• GLOBAL CAPITAL MARKETS OVERVIEW:

European stock markets fell on Tuesday. The Frankfurt DAX 30 index fell 0.9% to a seven-week low, and other significant stocks fell 0.4% to 2%. Concerns about the Omicron coronavirus variant and the tightening of monetary policy in the United States hindered hopes for economic recovery. . The Chief Executive Officer of Modena said that he expects existing vaccines to be less effective and that the development and marketing of new vaccines will take months. At the same time, Fed Chairman Powell said that monthly bond purchases could be reduced faster than the previously announced $15 billion. At the same time, as the Eurozone inflation rate is higher than the European Central Bank's target, reaching the highest level since 1991, the new data has increased concerns about price pressures. In terms of revenue, easyJet emphasized that compared with FY20, operating and financial data in FY21 showed a double-digit decline, with total revenue falling (1.5 billion pounds to 3 billion pounds) and overall losses increasing (11 Billion pounds to 800 million pounds). On Tuesday, the FTSE MIB index fell 0.9% to close at 25814.34 points, the lowest level in seven weeks. It was flat with European counterparts, as pandemic concerns and the possibility of the Federal Reserve's accelerated reductions dragged down the stock market. Moderna's CEO Bancel said that the company's mRNA vaccine might not be as effective as other variants in combating the Omicron variant of the coronavirus. Italy estimates that its first omicron case may arrive in the country two weeks before the discovery, and the government is taking more restrictive measures on unvaccinated individuals this week. On the other side of the Atlantic, the Federal Reserve’s Powell said that the central bank’s bond purchases might slow down because of high inflationary pressures and a strong economy. On the company side, the energy and industrial sectors led the decline, driven by Eni Group (down 1.1%), Tenaris Group (down 2.9%), and Sepem Group (down 1.8%). The FTSE 100 index fell 0.7% on Tuesday to close at 7,059 points, close to the 7-week low of 7.044 points set on November 26, the same as its European counterparts. Concerns about the effectiveness of the Omicron coronavirus vaccine reignited. . The CEO of Modena told the Financial Times that he expects the efficacy of existing vaccines to drop significantly because the current vaccine focuses on the number of spike protein mutations. He added that a new shoot would take several months to develop and release. In addition, Powell said that the central bank might discuss speeding up its withdrawal from the large-scale bond purchase program at the next meeting, thereby exacerbating the decline in the UK index. In terms of revenue, easyJet emphasized that compared with FY20, the operational and financial data in FY21 has experienced a significant deterioration, with double-digit declines in capacity, passenger volume, total revenue, and overall loss. Note that the current income in the second half of the 2012 fiscal year has exceeded the 19 fiscal years. The Dow Jones Industrial Average fell 500 points, or 1.4%, on Tuesday, while the S&P 500 fell 1.3%, and Nasdaq technology stocks fell 1.4% due to renewed concerns about the effectiveness of CoVID-19 on OmiCon’s changes. It caused shocks in travel, energy, and banking stocks. NeTr2019 coronavirus disease experts told the Financial Times that the current vaccine might need to be modified. ReGeanon Pharmaceuticals said its COVID-19 antibody treatment might not be effective for the new variants. Elsewhere, Janet Yellen of COVID-19 and Jerome Powell, chairman of the Federal Reserve, testified before Congress. The central bank chairman’s prepared speech indicated that the new variant of CVID-19 on growth and employment might affect the Federal Reserve’s hawkish monetary policy stance. Toronto's main stock index s&P/TSX fell to a one-month low on Tuesday, as concerns about the possible impact of the new omicron coronavirus variant continue to plague global markets. After the remarks by the Modena chief executive suggested that the effectiveness of the new strain of vaccine was "substantially reduced," market sentiment deteriorated again after a moment of calm on Monday. He added that the reformulated vaccine would take months to develop and redistribute. The news also suppressed oil prices and suppressed Canadian heavyweight energy stocks. In terms of data, supported by household spending and exports, Canada’s third-quarter GDP rebounded by 1.3% from an upwardly revised 0.8% contraction in the June quarter. In terms of earnings, Scotiabank adjusted its profit by 3.6 billion Canadian dollars, exceeding market expectations, and announced a dividend of 1 Canadian dollar per share, becoming the first Canadian bank to do so after the country lifted large-scale restrictions on the financial sector. Japanese stocks fell for the third consecutive trading day on Tuesday, after the CEO of Moderna told the Financial Times that the effect of the new crown vaccine on the Omicron variant strain is unlikely to be the same as on Delta. The variant is as effective. The Nikkei index closed down 1.63% to 27,821.76 points, the lowest level since October 7th, and erased the previous gains due to the hope that the impact of Omicron may not be as serious as people feared. In the past three trading days, the index has fallen 5.7%. The Topix Stock Index fell 1.03% to a three-month low of 1,928.35 points, further down below the much-watched 200-day moving average. Following the report by the Financial Times, the two major indexes erased the sharp gains recorded earlier. Some fund managers pointed out that the market is fragile because concerns about inflation prompt central banks worldwide to reduce stimulus measures gradually. Although there are signs that the chip shortages of automakers are alleviating, as the yen strengthened with the help of safe-haven buying, automakers have become one of the most severely hit industries. Nissan Motor fell 5.2%, Mitsubishi Motors fell 4.4%, and Toyota Motor fell 0.6%. Circulating stocks such as steel manufacturers were also affected. The Topix Steel Manufacturing Index fell 2.4%, becoming the worst-performing sector, and shipping stocks fell 1.9%. The market was also affected by net selling from inactive accounts tracking the MSCI index, which is estimated to be about 200 billion yen because 15 Japanese stocks will be removed from the index, and only two stocks will be added. The Shanghai Composite Index of Chinese stocks closed almost flat on Tuesday but rose slightly this month. Catalyzed by recent news of geopolitical tensions, the military industry sector led the rise this month; on the other hand, with the outbreak of the epidemic counterattack and the emergence of mutant strains of the new crown virus, the tourism sector underperformed the market this month. The Shanghai Composite Index.SSEC closed slightly up 0.03% to 3,563.89 points, up 0.5% this month; the Shanghai and Shenzhen 300 Index.CSI300 closed down 0.4%, down 1.6% this month. The Shenzhen Growth Enterprise Market Index closed down 0.2% and rose 4.3% this month; the Shanghai Stock Exchange Science and Technology Innovation Board 50 component index closed up 0.3%, rising 5.6%.

