Furthermore, the Turkish central bank kept its interest rate steady at 9% for the second time in January, marking the end of its rate-cutting cycle. As a result, while the country's inflation remains high, it fell to a 9-month low of 64.3% in December 2022 from 84.4% in November. - CA: Preliminary estimates suggest that in December 2022, Canadian retail sales may increase by 0.5% month-on-month. In November, retail sales were down 0.1% from a month earlier, compared with a downwardly revised 1.1% gain in October and a preliminary estimate of a 0.5% increase. Retail sales fell in six of the 11 subsectors, with sharp falls in food and beverage stores (-1.6%), building materials and garden stores (-3.8%), and department stores (-0.8%). Meanwhile, sales at gas stations rose 2.2% during the period, even as gasoline prices fell 3.6% due to the reopening of several U.S. refineries. Keeping costs unchanged, retail turnover fell 0.4% from the previous month. Retail sales rose 5.2 percent in November from a year earlier, the weakest since March. - IT: Italian construction output rose 5.3% year-on-year in November 2022, the weakest since August 2021, easing from a downwardly revised 6.3% growth in the previous month. On a monthly basis, construction edged up 0.5% in November, rebounding from an upwardly revised 1% contraction in the last period. Even so, the Italian construction industry grew by 12.5% when considering the first 11 months of the year. - HK: Hong Kong's annual inflation rate rose to 2% in December 2022 after holding steady at 1.8% for the past two months, slightly higher than the market forecast of 1.9%. Price increases were largely due to food (3.8 percent versus 3.5 percent in November), electricity and utilities (14.7 percent versus 14.3 percent), transportation (2.7 percent versus 1.6 percent), miscellaneous goods (0.5 percent versus 0.4 percent), and services (1.9 percent % to 1.6%. In 2022, the Composite CPI rose 1.9 percent from the previous year, while the underlying CPI inflation averaged 1.7 percent. The CPI rose 0.3 percent on a monthly basis after increasing 0.1 percent in November. - HK: In the first quarter of 2023, Hong Kong's business confidence index was 6, up from 4 in the previous period. The proportion of respondents expecting better business conditions was 19% (16% in Q4 2022), while the proportion expecting worse business conditions increased slightly to 11% (12%). Sentiment improved in manufacturing (+23 vs. -11), accommodation and food services (+39 vs. +37), finance and insurance (+25 vs. +4), and real estate (+4 vs. -2). At the same time, the construction industry (-7 vs-5), transportation, warehousing, and express service industry (-5 vs+8), import and export trade and wholesale industry (-8 vs+9), information and communication industry (-1 vs.- 4) Sentiment remains weak as well as professional and business services (-3 vs. +2). - GE: Germany's annual producer inflation rate fell to 21.6% in December 2022 from 28.2% in November, compared with market forecasts of 20.8%, the lowest since November 2021. Energy prices remained the most significant contributor (41.9% vs. 65.8% in November), namely the distribution of natural gas (52%) and electricity (46.8%). Excluding energy, producer prices rose 12% year over year. Other notable increases were also seen in the prices of intermediate goods (12.3%), notably wood (143.2%), basic chemicals, fertilizers and nitrogen (23%), and metals (10.8%); non-durable consumer goods (18.1%) such as food (23.5%); consumer durables (11.9%); capital goods (7.7%), led mainly by machinery (9.8%) and motor vehicles (5.6%). On a month-on-month basis, producer prices fell 0.4%, the third straight monthly decline. Consider that for 2022, producer prices rose 32.9%, the highest price increase since the survey began in 1949. - CN: As widely expected, the People's Bank of China (PBoC) left key lending rates unchanged at January's level for the fifth straight month. The decision was made on the last working day before China's week-long Lunar New Year holiday. The one-year loan prime rate (LPR), used for corporate and household loans, was left unchanged at 3.65 percent; while the five-year rate, which serves as a benchmark for mortgages, remained at 4.3 percent. Earlier last week, the central bank kept its medium-term policy rate steady at 2.75% while extending more lending to some banks ahead of the Lunar New Year. In early January, the People's Bank of China established a dynamic adjustment mechanism for mortgage interest rates for first-time home buyers. Meanwhile, PBOC vice-governor Xuan Changneng said that the board has committed to further boosting market confidence and increasing support for manufacturers and small companies, hoping the economy will rebound strongly this year. - UK: UK GfK consumer confidence fell to -45 in January 2023 from -42 in December, defying expectations for a slight improvement to -40, as Brits continue to grapple with persistently high inflation and soaring energy bills. The January figure also snapped three straight months of gains, staying near the all-time low of -49 set in September. Joe Staton, director of client strategy at GfK, said: "With inflation continuing to eat up wage