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  • Gold hits 8-month peak as bets of slower rate hikes dent dollar

    Gold hits 8-month peak as bets of slower rate hikes dent dollar

    Gold prices hit an eight-month high on Monday, as the dollar slipped on bets for slower U.S. interest rate hikes, while investors also cheered top bullion consumer China reopening its borders.

    Spot gold rose 0.49% to $1,874.78 per ounce, its highest since May 9, 2022. U.S. gold futures gained 0.53% to $1,879.50.

    The weaker dollar is likely the main factor lifting gold, and investors have also started slowly increasing their holdings in exchange-traded funds (ETFs), indicating positive sentiment in gold, UBS analyst Giovanni Staunovo said.

    Making gold cheaper for overseas buyers, the dollar index eased 0.2%, still under pressure after recent U.S. data raised hopes for a slowdown in the pace of rate hikes by the Federal Reserve.

    Elevated rates dampen interest in non-yielding gold, as they did for the majority of 2022.

    “Data suggests that the Fed’s cumulative tightening in 2022 is starting to have its effects felt on the economy and that the Fed can afford to slow its pace of tightening,” said OCBC FX strategist Christopher Wong.

    Traders will now assess Fed Chair Jerome Powell’s speech at a central bank conference in Stockholm on Tuesday and U.S. consumer price index data due later this week.

    “We believe (gold) prices are trading at the upper end of a fundamentally justified range,” Julius Baer analyst Carsten Menke said in a note, adding that central bank buying had become a new focus area for the bullion market.

    China held 64.64 million fine troy ounces of gold, as of end-December.

    However, UBS’ Staunovo said while China’s reopening of its borders could support jewellery demand to some extent, the overall impact on gold market may be limited.

  • Oil jumps 3% on demand optimism as China borders reopen

    Oil jumps 3% on demand optimism as China borders reopen

    Oil extended gains on Monday, rising about 3% after China’s move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

    The rally was part of a wider boost for risk sentiment supported by both the reopening of the world’s biggest crude importer and hopes for less-aggressive increases to U.S. interest rates, with equities rising and the dollar weakening.

    Brent crude was up $2.29, or 2.9%, at $80.86 a barrel by 1150 GMT while U.S. West Texas Intermediate crude rose $2.46, or 3.3%, to $76.23.

    “If recession is avoided, global oil demand and demand growth will remain resilient,” said Tamas Varga of oil broker PVM, adding that developments in China were the main reason for Monday’s gains.

    “The gradual reopening of the Chinese economy will provide an additional and immeasurable layer of price support,” he said.

    The rally followed a drop last week of more than 8% for both oil benchmarks, their biggest weekly declines at the start of a year since 2016.

    As part of a “new phase” in the fight against COVID-19, China opened its borders over the weekend for the first time in three years. Domestically, about 2 billion trips are expected during the Lunar New Year season, nearly double last year’s and 70% of 2019 levels, Beijing says.

    In oil-specific developments, China issued a second batch of 2023 crude import quotas, according to sources and documents reviewed by Reuters, raising the total for this year by 20% from the same time last year.

    Despite Monday’s oil rebound, there is still concern that the massive flow of Chinese travellers could cause another surge in COVID infections while broader economic concerns also linger.

    Those concerns are reflected in oil’s market structure. Both the near-term Brent and U.S. crude contracts are trading at a discount to the next month, a structure known as contango, which typically indicates bearish sentiment.

  • European markets close higher as travel stocks get a boost; German inflation lower than expected

    European markets close higher as travel stocks get a boost; German inflation lower than expected

    The pan-European Stoxx 600 closed up 1.2%, with almost all sectors in positive territory. Europe’s banking index rose 2.4% to lead gains, while oil and gas stocks bucked the trend to end the session down 0.7%.

    Of the major bourses, the U.K.’s FTSE 100 closed up 1.4%, while Germany’s DAX index added 0.8% and France’s CAC 40 was up 0.4%.

    Germany published lower-than-expected inflation figures for December, down to 9.6% year on year. They will be followed by inflation figures from France on Wednesday, Italy on Thursday, and a flash estimate for the whole euro area on Friday.

    U.K. markets were closed Monday. Shares across the rest of the continent rose, as euro zone manufacturing data indicated that the worst may have passed for the 20-member currency bloc.

    The figures offered hope of a light at the end of the tunnel, after a year beset by recession fears as central banks around the world hiked interest rates aggressively to rein in soaring inflation.

