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Market Update December 28, 2022 By Daniel Ang

On Wednesday, December 28, 2022, the stock market saw mixed results as the S&P 500 and the Nasdaq closed lower, while the Dow Jones Industrial Average rose. The decline in the S&P 500 and the Nasdaq was due in part to the poor performance of Tesla, whose shares plummeted 11% after announcing a temporary halt to production at its Shanghai gigafactory. This marked the company’s longest losing streak since 2018 and caused it to fall out of the top 10 companies in the S&P 500 Index.

Market Update December 28, 2022 by Daniel Ang

Tesla’s problems have been compounded by the 69% drop in its value this year due to investor jitters caused by Elon Musk’s tweets and other online antics. The electric vehicle maker’s struggles go beyond just slowing demand, as demonstrated by the recent production halt and the significant discount offered to US consumers to take delivery of its two highest-volume models before the end of the year.

In addition to the impact of Tesla’s performance, the market was also influenced by economic data releases. The advance goods US trade deficit for November narrowed to $83.35 billion, a decrease from the previous month’s $98.8 billion. However, a separate report indicated continued struggles in the housing market as home prices fell under the pressure of rising mortgage rates.

China has announced that it will relax its strict coronavirus restrictions on entry into the country starting January 8th. This marks a significant change from the current practice, in which all arrivals, including foreign visitors and Chinese citizens, are tested by hazmat-suit-clad workers and quarantined in hotels for several days. Under the new policies, arrivals with negative nucleic acid tests will be able to “enter society” and will not have their movements restricted by China’s digital health passes. The restrictions on the number of flights allowed into Chinese airports will also be eased. Outbound travel for Chinese citizens, who have largely been unable to leave the country since 2020, will be “resumed in an orderly manner.” It is not yet clear if China will reopen for tourism. The new policies are intended to facilitate travel for business, study, and family reunions.

In foreign exchange markets, the US dollar was relatively stable as investors processed news of China’s easing of quarantine requirements for inbound travelers. The move was seen as a potential economic boost, but investors remained cautious due to reports of increasing infection rates in the country. The Dollar Index rose slightly, while the euro saw a small increase to 1.0639 and the British pound fell by 0.28% to 1.2026. The USD/JPY pair saw a more significant increase of 0.49% to 133.54.

Oil prices were mixed at settlement, with the restart of some US energy plants offsetting the hope for a recovery in demand following China’s easing of restrictions. WTI crude settled down 0.04% at $79.53 per barrel, while Brent ended the day up 0.49% at $84.33. Gold prices saw a significant increase, reaching their highest level in six months, as traders were optimistic about China’s decision to further ease COVID-19 restrictions. Spot gold added 0.8% to $1,812.58 per ounce, while COMEX gold futures gained 1.12% to $1,816.00 per ounce.

The cryptocurrency market also saw mixed results on Wednesday. Bitcoin rose 0.25% to trade as high as $16,914 before closing the day at $16,700. Ether lost 1.37% to trade at $1,210.37, while XRP increased 0.41% and was trading at $0.3679. Cardano saw a decline of 1.89% to $0.2600, and Polygon was down 1.13% at $0.8060. Dogecoin slipped 2.99% to trade at $0.0736.

Overall, Wednesday’s market activity was influenced by a variety of factors, including the performance of individual companies, economic data releases, and investor sentiment. As the holiday-shortened week comes to a close, traders and investors will be closely watching for any further developments that could impact market performance.

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