Morning Report

November 21, 2022

“The greenback was firmly higher against its peers this morning, with rising Covid-19 cases in China leading to new restrictions which weighed on global investor sentiment. The main highlight this week will be the flash PMI data for November from the US, UK and Eurozone, where further deterioration is expected.”

Tim Hallinan – Trading Director

Main Headlines

US retailers are facing their first real terms fall in revenues since the global financial crisis this holiday season, even as resilient consumer spending poses challenges to officials seeking to bring inflation under control. Black Friday falls this week at a turning point for consumer spending, as the highest inflation since the early 1980s erodes shoppers’ purchasing power. Most retailers are cautiously optimistic about the coming weeks, however, as the pandemic health fears and supply chain shocks that affected holiday spending in 2020 and 2021 recede.

England’s stock of office space is falling at the fastest rate for 20 years, as new construction slows, and employers cut back on offices that remain only half full because of homeworking. Close to 20mn sq ft of workspace was lost to use in the year to the end of March, just over 2 per cent of the total market. That is the biggest annual drop since this data was first collected in 2001. The contraction comes as employers consider how much space they need in the post-pandemic world and accelerates a trend that has seen overall floorspace decline by more than 6 per cent since 2014.


Sterling is stronger against euro and weaker against the dollar this morning. Rishi Sunak will face pressure from business to soften the economic effects of Brexit, including opening the doors to more immigration to fill holes in the country’s labour market. The prime minister will be urged to improve relations with the EU and to take the brakes off the country’s economy. The cost of plans to break the dominance of the Big Four accounting firms by forcing the largest UK companies to hire two sets of auditors has risen fivefold to about £1bn over 10 years.


Euro is weaker than most major currencies in the early morning trade. German house prices will fall 3.5% next year as the cost-of-living crisis and rising borrowing costs hits consumers, but the chances of an outright crash are low. Forty-five countries and institutions will meet in Paris today to pledge millions of euros of aid for Moldova, as fears mount that it could be further destabilised by the conflict in Ukraine. European traders are rushing to fill tanks in the region with Russian diesel before an EU ban begins in February, as alternative sources remain limited.


The dollar is well bid against most major currencies overnight. Joe Biden’s antitrust adviser has warned of a “profusion of junk fees” in the US economy, as he pushes to expand the war on hidden costs to include those affecting investors in the securities market. With Manila emerging as a critical element in the Pentagon’s plans to counter China, the US and Philippines aim to expedite the implementation of a stalled 2014 Defence pact that would see US troops gain access to a number of Philippine military facilities.


Stocks fell amid concern that China may tighten Covid curbs after a string of reported deaths, with investors seeking shelter in the dollar. European equities edged lower, with mining stocks the biggest drag on the regional benchmark index. S&P 500 and Nasdaq 100 futures contracts both dropped by about 0.5%. Walt Disney Co. rallied more than 10% in New York premarket trading after the company brought back former leader Bob Iger as chief executive officer. The dollar climbed against its Group-of-10 counterparts and emerging-market currencies. Treasuries gave back earlier gains. Oil sank on concern of a weakening demand outlook from China.

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

7:00 a.m.: Estonia Oct. PPI
8:00 a.m.: Germany Oct. PPI
9:00 a.m.: Swiss Oct. Money Supply
10:05 a.m.: BOE’s Cunliffe speaks
11:30 a.m.: Germany sells bills
12:30 p.m.: ECB Vasle speaks
1:00 p.m.: ECB’s Holzmann speaks
3:00 p.m.: Israel central bank rate decision
3:15 p.m.: ECB’s Holzmann, Simkus speak
5:30 p.m.: ECB’s Centeno speaks
6:30 p.m.: ECB’s Nagel speaks

Corporate Events

Earnings include Compass Group, Virgin Money, Urban Outfitters, J M Smucker, Dell, Zoom, Maximus


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