    Meanwhile, markets in Asia-Pacific were mixed as investors weighed the short-term implications of the rise in coronavirus infections in China against the potential longer-term boost from the full reopening of the world’s second-largest economy.

    https://www.cnbc.com/2023/01/03/european-markets-set-for-mixed-open-as-uncertainty-continues-into-2023.html

  • Economic Calendar: Jan 9 – Jan 13, 2023

    Economic Calendar: Jan 9 – Jan 13, 2023

    Monday January 9

    China aggregate yuan financing, new yuan loans and foreign reserves

    Euro zone jobless rate

    Germany industrial production

    (8:30 a.m. ET) Canadian building permits for November.

    (3 p.m. ET) U.S. consumer credit for November.

    Earnings include: Tilray Inc.

    ==

    Tuesday January 10

    Japan household spending

    (5:10 a.m. ET) Bank of Canada Governor Tiff Macklem joins a panel in Stockholm on “Central bank independence and new risks: climate”

    (9 a.m. ET) U.S. Fed Chair Jerome Powell joins a panel in Stockholm on “Central bank independence and the mandate – evolving views.”

    Earnings include: Shaw Communications Inc.

    ==

    Wednesday January 11

    No major economic events or corporate earnings scheduled.

    ==

    Thursday January 12

    China CPI, PPI and trade surplus

    Japan current account surplus and bank lending

    EBC Economic Bulletin

    (8:30 a.m. ET) U.S. initial jobless claims for week of Jan. 7. Estimate is 214,000, up 10,000 from the previous week.

    (8:30 a.m. ET) U.S. CPI for December. The Street expects a flat result month-over-month with a 6.5-per-cent increase year-over-year.

    (2 p.m. ET) U.S. budget balance for December.

    Earnings include: Aritzia Inc.; Cogeco Inc.; Cogeco Communications Inc.; Delta Air Lines Inc.; Taiwan Semiconductor Manufacturing Company Ltd.

    ==

    Friday January 13

    Euro zone industrial production and trade deficit

    (8:30 a.m. ET) U.S. import prices for December. The Street expects a drop of 0.7 per cent from November and an increase of 2.3 per cent year-over-year.

    (10 a.m. ET) U.S. University of Michigan Consumer Sentiment for January.

    Earnings include: Bank of America; Bank of NY Mellon; Blackrock Inc.; Citigroup Inc.; Corus Entertainment Inc.; JPMorgan Chase & Co.; UnitedHealth Group Inc.; Wells Fargo & Co.

  • Nonfarm payrolls rose 223,000 in December, as strong jobs market tops expectations

    Nonfarm payrolls rose 223,000 in December, as strong jobs market tops expectations

    • Nonfarm payrolls increased by 223,000 for the month, above the Dow Jones estimate for 200,000.
    • The unemployment rate fell to 3.5%, a decline of 0.2 percentage point and also better than the estimate.
    • Wage growth was below expectations, with average hourly earnings up 4.6% from a year ago, below the 5% estimate.
    • Leisure and hospitality led job gains, followed by health care, construction and social assistance.

    https://www.cnbc.com/2023/01/06/jobs-report-december-2022-nonfarm-payrolls-rose-223000-in-december-as-strong-jobs-market-tops-expectations.html

  • CIBC to appeal U.S. court decision ordering it to pay $1.16-billion to Cerberus

    CIBC to appeal U.S. court decision ordering it to pay $1.16-billion to Cerberus

    Canadian Imperial Bank of Commerce CM-T +1.05%increaseCM-T +1.05%increaseis appealing a U.S. court decision that could force the lender to pay about $1.16-billion, after it was found liable for losses incurred by a New York hedge fund in debt deals related to the 2008 U.S. housing crisis.

    A New York State court said late Tuesday that CIBC must pay US$491-million in damages before prejudgment interest. That is less than the US$1.1-billion the hedge fund, Cerberus Capital Management LP, sought when it first brought the bank to court in 2015.

    Including prejudgment interest, CIBC said it expects to pay US$848-million. That could cause the bank to record a pretax provision of $1.16-billion in its earnings for its fiscal first quarter, which ends Jan. 31.

    New York court issues liability ruling against CIBC in Cerberus lawsuit

    Cerberus alleged CIBC defaulted on payments on a limited recourse note the bank issued in 2008, and on a related transaction in 2011. Limited recourse notes are a type of debt instrument that combines elements of preferred shares and corporate bonds to provide fixed-income investors with higher yields.

    CIBC has said in its public filings that the two transactions with Cerberus reduced the bank’s exposure to the U.S. residential real estate market.

    “CIBC strongly disagrees with the legal and factual basis for the court’s decision,” the bank said in a news release announcing its appeal on Wednesday.

    The court initially found CIBC liable for damages in an early December decision, but it had yet to decide how much the bank would have to pay. At the time, CIBC said in a release that it had not set aside any money for a potential loss because it believed it was “more likely than not to prevail at trial.”