 

• REVIEWING ECONOMIC DATA:

Looking at the last economic data:

- US: At the Senate Banking Committee hearing in Washington on Tuesday, Fed Chairman Powell admitted that the economy is very strong and inflationary pressures higher, it is appropriate to consider appropriate adjustments to the ultra-loose monetary policy at the upcoming meeting. The chairman also stated that it is time to stop using “temporary” to describe inflation. The recent omicron variant poses “downside risks to employment and economic activity and increases the uncertainty of inflation.” November On the 3rd, the Federal Reserve decided to reduce the monthly net asset purchase rate by US$10 billion for the purchase of U.S. Treasury bonds and US$5 billion for the purchase of institutional mortgage-backed securities, and this process would be completed by the middle of 2022. The following policy meeting is scheduled for December 14-15.

- US: Federal Reserve Chairman Jerome Powell said that the Federal Reserve would discuss the issue of speeding up bond purchases and reductions at its December meeting. At the same time, concerns about Omicron variants reappeared, and US stocks continued their decline on Tuesday. The Dow Jones Index fell more than 600 points, the Standard & Poor's 500 Index fell 1.6%, and the Nasdaq Index, dominated by technology stocks, fell 1.7%. In his testimony at a congressional hearing with Janet Yellen, Treasury Secretary Powell admitted that given the robust economy and higher inflationary pressures, it is appropriate to consider appropriate adjustments to the ultra-loose monetary policy. In addition, the COVID-19 Disease Management Company CEO told the Financial Times that the current vaccine might need to be modified. At the same time, ReGeanon Pharmaceuticals stated that its COVID-19 antibody treatment might not be effective against the new mutation.

- US: The Federal Reserve Bank of Dallas's general business activity index for the Texas service industry rose from 20.7 last month to 22.7 in November 2021, indicating that the state's service industry activity has accelerated. As a key indicator to measure the country’s service industry state, the income index has increased from 19.6 to 25.4. In contrast, labor market indicators show that employees have continued to grow, and the average working hours have increased. The employment index fell 1.1 points to 12.9, although the part-time employment index rose to its highest level since 2007. The working hour index remained roughly unchanged at 11.1. Finally, wage and price pressures continued to increase in November, and the index was at a record high.

- US: The Chicago Business Barometer fell from 68.4 last month to 61.8 in November 2021, which was lower than market expectations of 67.0. This is the lowest level since February, indicating a slowdown in economic activity in the Chicago area. In addition, the order backlog index fell to 60.8, 6 points below the 12-month average, because companies reported that the number of orders received was reduced. In contrast, the employment sub-index fell to 51.6 because companies struggled to find qualified employees to fill vacancies. In addition, new orders fell to 58.2 in February, while inventories rose to 59.6, the highest level since the fall of 2018. Some companies reported that they need to reserve stock to prevent further supply chain disruptions and deal with logistics issues. In terms of cost, the price paid is still close to the 10-year high in October.

- US: In September 2021, the US Standard & Poor's CoreLogic Case-Shiller 20 urban housing price index rose 19.1% year-on-year, lower than the 19.6% growth rate and 19.3% market expectations of the previous month after the revision. Housing prices continue to increase at a rate close to historical records. However, the rate of price increases has declined slightly because the demand for suburban housing remains strong due to the new crown epidemic. In September, Phoenix's annual salary increase was the highest among the 20 cities at 33.1%, followed by Tampa (27.7%) and Miami (25.2%).

- US: The average single-family home price guaranteed by Fannie Mae and Freddie Mac in the United States rose by 0.9% in September 2021 from the previous month after increasing 1% in August. House prices rose by 17.7% year on year. Taking into account the third quarter, US house prices rose 18.5% year-on-year. Dr. William Donner, the FHFA Research and Statistics Department chief economist, said: "House prices have risen to the highest historical level in a quarterly series." "Compared with a year ago, the annual growth rates of all states and metropolitan areas have increased. As a result, real estate prices have risen exceptionally fast, but as the month-on-month growth rate has slowed down, market momentum peaked in July."

- US: The outbreak of the COVID-19 disease in US stock futures on Tuesday, renewed attention caused by travel, energy, and banking stocks, once again raised concerns about the effectiveness of CoVID-19 against the OmiCon variant. NeTr2019 coronavirus disease experts told the Financial Times that the current vaccine might need to be modified. In addition, ReGeanon Pharmaceuticals said its COVID-19 antibody treatment might not be effective for the new variants. Elsewhere, COVID-19 Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell will testify before Congress. The central bank’s chief representatives are prepared to say that the new variant of CVID-19 on growth and employment may affect the Fed Hawkish monetary policy stance.

