what is crude oil?

The oil market is full of mysteries. U.S. companies have drastically reduced investment in production, suggesting lower supply and higher prices. But prices are falling! Western sanctions were supposed to hit Russian exports, and strong U.S. macroeconomic data for January should have stimulated demand. Instead, oil reserves in the United States are increasing, and Brent has fallen below $79 per barrel for the first time since the beginning of the year. The U.S. dollar failed miserably due to the bankruptcy of the SVB, which on paper means a higher cost of oil, but it breaks all ties! What's the matter? Have the markets gone crazy?

In fact, oil is an indicator of the health of the global economy. And its health is clearly not good. For a long time, Brent has been trading in consolidation as investors were choosing between the East, led by China, which is ready for a rapid recovery, and the West giving alarming signals. After deflation began to smell in China, it became clear that the "

Crude Oil: Between Slowing Demand and Shrinking Supply

Crude Oil: Between Slowing Demand and Shrinking Supply

Sebastian Bischeri Sebastian Bischeri 12.04.2022 16:47
Coronavirus in China, fights in Ukraine, sanctions against Russia – what else could raise concerns about oil supply in an already tense market? An economic slowdown in China, which appears to have adopted a “zero-tolerance” epidemic policy, was weighing on oil prices as the country’s COVID case count rose. Lockdown that has locked 25 million people in their homes Finally, some restrictions in Shanghai are being eased in certain neighborhoods following growing dissatisfaction with the very strict lockdown that has locked 25 million people in their homes. That lockdown has caused food shortages and forced thousands of citizens into isolation in specialized centers, consequently causing a food delivery surge and staff shortages. Related article: ECB To Shock Markets In The Following Week!? US Dollar Rate Under Pressure As Well! 7 million barrels a day of Russian exports, supposed to be lost due to sanctions, could not be fully replaced In Ukraine, fears of fighting, which could intensify in the eastern region (around the Donbas), are also stirring the markets. Meanwhile, OPEC Secretary General HE Mohammad Sanusi Barkindo warned the European Union on Monday that the 7 million barrels a day of Russian exports, supposed to be lost due to sanctions, could not be fully replaced, reports the financial press. Such concerns may again raise fears about the supply of black gold in an already tight market. It was added that the current and future sanctions on Russia could create one of the worst oil supply shocks ever and it would be impossible to replace those volumes, as OPEC signaled it would not pump more. WTI Crude Oil (CLK22) Futures (May contract, daily chart) Henry Hub Natural Gas (NGK22) Futures (May contract, daily chart) Like what you’ve read? Subscribe for our daily newsletter today, and you'll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today! Thank you. Sebastien BischeriOil & Gas Trading Strategist * * * * * The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data's accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits' employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

Crude Oil Price Chart - How Will The Price Of Crude Oil Change Amid The Reduce Of Production?

Alex Kuptsikevich Alex Kuptsikevich 13.04.2022 12:18
The price of oil rose more than 6% on Tuesday, with the main driver being news that Russia is sharply cutting its oil production. Reuters sources report a fall in production in the first days of April to 10.32m BPD, down from an average of 11M in March and 11.06M in February. But the same sources report that only 9.76M was produced on Monday, noting an increasingly rapid drop in production. By comparison, the low point of Russian oil production at the deep of the coronavirus restrictions was 9.37M barrels. Russia probably has not yet solved the problem of drastically changed logistics due to sanctions A 12% drop in production or 1.7M BPD in just a month and a half calls this quarter's global oil stockpile growth projections into question. Another source, the International Energy Agency, expects Russian production to fall by 1.5M BPD in April and 3m BPD in May. A gradual production ramp-up cannot offset such a dip. Neither will it help to reduce forecasted demand growth rates. Russia probably has not yet solved the problem of drastically changed logistics due to sanctions. But investors should also bear in mind how devastating the sanctions have been on the energy sectors of Iran and Venezuela, where production decreased 2-4 times from the pre-sanctions peak. The falling volumes of these countries have been replaced by Russia, the US and Saudi Arabia, but there is little indication that the latter two have the strength to pick up the former's export share. A sharp fall in Russian production has brought worries about energy shortages back to the market Oil prices have been bouncing back since March 24th on reports of increased sales from strategic reserves by the US and its allies. Meanwhile, OPEC+ has increasingly failed to keep up with its quotas, not just because of Russia but because of all other members. A sharp fall in Russian production has brought worries about energy shortages back to the market. These reports have helped oil stay within the uptrend formed in early December. It will not be surprising if the oil price manages to bounce back from this five-month support in the coming days, again going on to storm levels above $110. Until recently, the USA has been unable to take advantage of the situation and has been increasing its production much more slowly than it has since the global financial crisis. Perhaps we will see a change in this situation in the weekly US oil production and reserves data published later today.
UK Inflation Influences GBPUSD Price Line, USDCAD Shows Canadian Dollar Strength, Crude Oil Price (USOIL) Has Been Rising Gradually

UK Inflation Influences GBPUSD Price Line, USDCAD Shows Canadian Dollar Strength, Crude Oil Price (USOIL) Has Been Rising Gradually

Jing Ren Jing Ren 14.04.2022 08:55
USDCAD tumbles towards daily support The Canadian dollar surged after the BOC’s aggressive rate hike of 50bp. The pair’s recovery came under pressure at 1.2670. A bearish RSI divergence shows a loss of momentum in the rally and the ensuing break below 1.2580 acts as confirmation of underlying weakness. A combination of stop losses and momentum selling could further depress the greenback. An oversold RSI may attract some bargain hunters and 1.2480 is a major level to keep the rebound intact. In fact, its breach could cause extended losses beyond 1.2400. Related article: ECB Interest Rate Decision Is Coming! European Indices (DAX, CAC40) To Plunge Or Rise? What About Forex Pairs? GBPUSD breaks resistance The pound recoups losses as the UK’s March CPI beats market expectations. Overall sentiment ticked down after the pair dropped below the psychological level of 1.3000. However, a swift bounce above 1.3080 is an encouraging sign for the bulls as it forced the bears to cover their positions. 1.3180 is the next resistance and a bullish breakout could bring the sterling back to 1.3300 and open the door to a reversal. The RSI’s overbought condition may lead to a pullback. And 1.2990 is the immediate support should this happen. USOIL grinds resistance WTI bounces as major trading houses plan to trim purchases of Russian crude. The price is slowly recovering from the daily demand zone around 94.00. This could be a consolidation phase after the recent wild ride. The RSI’s double-dip in the oversold territory triggered a buy-the-dips behavior. A break above 105.00 could cause a broader recovery to 115.00. The RSI’s swing into overextension may limit the impetus. The psychological level of 100.00 is a fresh support and 94.00 is a critical floor to keep the price afloat.
Uranium Prices Rising Amidst Russia-Ukraine Conflict, Oil Futures Seeing Large Gains, Lumber Price - Commodities in the Current Market

Uranium Prices Rising Amidst Russia-Ukraine Conflict, Oil Futures Seeing Large Gains, Lumber Price - Commodities in the Current Market

Rebecca Duthie Rebecca Duthie 14.04.2022 08:55
Commodities update by FXMAG.COM Value of lumber had increased by 1.25% As a result of the possibility that Uranium exports from Russia may be banned, the price of the commodity has increased by at least 50% As of market close yesterday, Oil futures saw a rise of nearly 4% as a result of the Ukraine and Russia coming to a dead end on negotiations The Price of Lumber and its relationship with mortgage prices and inflation. As of market close yesterday, the value of lumber had increased by 1.25%, showing small signs of recovery after the price fell by 6% on Tuesday. The price of Lumber falling consistently over the past month could be explained by the increase in the inflation rate which has put a dent in the home improvement market, thus weakening the demand for Lumber. Another potential explanation for the price of this essential commodity falling could be due to the supply chain issues the Lumber market was experiencing last year having being solved, easing supply pressures and subsequently lowering prices further. Lumber Price Chart Related article: ECB Interest Rate Decision Is Coming! European Indices (DAX, CAC40) To Plunge Or Rise? What About Forex Pairs? Uranium Prices Rising Amidst Russia-Ukraine Conflict. As a result of the possibility that Uranium exports from Russia may be banned, the price of the commodity has increased by at least 50% and according to Bank of America, they don't suspect the price surge to begin slowing down. As the war in the Ukraine continues, there is more possibility for the rising commodity prices to continue. Uranium Price Chart Related article: Wheat Futures Prices Influenced, By Weather, Naturally! Oil Futures Seeing Large Gains As of market close yesterday, Oil futures saw a rise of nearly 4% as a result of the Ukraine and Russia coming to a dead end on negotiations. As of the market open today, the price has dropped slightly to $102.95. The graph below shows the major gains made by this commodity yesterday. Crude Oil Price Chart Sources: Finance.yahoo.com, markets.businessinsider.com
The Commodities Feed: First US crude draw this year

Price Of Crude Oil (WTI) And Natural Gas (NGAS) Boosting US Dollar (USD) Which Jumps High

Alex Kuptsikevich Alex Kuptsikevich 15.04.2022 09:57
Energy prices continue to fly into the stratosphere, adding 30% since the start of April, strengthening at twice the rate of March. The last time US gas was this expensive was in October 2008. Energy, oil, and gas have a very high price elasticity Demand for American gas has surged as Europe tries to cut back on purchases from Russia as much as possible. But this also puts the current commodity sharply in short supply. Energy, oil, and gas have a very high price elasticity, meaning that a supply or demand shift of just a couple of per cent leads to a much higher price change. Thus, the US provokes soaring prices on domestic markets by providing Europe with gas. Oil also receives a strong upward marches, not only as of the closest substitute but also as another Russian export that the world is in a hurry to abandon. Oil prices managed to stay in an uptrend WTI was back above $105, and Brent closed Thursday above $110, returning to levels of two weeks ago. Oil prices managed to stay in an uptrend, albeit this time as a slider amid accelerating gas prices. The performance of oil and gas prices is supported by US export figures, which is favourable for the Dollar. Notably, in contrast to the historical correlation, energy is rising with the Dollar, although more often than not, a rising dollar pressures energy. As one of the leading energy exporters, having strengthened its position, the states will economically have the most negligible impact on the economy compared with most developed countries that are net importers of oil and gas. Fed can raise interest rates more quickly Higher energy costs may not prevent the Dollar from moving somewhat up further but may strengthen it by giving the Fed carte blanche to tighten policy more forcefully. The Fed can raise interest rates more quickly, but it can also push them to higher levels without the risk of seriously hurting the economy.
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

