• GLOBAL CAPITAL MARKETS OVERVIEW:

On Wednesday, European stock markets closed in the green, partly rebounding from the multi-week low hit in the previous trading day. The Frankfurt DAX 30 index rose more than 400 points, or 2.7%, to close at 15,506 points, and other major stock indexes rose 1.7% to 2.7%. Investors digested a batch of mixed economic data while still paying attention to the new omicron-Covid variation and its impact on growth, as well as rising inflationary pressures and signals from the Federal Reserve to reduce volume faster than planned. Fed Chairman Jerome Powell said that the Fed would discuss speeding up bond purchases at a meeting later this month. In addition, the term "temporary" is no longer the most accurate term to describe current inflation. In terms of data, the Markit PMI final survey for the euro area's manufacturing industry showed that the euro area's economy expanded enormously in another month. At the same time, German retail sales in October were lower than market expectations. The CAC 40 index rose 2.4% on Wednesday to close at 6881.87 points, partly recovering from last week’s decline. Investors welcomed the promising labor data in the United States and suppressed concerns about Omicron variables while still digesting the Fed’s accelerated contraction.Shortly before the close of the last trading day, Fed Chairman Powell stated that “temporary” is no longer accurate when describing current inflationary pressures, indicating that bond purchases may slow down further. In terms of data, the Eurozone Manufacturing Markit PMI shows that the Eurozone economy has expanded in another month. On the corporate side, the tourism and accommodation industries have rebounded, such as Safin (4.4%), Airbus (3.2%), Air France-KLM (3.4%), and Accor (2%). Due to rising oil prices, the energy and industrial sectors are also green trading, led by TotalEnergies (3.3%) and ArcelorMittal (2.9%). The U.S. stock market rebounded from several-week lows on the first trading day in December. Investors weighed the optimistic data on U.S. private employment and factory activity against Fed Chairman Jerome Powell’s hawkish remarks and the new Omi Kroner. -Concerns about variants of the new coronavirus. Powell said on Tuesday that he expects to discuss speeding up the cut to the minimum monthly bond-purchase plan of $120 billion at the next meeting of the central bank and said that he no longer believes that inflation is "temporary." After the FDA approval of the COVID-19 treatment drug CVID-19 in a single stock, Melk & Co's revenue exceeded 1%, while Salesforce.com faced a 5% drop when its current profit was lower than expected. It faces fierce competition from competitors, including Microsoft. The Standard & Poor's/TSX Composite Index rebounded 1.2% on Wednesday to close at around 20,900 points. It hit a seven-week low last trading day as the rise in oil prices after the OPEC meeting started boosting the share price of the energy sector. At the same time, investors balanced the US's better-than-expected ADP employment data and the Fed's expectations of faster shrinking while also paying attention to news about Omicron variants. On the corporate side, Royal Bank of Canada and National Bank of Canada both reported losses. Both banks previously failed to meet their fourth-quarter profit expectations, even though they announced an increase in dividends. Profitability has improved. Royal Bank’s quarterly dividend will increase from 1.08 Canadian dollars to 1.2 Canadian dollars per share, while National Bank’s dividend will increase by 23% to 0.87 Canadian dollars per share. Japanese stocks closed in shock on Wednesday, rebounding from three consecutive trading days of sharp declines. Still, the uncertainty about the impact of the Omicron variant of the new crown virus limited the increase. The Nikkei index closed up 0.41% to 27,935.62 points, the highest intraday gain of 1%. The Topix Stock Index also reversed its earlier decline, closing 0.44% higher at 1,936.74 points. The Nikkei index has fallen 5.7% in the past three trading days, while the Topix stock index has fallen 4.8%. The reason for the market volatility is that investors reacted cautiously to the uncertainty of the Omicron variant. Japan confirmed the country’s first case of the Omicron variant on Tuesday, and it was only one day before Japan closed its borders to all foreigners. The economically sensitive paper and pulp, shipping, machinery, and other stocks ranked the top gainers among the exchange's 33 sub-indexes. Robot manufacturer Fanuc (Fanuc) and air conditioner manufacturer Daikin Industries contributed the most to the Nikkei index, rising by 4.45% and 4.47%, respectively. Automaker stocks rose after data showed that as Asian factories reopened to ease supply constraints from automakers, Japan’s October industrial production increased for the first time in four months. Toyota Motor rose 2.22%; Honda Motor rose 2.39%. Auto parts maker Denso rose 1.88%. On the other hand, technology heavyweights fell, SoftBank Group fell 2.19%, and medical service platform M3 fell 2.11%. On Wednesday, the Shanghai Composite Index edged up 0.36% to close at 3577 points, and the Shenzhen constituent stock index fell 0.01% to close at 14,794 points. The reason was that mainland China stock markets were cautious in trading and remained slightly correlated with the violent fluctuations of their global counterparts. Due to the Omicron variant and the uncertainty of the hawkish Fed signal, global stock markets are oscillating between a sharp sell-off and a recovery rebound, and the mainland Chinese stock market is still in a tight trading range. At the same time, China’s November factory activity data was mixed, with Caixin’s PMI showing contraction, while official data showed unexpected growth in manufacturing. Market leaders include Jiangxi Special (6.26%), Shanxi US Dollar (10%), China Energy Conservation Solar (10%), Hubei Yihua (10%), and Gigadevice Semiconductor (10%);. In comparison, some laggards are Lange Green Energy (down 3.84%), Gaoteng Technology (down 4.9%), and Tianjin Zhonghua (down 6.27%). The Standard & Poor's/ASX 200 Index fell 0.28% on Wednesday to close at 7236. Australian authorities confirmed the first community case of the Omega variant, raising concerns about new restrictions and a long road to economic recovery. Official data showed that Australia’s economy contracted by 1.9% in the third quarter from the previous quarter due to the prolonged blockade. Still, trade and fiscal stimulus helped ease the decline in household spending, which was less than people’s concerns. Technology companies, consumer and travel-related stocks led the declines, with after-sales service (-2.16%), Woolworths Group (-2.4%), IDP Education (-6%), Transurban Group (-1.1%) and Qantas (-2.17%) ) Loss. At the same time, after the benchmark iron ore contract surged late on Tuesday, heavy mining stocks resisted the sell-off, led by BHP Billiton Group (1.35%), Fort Scoo Metal (1.53%), and Rio Tinto (2.42%). The NZX 50 index fell 0.5% in early trading and closed 0.04% higher on Wednesday to close at 12,724. At Asian midday on Tuesday, the New Zealand stock market almost missed the sharp sell-off of global stock markets. A report in the British Financial Times raised doubts about the effectiveness of the new crown vaccine against the Omicron mutant virus. At the same time, the COVID-19 disease prevention system is preparing to enter a system of life with the COVID-19 virus starting from Friday, despite the emergence of a new variant. So far, the country has not reported any cases of Omicron variants but emphasizes the need for caution at the border. The largest market gains include Contact Energy (1.27%), Infratil Ltd (2.8%), and Vista Group (3.54%), while the lagging ones include Fisher & Paykel (1.11%), A2 Milk (2.29%), and Spark New Zealand (2.39%) ).