- CA: The Canadian economy rebounded 1.3% quarter-on-quarter in the third quarter of 2021. The contraction rate was revised upward by 0.8% in the previous period. This was due to the phasing out of epidemic restrictions and the support of household spending and exports. Final consumption expenditure grew rapidly (2.9% vs. 0.1% in the second quarter), mainly driven by household spending (4.2% vs. -0.1%) and non-profit organization spending (1.3% vs. 0.6%) serving household final spending , While government consumption declined (0.2% vs. 0.7%). Net external demand has also improved, with exports increasing by 1.9% (-4.5% in the second quarter) and imports falling slightly by 0.6% (0.5% in the second quarter). Nevertheless, gross fixed capital formation deteriorated further (-3.6% vs. -0.5%) due to the sharp decline in housing investment and the withdrawal of inventories, which restrained part of the upward momentum.

- CA: In September 2021, Canada’s economy grew by 0.1% month-on-month, higher than the 0.6% upward revision in the previous period and consistent with the market’s expected 0.1% growth. Among these 20 industries, 12 industries have seen growth, of which the service industry (0.4%) is the first. In addition, the public sector (0.6%) and the mining, quarrying, oil, and gas extraction sectors (1.2%) have brought additional upward pressure. On the other hand, the manufacturing industry (-1.7%) limits higher expansion, mainly due to the shortage of semiconductor chips. At the same time, preliminary data showed that the economy grew by 0.8% in October.

- HK: In October, retail sales in Hong Kong increased by 9.4% year-on-year, an increase of 4.9% from the previous month. This is the ninth consecutive month of expansion for the industry, supported by sales of durable consumer goods (28.6% and 29.5% in September); jewelry, watches, and precious gifts (16.4% and 9.6%, respectively); and other consumer goods ( 10.9% and 9.6% respectively). In addition, clothing and footwear stores (4.6% vs. -1.6%) and department stores (3.5% vs. -14.1%) also saw sales growth, with smaller increases. Looking ahead, a government spokesperson said that the stable local epidemic, growing employment, and income conditions, coupled with the consumer voucher program, should continue to support the retail industry.

- RU: Due to the discovery of the COVID-19 disease in South Africa, global oil prices, and global risk aversion, last Friday, the Russian ruble fell back to US$75 per US dollar, which is close to the seven-month low reached in 75.9 months. Russia’s main export of global benchmark Brent crude oil fell to a 12-week low of less than US$71 per barrel after a previous report questioned the effectiveness of the existing Omicron vaccine. The ruble has fallen by more than 8% since reaching a 16-month high of 69.3 on October 26. The reason is that the West fears that Russia may intervene in Ukraine. In terms of monetary policy, the Bank of Russia has raised borrowing costs by 250 basis points this year in the face of soaring prices. It is widely expected that the bank will raise interest rates again at the next board meeting on December 17.

- EU: In November 2021, Italy’s annual inflation rate may accelerate from 3% last month to 3.8%, exceeding market forecasts of 3.2%. This is the highest reading since September 2008. Energy product prices have soared (30.7% vs. 24.9% in October), especially non-regulated energy products (24.3% vs. 15%). Additional upward pressure should come from processed food (1.7% vs. 1%) and transportation-related services (3.6% vs. 2.4%). The annual core inflation rate (excluding energy and unprocessed food) rose slightly to 1.4% from 1.1% in October. Every month, the inflation rate in November maybe 0.7%, the same as the previous month. At the same time, the coordination index may rise by 4% and 0.8% this year and this month, respectively.

 

• LOOKING AHEAD:

Today, investors will receive:

- USD: ADP Non-Farm Employment Change, Final Manufacturing PMI, Fed Chair Powell Testifies, ISM Manufacturing PMI, Treasury Sec Yellen Speaks, Construction Spending m/m, ISM Manufacturing Prices, Wards Total Vehicle Sales, Crude Oil Inventories, and Beige Book.

- EUR: German Retail Sales m/m, Spanish Manufacturing PMI, Italian Manufacturing PMI, French Final Manufacturing PMI, German Final Manufacturing PMI, and Final Manufacturing PMI.

- GBP: BRC Shop Price Index y/y, Nationwide HPI m/m, Final Manufacturing PMI, 10-y Bond Auction, and BOE Gov Bailey Speaks.

- AUD: GDP q/q, and Commodity Prices y/y.

- CAD: Building Permits and Manufacturing PMI.

- CHF: CPI m/m, and Manufacturing PMI.

- JPY: Capital Spending q/y, and Final Manufacturing PMI.

 

• KEY EQUITY & BOND MARKET DRIVERS:

- The benchmark Japanese 10-year Japanese government bond yield fell below 0.06%, close to the level since October 5, because people are increasingly worried about the impact of the newly discovered variant of the omicron coronavirus. Traders worry that fighting the COVID-19 disease will become more difficult because this strain shows some mutations in the spike protein targeted by existing vaccines. The Chief Executive Officer of Modena told the Financial Times that the current vaccine's effectiveness might be significantly reduced, and it will take months to redesign a new vaccine and distribute it to all parts of the world. In addition, local media reported that the Japanese government's 2022 fiscal year budget might exceed a record $946 billion due to defense and social welfare expenditures.

- The yield on French 10-year government bonds fell to around 0%, the lowest in 11 weeks. It was flat with European counterparts, as investors sought safer securities and a possible mRNA vaccine under the threat of the Omicron variant of the coronavirus. More resistant. On November 29, the number of patients in the intensive care unit increased by 117 to 1,749, the most significant single-day increase since March because the French health authorities face increasingly strict restrictions. In addition, despite the high inflation data in the Eurozone, the threat of a slower economic recovery brought about by increased business restrictions has led investors to believe that the European Central Bank’s interest rate hike may be delayed.

- Canadian 10-year government bond yield drops to a 6-week low of 1.556%.

