The Early

The marginal buyers of equities appear to have disappeared for now; they may be preoccupied weighing up the potential conflicting influences on market performance through 2023.

Eurozone equities were unable to hold onto a promising start, grinding steadily lower through the session to another negative close. Sanofi +6% helped health care +1.6% to the top of Euro Stoxx the list, but energy -2.0% and telecoms -1.1% struggled.

The FTSE 100 was propped up by GSK +10%, after potential US lawsuits were dismissed in a Florida court. So the pharmas sector added +2.7%, but oil & gas -2.0% and mining -1.9% were under pressure. Only consumer goods +0.2% escaped the markdown across our PHySiCS mid/small cap sectors and the style factors have also suffered this week, with only value (fractionally) ahead long/short.

Overnight. Five straight daily declines for the S&P (just) as the deeply inverted US Treasury yield curve continues to signal a sharp downturn. It was a day of narrow sector moves, ranging between health care +0.9% and communications -0.9%. The VIX touched a two-week high. HK was the standout in Asia as the authorities consider further loosening of Covid rules. A mixed picture elsewhere as the US dollar and yields rose slightly. Oil steadied after logging YTD lows yesterday on the combination of building inventories and weaker demand. Another subdued open is likely for Europe.

Early numbers. Dow 0.00%, S&P -0.19%, NASDAQ -0.51%, Russell 2k -0.31%, VIX 22.68, US 10-yr 3.45%; Nikkei -0.40%, Hang Seng +2.72%, Shanghai Comp -0.24%; £=$1.2193, £=€1.1600, Brent $77.57/bbl, Gold $1785.66, FTSE 100 indication +6 (at 6.30 UK).

Macro: too much to ask

The November update from the Halifax confirmed the impact of macro uncertainty and stretched affordability on UK house prices. The average price fell to £285.6k; -2.3% MoM, -1.0% QoQ and -4.7% YoY. It was the 3rd straight monthly fall, the biggest since October 2008. Annual inflation eased in every region bar NE England. "The market may now be going through a process of normalisation... the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023.”

The November RICS survey released overnight underlined the breadth of the decline as its headline price balance of -25% was the weakest since May 2020., with the 12m ahead measure at -61%.

Eurozone Q3 GDP was revised upwards to +0.3% QoQ, +2.3% YoY (flash +0.2%, QoQ, +2.1% YoY). Household spending and GFCF were the main positive contributors and Ireland +2.3% QoQ the strongest nation. That marginal expansion will be followed by a contraction in Q4.

Japan's Q3 GDP contraction was revised to -0.8% QoQ, with inventories the main swing factor.

Today’s events. No major data.