Market Spotlight: Credit Suisse Shares Tumble on Q4 Profit Warning

Client WithdrawalsShares in troubled French bank Credit Suisse are coming under fresh selling pressure this week as concerns build around large client withdrawals. Credit Suisse this week warned that it is facing a roughly $1.5 billion loss in Q4 as a result of withdrawals from major clients. The bank’s shares have been in decline all year and were only recently recovering from insolvency rumours, recovering off the roughly $3.79 lows. However, retracing the gap which opened up on Q3 earnings day, Credit Suisse shares have since turned lower again.Litigation CostsAlongside client outflows, the group noted that it was suffering high levels of litigation costs as a result of compliance failures. Looking ahead, the bank expects these costs to continue to hurt the group’s results. Additionally, these increased costs are fuelling an acceleration of the bank’s restructuring program.  Chinese IB & Research LayoffsOn that note, the group also announced this week that it was laying off around one-third of Chinese investment bank staff. This is part of the group’s broader shift in strategy which will see it carving up its investment banking business into smaller sections. The announcement, alongside a roughly 50% reduction in research department staff, is also in response to slowing business in China.Technical ViewsCredit SuisseThe decline in Credit Suisse shares this year has been framed by a well- defined bear channel. The sell-off has recently stalled along support at the 3.77 level. While we’ve seen bullish divergence creeping in on momentum studies, the bear channel is holding for now and while price remains below the 4.97 level, the focus is on an eventual break lower. If bulls can get back above the 4.97 level, the focus will turn to the 5.94 level next.

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15 ways bitcoin makes the world better

What problem does bitcoin solve? How does it make the world better? Dominic Frisby shares his view.

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Market Spotlight: AUDNZD Falls on Record RBNZ Hike

RBNZ Hikes AgainAt the November RBNZ meeting held overnight, the bank made good on prior hawkish signals and hiked rates by .75bps, in line with market expectations. The move marks the largest rate increase in RBNZ history, taking rates back up to 4.25% from 3.5% prior. Alongside the rate hike, the RBNZ was also firmly hawkish in its outlook and guidance, citing the need to stay tough on inflation. The latest consumer price data showed that CPI hit 7.2% in the three months to September, marking a thirty year high.Ongoing Inflation BattleLooking ahead, the RBNZ outlined the difficulties facing it as it tries to balance its efforts to tame inflation with protecting the economy. The latest set of RBNZ economic forecasts project that the domestic economy will likely fall into recession by Q3 next year. However, the RBNZ noted that any attempts to avoid recession by slowing the pace of rate hikes would only see inflation become entrenched at higher levels requiring more aggressive rates action later, having a worse impact on growth.RBA vs RBNZOn the back of the meeting, the market is expecting the RBNZ to push ahead with further rate hikes in coming months. In contrast, the RBA has recently pivoted on rates, slowing the pace of its tightening over the last two meetings. This policy divergence between the two central banks is likely to keep AUDNZD pressured lower near-term.Technical ViewsAUDNZDThe reversal lower in AUDNZD has seen the market breaking below the rising trend line from Q4 2022 lows and below the last key support at the 1.0828 level. With momentum studies bearish and the retail market heavily long here, there is plenty of room for a deeper push lower towards the 1.0618 level next while the market remains below the broken bullish trend line.

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Daily Market Outlook, November 23, 2022