    The court-ordered charge would take a chunk out of the bank’s common equity tier (CET1) ratio, a key measure of a bank’s ability to cover sour loans, at a time when Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, is increasing the amount of money that banks are required to hold for this purpose.

    In December, OSFI increased the domestic stability buffer (DSB), meaning banks must now store more capital during good economic times to limit the damage from downturns. It also increased the maximum level to which the DSB can rise, opening the possibility of the minimum CET1 ratio reaching 12 per cent, from the current 11 per cent.

    CIBC said the charge could push its CET1 level down to 11.4 per cent, from its current 11.7 per cent. This would bring the bank closer to the current minimum level and put it in danger offalling under if OSFI were to hike the DSB again. Some analysts have speculated that this could prompt CIBC to turn to public markets to raise funds.

    If CIBC had borne the full brunt of Cerberus’ claim, its CET1 ratio would have dropped to 11.2 per cent, which would probably have been “high enough to avoid an equity issue” unless other issues cropped up, RBC analyst Darko Mihelic said in a note in December.

    Bank of Montreal is so far the only bank to have done a share sale after OSFI’s change. The lender raised a total of $3.35-billion in a share offering in early December to help cushion the blow of the higher capital requirements as it works toward closing its deal to take over California-based Bank of the West from BNP Paribas.

    BMO also lost a year-long legal battle last year, resulting in a $1.1-billion charge. In November, a Minnesota bankruptcy court found the bank’s U.S. arm was liable for US$564-million in damages related to one of the largest-ever Ponzi schemes. The bank is appealing the decision.

  • UPDATED THU, JAN 5 20235:36 AM EST

    UPDATED THU, JAN 5 20235:36 AM EST

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    Stock futures are flat as investors digest Fed minutes, look ahead to labor data

    Stock futures were flat Thursday as investors looked beyond the hawkishness of the Federal Reserve’s meeting minutes released in the afternoon toward labor data coming later this week.

    Futures tied to the Dow Jones Industrial Average lost just 11 points. S&P 500 and Nasdaq 100 futures were both marginally lower as well.

    The moves follow a choppy trading session as traders pored over a mixed bag of economic data.

    November’s Job Openings and Labor Turnover, or JOLTS, report showed the job market remained strong, bolstering concerns that the Fed could continue raising interest rates as long as there remained a hot market for workers. But the ISM manufacturing index showed the sector was contracting after 30 months of expansion, which investors saw as a positive indicator that previous rate hikes had the intended impact of cooling the economy.

    Meanwhile, the minutes from the Fed’s December meeting showed the central bank remained committed to higher interest rates for “some time.”

    Investors have “wounds that are still fresh” following 2022, which brought the worst year for the stock market since 2008, said Keith Buchanan, a portfolio manager at GLOBALT Investments. He said investors are attempting to balance what each new piece of economic data or Fed commentary can indicate with broader concerns about the future.

    “Every day that goes by and we get a data point that’s moving in the right direction, it’s positive,” Buchanan said. “But it’s also quickly followed up with apprehension on how sensitive and delicate this moment is.”

    Investors will watch Thursday for more data on jobs, the trade deficit and business activity. Fed speakers Raphael Bostic and James Bullard are also both slated to speak.

    On Friday, investors will review data on nonfarm payrolls, the unemployment rate and hourly wages. Since the report could have a big impact on the Fed’s next moves, it has the potential to impact the market. Investors don’t want to see big gains in wage growth.

  • Hong Kong stocks are off to their best start since 2018 on China recovery hopes

    Hong Kong stocks are off to their best start since 2018 on China recovery hopes

    • The Hang Seng index on Tuesday gained 1.84%, its biggest gain on the first trading session of a year since 2018.
    • Property and technology stocks continued to rally, leading the Hang Seng index.
    • Alibaba shares rose 8% on Wednesday, as Chinese regulators approved Ant Group’s plan to more than double its registered capital, a sign of progress in resolving regulators’ concerns.

    https://www.cnbc.com/2023/01/05/hong-kong-stocks-best-start-since-2018-on-china-recovery-hopes.html

  • Dubai announces $8.7 trillion economic plan to boost trade, investment and global hub status

    Dubai announces $8.7 trillion economic plan to boost trade, investment and global hub status

    • Dubai aims to double the size of its economy in the next decade and become one of the “top 3 economic cities around the world,” Sheikh Mohammed bin Rashid al Maktoum, the ruler of Dubai, tweeted.
    • Recent years have seen Dubai roll out a flurry of reforms aimed at making it more attractive for foreigners and international companies to live and invest.

    https://www.cnbc.com/2023/01/04/dubai-announces-8point7-trillion-economic-plan-to-boost-trade-investment.html