- Barnes & Noble Education (BNED) Shares Lost 20% After Weak Quarterly Sales;

- Citi Trends (CTRN) shares surged 5% after solid quarterly report and full-year solid outlook;
- Deciphera Pharmaceuticals (DCPH) shares rose 11%: the company announced a restructuring, in which priority will be given to the development of Vimseltinib and DCC-3116, and the development of Rebastinib will be suspended;
- DocGo (DCGO) shares added 4%: Barclays began research coverage of securities with an 'above market' rating;
- Pfizer (PFE) shares were up 4%. The papers have every chance to show a record over the past 30 years monthly growth due to increased demand for shares in vaccine manufacturers;
- SmartRent (SMRT) shares gained 4%: Deutsche Bank started analytical coverage of securities with a “Buy” rating;
- StoneX Group (SNEX) shares declined 20% after publishing quarterly results, which were below the company's long-term target;
- TG Therapeutics (TGTX) shares lost 41% after news FDA regulator had questions about preliminary mortality data during trials of the company's anti-cancer diet;
- Olema Pharmaceuticals (OLMA) shares fell 56% after the publication of the results of early research on the anti-cancer drug OP-1250.

 

• STOCK MARKET SECTORS:

- High: Real Estate.

- Low: Communication Services, Materials, Financials.

 

• TOP CURRENCY & COMMODITIES MARKET DRIVERS:

- CURRENCY: The disposition in the foreign exchange market on Tuesday, at first glance, looked terrific. During the day, the growth leaders in the Big Ten were the safe-haven currencies - the Japanese yen and the Swiss franc. The decline leaders were the Canadian dollar and the Norwegian krone, reflecting the fall in oil prices. However, the US dollar, which also belongs to the defensive currencies, depreciated against most of its main competitors, including the euro, which was only behind the yen and franc in terms of growth rates. First, the technical flows associated with the end of the month put pressure on the US currency. Second, on the back of a decline in risk appetite after the comments of the head of Moderna about the effectiveness of the available vaccines against the omicron strain, Treasury quotes continued to rise, and the yield on 10-year notes fell 1.42%. This put pressure on the US currency. Just a week ago, the federal funds rate futures market was 100% likely to consider the rate hike in June 2022. However, on Tuesday afternoon, the likelihood of such a move fell to 58%. At the same time, the likelihood of a July increase fell to 77%. However, in the evening, the dollar strengthened sharply across the market in response to comments from Fed Chairman Jerome Powell, who, speaking in Congress, noted that it was time to abandon the word "transitory" about inflation as the threat of higher inflation has grown. It is pertinent to consider accelerating the pace of the decline in asset purchases, which will be done at the December meeting. After Powell's hawkish comments, the likelihood of a federal funds rate hike in July 2022 was again predicted with 100% probability. The likelihood of a June rise jumped to 80%. This supported the dollar, which also reacted positively to the resumption of bond yields (the yield rose to 1.48% over ten years). The Canadian dollar fell above 1.28, close to the nearly 3.5-month low of 1.2948 on August 20. The dollar strengthened, oil prices fell, and risk-sensitive currencies generally fell. A previous report questioned the effectiveness of the existing Omicron variant vaccine. , Sparking concerns about the new lockdown and more travel restrictions. NeTNA CEO Stephen Barrener told the Financial Times that the COVID-19 vaccine is unlikely to be effective against the new variant because they oppose the Delta variant. At the same time, Powell's speech strengthened the US dollar index because some people mentioned that the Fed might discuss a faster withdrawal from the large-scale bond purchase program at the next meeting. The reason is that the economy is strong, and it is expected that the factors driving up inflation will continue until next year. In addition, the price of oil, which is Canada’s main export commodity, has also fallen below US$66 per barrel.

- COMMODITIES: Oil prices have been under pressure amid concerns that the omicron strain will spur renewal of restrictions, which will negatively impact demand. The spread between the near February and March Brent futures has moved from backwardation to contango for the first time since August, indicating real market concerns about short-term demand. At the same time, the current situation may well justify the decision of OPEC + on December 2 not to increase production by 400 thousand b / d from January, as it is assumed by the terms of the current agreement. Brent, $ / bar. - 70.89 (-3.47%), WTI, $ / bar. - 67.41 (-3.63%), Urals, $ / bar. - 69.29 (-5.52%), Gold, $ / tr. oz. - 1,779.00 (-0.34%), Silver, $ / tr. oz. - 22.84 (-0.22%), Aluminum, $ / t - 2 630.00 (-0.23%), Copper, $ / t - 9,577.50 (+ 1.43%), Nickel, $ / t - 20,141.00 (+ 0.38%).

 

• CHART OF THE DAY:

On Tuesday, the CAC 40 index fell 0.8% to close at 6721.16 points, the lowest level in five weeks. The uncertainty about the impact of the Omicron variant and the hawkish Federal Reserve weakened confidence in the global economic recovery. The CEO of Moderna said that biotechnology mRNA vaccines are less effective on new variants than on old variants. In contrast, Fed Chairman Powell said that due to increased inflationary pressures, the gradual reduction of vaccines might accelerate. Valneva shares fell 1.6%, investors worried that the vaccine might be outdated, so they reconsidered their position on the recent contract with the European Commission to supply new crown vaccine. The ongoing epidemic struggle and preliminary data indicate that domestic inflation was at an 11-year high in November, making it increasingly difficult for the European Central Bank to maintain inflationary pressures as a brief statement. On the company side, the travel and accommodation industries recorded losses, driven by Air France-KLM (down 2.9%), Airbus (down 1%), and Accor (down 1.9%).