 

• REVIEWING ECONOMIC DATA:

Looking at the last economic data:

- RU: In September 2021, Russia's real wages increased by 2.0% year-on-year, rebounding from the 1.5% growth in August and higher than market expectations of 1.0%.

- RU: In October 2021, Russia’s unemployment rate remained unchanged at 4.3%, lower than the market’s forecast of 4.4%. The unemployment rate remained at the lowest level since August 2019, and the number of unemployed fell to 3.3 million from 3.4 million in the previous period.

- RU: In October 2021, Russia's retail sales increased by 4.1% year-on-year, a slowdown from the 5.6% increase in the previous month and lower than the market's expected increase of 4.8%. This is the seventh consecutive month of growth in retail activity. Monthly retail sales increased by 0.8%, after falling by 1.5% in the previous month.

- US: The US ISM manufacturing PMI rose slightly from 60.8 last month to 61.1 in November 2021, which is basically in line with the 61.0 generally believed by the market. The latest data shows that the manufacturing sector expanded for the 18th consecutive month after contracting in April 2020, although factories are still battling pandemic-related raw material shortages. Production (61.5 vs. 59.3 in October), new orders (61.5 vs. 59.8), and employment (53.3 vs. 52.0) grew faster, while the price paid by manufacturers in the survey fell from 85.7 in the previous month to a still high 82.4.

- US: Private companies in the United States hired 534,000 workers in November 2021, and the 570,000 workers after a downward revision in October increased, exceeding market expectations of 525,000, as the labor market continued to show signs of a continued economic rebound. Symptoms of a steady recovery. The service industry added 424,000 jobs, including leisure and hospitality (136,000), professional and business (110,000), trade, transportation, and public utilities (78,000), and education and health (5.5 Ten thousand) topped the list. Driven by the increase in employment in the construction industry (52,000) and manufacturing (50,000), the commodity production sector added 110,000 jobs.

- US: The IHS Markit US Manufacturing PMI was revised from a preliminary estimate of 59.1 to 58.3 in November 2021, slightly lower than the final reading of 58.4 last month. The latest data show that due to reports of supply delays and slowing demand, the expansion of the manufacturing industry is the slowest since December 2020. Production growth is the second slowest since September 2020, and new orders growth is the smallest in 11 months. In addition, as labor shortages hindered efforts to fill existing job vacancies, the rate of job creation slowed to a moderate level. In terms of prices, due to rising prices of metals, chemicals, and plastics and increasing freight and transportation costs, input cost inflation has set a new record. However, despite the rapid growth, the output cost inflation rate fell to its lowest level in three months. Finally, expectations for output prospects for the coming year are raised to their highest level in three months.

- US: According to data from the Mortgage Bankers Association, in the week ending November 26, U.S. mortgage applications fell by 7.2%, the most significant drop since mid-February due to rising interest rates. Housing refinancing applications fell 14.8%, the average interest rate on 30-year fixed mortgages soared by seven basis points to 3.31%, the highest level since April, while housing applications rose 5.1%. Compared with the same period last year, refinancing demand fell by 41% compared with the same period a year ago, while housing applications fell by 8%.

- CA: The IHS Markit Canadian Manufacturing PMI was 57.2 in November 2021, slightly lower than the seven-month high of 57.7 last month. Factory activity conditions improved for the 17th consecutive month, the most robust expansion in the history of the series. Due to improved demand and increased number of customers, production growth has accelerated, and new orders have grown steadily. Due to increased demand in the US and Asian markets, exports have increased for the tenth consecutive month. Despite continued supply disruptions and material shortages, this has prompted suppliers to extend the average delivery period to the second-largest extent since the survey began in October 2010. In terms of prices, input and output inflation both climbed to record levels. Finally, the manufacturer’s optimism fell to its lowest level since July but still above the long-term series average.

- CA: The value of Canadian building permits increased by 1.3% in October 2021 from the previous month to 10.3 billion Canadian dollars. Previously, it was revised downward by 4.1% in September, and the market is expected to fall by 1%. Construction intentions in the non-residential sector increased by 4.2% to 3.4 billion Canadian dollars, institutional and government permits increased by 63.2% to 1.2 billion Canadian dollars, and commercial construction projects increased by 10.1% to 1.8 billion Canadian dollars. At the same time, the residential sector fell 0.1%, and the single-family residential sector rose 10.8% to 3.4 billion Canadian dollars, offset by an 8.8% drop in the multi-family residential industry to 3.5 billion Canadian dollars. Among Canada's significant provinces, British Columbia (15.0% to 1.7 billion Canadian dollars) and Ontario (4.5% to 4.4 billion Canadian dollars) contributed the most to overall growth.

- UK: The IHS Markit/CIPS UK manufacturing PMI in November 2021 was 58.1, almost unchanged from the preliminary estimate of 58.2, while it was 57.8 last month. Output growth has accelerated from the 8-month low in October, and new business has grown for the 10th consecutive month. This is due to the improvement of market conditions in the UK, the return of customers, and increased customer confidence. Despite this, new export sales have fallen for the third consecutive month, with reports of weakening Chinese demand, disruption of trade with the European Union (partly due to Brexit), and cancellation of some orders due to extended delivery periods. During November, the capacity of British manufacturers was still stretched, the backlog of jobs almost reached a record level, and the rate of job creation was the strongest since August. In terms of prices, input costs hit a record high. Finally, business optimism reached its highest point in three months.

