UK economy recession risks on the rise as S&P Global indicates decline in activity

The UK economy is likely to contract again in December as expansion in services sector cannot fully offset the decline in manufacturing.The S&P Global Composite Purchasing Managers Index edged up slightly to 49.0 from 48.2 in November, but remained below the 50 level that usually separates a rise from a decline for the fifth month in a row.December data raises the possibility that the UK is in recession, with PMI pointing to a 0.3% GDP contraction in the fourth quarter, following a 0.2% decline seen in the three months to September. The services PMI, which covers most economic activity, rebounded to 50.0 from 48.8 in November, but the manufacturing PMI fell to 44.7 - its lowest level since June 2020 - from 46. 5.S&P saw a "hard and accelerated" fall in manufacturing employment as new export orders fell for the sixth month in a row. Employment in the service sector has stalled.Forward-looking elements of the survey, such as business confidence and order books, remain low by historical standards, both of which are key indicators of increased levels of economic stress.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/uk-economy-recession-risks-on-the-rise-as-s-and-p-global-indicates-decline-in-activity"
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The best offers for switching banks: get up to £200 free cash

Looking to move bank accounts? You can now bag as much as £200 for switching current accounts

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Share tips of the week – 16 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/605590/share-tips-of-the-week-16-december
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Share tips of the week – 16 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.

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Share tips of the week – 16 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.

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Market Spotlight: EURAUD Explodes on Hawkish ECB

Hawkish ECB Message Rocks MarketsThe December ECB meeting proved to be far from a muted event as markets were rocked yesterday by the bank’s outlook and guidance. The ECB delivered a widely expected .5% hike, despite hawkish risks, but it was the accompanying projections which were the main focus.Inflation Revised HigherCiting the need to drive inflation lower, the ECB warned that it would need to hike rates “significantly”. The warning came alongside sharp upward revisions to the bank’s inflation forecasts. The ECB now projects inflation to 8.4% in 2022, 6.3% in 2023, 3.4% in 2024 and 2.3% in 2025.No PivotECB chief Lagarde was keen to drive home the bank’s hawkish outlook. In the press conference following the decision Lagarde explained that “One of the key messages, in addition to the hike, is the indication that not only will we raise interest rates further, which we had said before, but that today we judged that interest rates will still have to rise significantly, at a steady place.” Lagarde went on to warn against those with any expectation that the ECB will soon pivot, saying “Anybody who thinks this is a pivot for the ECB is wrong. We’re not pivoting, we’re not wavering, we are showing determination and resilience in continuing a journey.”QT To Step Up Regarding the bank’s asset purchase program, the ECB said that it will begin shrinking its balance sheet by 15 billion EUR per month from March and will announce further details in February.The uptick in ECB hawkishness at a time when many other central banks are pivoting (Fed, RBA, RBC) creates very tradable monetary policy divergence which favours EUR against those respective currencies near-term.Technical ViewsEURAUDThe rally in EUR this week has seen the pair breaking out above the 1.5713 resistance. With momentum studies bullish and with the retail market heavily short, the focus is on a continuation higher towards 1.6173 while 1.5713 holds as support.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-euraud-explodes-on-hawkish-ecb"
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Share tips of the week – 16 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/605590/share-tips-of-the-week-16-december
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FOMO Friday: Nasdaq Plunges on Market Woes

