GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

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

European stocks had a solid start to the week, with the Stoxx 600 up 0.5% and technology stocks up more than 2%. Elsewhere, Germany's DAX rose 0.5%, above 15,100. Optimism over China's reopening, falling gas prices in Europe, and expectations of more accessible monetary policy from the Federal Reserve supported market sentiment. However, ECB Governing Council member Nott said the ECB would raise interest rates by 50 basis points in February and March and will continue to hike rates in the following months. On the macro front, eurozone consumer morale rose to its highest level since February 2022. In corporate headlines, spices and spices maker Symrise dropped, warning its 2022 results would miss expectations due to impairments. Citigroup upgraded the shares of Remy Cointreau to "buy" from "neutral" and raised the target price. The CAC 40 index rose on Monday, closing at 7032 points, or about 0.5%, rising for the second consecutive session, as expectations of a mild recession in the euro zone offset hawkish comments from European Central Bank officials. Meanwhile, investors awaited a slew of economic data from major economies while also bracing for a busy week of earnings in Europe and the United States. On the corporate front, cyclical were the best performers, led by Unibail Rodamco (+4.7%), Alstom (+3.4%), STMicroelectronics (+2.6%), Renault (+2.2%), and Michelin (+1.9%), Sanofi lost nearly 1%, like the entire medical industry in Europe. The FTSE MIB index erased earlier losses to end 0.2% higher at 25,820 on Monday, slightly extending the previous session's rally on the back of technology stocks, utility providers, and banks. However, some weighting Dividends on shares have been reduced. Meanwhile, investors digested signals from European Central Bank policymakers paving the way for two consecutive 50 basis point rate hikes at their upcoming meeting, weighing on government debt prices. Leonardo shares rose 3.5 percent after top consumer France said it would boost defense spending this year. Utilities also posted gains as TTF natural gas prices fell. On the other hand, Enel and Saipem fell 3.2% and 2.8%, respectively, in ex-dividend trading. The Spanish Ibex 35 rose 0.3% to 8,944 on Monday, hitting its highest closing level since November 2021 and extending a 0.4% gain from last week, in line with its European counterparts on optimism on the recovery in China and hopes for small interest rate hikes from the Fed. In addition, investors welcomed data on the consumer confidence indicator in the euro area, which increased by 1.1 points to - 20.9 in January 2023, the highest score since February 2022. Among individual stocks, Fluidra (+2.3%) led gains, followed by Inmobiliaria Colonial and Enagas, up about 2% each. Conversely, the most significant drop was Grupo ACS, down 2.32%.

London shares rose for a second straight session on Monday, driven by the heavyweight materials sector, with the blue-chip FTSE 100 closing around 7,780. Dismal U.S. economic data last week supported the case for a slowdown in the pace of rate hikes, with Fed President Christopher Waller backing a quarter-point hike at the next meeting. On the corporate front, online grocery retailer Ocado rose nearly 4 percent to lead the FTSE 100's gains. 

The Baltic Exchange's dry bulk shipping index, which measures the cost of shipping goods around the world, fell for the fifth consecutive session on Monday, falling about 43% to a low in more than 2.5 years by 740 points, as shipping activity remains low and amid subdued demand due to the Lunar New Year holiday in China. The Capesize index, which tracks iron ore and coal cargoes of 150,000 tons, tumbled about 6.6% to a new four-month low of 735 points; and the Panamax index, which tracks about 60,000-70,000 tons of coal and grain cargoes, fell 12 points to 1,048 points. Among smaller vessels, the supramax index recorded a 22nd consecutive day of declines, shedding 7 points to a two-and-a-half-year low of 645 points.

The ruble-based MOEX Russia index rose 0.7% to 2,182 in early trade on Monday, paring losses from the previous week on the back of banks and technology stocks, as investors weighed in on Russia's pledge to arm Ukraine with Panther tanks if the West, will escalate its war, and geopolitical risks are monitored. Tech giants Ozon and Yandex led the gains, rising 3.2 percent and 2 percent, respectively. Lenders also rose sharply, with Sberbank up 1.4%. Meanwhile, Gazprom rose 0.6% as the latest data showed a 44% surge in liquefied natural gas exports to China in 2022, softening the blow as flows to Europe dwindle. On the other hand, oil stocks continued to underperform the broader index and were mixed, with Bashneft down 0.3% and Rosneft and Lukoil closing in the green. Russia's economic isolation has limited the number of customers available for bidding and pushed Urals' discount to Brent to more than $30 a barrel.

The Dow rose nearly 400 points on Monday, while the S&P 500 and Nasdaq 100 gained 1.5% and 2.2%, respectively, as investors paused to reassess the outlook for monetary policy while bracing for a busy week of earnings. Recent economic data has heightened fears that the U.S. economy is nearing a recession while fueling speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. Meanwhile, earnings season for several big tech companies, including Microsoft, Tesla, IBM, and Intel, is set to kick into high gear this week. 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. Elsewhere, software company Salesforce rose 3% today after activist investor Elliott Management Corp invested in the company.

The Canada S&P/TSX Composite rose 0.2% to close at 20,550 on Monday, hovering near a seven-month high, as investors monitored commodity prices and monetary policy expectations ahead of Wednesday's Bank of Canada rate decision. The People's Bank of China is expected to raise its key interest rate by 25 basis points, having previously signaled that the tightening cycle is ending. Hopes for easier monetary conditions supported technology stocks leading the gains, averaging gains of more than 1%. Rate-sensitive cannabis producers also fell sharply after a weak performance last week. Meanwhile, energy stocks edged higher on higher crude oil prices. Miners, on the other hand, underperformed as they tracked the fall in gold prices.

The Japan Nikkei 225 gained 1.11% to close at 26,906, while the broader Topix rose 0.96% to close at 1,945 on Monday, its highest level in a month, buoyed by a rebound in tech stocks following a rally on Wall Street and pressure on monetary tightening. Smaller expected boost. Japanese stocks also rose last week as the Bank of Japan defied market pressure to adjust its ultra-low interest rate policy, even as another touted inflation data supported the policy change. SoftBank Group (1.7%), Tokyo Electron (2.5%), Keyence (2.8%), Advantest (2.2%), and Murata Manufacturing (2.1%) led the technology sector. Almost all other sectors were up, including index heavyweights such as Fast Retailing (2.7%), Nippon Steel (2.4%), Daikin Industries (%), Orient Land (1.8%), and Sumitomo Mitsui (1%).

