Traders are waiting for the speech of the head of the U.S. Federal Reserve (Fed) Jerome Powell, which will be held on Wednesday evening, as well as assess statistical data from China and follow the news about the restrictions related to the spread of coronavirus infection in the country, and large-scale protests against them.
Chinese authorities the previous day announced plans to more actively vaccinate the elderly population against the coronavirus, shortening the time between vaccinations for those over 80 years old to three months.
The Shanghai Composite stock index was up 0.06% by 7:22 a.m. KSC and the Hang Seng of Hong Kong was up 0.8%.
China’s Purchasing Managers’ Index (PMI) for the manufacturing industry fell to 48 points in November from 49.2 points a month earlier, the fastest pace since April, data from China’s State Bureau of Statistics (SBS) showed.
Experts on average had expected it to drop to 49 points, Trading Economics noted.
The service sector PMI fell to 46.7 points in November, also the fastest pace since April. In October, its value was 48.7 points.
Growth leaders in Hong Kong are shares of automaker Geely Automobile Holdings Ltd. (+8.6%), telecom China Unicom Ltd. (+6.25%) and restaurant chain owner Haidilao International Holding Ltd. (+3.7%).
Japan’s Nikkei 225 stock index was losing 0.35% by 7:22 a.m. KSC.
Japan’s industrial output fell 2.6% in October compared to the previous month, preliminary statistical data showed. The decline in industrial production was recorded for the second month in a row. In September the index decreased by 1.7%.
Experts on average expected a decrease in industrial production in October by 1.5%, according to Trading Economics.
Leaders of the decline are securities of Tokyo Electric Power Co. Holdings Inc. (-3.3%), construction materials producer Sumitomo Osaka Cement Co. Ltd. (-3.3%) and game developer Konami Group Corp. (-2.9%).
South Korea’s KOSPI was up 1.1% by 7:24 a.m. KSC.
South Korean industrial production fell 3.5% month-over-month in October. The rate of decline was the fastest since May 2020. In September, the figure was down 1.9%. Experts had forecast a 1% decline in industrial production in October.
Retail sales in the country fell 0.2% in October relative to the previous month after falling 1.9% in September.
Shares of the world’s biggest chip and consumer electronics maker Samsung Electronics Co. rose 1.5% and automaker Hyundai Motor Co. rose 0.3%.
Australia’s S&P/ASX 200 index added 0.4% on Wednesday.
Australia’s consumer price index (CPI) rose 6.9% year on year in October, official data showed. The rate of growth slowed from a 7.3 percent rise in September, which was the highest since at least September 2018, Trading Economics wrote.
Experts on average had predicted a 7.4% rise in the index.
Share prices of the world’s largest mining companies BHP and Rio Tinto rose by 1.6% and 1.7%, respectively.
The European Union will send 40 generators to Ukraine as part of its support in addition to the already supplied 550, European Union diplomatic chief Josep Borrel said.
“Russia is trying to break Ukraine’s fighting spirit by striking at its energy infrastructure and using winter as a weapon of war against civilians. At the G7 meeting, we are coordinating our support; the EU is sending 40 generators in addition to the 550 already provided through the European Civil Protection and Humanitarian Aid Operations mechanism,” Borrel wrote on Twitter Wednesday.
As reported, the European Commission reported that 200 medium transformers and a large autotransformer from Lithuania, a medium autotransformer from Latvia and 40 heavy generators from the EC reserve located in Romania (rescEU) were prepared to be sent to Ukraine through the EU Emergency Response Coordination Center. According to the report, each of the generators can provide uninterrupted power to a small or medium-sized hospital.
The EC is also additionally working on a new rescEU energy hub in Poland to provide assistance from third parties and facilitate its coordinated delivery to Ukraine, including with G7 partners.
President of Ukraine Volodymyr Zelensky discussed with UNITED24 ambassadors the fundraising to buy generators for hospitals.