gains and the prospect of some staggering energy bills looming, the forecast for consumer confidence this year is not looking rosy."Consumer Confidence The index fell short of expectations, largely due to a deteriorating assessment of personal financial and economic conditions over the past year. The main purchasing index also fell notably, while perceptions of personal finances for the next year improved. - JP: Food prices in Japan rose 7.0% year-on-year in December 2022, the highest increase since September 1980, after rising 6.9% in the previous month. It was the 16th month of rising food costs due to the yen's rapid fall. Increasing cost pressures came mainly from grains (9.6% vs. 8.9% in November), fish and seafood (15.1% vs. 11.1%), alcoholic beverages (6.1% vs. 5.9%), drinks (6.3% vs. 5.6%), meat Cakes (7.1% vs. 6.4%), dairy products and eggs (9.0% vs. 7.5%), cakes and confectionary (7.6% vs. 7.3%), oils, fats and seasonings (10.2% vs. 9.5%), outdoor meals (5.8% % vs. 5.3%) and cooked food (7.3% vs. 6.8%), fresh vegetable prices rose the least in three months (0.5% vs. 7.5%), while new fruit prices fell further (-1.0% vs. 1.1%). - JP: Japan's core consumer price index (which excludes fresh food but includes fuel costs) jumped 4% in December 2022 from a year earlier, accelerating at the fastest pace since December 1981 as widening inflation Stress continues to creep through the economy. The December figure followed a 3.7 percent rise in November, in line with analysts' expectations. The core inflation reading also topped the central bank's 2 percent target for the ninth month, challenging the BOJ's view that recent cost-push inflation will prove temporary. The Bank of Japan recently defied market expectations for another policy adjustment by keeping interest rates ultra-low and its yield control policy unchanged. Still, speculators are doubling down on bets that the World Bank will need to change policy soon as inflationary pressures persist and interest rates continue to rise in other major economies. - JP: Japan's annual inflation rate rose to 4.0% in December 2022 from 3.8% a month earlier, the highest level since January 1991, due to high prices for imported raw materials and a weak yen. Upward price pressure came from all components, namely food (7.0% vs. 6.9% in November); housing (1.2% vs. 1.2%); fuel, light, and water (15.2% vs. 20.1%) and gas bills (23.3% against 21.0%); transportation and communications (2.1% against 1.6%); health care (0.4% against 0.3%), furniture and household appliances (7.5% against 7.3%); clothing ( 2.9% vs. 2.7%), education (0.7% vs. 0.7%) and miscellaneous (1.1% vs. 0.9%). As a result, core consumer prices rose 4.0 percent year-on-year, the highest since December 1981, in line with market forecasts but above the Bank of Japan's 2 percent target for the ninth month. However, on a monthly basis, consumer prices rose 0.3 percent in December, the weakest in four months, after rising 0.4 percent in November. - NZ: In December 2022, New Zealand's BusinessNZ manufacturing index fell to 47.2 from 47.4 in the previous month, the lowest level since May 2020. New orders continued to contract but improved from November (46.1 vs. 42.2), and production (49.7 vs. 49.5) rose slightly but was below no change. Inventories of finished goods (50.1 vs. 55.5) and deliveries of raw materials (48.4 vs. 49.6) both fell further, while employment (48.8 vs. 46.9) returned to October levels. - NZ: In November 2022, the number of New Zealand tourists soared 4,257% year-on-year to 226,004. Tourists mainly came from Australia (+19647.2 to 105309), the United States (+5637.9 to 24976), the United Kingdom (+1894.5 to 14929), and Singapore (+4735.3 to 7908). Still, the November figure was down from the pre-COVID-19 figure of 283,800 in October 2019. - SK: Producer prices in South Korea rose 6% year-on-year in December 2022, the lowest level since April 2021, moderating from a downwardly revised 7.2% gain in the previous month. Prices for manufactured goods rose more slowly (5.9% vs. 6.3% in November), while prices for electricity, electricity, natural gas, and wastewater rose faster (29.9% vs. 29.7%). At the same time, prices of agricultural, forestry, and marine products rose (+1.5% vs. -0.7%). On a monthly basis, the producer price index fell 0.2% from 0.3% in the previous month. - AN: The National Bank of Angola cut its key policy rate by 150 basis points to 18% at its January 2023 meeting after leaving it unchanged in November. This is the steepest rate cut since July 2018, based on the reduction in inflation observed throughout 2022 and inflationary pressures, as well as the alignment of monetary conditions with medium- to long-term inflation targets. Inflation has been declining since February, reaching a seven-year low of 11.86% in December 2022, largely due to the appreciation of the kwanza and the increased and regular supply of goods, especially food products. The central bank governor said he expects Angola to finish with 9%-11% inflation this year. “If the current situation remains unchanged, we can continue on this path,” Massano said. - IR: Wholesale prices in Ireland rose 2.5% year-on-year in December 2022, the lowest since February, and