(USOIL) Crude Oil Price To Jump Above $110!? Soaring Coffee Demand

Rebecca Duthie Rebecca Duthie 15.04.2022 10:54
Summary: Price of Crude oil prices skyrocketed High global demand for coffee Price of platinium is rising again after the UK announced further sanctions on top Platinum suppliers The price of US Crude oil reflects the market's volatility and its liquid nature, the commodity is also used as a benchmark for global economic activity At the start of the Russia-Ukraine conflict, the price of Crude oil prices skyrocketed to unprecedented levels. The fall in the price that followed came after the White House's announcement that the US was considering releasing record breaking amounts of US crude oil in an attempt to combat shortage fears. The price is once again on the increase due to the high expectations on demand for US Crude coming hand-in-hand with the limited supply. US Crude Oil Price Chart Related article: Terra USD (USDT), Shiba Inu (SHIB), Polygon (MATIC) Update. Take a Look at What Happened in the World of Cryptocurrency Today  Coffee is second to Crude oil when it comes to popularity in the commodities market Despite the high global demand for coffee, the price is still falling due to unfavorable weather conditions during the growth phase, this comes in addition to the high increase in the cost of shipping also. Coffee Price Chart Platinum as a commodity in the current market The price of platinum increased earlier this month as a result of the rising in demand for the commodity. However, shortly after the initial increase, the price began to fall again and given the current conflict between Russia and the Ukraine, this is not very surprising (Russia is the second largest producer of Platinum after South Africa). The price is rising again after the UK announced further sanctions on top Platinum suppliers, sparking fears of shortages. Platinum Price Chart Sources: capital.com, Tradingeconomics.com, Finance.yahoocom, Dailyfx.com
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

(USOIL) Crude Oil Price Crisis!? Fed To Boost (USD) US Dollar? UK Inflation Rate Surprised Many This Week, What About The Following One? Economic Calendar by FXMAG.COM

Mikołaj Marcinowski Mikołaj Marcinowski 16.04.2022 17:59
Today, tomorrow and on Monday many countries around the world celebrate Easter. Friday was a day free for many stock markets and banks too. As we wrote yesterday forex market was live so we may say it had some time to stock (sic!) up. The following week is going bring many news and next proves of hawkish rhetoric of Fed, ECB and BoE. Monday – Going East – Chinese GDP On Monday many, many countries – Germany, Italy Spain, Australia and more has a day free. Only in China, very early in the morning GDP and Industrial Production are printed. Previously Gross Domestic Product amounted to 4%. Another indicator released at 3 a.m. – Industrial Production hit 7.5% previously. Related article: Deutsche Bank Shook DAX! French Election, Inflation And ECB Are Factors Which Shaped DAX (GER 40), CAC40, FTSE 100 And IBEX35 - Top Gainers, Top Losers Tuesday – RBA Meeting Minutes – NZD/USD To Plunge Again!? It’s good to have a look at RBA Meeting Minutes in the morning. The document will be released at 2:30 a.m. and may let us prepare NZD rate prediction. At 1:30 p.m. we focus on the data coming from the USA. Building Permits release previously amounted to 1.865M. This indicator let us diagnose the real estate market in the United States. Wednesday - Crude Oil Price To Skyrocket!? CAD/USD And NZD/USD May Fluctuate! First release of the day is Chinese PBoC Loan Prime Rate which takes place at 2:15 a.m. Previously this indicator amounted to 3.7%. At 1:30 p.m. you better follow CAD/USD and other pairs with Canadian dollar as Core CPI may shake the rate. Indicator amounted to 0.8% previous time. Later in the afternoon investors should follow the release of Existing Home Sales (6.02M) and, what’s most important – Crude Oil Inventories. ON April 13th Crude Oil Inventories hit 9.382M! Very late in the afternoon we focus on New Zealand where CPI (Q1) is released. Let’s follow NZD forex pairs then. Thursday – Huge Gain Of US Dollar Index (DXY) Amid Hawkish Fed!? Follow Euro To US Dollar (EUR/USD) and GBP/USD Fluctuations! What Will BoE And ECB Do? Naturally next Fed decision is made in May, but before it happens we all stay updated with the current Fed rhetoric expressed by i.a. Jerome Powell who speaks at 6 p.m. on Thursday. What’s more it’s going to be a really, really market moving day as alongside Powell, BoE’s Bailey and ECB’s Lagarde speaks as well! Additionally, at 10 a.m. the EU CPI is released. After the recent interest rate decision ECB’s rhetoric is definitely worth a follow! Article on Crypto: Hot Topic - NEAR Protocol! Terra (LUNA) has been seeing a consistent downward price trend, DAI Should Stay Close To $1 Friday – GBP/USD To Plunge!? UK Manufacturing PMI Release And BoE’s Lagarde Speaks Again The following week ends with some important releases. We begin with UK Retail sales, Manufacturing PMI, Services PMI and German Manufacturing PMI. In the afternoon Canadian Core Retail Sales (2.5%) is released. The day ends with ECB’s and BoE’s representatives’ testimonies. Source/Data: Investing.com Economic Calendar
End Of Crude Oil Price Crisis!? Price Of Crude Oil Amid Said Arabia And G-7 Acts

End Of Crude Oil Price Crisis!? Price Of Crude Oil Amid Said Arabia And G-7 Acts

Alex Kuptsikevich Alex Kuptsikevich 09.05.2022 15:09
Brent crude is back below $110/bbl, losing 2% since the start of the day on Monday. At the beginning of May, oil largely remained within the trends of previous months. There are still accumulating risks that oil will break down this support, giving the start of a correction. Since last month, bulls and bears have been concentrating on pulling the tug-of-war near the 50-day average Brent maintains an upward trend, but it is also running near a line that passes near the lows of the last five months. Since last month, bulls and bears have been concentrating on pulling the tug-of-war near the 50-day average, which has been pointing upwards since the beginning of the year. Saudi Arabia has cut its oil price premium to buyers in Europe and Asia Positively for oil, the G7 has declared a phase-out of Russian oil purchases, and OPEC has indicated a commitment to a rate increase of 432k a month. But at the same time, Saudi Arabia has cut its oil price premium to buyers in Europe and Asia. Locally, traders should pay attention to the dynamics of Brent near $112 Also playing out locally against oil was the news that Russia has stabilised production after a dip in April. In addition, drilling activity is picking up in the US, which promises a rise in output in the next few months. There is also more incentive for Saudi Arabia to increase its production. Brent remains in a triangle on the technical analysis side, retreating from its upper boundary. Locally, traders should pay attention to the dynamics of Brent near $112, where the area of previous local peaks is located. Bears, for their part, may cheer up in case of consolidation under $104, where purchases were strengthened last week. A move out of the 104-112 range could increase volatility in oil.
Oil pullback ends, gold steadies

Crude Oil (WTI) Pullback Ends, Gold Price (XAUUSD) Steadies | Oanda

Ed Moya Ed Moya 11.05.2022 22:15
Oil  Energy traders are bullish on oil prices again as China’s COVID situation shows signs of improving and after the dollar eased following a hot inflation report that did little to change short-term Fed rate hiking expectations. The oil market can’t justify oil prices below USD 100 given the potential shock that will occur once the EU is able to move forward with their ban on Russian crude. ​ ​ WTI crude tentatively pared gains after the EIA crude oil inventory report posted a surprisingly large build with stockpiles. ​ This report was full of surprises as US production declined by 100,000 bpd, the first drop since January. Read next: Stock Market Showing Signs Of Slight Recovery Amidst U.S CPI Report Release| FXMAG.COM The oil market seems to have made up its mind and it will focus on how tight supplies will be and not the eventual demand destruction that might happen later this year. ​ Gold slides after CPI report Gold prices tumbled as the dollar surged following a hotter-than-expected inflation report that will likely force the Fed into delivering more tightening than they were initially thinking. â€‹ Today’s inflation report proves that Fed Chair Powell made a mistake last week when he removed the option of a 75-basis point rate hike at the next policy meeting. The overall takeaway for much of Wall Street however is that the Fed is still poised to deliver consecutive half-point rate increases at the June and July FOMC meetings. Read next: Earnings Season: (DIS) Disney Stock Price Awaits Earnings Announcements| FXMAG.COM Gold gave up a majority of its gains after the inflation report but found massive support around the USD 1830 level, which is where the 200-day simple moving day resides. ​ Gold was close to showing signs of stabilizing as many investors were hoping for a sharper deceleration of pricing pressures, which was supposed to pave the way for a dollar pullback and a peak in with the rally in Treasury yields. Gold is tentatively holding onto the USD 1830 level and should continue to stabilize, but that may get tested if a steady wave of Fed speak raises market expectations for more aggressive tightening later this year. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Agriculture: Russia's Exit from Black Sea Grain Deal Impacts Grain Prices

Will Petrol Prices Scare Drivers Again!? Crude Oil Price Reaches Really High Levels! US Dollar (USD) To Slowdown Its Skyrocketing? | Saxo Bank