Daily Market Outlook, November 23, 2022 Overnight Asian markets staged a rebound taking their lead from a positive session on Wall Street, albeit on very low volumes, a pullback in the Dollar and US yields supported sentiment ahead of the Thanksgiving holiday. Investors continue to keep one eye on the China Covid headlines, with major regions reintroducing mass testing to access public venues within the coming days. The Reserve Bank of New Zealand lifted rates by 75 bps stating that further tightening is likely, keeping the global rate story firmly on investors' radars. In the US Fed. The Crypto carnage continues to attract market attention as the New York Times reports that beleaguered lender Genesis, has now formally retained restructuring advisors to explore all options including bankruptcy,For the day ahead: November flash PMI data will be the main focus in the UK and Europe. Market watchers expect UK manufacturing and Services data to show continued contraction. The deceleration in activity suggests a contraction in Q4 GDP which would confirm a technical recession in the UK. In the Eurozone, PMI’s are also likely to remain in contraction given the loss of demand and general economic malaise, this would imply a Q4 GDP decline for the first time since 2021. The US data slate is heavy ahead of the holidays, first up will be US PMI’s which are set to remain below the all important 50 level confirming contraction. Durable goods data, new home sales and University of Michigan sentiment will also be released, but. The main event will be the FOMC meeting minutes. The FOMC raised rates by a further 75 bps at its November meeting, the key question for markets is will the committee slow the rate of hikes and where could rates peak in 2023, with markets betting on a slower increase at the December meeting.Overnight HeadlinesNew Zealand Steps Up Inflation Fight With Record Rate HikeRBNZ Warns Of Growing Wage Pressures Amid Rate Hikes, InflationAsia Shares Gain Despite Chinese Covid Case Numbers RisingNZ’s Robertson Says Economy Faces ‘Significant Challenges’Australian Private Sector Output Contracts Faster In NovemberChina Tightens Covid Restrictions In Big Cities As Cases ClimbChina Should Use Targeted Moves In Covid Control - Economic DailyChina Buys Fewer Chip-Making Machines As US Restrictions StartFed’s Mester Says Inflation Key Focus, George Weighing SavingsBank Of Canada Says Financial System To Weather Rate Hike RisksOil Steadies As Traders Look To Price-Cap Plan, Demand In ChinaAPI Reports US Crude Stockpiles Decreased 4.8M Bbl Last WeekU.S: G7 Should Soon Unveil Cap Level On Russian Oil, Adjust RegularlyGoldman Sees 10-Year Treasury Yield Of 4% Or More Through 2024Chinese Brokerages See Stock Market Rebound In H1 2023 - Sec NewsViolent Protests Erupt At Apple's Main iPhone Plant In Zhengzhou ChinaHP Plans Layoffs With PC Demand Slump Stretching Into Next YearTechnical & Trade ViewsSP500 Bias: Bullish Above Bearish Below 3950TechnicalsPrimary support is 3950Primary upside objective is 4120Next pattern confirmation, acceptance above 4050Failure below 3900 opens a test of 388020 Day VWAP bullish, 5 Day VWAP bullishEURUSD Bias: Bullish Above Bearish below 1.0230TechnicalsPrimary support is 1.0230Primary upside objective is 1.0620Next pattern confirmation, acceptance above 1.04Failure below 1.0230 opens a test of 1.018020 Day VWAP bullish, 5 Day VWAP bearishToday’s New York Cut Option Expiries: 1.0050-55 (1.4BLN), 1.0060 (408M)1.0085 (247M), 1.0280 (853M), 1.0300-10 (1.94BLN)1.0315-20 (344M), 1.0330 (236M), 1.0350-55 (904M)1.0395-05 (809M), 1.0475 (276M)GBPUSD Bias: Bullish Above Bearish below 1.1730TechnicalsPrimary support is 1.1730Primary upside objective 1.2050Next pattern confirmation, acceptance above 1.1970Failure below 1.17 opens a test of 1.164020 Day VWAP bullish, 5 Day VWAP bullishToday’s New York Cut Option Expiries: GBP/USD: 1.1800 (303M), 1.1850-55 (341M)EUR/GBP: 0.8725 (358M), 0.8750 (315M), 0.8775 (376MUSDJPY Bias: Bullish above Bearish Below 143TechnicalsPrimary resistance is 143Primary downside objective is 136Next pattern confirmation, acceptance below 138Acceptance above 143.30 opens a test of 14520 Day VWAP bearish, 5 Day VWAP bullishToday's New York Cut Option Expiries: 140.00 (900M), 141.25-30 (371M), 141.40-45 (225M) 141.75-85 (873M), 142.00 (491M), 142.50 220M)AUDUSD Bias: Bullish Above Bearish below .6560TechnicalsPrimary support is .6560Primary upside objective is .6900Next pattern confirmation, acceptance above .6775Failure below .6560 opens a test of .650820 Day VWAP bullish, 5 Day VWAP bearishToday’s New York Cut Option Expiries: 0.6600 (342M), 0.6700 (226M)BTCUSD Bias: Intraday Bullish Above Bearish below 16600TechnicalsIntraday 16600 is primary resistancePrimary downside objective is 15000Next pattern confirmation, acceptance below 15500Acceptance above 16700 opens a test of 1710020 Day VWAP bearish, 5 Day VWAP bearish

