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The US stock indices declined on Monday after strong data on manufacturing orders and the services sector combined with signs of a robust labor market heightened fears of tight US inflation. As the stock market closed Monday, the Dow Jones Index (US30) decreased by 1.40%, and the S&P500 Index (US500) lost 1.79%. The technology index Nasdaq (US100) was down 1.93% yesterday. All three indices closed negative.

The Fed is expected to slow the interest rate changes at its meeting next week, but the latest data shows the central bank will have to hold rates high for quite some time. Analysts predict that the Fed will raise rates until spring 2023, after which the bank will take a pause until late 2023.

Apple is considering a partial shift of production to India as US-China relations deteriorate and anti-Chinese restrictions disrupt supply chains.

Tesla shares fell by 6% yesterday as the company intends to cut production of its Model Y car by more than 20% at its Gigafactory in Shanghai.

Stock markets in Europe were mostly down yesterday. Germany's DAX (DE30) decreased by 0.56%, France's CAC 40 (FR 40) lost 0.67%, Spain's IBEX 35 (ES35) fell by 0.15%, and the British FTSE 100 (UK100) closed by 0.15% on Monday.

European stocks fell on Monday after data showing a decline in business activity in the Eurozone heightened fears of a recession. According to ECB Governing Council member Gabriel Makhlouf, Europe's central bank is likely to raise interest rates by 0.5% this month. Makhlouf considers the half-point move the "minimum necessary" to keep inflation moving back toward the 2% target. Makhlouf also believes that Europe will likely suffer a "technical recession" this quarter and in the first three months of 2023, but that rate hikes should continue.

The British Retail Consortium said the value of in-store purchases rose 4.1% year-over-year last month, the highest since January. According to the BRC, the cost of food sales rose 5.8% in three months, less than half of the sector's inflation rate of 12.4%.

Gold prices dipped below key levels on Tuesday, and metals markets came under renewed pressure as stronger-than-expected US data strengthened the dollar and increased uncertainty about the strength of the US economy and the Federal Reserve's response to it. Gold and silver are inversely correlated to the US dollar Index and government bond yields.

Europe's ban on Russian oil and price caps dominated energy news headlines on Monday, pushing oil quotes lower. This oil dynamic may persist in the medium term unless OPEC+ countries decide to cut oil production to reduce supply.

The Reserve Bank of Australia (RBA) raised its benchmark rate by 25 basis points to 3.10%, as expected, and made it clear that future rate hikes will largely depend on inflation and economic growth. The RBA expects inflation to rise further in the near term, while economic growth is likely to slow. Consumer inflation, which rose at an annualized rate of 6.9% in November, is projected to be around 8% by the end of the year. The RBA predicts that CPI inflation will be slightly above 3% by 2024. The economic slowdown in China, Australia's largest trading partner, has hit its economy hard as mainland demand for commodity exports has declined.

• S&P 500 (F) (US500) 3,998.84 −72.86  ((−1.79%)
• Dow Jones (US30) 33,947.10 −482.78 (−1.40%)
• DAX (DE40) 14,447.61 −81.78  (−0.56%)
• FTSE 100 (UK100) 7,567.54 +11.31 (+0.15%)
• USD Index 105.31 +0.76 (+0.73%)

Important events for today:

• Australia RBA Interest Rate Decision at 05:30 (GMT+3);
• Australia RBA Rate Statement at 05:30 (GMT+3);
• UK Construction PMI (m/m) at 11:30 (GMT+3).

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