HomeContributorsFundamental AnalysisRisk Aversion Sentiment Continues To Percolate

Risk Aversion Sentiment Continues To Percolate


  • Risk aversion sentiment on rapid spread of the omicron coronavirus variant and more potential restrictions; String of new Covid-related restrictions planned in Europe, Moderna prelim booster data helps revers some sentiment.
  • UK Brexit Frost resignation highlights concerns of chaos within PM Johnson’s govt.
  • Chinese property sector remains in focus as PBoC trims its 1-year LPR for the 1st time since the early stages of the pandemic.


  • China PBOC Monthly Loan Prime Rate Setting Operation cut the 1-year rate for the 1st time since Apr 2020 by 5bps to 3.80%; maintained rate on 5-year LPR at 4.65%.
  • Chinese property developer China Estates [127.HK] failed to receive sufficient shareholder support to take it private of an offer price of HK$4.00/shr.
  • Chinese property developer Kaisa [1638.HK] missed total of $118.8M interest payments for bonds due 2021, 2023, 2025 notes and $400M in prinicpal payments for 2021 notes.
  • Hong Kong Legislative Council elections saw just 30.2% of voter turnout (lowest on record), all candidates picked by China Communist Party and election under new rules.


  • Netherlands PM Rutte announced that a lockdowns was unavoidable due to a 5th wave of the pandemic.
  • UK Health Sec Javid refused to rule out further coronavirus containment measures in England before Christmas.
  • Italy govt said to be contemplating new virus restrictions in order to avoid a surge in cases.
  • German govt said to be bracing for tighter contact restrictions to stem virus spread.


  • Uk Brexit Min Frost resigned. Liz Truss to take over in position. Frosted noted that confident that Brexit was secured but had concerns about the government’s direction.
  • EU Commissioner McGuiness: On Brexit Min Frosts resignation: Noted that the name will change but the issues would not . EU planning to buildon progress already made.
  • ECB’s Holzmann (Austria) stated that could quickly assess if inflation was falling as expected in 2022 and adjust monetary policy accordingly.
  • Turkey President Erdogan renewed pledges to continued pace of rate cuts; President referenced Islamic teachings on interest rate (Note: Turkey TRY currency (Lira) weakens beyond the 17 handle against the USD (fresh record lows).


  • Sen Manchin (D-VW) stated that he would not support Biden’s “Build Back Better” legislation.
  • House Speaker Pelosi noted that Build Back Better package won’t have passed the law by year end but hopeful we’ll soon reach an agreement soon and pass the legislation asap next year.
  • Goldman Sachs analyst lowers US GDP Q1 outlook to 2% (prior 3%) and Q2 to 3% (prior 3.5%).

Speakers/Fixed income/FX/Commodities/Erratum


  • Indices [Stoxx600-1.5% at #, FTSE -1.7% at 7,146, DAX -2.1% at 15,204, CAC-40 -1.4% at 6,833, IBEX-35 -2.1% at 8,140, FTSE MIB -2.3% at 25,997, SMI -1.0% at 12,588, S&P 500 Futures -1.3%].
  • Market Focal Points/Key Themes: European indices open lower across the board but moderated the losses ab it as the session progressed; omicrong fears blamed for the lack of risk appetite; all sectors start the day in the red, but the least negative ones include telecom and real estata; among sectors leading to the downside are materials and consumer disrectionary; effective date for Ryanair delisting from London trading (continues trading in Ireland); BNP sells its US operations to Bank of Montreal; Osram sells its Fluence unit to Signify; earnings expected during the upcoming US session inclue Nike and Micron Technology.


  • Energy: Vestas VWS.DK -5.2% (price increases).
  • Healthcare: Novo Nordisk NOVOB.DK -10.8% (delay to Wegovy); Genfit GNFT.FR +4.7% (analyst action).
  • Industrials: ArcellorMitall MT.NL -2.8% (analyst action).
  • Technology: BE Semi BESI.NL -3.9% ( Cuts outlook).
  • Telecom: Telecom Italia TIT.IT -2.3% (Former CEO steps down from board).