On Monday, the New Zealand ANZ 50 index fell 28.76 points to close at 11948.72 points, a drop of 0.24% lower than the nine-month high set in the previous trading day. Many markets in Asia were closed due to the Lunar New Year. Meanwhile, U.S. stock futures fell on Friday as U.S. stocks rose as technology and other high-growth stocks rebounded. Elsewhere, Los Angeles police confirmed the death of a suspect in Saturday's mass shooting at a California ballroom that left at least ten dead and ten others injured. Locally, New Zealand's new prime minister, Chris Hipkins, pledged to cut government reforms to focus on "bread and butter issues," including inflation. Ardern is expected to be sworn in as the new leader on Wednesday after formally resigning last week. At the bottom are business services, consumer durables, and retail trade. Fisher & Paykel fell 3.4 percent, PGG Wrightson Ltd and Mercury NZ each fell 2 percent and Restaurant Brands fell 1.1 percent.

The Australia S&P/ASX 200 rose 0.2% to close above 7,460 on Monday, its highest level in nearly nine months, led by technology stocks after Wall Street rebounded and expectations of monetary tightening faded. Gains in the technology sector included Block Inc (6.3%), Xero (2.3%), Altium (1.7%), Brainchip Holdings (2.3%), and Megaport (1.6%). Sezzle Inc also rose 26% after the company announced a second consecutive month of profit. Clean energy-related companies also posted strong gains, including Pilbara Mining (4%), Liontown Resources (6.2%), Allen (2%), Core Lithium (4.3%), and IGO Ltd (2.6%). Meanwhile, heavyweight iron ore miners lagged behind the market, with BHP Group (-0.7%), Rio Tinto (-0.9%), and Fortescue Metals (-0.4%) down.

The India BSE Sensex rose 340 points to close at 20,940 on Monday, extending gains from the previous week and tracking Wall Street's gains on Friday as comments from Fed policymakers bolstered expectations of a slowdown in Fed rate hikes. The sentiment was also underpinned by an expected increase in demand from the Chinese economy as reopening measures continue amid Lunar New Year celebrations. Tech stocks and banks both rose sharply, with State Bank of India Tech Mahindra and Infosys up more than 1.5%. However, outside the benchmark index, Yes Bank fell 8.1 percent as bad debt provisions surged in the quarter to December, and net profit fell 80 percent. Meanwhile, economists expect the central government to borrow a record 16 trillion rupees in the fiscal year ending March 2024, further putting pressure on India's debt instruments.

 

REVIEWING THE LAST ECONOMIC DATA:

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

- EU: Eurozone consumer confidence rose 1.1 points to -20.9 in January 2023, the highest since February 2022, on hopes that lower energy prices and recovery fund spending could help avert a recession this year. However, preliminary estimates showed the index was still below market expectations of -20. Across the EU, consumer confidence rose by 1.4 percentage points to -22.4.

- CA: The loonie changed hands to $1.34 in the fourth week of January, more than 3% above its more than two-year low of $1.388, hit on Oct. highest level since 2007. The central bank has raised interest rates at a record pace of 400 basis points since March amid high inflation. As a result, Canada's annual inflation rate fell to 6.3% in December 2022, down further from the 1983 peak of 8.1% in June and below market expectations of 6.4%. In addition, rising crude oil prices also added support for the lunatics. Oil, one of Canada's main exports, traded above $88 a barrel on continued optimism about future fuel demand.

- CA: New home prices in Canada stagnated in December 2022 compared to the previous month, maintaining a 0.2% decline from the previous month compared to expectations for a 0.2% decline. It marked the fourth straight month of no growth in new home prices, as costs fell in six of the 27 census metropolitan areas and remained unchanged in 19. These developments underscore that high mortgage rates continue to weigh on the Canadian housing market, with the Bank of Canada raising its key interest rate earlier this month. Prices fell in Winnipeg, Saskatoon, London, Kelowna, and Edmonton, while costs rose slightly in Montreal and Calgary. New home prices rose 3.9% yearly, the slowest gain since October 2020.

- PL: Producer prices in Poland increased 20.4% year on year in December 2022, down from an upwardly revised 21.1% increase in the previous month but above market expectations for a rise of 19.4%. It was the lowest reading since February 2022, as prices fell for most industrial activities, namely manufacturing (15.3% versus 16.2% in November), electricity supply, gas, steam, and air conditioning (66.8% vs. 67.3%), water supply, sewage, waste management and remediation activities (4.7% vs. 5%). Meanwhile, prices have increased faster for mining and quarrying (23.2% versus 21.6%). Month-on-month, producer prices rose 0.5%, rebounding from November's 0.3% drop.

- PL: Industrial production in Poland rose 1% year-on-year in December 2022, down from a 4.5% increase the previous month and below market expectations of a 1.4% increase. It was the weakest growth since January 2021, as output fell in mining and quarrying (-6.9% versus 0.6% in November) and in electricity, gas, steam, and air conditioning (-16 .3% versus -12.6%). At the same time, output slowed for manufacturing (3.4% versus 6.4%) while it accelerated for water supply and sewage waste management (1.8% versus 0.6%). Looking at the January-December period, industrial activity increased by 10.2 percent compared to 2021. However, on a month-on-month basis, industrial production decreased by 6.4 percent, following a 2.8 percent increase in November.

 

LOOKING AHEAD:

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

- GBP: Public Sector Net Borrowing, Flash Manufacturing PMI, Flash Services PMI, and CBI Industrial Order Expectations.

- USD: Flash Services PMI, Flash Manufacturing PMI, and Richmond Manufacturing Index.

- JPY: Flash Manufacturing PMI and BOJ Core CPI y/y.

- EUR: German GfK Consumer Climate, French Flash Manufacturing PMI, French Flash Services PMI, German Flash, Manufacturing PMI, German Flash Services PMI, Flash Manufacturing PMI, and Flash Services PMI.

- AUD: Flash Manufacturing PMI, NAB Business Confidence, and Flash Services PMI.

- CHF: Trade Balance, and Gov Board Member Schlegel Speaks.

- CNY: Bank Holiday.

- NZD: CPI q/q.

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- CA: Canada's 10-year government bond yield has recovered to around 2.9 percent from a five-month low of 2.7 percent hit on Jan. 18 as investors reassess monetary policy and growth prospects. Canada's annual inflation rate fell to 6.3% in December 2022, the lowest since February 2022 and below market expectations of 6.4%, reinforcing the case for a slowdown in the Bank of Canada's pace of rate hikes or even the end of the tightening cycle. Meanwhile, analysts expect growth to stall in the final quarter of 2022 and the first half of 2023 amid evidence that tight monetary policy is already dampening domestic demand and weakening economic activity.

- US: U.S. 10-year Treasury yields, seen as a proxy for global borrowing costs, consolidated around 3.5% as hawkish comments from several Fed policymakers poured cold water on expectations the central bank would soon slow its aggressive tightening drive. Federal Reserve Vice Chairman Rael Brainard, considered dovish, said interest rates would need to remain high to bring inflation down to the 2% target. Still, investors aren't blindly buying the tightening narrative, with recession speculation fueling bets the Fed will eventually cut rates later this year. Moreover, data last week showed Americans held back spending even as business investment fell, adding to fears that the economy may be headed toward a recession. As a result, money markets are now pricing in more than a 95% chance that the U.S. central bank will raise rates by 25 basis points in February.

