Global Markets Advance After Inflation Eased, SBF Denied Bail

Barry Adams
13 Dec, 2022
New York City

Stocks advanced on Wall Street after November inflation cooled and raised the prospect of a lesser hawkish stance from the Federal Reserve Bank. 

Consumer prices rose at a slower pace in November after energy prices dropped sharply but housing inflation remained elevated. 

Core rate of inflation also slowed, raising the prospect of a moderate interest rate increase on Wednesday. 

Markets are widely anticipating rate increase moderation at the conclusion of a two-day meeting of the Federal Reserve's policy committee on Wednesday. 

Despite the cooling of inflation in November, inflation is still significantly above the Fed's preferred rate of 2.0%. 

Moreover, the last four rate hikes have had no meaningful impact on inflation and the Fed's fight against rapid price increases may continue for a while. 

The yield on 2-year Treasury notes declined sharply to a 3-month low of 4.21%, 10-year Treasury notes fell to 3.50% and 30-year U.S. bonds dropped to 3.54%. 

 

Market Indexes Trim Earlier Gains 

Tech stocks led the market advance on the hopes that future rate hikes may be moderate after inflation cooled in November. 

The S&P 500 index soared 0.7% to 4,019.65 and the Nasdaq Composite index jumped 1.01% to 11,256.81. 

 

Oil and Natural Gas Rebounds 

Crude oil prices in New York and London rose amid optimism about China's easing of mobility restrictions and unwinding of stringent isolation requirements for coronavirus infected patients.  

Crude oil increased $1.88 to $75.05 a barrel and natural gas futures added 37 cents to $6.97 a thermal unit. 

 

Consumer Inflation Eased In November 

The Consumer Price Index increased 7.1% in November from a year ago and rose 0.1% from October, the U.S. Bureau of Labor Statistics reported Tuesday.

The monthly increase data are adjusted for seasonal factors but annual pace of change is unadjusted for seasonal variations.

The annual pace of increase was the smallest 12-month increase since the period ending in December 2021.

The core inflation, excluding food and energy, slowed to 6.0% on an annual basis and eased to 0.2% on a monthly basis in November.

Despite the cooling of inflation, prices still rose at elevated levels after the decline in energy prices were offset by the increase in housing costs.

The energy index decreased 1.6% over the month as  the gasoline index, the natural gas index, and the electricity index all declined.

The energy index increased 13.1% over the 12-month period.

The shelter increased at a slower pace of 0.6% over the month after rising 0.8% in October and slowed to 7.1% increase on an annual basis.

 

U.S. Stock Movers 

Oracle Corporation rose 2.7% to $83.43 after the database developer said revenue in the fiscal 2023 second quarter rose 18% to $12.3 billion. 

The company swung to a net income of $1.7 billion from a loss of $1.2 billion or 63 cents from 46 cents loss a share a year ago.

Boeing Company rose 1.2% to $188.52 after United Airlines placed an order to purchase 200 jet planes with an option to acquire more planes in future. 

United Airlines said it plans to purchase 100 787 Boeing Dreamliners and 100 Boeing 737 Max jets as the company replaces its aging fleet.

 The order is worth $43 billion at list prices.

 

Cryptocurrencies and Assets Under Pressure 

Cryptocurrencies and publicly listed companies were in focus after the Bahamas police arrested the former chief executive of the fallen crypto exchange FTX at the request of federal prosecutors in New York.

Sam Bankman Fried faces criminal charges including defrauding investors and wire fraud charges and a separate set of charges from the U.S. Securities and Exchange Commission. 

In addition, the U.S. regulators charged SBF with misappropriating client assets, making illegal political donations and in all eight criminal charges. 

The 30-year old founder of the crypto exchange was denied bail in the Bahamas and he told a judge in the Bahamas that he was not waiving his right to fight extradition to the U.S.  

Coinbase Global declined 1.1% to $42.15 and the Bitcoin and other cryptocurrencies rose between 2% and 4%. 

Robinhood Markets increased 1.1% to $9.69. 

Binance, the rival crypto exchange, has seen withdrawal requests of as much as $1.9 billion in the last 24 hours,   blockchain data tracker Nansen said on Tuesday. 

 

Rate Moderation Hopes Lift Europe Indexes 

Market averages in Europe soared following the easing of inflation in the U.S. and resource stocks advanced amid optimism about China's unwinding of coronavirus restrictions. 

Benchmark indexes shot up after the consumer prices in November rose at a slower pace of 7.1% in November following 7.7% in October, the U.S. Bureau of Labor Statistics reported Wednesday. 

Monthly rate of inflation eased to 0.1% in November from 0.4% in October after energy prices declined, food inflation moderated but housing prices remained elevated. 

The inflation cooled more than expected stoking optimism that the U.S. Federal Reserve may moderate its rate hike to 50 basis points after the end of the policy meeting tomorrow and the European Central Bank may also moderate its rate hike to 50 basis points on Thursday. 

The bond yields traded down and the euro and the British pound rebounded to multi-month highs. 

The 10-year German Bund yield declined to 1.918%, French bonds dropped to 2.39%, the UK gilts eased to 3.304% and Italian bonds inched lower to 3.804%. 

The euro rebounded to the level last seen in mid-June and traded up to $1.645 and the British pound gained to close at $1.235. 

 

Europe Market Indexes Soar

European market indexes advanced on the hopes of rate moderation by the Federal Reserve and the Bank of England tomorrow and the European Central Bank on Thursday. 

The DAX index increased 1.3% to 14,497.89, the CAC-40 index added 1.4% to 6,744.98 and the FTSE 100 index advanced 0.7% to 7,502.89. 

 

German Consumer Price Inflation Eases 

Consumer price index in Germany eased to 10.0% in November from 10.4% in October, the Federal Statistics Office said Tuesday. 

"Despite a slight easing in energy prices, the inflation rate remains at a high level of +0.0%," says Dr. Georg Thiel, President of the Federal Statistical Office.