Marketmind: Being detained
Anshuman Daga previews the day’s trading in European and international markets.
The day’s top news is the arrest of Sam Bankman-Fried, the former CEO of FTX, in the Bahamas at the request of American prosecutors, which happened just one month after the cryptocurrency exchange declared bankruptcy.
U.S. inflation data anticipated later on Tuesday is shaping up as a critical event for the financial markets, perhaps even more significant for the outlook than the Federal Reserve’s interest rate decision tomorrow.
Related: Marketmind: Central banks keep getting into trouble.
While the dollar, which has been strengthened by high and increasing interest rate forecasts, maintained solidity on Tuesday, Asian stocks were in a wait-and-see mode.
Markets in Europe will pay close attention to the ZEW poll results on economic confidence from Germany, the continent’s largest economy. Germany is also scheduled to release inflation figures.
Despite the fact that central banks are starting to moderate their aggressive rate increases, investors typically continue to be vigilant to the risks of additional increases in borrowing rates harming economies.
The developed countries have had to increase borrowing costs by a total of 25.15 percentage points this cycle due to runaway inflation, which is the most pronounced increase in decades.
In the US, the rate of price increases is starting to slow down, but investors need more proof to confirm this trend, which would lessen any policy shocks from the Fed.
Reuters polled economists who anticipate stable core inflation in the US at 0.3% on a monthly basis but moderate annual growth with headline prices 7.3% higher than a year ago.
Large movements on CPI days: http://graphics.reuters.com/USA-STOCKS/WEEKAHEAD/egpbyykqmvq/chart.png
The most recent study conducted by the New York Fed revealed that Americans anticipate lower inflation pressures over the coming years, along with rising incomes.
Travel demand is still strong despite double-digit inflation and rising energy prices, with TUI, the largest travel firm in the world, targeting robust business in the summer of 2023.
While a cold snap seized the nation, Britain’s National Grid (LON:NG) cancelled standby notices for two coal units just hours after filing the requests. However, high nuclear output and fast wind speeds lowered the likelihood of energy shortages.
Important events that may have an impact on markets on Tuesday include:
Economic data: German employment in October and the UK’s November inflation data; Germany’s December ZEW poll
Related: Marketmind: I’m sick of waiting.
Events: Fed starts 2-day meeting; BOE issues Financial Stability Report
U.S. data: inflation in November