- IN: India's 10-year government bond yield rose to 7.35%, close to a two-month high of 7.37% hit on Jan. 6, as worries about larger debt offset expectations for a pause in the RBI's tightening cycle. Economists expect India's central government to borrow a record 16 trillion rupees in the fiscal year ending March 2024. Concerns about soaring debt remain despite the government's pledge to prioritize budgetary discipline, as slower growth and lower tax revenues limit government revenue. Meanwhile, accommodative inflation has fueled hopes that the RBI is about to pause its tightening cycle after raising rates by 25 basis points in February, adding to 250 basis points of hikes from May 2022. Retail prices grew by an average annual rate of 5.7% in December, below the central bank's upper limit target of 6% for the second consecutive month and market expectations of 5.9%.

- US: Stock futures contracts linked to the three major indexes fluctuated between modest gains and losses on Monday, as investors appeared unwilling to take positions ahead of a busy week of earnings and economic data. 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. Later in the week, several prominent tech companies, including Microsoft, Tesla, IBM, and Intel, will report results, and the season will enter a higher stage. At the same time, recent economic data has fueled fears that the U.S. economy is nearing a recession and speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. In addition, fourth-quarter GDP data due on Thursday will give analysts clues about the health of the world's largest economy.

- IT: Italy's 10-year BTP yield rebounded to 4.01% after touching 3.691% on Jan. 18, its lowest level since early December, amid still rising underlying inflation in the eurozone and hawkish comments from some policymakers; the ECB is expected to continue tightening. ECB official Klaas Knot said on Sunday he expected the central bank's primary interest rate to rise by 50 basis points in both February and March and continue to climb after that, while President Lagarde also warned that The central bank would continue to raise interest rates and hold them within limits if necessary to bring inflation down to its 2% target. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023. As a result, the spread between the closely watched 10-year BTP and Germany's BTP widened from an eight-month low of 164 basis points last week.

- FR: French 10-year bond yields rose to 2.63% from a more than one-month low of 2.394% touched on Jan. 18, as investors priced in concerns from the ECB's key policymaker on recession fears and signs of easing inflationary pressures. Hawkish rhetoric. European Central Bank board member Klaas Knot (Klaas Knot) said that the ECB should continue to raise interest rates by half a percentage point at the next two meetings. The time for slowing the rate hikes is "far away," while Hall Ziman said he expects at least two rate hikes of 50 basis points each in the first half of the year. Earlier this month, Wren had said that sharp rate hikes in the near term were justified to keep inflation expectations in check. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023.

- UK: U.K. 10-year gilt yields rose to 3.4 percent from a more than one-month low of 3.3 percent in late January, little changed as investors looked set to hike rates again to 4 percent next month, with markets pessimistic beyond that. However, there is disagreement about how much higher borrowing costs will rise. The prospect of rising bond supply and concerns that the global economy could slip into recession also supported yields. The latest data showed that UK consumer price inflation fell as expected to 10.5% in December but remained well above the Bank of England's 2% target, while core interest rates were near October's record high. Meanwhile, food and drink costs rose at the fastest pace since 1977, suggesting inflationary pressures are likely to persist for some time. Earlier this month, the latest jobs report showed that wages in the UK grew faster since records began in 2001, excluding gains during the COVID-19 pandemic.

- GE: German 10-year bond yields were little changed at 2.2 percent in late January, above a more than one-month low of 2 percent, as investors weighed hawkish comments from several European Central Bank policymakers and expectations that the Fed would soon The meeting held continued to lower expectations for the pace of tightening. ECB official Klaas Knot said on Sunday he expects the central bank's key interest rate to rise by 50 basis points in February and March and continue to climb after that. President Lagarde also warned that the central bank would continue to raise interest rates and keep them within limits if necessary to bring inflation down to its 2% target. Holzman said he expects at least two rate hikes of 50 basis points each in the year's first half. Earlier this month, Wren had said that sharp rate hikes in the near term were justified to keep inflation expectations in check. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023.

- JP: The yen fell to 130 yen/dollar, retreating further from multi-month highs, as the Bank of Japan remained committed to its ultra-low interest rate policy despite rising inflation and mounting market pressures. Last week, the central bank fended off speculation of another policy adjustment by keeping its ultra-low interest rate and yield control policy unchanged. Bank of Japan Governor Haruhiko Kuroda also reiterated that the 2 percent inflation target must be achieved sustainably. Meanwhile, traders are eyeing the Bank of Japan's policy meeting in March and April when the BOJ's new governor takes office. Japanese Finance Minister Junichi Suzuki also warned that "the severity of Japan's public finances has reached an unprecedented level as we prepare a supplementary budget to deal with the new crown virus and similar problems."

- EU: The European Central Bank (ECB) will raise interest rates by 50 basis points in February and March, ECB Governing Council member Klas Knot said in an interview with Dutch broadcaster WNL on Sunday, according to Reuters. And will continue to raise interest rates in the next few months. However, in a separate interview with the Italian newspaper La Stampa published on Sunday, Knot said it was too early to "judge" whether the ECB would be able to slow the pace of rate hikes before the summer. Meanwhile, the accounts of the central bank's December policy meeting showed that some ECB policymakers had initially advocated a 75 basis point rate hike, as inflation was expected to remain too high for too long, and the worsening outlook called for a larger walk than the market was pricing in. However, most members ultimately agreed to a small 50 basis point rate hike. The ECB has hiked interest rates by 250 basis points since the summer, and markets are already pricing at a peak rate of 3.2% by August 2023.

- CH: The yield on the 10-year Swiss government bond rose to 1.23%, rebounding from a six-week low of 1.06% hit on January 18 and following the decline in European bond prices as major central banks of the continent have promised to maintain an aggressive policy in their next decisions. The ECB has signaled it will raise its key rates by 50 basis points over the next two meetings to extend the fight against rising inflation. Domestically, the SNB warned that further rate hikes should be considered as price growth could remain high for an extended period even if energy prices fall due to secondary effects. However, Swiss inflation is seen well below that of its eurozone neighbors, falling to 2.8% in December versus market bets of 2.9% and central bank expectations of 3%.

- BR: The yield on Brazilian 10-year government bonds consolidated at around 11%, rebounding from a two-month low of 12.3% reached on January 12, amid growing worries about Brazil's public finances and political turmoil. Left-wing President Luiz Inacio Lula da Silva is considering increasing government spending despite warnings of rising debt after significant outlays during the pandemic. Furthermore, Lula recently criticized formal central bank independence, saying that the current inflation target is hampering economic growth. The Brazilian economy is likely to slow down or even enter a recession this year as tightening financial conditions have dented household spending. On the policy side, Brazil's central bank has already pushed interest rates to 11.75% from a record low of 2% in March last year.