• French CAC40 Index - D1, Resistance around ~ 6950, Support (target zone) around ~ 6671 & 6173

Market down sharply on Powell comments, Omicron uncertainty - US 2-yr yield spikes

• GLOBAL CAPITAL MARKETS OVERVIEW:

European stock markets fell on Tuesday. The Frankfurt DAX 30 index fell 0.9% to a seven-week low, and other significant stocks fell 0.4% to 2%. Concerns about the Omicron coronavirus variant and the tightening of monetary policy in the United States hindered hopes for economic recovery. . The Chief Executive Officer of Modena said that he expects existing vaccines to be less effective and that the development and marketing of new vaccines will take months. At the same time, Fed Chairman Powell said that monthly bond purchases could be reduced faster than the previously announced $15 billion. At the same time, as the Eurozone inflation rate is higher than the European Central Bank's target, reaching the highest level since 1991, the new data has increased concerns about price pressures. In terms of revenue, easyJet emphasized that compared with FY20, operating and financial data in FY21 showed a double-digit decline, with total revenue falling (1.5 billion pounds to 3 billion pounds) and overall losses increasing (11 Billion pounds to 800 million pounds). On Tuesday, the FTSE MIB index fell 0.9% to close at 25814.34 points, the lowest level in seven weeks. It was flat with European counterparts, as pandemic concerns and the possibility of the Federal Reserve's accelerated reductions dragged down the stock market. Moderna's CEO Bancel said that the company's mRNA vaccine might not be as effective as other variants in combating the Omicron variant of the coronavirus. Italy estimates that its first omicron case may arrive in the country two weeks before the discovery, and the government is taking more restrictive measures on unvaccinated individuals this week. On the other side of the Atlantic, the Federal Reserve’s Powell said that the central bank’s bond purchases might slow down because of high inflationary pressures and a strong economy. On the company side, the energy and industrial sectors led the decline, driven by Eni Group (down 1.1%), Tenaris Group (down 2.9%), and Sepem Group (down 1.8%). The FTSE 100 index fell 0.7% on Tuesday to close at 7,059 points, close to the 7-week low of 7.044 points set on November 26, the same as its European counterparts. Concerns about the effectiveness of the Omicron coronavirus vaccine reignited. . The CEO of Modena told the Financial Times that he expects the efficacy of existing vaccines to drop significantly because the current vaccine focuses on the number of spike protein mutations. He added that a new shoot would take several months to develop and release. In addition, Powell said that the central bank might discuss speeding up its withdrawal from the large-scale bond purchase program at the next meeting, thereby exacerbating the decline in the UK index. In terms of revenue, easyJet emphasized that compared with FY20, the operational and financial data in FY21 has experienced a significant deterioration, with double-digit declines in capacity, passenger volume, total revenue, and overall loss. Note that the current income in the second half of the 2012 fiscal year has exceeded the 19 fiscal years. The Dow Jones Industrial Average fell 500 points, or 1.4%, on Tuesday, while the S&P 500 fell 1.3%, and Nasdaq technology stocks fell 1.4% due to renewed concerns about the effectiveness of CoVID-19 on OmiCon’s changes. It caused shocks in travel, energy, and banking stocks. NeTr2019 coronavirus disease experts told the Financial Times that the current vaccine might need to be modified. ReGeanon Pharmaceuticals said its COVID-19 antibody treatment might not be effective for the new variants. Elsewhere, Janet Yellen of COVID-19 and Jerome Powell, chairman of the Federal Reserve, testified before Congress. The central bank chairman’s prepared speech indicated that the new variant of CVID-19 on growth and employment might affect the Federal Reserve’s hawkish monetary policy stance. Toronto's main stock index s&P/TSX fell to a one-month low on Tuesday, as concerns about the possible impact of the new omicron coronavirus variant continue to plague global markets. After the remarks by the Modena chief executive suggested that the effectiveness of the new strain of vaccine was "substantially reduced," market sentiment deteriorated again after a moment of calm on Monday. He added that the reformulated vaccine would take months to develop and redistribute. The news also suppressed oil prices and suppressed Canadian heavyweight energy stocks. In terms of data, supported by household spending and exports, Canada’s third-quarter GDP rebounded by 1.3% from an upwardly revised 0.8% contraction in the June quarter. In terms of earnings, Scotiabank adjusted its profit by 3.6 billion Canadian dollars, exceeding market expectations, and announced a dividend of 1 Canadian dollar per share, becoming the first Canadian bank to do so after the country lifted large-scale restrictions on the financial sector. Japanese stocks fell for the third consecutive trading day on Tuesday, after the CEO of Moderna told the Financial Times that the effect of the new crown vaccine on the Omicron variant strain is unlikely to be the same as on Delta. The variant is as effective. The Nikkei index closed down 1.63% to 27,821.76 points, the lowest level since October 7th, and erased the previous gains due to the hope that the impact of Omicron may not be as serious as people feared. In the past three trading days, the index has fallen 5.7%. The Topix Stock Index fell 1.03% to a three-month low of 1,928.35 points, further down below the much-watched 200-day moving average. Following the report by the Financial Times, the two major indexes erased the sharp gains recorded earlier. Some fund managers pointed out that the market is fragile because concerns about inflation prompt central banks worldwide to reduce stimulus measures gradually. Although there are signs that the chip shortages of automakers are alleviating, as the yen strengthened with the help of safe-haven buying, automakers have become one of the most severely hit industries. Nissan Motor fell 5.2%, Mitsubishi Motors fell 4.4%, and Toyota Motor fell 0.6%. Circulating stocks such as steel manufacturers were also affected. The Topix Steel Manufacturing Index fell 2.4%, becoming the worst-performing sector, and shipping stocks fell 1.9%. The market was also affected by net selling from inactive accounts tracking the MSCI index, which is estimated to be about 200 billion yen because 15 Japanese stocks will be removed from the index, and only two stocks will be added. The Shanghai Composite Index of Chinese stocks closed almost flat on Tuesday but rose slightly this month. Catalyzed by recent news of geopolitical tensions, the military industry sector led the rise this month; on the other hand, with the outbreak of the epidemic counterattack and the emergence of mutant strains of the new crown virus, the tourism sector underperformed the market this month. The Shanghai Composite Index.SSEC closed slightly up 0.03% to 3,563.89 points, up 0.5% this month; the Shanghai and Shenzhen 300 Index.CSI300 closed down 0.4%, down 1.6% this month. The Shenzhen Growth Enterprise Market Index closed down 0.2% and rose 4.3% this month; the Shanghai Stock Exchange Science and Technology Innovation Board 50 component index closed up 0.3%, rising 5.6%.