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OECD Flags Fresh UK Growth Fears

OECD Bearish on UK GrowthThe latest report from the OECD yesterday has cast further dark clouds over the UK economy. The group warned that the UK, the fifth largest global economy as of last year, is facing a unique downturn which other economies in the G7 are not facing. Indeed, in a table of 22 world economies, the UK is among only three economies looking at negative growth next year, alongside Russia and Germany. While the global economy as a whole is forecast to grow 2.2% next year, largely propped up by rebounding growth in emerging markets economies, the UK economy is forecast to shrink by 0.4%.UK Inflation WoesOne of the key drivers behind the harsher economic outlook for the UK is inflation. While we have started to see inflation moderating in the US and Eurozone for example, UK inflation was seen soaring to fresh multi-decade highs last month at 11.1%, a full 1% jump on the prior month’s reading. With inflation looking likely to remain entrenched at higher levels well into next year, the impact on growth will be significant. The OECD now forecasts UK inflation to cool to only 6.6% next year and 3.3% in 2024, still above the BOE’s 2% target.OECD Worried About UK Energy Payments SchemeIn particular, the OECD took issue with the UK government’s energy price guarantee scheme which will see all domestic electricity users paid £400, to help reduce financial stress. However, the OECD argues that this will only drive inflation further higher, causing the need for more aggressive tightening from the BOE, which will have harsher consequences on growth yet again. Additionally, with the minimum wage set to rise next year in the UK, consumer spending power will be marginally boosted, potentially offsetting some of the weaker demand seen in the face of the cost-of-living crisis, again underpinning inflation and harming UK growth.December BOE In FocusLooking ahead, the main focus for UK investors now will be the last remaining BOE meeting of the year. With inflation still at record highs, a further hike from the BOE is widely expected though a smaller .5% hike is the consensus call for now. While the BOE has cited a desire to slow the pace of tightening, inflation is not yet allowing for this and if CPI continues to outperform into next year, we will likely start to see current BOE peak-rate projections revised higher, further damaging the UK growth outlook.Technical ViewsGBPUSDThe rally off the YTD lows in GBPUSD remains intact for now, underpinned by the rising trend line. Price has recently broken above the bear trend line from YTD highs and above the 1.1474 level. With momentum studies bullish, the outlook remains in favour of further rallies while 1.1474 holds, with 1.2195 the next resistance for bulls to note.

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NZDCAD Targeting A test of .8400

Technical & Trade ViewNZDCADTrade VieWBias: Bullish Above Bearish below .8190/60TechnicalsPrimary support is .8190/60Primary upside objective .8400 Weekly TrendlineNext pattern confirmation, acceptance above .8285Failure below .8150 opens a test of .810020 Day VWAP bullish, 5 Day VWAP bullishInstitutional InsightsAnalysts at Credit Agricole note ‘The RBNZ’s aggressive tightening cycle will see NZ lead the rest of the G10 into an economic slowdown, and falling dairy  prices  on  the  back  of  a  weak  China  economy  are  seeing  the  NZD  underperform.  The  re-opening  of  the international border will be a positive for the coming 3M. Soft economic landings locally and internationally will improve the NZD’s prospects over the coming 6-12M’

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Four money apps to help your cut your spending

These four money apps will help you cut your bills, cancel unwanted subscriptions, grow your savings, and even file your tax return.