 

LEADING MARKET SECTORS:

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

- Weak sectors: --

 

TOP CURRENCY & COMMODITIES MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- USD: The U.S. dollar index bottomed out around 102 and hovered near its highest level since May 2022 as investors shunned the greenback on fears of a U.S. recession and a less aggressive outlook for the Federal Reserve. Recent economic data, such as housing and manufacturing data, point to rising headwinds facing the overall economy. Meanwhile, signs of moderating U.S. inflation have fueled speculation that the Fed will slow its rate hikes further, with money markets now pricing in more than a 95% chance the central bank will raise its funding by 25 basis points in February. Investors are also looking ahead to a slew of U.S. data that may offer clues to the path of interest rates, including fourth-quarter GDP growth, durable goods orders, the PCE price index, and consumer data.

- GBP: Sterling rose above $1.24 for the first time since Dec. 14, as the Bank of England is likely to stick with its current tightening policy, while investors expect the Fed to be less aggressive in the coming months after weaker-than-expected U.S. economic data. So positive. In the UK, policymakers are set to raise interest rates by half a percentage point to 4.0% at their February policy meeting after raising rates nine times in a row. Markets are divided on how much further to rise in rates, while they expect bank rates to peak at around 4.5% by the middle of the year. Data last week showed UK inflation moved further away from October's 41-year high but remained well above the Bank of England's 2 percent target. The core CPI rate remained unchanged near record highs, and food and beverage prices rose at the fastest pace since 1977, suggesting that inflation will remain elevated for some time.

- EUR: The euro continued to rise to near $1.09 in the second half of January, hitting a fresh nine-month high, as bets grew on more monetary policy tightening from the European Central Bank and markets started pricing in cuts from the Fed. The ECB is expected to continue to act aggressively, raising interest rates by 50 basis points in February and March, with the deposit rate rising from the current 2% to a peak of 3.25%. The bet was strengthened after Governing Council member Klaas Knot signaled at least two 50 basis point rate hikes, and the tightening mode continued into the summer. On the other hand, the Federal Reserve, which started raising borrowing costs earlier than the ECB, is expected to continue to ease the pace of tightening this year, with a 25 basis point hike at its next two policy meetings.

- CHF: The Swiss franc weakened to 0.92 per USD from a 1-year high of 0.916 hit on Jan. 16 as investors continued to assess the prospects for monetary tightening from the Swiss National Bank and Federal Reserve. The sharp slowdown in Swiss inflation limited expectations of how much the SNB would increase its benchmark borrowing cost. December price data showed inflation fell to 2.8% in Switzerland, below the SNB's projection of 3% and market estimates of 2.9%. However, President Jordan stressed that further rate hikes should not be ruled out as second-degree inflation threats are still prevalent in the country's economy. Last year the SNB raised its key rate by 175 basis points, lifting borrowing costs from the negative territory for the first time since 2011.

- SLV: Spot silver prices fell to $23 an ounce, retreating from a nine-month high of $24.4 hit on Jan. 16 as the dollar stabilized and investors reassessed the monetary policy outlook at major central banks and the demand for industrial inputs. Despite growing bets that the Federal Reserve will hike its key rate 25bps more slowly at its next meeting, policymakers have stressed there is still more work to be done before inflation returns to target and signaled the possibility that the terminal rate exceeds the 5% currently valued by the money markets. In addition to reducing the attractiveness of non-interest-bearing bullion investments, rising borrowing costs ease the demand for silver as an industrial input for goods with high electrical conduction needs, which was reflected in the recent decline in energy stocks solar.

- GAS: Natural gas prices in Europe traded below €65/MWh, reversing a 3% increase in the previous week and approaching the 16-month low of nearly €50 hit in early January as the cold snap in Europe is set to fade this week, with warmer temperatures expected to return next week. Gas depots across Europe are fuller than usual at more than 78%, and LNG imports are expected to remain strong, which helps counter weaker supplies from Norway due to maintenance work. European countries avoided a major energy crisis without Russian gas this winter thanks to hot weather, record amounts of LNG imports, shipments from Norway, and other alternatives, including coal, nuclear, and wind. Russia sends gas via pipelines to Europe, through Ukraine, and via TurkStream, but flows through Ukraine have been reduced recently.

- SOY: As supply concerns eased, soybean futures extended losses to less than $15 a bushel, the lowest level in more than a week. Argentina, the world's largest exporter of soybean meal and soybean oil, received some rain over the weekend, and the weather forecast indicates more to come this week. In addition, Brazil's production in 2022-23 is expected to reach a record high, which could hurt exports from the United States. Meanwhile, China's top consumer is expected to ramp up purchases as the country reopens after three years of pandemic lockdown.

- WTI: WTI crude futures traded around $82 a barrel on Monday, closing at its highest level since Nov. 16, as investors continued to assess the global demand outlook as they braced for more sanctions on Russian oil. However, trading will likely remain subdued as many Asian markets were offline for the Lunar New Year holiday. Last week, the IEA and OPEC offered a bullish outlook for 2023, saying reopening China's economy will boost demand. Additionally, increased traffic in China before the Lunar New Year holiday bodes well for fuel consumption. On the supply side, the EU and G7 nations will cap the prices of refined Russian products starting in February, on top of the price cap on Russian crude that has been in effect since December and the EU embargo on imports of Russian oil by sea.

- GLD: Spot gold prices remained close to $1,925 an ounce on Monday, slightly below the nine-month high of $1,931 hit in the previous session despite a weaker dollar as investors continued to weigh policy expectations more restrictive monetary policy by the main central banks. While money markets expect the Federal Reserve to raise its funds rate by a 25 basis point drop at its next meeting, FOMC members have repeatedly said that the fight against inflation is far from over, suggesting that slower interest rate hikes could continue beyond the 5% terminal rate, which is currently discounted. Meanwhile, the European Central Bank has signaled it will continue its aggressive tightening path to curb the rise in inflation in the bloc, with policymakers clearing the way for two more 50bp rate hikes.

 

CHART OF THE DAY:

The France CAC 40 index rose on Monday, closing at 7032 points, or about 0.5%, rising for the second consecutive session, as expectations of a mild recession in the euro zone offset hawkish comments from European Central Bank officials. Meanwhile, investors awaited a slew of economic data from major economies while also bracing for a busy week of earnings in Europe and the United States. On the corporate front, cyclical were the best performers, led by Unibail Rodamco (+4.7%), Alstom (+3.4%), STMicroelectronics (+2.6%), Renault (+2.2%), and Michelin (+1.9%), Sanofi lost nearly 1%, like the entire medical industry in Europe.

 

 

 

 

-  France CAC 40 index  - chart (D1), Resistance (target zone) around ~ all-time high 7384,  Support (consolidation) around  ~ 6767 & 6484.

GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS: Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS) European stocks had a solid start to the week, with the Stoxx 600 up 0.5% and technology stocks up more than 2%. Elsewhere, Germany's DAX rose 0.5%, above 15,100. Optimism over China's reopening, falling gas prices in Europe, and expectations of more accessible monetary policy from the Federal Reserve supported market sentiment. However, ECB Governing Council member Nott said the ECB would raise interest rates by 50 basis points in February and March and will continue to hike rates in the following months. On the macro front, eurozone consumer morale rose to its highest level since February 2022. In corporate headlines, spices and spices maker Symrise dropped, warning its 2022 results would miss expectations due to impairments. Citigroup upgraded the shares of Remy Cointreau to "buy" from "neutral" and raised the target price. The CAC 40 index rose on Monday, closing at 7032 points, or about 0.5%, rising for the second consecutive session, as expectations of a mild recession in the euro zone offset hawkish comments from European Central Bank officials. Meanwhile, investors awaited a slew of economic data from major economies while also bracing for a busy week of earnings in Europe and the United States. On the corporate front, cyclical were the best performers, led by Unibail Rodamco (+4.7%), Alstom (+3.4%), STMicroelectronics (+2.6%), Renault (+2.2%), and Michelin (+1.9%), Sanofi lost nearly 1%, like the entire medical industry in Europe. The FTSE MIB index erased earlier losses to end 0.2% higher at 25,820 on Monday, slightly extending the previous session's rally on the back of technology stocks, utility providers, and banks. However, some weighting Dividends on shares have been reduced. Meanwhile, investors digested signals from European Central Bank policymakers paving the way for two consecutive 50 basis point rate hikes at their upcoming meeting, weighing on government debt prices. Leonardo shares rose 3.5 percent after top consumer France said it would boost defense spending this year. Utilities also posted gains as TTF natural gas prices fell. On the other hand, Enel and Saipem fell 3.2% and 2.8%, respectively, in ex-dividend trading. The Spanish Ibex 35 rose 0.3% to 8,944 on Monday, hitting its highest closing level since November 2021 and extending a 0.4% gain from last week, in line with its European counterparts on optimism on the recovery in China and hopes for small interest rate hikes from the Fed. In addition, investors welcomed data on the consumer confidence indicator in the euro area, which increased by 1.1 points to - 20.9 in January 2023, the highest score since February 2022. Among individual stocks, Fluidra (+2.3%) led gains, followed by Inmobiliaria Colonial and Enagas, up about 2% each. Conversely, the most significant drop was Grupo ACS, down 2.32%. London shares rose for a second straight session on Monday, driven by the heavyweight materials sector, with the blue-chip FTSE 100 closing around 7,780. Dismal U.S. economic data last week supported the case for a slowdown in the pace of rate hikes, with Fed President Christopher Waller backing a quarter-point hike at the next meeting. On the corporate front, online grocery retailer Ocado rose nearly 4 percent to lead the FTSE 100's gains.  The Baltic Exchange's dry bulk shipping index, which measures the cost of shipping goods around the world, fell for the fifth consecutive session on Monday, falling about 43% to a low in more than 2.5 years by 740 points, as shipping activity remains low and amid subdued demand due to the Lunar New Year holiday in China. The Capesize index, which tracks iron ore and coal cargoes of 150,000 tons, tumbled about 6.6% to a new four-month low of 735 points; and the Panamax index, which tracks about 60,000-70,000 tons of coal and grain cargoes, fell 12 points to 1,048 points. Among smaller vessels, the supramax index recorded a 22nd consecutive day of declines, shedding 7 points to a two-and-a-half-year low of 645 points. The ruble-based MOEX Russia index rose 0.7% to 2,182 in early trade on Monday, paring losses from the previous week on the back of banks and technology stocks, as investors weighed in on Russia's pledge to arm Ukraine with Panther tanks if the West, will escalate its war, and geopolitical risks are monitored. Tech giants Ozon and Yandex led the gains, rising 3.2 percent and 2 percent, respectively. Lenders also rose sharply, with Sberbank up 1.4%. Meanwhile, Gazprom rose 0.6% as the latest data showed a 44% surge in liquefied natural gas exports to China in 2022, softening the blow as flows to Europe dwindle. On the other hand, oil stocks continued to underperform the broader index and were mixed, with Bashneft down 0.3% and Rosneft and Lukoil closing in the green. Russia's economic isolation has limited the number of customers available for bidding and pushed Urals' discount to Brent to more than $30 a barrel. The Dow rose nearly 400 points on Monday, while the S&P 500 and Nasdaq 100 gained 1.5% and 2.2%, respectively, as investors paused to reassess the outlook for monetary policy while bracing for a busy week of earnings. Recent economic data has heightened fears that the U.S. economy is nearing a recession while fueling speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. Meanwhile, earnings season for several big tech companies, including Microsoft, Tesla, IBM, and Intel, is set to kick into high gear this week. 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. Elsewhere, software company Salesforce rose 3% today after activist investor Elliott Management Corp invested in the company. The Canada S&P/TSX Composite rose 0.2% to close at 20,550 on Monday, hovering near a seven-month high, as investors monitored commodity prices and monetary policy expectations ahead of Wednesday's Bank of Canada rate decision. The People's Bank of China is expected to raise its key interest rate by 25 basis points, having previously signaled that the tightening cycle is ending. Hopes for easier monetary conditions supported technology stocks leading the gains, averaging gains of more than 1%. Rate-sensitive cannabis producers also fell sharply after a weak performance last week. Meanwhile, energy stocks edged higher on higher crude oil prices. Miners, on the other hand, underperformed as they tracked the fall in gold prices. The Japan Nikkei 225 gained 1.11% to close at 26,906, while the broader Topix rose 0.96% to close at 1,945 on Monday, its highest level in a month, buoyed by a rebound in tech stocks following a rally on Wall Street and pressure on monetary tightening. Smaller expected boost. Japanese stocks also rose last week as the Bank of Japan defied market pressure to adjust its ultra-low interest rate policy, even as another touted inflation data supported the policy change. SoftBank Group (1.7%), Tokyo Electron (2.5%), Keyence (2.8%), Advantest (2.2%), and Murata Manufacturing (2.1%) led the technology sector. Almost all other sectors were up, including index heavyweights such as Fast Retailing (2.7%), Nippon Steel (2.4%), Daikin Industries (%), Orient Land (1.8%), and Sumitomo Mitsui (1%). On Monday, the New Zealand ANZ 50 index fell 28.76 points to close at 11948.72 points, a drop of 0.24% lower than the nine-month high set in the previous trading day. Many markets in Asia were closed due to the Lunar New Year. Meanwhile, U.S. stock futures fell on Friday as U.S. stocks rose as technology and other high-growth stocks rebounded. Elsewhere, Los Angeles police confirmed the death of a suspect in Saturday's mass shooting at a California ballroom that left at least ten dead and ten others injured. Locally, New Zealand's new prime minister, Chris Hipkins, pledged to cut government reforms to focus on "bread and butter issues," including inflation. Ardern is expected to be sworn in as the new leader on Wednesday after formally resigning last