Happy New Year! Last year, the majority of the economy and market reopened as the COVID-19 fear effect faded and people became more aware of the new normal. People from all walks of life have returned to the streets to live their lives, but most are still cautious, wearing masks on public transportation and in crowded places. The US market recorded its first losses since 2018, and the outlook for 2023 is bleak for the first half and hopeful for the other.
EQUITY
The first trading day for most major markets in Asia was tumultuous as investors tried to understand the conflicting impacts of China's economic recovery and the resurgence of COVID-19. While China's factory activity shrank at the fastest pace in almost three years due to the virus, traders seemed to consider the longer-term prospects for the country's economy, leading the Chinese yuan to rise to a four-month high and stocks in Hong Kong, Seoul, and Shanghai to recover from early losses.
GOLD
Gold is on the rise as investors bet that the Federal Reserve will take it slow with interest rate hikes, a decision that is expected to weigh on the dollar and Treasury yields. In contrast, last year's higher interest rates were a heavy burden for gold. It looks like the precious metal is finally getting a break and can rest easy, unlike those poor Treasury yields constantly being chased by the Fed.
OIL
Oil prices are showing some indecision as the market grapples with concerns about demand and the outlook for the global economy. While a weak manufacturing survey from China has put some pressure on prices, the recent influx of funds into commodities, particularly Brent, suggests that investors are still bullish on the market.
CURRENCY
The U.S. dollar is making gains ahead of a big week for economic data, with markets keeping a close eye on the Federal Reserve minutes and U.S. jobs report. Meanwhile, the Japanese yen is on the rise as investors speculate about the possibility of tighter monetary policy, leading to a weaker dollar. It looks like the race for currency supremacy is heating up, but we'll have to wait and see if the greenback can hold onto its lead.
