Market Wrap: 20 December 2022

Market Wrap: 20 December 2022

Asian Stocks Slide as Inflation Fight Endures:

  • Shares of big technology companies led the S&P 500 lower
  • Focus on BOJ meeting amid speculation of hawkish pivot

Asian equities headed for a fourth day of declines as investors focused on the outlook for inflation and interest rates ahead of the Bank of Japan’s policy decision later Tuesday.

Shares dropped in China, South Korea and Australia, while Japanese shares eked out a small gain. Reports of growing disruptions from Covid outbreaks remained concerns among investors in Hong Kong and mainland. 

US stock futures were marginally higher after the S&P 500 closed at its lowest level in more than a month on Monday. The benchmark was dragged down by declines in big-tech firms including Apple Inc., Microsoft Corp. and Inc. 

Investors, still on edge after recent hawkish remarks from the Federal Reserve and other central banks, will be looking closely at the Bank of Japan. While economists are unanimous in forecasting no change from the BOJ Tuesday, market speculation is growing of a future pivot away from ultra-lose policy, which would further support the yen.

The dollar was little changed and the yen weakened.

Treasuries steadied after benchmark 10-year Treasury yield rose the most since October on Monday. Yields climbed in Australia. Japan’s 10-year government bond yield was unchanged at 0.25% — the top of the BOJ’s target trading band. 


In China, banks maintained their benchmark lending rates, including the five-year rate that is a reference for mortgages, for a fourth month after the central bank kept its monetary policy settings unchanged last week. 

Oil was higher as investors weighed a pledge from China to revive consumption against broader low-risk sentiment, with West Texas Intermediate above $75 a barrel.

Still, global sentiment remained sour after former New York Fed President and Bloomberg Opinion columnist William Dudley told Bloomberg Television on Monday that optimistic markets could only make the central bank tighten even more. 

Milford Asset Management sees the risk of profit decline among companies dragging for longer as the economy slows. “We are looking for at least a profit decline of 20% and possibly a bit more. That’s going to be a bit of a shock to investors next year,” William Curtayne, portfolio manager, said on Bloomberg Television

Source: Bloomberg


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