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Market Spotlight: NZDJPY Upside Risks Into RBNZ

Japanese CPI Jumps AgainThe BOJ’s commitment to maintaining an easing presence in the market is being tested further this week. The latest econ data shows that Japanese CPI hit forty-year highs last month at 2.7%, rising from the prior month’s 2% reading and well above the 2.2% reading the market was looking for. Annually, CPI rose at 3.6%, above the 3.5% increase the market was looking for, marking the fastest pace of inflation since 1982 in Japan. Japanese CPI has now spent seven consecutive months above the BOJ’s 2% target, raising serious questions over the central banks easing strategy.On the back of the data, BOJ governor Kuroda was quick to reaffirm the bank’s commitment to keeping rates at ultra-low levels in order to support the economy. However, Kuroda did acknowledge that price increases were significant and subject to upside risks in the near-future.Speculators vs BOJDespite the BOJ’s attempts at underpinning JPY, the currency has weakened again recently creating further upward prices pressures in the domestic economy. Withs peculators essentially pitted against the BOJ, JPY looks vulnerable to further downside while the BOJ refuses to budge on rates, regardless of other tactics such as FX intervention.Technical ViewsNZDJPYNZDJPY has been stalled against the 87.15 – 87.88 level resistance since Q1, despite several attempts at breaking higher. Price is now once again pushing up against the level and with the retail market heavily short, risks of an upside break are growing, particularly with the RBNZ head tonight. If NZDJPY does break above current resistance, 89.12 will be the initial target on the move with the near-term focus remaining bullish while price holds above 87.88.

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BTC – On the Ropes!

The entire Cryptocurrency ecosystem is suffering a real shock, partly due to the loss of investor confidence following the earthquake caused by the fall of the FTX exchange platform and the house investment fund Alameda, which both belong to Sam Bankman-Fried. The aftershocks were long overdue, and Genesis, an American trading company which specializes in crypto lending and which mainly targets institutional clients, could become the first big victim of the FTX-Alameda affair. This turmoil has served Bitcoin, which is trying hard to parry the blows, and is currently below the level of $16,000 at $15,633.

In order to avoid bankruptcy Genesis has engaged in a real race for financing up to 1 billion dollars. In this context, the firm has appealed to the investment fund Apollo Global Management as well as to Binance but has suffered a re-buff. The exchange platform explained that a potential conflict of interest with the economic model of Genesis would be at the origin of its withdrawal. Last night the company announced that it was revising its need for refinancing downwards, from 1 billion dollars to 500 million. However, the company said it had no plans to file for bankruptcy ‘imminently’.

Source: @Genesis sur Twitter

Already today, crypto broker Genesis warned of the risk of bankruptcy due to contagion from the rapid demise of Sam Bankman-Fried’s FTX empire, according to Bloomberg .

This heavy climate has been all the more exacerbated by the return of the Dollar as a safe haven, the surge in the number of Covid cases in China, and the hawkish remarks of certain members of the FED as well as the continuation of the war in Ukraine which could engender a risk of nuclear accident.

Technical Analysis

BTC price is currently at the $15,700 level below its KIJUN (Lv) and Tenkan (Lj) cloud; the lagging span (Lb) is located below the cloud and its partners clearly showing a bearish momentum. This decline could lead the price to its lowest level at $15,428, and if it is broken it could reach its support at the level of $14,000 for a second time. Conversely, if the price starts to rise again, it could reach $18,354.