week. At the bottom are business services, consumer durables, and retail trade. Fisher & Paykel fell 3.4 percent, PGG Wrightson Ltd and Mercury NZ each fell 2 percent and Restaurant Brands fell 1.1 percent. The Australia S&P/ASX 200 rose 0.2% to close above 7,460 on Monday, its highest level in nearly nine months, led by technology stocks after Wall Street rebounded and expectations of monetary tightening faded. Gains in the technology sector included Block Inc (6.3%), Xero (2.3%), Altium (1.7%), Brainchip Holdings (2.3%), and Megaport (1.6%). Sezzle Inc also rose 26% after the company announced a second consecutive month of profit. Clean energy-related companies also posted strong gains, including Pilbara Mining (4%), Liontown Resources (6.2%), Allen (2%), Core Lithium (4.3%), and IGO Ltd (2.6%). Meanwhile, heavyweight iron ore miners lagged behind the market, with BHP Group (-0.7%), Rio Tinto (-0.9%), and Fortescue Metals (-0.4%) down. The India BSE Sensex rose 340 points to close at 20,940 on Monday, extending gains from the previous week and tracking Wall Street's gains on Friday as comments from Fed policymakers bolstered expectations of a slowdown in Fed rate hikes. The sentiment was also underpinned by an expected increase in demand from the Chinese economy as reopening measures continue amid Lunar New Year celebrations. Tech stocks and banks both rose sharply, with State Bank of India Tech Mahindra and Infosys up more than 1.5%. However, outside the benchmark index, Yes Bank fell 8.1 percent as bad debt provisions surged in the quarter to December, and net profit fell 80 percent. Meanwhile, economists expect the central government to borrow a record 16 trillion rupees in the fiscal year ending March 2024, further putting pressure on India's debt instruments.   REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most important data is: - EU: Eurozone consumer confidence rose 1.1 points to -20.9 in January 2023, the highest since February 2022, on hopes that lower energy prices and recovery fund spending could help avert a recession this year. However, preliminary estimates showed the index was still below market expectations of -20. Across the EU, consumer confidence rose by 1.4 percentage points to -22.4. - CA: The loonie changed hands to $1.34 in the fourth week of January, more than 3% above its more than two-year low of $1.388, hit on Oct. highest level since 2007. The central bank has raised interest rates at a record pace of 400 basis points since March amid high inflation. As a result, Canada's annual inflation rate fell to 6.3% in December 2022, down further from the 1983 peak of 8.1% in June and below market expectations of 6.4%. In addition, rising crude oil prices also added support for the lunatics. Oil, one of Canada's main exports, traded above $88 a barrel on continued optimism about future fuel demand. - CA: New home prices in Canada stagnated in December 2022 compared to the previous month, maintaining a 0.2% decline from the previous month compared to expectations for a 0.2% decline. It marked the fourth straight month of no growth in new home prices, as costs fell in six of the 27 census metropolitan areas and remained unchanged in 19. These developments underscore that high mortgage rates continue to weigh on the Canadian housing market, with the Bank of Canada raising its key interest rate earlier this month. Prices fell in Winnipeg, Saskatoon, London, Kelowna, and Edmonton, while costs rose slightly in Montreal and Calgary. New home prices rose 3.9% yearly, the slowest gain since October 2020. - PL: Producer prices in Poland increased 20.4% year on year in December 2022, down from an upwardly revised 21.1% increase in the previous month but above market expectations for a rise of 19.4%. It was the lowest reading since February 2022, as prices fell for most industrial activities, namely manufacturing (15.3% versus 16.2% in November), electricity supply, gas, steam, and air conditioning (66.8% vs. 67.3%), water supply, sewage, waste management and remediation activities (4.7% vs. 5%). Meanwhile, prices have increased faster for mining and quarrying (23.2% versus 21.6%). Month-on-month, producer prices rose 0.5%, rebounding from November's 0.3% drop. - PL: Industrial production in Poland rose 1% year-on-year in December 2022, down from a 4.5% increase the previous month and below market expectations of a 1.4% increase. It was the weakest growth since January 2021, as output fell in mining and quarrying (-6.9% versus 0.6% in November) and in electricity, gas, steam, and air conditioning (-16 .3% versus -12.6%). At the same time, output slowed for manufacturing (3.4% versus 6.4%) while it accelerated for water supply and sewage waste management (1.8% versus 0.6%). Looking at the January-December period, industrial activity increased by 10.2 percent compared to 2021. However, on a month-on-month basis, industrial production decreased by 6.4 percent, following a 2.8 percent increase in November.   LOOKING AHEAD: Today, investors should watch out for the following important data: - GBP: Public Sector Net Borrowing, Flash Manufacturing PMI, Flash Services PMI, and CBI Industrial Order Expectations. - USD: Flash Services PMI, Flash Manufacturing PMI, and Richmond Manufacturing Index. - JPY: Flash Manufacturing PMI and BOJ Core CPI y/y. - EUR: German GfK Consumer Climate, French Flash Manufacturing PMI, French Flash Services PMI, German Flash, Manufacturing PMI, German Flash Services PMI, Flash Manufacturing PMI, and Flash Services PMI. - AUD: Flash Manufacturing PMI, NAB Business Confidence, and Flash Services PMI. - CHF: Trade Balance, and Gov Board Member Schlegel Speaks. - CNY: Bank Holiday. - NZD: CPI q/q.   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - CA: Canada's 10-year government bond yield has recovered to around 2.9 percent from a five-month low of 2.7 percent hit on Jan. 18 as investors reassess monetary policy and growth prospects. Canada's annual inflation rate fell to 6.3% in December 2022, the lowest since February 2022 and below market expectations of 6.4%, reinforcing the case for a slowdown in the Bank of Canada's pace of rate hikes or even the end of the tightening cycle. Meanwhile, analysts expect growth to stall in the final quarter of 2022 and the first half of 2023 amid evidence that tight monetary policy is already dampening domestic demand and weakening economic activity. - US: U.S. 10-year Treasury yields, seen as a proxy for global borrowing costs, consolidated around 3.5% as hawkish comments from several Fed policymakers poured cold water on expectations the central bank would soon slow its aggressive tightening drive. Federal Reserve Vice Chairman Rael Brainard, considered dovish, said interest rates would need to remain high to bring inflation down to the 2% target. Still, investors aren't blindly buying the tightening narrative, with recession speculation fueling bets the Fed will eventually cut rates later this year. Moreover, data last week showed Americans held back spending even as business investment fell, adding to fears that the economy may be headed toward a recession. As a result, money markets are now pricing in more than a 95% chance that the U.S. central bank will raise rates by 25 basis points in February. - IN: India's 10-year government bond yield rose to 7.35%, close to a two-month high of 7.37% hit on Jan. 6, as worries about larger debt offset expectations for a pause in the RBI's tightening cycle. Economists expect India's central government to borrow a record 16 trillion rupees in the fiscal year ending March 2024. Concerns about soaring debt remain despite the government's pledge to prioritize budgetary discipline, as slower growth and lower tax revenues limit government revenue. Meanwhile, accommodative inflation has fueled hopes that the RBI is about to pause its tightening cycle after raising rates by 25 basis points in February, adding to 250 basis points of hikes from May 2022. Retail prices grew by an average annual rate of 5.7% in December, below the central bank's upper limit target of 6% for the second consecutive month and market expectations of 5.9%. - US: Stock futures contracts linked to the three major indexes fluctuated between modest gains and losses on Monday, as investors appeared unwilling to take positions ahead of a busy week of earnings and economic data. 