Consumer confidence can take a turn

During an economic expansion, consumer confidence is usually high. Consumers accordingly tend to spend more than they do at other times, especially for bigger-ticket items and durable goods (e.g., automobiles and household appliances). The increase in consumer spending in turn helps the economy sustain its expansion.

US stocks pared strong gains since the afternoon to close near a flatline on Tuesday, failing to rebound significantly from four straight sessions in the red due to losses in high-growth and technology stocks.

MARKETS

US stocks pared strong gains since the afternoon to close near a flatline on Tuesday, failing to rebound significantly from four straight sessions in the red due to losses in high-growth and technology stocks. The Nasdaq 100 underperformed other benchmarks and posted slight losses, pressured by high Treasury yields after the Bank of Japan raised the upper bound on the 10-year JGB yield and magnified aggressive monetary tightening momentum of the major central banks.

Meanwhile, new data showed that building permits collapsed 11.2% month-on-month in November, the most significant monthly drop since the pandemic-induced hit. Among the individual actions, Tesla sank more than 7% amid lingering concerns about lower demand in China and CEO Elon Musk's leadership on Twitter. Elsewhere, the Dow added 90 points and the S&P closed marginally above flatline as the US dollar's decline benefited export prospects for energy producers and bullion miners.

Meanwhile, the Shanghai Composite rose 0.1% to 3,080 pts while the Shenzhen Component gained 0.2% to 10,970 pts early Wednesday, rising from three-week lows, with stocks related to the consumption leading the rebound. Investors also continued to digest the latest pro-growth measures from the Chinese government in an effort to boost the economy, though concerns over a resurgence of Covid outbreaks continued to weigh on the market.

COMMODITIES

Gold: Gold held its recent advance above $1,810 an ounce on Wednesday, near its highest levels in six months, benefiting mainly from recent dollar weakness following a surprise aggressive move by the Bank of Japan. The metal was also buoyed by fears that further monetary tightening by the Federal Reserve could push the world's largest economy into recession in 2023. Some analysts speculate that a sharp economic downturn in the United States next year could force the Fed to change policy sooner than expected, a bullish case for gold. Still, Fed Chairman Jerome Powell said last week that the central bank will offer more rate hikes next year despite economic risks.

FOREIGN EXCHANGE

Euro:The euro traded near a six-month high of $1.06 in mid-December as investors continue to gauge the hawkish outlook for the central bank, specifically the ECB and Fed, and an impending recession in Europe. The common currency is also benefiting from the general weakness of the dollar as inflationary pressures in the US continue to ease. Last week, the ECB raised interest rates by 50bp as expected, reiterating that more hikes will follow and outlining plans for quantitative tightening.

The central bank also revised its inflation forecasts up, while the growth outlook was revised down. In the meantime, The new PMIs for December showed that private sector activity in the euro area contracted at the slowest pace in four months, suggesting that the recession could be a little less severe than previously thought. However, so far this year, the euro has lost almost 6% against the dollar.

Chilean Peso: The dollar peso is locked between the levels of $875 and $895 at the moment and, apparently, the downward trend continues to strengthen, which is making the peso gain more value. For now, close to the end of the year, all that remains is to wait for the global context that is heading towards a global recession that originated due to high inflation and at the moment due to high interest rates from central banks at an international level, which it is driving investors out of equities and into fixed income. For today, it is most likely that we will continue to see a downward dollar because in 4-hour charts it is giving that impression and it has already been a couple of sessions in which it has not been able to break the $895 levels.

CRYPTO MARKET

Bitcoin remains at levels below $17,000 usd and has lateralized below that area, for now we will wait for the consumer confidence data that will be delivered at 12 noon Chile time. We will see if this data is powerful enough to see a recovery in the indices as well as see a coupling with the crypto market. On the other hand, Uniswap will allow users to buy cryptocurrencies with debit and credit cards. Users of the decentralized exchange will also be able to use bank transfers to buy cryptocurrencies.

Decentralized exchange Uniswap has partnered with fintech company Moonpay to allow users to purchase cryptocurrency on its web app using debit cards, credit cards, and bank transfers. The bank transfer option is rolling out to users in most US states, Brazil, the UK, and the Single European Payments Arena, also known as SEPA. In the announcement made on Dec. 20, Uniswap shared that its users will now be able to convert fiat to cryptocurrencies on the Ethereum, Polygon, Optimism, and Artibrum mainnet in a matter of minutes.