Positive start for stocks in the stock market fades
As stock traders watched Tesla’s share price decline at the open, the indices traded higher during the session.
US index futures followed Europe higher and opened in positive territory, but at the time of writing, some of those advances are fading. The big news from the one-man business was that Tesla delivered a record 1.3 million vehicles in 2022, but the 40% jump was still well below the automaker’s goal of increasing shipments by about 50% each year. As stock traders watched Tesla’s share price decline at the open, the indices traded higher during the session. Questions remain about whether growth can be sustained given fears of a recession and further policy tightening by the Fed and other major central banks.
European markets started the day positively. Mood improved in part as fears of gas shortages eased due to a milder start to the winter, which resulted in less heating demand. Gas futures continue to fall, with European gas futures trading at levels last seen before the start of the war in Ukraine.
Overall, most of the challenges we faced in 2022 will continue into 2023, including high inflation and rising interest rates. A recession seems inevitable. Traders know that after the significant rebound in US and global stocks since October, much of the positive that the Fed has changed its hawkish stance has already been priced in. As such, risks remain skewed to the downside despite today’s strong start in equity markets.
Watch the already underperforming Nasdaq for short selling opportunities as it tests key resistance around 11,000-11,100.
Source: Tradingview, Stone X
In the short term, equity investors will look to the Fed’s minutes and the December US employment report to navigate risky assets.
FOMC Meeting Notes (Wednesday 2:00 pm EDT)
The first major macroeconomic data of this year is likely to be the minutes of the December meeting of the FOMC. At this meeting, the FOMC cut the pace of tightening to 50 basis points but looked more hawkish than expected as policymakers forecast a higher final interest rate and signaled that monetary policy would remain restrictive longer. The minutes should reveal more details that should set the tone for at least the next few days.
US Nonfarm Payrolls (Friday, 8:00 AM EST)
The first week of January could end with a bang if US employment data throws a big surprise. Overall non-farm payrolls have exceeded expectations in each of the previous 8 months, with previous months continually revised upwards. The US labor market remains hot, and as long as it is, the Fed will be encouraged to maintain its tight policy. If we get another round of stronger-than-expected numbers, this could provide fresh support for the dollar.
Text: Fawad Razaqzada, FOREX.com » Official site
Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no liability for any direct, indirect or consequential damages that may result from anyone relying to such information.