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. Later in the week, several prominent tech companies, including Microsoft, Tesla, IBM, and Intel, will report results, and the season will enter a higher stage. At the same time, recent economic data has fueled fears that the U.S. economy is nearing a recession and speculation that the Federal Reserve will continue to slow the pace of policy rate hikes. In addition, fourth-quarter GDP data due on Thursday will give analysts clues about the health of the world's largest economy. - IT: Italy's 10-year BTP yield rebounded to 4.01% after touching 3.691% on Jan. 18, its lowest level since early December, amid still rising underlying inflation in the eurozone and hawkish comments from some policymakers; the ECB is expected to continue tightening. ECB official Klaas Knot said on Sunday he expected the central bank's primary interest rate to rise by 50 basis points in both February and March and continue to climb after that, while President Lagarde also warned that The central bank would continue to raise interest rates and hold them within limits if necessary to bring inflation down to its 2% target. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023. As a result, the spread between the closely watched 10-year BTP and Germany's BTP widened from an eight-month low of 164 basis points last week. - FR: French 10-year bond yields rose to 2.63% from a more than one-month low of 2.394% touched on Jan. 18, as investors priced in concerns from the ECB's key policymaker on recession fears and signs of easing inflationary pressures. Hawkish rhetoric. European Central Bank board member Klaas Knot (Klaas Knot) said that the ECB should continue to raise interest rates by half a percentage point at the next two meetings. The time for slowing the rate hikes is "far away," while Hall Ziman said he expects at least two rate hikes of 50 basis points each in the first half of the year. Earlier this month, Wren had said that sharp rate hikes in the near term were justified to keep inflation expectations in check. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023. - UK: U.K. 10-year gilt yields rose to 3.4 percent from a more than one-month low of 3.3 percent in late January, little changed as investors looked set to hike rates again to 4 percent next month, with markets pessimistic beyond that. However, there is disagreement about how much higher borrowing costs will rise. The prospect of rising bond supply and concerns that the global economy could slip into recession also supported yields. The latest data showed that UK consumer price inflation fell as expected to 10.5% in December but remained well above the Bank of England's 2% target, while core interest rates were near October's record high. Meanwhile, food and drink costs rose at the fastest pace since 1977, suggesting inflationary pressures are likely to persist for some time. Earlier this month, the latest jobs report showed that wages in the UK grew faster since records began in 2001, excluding gains during the COVID-19 pandemic. - GE: German 10-year bond yields were little changed at 2.2 percent in late January, above a more than one-month low of 2 percent, as investors weighed hawkish comments from several European Central Bank policymakers and expectations that the Fed would soon The meeting held continued to lower expectations for the pace of tightening. ECB official Klaas Knot said on Sunday he expects the central bank's key interest rate to rise by 50 basis points in February and March and continue to climb after that. President Lagarde also warned that the central bank would continue to raise interest rates and keep them within limits if necessary to bring inflation down to its 2% target. Holzman said he expects at least two rate hikes of 50 basis points each in the year's first half. Earlier this month, Wren had said that sharp rate hikes in the near term were justified to keep inflation expectations in check. Investors expect the ECB's key interest rate to peak at around 3.3% in July 2023. - JP: The yen fell to 130 yen/dollar, retreating further from multi-month highs, as the Bank of Japan remained committed to its ultra-low interest rate policy despite rising inflation and mounting market pressures. Last week, the central bank fended off speculation of another policy adjustment by keeping its ultra-low interest rate and yield control policy unchanged. Bank of Japan Governor Haruhiko Kuroda also reiterated that the 2 percent inflation target must be achieved sustainably. Meanwhile, traders are eyeing the Bank of Japan's policy meeting in March and April when the BOJ's new governor takes office. Japanese Finance Minister Junichi Suzuki also warned that "the severity of Japan's public finances has reached an unprecedented level as we prepare a supplementary budget to deal with the new crown virus and similar problems." - EU: The European Central Bank (ECB) will raise interest rates by 50 basis points in February and March, ECB Governing Council member Klas Knot said in an interview with Dutch broadcaster WNL on Sunday, according to Reuters. And will continue to raise interest rates in the next few months. However, in a separate interview with the Italian newspaper La Stampa published on Sunday, Knot said it was too early to "judge" whether the ECB would be able to slow the pace of rate hikes before the summer. Meanwhile, the accounts of the central bank's December policy meeting showed that some ECB policymakers had initially advocated a 75 basis point rate hike, as inflation was expected to remain too high for too long, and the worsening outlook called for a larger walk than the market was pricing in. However, most members ultimately agreed to a small 50 basis point rate hike. The ECB has hiked interest rates by 250 basis points since the summer, and markets are already pricing at a peak rate of 3.2% by August 2023. - CH: The yield on the 10-year Swiss government bond rose to 1.23%, rebounding from a six-week low of 1.06% hit on January 18 and following the decline in European bond prices as major central banks of the continent have promised to maintain an aggressive policy in their next decisions. The ECB has signaled it will raise its key rates by 50 basis points over the next two meetings to extend the fight against rising inflation. Domestically, the SNB warned that further rate hikes should be considered as price growth could remain high for an extended period even if energy prices fall due to secondary effects. However, Swiss inflation is seen well below that of its eurozone neighbors, falling to 2.8% in December versus market bets of 2.9% and central bank expectations of 3%. - BR: The yield on Brazilian 10-year government bonds consolidated at around 11%, rebounding from a two-month low of 12.3% reached on January 12, amid growing worries about Brazil's public finances and political turmoil. Left-wing President Luiz Inacio Lula da Silva is considering increasing government spending despite warnings of rising debt after significant outlays during the pandemic. Furthermore, Lula recently criticized formal central bank independence, saying that the current inflation target is hampering economic growth. The Brazilian economy is likely to slow down or even enter a recession this year as tightening financial conditions have dented household spending. On the policy side, Brazil's central bank has already pushed interest rates to 11.75% from a record low of 2% in March last year.   