 

Click here to access our Economic Calendar

 

Kader Djellouli

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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The IndeX Files 22-11-2022

Equities Rally Pauses Amidst Fed HawkishnessIt’s been a rather muted start to the week for benchmark global equities indices. On the back of the wave of better risk appetite we saw following the US October CPI report, markets have lost their shine due to a combination of better-than-expected US retail sales, hawkish Fed commentary and fresh fears regarding China lockdown risks.Market pricing for a large Fed hike in December is creeping up again in response to recent Fed comments. Last week, we heard Fed’s Daly calling for the Fed to hike rates beyond the current projected peak. This week, Fed’s Mester echoed that sentiment saying that Fed policy needed to be more restrictive, and that the Fed was “barely there” on rates so far. If this recent theme continues, and particularly if we see any upside surprise in the next inflation report, equities might well turn lower again.China Lockdown FearsOn the China front, news this week of two fresh covid deaths in Beijing have sparked concern that the region might be headed for fresh lockdowns. With China still sticking to its zero covid policy for now, there is a real risk of such measures being announced, particularly if further fatalities are noted. With plenty of market focus recently on potential reopening in China, such news would likely fuel sharp downside in equities markets, reflecting disappointment.Technical ViewsDAXThe breakout above the bearish trend line from YTD highs is holding for now. Price is currently sitting atop the 14170.79 level and with both MACD and RSI bullish the focus is on a continuation higher towards the 14703.98 level next. To the downside, 13672.31 is the nig support to note.S&P 500The rally in the S&P, framed by the corrective bull channel off the YTD lows, is fast approaching a test of the bearish trend line from YTD highs. This is a key area for the market and a break above there will be firmly bullish. To the downside, initial support is at the 3910 level, underpinning price currently, with 3814 and the bull channel low sitting beneath.FTSEThe rally off the YTD lows is continuing with the index attempting to break higher again this week. Price is fast approaching a test of the bear channel top, with structural resistance at 7575.8 – 7678.8 sitting just above. With momentum studies supportive, outlook remains bullish while the market holds above 7362.6.NIKKEIThe rally in the NIKKEI stalled into a test of the 28356.6 resistance last week. However, the recent bull move remains intact, with momentum studies supportive, and while price holds above the 27422.9 level, the focus is on a breakout higher and a continuation towards the next resistance level at 29464.9

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Commodities In Dead End?

Oil prices have backed up after reports that OPEC+ may consider output increases at the December 4 meeting was denied. More precisely, Saudi denied oil output hike discussion, and clarified that OPEC+ was sticking with oil output cuts and could take further measures to balance the market amid falling prices.

That earlier rumor surprised the market, especially after the recent decision to trim supply. And it added to the overnight drop in prices amid rising concerns that China would not be opening up its economy due to the pick up in covid cases and the first deaths since the summer. WTI oil fell to $75.08, a new low for the year, before climbing to $79.86. Brent surged back to $87.48 after diving to $82.32.

Oil markets continue to keep a close eye on the demand outlook and monetary policy expectations. Fed officials have pushed back against overly optimistic market expectations for the policy outlook, and concern that China’s Covid restrictions will be tightened once again have put pressure on oil prices over the past week. Gas prices meanwhile eye the EU’s renewed attempt to agree on a price cap when energy ministers meet this week.

Oil prices corrected sharply lower last week and have remained under pressure even today at 80.50 area, as the demand outlook was dented by fading hope that China would ease virus restrictions and add further stimulus. China reported the first covid-related deaths in many months over the weekend, which fueled fear of a renewed tightening of Covid curbs. At the same time, the PBOC last week warned of inflation risks and seemed to flag the limits to monetary policy support. WTI extended losses to below USD 80 per barrel, the lowest in over seven weeks.

The highly uncertain supply output and the EU’s ban of Russian crude flows, which kicks in next month, should keep a floor under oil prices mid-term. However, as Europe rushed to fill up on Russian diesel ahead of the plan, and European refiners seem to be oversupplied with crude for now, the prospect of future shortages is enough to counterbalance demand concerns at the moment.

Gold prices corrected lower last week and have remained under pressure so far this week, as risk aversion picked up and the USD rather than bullion benefited from haven flows. The precious metal is currently trading at $1,745.57 as Fed officials continued to push back against overly optimistic market view on the Fed’s policy outlook. Gold had made quite a come-back from lows around the USD 1,630 mark earlier in the month, but remains at the mercy of policy outlooks and overall sentiment.