Saxo Bank Saxo Bank 17.05.2022 11:09
Summary:  Market sentiment is mostly stable after a rare, uneventful day for global markets. Crude oil has pulled to a new local high as petrol prices in many countries have risen to record highs. The US dollar is on its back foot, helping to spark a sharp gold rally from capitulation lows after the precious metal had broken down through all major support levels. The mood in Asia brightened overnight on hopes China is set to ease its clampdown on the tech companies.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - S&P 500 futures closed just above the 4,000 level yesterday as US equities failed to extend their gains from Friday’s session. Tesla shares fell 6% as bubble stocks and crypto related companies fell almost 5% suggesting weakness in technology stocks continues. While the Empire State manufacturing PMI figures yesterday were from a little region of the US, they surprised significantly to the downside hitting levels typically consistent with low economic activity or even a mild contraction. S&P 500 futures are pushing higher trading around the 4,024 level with yesterday’s high at 4,043. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) rallied 2% and 1% respectively on prospect of relaxation of Covid restrictions in China.  JPMorgan’s 180-degree reversal to turn overweight in Chinese internet stocks also help the market sentiment. Alibaba (09988), Tencent (00700), Meituan (03690) and JD.COM (09618) gained about 5% to 6%. Auto makers, batteries and semiconductors surged on the prospect of normalization of supply chain from lockdown. Great Wall Motor (02333) rose over 10%. Ganfeng (01772) rose 6.7%. Hua Hong Semiconductor (01347) gained 6%.  Stoxx 50 (EU50.I) - European equities continue to trade at levels lower than a year ago as weakness is still widespread due to the war in Ukraine with BOE chief Bailey warning yesterday of the extreme risks related to galloping food prices and security of supply. Stoxx 50 futures are trading just below the 3,700 level this morning with the 50-day moving average at 3,732 being the key resistance level to watch on the upside. USD pairs – the US dollar weakened rather sharply yesterday as risk sentiment continued to stabilize. Traders should be on the lookout for whether the sell-off could extend sufficiently to trigger a tactical reversal in the USD bull trend. Levels worth watching include the 1.0500 resistance area in EURUSD, 0.7050-0.7100 resistance zone in AUDUSD, and 1.2400 resistance in GBPUSD. The Apr. Retail Sales report up later today could trigger market volatility. JPY pairs – JPY crosses have bounced hard from the steep sell-off late last week as risk sentiment has stabilized since Friday and, to a lesser degree, as bond yields pulled back higher. The volatility looks excessive relative to coincident developments. USDJPY will watch US treasury yields over the US data today with resistance around 130.00, while a break down through the important 128.00-127.50 area and consolidation back toward 125.00 likely needing a significant consolidation lower in US treasury yields. AUDJPY and GBPJPY have been particularly volatile JPY pairs since a one-off meltdown last Thursday that has now largely been erased. Gold (XAUUSD) trades higher supported by a softer dollar, higher oil prices and tailwind from silver (XAGUSD), as the industrial metal sector receives a boost from the prospect of easing lockdowns in China. The recent loss of momentum which helped attract fresh tactical short sellers was driven by the relentless rise of the dollar and the markets belief in the FOMC’s ability to bring down inflation without hurting growth. With the latter increasingly seeing downgrades, the risk of recession has not gone away, and it raises the question of whether real yields may pause following its March to May near 1.5% jump. Further weakness below 0.09% may signal a period of consolidation in US ten-year yields. Gold needs to break above its 200-day moving average at $1838 to force a further improvement in sentiment. Crude oil (OILUKJUL22 & OILUSJUN22) returned to an eight-week high overnight after China signaled it would start unwinding lockdowns in the Shanghai. Also underpinning prices is the continued strength in the price of fuel products, driven by strong demand and restrained refining capacity. Recently led by a record high price of RBOB gasoline future. Global demand has yet to show signs of demand destruction and with Chinese demand starting to recover the risk of higher prices remains, not least considering Europe’s continued efforts to reduce its dependency on Russian oil and gas. HG Copper (COPPERUSJUL22) has bounced back after hitting a seven-month low last week, and as we highlighted in a recent update, the market has been under pressure due to China lockdowns, and with those now starting to ease a bid has returned. If the change in sentiment towards a more favorable outlook takes hold, hedge funds may soon be forced to cover a short position which according to the latest COT report doubled to a two-year high in the week to May 10. The industrial metal sector slumped 25% during since early March as China closed, but with lockdowns now easing, stimulus policies focusing on the property sector and infrastructure will likely support a recovery. What is going on? High yield credit spreads continue to widen, signaling rising stress in corporate debt markets.  One measure of credit spreads, the Bloomberg US Corporate High Yield Average option-adjusted-spread, has widened to above 450 basis to US treasuries, the highest levels since late 2020. Back in late 2018, the spread peaked at 537 basis points just before the Powell Fed pivoted to easing policy. Lockdowns start to ease in Chinese cities. China’s nationwide (excluding Hong Kong) new local cases fell to 1,049 (sharply lower from the April 13 high of 29,317 cases), of which 823 cases from Shanghai and 52 cases from Beijing.  Shanghai reported three consecutive days of zero community (i.e. outside of quarantine) transmission.   The municipality expects to gradually resume public transportation services from May 22.  Starting from today train services and air flights to and from other Chinese cities is gradually resuming services.  The Shanghai government expects that the lockdown will be completely lifted in June.  Chinese tech stocks trade higher on hopes for easing stance from regulators. A symposium hosted by a prominent advisory body today in China has sparked hopes for a revival of tech stocks as executives of prominent companies like Baidu Inc were invited. JP Morgan Chase & Co. analysts yesterday announced upgrades to ratings on major Chinese tech names like Alibaba and Tencent Holdings. Bank of England Governor Bailey fears “apocalyptic” risk from rising food prices. Governor Bailey testified before a parliamentary committee yesterday and said the rise in prices is “a major worry not just for this country but for the developing world.” Bailey bemoaned the series of supply shocks that are driving a cost-of-living crisis for the many UK citizens as the price of food and energy, in particularly have risen sharply, the latter a direct result of the Russian invasion of Ukraine. Bailey also noted a 1.3% fall in the size of the labor market, which also limits economic growth potential. Deputy Governor Ramsden added that “we hear companies telling us that even people on median incomes are overextended.” RBA opening the door for bigger rate hikes. Minutes of the Reserve Bank of Australia's May monetary policy meeting showed that members considered three options, raising the cash rate by 15 basis points, 25 basis points or 40 basis points. The 40bps rate hike was avoided considering that the board meets monthly and would have the opportunity to review the data flowing in to decide on the size of future interest rate hikes. With inflation being seen as a key concern and Q1 inflation hitting 5.1% - the fastest pace in two decades – this likely suggests that there is room for 40bps (or more) of rate hikes in the upcoming meetings. What are we watching next? The European Commission downgraded GDP forecasts for 2022 and 2023. The EU Q1 GDP estimate is out later this morning. Official real GDP growth in both the European Union and the euro area is now forecast at 2.7 % in 2022 and 2.3 % in 2023, down from 4.0 % and 2.8 % (2.7 % in the euro area) in the last forecast released in February 2022. The forecast for 2022 is likely too optimistic. Several countries are facing a very challenging economic environment (stagflation risk in Germany and risk of technical recession in France, for instance). France’s wage negotiations are kicking off. According to a blog article published by the Bank of France last week, wages are likely to increase by 3% this year, on average. From 2014 to 2020, wages barely moved (+1 %). This is still not enough to cope with higher inflation (4.8 % YoY in April). April U.S. retail sales are out today. Expect the positive momentum to remain in place. Several factors are pushing retail sales up: solid auto sales, significant cash savings buffers (built during the pandemic) and rising wages (though they are not keeping pace with the increases in the cost of living). In the short-term, we believe consumer spending will remain robust and the domestic economy will be in a good position. Earnings Watch. As with many earnings release dates for Chinese companies they are postponed and that happened to Meituan yesterday. The Q1 earnings release has been postponed to 23 May. Today’s focus in Europe is Vodafone which could show its qualities as a defensive company during the current declines and then Nibe Industrier which is big on air-to-heat water pumps which are a declared preferred technology by the EU in its quest to become independent of Russian natural gas. In the US session, the focus will be on Walmart, Home Depot, JD.com and Sea Ltd. The two big retailers Walmart and Home Depot will provide great insights into consumer behaviour in their outlook. Today: Engie, Vodafone, Nibe Industrier, Sonova, Walmart, Home Depot, JD.com, Sea Ltd Wednesday: Tencent, Experian, Burberry, Singapore Airlines, Cisco, Lowe’s, Target, Analog Devices, TJX, Synopsys, Copart, Trip.com Thursday: Xiaomi, Generali, National Grid, Applied Materials, Palo Alto Networks, Ross Stores, DiDi Global Economic calendar highlights for today (times GMT) 0900 – Euro zone Q1 GDP forecast 1005 – UK Bank of England’s Cunliffe to speak 1230 – US Apr. Retail Sales 1315 – US Fed’s Harker (non-voter) to speak 1315 – US Apr. Industrial Production and Capacity Utilization 1400 – US May NAHB Housing Market Index 1700 – ECB President Lagarde to speak 1800 – US Fed Chair Powell Interview at event 1830 – US Fed’s Mester (voter) to speak 2030 – API Weekly Report on U.S. oil and fuel inventories 2350 – Japan Q1 GDP estimate 0130 – Australia Q1 Wage Price Index Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Saxo Bank
Drivers Don't Want To Pay More For Petrol. Crude Oil Price: the latest upward momentum? | FxPro

Drivers Don't Want To Pay More For Petrol. Crude Oil Price: the latest upward momentum? | FxPro

Alex Kuptsikevich Alex Kuptsikevich 17.05.2022 12:17
Crude oil has added 15% since last Wednesday, rising to $112/bbl WTI and $113/bbl Brent. Both grades reached new two-month highs on Tuesday morning, despite a decidedly bearish news backdrop. Since early April, WTI has seen a sequence of higher highs and higher lows A sharper than previously estimated slowdown in China and not yet agreed package with Russian Crude oil phased embargo was met with buying in Crude, despite those suggesting lower demand and higher supply. Since early April, WTI has seen a sequence of higher highs and higher lows. Oil’s dip under the uptrend line last week only encouraged buyers, kick-starting the latest upward momentum. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM This is the third time Brent has reached that horizon, from which it has rolled back in April and early May. A consolidation above $114 could signal a new buying wave and quickly take prices to the $120 area - near the late March peaks. It should not be surprising if WTI becomes more expensive than the heavier Brent in a few weeks In this case, the North Sea Brent lags behind the US WTI as the supply-demand balance favours the latter. It should not be surprising if WTI becomes more expensive than the heavier Brent in a few weeks, restoring the historic balance broken by tight OPEC+ quotas and once rampant US production. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Nevertheless, be prepared that the oil rally that started from lows in April 2020, culminating in the war events in Ukraine, is coming to an end. The global economy and energy consumption are slowing to recover while the cartel continues to raise quotas. Temporarily, due to lower investment in production in previous quarters, OPEC has not kept pace with production increases. Still, this balance will change sooner rather than later, promising to keep the price from rising.
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The Commodities Feed: US gasoline tightness | ING Economics