LEADING MARKET SECTORS: - Strong sectors: Information Technology, Communication Services, Energy, Industrials, Consumer Discretionary. - Weak sectors: --   TOP CURRENCY & COMMODITIES MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - USD: The U.S. dollar index bottomed out around 102 and hovered near its highest level since May 2022 as investors shunned the greenback on fears of a U.S. recession and a less aggressive outlook for the Federal Reserve. Recent economic data, such as housing and manufacturing data, point to rising headwinds facing the overall economy. Meanwhile, signs of moderating U.S. inflation have fueled speculation that the Fed will slow its rate hikes further, with money markets now pricing in more than a 95% chance the central bank will raise its funding by 25 basis points in February. Investors are also looking ahead to a slew of U.S. data that may offer clues to the path of interest rates, including fourth-quarter GDP growth, durable goods orders, the PCE price index, and consumer data. - GBP: Sterling rose above $1.24 for the first time since Dec. 14, as the Bank of England is likely to stick with its current tightening policy, while investors expect the Fed to be less aggressive in the coming months after weaker-than-expected U.S. economic data. So positive. In the UK, policymakers are set to raise interest rates by half a percentage point to 4.0% at their February policy meeting after raising rates nine times in a row. Markets are divided on how much further to rise in rates, while they expect bank rates to peak at around 4.5% by the middle of the year. Data last week showed UK inflation moved further away from October's 41-year high but remained well above the Bank of England's 2 percent target. The core CPI rate remained unchanged near record highs, and food and beverage prices rose at the fastest pace since 1977, suggesting that inflation will remain elevated for some time. - EUR: The euro continued to rise to near $1.09 in the second half of January, hitting a fresh nine-month high, as bets grew on more monetary policy tightening from the European Central Bank and markets started pricing in cuts from the Fed. The ECB is expected to continue to act aggressively, raising interest rates by 50 basis points in February and March, with the deposit rate rising from the current 2% to a peak of 3.25%. The bet was strengthened after Governing Council member Klaas Knot signaled at least two 50 basis point rate hikes, and the tightening mode continued into the summer. On the other hand, the Federal Reserve, which started raising borrowing costs earlier than the ECB, is expected to continue to ease the pace of tightening this year, with a 25 basis point hike at its next two policy meetings. - CHF: The Swiss franc weakened to 0.92 per USD from a 1-year high of 0.916 hit on Jan. 16 as investors continued to assess the prospects for monetary tightening from the Swiss National Bank and Federal Reserve. The sharp slowdown in Swiss inflation limited expectations of how much the SNB would increase its benchmark borrowing cost. December price data showed inflation fell to 2.8% in Switzerland, below the SNB's projection of 3% and market estimates of 2.9%. However, President Jordan stressed that further rate hikes should not be ruled out as second-degree inflation threats are still prevalent in the country's economy. Last year the SNB raised its key rate by 175 basis points, lifting borrowing costs from the negative territory for the first time since 2011. - SLV: Spot silver prices fell to $23 an ounce, retreating from a nine-month high of $24.4 hit on Jan. 16 as the dollar stabilized and investors reassessed the monetary policy outlook at major central banks and the demand for industrial inputs. Despite growing bets that the Federal Reserve will hike its key rate 25bps more slowly at its next meeting, policymakers have stressed there is still more work to be done before inflation returns to target and signaled the possibility that the terminal rate exceeds the 5% currently valued by the money markets. In addition to reducing the attractiveness of non-interest-bearing bullion investments, rising borrowing costs ease the demand for silver as an industrial input for goods with high electrical conduction needs, which was reflected in the recent decline in energy stocks solar. - GAS: Natural gas prices in Europe traded below €65/MWh, reversing a 3% increase in the previous week and approaching the 16-month low of nearly €50 hit in early January as the cold snap in Europe is set to fade this week, with warmer temperatures expected to return next week. Gas depots across Europe are fuller than usual at more than 78%, and LNG imports are expected to remain strong, which helps counter weaker supplies from Norway due to maintenance work. European countries avoided a major energy crisis without Russian gas this winter thanks to hot weather, record amounts of LNG imports, shipments from Norway, and other alternatives, including coal, nuclear, and wind. Russia sends gas via pipelines to Europe, through Ukraine, and via TurkStream, but flows through Ukraine have been reduced recently. - SOY: As supply concerns eased, soybean futures extended losses to less than $15 a bushel, the lowest level in more than a week. Argentina, the world's largest exporter of soybean meal and soybean oil, received some rain over the weekend, and the weather forecast indicates more to come this week. In addition, Brazil's production in 2022-23 is expected to reach a record high, which could hurt exports from the United States. Meanwhile, China's top consumer is expected to ramp up purchases as the country reopens after three years of pandemic lockdown. - WTI: WTI crude futures traded around $82 a barrel on Monday, closing at its highest level since Nov. 16, as investors continued to assess the global demand outlook as they braced for more sanctions on Russian oil. However, trading will likely remain subdued as many Asian markets were offline for the Lunar New Year holiday. Last week, the IEA and OPEC offered a bullish outlook for 2023, saying reopening China's economy will boost demand. Additionally, increased traffic in China before the Lunar New Year holiday bodes well for fuel consumption. On the supply side, the EU and G7 nations will cap the prices of refined Russian products starting in February, on top of the price cap on Russian crude that has been in effect since December and the EU embargo on imports of Russian oil by sea. - GLD: Spot gold prices remained close to $1,925 an ounce on Monday, slightly below the nine-month high of $1,931 hit in the previous session despite a weaker dollar as investors continued to weigh policy expectations more restrictive monetary policy by the main central banks. While money markets expect the Federal Reserve to raise its funds rate by a 25 basis point drop at its next meeting, FOMC members have repeatedly said that the fight against inflation is far from over, suggesting that slower interest rate hikes could continue beyond the 5% terminal rate, which is currently discounted. Meanwhile, the European Central Bank has signaled it will continue its aggressive tightening path to curb the rise in inflation in the bloc, with policymakers clearing the way for two more 50bp rate hikes.   CHART OF THE DAY: The France CAC 40 index rose on Monday, closing at 7032 points, or about 0.5%, rising for the second consecutive session, as expectations of a mild recession in the euro zone offset hawkish comments from European Central Bank officials. Meanwhile, investors awaited a slew of economic data from major economies while also bracing for a busy week of earnings in Europe and the United States. On the corporate front, cyclical were the best performers, led by Unibail Rodamco (+4.7%), Alstom (+3.4%), STMicroelectronics (+2.6%), Renault (+2.2%), and Michelin (+1.9%), Sanofi lost nearly 1%, like the entire medical industry in Europe.         -  France CAC 40 index  - chart (D1), Resistance (target zone) around ~ all-time high 7384,  Support (consolidation) around  ~ 6767 & 6484.