Nasdaq - Naughty or Nice?It’s been a pivotal week for financial markets. For many, the last full week of trading before the Christmas break. The three headline central bank meetings on deck this week certainly delivered the goods, Christmas come early for some, for others, a chance to reflect on missed opportunities. Looking at the action we’ve seen this week and chatting with traders there’s certainly been plenty to focus on. However, the move seemingly catching the most attention ahead of the weekend is the reversal we’ve seen in risk sentiment. The Nasdaq in particular has shed more than 7% on the week, plunging from highs around 12229.22 to sub 11540.72 lows. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week.What Caused the Move?Fed - Higher for LongerThe first catalyst to look at is the Fed. The FOMC on Wednesday was an interesting event in that, while the Fed finally delivered a pivot on rates (hiking by a smaller .5%), the accompanying outlook was more hawkish. Citing the need to keep driving inflation lower, the Fed lifted its peak rate projection, forecasting that rates will stay at higher levels for longer with no rate cuts to be considered before 2024 at the earliest. This guidance saw risk assets tumbling with tech stocks bearing the brunt of the moves.ECB FireworksFollowing the Fed we then saw the ECB lighting the markets up (in the wrong way) on Thursday. The bank struck a heavily cautious tone warning of the growing downside risks to the domestic and global economy next year. Additionally, a set of upwardly revised inflation forecasts means that traders are eyeing further hikes from the bank across next year, again weighing heavily on sentiment in tech stocks.Recession FearsFinally, recession fears swung back into sharp focus with November US retail sales falling unexpectedly into negative territory. Given that the pre-holiday season is typically a time of high demand, the data poses worrying questions for Q4 performance as a whole and added heavily to bearish sentiment in stocks, sending tech names plunging across the board, reflected in the Nasdaq breaking through support this week.Technical ViewsNasdaqThe sell off in the Nasdaq this week saw the market reversing from the latest test of the resistance zone around 12220.22 with the bull channel top adding confluence. Price has since broken back below the 11540.72 level support and is now fast approaching a test of the 11034.18 level support and bull channel lows. Bulls need to defend this area to keep the broader bullish bias intact.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/fomo-friday-nasdaq-plunges-on-market-woes"
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EU yield outlook improves on hawkish ECB, the odds of Fed Pivot grow on dovish retail sales surprise

The key question ahead of today’s ECB policy meeting was whether the bank would opt for a large rate hike with a dovish statement or deliver modest tightening policies while retaining a hawkish stance. The meeting indicated that the ECB leaned in favor of the second option. In its statement, the ECB did not skimp on hawkish language: “interest rates need to be raised further at a steady pace to a sufficiently restrictive level to ensure inflation moves towards a medium-term target of 2%”, and also “keeping interest rates above the neutral level will reduce inflation over time by dampening demand, and also guard against the risk of a persistent upward shift in inflation expectations.”In terms of reducing the ECB's bond holdings, redemption bond reinvestment under the Asset Purchase Program (APP) will decline to an average of 15 billion euros per month until the end of the second quarter of 2023, and its subsequent pace will be determined as the process progresses.The ECB has also released updated staff economic projections. The regulator expects inflation to fall to 3.4% in 2024 and 2.3% in 2025. The figure for 2024 has been significantly revised upwards. At the same time, the ECB expects only a short and shallow recession, forecasting a eurozone growth of 0.5% in 2023 and 1.9% in 2024. This is slightly less optimistic than the previous forecast, but there is no noticeable anxiety about recession.EURUSD moved up amid hawkish statements from the European regulator, the dollar also further weakened on a negative surprise in US retail sales data (-0.6% MoM, -0.1% forecast):Together with a faster slowdown in US inflation in November, a weak retail sales report fueled markets' fears of an impending downturn in the US economy, which spooked investors in risk assets. Major US stock indexes fell by about 1.5%.Based on the outcomes of the meetings of the Fed and the ECB, it seems that the ECB is becoming more decisive in the fight against inflation, while the risks of a pause from the Fed started to increase, especially against the backdrop of weak incoming data in the key US consumer sector. There is still little the ECB can do to reduce actual inflation, but it can help re-anchor inflation expectations. With today's announcement, it's clear that the ECB wants to use interest rates fully as its primary inflation-fighting tool first, and that balance sheet shrinkage remains on the back burner. With growth prospects still relatively optimistic, there is a growing risk that the ECB will push the eurozone economy further into recession with each new interest rate hike. Nevertheless, in the short term, the Euro becomes a more attractive choice on expectations of a narrowing yield differential, so the EURUSD pair is likely to continue to rise for some time.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/eu-yield-outlook-improves-on-hawkish-ecb-the-odds-of-fed-pivot-grow-on-dovish-retail-sales-surprise"
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CPI inflation vs RPI inflation: what’s the difference?