- EU: The IHS Markit Eurozone Manufacturing PMI reached 58.4 in November 2021, almost unchanged from the preliminary estimate of 58.6 and last month's final reading of 58.3. The latest data shows that this is the second slowest growth rate since February due to reports of severe supply constraints. Output is growing faster, but the growth rate is still the second weakest in the current 17-month growth sequence. The growth of new orders has also accelerated, while the pace of job creation remains steady. At the same time, the average input lead time has been dramatically extended again, and the accumulation of pre-production inventory has reached the fastest level since the first data collection in June 1997. In terms of prices, input cost inflation is the third strongest in the history of the series, and output prices have risen the most since the series began in November 2002.

- SW: Swedbank’s November 2021 manufacturing PMI fell to 63.3 from a downward revision of 64.2 last month. This is the 17th consecutive month of growth in factory activity. This is the weakest rate since August but still above the long-term average of 54.8. After reaching a record level in October, the supplier's raw material and intermediate product price index declined in November (93.6). Swedbank’s Jörgen Kennemer, who is in charge of PMI analysis, said: “So far, the intensification of the spread of infections in Europe and supply disruptions in the supply chain have not stopped the growth of the industry. However, even if new restrictions are introduced, downside risks cannot be ignored.”

- CN: The Caixin China General Manufacturing PMI fell from 50.6 last month to 49.9 in November 2021, which was lower than market expectations of 50.5. Since the outbreak of the COVID-19 disease and weak demand, the index has fallen into a contracting region for the second time since April 2020. As a result, new orders fell slightly after two months of expansion, export sales and employment fell for the fourth consecutive month, and purchasing levels fell further. At the same time, due to low supplier inventory levels and logistics delays, supplier performance has deteriorated again. On the positive side, as power supply problems eased, output increased for the first time in four months. In terms of prices, input cost inflation has reached the lowest level since October 2020, reflecting the decline in the prices of some raw materials; output cost inflation has slowed sharply. Looking to the future, people’s hopes for improving the epidemic and the recovery of the supply chain have increased their confidence.

 

• LOOKING AHEAD:

Today, investors will receive:

- USD: Challenger Job Cuts y/y, Unemployment Claims, FOMC Member Bostic Speaks, Treasury Sec Yellen Speaks, Natural Gas Storage, FOMC Member Quarles Speaks, FOMC Member Barkin Speaks, FOMC Member Bostic Speaks, and FOMC Member Daly Speaks.

- EUR: Spanish Unemployment Change, Italian Monthly Unemployment Rate, PPI m/m, Unemployment Rate, Spanish 10-y Bond Auction, OPEC-JMMC Meetings, and French 10-y Bond Auction.

- AUD: Retail Sales m/m, Trade Balance, and AIG Construction Index.

- CHF: Retail Sales y/y.

- JPY: Monetary Base y/y, 10-y Bond Auction, and Consumer Confidence.

 

• KEY EQUITY & BOND MARKET DRIVERS:

- Germany's benchmark bond yield rose to -0.3% in an attempt to rebound from the nearly three-month low hit at the end of November. Investors balanced their concerns about the spread of the Omicron coronavirus variant with the expectation of a faster reduction by the Federal Reserve. On Tuesday, Federal Reserve Chairman Jerome Powell said that the central bank might discuss speeding up its withdrawal from large-scale bond purchases at its next meeting, and inflationary pressures may continue until mid-2022. In Europe, money market participants no longer expect the European Central Bank to raise interest rates on deposits in 2022, even though Eurozone inflation rose to near the highest level in history in November.

- The UK 10-year government bond yield rose to 0.85% after hitting its lowest level since mid-September earlier this week, due to investor concerns about the spread of the new Omicron coronavirus variant and the Fed’s faster reduction in bond purchases. The prospects are weighed. Federal Reserve Chairman Jerome Powell said on Tuesday that policymakers would discuss at the December meeting whether to end bond purchases months earlier than expected while expressing concerns about rising inflationary pressures. However, there are doubts about whether the Bank of England will raise interest rates at its December meeting in the UK.

- In early December, the French 10-year oat yield rebounded to about 0.03%, which was in line with its European counterparts, as investors reacted to the hawkish Fed. Fed Chairman Powell said on Tuesday that because inflationary pressures are no longer considered temporary, the Fed may speed up its downsizing. Investors believe that despite increasing concerns about Omicron variants, the hawkish stance may indicate that the interest rate hike was earlier than expected. At the same time, consumer inflation in the Eurozone accelerated to its highest level in 30 years.

- Italy's 10-year BTP yield rose to 1.05%, close to the three-week high of 1.09% hit on November 24. The Fed said it would accelerate bond purchases. Although the market has general concerns about the Omicron variant, this news boosted The rate of return. Fed Chairman Powell said on Tuesday that bond purchases might slow further than the initially indicated $15 billion per month because inflationary pressures are no longer considered temporary, and investors expect interest rate hikes to come early. According to preliminary data, in China, annual consumer inflation has accelerated to its highest level in 11 years, while Eurozone inflation has reached its highest level in 30 years. At the same time, the Italian government is considering increasing restrictions because daily infections continue to grow at a higher rate, and the Omicron variant has been detected in the national soil.

- On Wednesday, the 10-year U.S. Treasury bond yield rebounded from a 9-week low to 1.5%. Investors balanced their concerns about the emergence of the new crown virus variants and the prospect of a faster reduction by the Federal Reserve. Fed Chairman Powell said that the Fed would discuss at the next meeting whether to reduce bond purchases faster than previously expected, and the term "temporary" is no longer the most accurate term to describe current inflation.