 

• REVIEWING ECONOMIC DATA:

Looking at the last economic data:

- US: At the Senate Banking Committee hearing in Washington on Tuesday, Fed Chairman Powell admitted that the economy is very strong and inflationary pressures higher, it is appropriate to consider appropriate adjustments to the ultra-loose monetary policy at the upcoming meeting. The chairman also stated that it is time to stop using “temporary” to describe inflation. The recent omicron variant poses “downside risks to employment and economic activity and increases the uncertainty of inflation.” November On the 3rd, the Federal Reserve decided to reduce the monthly net asset purchase rate by US$10 billion for the purchase of U.S. Treasury bonds and US$5 billion for the purchase of institutional mortgage-backed securities, and this process would be completed by the middle of 2022. The following policy meeting is scheduled for December 14-15.

- US: Federal Reserve Chairman Jerome Powell said that the Federal Reserve would discuss the issue of speeding up bond purchases and reductions at its December meeting. At the same time, concerns about Omicron variants reappeared, and US stocks continued their decline on Tuesday. The Dow Jones Index fell more than 600 points, the Standard & Poor's 500 Index fell 1.6%, and the Nasdaq Index, dominated by technology stocks, fell 1.7%. In his testimony at a congressional hearing with Janet Yellen, Treasury Secretary Powell admitted that given the robust economy and higher inflationary pressures, it is appropriate to consider appropriate adjustments to the ultra-loose monetary policy. In addition, the COVID-19 Disease Management Company CEO told the Financial Times that the current vaccine might need to be modified. At the same time, ReGeanon Pharmaceuticals stated that its COVID-19 antibody treatment might not be effective against the new mutation.

- US: The Federal Reserve Bank of Dallas's general business activity index for the Texas service industry rose from 20.7 last month to 22.7 in November 2021, indicating that the state's service industry activity has accelerated. As a key indicator to measure the country’s service industry state, the income index has increased from 19.6 to 25.4. In contrast, labor market indicators show that employees have continued to grow, and the average working hours have increased. The employment index fell 1.1 points to 12.9, although the part-time employment index rose to its highest level since 2007. The working hour index remained roughly unchanged at 11.1. Finally, wage and price pressures continued to increase in November, and the index was at a record high.

- US: The Chicago Business Barometer fell from 68.4 last month to 61.8 in November 2021, which was lower than market expectations of 67.0. This is the lowest level since February, indicating a slowdown in economic activity in the Chicago area. In addition, the order backlog index fell to 60.8, 6 points below the 12-month average, because companies reported that the number of orders received was reduced. In contrast, the employment sub-index fell to 51.6 because companies struggled to find qualified employees to fill vacancies. In addition, new orders fell to 58.2 in February, while inventories rose to 59.6, the highest level since the fall of 2018. Some companies reported that they need to reserve stock to prevent further supply chain disruptions and deal with logistics issues. In terms of cost, the price paid is still close to the 10-year high in October.

- US: In September 2021, the US Standard & Poor's CoreLogic Case-Shiller 20 urban housing price index rose 19.1% year-on-year, lower than the 19.6% growth rate and 19.3% market expectations of the previous month after the revision. Housing prices continue to increase at a rate close to historical records. However, the rate of price increases has declined slightly because the demand for suburban housing remains strong due to the new crown epidemic. In September, Phoenix's annual salary increase was the highest among the 20 cities at 33.1%, followed by Tampa (27.7%) and Miami (25.2%).

- US: The average single-family home price guaranteed by Fannie Mae and Freddie Mac in the United States rose by 0.9% in September 2021 from the previous month after increasing 1% in August. House prices rose by 17.7% year on year. Taking into account the third quarter, US house prices rose 18.5% year-on-year. Dr. William Donner, the FHFA Research and Statistics Department chief economist, said: "House prices have risen to the highest historical level in a quarterly series." "Compared with a year ago, the annual growth rates of all states and metropolitan areas have increased. As a result, real estate prices have risen exceptionally fast, but as the month-on-month growth rate has slowed down, market momentum peaked in July."

- US: The outbreak of the COVID-19 disease in US stock futures on Tuesday, renewed attention caused by travel, energy, and banking stocks, once again raised concerns about the effectiveness of CoVID-19 against the OmiCon variant. NeTr2019 coronavirus disease experts told the Financial Times that the current vaccine might need to be modified. In addition, ReGeanon Pharmaceuticals said its COVID-19 antibody treatment might not be effective for the new variants. Elsewhere, COVID-19 Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell will testify before Congress. The central bank’s chief representatives are prepared to say that the new variant of CVID-19 on growth and employment may affect the Fed Hawkish monetary policy stance.