ING Economics ING Economics 18.05.2022 07:45
Your daily roundup of commodities news and ING views Learn more on ING Economics Energy The oil market has seen a partial recovery in early morning trading today, after Brent settled more than 2% lower yesterday. Reports that the US is looking to ease some sanctions against Venezuela contributed to yesterday’s weakness, with it thought that the easing could see a partial resumption of Venezuelan oil to Europe. Any increase is likely to be rather limited, at least in the short term.   There are growing concerns over the refined products market. What started out as a tight middle distillate market appears to be spreading into the gasoline market, at least for the US. At a time when US gasoline inventories should be building ahead of the driving season, inventories instead have declined for most of this year. These are now below the low end of the 5-year range.  Gasoline demand should only increase over the coming months and, in the absence of a pick up in refinery runs, the gasoline market is likely to continue to tighten. The tighter gasoline market appears to have also contributed to a narrowing in the WTI/Brent discount, given the  need for higher US refinery runs, which should be supportive for US crude demand. Gasoline stocks in the ARA region of Europe are more comfortable, and are at least at a decade high for this time of the year. Given the tightness on the US East Coast and more comfortable European stock levels, we would expect to see a pick-up in European gasoline flows to the US East Coast in order to help alleviate some of this tightness. API numbers released overnight confirm the tightening in the market. US crude oil inventories are reported to have fallen by 2.4MMbbls, whilst stock levels at Cushing, the WTI delivery hub, fell by 3.1MMbbls. It was the gasoline market which saw the largest decline, with stocks falling by 5.1MMbbls over the last week. EIA numbers will be released later today. The EU carbon market saw some strength yesterday, with the market breaking above EUR91/t. The European Parliament’s Environmental Committee voted yesterday on reforms to the EU ETS. The committee agreed on the need for more aggressive carbon emission reduction targets. The committee would like to see emissions covered by the ETS fall by 67% by 2030 from 2005 levels, this compares to the initial proposal for a 61% reduction. In order to achieve this, the committee has  recommended that the amount of emission allowances should be reduced by 4.2% in the first year the reform starts, and then this reduction should increase by 0.1% each year through until 2030. The committee also wants to see the phasing out of free allowances between 2026 and 2030, and the full implementation of  the EU Carbon Border Adjustment Mechanism (CBAM) by 2030, which would be 5 years earlier than currently proposed. In addition,  the Environmental Committee wants to phase out free allocations for the aviation  sector  by 2025, which would  be 2 years earlier than the Commission had proposed. The proposal will also see maritime transport included in the ETS from 2024, which would cover 100% of intra-EU routes, and 50% of emissions from extra-EU routes coming in and out of the EU initially. Finally, the committee also agreed on the implementation of another emission trading  system for commercial buildings and transport, which would start in 2025, whilst private buildings and transportation will be excluded  from this new ETS until at least 2029. This latest proposal will be put to a vote  in parliament next month, after which negotiations between member states will likely start. Metals Latest reports that Shanghai might start relaxing its two-month lockdown after three days of zero community transmission, along with better-than-expected retail sales and consumer spending data from the US, were constructive for risk assets yesterday. Most base metals settled higher on the day, with LME aluminium closing more  than 2% up. Shrinking LME inventories have provided some support  to aluminium. The latest LME data shows that on-warrant inventories for the metal fell for an eighth consecutive day to a new record low of 230kt yesterday. Turning to steel, and China Iron & Steel Association (CISA) said that China will keep its restrictions on new steel capacity intact and would push for more mergers and acquisitions within the industry. Due to ongoing Covid-related restrictions, steel demand has remained under pressure recently, but this should improve as the Covid situation improves. Mysteel expects China’s steel demand over 2H22 to rise by 10% compared to 1H22, whilst YoY growth is expected to hit 15% in 2H22. This growth is expected  to be supported by local government policies. Agriculture CBOT wheat continued to trade firm yesterday, even after India relaxed its stance with its recently announced export ban on wheat. New directives from the Indian government indicate that the restrictions will not apply to wheat shipments that have already been handed over to the customs department for clearance and loadings. However, the export restrictions will still apply to wheat sales where the shipments are not yet finalised through the issuance of irrevocable LoC. Reuters reported that only around 400kt of wheat (out of around 2.2mt of wheat currently at ports) would be eligible for relief and likely to be exported. The relaxation is unlikely to provide much relief to the global market. TagsWheat Oil Metals Gasoline EU carbon Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
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Fed hawks may not let the equity rally extend! | MarketTalk: What’s up today? | Swissquote

Swissquote Bank Swissquote Bank 18.05.2022 10:58
The US equity markets rallied yesterday after taking over a positive session from the Europeans. However, the US retail sales data didn’t necessarily hint at slowing spending, and Jerome Powell didn’t say things that investors would normally like to hear. Powell’s words didn’t hit the investor appetite immediate, but mixed activity in US futures hint that appetite may not remain as strong in the coming sessions. In the FX, the US dollar eased from two-decade highs. Gold trades around the $1800 mark and crude oil bumps into solid topsellers approaching above the $115pb   The EURUSD rebounded past the 1.05 and Cable traded past 1.24. Yet, prospects of higher US rates, and the positive divergence between the Fed and other central banks should prevent the dollar from falling significantly. Eurozone’s final inflation data is due today, and should confirm a rise to 7.5% in April, an eye-watering number which should keep the European Central Bank (ECB) hawks and the euro bulls alert, and help the single currency consolidate its latest gains against the US dollar. Gold trades around the $1800 mark and crude oil bumps into solid topsellers approaching above the $115pb. On the earnings front, the US retailers reveal mixed earnings but they all agree on one thing: inflation impacts activity. Watch the full episode to find out more! 0:00 Intro 0:22 Market update 2:06 Jerome Powell is decided to bring inflation down! 2:48 High EZ inflation to keep euro bulls alert 3:41 ...but the dollar may not ease much! 4:42 Gold under the pressure on rising rates 5:31 Crude oil bumps into topsellers past $115pb 6:47 US retailers reveal mixed results, but agree that inflation is an issue Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
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More Expensive Coffee!? Weather Conditions In South America Can Limit Crops. (WTI) Crude Oil Price Recovering, Palladium Prices Rise Amidst Concerns Around Supply

Rebecca Duthie Rebecca Duthie 18.05.2022 12:35
Summary: With China likely to ease lockdowns and the Russian oil embargo, WTI Crude prices are rising. Coffee futures prices are rising again amidst concerns around supply. Concerns around supply heighten for Palladium.   WTI Crude Oil recovering WTI Crude Oil futures have been recovering this week after the poor market performance last week. Going forward, it is likely that the market will see oil prices go up, therefore raising gas prices as well. Despite the lockdowns in China suppressing oil demand, the possibility of the lockdowns being lifted the market will see the demand rise. The Russian oil embargo is likely to get tighter, which is heightening investors' concerns around the supply of oil, which is also pushing up the price. U.S President Joe Biden's attempt at reducing prices through releasing some of the U.S Crude Reserves into the market has not made a very noticeable impact so far, the release is expected to last until November. WTI Crude Oil Futures Price Chart Read next: (XAUUD) Gold Regains Investor Interest As The Dollar Weakens, NGAS Prices Going Up, Cotton Price Rising Along With Concerns Around Supply   Coffee futures recovering amidst supply concerns Coffee futures prices are recovering in the wake of the poor market performance of last week. The prices are rising again over concerns around weather conditions in South America as the coffee farmers in Brazil are expecting frost in the coming days. The adverse weather conditions could affect the coffee crop and lead to a poor harvest in the future. There are also expectations on smaller supplies from Columbia. With concerns around coffee supplies across the board, the price of futures is rising. Coffee Jul ‘22 Futures Price Chart Concerns around Palladium supply are pushing up the futures prices Palladium futures rose above $2000, it is possible that the market could continue to see this growth as the reduced supply from Russia continues and a deficit supply from South African suppliers heighten concerns. South African producers are facing operational challenges, causing their output to decrease. Palladium Jun ‘22 Futures Price Chart Read next: Commodities Prices Recovering After Poor Performance Early Last Week - Brent Crude Oil Prices, Silver Prices Fall As Investors Shy Away From Precious Metals & Corn  Sources: tradingeconomics.com, finance.yahoo.com  
Oil dips ahead of OPEC+, gold flat

Oil falls on Venezuala and EU, gold dips | Oanda

Jeffrey Halley Jeffrey Halley 18.05.2022 15:30
Venezuela/Europe send oil lower Overnight, oil prices touched multi-week highs until the US announced it was starting a process, potentially leading to an easing of sanctions on Venezuela. That immediately saw oil reverse all its impressive intraday gains and both Brent crude and WTI finished slightly lower on the day. The EU effectively allowing European importers to pay for Russian gas via roubles should take the edge off European gas prices and flow through to oil prices. Brent crude finished 1.05% lower at USD 112.70 a barrel, having tested USD 116.00 intraday. WTI, by contrast, finished just 0.10% lower at USD 113.60 a barrel, having also tested USD 116.00 intraday. Prices are unmoved in Asia. Tight API inventory data and soaring diesel prices in the US have combined to send WTI to a premium over Brent and is likely to limit the downside for both contracts, Venezuela, or not. Tonight’s official crude inventory data dump will now be closely watched, and sharp falls in gasoline and distillates inventories could increase the WTI premium over Brent crude. Brent crude has resistance at USD 116.00 and support at USD 111.50 a barrel. WTI has taken resistance at USD 116.00 a barrel as well, with support at USD 111.50. Any progress on Venezuela’s supply returning to international markets is potentially a game-changer and should mean the top of my longer-term range, at USD 120.00 a barrel, remains intact. Gold’s price action doesn’t inspire confidence Despite the US dollar falling heavily overnight, and risk sentiment rising generally, gold prices fell 0.53% to USD 1815.00 an ounce overnight, easing to USD 1814.50 in Asia. US yields climbing higher may have played a part, but the direction of the US dollar has been more important of late. When gold falls as the US dollar falls heavily, we should all take that as a warning sign, suggesting lower prices are the path of least resistance. As such, I believe gold’s downside risks have ratcheted higher. Support lies at USD 1789.00, followed by USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. That move could occur quite quickly if USD 1780.00 fails. Gold has resistance at USD 1836.00, followed by the 200-DMA at USD 1836.80, and then USD 1850.00 an ounce. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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The Commodities Feed: Another week passes with no EU ban | ING Economics