- Shares of airlines and companies from the tourism and recreation sector rose in price, interrupting a three-day decline;

- Vaccine manufacturers' shares, which have been in good demand in recent days, are now falling in price: the initial excitement subsided, and investors began to take profits;
- Twitter (TWTR) shares rose 1.7% on news that Ark Invest Katie Wood bought $ 49 million on Tuesday, taking advantage of the weakness triggered by the announcement of the departure of co-founder Jack Dorsey as CEO;
- Ambarella (AMBA) rose 21% after fourth-quarter solid guidance that prompted analysts at several companies to raise target levels for the stock;
- AMC Entertainment (AMC) rose 1% after the company reported very high ticket sales on Monday for Spider-Man: No Way Home. The price of paper and other cinemas rose;
- Box Inc. shares (BOX) added 15% after publishing an excellent quarterly earnings report;
- Salesforce (CRM) shares lost 7% after the weak forecast for revenue and earnings for the current quarter;
- Stronghold Digital Mining (SDIG) Shares Up 21% Following Strong Quarterly Revenue Report;
- United Fire Group (UFCS) gained 6% after positive comments from Piper Sandler and a rating upgrade to the above market.

 

• STOCK MARKET SECTORS:

- High: Energy, Materials, Utilities.

- Low: Consumer Discretionary, Communication Services.

 

• TOP CURRENCY & COMMODITIES MARKET DRIVERS:

- CAD: After the Canadian dollar hit a nearly two-month low of 1.2788 on November 26, the transaction price was about 1.274, the dollar weakened, oil prices rebounded, and economic data showed that despite the supply bottleneck, the manufacturing industry was still expanding steadily. The price of oil, Canada’s main export product, fell below US$65 per barrel and was slightly higher than US$68 per barrel. Investors are waiting for OPEC to respond to the threat of fuel demand from the Omega Dragon variant. At the same time, the Canadian manufacturing PMI fell from 57.7 last month to 57.2 in November, although it is still well above 50, which indicates that the industry has grown.

- OIL: According to data from the EIA Oil State Report, in the week ending November 26, US crude oil inventories fell by 910,000 barrels, after an increase of 1.017 million barrels in the previous week, while market forecasts fell by 1.237 million barrels. At the same time, gasoline inventories increased by 4.029 million barrels, exceeding the expected increase of 0.29 million barrels.

- RMB: On Wednesday, the offshore renminbi against the U.S. dollar rose to a six-month high near 6.3750, mainly supported by solid corporate demand from Chinese companies continuing to sell U.S. dollars to renminbi to pay various payments. Although Fed Chairman Jerome Powell's (Jerome Powell)'s challenging remarks pushed up the dollar and U.S. Treasury yields, the renminbi remained resilient. Analysts still believe that the Chinese authorities will not take any measures to curb the strengthening of the renminbi, which means that the renminbi will appreciate further. At the same time, China’s foreign exchange regulators are conducting trials of RMB futures trading to improve their ability to hedge currency risks in a market where the recent appreciation of the RMB has been affected by the “herd effect.”

- JPY: The yen-dollar exchange rate fell to 113.4. The previous trading day was as high as 112.54. Under the influence of the Fed’s hawkish comments, the market weighed the economic risks and uncertainties from the Omicron variant. On Tuesday, Fed Chairman Jerome Powell (Jerome Powell) said that the Fed would discuss speeding up the scale of bond purchases at its December meeting, which shows the market that the Fed is focusing on solving the problem of high inflation rather than new variants—coming threat. The yen mainly benefited from safe-haven trading, as the market is concerned about the new variants. However, it is still under pressure from intensified policy differences between the United States and Japan. The Fed’s hawkish signal contrasts with the Bank of Japan’s firm commitment to maintaining loose monetary policy to achieve the 2% price stability target.

- AUD: The Australian dollar against the US dollar stabilized above 0.7150 on Wednesday, recovering from a one-year low in the previous trading day, as the currency market in Asian trade calmed down. On Wednesday, Asian stock markets, global index futures, and commodities indicated increased risk appetite, and risky assets rose due to market recovery. Better-than-expected third-quarter GDP data also boosted the Australian dollar. The Australian economy shrank by 1.9%, while the market is expected to decline by 2.7%. At the same time, the Omicron variant increases downward pressure on the currency because it brings economic risks and supports the Reserve Bank of Australia’s stance of maintaining the loose monetary policy. In the latest meeting minutes, the central bank reiterated that it is prepared to remain patient until the wage and inflation targets are achieved and that raising interest rates in 2024 remains its core issue.

- NZD: The New Zealand dollar climbed to 0.6860 against the U.S. dollar, recovering from a one-year low in the previous trading day, as the currency market in Asian trade calmed down. On Wednesday, Asian stock markets, global index futures, and commodities indicated increased risk appetite, and risky assets rose due to market recovery. At the same time, the New Zealand dollar is still weak as US interest rates are expected to grow, and the latest hawkish comments by Fed Chairman Jerome Powell have increased the New Zealand dollar’s downside risks. The Reserve Bank of New Zealand also raised the official cash rate by 25 basis points to 0.75%, in line with expectations, but did not meet market expectations for a more aggressive 50 basis point rate hike, which analysts believe will Be more beneficial to the euro.

- USD: After the extreme volatility in the last trading day, the US dollar index stabilized at a level close to 96 points on Wednesday. The market weighed the risks of the Omicron variant with the challenging remarks of Federal Reserve Chairman Jerome Powell. The Fed chairman said that the Fed might discuss speeding up its withdrawal from the large-scale bond purchase program at the next meeting, citing the strong economy. However, it is expected that the factors driving up inflation will continue until next year. As inflation in the United States reached its highest level in 30 years in November and the labor market recovered steadily, some policymakers have called for faster asset purchases and higher interest rates. At the same time, the US dollar is still under pressure due to concerns that the global economy may take longer to return to pre-pandemic levels.

