By Geoffrey Smith
Investing.com – Global markets are getting nervous at the end of a week of central bank rate hikes, with a dovish tone from the European Central Bank on Thursday responsible for the latest decline. Outside of China, the news is no better, with anecdotal reports of a spate of COVID-related deaths in Beijing pointing to a tough few months ahead. U.S. stocks are on course for a second straight weekly loss after weak retail sales data and factory surveys on Thursday, despite a strong showing from Adobe ( NASDAQ: ) after the bell. Accenture (NYSE: ) and Darden Restaurants (NYSE: ) should report sooner. Crypto prices are under pressure amid fresh doubts about the reliability of Binance’s reserves data, and the Kremlin was the first to blink, failing to cut off oil supplies to those applying a G7 price cap on its oil exports. Here’s what you need to know in the financial markets on Friday, December 16.
1. Global markets take another step against ECB fanaticism
Global markets were left in turmoil at the end of a week when central banks again signaled that the balance of risks between growth and inflation is very different from markets.
Eurozone bond markets fell after the European Central Bank struck a much hawkier-than-expected tone at its governing council meeting on Thursday, the biggest daily move in the region’s risk-free asset since 2008.
It’s rare for the ECB to move markets more than the Federal Reserve, but President Christine Lagarde’s guidance shows a much greater willingness to tolerate a downturn than markets are used to hearing from a central bank that has erred on the side of dovish. in the last decade rather than risk the single currency project.
2. China’s epidemic is getting worse
Chinese stocks closed the week lower as reports of rising COVID-19 deaths in Beijing hit local and international media.
Anecdotal real-time data points to steep declines in road and public transport use as virus fears limit activity almost as much as official lockdowns. The development is a fresh blow to an economy that needs consumer demand to cushion the chilling effects of a chronic real estate crisis. It suggests that consumer-facing indicators such as retail sales are likely to decline further before the smell is intact.
Chinese stock indexes fell as much as 1% and rose to 6.9743 against the dollar.
3. Stocks will open lower; Adobe is the standout performer
US stock markets are set to open sharply lower again as the market reflects on a week in which central banks took steps to significantly tighten financial conditions despite signs of a broader economic slowdown. Weak U.S. and manufacturing surveys on Thursday dealt fresh blows to hopes for a soft landing next year for the U.S. economy.
At 06:35 ET (11:35 GMT), they were down 356 points, or 1.1%, while they were down the same amount and slightly outperformed at 0.7%. The three major cash indexes lost 2.3% and 3.2% on Thursday and are on pace for a loss of about 2% for the week.
Stocks likely to be in the spotlight later include Adobe, which opened up 4% in premarket after a strong release late Thursday. could extend a string of strong business software earnings when it reports early, while the numbers are threatened by a squeeze on consumer income from higher inflation.
4. Crypto Weakens as Binance Reserves Face New Doubts
Cryptocurrency prices have fallen following new developments regarding the reliability of reserve figures provided by Binance, the world’s largest exchange.
The tax and audit firm Mazars, which published a controversial certification about Binance’s reserves last week, has now stopped all work with the crypto sector. Its other clients include KuCoin and Crypto.com.
The news puts to rest one of Binance founder and CEO Changpeng Zhao’s repeated assertions that the exchange is properly managing its customers’ deposits, a concern in the crypto community that erupted after the collapse of rival exchange FTX.
fell more than 3%, while falling 6% in response, with other altcoins following the trend.
5. Russia blinks oil price cap standoff
prices have fallen further as the scale of demand destruction in China due to the COVID-19 scare becomes increasingly clear.
Another factor affecting prices was a report by the Financial Times which proved that Russia was selling crude oil to India despite the fact that Indian buyers were abiding by the price cap set by the G7.
The Kremlin has repeatedly said it will not sell out to countries that follow the G7 initiative, and the report said it would not be able to follow through on threats to curb output as the cost of financing the war in Ukraine continues to rise. . Separately on Friday, Russia’s central bank warned that the Kremlin’s mobilization of another 300,000 earlier in the fall had worsened an already existing shortage of skilled labor, posing a risk to future growth.