ING Economics ING Economics 20.05.2022 08:36
Your daily roundup of commodities news and ING views Tank farm for storage of petroleum products in Volgograd, Russia Energy It appears that another week will pass with the EU still unable to agree on a Russian oil ban. While it is taking longer than expected to come to an agreement, we believe that member states will eventually come to a deal. How much of an impact this will have on the market will depend on how watered down the final agreement is relative to the proposal. The effectiveness of the ban will also depend on the actions of countries outside the EU. Bloomberg reports that China is looking to potentially buy Russian crude for its strategic reserves. Although this shouldn’t come as too much of a surprise if China is set to increase its share of Russian oil purchases. The significant discounts available for Russian crude will prove very tempting for some buyers, like China and India. Self-sanctioning will already be affecting Russian oil flows to the EU, even in the absence of an official oil ban. This has left the EU to look elsewhere for alternative supplies, and whilst the US is an obvious candidate (given the expectation of relatively strong supply growth), we could in fact see US crude exports coming under pressure given the narrowing that we have seen in the WTI/Brent discount. The July WTI/Brent discount narrowed to less than US$2/bbl at one stage this week, after starting the month at more than a US$4/bbl discount. Inventories continue to point towards a tightening of the refined products market in Europe. The latest data from Insights Global show that gasoil inventories in the ARA region fell by 31kt over the week to 1.55kt, leaving inventories at multi-year lows. However, the big move over the week was in European gasoline inventories. Gasoline stocks in ARA fell by 342kt to 1.05mt. This decline over the week has seen gasoline inventories fall from more than a 5-year high to just below the 5-year average. Singapore also saw a further tightening in light distillate stocks over the week, with inventory levels declining by 815Mbbls to 13.74MMbbls, leaving them hovering just above the 5-year average. Clearly, the tightness that we are seeing in the US gasoline market is spreading into other regions. And given that the driving season is still ahead of us, we would expect to see further declines in inventories, which should prove supportive for gasoline prices over the summer. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM European gas prices came under pressure yesterday. TTF fell by more than 3.7%, which saw the market settling at its lowest levels since the start of the war. European gas storage continues to improve due to strong LNG inflows. Storage in Europe is almost 41% full at the moment compared to a 5-year average of around 44% for this stage of the year. The gap between current inventories and the 5-year average continues to narrow. Assuming we go through injection season with no significant disruption to Russian gas flows, Europe should enter the next heating season with a comfortable inventory. However, this is a big assumption, and the risk of disruption is likely to continue to keep the market trading at historically high levels. US natural gas prices also came under pressure yesterday, selling off almost 2.7%. Weekly storage data shows that US gas storage increased by 89Bcf over the week, which was slightly higher than the 5-year average of 87Bcf. Agriculture The latest data from the Indian Sugar Mills Association shows that sugar production in India has increased to around 34.9mt so far this season. The association reported that around 116 sugar mills were still operating as of 15 May. ISMA maintained its export estimate at around 9mt for the current year, with around 8.5mt of export sales already made. The food ministry reported that sugar exports have increased to around 7.5mt as of 18th May, already surpassing last year’s 7.2mt of exports. The ministry estimates that around 3.5mt of sugar equivalent would be diverted to ethanol this year and expects this to grow with targets of around 6mt by 2025. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM Read this article on THINK TagsSugar Russian oil ban Natural gas Gasoline shortage Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Follow FXMAG.COM on Google News
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Green Energy Stocks To Dominate Markets In The Near Future? | America's growing bioenergy market needs clearer monitoring and more innovation | ING Economics

ING Economics ING Economics 20.05.2022 00:00
Bioenergy is a crucial pathway to net-zero emissions by 2050. The bioenergy market in the US has been growing and diversifying, with strong growth potential seen in carbon capture and storage (CCS), renewable diesel, and renewable natural gas. Addressing the environmental impact of bioenergy needs clear monitoring and more innovative solutions Bioenergy is a form of renewable energy derived from organic material   Bioenergy, a form of renewable energy derived from organic materials (or biomass), will play a pivotal role in helping the world achieve net-zero emissions by 2050. With a wide range of application options in sectors such as transport, heating, and electricity, bioenergy is forecast to account for 19% of total energy supply in 2050 and will contribute to 13% of the emissions reduction between 2020 and 2030 under the International Energy Agency's (IEA) Net-Zero Emissions (NZE) scenario. Emissions reductions by mitigation measure in the Net-Zero Emissions scenario, 2020-50 Source: International Energy Agency   In the US, the development of bioenergy has been accelerating and expanding. In the transport sector, the US is home to the world’s largest biofuels market, and the demand for biofuels in North America is expected to grow more than any other region through 2026 under the IEA’s baseline scenario. Growth will continue to be led by a diversification of biofuels supply beyond conventional ethanol, as advanced biofuels like renewable diesel and renewable natural gas (RNG) keep gaining momentum. Sustainable aviation fuels (SAFs) are another point of growth; these will be covered in a later article. Biofuel demand growth by region in the baseline scenario, 2021-2026 Source: International Energy Agency   But the deployment of and investment in bioenergy is rising in other sectors as well, led by mounting action from corporates and investors across sectors to decarbonise their businesses and portfolios. So, let's take a look at the growth prospects of various bioenergy applications in the US, as well as the challenges they face.   Examples of bioenergy-related corporate climate strategies: Oil and gas: ExxonMobil identifies biofuels as one of its core solutions for its net-zero ambition. The company announced in early 2022 that it would acquire a 49.9% stake in Biojet AS, a Norwegian biofuels company, to receive up to three million barrels of biofuels per year. ExxonMobil is also investing $125m in California-based Global Clean Energy to purchase up to five million barrels per year of renewable diesel. Petrochemicals: Dow sees the creation of a circular economy through recycling and using bio-based materials as a focus area to accelerate sustainability. The company is expanding an agreement with Fuenix Ecogy Group to ramp up circular plastics production. It has also signed agreements with Gunvor Petroleum Rotterdam and Texas-based New Hope Energy to purify pyrolysis oil feedstocks derived from plastic waste. Power: Southern Company last year took ownership of the Meadow Branch Landfill Methane Recovery Facility, the renewable natural gas facility located in Tennessee, to strengthen its RNG capacity as part of the company’s strategy to achieve net-zero emissions by 2050. Biofuels: Federal policies will have a net positive effect on US production this year The main federal policy to support the US biofuels market is the renewable fuel standard (RFS), which requires refiners to blend certain volumes of biofuels in gasoline each year. The RFS benefited biofuels production – especially that of fuel ethanol – in the past, although in recent years the RFS has become more susceptible to policy uncertainty. The Environmental Protection Agency (EPA), which is in charge of setting RFS mandates, last December proposed to retroactively lower biofuel mandates for 2020 and 2021 but set 2022 requirements slightly above pre-pandemic levels. This will put pressure on refiners to blend more biofuel into their gasoline production this year, resulting in a net positive impact on the biofuels industry. Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM In addition, the EPA has proposed the rejection of all outstanding small refinery exemption (SREs) waivers pending for the 2016-20 compliance years. SREs give small refiners that process less than 75,000 barrels per day (bpd) of oil and can demonstrate economic hardship caused by the RFS an exemption from complying with the rules. If implemented, this decision would substantially raise the demand for biofuel credits. A federal policy that will specifically boost the production of ethanol is the Biden administration's plan to allow E15 gasoline, a fuel that uses a 15% ethanol blend, to be sold between June and September. E15 gasoline is typically banned in summer due to worries about air pollution. E15 consumption is low also because of retail availability, automobile compatibility, and safety concerns. But heightened oil prices amid the Russia-Ukraine war have made the case for more E15 gasoline sales to ease prices. State level policies are a powerful addition At the state level, California’s low-carbon fuel standard (LCFS), the backbone of a carbon intensity-based cap-and-trade system, has been playing a substantial role in incentivising biofuels production in and near the state. The LCFS aims to achieve a 20% reduction in the carbon intensity of California’s transportation fuel pool by 2030, with compliance standards set for each year. Carbon intensity (CIs) based on composite of gasoline and diesel fuels under the LCFS Source: California Air Resources Board   Since last year, LCFS credits (supply) generated from low-carbon fuels have increasingly outgrown LCFS deficits (demand), which has led to a 23% fall from the record high LCFS price of $206/metric ton to $158/metric ton in March 2022. This is mainly because the demand for gasoline and LCFS credits has not recovered from the pandemic, whereas the production of low-carbon fuels keeps growing steadily. The biggest driver of recent LCFS credit generation is renewable diesel, followed by electricity, which has been boosted by the continuing adoption of electric vehicles. LCFS total credits and deficits for all fuels reported Note: Cumulative bank refers to total number of banked credits Source: California Air Resources Board LCFS credit generation by fuel type *Hydrogen, Renewable Naphtha, Propane, Innovative Crude & Low Complexity/Low Energy Use Refining, etc.. Note: Project based credits are issued post verification and may not be included. Source: California Air Resources Board   It remains to be seen whether this deficit trend will be temporary or permanent; we also don't know how the expected implementation of similar programmes in adjacent jurisdictions will alter the LCFS system in California. In addition to the Clean Fuels Program in Oregon which is already in place, Washington State is expecting to implement its Clean Fuel Standard in 2023 and a federal fuel standard is set to come into force in Canada in the same year.  Other US states including New Mexico, Colorado, Minnesota, and states in the Northeast and Midwest are also in various stages of developing LCFS-style systems. These programmes will provide effective additions to the federal RFS programme in driving biofuels demand. Renewable diesel takes the lead in advanced biofuel deployment The production of biomass-based diesel – namely biodiesel and renewable diesel – has taken off in the US and is set to increase further. Of the two, biodiesel dominates the bio-based diesel market, but renewable diesel is seeing faster growth. This is partly because renewable diesel is compatible with existing distribution infrastructure and engines. With the same composition as fossil diesel, renewable diesel does not have a blending limit, whereas biodiesel typically accounts for up to 20% of fossil diesel in the US, because of insufficient regulatory incentives despite higher blends being available. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM Renewable diesel’s ability to lower carbon intensity, particularly in trucking and aviation, has prompted several US refineries to invest in greenfield projects and/or convert traditional plants to process renewable diesel. Refineries set to complete conversion between 2022-23 include Marathon Petroleum’s Martinez refinery in California, CVR Energy’s Wynnewood refinery in Oklahoma, and HollyFrontier’s Cheyenne plant in Wyoming, etc. Planned renewable diesel capacity in the US is expected to reach 6bn gallons by 2025, up from less than 2.4bn gallons estimated for 2021. One major challenge to the growth of both biodiesel and renewable diesel is feedstock availability and costs. It is estimated by Bloomberg New Energy Finance (BNEF) that the demand for bio-based diesel feedstock will more than double from 2020 to 38.3bn pounds (17.4bn kilograms) in 2022, and soar to over 64bn pounds (19bn kilograms) in 2024. Prices for bio-based diesel feedstock have also climbed since 2020, causing some companies to postpone their renewable diesel projects. US estimated bio-based diesel feedstock use and implied future demand from capacity additions Source: Bloomberg New Energy Finance   In the long term, despite the growth momentum for bio-based diesel, the Energy Information Administration forecasts that bio-based diesel will remain a small part of the diesel market, accounting for less than 8% of US diesel production in 2050. This is partially due to competition from food consumption and electric vehicles (EVs), which will be discussed in a later section. Nevertheless, that 8% still translates into roughly 0.23mn bpd of production, a considerable absolute amount. RNG to see demand build up in the power sector Another promising advanced biofuel which is set for growth is renewable natural gas (RNG), or biogas that has been upgraded to replace fossil gas. RNG production capacity in the US increased at a compound annual rate of 35% between 2017 and 2021, thanks to $1.7bn of investment from oil and gas companies. Looking forward, RNG demand is projected to jump from 0.2 trillion cubic feet (Tcf) today to between 2.3 and 3.2 Tcf in 2040, according to BNEF. The fuel is forecast to be capable of displacing 6-12% of the US natural gas demand. RNG can be produced from various sources. Landfill has the strongest supply and cost advantage – most landfill RNG projects can be economical at $10/MMBtu or lower; landfill accounts for more than 60% of the RNG credits generated under the RFS and more than 90% of the RNG credits under the LCFS. In contrast, RNG produced from manure is more costly – at $30/MMBtu or higher – but remains attractive under the LCFS as it offers one of the lowest carbon intensities of less than -300 gCO2e/MJ. Importantly, although RNG demand from transportation dominates now, the majority of demand for RNG by 2040 will come from the power sector. In California, where the LCFS is advanced, RNG already contributes to 98% of natural gas used for transportation, mostly in municipal buses and trucking. The can add risks to future project returns if the produced RNG cannot be contracted in time. There is a potential in the long term for more RNG to be used in shipping, though it will encounter competition from other biofuels or synthetic fuels. RNG producers are starting to pivot their focus away from the transport sector. Archaea Energy is aiming to sell its RNG to natural gas utilities through long-term offtake agreements. The company plans to allocate 65% of its RNG production to non-transport applications. Admittedly, electricity generation from RNG today is more expensive than from conventional gas and the contribution of RNG to the grid is limited. Yet demand is likely to be sustained in the future, driven by climate commitments from commercial/residential customers and precuring requirements set for utilities. California now mandates utility company SoCalGas to increase RNG’s share of gas deliveries from 4% in 2021 to 12.5% by 2030. ­Oregon passed legislation to allow RNG to account for 30% of a utility’s purchases by 2045; the state is also letting utilities recover prudently incurred costs to meet the target. A handful of other states are considering similar policies. Outlook for US renewable natural gas demand Source: Bloomberg New Energy Finance   The favourable outlook for RNG/biogas can also augment the production of bio-fertilisers, which can be generated from the waste from biogas production. This will help meet the rising demand for bio-fertilisers in the US, spurred by growing preferences for organic food, as well as concerns over the likely harmful effects of chemical fertilisers on both health and the environment. US to pioneer in BECCS development The US is poised to lead the deployment of bioenergy with carbon capture and storage (BECCS) technology, a high-potential application of bioenergy. BECCS involves converting biomass to heat, electricity, or liquid fuels while capturing and storing the CO2 that is emitted during the conversion process. Since the growing of plant biomass absorbs CO2, BECCS can achieve net negative emissions when the emitted CO2 from bioenergy generation is permanently stored. Indeed, the UN's Intergovernmental Panel on Climate Change highlighted in its most recent report the need for carbon removal technologies for the world to reach net-zero emissions. The US is already a front-runner in CCS – it is home to 36 of the 71 new CCS projects added worldwide during the first nine months of 2021. On top of this, several BECCS networks are emerging in the Midwest thanks to lower costs of bioethanol production. Summit Carbon Solutions, for instance, is progressing with a project to link more than 30 ethanol biorefineries across Iowa, Minnesota, Nebraska, North Dakota, and South Dakota. With a total potential capturing capacity of 8 Mtpa, the network would be the largest of its kind globally. Valero Energy and BlackRock are partnering with Navigator Energy Services to develop an industrial-scale CCS network that would connect biorefineries and other industrial plants across five Midwest states. The challenges facing bioenergy The use of bioenergy is not without controversy. The main challenge is the negative impact of bioenergy generation from excessive land use. From an environmental point of view, growing feedstocks such as soybeans and corn can lead to more deforestation, degradation of soil, and harmful changes to ecosystems. From a social point of view, despite yield growth potentials, the more feedstock is used for biofuels, the less there will be for food production. This has been exacerbated by the Russia-Ukraine war, which has disrupted the global food supply chain as both countries are major exporters of several leading crops. Hence, concerns have arisen in the US that the increasing use of crops for biofuels will limit food supply and add pressure to food prices. To tackle the problem in the long term, there needs to be a switch away from conventional, food-based biofuel feedstocks to advanced biofuels which use non-food crops, municipal solid waste, and agricultural and forest residues. The IEA forests that 60% of the global bioenergy supply in 2050 will need to come from sources that do not need dedicated land use to achieve net-zero emissions. Accelerating advanced biofuel production requires stronger incentives compared to those for conventional biofuels. In the US, the federal Biomass Crop Assistance Program provides financial assistance to producers of advanced biofuel feedstock. The Biden administration has also included in its FY23 budget $245m to accelerate the R&D of next-generation biofuel technologies. Another challenge is that the traditional use of bioenergy (burning wood or traditional charcoal) remains controversial as it can cause more emissions and deforestation. The EU still categorises bioenergy as green in its Taxonomy, but has strengthened the criteria to exclude certain forms of wooden biomass from qualifying as “renewable”. In the US, the EPA sees bioenergy as a cleaner fuel, while also recognising its negative potential if not managed well. Moreover, bioenergy-based solutions face scepticism that the supply chain – which involves biomass growing, transportation, storage, and processing – can emit more CO2 and harm the environment. That is why more precise monitoring and reporting of life-cycle emissions along a bioenergy technology’s supply chain needs to be in place. Finally, competing low-carbon technologies can complicate the growth of bioenergy. In the transport sector, the massive adoption of EVs will be a major threat to the demand for biofuels. As mentioned above, RNG developers are expanding their business footprint to the power sector, though these developers will likely encounter competition from renewable energy. Nonetheless, biofuels are still likely to maintain their niche in transportation, especially in heavy-duty trucks and aeroplanes, as it will be challenging for EVs to provide long-haul services without a step-change in technology. Global bioenergy supply in the Net-Zero by 2050 Scenario, 2010-50 Source: International Energy Agency Read this article on THINK TagsUnited States Renewables Net zero Energy Transition Biofuels Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Follow FXMAG.COM on Google News
China: Slowdown in Non-Manufacturing Activity Raises GDP Downgrade Concerns

