HSBC Holdings Share News (HSBA)

*
Main U.S. stock indexes red; DJI down >1%
  
* 
All S&P 500 sectors lower: staples weakest group
  
* 
Euro STOXX 600 index up ~0.2%
  
* 
Dollar, gold, bitcoin slip; crude gains
  
* 
U.S. 10-Year Treasury yield slides to ~3.43%
  
 
Welcome to the home for real-time coverage of markets brought to 
you by Reuters reporters. You can share your thoughts with us at 
HUMP-DAY DATA DUMP: RETAIL SALES, PPI, ETC, ETC (1217 EST/1717 GMT) 
A cascade of economic data on Wednesday buried market participants under a mountain of evidence that the Fed's 
restrictive policy rate is working its magic; demand would 
appear to be cooling, dragging inflation down with it.
Receipts at U.S. retailers dropped in December by 1.1%, steeper than the -0.8% consensus and extending 
November's downwardly revised 0.6% drop, a worrisome one-two 
punch amid the crucial holiday shopping season. 
On a granular level, the Commerce Department's report showed broad-based weakness. The 4.6% decline at filling stations was 
to be expected as gas prices dropped, but the 6.6% plunge at 
department stores and a 1.1% slide in non-store (which includes 
e-commerce) were eye-poppers. 
Core retail sales, which excludes autos, gasoline, building supplies and food services, and closely corresponds with the 
personal consumption element of GDP, also fell more than 
expected, dropping 0.7%, an acceleration from the previous 
month's 0.2% dip. 
"The consumer is feeling the weight of slow wage growth and nagging price pressures," writes Jeffrey Roach, chief economist 
at LPL Financial. "Weak retail sales in December shows consumers 
are likely retrenching during a time of economic uncertainty." 
Speaking of which, the prices U.S. companies get for their goods and services at the proverbial factory door cooled more 
than economists predicted last month. 
The Labor Department's producer prices report (PPI) showed a headline monthly decline of 0.5%, a 
stronger pullback than the nominal -0.1% forecast, resulting in 
a year-over-year print of 6.2% - a whopping 1.1 percentage 
points cooler than November. 
"Much of latest decline can be attributed to the volatile final demand for energy, tempering some of the positive news," 
says Matthew Martin, U.S. economist at Oxford Economics. "We do 
not expect outright year-over-year declines to the headline 
index in 2023, but the annual rate should fall below the 2% mark 
by the end of the second quarter." 
Core PPI, which strips away volatile food, energy and trade services, landed at 4.6% year-over-year, 0.3 ppts cooler than 
the previous month. 
The report adds further certainty that the economy is on the post-peak side of the inflationary cycle. But the graphic below 
shows how far the major indicators have to fall before 
approaching Powell & Co's average annual 2% inflation target: 
Moving on to the manufacturing sector, the industrial output contracted by 0.7% last month, plunging past the 
slight 0.1% pullback analysts expected and building on the 
steeper-than-previously-stated 0.6% decline in November, 
according to the Federal Reserve. 
Further, capacity utilization - a measure of economic slack - dropped by a significant 0.6 ppts to 78.8, or 
0.8 ppts to the south of consensus. 
"The bigger picture here is that the downward trend in manufacturing output growth has accelerated sharply in recent 
months, bringing it closer into line with the survey data, which 
point to further weakness ahead," says Ian Shepherdson, chief 
economist at Pantheon Macroeconomics. 
Pivoting to the housing market, while the sector has been the source of much doom and gloom in recent months, on Wednesday 
it provided a rare and unexpected ray of sunlight. 
First, the National Association of Homebuilders (NAHB) showed builder sentiment unexpectedly growing less 
gloomy this month, coming in at 35 from 31. 
Still, an NAHB print below 50 indicates pessimism in the sector. 
"It appears a turning point for housing lies ahead," writes Robert Dietz, chief economist at NAHB. "In the coming quarters, 
single-family home building will rise off of cycle lows as 
mortgage rates are expected to trend lower and boost housing 
affordability." 
Glad you mentioned mortgage rates, Mr. Dietz, because a 19 basis point drop in the average 30-year fixed contract rate 
prompted a whopping 27.9% jump in applications for 
home loans last week, according to the Mortgage Bankers 
Association (MBA). 
"Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak 
mortgage rate last fall," notes Mike Fratantoni, chief economist 
at MBA. "As we enter the beginning of the spring buying season, 
lower mortgage rates and more homes on the market will help 
affordability for first-time homebuyers." 
Even so, total mortgage demand is still 59.8% below the same week last year: 
Finally, the Commerce Department's business inventories report for November bucked the trend by delivering 
exactly what economists projected, growing by 0.4%. 
This is the 19th consecutive monthly increase, which suggests easing of supply chain headwinds combined with 
softening demand, both of which hint at headway in the Fed's 
attempt to cool the economy down. 
Wall Street reversed initial gains as investors digested the data, as the soft data appeared to fuel recession worries. 
But while the sell-off was broad, the transports index , considered a barometer of economic health, is providing 
a rare glimpse of green. 
ESG INVESTORS KEEP A STERN BLIND-EYE TO ENERGY - BERNSTEIN (1055 EST/1555 GMT) 
Environmental, social and governance (ESG) investors did not jump into the energy rally bandwagon in 2022 despite the 
sector's outperformance and kept up with their "exclusion 
