Morning Report

December 16, 2022

“The BoE and the ECB both raised interest rates by 50 basis points as expected yesterday, causing both the euro and sterling to rise briefly against the US dollar. However, the US dollar benefited from the market’s risk-off atmosphere and regained its losses. Earlier this morning, both UK and EU PMIs data showed signs of slight improvement in economic conditions. Later today, the US PMIs data for December is due.”

Sam Cornford, Partner – Head of Trading  


Main Headlines

The US has placed three dozen Chinese companies on a trade blacklist, in another escalation of its effort to slow China’s development of advanced chips and technologies for military uses such as hypersonic weapons. The commerce department put 36 Chinese groups on the “entity list.” It also applied the “foreign direct product rule” to 21 entities, meaning non-American companies will be prohibited from exporting products that contain a specified amount of US technology to the Chinese groups. The dramatic action comes after Washington in October unveiled severe export controls.

British retail sales fell unexpectedly in November as the cost of living crisis hit household finances and consumer confidence. The volume of retail sales in Great Britain fell 0.4 per cent between October and November, according to data published by the Office for National Statistics today. Darren Morgan, ONS director of economic statistics, said: “Retail sales fell overall in November, driven by a notable drop for online retailers, with Black Friday offers failing to provide their usual lift in this sector.”



Sterling is weaker than most major currencies in the early morning trade. The downturn across most British businesses eased slightly this month but manufacturers struggled, and the economy is still likely to contract this quarter, making a recession. The S&P global Composite Purchasing Manager’s Index (PMI) rose unexpectedly to 49.0 from 48.2 in November, although it remained below the 50 threshold for growth. The dominant services sector drove all the improvement as the decline deepened among British manufacturers, which cut jobs for the first time since October 2020.



Euro is stronger against sterling and weaker against the dollar this morning. The downturn in the euro area is seen easing in December, helped by an improvement in economic conditions in Germany mostly. That said, business sentiment remains subdued even as cost pressure are seen improving as the overall landscape remains rather challenging amid the high cost of living, rising rates, and the Russia-Ukraine conflict.



The dollar is well bid against most major currencies overnight. US retail sales slipped 0.6% in November, as consumers shied away from big-ticket items like furniture and electronics, the Census Bureau reported yesterday. That compares to an increase of 1.3% in October and forecasts for a modest dip of 0.3%. Categories that saw decreases were motor vehicles, furniture and electronics. Consumers have continued to spend even as the economy slows and the Federal Reserve raises interest rates, as it did on Wednesday with a half-point increase and vows to not stop in 2023.



European markets were marginally down this morning as investors processed the raft of central bank decisions announced yesterday. The Stoxx 600 was down 0.9% early morning, with all sectors and major bourses posting losses. Tech stocks shed 1.5% to lead the losses, followed by telecoms and financial services, which both lost 1.4%. US stocks tumbled yesterday as Wall Street reeled from another sizable rate hike by Federal Reserve officials and assessed similar moves by monetary policymakers across the Atlantic. The S&P 500 slid 2.5%, while the Dow Jones Industrial Average shed more than 750 points, or 2.3%, logging its worst day in three months.


Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: UK Nov. Retail Sales
9:15 a.m.: France Dec. S&P Global PMIs
9:30 a.m.: Germany Dec. PMIs
10:00 a.m.: Euro-Area Dec. PMIs
10:00 a.m.: ECB’s Holzmann speaks
10:30 a.m.: UK. Dec. PMIs
11:00 a.m.: Italy Nov. CPI
11:00 a.m.: Euro-Area Nov. CPI
11:30 a.m.: Bank of Russia Rate Decision
12:00 p.m.: ECB’s Centeno speaks
12:30 p.m.: ECB’s Knot speaks
2:00 p.m.: Poland Nov. Core CPI
3:45 p.m.: US Dec. PMIs


Corporate Events

Earnings include Accenture, Darden


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