Markets Today – A Tough Year, China, Japan, Oil, Gold, Bitcoin

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Stock markets are limping into 2023, with investors seemingly taking advantage of the festive break to stock up for what is going to be another crazy year.

Stocks are a bit lower on the last trading day of the year, but generally speaking over the past week there has been no development, just choppy trading with no conviction or direction. It looks like investors are positioned for a first quarter of significant uncertainty, which is about right.

So much now hinges on economic data and how companies plan to adjust to a potentially impending recession. Data towards the end of 2022 was not as promising as hoped and communication from the Fed and others remained more hawkish than investors would like.

China’s move away from zero-Covid doesn’t appear to be going as planned with anecdotal evidence suggesting cases are skyrocketing and the healthcare system is stretched. If it weathers the storm over the next month, it could bode well for the rest of the year, but past evidence suggests the road to zero restrictions is full of potholes.

The BoJ’s decision to change its yield curve control policy tool could also backfire, as traders see it as the first step towards abandoning it altogether. It could be forced to be even more active in the markets as a result, as emboldened JGB bears look to test the central bank’s resolve.

Upside risks?

Oil markets rebound in another volatile year-end session. As we approach 2023, the risks are arguably on the upside, although that has been the narrative for much of the year and yet we are on track to end it not far from where we we started. While producers have finally caught up with post-pandemic demand, other risks remain next year, including Russian production under the new price cap and its threats to cut production and not supply countries. who respect him. This is not a problem now, but if prices start to rise, it could accelerate the move quickly.

Gold lacks momentum

Gold is pushing higher again on Friday, but once again lacks the momentum to take advantage of recent gains in a big way. The outlook may still look very positive for the yellow metal with central bank interest rates near highs and a rather bleak economic outlook, but in the short term a correction could be on the cards absent another bullish catalyst. .

Another intriguing year

The crypto community won’t be sad to see the return of 2022 and who can blame them? Who knows what awaits them in 2023, but at the very least they hope to put the FTX scandal behind them and once again focus on innovation and adoption. That may be asking a lot in the short term, especially if other market factors are not favourable. No doubt it will be another intriguing year for space.

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