policy" for the fossil fuel ESG funds, Bernstein says. 
ESG investors have not loosened their exclusion policy over the past year while 12% of them have strengthened their 
exclusion lists, according to the brokerage's propreitary survey 
from a pool of more than 50 institutional investors. 
"We don’t expect the exclusionary approach to go out of favor anytime soon, especially as most investors have adopted an 
exclusion policy for non-financial reasons," Bernstein says. 
Investors pulled more money from funds marketed as "sustainable" than they added for the first time in more than a 
decade in 2022, hit by fallout from the Ukraine war, tumbling 
financial markets and a political backlash against the industry. 
The funds, which reflect a range of environmental, social and governance (ESG) issues, are also set to lag the performance 
of non-ESG funds for the first time in five years, data shows, 
after the fossil fuel shares they typically shun soared. 
While shunning energy, funds with global mandates continue to overweight industries along the clean energy value chain like 
electrical equipment and machinery, the brokerage says. 
ESG funds globally continued to be "underweight" oil and gas relative to benchmarks as of the third quarter in 2022. Funds 
with global and Asian mandates became less "underweight" on oil 
and gas during the quarter, while European and North American 
ESG investors became slightly more "underweight." 
(Siddarth S) 
***** 
GLIMMER OF HOPE FOR EUROPEAN EQUITIES IN 2023 (1022 ET/1523 GMT) 
European equities are finally seeing some light at the end of the tunnel, considering China's reopening and a lesser 
stagflation shock in Europe limiting the downside risks to 
corporate earnings, analysts at Barclays say. 
Energy services and utilities are set for another strong quarter, while insurance and banks are also poised for a decent 
one on the back of higher rates, according to Barclays' outlook. 
Cyclical plays like construction, autos and luxury goods are also set for steady earnings. 
NatWest Group PLC, HSBC Holdings PLC and BNP Paribas SA were among the top picks within the 
banking space. 
On the other hand, refiners and exploration & production sectors could post weak earnings owing to a sharp decline in 
energy prices. 
The oil and gas sector was the top performer in 2022 with, ending the year 24% higher as energy prices rose sharply. 
Analysts were optimistic about higher earnings estimates for the broader market, barring commodities, at mid-high 
single-digit growth. 
"Although earnings won’t help equities this year, we believe that if rates volatility indeed subsides, stocks may be okay," 
the brokerage said, adding that price-to-earnings de-rating in 
2022 should provide equities some cushion to absorb mild 
earnings downside. 
The pan-European STOXX 600 fell around 13% in 2022, before gaining nearly 8% so far this year. 
Easing inflation pressure could introduce a more stable rates backdrop in 2023, which in turn is likely to cushion 
equity valuations, according to the analysts at Barclays. 
While resilient demand and pricing backdrop should support top lines, inventory destocking and still high costs are likely 
to pressurize margins, the analysts added. 
(Ankika Biswas) 
WALL STREET RALLIES AS PPI BACKS SLOW INFLATION NARRATIVE (1012 ET/1412 GMT) 
Stocks on Wall Street are higher on Wednesday after a bigger-than-expected decline in U.S. producer prices offered 
more evidence of receding inflation and kindled speculation the 
Federal Reserve can soon curb its interest rate hikes. 
Energy and consumer discretionary are among leading S&P 500 sector gainers, while consumers 
staples is the biggest loser. 
Semiconductors, small caps and Dow transports are all in the green. Growth stocks are more than 
doubling the gains of value. 
The producer price index for final demand decreased 0.5% last month, the Labor Department said, while data for November 
was revised lower to show the PPI rising 0.2% instead of 0.3% as 
previously reported. 
Below is a snapshot of early prices on Wall Street:
HOW TO GUIDE FOR DISINFLATION [0930 EST/1430 GMT]
Strategists and economists at UBS believe that the pace of disinflation in 2023 could surprise investors just as much as 
the pace of inflation last year. 
According to UBS, signs of easing inflation seem clearer and 80% of their sample of economies around the world saw lower 
price increases in the second half of 2022 than in the first 
half of the year. 
"Based on our model, higher prices in 2021 were mostly caused by strong consumer demand after the Covid lockdowns 
ended, when in 2022, supply bottlenecks, magnified by the 
Russia-Ukraine war, were the main driver of inflationary 
pressures," wrote the researchers. 
"In 2023, we expect both demand and supply to play a role in the disinflation process." 
Globally, they have selected stocks most positively or negatively impacted by this trend based on return sensitivity to 
changes in inflation indexes, price performance during periods 
of declining inflation and sensitivity of revenues to changes in 
inflation indexes. 
While preference varies on the region, they are generally overweight on health care, tech, communication services and 
consumer discretionary stocks given their past outperformance in 
periods of declining inflation. 
UBS is underweight on energy stocks that have led gains last year, along with financials, industrials and materials, that 
have lagged in disinflationary periods. 
Nevertheless, they expect global growth to be historically weak in 2023, at 2.1%, which is the weakest since 1993, outside 
of the pandemic and the Global Financial Crisis. 
 