US Close – Stocks Near Bear Market, Crude Oil Price Higher On Supply Concerns, Gold Price (XAUUSD) Pops, Bitcoin (BTC/USD) Stabilizes | Oanda

Ed Moya Ed Moya 19.05.2022 23:51
US stocks edged lower as Wall Street became more focused over a deteriorating growth outlook that could see stubbornly high pricing pressures for the Fed into a much more aggressive tightening cycle. It doesn’t seem like we will see a deceleration in pricing pressures and that has many traders worried that the Fed will send the economy into a recession.  Right now markets are functioning properly but if we see another 5% decline with stocks, credit conditions will worsen and that could provide the Fed an excuse to stop tightening so aggressively.  Tighter financial conditions will hurt the parts of the economy that are doing well and further selling of stocks could remain the theme if the S&P 500 enters a bear market.  The S&P 500 is looking vulnerable here as more strategists slash their forecasts as recession risks rise.  Fed (Federal Reserve) Fed’s George affirmed the board’s stance that a half-point rate increase pace is appropriate.  The Fed remains focused with fighting inflation and they will remain aggressive with tightening policy until liquidity becomes a concern.  FX (Forex) The dollar is in freefall as investors buy up Treasuries over concerns that the economy is headed for a rough patch. The dollar was ripe for a pullback and today’s across the board weakness might continue a while longer. Read next: Altcoins: What Is PancakeSwap (CAKE)? A Deeper Look Into The PancakeSwap Platform| FXMAG.COM US Data A wrath of US economic data painted a gloomy picture of the economy: Jobless claims rose, the housing market is clearly cooling, another Fed regional survey showed the weakest print since early in the pandemic and the leading index turned negative.  Weekly jobless claims rose from 197,000 to 218,000. The Philly Fed manufacturing outlook fell sharply from 17.6 to 2.6.  Surging mortgage rates and record home prices led to a drop in April existing home sales  Crude Oil Price Crude prices rallied as the EU nears a key deadline to pay for Russian oil with a roubles account.  The oil market just has too many risks to supplies and still a strong short-term travel outlook both in the EU and US.  WTI crude should be well supported at the $100 level as US production is slowly increasing. Recession fears are rising but that impact won’t be felt for quite a while, which means the oil market won’t see imminent crude demand destruction. Crude inventories are too low for oil traders to turn bearish with WTI crude. Read next: Altcoins: What Is Litecoin (LTC)? A Deeper Look Into The Litecoin Platform| FXMAG.COM Gold Price Gold is acting like a safe-haven again as recession fears are triggering massive demand for Treasuries, which is sending both yields and the dollar lower. The US labor market is showing signs of weakness and that could lead fears that consumer spending will deteriorate much faster than most are expecting. The dollar is getting sold against everything and that is great news for gold. Right now, investors are looking for safety and Treasuries and gold should both outperform in the short-term.   Bitcoin (BTC) Bitcoin is hovering around the $30,000 level as investors continue to shy away from stocks.  A weaker dollar and bear market stock fears are making Bitcoin attractive again.  It seems the fallout from all the stablecoin drama that sent cryptos sharply lower is finally fading.  Bitcoin looks poised to consolidate here, but bulls should be happy to see prices are not mimicking what happens with the stock market.   Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Top 10 Stocks to Watch: August 2023 - BY: RYAN SULLIVAN