We’ve been hearing a lot about CPI inflation recently, but what is this metric and why is it different to RPI inflation?

from Moneyweek RSS Feed https://moneyweek.com/economy/inflation/605602/cpi-inflation-vs-rpi-inflation
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S&P 500 E-mini Futures ( ES1! ), H4 Potential for Bullish Rise

Type: Bullish RiseKey Levels:Resistance:4173.25Pivot:3913.25Support:3751.75Preferred Case:Looking at the H4 chart, my overall bias for SPX is bullish due to the current price being above the Ichimoku cloud , indicating a bullish market. If this bullish momentum continues, expect price to possibly head up towards the resistance at 4173.25, where the 78.6% Fibonacci line is.Alternative Scenario:Price could head back down to retest the pivot at 3913.25, where the 50% Fibonacci line is.Fundamentals:There are no major news.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/s-and-p-500-e-mini-futures-es1-h4-potential-for-bullish-rise15"
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Soybean Futures ( ZS1! ), H4 Potential for Bullish Continuation

Type: Bullish ContinuationKey Levels:Resistance:1508.75Pivot:1469.00Support:1423.25Preferred Case:Looking at the H4 chart, my overall bias for ZS1! is bullish due to the current price being above the Ichimoku cloud , indicating a bullish market. If this bullish momentum continues, expect price to possibly continue heading towards the resistance level at 1508.75, where the previous swing high is.Alternative Scenario:Price may head back down to break the pivot at 1469.00, where the previous high and 78.6% Fibonacci line are before heading to the support at 1423.25, where the 38.2% Fibonacci line is. Fundamentals:There are no major news.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/soybean-futures-zs1-h4-potential-for-bullish-continuation15"
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Daily Market Outlook, December 15, 2022

