November 22, 2022

“The US dollar weakened against its peers this morning and Treasury yields declined. Meanwhile, companies across Europe are looking to sell bonds after months of turbulence in the markets as investors start warming up to riskier debts.”

Sam Cornford, Partner – Head of Trading

Main Headlines

The Biden administration announced preliminary approval to spend up to $1.1 billion to help keep California’s last operating nuclear power plant running. The Energy Department said it was creating a path forward for the Diablo Canyon Power Plant on California’s central coast to remain open. The plant was chosen in the first round of funding for the administration’s new civil nuclear credit program, intended to bail out financially distressed owners or operators of nuclear power reactors. The program is part of Biden’s effort to cut planet-warming greenhouse gas emissions in half by 2030, compared with 2005 levels.

UK public sector borrowing rose last month as the government’s measures to shield households and businesses from soaring energy prices took effect. Public sector net borrowing was £13.5bn in October, £4.4bn more than in the same month last year and the fourth highest October borrowing figure since monthly records began in 1993, according to data published by the Office for National Statistics on Tuesday. Government measures including the energy bills support scheme, the energy price guarantee, and the energy bill relief scheme, came into effect last month to help businesses and consumers with soaring energy costs.

GBP

Sterling is well bid against most major currencies overnight. One of Europe’s leading meat companies is to build a £100mn production facility in the UK as the country’s appetite for bacon surges. Danish Crown will build the plant in Rochdale, north of Manchester, creating more than 300 jobs in the second half of next year. The government’s flagship “Brexit freedoms” bill, intended to purge swaths of EU law from the British statute book, has been slammed by official experts, who warned that an impact assessment signed off by ministers was “not fit for purpose.”

EUR

Euro is stronger against the dollar and weaker against sterling this morning. Italy’s new right-wing government signed off on its first budget today, a package focusing on curbing sky-high energy bills and cutting taxes from next year for payroll workers and the self-employed. German industrial production is on track to rise slightly this year thanks to order backlogs but the outlook for 2023 is gloomy as high energy prices and geopolitical uncertainties hurt businesses, the BDI industry association said today.

USD

The dollar is weaker than most major currencies in the early morning trade. The US, fresh from reversing its 30 years of opposition to a “loss and damage” fund for poorer countries suffering the worst impacts of the climate crisis, has signalled that its longstanding image as global climate villain should now be pinned on China. US vice-president, Kamala Harris, visited the Philippine Island of Palawan on the edge of the disputed South China Sea in a bold demonstration of how Washington and Manila are reinvigorating their security alliance as they guard against an increasingly assertive Beijing.

Markets

European shares advanced, boosted by oil majors as crude prices recovered. US futures gained as investors parsed comments from Federal Reserve officials to assess the potential for slower interest rate hikes. The Stoxx Europe 600 Index climbed 0.7%, with Shell Plc and BP Plc among the biggest drivers of the gains. Contracts on the S&P 500 and the Nasdaq 100 were both higher, reversing earlier losses. In US premarket trading, Zoom Video Communications Inc. fell after reporting slower sales and trimming its full-year revenue forecast.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: UK Oct. Public Finances
10:00 a.m.: ECB’s Holzmann speaks
11:00 a.m.: OECD Economic Outlook
11:15 a.m.: ECB’s Rehn speaks
2:00 p.m.: Hungary rate decision
4:00 p.m.: Euro-area Nov. Consumer Confidence
5:00 p.m.: Fed’s Mester speaks
7:00 p.m.: ECB’s Nagel speaks
8:15 p.m.: Fed’s George speaks
8:45 p.m.: Fed’s Bullard speaks

Corporate Events

Earnings include Babcock, Homeserve, Cranswick, HP Inc., Best Buy, Warner Music

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