Agricultural commodity prices mostly corrected lower, and wheat futures in particular dropped to the lowest in nearly three months, as the supply outlook improved. There was some uncertainty over the outlook for the Black Sea Grain initiative, but Russia eventually agreed to extend the UN-brokered deal. This means a trade corridor for vessels carrying Ukrainian grain in the Black Sea will remain in place for another four months from November. Ukrainian authorities reported that the country was able to export more than 11 million tonnes of grain by ship since the start of the deal on August 1st. That went a long way to ease concerns over global shortages. In line with this, datafrom the USDA’s WASDE report increased projections for world supply and ending stocks for the upcoming marketing year, as higher output in Australia and Kazakhstan offset potential declines in Argentina and the EU.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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It’s time to focus on Fuller’s

The pub sector has had a torrid two years, but this group is resilient and poised to prosper. We take a closer look at Fuller’s.

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Market Spotlight: Factors Driving The Aussie

Aussie Slips on Fresh USD RallyThe failure at the bear channel top in the Aussie runs the risk of seeing the current 2022 downtrend continue. The Aussie was one of the key beneficiaries of the move lower in USD over the last fortnight and the recent rebound has weighed sharply on AUD, fuelling a quick unwinding of late longs. Recent hawkish Fed commentary and better-than-forecast US data is underpinning USD here, casting shadows over the near-term outlook for the Aussie. This week’s FOMC minutes will be closely watched. If the Fed is seen to be more open to a lower hike in December, this should help curtail the USD rally, allowing AUD to recover. However, if the Fed is seen to be more hawkish than expected in its outlook, this will certainly drag AUD lower.China COVID ImpactNews this week of 2 new covid deaths in Beijing is also adding to fears of fresh lockdowns in China which would be highly bearish for AUD given the importance of Chinese demand for Aussie exports. The China reopening story has been a key upside driver of risk assets recently. If this outlook starts to alter round further covid deaths and heightened lockdown fears, this will be heavily bearish for AUD. However, if China is seen to handle the outbreak without fresh lockdowns, keeping the reopening narrative intact, this will be bullish for AUD near-term.Technical ViewsAUDUSDThe rally off the YTD lows has seen the market trading back up to test the top of the bear channel which is holding for now. With momentum studies still bullish, the breakout above .6535 is important and while price holds above this level, risks of a channel break remain elevated. However, should price move back below this level, a resumption of the longer term downtrend looks likely.

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AUDCAD Targeting A .9070 Test

Technical & Trade ViewAUDCADTrade ViewBias: Bullish Above Bearish below .8830TechnicalsPrimary support is .8830, watch for bullish reversal patterns herePrimary upside objective .9070Next pattern confirmation, acceptance above .8980Failure below .8830 opens a test of .878020 Day VWAP bullish, 5 Day VWAP bearishInstitutional InsightsAnalysts at Credit Agricole note ‘While the Australian economy remains strong, the RBA believes it can be less aggressive than the Fed as Australia is not experiencing a wage-price spiral like the US. A falling Australian-US rate differential along with China’s weak growth will keep the AUD under downward pressure in the coming 3-6M. A soft economic landing locally and globally and recovery in China’s growth improve AUD/USD’s prospects from mid-2023 onward’Analysts at Scotia Bank note ‘The CAD has underperformed somewhat versus most of its major currency peers this week, a pattern that has become common as Q4 has progressed. The generally softer USD tone that has evolved since Sep’s valuation extremes has spilled over into North American FX generally with the MXN gaining only modestly alongside the CAD in contrast to more significant gains for the likes of the AUD and NZD as well as the GBP, EUR and JPY versus the weaker USD. CAD losses on some key crosses—EURCAD, GBPCAD, CADJPY—look poised to extend as the CAD continues to find it hard to move out of the USD’s broader shadow’

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