Daily Market Outlook, December 15, 2022 Asian equities are trading on the backfoot following last night’s more hawkish read from the US Fed policy decision, while the pace of tightening was reduced, with interest rates increasing by 50bp (to a Fed funds rate of 4.25-4.50%) compared with the 75bp hikes at the prior four meetings, the Fed’s latest guidance suggested a terminal rate higher than the committee was previously targeting. The median estimate of Fed policymakers’ forecasts, the so-called ‘dot plot’ suggests a terminal target of 5.00-5.25% in 2023. In the press conference, Fed Chair Powell stated the central bank still had a “ways to go” to defeat inflation. Following the Fed, markets will now focus on policy decisions from central banks across Europe, the Bank of England is expected to announce its latest policy decision at lunchtime in the UK. The guidance given at the last meeting suggested a further limited rise in interest rates with markets pricing a 50bp increase. Markets will parse the decision for any further signs of a split vote as it appears two or possibly three members may prefer a smaller move, given that two Monetary Policy Committee members voted against the previous decision to hike by 75bp, markets will also be keen to understand whether any members are leaning towards a larger rate increase. Today's meetings will not include BoE updates to its forecasts and there won't be a press conference. The guidance on further rate moves will likely be claimed to be ‘data dependent. The ECB hiked rates by 75bps at its last two meetings, and recent comments from ECB policymakers infer that they will now slow their pace, with markets pricing a 50bp rate increase today. Some ECB officials have suggested another 75bp rise may be necessary, but it seems as though the hawks may settle for an announcement that Quantitative Tightening will start next year. ECB President Lagarde recently confirmed that details on the principles for balance sheet reduction will be announced today, but it is unclear whether a specific start date will be given or whether some other guidance will be provided. The forward guidance on rates may again be that this is now ‘data dependent’ but that seems unlikely to weigh on expectations for further rate increases. Markets-wise, the action continues to replicate a classic bear market pattern, with gaps higher only to bleed lower, with investors seeking the illusive Fed pivot to end of restrictive monetary policy, once the BoE and ECB are done today it is more than likely that the massive December options expiration due tomorrow will contain the action, with the benchmark S&P500 pinned to the 4000 level as the price where the largest amount of options interest is set to expire, investors will look to next week with no further meaningful macro data, will Santa finally be on his sleigh ready to deliver the year-end boost to stocks?Overnight HeadlinesChina Economic Activity Slumps With More Disruption To ComePBoC Injects Net 150Bln Yuan Via MLF; Rate Kept UnchangedJapan’s Trade Balance Deficit Narrows Less Than ExpectedNZ Economy Grows Strongly In Q3, But Recession Clouds AheadPowell Sees Rates Higher For Longer, But Market Doesn’t Buy ItHouse Passes One-Week Spending Bill To Avert Dec. 17 ShutdownECB To Slow Rate Hikes And Lay Out Plans To Drain CashBank Of England Readies Another Rate Hike Even As Recession HitsOil Declines After Section Of Major Keystone Pipeline RestartsStocks Extend Drop In Asia On Fed; US Dollar AdvancesElon Musk Sold More Than $3.5 Billion Worth Of Tesla SharesWarner Bros. Discovery Lifts Writedown Costs To $5.3 BillionFord, China’s CATL Mull Workaround For New US Battery PlantSEC Proposes Rules That Would Squeeze Stock-Market Middlemen FX Options Expiring 10am New York CutEUR/USD: 1.0415-30 (1.06BLN), 1.0450 (1.93BLN)1.0500 (237M), 1.04530 (201M), 1.0550 (426M)1.0570-80 (419M), 1.0600 (337M), 1.0700 (1.15BLN)EUR/JPY: 146.00 (612M)USD/CHF: 0.9395-00 (628M)GBP/USD: 1.2350 (435M), 1.2495-00 (549M)AUD/USD: 0.6600 (302M), 0.6755-70 (479M)NZD/USD: 0.6300 (200M), 0.6400 (200M)USD/CAD 1.3500 (439M), 1.3850 (249M)Technical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 39504120 Target Achieved, New Pattern EmergingPrimary support is 3950Primary upside objective is 4150Failure at 3950 opens a test of 390020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish below 1.051.0620 Target Achieved, New Pattern EmergingPrimary support is 1.0590Primary upside objective is 1.07Failure at 1.05 opens a test of 1.0420 Day VWAP bullish, 5 Day VWAP bullishGBPUSD Bias: Bullish Above Bearish below 1.2250Primary support is 1.2250Primary upside objective 1.24Failure at 1.2080 opens a test of 1.203020 Day VWAP bullish, 5 Day VWAP bullishUSDJPY Bias: Bullish above Bearish Below 137.70Primary resistance is 137.70Primary downside objective is 132Acceptance above 138 opens a test of 139.3020 Day VWAP bearish, 5 Day VWAP bullishAUDUSD Bias: Bullish Above Bearish below .6700Primary support is .6700Primary upside objective is .6900Failure at .6700 opens a test of .660020 Day VWAP bullish, 5 Day VWAP bearishBTCUSD Bias: Intraday Bullish Above Bearish below 1750018200 Target Achieved, New Pattern EmergingIntraday 17500 is primary supportPrimary upside objective is 18500Failure at 17400 opens a test of 1720020 Day VWAP bearish, 5 Day VWAP bullis

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-december-15-2022"
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Market Spotlight: BOE & ECB In Focus Today - Where Do Hawkish Risks Lie?

BOE & ECB On Deck TodayFollowing on from the Fed yesterday, the BOE and ECB December meetings will take centre stage today. Both central banks are expected to hike by a further .5% while signalling the need for continued hikes into next year. However, if we’re looking at where the risks lie in terms of opportunities, the ECB looks to have more hawkish risks going into today’s meeting.Hawkish Risks Seen More for ECB Than BOE With the BOE having stridently pushed back against the idea of further aggressive tightening on the back of the last .75% hike, and with inflation having cooled last month, a smaller .5% hike looks fairly certain. However, the ECB being much earlier on in its tightening journey and with Lagarde and co sounding more concerned about inflation, there are outside risks of a surprise today which could see the bank hiking by a larger .75%. While this would no doubt drive EURGBP higher, short term at least, the greater impact is likely to be seen in EURUSD with the further eroding of monetary policy divergence between the Fed and the ECB set to favour EUR near-term.Technical ViewsEURUSDThe rally off the YTD lows has seen the market continuing to break higher recently. The last notable technical breakthrough was the move through the 1.0364 level. Momentum studies have waned a bit recently, suggesting room for a correction. However, while price stays above the 1.0364 level the focus remains on a continued push higher and an eventual break of the 1.0785 level towards the 1.1126 level above.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-boe-and-ecb-in-focus-today-where-do-ha"
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