 

• CHART OF THE DAY:

The FTSE MIB rebounded 2.2% to close at 26371.92 points, partly rebounding from the 11-week low hit in the previous trading day. Concerns about the Omicron variant were slightly weakened, while energy and industrial stocks tracked oil price increases after the OPEC+ announcement. At the same time, as the Federal Reserve may accelerate downsizing, investors are expected to tighten monetary policy while domestic, and eurozone inflationary pressures will continue to increase. In terms of data, Italy's IHS manufacturing PMI was higher than expected, at 62.8, marking the 18th consecutive month of expansion. On the company side, Stellaris (5.7%), STMicroelectronics (4.3%), and Tenaris (4.1%) led the gains.• Italian FTSE MIB Index - D1, Resistance around ~ 26536 Support (target zone) around ~ 25373 & 24656

Stocks try to rebound - the economy grew at a modest to moderate pace

• GLOBAL CAPITAL MARKETS OVERVIEW:

On Wednesday, European stock markets closed in the green, partly rebounding from the multi-week low hit in the previous trading day. The Frankfurt DAX 30 index rose more than 400 points, or 2.7%, to close at 15,506 points, and other major stock indexes rose 1.7% to 2.7%. Investors digested a batch of mixed economic data while still paying attention to the new omicron-Covid variation and its impact on growth, as well as rising inflationary pressures and signals from the Federal Reserve to reduce volume faster than planned. Fed Chairman Jerome Powell said that the Fed would discuss speeding up bond purchases at a meeting later this month. In addition, the term "temporary" is no longer the most accurate term to describe current inflation. In terms of data, the Markit PMI final survey for the euro area's manufacturing industry showed that the euro area's economy expanded enormously in another month. At the same time, German retail sales in October were lower than market expectations. The CAC 40 index rose 2.4% on Wednesday to close at 6881.87 points, partly recovering from last week’s decline. Investors welcomed the promising labor data in the United States and suppressed concerns about Omicron variables while still digesting the Fed’s accelerated contraction.Shortly before the close of the last trading day, Fed Chairman Powell stated that “temporary” is no longer accurate when describing current inflationary pressures, indicating that bond purchases may slow down further. In terms of data, the Eurozone Manufacturing Markit PMI shows that the Eurozone economy has expanded in another month. On the corporate side, the tourism and accommodation industries have rebounded, such as Safin (4.4%), Airbus (3.2%), Air France-KLM (3.4%), and Accor (2%). Due to rising oil prices, the energy and industrial sectors are also green trading, led by TotalEnergies (3.3%) and ArcelorMittal (2.9%). The U.S. stock market rebounded from several-week lows on the first trading day in December. Investors weighed the optimistic data on U.S. private employment and factory activity against Fed Chairman Jerome Powell’s hawkish remarks and the new Omi Kroner. -Concerns about variants of the new coronavirus. Powell said on Tuesday that he expects to discuss speeding up the cut to the minimum monthly bond-purchase plan of $120 billion at the next meeting of the central bank and said that he no longer believes that inflation is "temporary." After the FDA approval of the COVID-19 treatment drug CVID-19 in a single stock, Melk & Co's revenue exceeded 1%, while Salesforce.com faced a 5% drop when its current profit was lower than expected. It faces fierce competition from competitors, including Microsoft. The Standard & Poor's/TSX Composite Index rebounded 1.2% on Wednesday to close at around 20,900 points. It hit a seven-week low last trading day as the rise in oil prices after the OPEC meeting started boosting the share price of the energy sector. At the same time, investors balanced the US's better-than-expected ADP employment data and the Fed's expectations of faster shrinking while also paying attention to news about Omicron variants. On the corporate side, Royal Bank of Canada and National Bank of Canada both reported losses. Both banks previously failed to meet their fourth-quarter profit expectations, even though they announced an increase in dividends. Profitability has improved. Royal Bank’s quarterly dividend will increase from 1.08 Canadian dollars to 1.2 Canadian dollars per share, while National Bank’s dividend will increase by 23% to 0.87 Canadian dollars per share. Japanese stocks closed in shock on Wednesday, rebounding from three consecutive trading days of sharp declines. Still, the uncertainty about the impact of the Omicron variant of the new crown virus limited the increase. The Nikkei index closed up 0.41% to 27,935.62 points, the highest intraday gain of 1%. The Topix Stock Index also reversed its earlier decline, closing 0.44% higher at 1,936.74 points. The Nikkei index has fallen 5.7% in the past three trading days, while the Topix stock index has fallen 4.8%. The reason for the market volatility is that investors reacted cautiously to the uncertainty of the Omicron variant. Japan confirmed the country’s first case of the Omicron variant on Tuesday, and it was only one day before Japan closed its borders to all foreigners. The economically sensitive paper and pulp, shipping, machinery, and other stocks ranked the top gainers among the exchange's 33 sub-indexes. Robot manufacturer Fanuc (Fanuc) and air conditioner manufacturer Daikin Industries contributed the most to the Nikkei index, rising by 4.45% and 4.47%, respectively. Automaker stocks rose after data showed that as Asian factories reopened to ease supply constraints from automakers, Japan’s October industrial production increased for the first time in four months. Toyota Motor rose 2.22%; Honda Motor rose 2.39%. Auto parts maker Denso rose 1.88%. On the other hand, technology heavyweights fell, SoftBank Group fell 2.19%, and medical service platform M3 fell 2.11%. On Wednesday, the Shanghai Composite Index edged up 0.36% to close at 3577 points, and the Shenzhen constituent stock index fell 0.01% to close at 14,794 points. The reason was that mainland China stock markets were cautious in trading and remained slightly correlated with the violent fluctuations of their global counterparts. Due to the Omicron variant and the uncertainty of the hawkish Fed signal, global stock markets are oscillating between a sharp sell-off and a recovery rebound, and the mainland Chinese stock market is still in a tight trading range. At the same time, China’s November factory activity data was mixed, with Caixin’s PMI showing contraction, while official data showed unexpected growth in manufacturing. Market leaders include Jiangxi Special (6.26%), Shanxi US Dollar (10%), China Energy Conservation Solar (10%), Hubei Yihua (10%), and Gigadevice Semiconductor (10%);. In comparison, some laggards are Lange Green Energy (down 3.84%), Gaoteng Technology (down 4.9%), and Tianjin Zhonghua (down 6.27%). The Standard & Poor's/ASX 200 Index fell 0.28% on Wednesday to close at 7236. Australian authorities confirmed the first community case of the Omega variant, raising concerns about new restrictions and a long road to economic recovery. Official data showed that Australia’s economy contracted by 1.9% in the third quarter from the previous quarter due to the prolonged blockade. Still, trade and fiscal stimulus helped ease the decline in household spending, which was less than people’s concerns. Technology companies, consumer and travel-related stocks led the declines, with after-sales service (-2.16%), Woolworths Group (-2.4%), IDP Education (-6%), Transurban Group (-1.1%) and Qantas (-2.17%) ) Loss. At the same time, after the benchmark iron ore contract surged late on Tuesday, heavy mining stocks resisted the sell-off, led by BHP Billiton Group (1.35%), Fort Scoo Metal (1.53%), and Rio Tinto (2.42%). The NZX 50 index fell 0.5% in early trading and closed 0.04% higher on Wednesday to close at 12,724. At Asian midday on Tuesday, the New Zealand stock market almost missed the sharp sell-off of global stock markets. A report in the British Financial Times raised doubts about the effectiveness of the new crown vaccine against the Omicron mutant virus. At the same time, the COVID-19 disease prevention system is preparing to enter a system of life with the COVID-19 virus starting from Friday, despite the emergence of a new variant. So far, the country has not reported any cases of Omicron variants but emphasizes the need for caution at the border. The largest market gains include Contact Energy (1.27%), Infratil Ltd (2.8%), and Vista Group (3.54%), while the lagging ones include Fisher & Paykel (1.11%), A2 Milk (2.29%), and Spark New Zealand (2.39%) ).