- CA: The Canadian economy rebounded 1.3% quarter-on-quarter in the third quarter of 2021. The contraction rate was revised upward by 0.8% in the previous period. This was due to the phasing out of epidemic restrictions and the support of household spending and exports. Final consumption expenditure grew rapidly (2.9% vs. 0.1% in the second quarter), mainly driven by household spending (4.2% vs. -0.1%) and non-profit organization spending (1.3% vs. 0.6%) serving household final spending , While government consumption declined (0.2% vs. 0.7%). Net external demand has also improved, with exports increasing by 1.9% (-4.5% in the second quarter) and imports falling slightly by 0.6% (0.5% in the second quarter). Nevertheless, gross fixed capital formation deteriorated further (-3.6% vs. -0.5%) due to the sharp decline in housing investment and the withdrawal of inventories, which restrained part of the upward momentum.

- CA: In September 2021, Canada’s economy grew by 0.1% month-on-month, higher than the 0.6% upward revision in the previous period and consistent with the market’s expected 0.1% growth. Among these 20 industries, 12 industries have seen growth, of which the service industry (0.4%) is the first. In addition, the public sector (0.6%) and the mining, quarrying, oil, and gas extraction sectors (1.2%) have brought additional upward pressure. On the other hand, the manufacturing industry (-1.7%) limits higher expansion, mainly due to the shortage of semiconductor chips. At the same time, preliminary data showed that the economy grew by 0.8% in October.

- HK: In October, retail sales in Hong Kong increased by 9.4% year-on-year, an increase of 4.9% from the previous month. This is the ninth consecutive month of expansion for the industry, supported by sales of durable consumer goods (28.6% and 29.5% in September); jewelry, watches, and precious gifts (16.4% and 9.6%, respectively); and other consumer goods ( 10.9% and 9.6% respectively). In addition, clothing and footwear stores (4.6% vs. -1.6%) and department stores (3.5% vs. -14.1%) also saw sales growth, with smaller increases. Looking ahead, a government spokesperson said that the stable local epidemic, growing employment, and income conditions, coupled with the consumer voucher program, should continue to support the retail industry.

- RU: Due to the discovery of the COVID-19 disease in South Africa, global oil prices, and global risk aversion, last Friday, the Russian ruble fell back to US$75 per US dollar, which is close to the seven-month low reached in 75.9 months. Russia’s main export of global benchmark Brent crude oil fell to a 12-week low of less than US$71 per barrel after a previous report questioned the effectiveness of the existing Omicron vaccine. The ruble has fallen by more than 8% since reaching a 16-month high of 69.3 on October 26. The reason is that the West fears that Russia may intervene in Ukraine. In terms of monetary policy, the Bank of Russia has raised borrowing costs by 250 basis points this year in the face of soaring prices. It is widely expected that the bank will raise interest rates again at the next board meeting on December 17.

- EU: In November 2021, Italy’s annual inflation rate may accelerate from 3% last month to 3.8%, exceeding market forecasts of 3.2%. This is the highest reading since September 2008. Energy product prices have soared (30.7% vs. 24.9% in October), especially non-regulated energy products (24.3% vs. 15%). Additional upward pressure should come from processed food (1.7% vs. 1%) and transportation-related services (3.6% vs. 2.4%). The annual core inflation rate (excluding energy and unprocessed food) rose slightly to 1.4% from 1.1% in October. Every month, the inflation rate in November maybe 0.7%, the same as the previous month. At the same time, the coordination index may rise by 4% and 0.8% this year and this month, respectively.

 

• LOOKING AHEAD:

Today, investors will receive:

- USD: ADP Non-Farm Employment Change, Final Manufacturing PMI, Fed Chair Powell Testifies, ISM Manufacturing PMI, Treasury Sec Yellen Speaks, Construction Spending m/m, ISM Manufacturing Prices, Wards Total Vehicle Sales, Crude Oil Inventories, and Beige Book.

- EUR: German Retail Sales m/m, Spanish Manufacturing PMI, Italian Manufacturing PMI, French Final Manufacturing PMI, German Final Manufacturing PMI, and Final Manufacturing PMI.

- GBP: BRC Shop Price Index y/y, Nationwide HPI m/m, Final Manufacturing PMI, 10-y Bond Auction, and BOE Gov Bailey Speaks.

- AUD: GDP q/q, and Commodity Prices y/y.

- CAD: Building Permits and Manufacturing PMI.

- CHF: CPI m/m, and Manufacturing PMI.

- JPY: Capital Spending q/y, and Final Manufacturing PMI.

 

• KEY EQUITY & BOND MARKET DRIVERS:

- The benchmark Japanese 10-year Japanese government bond yield fell below 0.06%, close to the level since October 5, because people are increasingly worried about the impact of the newly discovered variant of the omicron coronavirus. Traders worry that fighting the COVID-19 disease will become more difficult because this strain shows some mutations in the spike protein targeted by existing vaccines. The Chief Executive Officer of Modena told the Financial Times that the current vaccine's effectiveness might be significantly reduced, and it will take months to redesign a new vaccine and distribute it to all parts of the world. In addition, local media reported that the Japanese government's 2022 fiscal year budget might exceed a record $946 billion due to defense and social welfare expenditures.

- The yield on French 10-year government bonds fell to around 0%, the lowest in 11 weeks. It was flat with European counterparts, as investors sought safer securities and a possible mRNA vaccine under the threat of the Omicron variant of the coronavirus. More resistant. On November 29, the number of patients in the intensive care unit increased by 117 to 1,749, the most significant single-day increase since March because the French health authorities face increasingly strict restrictions. In addition, despite the high inflation data in the Eurozone, the threat of a slower economic recovery brought about by increased business restrictions has led investors to believe that the European Central Bank’s interest rate hike may be delayed.

- Canadian 10-year government bond yield drops to a 6-week low of 1.556%.

