Daily Market Outlook, January 26, 2023

Asian Markets Back Online & In Buoyant Spirits With Hong Kong Scaling 7 Month Highs
Asian markets are trading with a mixed tone, the standout exception is the Hong Kong market which has opened with a strong risk on posture, as the Hang Seng printed fresh seven month highs. The handover from Wall Street was mixed, however all the major indices staged significant intraday reversals from lows to close broadly unchanged on the session, overnight Tesla earnings provided support for bulls as earnings and revenues topped estimates, although margins contracted, Tesla shares were seen up 5.5% in post market trade.
With no econ data of note for European trading, investor focus shifts to the US session, where US Q4 GDP is set to be released this afternoon. Markets expect the print to confirm a second successive quarter of growth reversing declines witnessed in the first half of 2022, softness seen in some December inputs suggests that growth may be lower than previously expected, however, growth is expected to confirm a 2.2-2.6% annualised uptick quarter over quarter. The Fed is deemed to still view this as a hotter than wanted levels of activity, the policy response to this level of growth will likely see the FOMC maintain a cautious tone at the Feb 1 meeting, with markets fully pricing a 0.25bps move, any upside surprise to the data would like see markets rapidly repricing a 50bps move, the data comes during the Fed black out period so markets wont get any response from Fed officials.
Other US data of note comes in the form of weekly jobless claims, expected show a small uptick, signalling slight softness in the employment outlook, another round of housing data is expected to confirm continued pressure in the sector with new homes sales believed to cool further in December dropping from 640k to 617k
Markets-wise, European bourses have opened on the front foot, buoyed by Tesla earnings and the upbeat outlook provided by Tesla CEO Musk, robust earnings out of STMicroelectronics were well received, helping cement the constructive opening to European trade with the FTSE & Eurostoxx in the green. US equity futures are also in positive territory as the Dollar remains pressured below the 102 level, supporting EUR and GBP. Crude continues to cling to the $80 handle with Gold closing on the 1950 target.