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Astute Market Overview - 13th December 2022


So, what happened last week? In the first full week of December the temperature dropped across the UK, and a big game on the weekend saw the England football squad head home. But there was more to the week than that.

Welcome to this Astute Market Overview of the last week.

Turning to China, following protests over lockdown measures across the country in recent weeks, it was reported that China’s National Health Commission issued a vast loosening of covid measures last week, including changes to lockdown, quarantine and testing measures.

China previously had a zero-covid policy in place for much of the pandemic, one of the strictest covid policies anywhere across the world, involving lockdowns that were both strict and plentiful, in a zero tolerance bid to stop the infection. This zero-covid policy has caused compressions in markets in the region in 2022, i.e. many investments with exposure to Chinese companies have dropped over the year. Due to this, investors watch announcements in China closely, for the potential of a bounce-back in markets as normality is slowly resumed, and consumer demand is released.

Brent crude oil is one of the main price benchmarks for oil. The price of a barrel of oil tumbled across the week, and ended the week sat at around $76 – a 2022 low, from a high of over $125 per barrel towards the start of the year, following the invasion of Ukraine. We have seen an economic slowdown in many regions, which points to a weakened demand outlook for oil.

Oil is instrumental in the manufacturing of many household goods, from the tyres on your bike to the paint on your walls, from the mobile phone in your pocket to the toothpaste in your bathroom cabinet. Given its vast usage, the lower price of oil relative to levels earlier in the year should help to ease some pressures behind inflation.

This week there is one story that will dominate the economic headlines: if 2022 has been a piece of theatre for interest rates and inflation, then the big finale for the year is to come later this week.

It will be a bumper week, filled with central bank meetings and inflation. Specifically, we’ll be watching out for:

  • The release of the latest US CPI inflation reading, following by an interest rate decision in the US
  • An interest rate decision for the European Central Bank, followed by eurozone CPI inflation later in the week, and
  • UK CPI inflation, followed by an interest rate decision from the Bank of England.

Anything other than an interest rate increase from all three central banks will come as a surprise.

See you then.

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