 

• REVIEWING ECONOMIC DATA:

Looking at the last economic data:

- RU: In September 2021, Russia's real wages increased by 2.0% year-on-year, rebounding from the 1.5% growth in August and higher than market expectations of 1.0%.

- RU: In October 2021, Russia’s unemployment rate remained unchanged at 4.3%, lower than the market’s forecast of 4.4%. The unemployment rate remained at the lowest level since August 2019, and the number of unemployed fell to 3.3 million from 3.4 million in the previous period.

- RU: In October 2021, Russia's retail sales increased by 4.1% year-on-year, a slowdown from the 5.6% increase in the previous month and lower than the market's expected increase of 4.8%. This is the seventh consecutive month of growth in retail activity. Monthly retail sales increased by 0.8%, after falling by 1.5% in the previous month.

- US: The US ISM manufacturing PMI rose slightly from 60.8 last month to 61.1 in November 2021, which is basically in line with the 61.0 generally believed by the market. The latest data shows that the manufacturing sector expanded for the 18th consecutive month after contracting in April 2020, although factories are still battling pandemic-related raw material shortages. Production (61.5 vs. 59.3 in October), new orders (61.5 vs. 59.8), and employment (53.3 vs. 52.0) grew faster, while the price paid by manufacturers in the survey fell from 85.7 in the previous month to a still high 82.4.

- US: Private companies in the United States hired 534,000 workers in November 2021, and the 570,000 workers after a downward revision in October increased, exceeding market expectations of 525,000, as the labor market continued to show signs of a continued economic rebound. Symptoms of a steady recovery. The service industry added 424,000 jobs, including leisure and hospitality (136,000), professional and business (110,000), trade, transportation, and public utilities (78,000), and education and health (5.5 Ten thousand) topped the list. Driven by the increase in employment in the construction industry (52,000) and manufacturing (50,000), the commodity production sector added 110,000 jobs.

- US: The IHS Markit US Manufacturing PMI was revised from a preliminary estimate of 59.1 to 58.3 in November 2021, slightly lower than the final reading of 58.4 last month. The latest data show that due to reports of supply delays and slowing demand, the expansion of the manufacturing industry is the slowest since December 2020. Production growth is the second slowest since September 2020, and new orders growth is the smallest in 11 months. In addition, as labor shortages hindered efforts to fill existing job vacancies, the rate of job creation slowed to a moderate level. In terms of prices, due to rising prices of metals, chemicals, and plastics and increasing freight and transportation costs, input cost inflation has set a new record. However, despite the rapid growth, the output cost inflation rate fell to its lowest level in three months. Finally, expectations for output prospects for the coming year are raised to their highest level in three months.

- US: According to data from the Mortgage Bankers Association, in the week ending November 26, U.S. mortgage applications fell by 7.2%, the most significant drop since mid-February due to rising interest rates. Housing refinancing applications fell 14.8%, the average interest rate on 30-year fixed mortgages soared by seven basis points to 3.31%, the highest level since April, while housing applications rose 5.1%. Compared with the same period last year, refinancing demand fell by 41% compared with the same period a year ago, while housing applications fell by 8%.

- CA: The IHS Markit Canadian Manufacturing PMI was 57.2 in November 2021, slightly lower than the seven-month high of 57.7 last month. Factory activity conditions improved for the 17th consecutive month, the most robust expansion in the history of the series. Due to improved demand and increased number of customers, production growth has accelerated, and new orders have grown steadily. Due to increased demand in the US and Asian markets, exports have increased for the tenth consecutive month. Despite continued supply disruptions and material shortages, this has prompted suppliers to extend the average delivery period to the second-largest extent since the survey began in October 2010. In terms of prices, input and output inflation both climbed to record levels. Finally, the manufacturer’s optimism fell to its lowest level since July but still above the long-term series average.

- CA: The value of Canadian building permits increased by 1.3% in October 2021 from the previous month to 10.3 billion Canadian dollars. Previously, it was revised downward by 4.1% in September, and the market is expected to fall by 1%. Construction intentions in the non-residential sector increased by 4.2% to 3.4 billion Canadian dollars, institutional and government permits increased by 63.2% to 1.2 billion Canadian dollars, and commercial construction projects increased by 10.1% to 1.8 billion Canadian dollars. At the same time, the residential sector fell 0.1%, and the single-family residential sector rose 10.8% to 3.4 billion Canadian dollars, offset by an 8.8% drop in the multi-family residential industry to 3.5 billion Canadian dollars. Among Canada's significant provinces, British Columbia (15.0% to 1.7 billion Canadian dollars) and Ontario (4.5% to 4.4 billion Canadian dollars) contributed the most to overall growth.

- UK: The IHS Markit/CIPS UK manufacturing PMI in November 2021 was 58.1, almost unchanged from the preliminary estimate of 58.2, while it was 57.8 last month. Output growth has accelerated from the 8-month low in October, and new business has grown for the 10th consecutive month. This is due to the improvement of market conditions in the UK, the return of customers, and increased customer confidence. Despite this, new export sales have fallen for the third consecutive month, with reports of weakening Chinese demand, disruption of trade with the European Union (partly due to Brexit), and cancellation of some orders due to extended delivery periods. During November, the capacity of British manufacturers was still stretched, the backlog of jobs almost reached a record level, and the rate of job creation was the strongest since August. In terms of prices, input costs hit a record high. Finally, business optimism reached its highest point in three months.

