Graphic: Take Five: Ready for that Santa rally?

China Reinsurance (Group)

02/12/2022 07:05

Dec 2 (Reuters) - Swiss lender Credit Suisse faces a
litmus test over its rights issue, just one several trials
markets must work through between now and year-end even if some
are already gearing up for festive cheer.
    U.S. data will provide a reality check on the shifting
nature of inflation while policy makers at Australia's central
bank and OPEC+ ministers are due to meet.    
    Here's a look at the week ahead in markets from Kevin
Buckland in Tokyo, Pablo Mayo Cerqueiro, Dhara Ranasinghe and
Karin Strohecker in London, and Ira Iosebashvili in New York.
    1/FRANC DISCUSSION
    Credit Suisse executives may need to sit down for an honest
chat about whether the bank's latest strategic plan is enough to
rally investors.
    Shares in the Zurich-based group hit new lows in recent days
as shareholders were asked to pump about 2.2 billion Swiss
francs into a restructuring programme aimed at reigning in its
embattled investment bank.
    The moment of reckoning will come on Thursday when the
rights issue closes, potentially leaving the underwriting banks
with a big chunk of leftover shares in their books.
    As one fund manager put it, there are many other banks
trading at discounted valuations with a clearer profitability
outlook. Investors face a tough choice.   
    2/DON'T SLACK OFF YET
    In a year full of twists and turns, markets know not to take
any signs of calm for granted. 
    Mainland China's biggest wave of civil disobedience since
the 1989 Tiananmen protests is the latest curveball thrown at
markets. Its impact on Beijing's stringent COVID-19 policies and
re-opening of the world's No. 2 economy will be watched closely.
    And with the Federal Reserve, European Central Bank and Bank
of England meeting in coming weeks, the drama isn't over.
Speculation about how quickly a peak in interest rates will come
remains in focus.
    For some, the notion of peak rates, peak inflation and
China's reopening is reason enough for cheer. Emerging stocks
just had their best month since 2009. After months of pain
inflicted by high inflation and aggressive rate increases,
perhaps it's time to bring on the Santa rally.    
    3/SHIFTING INFLATION
    Monday's U.S. service sector data will provide a signpost on
how the economy is faring given 375 basis points of Federal
Reserve rate increases to fight decade-high inflation.
    October's reading showed that businesses continued to face
higher prices for inputs even as the service industry grew at
its slowest pace in nearly 2 1/2 years, confirming inflation was
shifting to services from goods.
    Signs of this trend intensifying could exacerbate worries
that higher prices may be more stubborn than expected despite
the Fed's all-out efforts.
    That shift has also been on Fed chair Jerome Powell's mind,
adding to concerns over a tight labour market that will have to
be brought back into balance.
    4/TAKING A BREAK DOWN UNDER 
    The Reserve Bank of Australia is as likely as not to leave
rates right where they are on Tuesday, according to traders
emboldened by signs of a peak in price pressures.
    Inflation unexpectedly slowed in October, and quite sharply,
leading money markets to bet it is a coin toss between a pause
in the cash rate at 2.85% or another quarter-point bump.
 0#RBAWATCH 
    Economists are more confident, unanimously picking an
increase. But some now say a move in December could be the last
for this cycle.
    That wouldn't necessarily cut short a rally in  Aussie
dollar, which recently has been driven more by China's
re-opening hopes and a retreating greenback than the RBA.
    5/OPEC GOES VIRTUAL 
    Representatives from OPEC+ crude producers meet on Sunday to
discuss output targets for the world's top producers were
expected to gather in person in Vienna for only the second time
since the pandemic.
    A recent decision to meet online instead has raised doubts
over whether the group will decide to deliver more supply cuts
or leave policy unchanged. The meeting comes as markets are
bracing for a pending European Union deal over the price cap on
Russian oil, as well as a Dec. 5 deadline imposed by the bloc
for a full embargo on purchases of Moscow's seaborne crude. 
    China's COVID lockdowns have added to pressure on demand and
prices. Latest polls predict Brent oil prices will hold above
the $100 level a barrel for the rest of 2022, but tick lower to
around $93 next year as economic concerns prevail.
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Credit Suisse goes off piste    https://tmsnrt.rs/3VEaNjC
Emerging stocks bounce back in November    https://tmsnrt.rs/3Vy6dn4
U.S. services sector growth    https://tmsnrt.rs/3FeQu75
Raise or pause?    https://tmsnrt.rs/3VJhDnW
Reduced output    https://tmsnrt.rs/3FioZcT
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Compiled by Karin Strohecker; Graphics by Vincent Flasseur,
Sumanta Sen, Pasit Kongkunakornkul, Vineet Sachdev and Kripa
Jayaram; Editing by Gerry Doyle)
 ((karin.strohecker@thomsonreuters.com; +442075427262; Reuters
Messaging: karin.strohecker.reuters.com@reuters.net))