- Barnes & Noble Education (BNED) Shares Lost 20% After Weak Quarterly Sales;

- Citi Trends (CTRN) shares surged 5% after solid quarterly report and full-year solid outlook;
- Deciphera Pharmaceuticals (DCPH) shares rose 11%: the company announced a restructuring, in which priority will be given to the development of Vimseltinib and DCC-3116, and the development of Rebastinib will be suspended;
- DocGo (DCGO) shares added 4%: Barclays began research coverage of securities with an 'above market' rating;
- Pfizer (PFE) shares were up 4%. The papers have every chance to show a record over the past 30 years monthly growth due to increased demand for shares in vaccine manufacturers;
- SmartRent (SMRT) shares gained 4%: Deutsche Bank started analytical coverage of securities with a “Buy” rating;
- StoneX Group (SNEX) shares declined 20% after publishing quarterly results, which were below the company's long-term target;
- TG Therapeutics (TGTX) shares lost 41% after news FDA regulator had questions about preliminary mortality data during trials of the company's anti-cancer diet;
- Olema Pharmaceuticals (OLMA) shares fell 56% after the publication of the results of early research on the anti-cancer drug OP-1250.

 

• STOCK MARKET SECTORS:

- High: Real Estate.

- Low: Communication Services, Materials, Financials.

 

• TOP CURRENCY & COMMODITIES MARKET DRIVERS:

- CURRENCY: The disposition in the foreign exchange market on Tuesday, at first glance, looked terrific. During the day, the growth leaders in the Big Ten were the safe-haven currencies - the Japanese yen and the Swiss franc. The decline leaders were the Canadian dollar and the Norwegian krone, reflecting the fall in oil prices. However, the US dollar, which also belongs to the defensive currencies, depreciated against most of its main competitors, including the euro, which was only behind the yen and franc in terms of growth rates. First, the technical flows associated with the end of the month put pressure on the US currency. Second, on the back of a decline in risk appetite after the comments of the head of Moderna about the effectiveness of the available vaccines against the omicron strain, Treasury quotes continued to rise, and the yield on 10-year notes fell 1.42%. This put pressure on the US currency. Just a week ago, the federal funds rate futures market was 100% likely to consider the rate hike in June 2022. However, on Tuesday afternoon, the likelihood of such a move fell to 58%. At the same time, the likelihood of a July increase fell to 77%. However, in the evening, the dollar strengthened sharply across the market in response to comments from Fed Chairman Jerome Powell, who, speaking in Congress, noted that it was time to abandon the word "transitory" about inflation as the threat of higher inflation has grown. It is pertinent to consider accelerating the pace of the decline in asset purchases, which will be done at the December meeting. After Powell's hawkish comments, the likelihood of a federal funds rate hike in July 2022 was again predicted with 100% probability. The likelihood of a June rise jumped to 80%. This supported the dollar, which also reacted positively to the resumption of bond yields (the yield rose to 1.48% over ten years). The Canadian dollar fell above 1.28, close to the nearly 3.5-month low of 1.2948 on August 20. The dollar strengthened, oil prices fell, and risk-sensitive currencies generally fell. A previous report questioned the effectiveness of the existing Omicron variant vaccine. , Sparking concerns about the new lockdown and more travel restrictions. NeTNA CEO Stephen Barrener told the Financial Times that the COVID-19 vaccine is unlikely to be effective against the new variant because they oppose the Delta variant. At the same time, Powell's speech strengthened the US dollar index because some people mentioned that the Fed might discuss a faster withdrawal from the large-scale bond purchase program at the next meeting. The reason is that the economy is strong, and it is expected that the factors driving up inflation will continue until next year. In addition, the price of oil, which is Canada’s main export commodity, has also fallen below US$66 per barrel.

- COMMODITIES: Oil prices have been under pressure amid concerns that the omicron strain will spur renewal of restrictions, which will negatively impact demand. The spread between the near February and March Brent futures has moved from backwardation to contango for the first time since August, indicating real market concerns about short-term demand. At the same time, the current situation may well justify the decision of OPEC + on December 2 not to increase production by 400 thousand b / d from January, as it is assumed by the terms of the current agreement. Brent, $ / bar. - 70.89 (-3.47%), WTI, $ / bar. - 67.41 (-3.63%), Urals, $ / bar. - 69.29 (-5.52%), Gold, $ / tr. oz. - 1,779.00 (-0.34%), Silver, $ / tr. oz. - 22.84 (-0.22%), Aluminum, $ / t - 2 630.00 (-0.23%), Copper, $ / t - 9,577.50 (+ 1.43%), Nickel, $ / t - 20,141.00 (+ 0.38%).

 

• CHART OF THE DAY:

On Tuesday, the CAC 40 index fell 0.8% to close at 6721.16 points, the lowest level in five weeks. The uncertainty about the impact of the Omicron variant and the hawkish Federal Reserve weakened confidence in the global economic recovery. The CEO of Moderna said that biotechnology mRNA vaccines are less effective on new variants than on old variants. In contrast, Fed Chairman Powell said that due to increased inflationary pressures, the gradual reduction of vaccines might accelerate. Valneva shares fell 1.6%, investors worried that the vaccine might be outdated, so they reconsidered their position on the recent contract with the European Commission to supply new crown vaccine. The ongoing epidemic struggle and preliminary data indicate that domestic inflation was at an 11-year high in November, making it increasingly difficult for the European Central Bank to maintain inflationary pressures as a brief statement. On the company side, the travel and accommodation industries recorded losses, driven by Air France-KLM (down 2.9%), Airbus (down 1%), and Accor (down 1.9%).

• French CAC40 Index - D1, Resistance around ~ 6950, Support (target zone) around ~ 6671 & 6173

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