down from a 3.8% increase in November. The prices of wholesale goods sold on the domestic market increased by 8.9%, while those sold on foreign markets increased by 3.2%. However, wholesalers faced a 10.4% increase in electricity prices, as the monthly cost of electricity increased by 93.2%. - LX: Luxembourg's seasonally adjusted unemployment rate fell to 4.8% in December 2022 from 4.9% the previous month. The unemployed decreased by 111 from the last month to 14,816, while domestic employment increased by 1,950 to 510,299. Meanwhile, the number of active citizens in the workforce increased by 789 to 307,460. - GR: Greece's current account deficit increased to EUR 3.9 billion in November 2022 from EUR 2.7 billion in the corresponding month of the previous year. It was the most significant monthly current account deficit since March 2008, as the goods deficit widened substantially to €3.8 billion from €2.9 billion in November 2021, with imports (from 22.6% to 8.4 billion EUR) which exceeded exports (from 16.7% to 4.6 billion EUR) billion). At the same time, the primary income gap increased slightly to €0.3 billion from €0.2 billion; the secondary income deficit was adjusted somewhat to around €0.2 billion. Meanwhile, the services surplus fell to €0.3 billion from €0.5 billion a year ago. - GE: Annual producer price inflation in Germany fell to 21.6% in December 2022 from 28.2% in November, compared to market expectations of 20.8%, marking its lowest level since November 2021. energy continued to contribute more to the increase (41.9% against 65.8% in November), namely the distribution of natural gas (52%) and electricity (46.8%). Excluding energy, producer prices increased by 12% over the previous year. Other significant price increases were observed for intermediate goods (12.3%), especially wood (143.2%), basic chemicals, fertilizers and nitrogen (23%) and metals (10 .8%); non-durable consumer goods (18.1%), such as food (23.5%); durable consumer goods (11.9%); and capital goods (7.7%), mainly driven by machinery (9.8%) and motor vehicles (5.6%). On a month-on-month basis, producer prices fell 0.4%, the third consecutive month of declines. - ES: Estonian producer prices rose 16.6% year-on-year in December 2022, down from 22.4% growth in November 2022 and marking the lowest level since August 2021. This was the 25th consecutive month of rising producer price inflation, mainly affected by food, wood products, and metal production costs. On a monthly basis, producer prices increased by 0.3%, following a 0.2% increase in November.   LOOKING AHEAD: Week ahead: - It will be a busy week in the US with releases including the fourth quarter GDP growth rate, durable goods orders, PCE price index, personal income and spending, and earnings reports. In addition, Flash PMI data for January will be released for the US, UK, Japan, and euro area countries. Investors will also follow the BoC's interest rate decision, Germany's IFO Business Climate and GFK Consumer Confidence, GDP growth rates for South Korea and the Philippines, and the inflation rate for Australia.   Today, investors should watch out for the following essential data: - EUR: German Buba Monthly Report, Consumer Confidence, and ECB President Lagarde Speak. - CNY: Bank Holiday. - CAD: NHPI m/m. - NZD: BusinessNZ Services Index. - USD: CB Leading Index m/m. - JPY: Monetary Policy Meeting Minutes.   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - US: Stock futures contracts tied to the blue-chip Dow were flat on Friday, while those tied to the S&P 500 and Nasdaq rose 0.3% and 0.7%, respectively, as investors reassessed monetary policy and growth prospects. So far, the fourth-quarter earnings season has painted a mixed picture of the health of the U.S. economy. Some companies, such as Netflix, have reported strong growth, while big banks, including JPMorgan, have set aside more funds for expected defaults. Meanwhile, recent data showed retail sales, producer prices, and industrial production fell more than expected in December, fueling fears of a slowdown in the world's largest economy. Dismal economic data has boosted speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. Money markets expect rates to peak at 4.85% in June and a quarter-point hike in February, which Fed officials have recently delayed. - TR: The yield on the benchmark 10-year Turkish government bond traded around 9.9% in January, holding close to the lows seen in April 2015, as inflation in the country remained high and interest rates low. However, tightening measures are introduced to support the bond market, discouraging banks from holding inflation-linked bonds as collateral for central bank funding and encouraging lenders to purchase longer-term government bonds. Furthermore, the Turkish central bank kept its interest rate steady at 9% for the second time in January, marking the end of its rate-cutting cycle. As a result, while the country's inflation remains high, it fell to a 9-month low of 64.3% in December 2022 from 84.4% in November. - FR: The French 10-year yield hovered around 2.5%, remaining near its lowest level since December 14, as investors digested remarks from top European Central Bank policymakers amid fears of a slowdown