“The terrible war against our country continues, and with the onset of winter, new challenges have emerged. Together with the UNITED24 fundraising platform ambassadors Andriy Shevchenko, Oleksandr Usyk, Scott Kelly, Elina Svitolina, Liev Schreiber and Timothy Snyder, Head of the President’s Office Andriy Yermak we discussed further steps to support Ukraine. In particular, fundraising to buy generators for hospitals,” he wrote on his Telegram channel on Tuesday.
“After all, due to constant enemy strikes on the energy structure, Ukrainian doctors are forced to operate in the light of flashlights. We must maintain the unity of the world in support of Ukraine in order to get through this difficult period. And I am 100% sure that we will win. Thanks to UNITED24 ambassadors for everything you do for Ukraine and Ukrainians,” Zelensky said.
The U.S. dollar is moderately declining against major world currencies in early trading on Wednesday as market participants are waiting for Federal Reserve Chairman Jerome Powell to speak.
The index, calculated by ICE and showing the U.S. dollar dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona), is down 0.3%, while the broader WSJ Dollar Index is down 0.2%.
Powell will speak at 8:30 p.m. ksc Wednesday at the Hutchins Center on Fiscal and Monetary Policy with an outlook on the economy and labor market. The event also includes answers to questions from the audience. Traders will closely follow the Fed chief’s statements, hoping to get signals about the future trajectory of monetary policy.
Last meeting, the Fed raised the rate by 75 basis points (bps) for the fourth consecutive meeting, and the rate is now at its highest level since January 2008 at 3.75-4% per annum. The last meeting this year will be December 13-14, and the market is expecting a rate hike of a more moderate 50 bps.
Earlier Federal Reserve Bank of St. Louis Governor James Ballard noted that the U.S. central bank will have to keep its key interest rate above 5% throughout 2023 and part of 2024. He also said there is no big difference between raising the rate by 50bp or 75bp at a separate meeting, and he leaves such “tactical” details to the head of the Fed.
The euro/dollar pair is trading at $1.0356 by 7:47 kk against $1.0331 at the close of Tuesday’s session, with the euro gaining about 0.25%.
The dollar/yen exchange rate is down 0.15% at 138.51 yen from 138.71 yen at the end of last session.
The pound is up 0.3% and trades at $1.1987 versus $1.1951 the day before.
The U.S. will finance the purchase of $53 million worth of power grid equipment to restore Ukraine’s energy system, CNN reported, citing a U.S. State Department report.
“This supply package will include distribution transformers, circuit breakers, arresters, disconnectors, vehicles and other key equipment,” the report specifies.
The funds will be in addition to the $55 million already provided for emergency support of the country’s energy sector.
Oil prices are rising on Wednesday morning after having risen the previous day on expectations that China will ease anti-coke restrictions.
The price of January Brent futures, which end trading on Wednesday, on the ICE Futures Exchange in London is $83.97 a barrel by 7:17 a.m. Ksk, up $0.94 (1.13%) from the previous session’s closing price. The more actively traded February futures rose $0.93 (1.1%) to $85.18 a barrel. On Tuesday, February contracts rose $0.36 (0.4%) to $84.25 a barrel.
The price of WTI futures for January at electronic trades on the New York Mercantile Exchange (NYMEX) is $79.09 per barrel by that time, which is $0.89 (1.14%) above the final value of the previous session. The day before contract rose by $0.96 (1.2%) to $78.2 per barrel.
Chinese authorities the day before announced plans to more actively vaccinate the elderly population against coronavirus, reducing the time between vaccinations for those over 80 years to three months.
“The announcement followed unprecedented street protests and was the first signal that Beijing might consider easing draconian measures to control the spread of the coronavirus. The prospect of normalization in the world’s biggest oil importer has driven oil prices higher, the first significant recovery in two weeks,” said ActivTrades senior analyst Ricardo Evangelista.
The market’s attention is also directed towards OPEC+ meeting to be held on December 4. Eurasia Group analysts believe that the alliance may decide to reduce production quotas amid prospects of weakening demand in China.
Meanwhile, the American Petroleum Institute (API) data showed a decline of 7.85 million barrels of oil reserves in the USA last week instead of the 2.5 million barrels reduction which analysts expected.
Official data from the US Department of Energy on inventories will be released on Wednesday at 5:30 p.m. ksec.