WCU: Comeback week for industrial and precious metals | Saxo Bank

Ole Hansen Ole Hansen 20.05.2022 18:11
Summary:  The commodity sector continued to find support this past week, despite the hurricane sweeping across global stock markets where the S&P 500 so far has recorded its fourth biggest drawdown since 2010. Gains this past week were concentrated in industrial and precious metals - sectors that have suffered setbacks during the past two months. In addition, the risk of a global food crisis continues to support the agriculture sector while a tight fuel-product market kept crude oil range bound despite economic growth worries. The commodity sector continued to find support this past week, despite the hurricane sweeping across global stock markets. US stocks posted their biggest daily drop in almost two years on Wednesday, driven by surging inflation, weak earnings and the prospect of aggressive monetary policy tightening hurting economic growth. Nevertheless, the Bloomberg Commodity Spot index managed to climb by 1.6% and, while we are seeing the fourth biggest drawdown in the S&P 500 since 2010, the commodity sector continues to highlight the need for both supply and demand to keep prices stable. With the supply of many key commodities – from grains and coffee to fuel products and some industrial metals – being challenged, the sector is likely to remain supported despite softer growth; especially considering the prospect for a government-supported stimulus boost to a post-lockdown China. Growth in the country has been increasingly challenged by its stubborn adherence to the dynamic zero-Covid policy despite mounting economic and social costs. Gains this past week were concentrated in industrial and precious metals – sectors that have suffered setbacks during the past two months. In addition, the risk of a global food crisis continues to rise, with Russia’s aggression in Ukraine and poor weather conditions being the main culprits for the disruption to a lower supply of key food commodities. The grains sector hit a fresh record high with the Bloomberg Grains Spot Index sprinting to a +30% gain on the year. Soybeans led the rally, followed by wheat with corn registering a small loss in the week. Global worries about a food crisis persist with disruptions in shipments from the Ukraine, one of the world’s most important supplier of high-quality wheat and sunflower oil causing ripples around the world. Ukrainian farmers have almost completed the sowing of spring wheat for the 2022 harvest and the overall rate of this year's spring crop sowing is 25% lower than at the same date in 2021, the agriculture ministry said on Friday. A couple of positive supply news, however, helped ease but by no means remove worries about a global food crisis. Palm oil slumped after Indonesia ended its short-lived export ban. Wheat which earlier in the week surge to fresh highs in Europe and the US on worries about supplies from India saw prices ease on forecast for a bumper crop year in Russia. However, comments from agriculture analysis firm Gro Intelligence that the world only has 10 weeks’ worth of wheat consumption in reserve will keep prices supported. At least until we get some more clarity over production levels in Europe and North America, both areas that have seen a challenging weather-related start to the growing season.In our latest industrial metal-focused update, we wrote that the precious metals sector was looking to China for a rebound and, indeed, this week saw some of the signals that China is starting to turn more supportive. Before then, the Bloomberg Industrial Metal Index had lost 25% since the early March peak, with the main catalysts – aside from global growth worries – being China and its zero-Covid policy. Outbreaks in Shanghai and Beijing have been met with a prolonged period of lockdown, hurting economic growth and creating major bottlenecks across global supply chains.This week in China, we saw retail sales slump 11% and youth unemployment hit a record 18.2%, as well as economists forecasting downgraded GDP. Responding to these developments on Friday, Chinese banks cut their 5-year loan rate by a record 0.15 basis points. Keep in mind, this is happening while the rest of the world is going in the opposite direction, and it highlights the Chinese government’s willingness to support the economy. More support will likely follow as the government seeks to support infrastructure and property projects, which are both critical for industrial metal demand.Around the timing of the early March peak in prices, stock levels of the four major industrial metals held at warehouses monitored by the LME and Shanghai Futures Exchange stood at 1.77 million tons. Instead of rising as demand according to the price action showed weakness, this level has continued to fall, reaching 1.43 million tons this week – a 19% decline during this time.It highlights our view that a global economic slowdown does not prevent industrial metals from moving higher, despite supply potentially struggling to keep up with demand not only from China, but also from the energy transition away from fossil fuels. A transition that, in name, is green but actually is very black when you consider the number of different metals that are needed in the process. These range from aluminum, copper and nickel to more exotic metals like rare earth minerals, cobalt and lithium.High-Grade Copper: Despite the month-long correction, HG copper remains rangebound, having so far failed to properly challenge key support in the $4 per pound area. As it stands, the recovery this week has taken HG copper back to its 21-day moving average, with a break above signaling a loss of negative price momentum. If realised, it may soon force speculators to cover a net short which, in the week to May 10, doubled to reach a two-year high at 17.7k lots or 201k metric tons. Source: Saxo Group Gold, in a downtrend since mid-April, found a fresh bid amid continued turbulence across global stock markets. During the past month, gold suffered from the double blow of a stronger dollar and the FOMC signaling an aggressive pace of future rate hikes to combat inflation at the highest level in decades. This is fine if the economy does not suffer too much of a setback, thereby raising the risk of recession. What changed this week has been dismal earnings news from large US retailers raising the risk of a deeper than expected economic slump.We maintain a bullish outlook for gold, given the need to diversify amid a troubled stock market and the mentioned potential increased risk of a FOMC policy mistake driving yields and the dollar lower. From the chart below, gold has its work cut out, and a great deal of work is needed to mend the damage done during the past month. However, the first sign of improvement has been the break above the 200-day moving average at $1839 – with the next big challenge being $1868, the 38.2% retracement of the 210-dollar April to May correction.Silver, supported by the bounce across industrial metals, seems to have found its footing following a 22% correction, which – at one point – extended below previous support around $21.50. With speculators having cut their positions to neutral, any renewed upside momentum is likely to attract fresh buying from underexposed funds. Crude oil spent most of the week challenging the upper end of the trading range that has prevailed for the past six weeks. However, relative calm market action during this time has been hiding a market in continued turmoil where major opposing forces have managed to keep it rangebound. During this time, the U.S. government has injected millions of barrels in a failed attempt to suppress the price while Chinese demand has suffered due to its zero-Covid strategy.The fact the market has not fallen below $100 highlights the underlying strength with tight supply of key fuels, self-sanctioning of Russian crude oil, OPEC struggling to increase production and unrest in Libya all supporting the market. With China potentially starting to ease lockdowns and with unrest in Libya still growing, the short-term price risk remains firmly skewed to higher prices.During the past few weeks, the focus has turned from a rangebound crude oil market to the product market where the cost of gasoline, diesel and jet fuel have surged to levels not seen in years (if ever). The combination of refinery maintenance, a post pandemic reduction in capacity as well as self-sanctioning of Russian products have all led to incredible tight markets. Especially in North American refineries, where they are running flat out to produce what they can and, in turn, benefitting from mouthwatering margins.So, despite the prospect for slower global economic growth, the price of crude oil remains supported. If we stick to our wide $90 to $120 range call for Brent during the current quarter, while still considering structural issues (most importantly the continued level of underinvestment and OPEC’s struggle to increase production), this will continue to support prices over the coming quarters. US natural gas had another rollercoaster week, ending up off the highs after twice finding resistance around $8.5/therm. The current price is up by 200% compared to the same time last year, with record exports via LNG, flat production growth and a recent heatwave across the southern states increasing demand for cooling. However, the weekly injection of 89 billion cubic feet (bcf) to 1732 bcf was in line with expectations and helped reduce the deficit to the 5-year average to 15.2%. In addition, the milder weather ahead and Europe suffering from a temporary bout of LNG indigestion could suggest a period of stable prices. However, overall rising global demand and a sharp discount to prices in Europe and Asia is likely to prevent any significant weakness during the coming months. Source: Saxo Bank
OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

Crude Oil Calm, Gold Price (XAU/USD) Rises | Oanda

Jeffrey Halley Jeffrey Halley 23.05.2022 14:34
A quiet day for oil markets Oil prices edged higher on Friday in New York, as the persistent squeeze in refined petroleum products in the US, and ever-present Ukraine/Russia risk underpinned prices, with China slowdown and US recession noise limiting gains. Mind you, in one article I read this morning, China’s recovery hopes were supporting oil while China’s slowdown hopes were capping gains. I guess it’s not just equity markets that are very confused right now. I do note, though, that the Brent crude premium over WTI reasserted itself into the end of the week, so perhaps the worst of the US diesel and gasoline squeeze is passed for now. Brent crude rose by 1.10% to USD 112.55 on Friday, gaining another 0.70% to USD 113.30 a barrel in Asian trading. WTI rose 0.40% to USD 110.55 on Friday, gaining another 0.35% to USD 110.90 a barrel today. The price action is consistent with a market that is not strongly leaning one way or another at the moment. Overall, I am expecting Brent crude to bounce around in a USD 111.00 to USD 117.00 range this week Brent crude has resistance at USD 116.00 and support at USD 111.50 a barrel. WTI has resistance at USD 113.00 and USD 116.00 a barrel, with support at USD 108.00. Overall, I am expecting Brent crude to bounce around in a USD 111.00 to USD 117.00 range this week. Follow FXMAG.COM on Google News Gold rises on weaker US dollar Gold prices rose on Friday, climbing just 0.24% to USD 1844.00 an ounce. In Asia, they have gained 0.42% to USD 1854.00 an ounce. Although gold’s rally has been impressive over the past week, it has yet to be proven that it is not just the result of a weaker US dollar. The true test of its resolve will be its ability to maintain gains when the US dollar starts rising again. Nevertheless, the technical picture is swinging back to a further test of the upside with resistance at USD 1860.00 and then USD 1885.00 an ounce, its 100-day moving average. Support is at USD 1845.00 and USD 1840.00, followed by USD 1832.00 an ounce. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Learn more on Oanda
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

What's The Future Of Energy Stocks? High Crude Oil Prices And No New Investments | Conotoxia

Conotoxia Comments Conotoxia Comments 24.05.2022 12:29
A paradox seems to be emerging in the oil market. Typically, high prices caused companies to increase investment so they could produce more, boosting their profits and meeting demand. Currently, this may not be the case. Investors were also concerned that high oil prices could reduce fuel consumption around the world Oil prices are still above the $100 per barrel mark, but oil production companies are not expected to invest in exploring new fields or starting new drills. Representatives of the world's largest company, Saudi Aramco, are even announcing that the world may face a serious supply crisis in the oil market. Energy companies may be afraid to invest in this sector in the face of pressure related to politicians' attitude toward energy transformation and renewable energy sources - Reuters reports. Thus, energy companies may keep their current profits to themselves instead of investing until regulations and laws lead to a reduction in their market share. This, in a way, may explain why OPEC may care about high oil prices and why the cartel is not increasing production to the levels it declared earlier. Additionally, investors were also concerned that high oil prices could reduce fuel consumption around the world. Moreover, at the annual economic summit in Davos, political and business representatives highlighted the risk of a global recession in the face of multiple threats. IMF Managing Director Kristalina Georgieva said she does not expect a recession in major economies, but cannot rule it out. Meanwhile, lingering concerns about tight global supply and hopes for a return of demand in China provided some support for oil prices as Shanghai prepares to reopen and lift restrictions. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM In contrast, rising oil prices and slowing economic growth will significantly constrain demand growth for the remainder of 2022 and into 2023, according to a May IEA report. In addition, prolonged restrictions in China, where the government is battling the spread of the Covid-19 virus, are causing a significant slowdown in the world's second-largest oil consumer. For the full year, global oil demand is forecast to average 99.4 mb/d in 2022, up 1.8 mb/d year-on-year. If refiners cannot keep up with the pace of demand growth, consumers could come under additional pressure With the easing of restrictions in China, increased summer car traffic and further increases in jet fuel prices, global oil demand will rise by 3.6 mb/d from its April-August low. If refiners cannot keep up with the pace of demand growth, consumers could come under additional pressure. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Follow FXMAG.COM on Google News
Inclusion of Government Bonds in Global Indices to Provide Further Support for India's Stable Currency Amid Economic Growth