  • ECB’s De Cos reiterated Council view that unlikely to rate rates in 2022 if inflation behaved as expected.
  • Some ECB members said to have sought explicit acknowledgement of upside risks to inflation in statement but were rebuffed by chief economist Lane.
  • Joachim Nagel picked to run Germany’s Bundesbank (as speculated).
  • Germany Fin Min Lindner stated that Inflation risks increase the importance of stability-oriented monetary policy.
  • Former Brexit Min Frost: Left govt because could not support certain policies; have full admiration for PM Johnson.
  • Poland Central Bank’s Hardt reiterated view of seeing more rate hikes.
  • Ukraine Central Bank Dec Minutes noted that the majority backed the 50bps hike to 9.00%.

Currencies/Fixed income

  • Risk aversion flows put bid into the safe-haven plays of USD and JPY pairs. Greenback trying to build upon recent gains following an increasingly hawkish Fed.
  • EUR/USD off the session lows by mid-day at 1.1260.
  • GBP/USD was testing the 1.32 level in the aftermath of Lord Frost resignation as Brexit Min coupled with concerns that UK could tighten restrictions to contain the spread of the Omicron coronavirus variant.
  • Turkey TRY currency (Lira) weakened beyond the 17 handle against the USD (fresh record lows). Move followed Turkey President Erdogan renewed pledges to continued pace of rate cuts; President referenced Islamic teachings on interest rate.

Economic data

  • (TW) Taiwan Nov Export Orders Y/Y: 13.4% v 5.2%e.
  • (EU) Euro Zone Oct Current Account (seasonally adj): €18.1 v €17.6B prior.
  • (CH) Swiss weekly Total Sight Deposits (CHF): 722.7 v 722.7B prior; Domestic Sight Deposits: 645.7 v 646.8B prior.
  • (PL) Poland Q3 Unemployment Rate: 3.0% v 3.4%e.
  • (PL) Poland Nov Sold Industrial Output M/M: +5.3% v -1.1%e; Y/Y: 15.2% v 8.2%e.
  • (PL) Poland Nov PPI M/M: 1.0% v 2.0% prior; Y/Y: 13.2% v 12.0% prior.
  • (IT) Italy Oct Current Account Balance: €5.5B v €4.7B prior.
  • (PT) Portugal Oct Current Account: +€0.3B v -€0.1B prior.
  • (GR) Greece Oct Current Account Balance: -€0.8B v -€0.2B prior.
  • (BE) Belgium Dec Consumer Confidence: # v 1 prior.

Fixed income issuance

  • None seen.

Looking ahead

  • (CO) Colombia Nov Industrial Confidence: No est v 12.2 prior; Retail Confidence: No est v 41.7 prior.
  • 05:25 (EU) Daily ECB Liquidity Stats.
  • 06:00 (UK) Dec CBI Industrial Trends Total Orders: 20e v 26 prior; Selling Prices: 60e v 67 prior.
  • 06:00 (PT) Portugal Nov PPI M/M: No est v 2.4% prior; Y/Y: No est v 15.9% prior.
  • 06:25 (BR) Brazil Central Bank Weekly Economists Survey.
  • 06:45 (US) Daily Libor Fixing.
  • 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).
  • 08:00 (UK) Daily Baltic Dry Bulk Index.
  • 08:30 (UR) Ukraine Q3 Final GDP Q/Q: No est v 1.4% prelim; Y/Y: No est v 5.4% prelim.
  • 10:00 (US) Nov Leading Index: 0.9%e v 0.9% prior.
  • 10:00 (CO) Colombia Oct Trade Balance: -$1.4Be v -$1.7B prior; Total Imports: 5.7Be v $5.7B prior.
  • 16:00 (KR) South Korea Nov PPI Y/Y: No est v 8.9% prior.
  • 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 108.0 prior.
  • 19:00 (KR) South Korea Dec 1-20th Exports Y/Y: No est v 20.4% prior; Imports Y/Y: No est v 42.3% prior.
  • 19:01 (UK) Dec Lloyds Business Barometer: No est v 40 prior.
  • 19:30 (AU) RBA Dec Minutes.
  • 21:00 (NZ) New Zealand Nov Credit Card Spending M/M: No est v 8.4% prior; Y/Y: No est v -5.6% prior.
  • 23:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills.
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