Volatility declines, investors shift to safe-haven assets ahead of New Year holidays

The US Real Estate Market continues to show signs of weakness. Pending home sales fell in all regions this month. On a year-over-year basis, unfinished home sales fell by 38.60%, the largest year-over-year drop on record. Pending home sales are often seen as a leading indicator of purchases of existing homes, given that real estate contracts are usually entered into a month or two before they are sold.

Shares of Southwest Airlines (LUV) decreased by 3% after a warning that airlines continue to cancel flights due to bad weather. Shares of AAL (AAL) and DAL (DAL) were down more than 1% yesterday.

Tesla (TSLA) plans to cut production at its Shanghai plant due to an increase in the incidence of coronavirus.

Analysts believe that the energy crisis will lead to a significant slowdown of the European economy in 2023. At the same time, real estate prices will collapse, and unemployment will rise substantially. The main risk comes from the energy crisis amid falling temperatures in winter. And suppose Europe manages to get through this winter without significant problems in the energy system. In that case, it will be possible to say with certainty that the peak of inflation is over.

The EU replaced Russian and Ukrainian steel with supplies from Taiwan and South Korea.

Oil prices fell Wednesday because of the likelihood that China’s easing of pandemic restrictions will boost demand for fuel. China said it would stop requiring quarantine for arriving travelers starting January 8, an important step toward easing strict restrictions. But falling oil inventories could bring back bullish sentiment in the oil market. A preliminary Reuters poll showed that US crude inventories fell by 1.6 million barrels last week.

Gold and silver are inversely correlated to the dollar index and US government bond yields. As monetary policy tightens, the dollar index and government bond yields go up, and gold and silver prices go down, which they have been doing for 2022. But the first signs of a slowdown in rate hikes have returned investor interest in precious metals. The US Federal Reserve will peak rates in 2023, potentially setting the stage for a new medium-term or even long-term uptrend in gold.

Asian indices traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.41%, China’s FTSE China A50 (CHA50) was down by 0.08%, India’s NIFTY 50 (IND50) lost 0.05%, Hong Kong’s Hang Seng (HK50) jumped by 1.56%, and S&P/ASX 200 (AU200) closed down by 0.3%.

Chinese energy companies began constructing a power plant with a capacity of 16 million kW in northern China. The solar and wind power project will be the largest power plant of its kind built in the desert.