List of UBS covered stocks with positive or 
negative impact from disinflation’ based on UBS Strategy 
framework 
 
 
 
Positive                       Negative 
 
Netflix Inc                     Live Nation Entertainment Inc 
Ubisoft Entertainment SA        Pearson PLC 
Moneysupermarket.com Group      El Puerto de Liverpool SAB de Autohome Inc                    Swatch Group AG 
Dollar General Corp             Archer-Daniels-Midland Co 
Valeo                           Sao Martinho SA 
Flutter Entertainment           GrainCorp Ltd 
New Oriental Education &        Exxon Mobil Corp 
Technology 
Clorox                          Schlumberger NV 
Yihai International             Equinor ASA 
Natura & Co Holding              Shell PLC 
Neste Oyj                       Petroleo Brasileiro SA 
Lancashire Holdings             Investec PLC 
B3 SA - Brasil Bolsa Balcao     Raymond James Financial Inc Abbott Laboratories             Woori Financial Group Inc 
Koninklijke Philips NV          Sonova Holding AG 
Celltrion Inc                   Republic Services Inc 
Sino Biopharmaceutical Ltd      Alfa Laval AB Kone Oyj                        Nippon Yusen KK 
Masco Corp                      Grupo Aeroportuario del 
Pacifi 
Skyworks Solutions Inc          HP Inc 
Zebra Technologies Corp         Computershare Ltd 
Logitech International SA       Nucor Corp Win Semiconductors Corp         K+S AG 
Ecolab Inc                      Anglo American PLC 
Akzo Nobel NV                   Public Storage 
Aedifica SA                     Hammerson PLC 
Warehouses De Pauw CVA          Centrica PLC 
China Jinmao Holdings Group Lt  Naturgy Energy Group SA 
American Water Works Co Inc     GAIL India Ltd Enel SpA