- EU: The IHS Markit Eurozone Manufacturing PMI reached 58.4 in November 2021, almost unchanged from the preliminary estimate of 58.6 and last month's final reading of 58.3. The latest data shows that this is the second slowest growth rate since February due to reports of severe supply constraints. Output is growing faster, but the growth rate is still the second weakest in the current 17-month growth sequence. The growth of new orders has also accelerated, while the pace of job creation remains steady. At the same time, the average input lead time has been dramatically extended again, and the accumulation of pre-production inventory has reached the fastest level since the first data collection in June 1997. In terms of prices, input cost inflation is the third strongest in the history of the series, and output prices have risen the most since the series began in November 2002.

- SW: Swedbank’s November 2021 manufacturing PMI fell to 63.3 from a downward revision of 64.2 last month. This is the 17th consecutive month of growth in factory activity. This is the weakest rate since August but still above the long-term average of 54.8. After reaching a record level in October, the supplier's raw material and intermediate product price index declined in November (93.6). Swedbank’s Jörgen Kennemer, who is in charge of PMI analysis, said: “So far, the intensification of the spread of infections in Europe and supply disruptions in the supply chain have not stopped the growth of the industry. However, even if new restrictions are introduced, downside risks cannot be ignored.”

- CN: The Caixin China General Manufacturing PMI fell from 50.6 last month to 49.9 in November 2021, which was lower than market expectations of 50.5. Since the outbreak of the COVID-19 disease and weak demand, the index has fallen into a contracting region for the second time since April 2020. As a result, new orders fell slightly after two months of expansion, export sales and employment fell for the fourth consecutive month, and purchasing levels fell further. At the same time, due to low supplier inventory levels and logistics delays, supplier performance has deteriorated again. On the positive side, as power supply problems eased, output increased for the first time in four months. In terms of prices, input cost inflation has reached the lowest level since October 2020, reflecting the decline in the prices of some raw materials; output cost inflation has slowed sharply. Looking to the future, people’s hopes for improving the epidemic and the recovery of the supply chain have increased their confidence.

 

• LOOKING AHEAD:

Today, investors will receive:

- USD: Challenger Job Cuts y/y, Unemployment Claims, FOMC Member Bostic Speaks, Treasury Sec Yellen Speaks, Natural Gas Storage, FOMC Member Quarles Speaks, FOMC Member Barkin Speaks, FOMC Member Bostic Speaks, and FOMC Member Daly Speaks.

- EUR: Spanish Unemployment Change, Italian Monthly Unemployment Rate, PPI m/m, Unemployment Rate, Spanish 10-y Bond Auction, OPEC-JMMC Meetings, and French 10-y Bond Auction.

- AUD: Retail Sales m/m, Trade Balance, and AIG Construction Index.

- CHF: Retail Sales y/y.

- JPY: Monetary Base y/y, 10-y Bond Auction, and Consumer Confidence.

 

• KEY EQUITY & BOND MARKET DRIVERS:

- Germany's benchmark bond yield rose to -0.3% in an attempt to rebound from the nearly three-month low hit at the end of November. Investors balanced their concerns about the spread of the Omicron coronavirus variant with the expectation of a faster reduction by the Federal Reserve. On Tuesday, Federal Reserve Chairman Jerome Powell said that the central bank might discuss speeding up its withdrawal from large-scale bond purchases at its next meeting, and inflationary pressures may continue until mid-2022. In Europe, money market participants no longer expect the European Central Bank to raise interest rates on deposits in 2022, even though Eurozone inflation rose to near the highest level in history in November.

- The UK 10-year government bond yield rose to 0.85% after hitting its lowest level since mid-September earlier this week, due to investor concerns about the spread of the new Omicron coronavirus variant and the Fed’s faster reduction in bond purchases. The prospects are weighed. Federal Reserve Chairman Jerome Powell said on Tuesday that policymakers would discuss at the December meeting whether to end bond purchases months earlier than expected while expressing concerns about rising inflationary pressures. However, there are doubts about whether the Bank of England will raise interest rates at its December meeting in the UK.

- In early December, the French 10-year oat yield rebounded to about 0.03%, which was in line with its European counterparts, as investors reacted to the hawkish Fed. Fed Chairman Powell said on Tuesday that because inflationary pressures are no longer considered temporary, the Fed may speed up its downsizing. Investors believe that despite increasing concerns about Omicron variants, the hawkish stance may indicate that the interest rate hike was earlier than expected. At the same time, consumer inflation in the Eurozone accelerated to its highest level in 30 years.

- Italy's 10-year BTP yield rose to 1.05%, close to the three-week high of 1.09% hit on November 24. The Fed said it would accelerate bond purchases. Although the market has general concerns about the Omicron variant, this news boosted The rate of return. Fed Chairman Powell said on Tuesday that bond purchases might slow further than the initially indicated $15 billion per month because inflationary pressures are no longer considered temporary, and investors expect interest rate hikes to come early. According to preliminary data, in China, annual consumer inflation has accelerated to its highest level in 11 years, while Eurozone inflation has reached its highest level in 30 years. At the same time, the Italian government is considering increasing restrictions because daily infections continue to grow at a higher rate, and the Omicron variant has been detected in the national soil.

- On Wednesday, the 10-year U.S. Treasury bond yield rebounded from a 9-week low to 1.5%. Investors balanced their concerns about the emergence of the new crown virus variants and the prospect of a faster reduction by the Federal Reserve. Fed Chairman Powell said that the Fed would discuss at the next meeting whether to reduce bond purchases faster than previously expected, and the term "temporary" is no longer the most accurate term to describe current inflation.

