US stocks fell on the last trading day of 2022, closing out the worst year for global equities and bonds in more than a decade. S&P 500 is down almost 20% in 2022. The Nasdaq 100 is down 34% and the dow jones is down 9%.2022 was twice as bad as the global financial crisis: nearly $40 trillion in stock and bond value vaporized, double 2008.
Bulls looking ahead at 2023 might take solace in the fact that two consecutive down years are rare for major equity markets the S&P 500 index has fallen for two straight years on just four occasions since 1928. The scary thing though, is that when they do occur, drops in the second year tend to be deeper than in the first.
This week will be very important for the stock market, as all traders will focus on the FOMC meeting searching for clues about the interest rate cycle's peak and how long the fed could hold the terminal rates before inflation really collapse.
Nonfarm payroll will be released next Friday, are we going to see numbers that suggest that the labor market is still very strong and wages are still concerning and adding to the inflation spiral that will force the fed to continue with its hawkish tone through all of 2023.
The dollar is headed into 2023 on a more downbeat note as the pace of Federal Reserve interest-rate hikes begins to slow amid signs that inflation risks are beginning to lessen.
Traders added to their rate hike wagers, betting the ECB will lift its key rate to as high as 3.59% by mid-2023. The ECB is also expected to start shrinking its balance sheet in March, putting an end to years of accommodative monetary policy that has kept a lid on borrowing costs. That’s just as governments are set to ramp up bond issuance to fund programs designed to shield the region from an energy crisis.
British Pound may continue struggling during 2023, Money markets are pricing a peak rate of 4.69%, slightly lower than the 4.72% reading before the last BOE meeting but more than a percentage point above the current benchmark lending rate. The economy is 0.8% smaller than its pre-pandemic level, a bigger shortfall than the 0.4% previously estimated. That confirmed the UK as the only Group of Seven nation whose output is smaller than it was before Covid-19 hit.
The yen has climbed some 16% from its October nadir amid government intervention, hopes for slowing US rate hikes, and speculation over the possibility of a policy shift from the Bank of Japan this year. The BOJ’s surprise December decision to tweak its yield curve control parameters is seen by many as a sign its ultra-easy monetary policy might soon be coming to an end.
Brent:
Brent ended December near the open price - $86.66- as it closed at $85.95, down 0.82% sellers didn’t give the chance for brent to close far from November’s trading prices aiming to maintain the current support level since September 2022. On the weekly view, brent is in a downtrend and gained 1.73% in an upward correction with resistance at the 100-week exponential moving average (Fig1).
(Fig.1)- Brent weekly chart- source: Trading view
WTI:
Prices didn’t move in December as the month closed with 0.08% gains at $80.42. Traders secured not to break the monthly support zone around the $80 price level that has been sustained since September 2022. On the weekly downtrend view, WTI gained 1.29% however, closed below the 100 weeks exponential moving average. (Fig.2)
(Fig.2)- WTI weekly chart- source: Trading view
Gold rose the previous week by 1.4%, while silver rose by 1% as a result of the increase in the number of Coronavirus cases in China, and attention will turn on Wednesday to the results of the US Federal Reserve Committee meeting for the month of December, which will provide a view on the path of the Federal interest rate, which will have a direct impact on precious metals. From a technical point of view, the attached chart (Figure 1) shows us the importance of the 1824 levels at which gold is currently trading. We will monitor its ability to overcome it.
As for silver, levels close to $23.4 an ounce succeeded in forming important support for silver's movements, and it is now trying to target the important resistance area at $24.3 an ounce. We will monitor its ability to do so.
(Figure 1): XAUUSD
(Figure 2): XAGUSD
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