in the global economy and signs of easing of inflationary pressure. ECB President Lagarde warned that the central bank would keep raising interest rates until inflation returned to its 2% target, and Knot said markets could underestimate the central bank's planned rate hikes. block. Earlier in the week, policy council member Rehn said significant rate hikes were warranted in the near term to keep inflation expectations in check, while Francois Villeroy de Galhau said interest rates could peak within the summer. As a result, markets have priced at an interest rate peak of 3.2% by August 2023, below a previous forecast of 3.5%. - GE: The German 10-year yield hovered around 2%, remaining close to its lowest since December 14th. Investors digested comments from top central bankers as weaker-than-expected US economic data bolstered expectations that the US Fed will continue to ease its pace of tightening at upcoming meetings. In Europe, ECB President Lagarde warned that the central bank will continue to raise interest rates and keep them in familiar territory for long as long as it takes to bring inflation down to its 2% target, just hours after Knot said markets could underestimate the bloc's central bank's planned rate hikes. Earlier in the week, policy council member Rehn said significant rate hikes were warranted in the near term to keep inflation expectations in check. In contrast, Francois Villeroy de Galhau said interest rates could peak within the summer. As a result, investors now expect the ECB's primary interest rate to peak at 3.2% in August 2023, below a previous forecast of 3.5%.   LEADING MARKET SECTORS: - Strong sectors: Communication Services, Information Technology, Financials, Consumer Discretionary. - Weak sectors: --   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - OIL: Brent crude futures stabilized around $86 a barrel on Friday and are on course for a second consecutive weekly gain, supported by an improving demand outlook and lingering supply concerns. The International Energy Agency said global oil consumption would hit a record daily average this year as China, the top importer of crude oil, opened up its economy. At the same time, the IEA also warned that price cap sanctions on Russia could further dent supply.OPEC echoed a similar view in its monthly report released last week, saying demand for crude oil will rise by 2.22 million barrels per day (BPD), or 2.2%, supported by increasing Chinese consumption and a recovery in economic activity among advanced economies. On the supply side, OPEC+ decided to maintain its policy of reducing oil production in December. - WTI: WTI crude futures stabilized around $81 a barrel on Friday and are on course for a second consecutive weekly gain, supported by an improving demand outlook and lingering supply concerns. The International Energy Agency said global oil consumption would hit a record daily average this year as China, the top importer of crude oil, opened up its economy. At the same time, the IEA also warned that price cap sanctions on Russia could further dent supply.OPEC echoed a similar view in its monthly report released last week, saying demand for crude oil will rise by 2.22 million barrels per day (BPD), or 2.2%, supported by increasing Chinese consumption and a recovery in economic activity among advanced economies. On the supply side, OPEC+ decided to maintain its policy of cutting oil production, limiting global supplies by 2 million barrels a day in December. - WET: Chicago wheat futures extended losses to less than $7.3 a bushel in late January, the lowest since October 2021, following declines in other grains as rainfall in Argentina's top producer eased drought fears and added to strong supply expectations from other manufacturers. In Russia, industry research leader Sovecon has revised its shipment projections for the world's leading 200,000-ton exporter to 44.1 million for the current marketing year due to a record harvest and record inventories. Another major exporter, Australia, has also forecast its crop to reach a historic 42 million tons over the same period. Finally, the expansion of farmland in India has raised expectations that the current harvest would set a record and lead to the lifting of the ban on wheat exports from New Delhi.   CHART OF THE DAY: The U.S. dollar index was steady near 102 on Friday after increased volatility in recent sessions, as traders assessed a slew of U.S. data on Thursday that suggested the Federal Reserve's sharp rate hikes were already impacting the economy. However, U.S. jobless claims fell short of expectations last week, indicating another month of strong job growth and continued tightness in the labor market. Meanwhile, a slew of Fed officials last week reiterated their pledge to tighten policy, with Vice Chairman Rael Brainard saying rates need to remain elevated for some time to further cool inflation. Still, slowing U.S. inflation has fueled expectations that the Fed will scale back to a modest rate hike of 25 basis points in February after raising rates by half a percentage point in December.     - U.S. dollar index (DXY) - chart (W1), downtrend, Resistance (consolidation) around ~ 104, Support (target zone) around  ~ 98.