- Shares of airlines and companies from the tourism and recreation sector rose in price, interrupting a three-day decline;

- Vaccine manufacturers' shares, which have been in good demand in recent days, are now falling in price: the initial excitement subsided, and investors began to take profits;
- Twitter (TWTR) shares rose 1.7% on news that Ark Invest Katie Wood bought $ 49 million on Tuesday, taking advantage of the weakness triggered by the announcement of the departure of co-founder Jack Dorsey as CEO;
- Ambarella (AMBA) rose 21% after fourth-quarter solid guidance that prompted analysts at several companies to raise target levels for the stock;
- AMC Entertainment (AMC) rose 1% after the company reported very high ticket sales on Monday for Spider-Man: No Way Home. The price of paper and other cinemas rose;
- Box Inc. shares (BOX) added 15% after publishing an excellent quarterly earnings report;
- Salesforce (CRM) shares lost 7% after the weak forecast for revenue and earnings for the current quarter;
- Stronghold Digital Mining (SDIG) Shares Up 21% Following Strong Quarterly Revenue Report;
- United Fire Group (UFCS) gained 6% after positive comments from Piper Sandler and a rating upgrade to the above market.

 

• STOCK MARKET SECTORS:

- High: Energy, Materials, Utilities.

- Low: Consumer Discretionary, Communication Services.

 

• TOP CURRENCY & COMMODITIES MARKET DRIVERS:

- CAD: After the Canadian dollar hit a nearly two-month low of 1.2788 on November 26, the transaction price was about 1.274, the dollar weakened, oil prices rebounded, and economic data showed that despite the supply bottleneck, the manufacturing industry was still expanding steadily. The price of oil, Canada’s main export product, fell below US$65 per barrel and was slightly higher than US$68 per barrel. Investors are waiting for OPEC to respond to the threat of fuel demand from the Omega Dragon variant. At the same time, the Canadian manufacturing PMI fell from 57.7 last month to 57.2 in November, although it is still well above 50, which indicates that the industry has grown.

- OIL: According to data from the EIA Oil State Report, in the week ending November 26, US crude oil inventories fell by 910,000 barrels, after an increase of 1.017 million barrels in the previous week, while market forecasts fell by 1.237 million barrels. At the same time, gasoline inventories increased by 4.029 million barrels, exceeding the expected increase of 0.29 million barrels.

- RMB: On Wednesday, the offshore renminbi against the U.S. dollar rose to a six-month high near 6.3750, mainly supported by solid corporate demand from Chinese companies continuing to sell U.S. dollars to renminbi to pay various payments. Although Fed Chairman Jerome Powell's (Jerome Powell)'s challenging remarks pushed up the dollar and U.S. Treasury yields, the renminbi remained resilient. Analysts still believe that the Chinese authorities will not take any measures to curb the strengthening of the renminbi, which means that the renminbi will appreciate further. At the same time, China’s foreign exchange regulators are conducting trials of RMB futures trading to improve their ability to hedge currency risks in a market where the recent appreciation of the RMB has been affected by the “herd effect.”

- JPY: The yen-dollar exchange rate fell to 113.4. The previous trading day was as high as 112.54. Under the influence of the Fed’s hawkish comments, the market weighed the economic risks and uncertainties from the Omicron variant. On Tuesday, Fed Chairman Jerome Powell (Jerome Powell) said that the Fed would discuss speeding up the scale of bond purchases at its December meeting, which shows the market that the Fed is focusing on solving the problem of high inflation rather than new variants—coming threat. The yen mainly benefited from safe-haven trading, as the market is concerned about the new variants. However, it is still under pressure from intensified policy differences between the United States and Japan. The Fed’s hawkish signal contrasts with the Bank of Japan’s firm commitment to maintaining loose monetary policy to achieve the 2% price stability target.

- AUD: The Australian dollar against the US dollar stabilized above 0.7150 on Wednesday, recovering from a one-year low in the previous trading day, as the currency market in Asian trade calmed down. On Wednesday, Asian stock markets, global index futures, and commodities indicated increased risk appetite, and risky assets rose due to market recovery. Better-than-expected third-quarter GDP data also boosted the Australian dollar. The Australian economy shrank by 1.9%, while the market is expected to decline by 2.7%. At the same time, the Omicron variant increases downward pressure on the currency because it brings economic risks and supports the Reserve Bank of Australia’s stance of maintaining the loose monetary policy. In the latest meeting minutes, the central bank reiterated that it is prepared to remain patient until the wage and inflation targets are achieved and that raising interest rates in 2024 remains its core issue.

- NZD: The New Zealand dollar climbed to 0.6860 against the U.S. dollar, recovering from a one-year low in the previous trading day, as the currency market in Asian trade calmed down. On Wednesday, Asian stock markets, global index futures, and commodities indicated increased risk appetite, and risky assets rose due to market recovery. At the same time, the New Zealand dollar is still weak as US interest rates are expected to grow, and the latest hawkish comments by Fed Chairman Jerome Powell have increased the New Zealand dollar’s downside risks. The Reserve Bank of New Zealand also raised the official cash rate by 25 basis points to 0.75%, in line with expectations, but did not meet market expectations for a more aggressive 50 basis point rate hike, which analysts believe will Be more beneficial to the euro.

- USD: After the extreme volatility in the last trading day, the US dollar index stabilized at a level close to 96 points on Wednesday. The market weighed the risks of the Omicron variant with the challenging remarks of Federal Reserve Chairman Jerome Powell. The Fed chairman said that the Fed might discuss speeding up its withdrawal from the large-scale bond purchase program at the next meeting, citing the strong economy. However, it is expected that the factors driving up inflation will continue until next year. As inflation in the United States reached its highest level in 30 years in November and the labor market recovered steadily, some policymakers have called for faster asset purchases and higher interest rates. At the same time, the US dollar is still under pressure due to concerns that the global economy may take longer to return to pre-pandemic levels.

 

• CHART OF THE DAY:

The FTSE MIB rebounded 2.2% to close at 26371.92 points, partly rebounding from the 11-week low hit in the previous trading day. Concerns about the Omicron variant were slightly weakened, while energy and industrial stocks tracked oil price increases after the OPEC+ announcement. At the same time, as the Federal Reserve may accelerate downsizing, investors are expected to tighten monetary policy while domestic, and eurozone inflationary pressures will continue to increase. In terms of data, Italy's IHS manufacturing PMI was higher than expected, at 62.8, marking the 18th consecutive month of expansion. On the company side, Stellaris (5.7%), STMicroelectronics (4.3%), and Tenaris (4.1%) led the gains.• Italian FTSE MIB Index - D1, Resistance around ~ 26536 Support (target zone) around ~ 25373 & 24656

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