What's It Going To Be Drivers? Crude Oil Drifting, Price Of Gold Price (XAUUSD) Edges Higher | Oanda

Craig Erlam Craig Erlam 24.05.2022 14:19
Oil rally stalls Oil prices are relatively flat on Tuesday as global economic fears and the prospect of tighter restrictions in Beijing take some of the heat out of the rally. Brent and WTI are trading right at the upper end of the range they’ve been within the last couple of months, with tight supplies, easing restrictions in Shanghai and a potential EU ban on Russian oil imports driving the price higher. As has been the case for months now, there are so many countering forces in the market that it can be hard to keep up. Not to mention sentiment in the broader markets drastically changing from one day to the next. It’s quite a challenging market right now but one thing is clear, it’s still extremely tight and those pressures will keep prices elevated. Just not quite as much as it would if not for the recession warnings and Chinese Covid cases. Read next: Altcoins: What Is Polkadot (DOT)? Cross-Chain Transfers Of Any Type Of Asset Or Data. A Deeper Look Into Polkadot Protocol | FXMAG.COM Gold edges higher Gold is aiming for a fifth consecutive winning day on Tuesday as a softer dollar and slightly lower US yields have allowed for a recovery in the yellow metal. It is trading back above USD 1,850, with USD 1,875 and USD 1,900 being the next big tests. If USD 1,850 fails to hold as support, the next test below falls around USD 1,835, with USD 1,800 then being the key support below that. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Commodities Update: Strong Russian Oil Flows to China and Volatility in European Gas Market

Crude Oil Rangebound, Gold Price (XAU/USD) Shines | Oanda

Ed Moya Ed Moya 24.05.2022 20:02
Oil looking for direction Oil prices remain directionless as energy traders try to assess how significant the deceleration in economic activity will be for the short-term crude demand outlook. The oil market remains tight but the COVID situation in China points to a gradual pickup in demand and that might keep this market rangebound a while longer. Saudi Prince Faisal bin Farhan noted that the kingdom has done what it can for global oil markets and that should mean production increases will remain slow. Oil prices will likely remain supported above the USD 100 level for the rest of the year. ​ ​ It looks like the only thing that will send oil back to the pre-COVID levels is demand destruction across the world’s largest economies and that probably won’t happen. WTI crude pared gains after a steady stream of weakening US economic data, but the overall outlook is still ok and a recession is unlikely until 2024. Gold Gold prices are surging as Treasury yields plunge following a wave of risk aversion that stemmed from disappointing earnings and deteriorating economic data from the US. ​ Non-interest bearing gold is a safe-haven again and it could be on the verge of a major breakout if prices can recapture the USD 1885 level. A peak in Treasury yields is in place and now the dollar looks like it is ready for a pullback as the ECB is ready to raise rates which is good news for the euro. ​ Read next: Altcoins: What Is Monero? Explaining XMR. Untraceable Cryptocurrency!? | FXMAG.COM There might be no stopping gold right now as the wall of worry on Wall Street continues to grow. ​ Gold should remain supported as inflationary pressures weigh further, China’s COVID situation remains a big unknown, and corporate America continues to slash outlooks. Follow FXMAG.COM on Google News This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Corn Prices Recorded Their Biggest Weekly Gain, Gold Demand In India May Suffer A Temporary Setback

The Commodities Feed: Further US gasoline draws | ING Economics

ING Economics ING Economics 25.05.2022 08:37
Your daily roundup of commodities news and ING views Energy The oil market has traded firmer during the morning session in Asia. API numbers overnight were once again supportive for the market. Crude oil inventories are reported to have increased by 567Mbbls over the last week. However, there were continued product draws, with gasoline and distillate stocks falling by 4.22MMbbls and 949Mbbls respectively. The tightening in the US gasoline market will raise concerns over supply as we move into driving season. Tightness in the US is pulling in gasoline from elsewhere, including Europe, which is also looking increasingly tight. The US energy secretary has also not ruled out restricting petroleum exports, given rising prices. Up until now the US administration has been reluctant to go down this route and instead has focused on releases from the Strategic Petroleum Reserve.  Whilst these releases may offer some relief to crude oil prices, they may do little to ease gasoline shortages if the bottleneck is on the refining side. It’s looking unlikely that differences over an EU ban on Russian oil imports will be resolved at next week’s meeting of EU leaders. The Hungarian Prime Minister has reportedly said that meetings on 30 and 31 May would not be an appropriate place to discuss the ban, whilst the European Commission President has also made similar comments. Therefore, the uncertainty over a Russian oil ban looks as though it will hang over markets for quite a bit longer. We continue to believe that the EU will eventually agree on a ban and, assuming it is not too different to the current proposal, we would expect  the move to be supportive for prices, particularly over 2H22. Austrian Gas Grid Management (AGGM) announced the results of its recent purchase tender for natural gas for strategic reserves. The tender attracted 189 bids, which ended up seeing AGGM buying 7.7TWh of storage at an average price of EUR124.50/MWh including storage costs through until April 2023. This price is well above the current prompt price in Europe of around EUR85/MWh.  Austrian gas storage levels are well below average at the moment - inventories are 29% full compared to a 5-year average of almost 45% at this stage of the year. EU allowances saw somewhat of a recovery yesterday, following the weakness seen over the past week due to EU plans to sell EUR20b worth of allowances from the Market Stability Reserve. The Dec-22 contract rallied by 4% yesterday to settle at EUR81.32/t, although it is still some distance from the more than EUR92/t we saw it trading at early last week. The catalyst for yesterday’s move appears to be comments from an EU official who was more supportive about the role that financial institutions play in the EU carbon market. This comes after the EU Parliament’s Environment Committee supported a proposal to restrict speculative activity in the EU carbon market. Agriculture There appears to be a growing trend of protectionist measures taken by governments around the world, given concerns over food security and inflationary pressures. After India recently surprised the market with a ban on wheat exports, the Indian government has now announced that it will limit sugar exports to 10mt in the current 2021/22 season, which ends in September. India is set to be the third-largest sugar exporter this season, behind Brazil and Thailand. The announcement is somewhat surprising, given that India has had a very strong sugarcane crop this season. However, as reflected in the price action, the market is not too concerned at the moment about this export limit, given that most in the market have been expecting Indian sugar exports this season to total around 9mt, so below the export limit. The bigger concern is that we see other countries taking similar action when it comes to agricultural commodity exports. Apart from the action taken by India, Malaysia is also set to ban chicken exports, whilst Indonesia has gone back and forth on a palm oil export ban. Read this article on THINK TagsSugar Russian oil ban Oil Natural gas EU carbon Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Crude Oil And Price Of Gold (XAU/USD) Head Higher | Oanda

Jeffrey Halley Jeffrey Halley 25.05.2022 14:24
White House unnerves oil markets Oil prices continued to range trade overnight, finishing almost unchanged in New York. Asia, though, has seen both Brent crude and WTI rise. A couple of items seem to be behind the move. A sharp 4.20 million drop in gasoline inventories late in New York from the API Inventory data is likely supportive, with gasoline prices becoming a major issue in the US. Following on from that, White House officials explicitly refusing to say possible crude export restrictions were off the table appears to have spooked Asian suppliers. The last thing the world needs right now is US crude oil export restrictions with global supplies already tight. That saw both Brent crude and WTI spike 1.0% higher in early Asian trade, although those gains have eased as the session has gone on. Brent crude is 0.90% higher at USD 114.70 a barrel, and WTI is 0.65% higher at USD 110.90 a barrel. The White House likely needs to “clarify” its stance, least it creates unintended consequences by pushing crude prices higher. Brent crude, notably, is testing multi-week resistance today. Brent crude is testing resistance at USD 114.70 today, which is followed by USD 116.00, with support at USD 112.00. Failure of USD 116.00 could set up a retest test of my medium-term resistance at 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will almost certainly drag WTI higher as well, precisely what President Biden doesn’t want. Gold rises once again Gold had another decent overnight session, buoyed by lower US yields and a still-weakening US Dollar. Gold finished 0.69% higher at USD 1866.50 an ounce. In Asia, some US dollar strength has seen it weaken slightly by 0.40% to USD 1859.00 an ounce. Overall, although I acknowledge gold’s upward momentum, I remain sceptical of its longevity until it manages to hold on to material gains in the face of US dollar strength. Read next: (TRX) TRON USD Decentralised Blockchain Platform That Focuses On Entertainment And Content Sharing. Altcoins: A Deep Look Into The TRON Network | FXMAG.COM The technical picture continues to remain supportive, and it seems only a marked US dollar recovery will cap gold’s rally. Gold took out resistance at the double top at USD 1865.00 an ounce which becomes intraday support, followed by USD 1845.00 and USD 1840.00 an ounce. It should now target USD 1886.00, its 100-day moving average. That would open up a test of USD 1900.00, although I suspect there will be plenty of option-related selling ahead of that level. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
SEK: Riksbank's Impact on the Krona

Crude Oil steady, Gold Price (XAU/USD) Dips As US Dollar (USD) Rises | Oanda

Jeffrey Halley Jeffrey Halley 26.05.2022 15:59
Oil markets slumber Oil prices had another comatose session by their standards, barely rising from the day before. Nevertheless, both Brent crude and WTI have held on to all their recent gains, suggesting the weaker side is the upside in prices for now. While China slowdown fears are receding in the minds of traders, for now, fears persist around the increasing tightness of the US diesel market, and I suspect not ruling out export controls has unnerved international markets, and rightly so. I expect prices to remain firm for the rest of the week, with the global data calendar fairly light. Brent crude rose 0.60% to USD 114.35 overnight, where it remains in an equally quiet Asian session. WTI rose 0.40% to USD 110.70, adding just 20 cents to USD 110.90 a barrel in Asia. Brent crude has resistance at USD 115.00 and USD 116.00 today, with support at USD 112.00. A rally through USD 116.00 could set up a retest test of my medium-term resistance at USD 120.00. ​ WTI is taking comfort from the White House stance and is sitting in a USD 108.00 to USD 112.00 a barrel range. Nevertheless, a topside breakout by Brent crude will drag WTI higher as well, allowing a test of the USD 115.00 to USD 116.00 resistance zone. Gold weakens on US dollar strength Gold fell by 0.70% to USD 1853.25 an ounce overnight, retreating another 0.45% to USD 1845.00 an ounce in Asia. As I have touched on before, the true test of gold’s underlying strength will be maintaining gains in the face of a US dollar rally. The fall by gold over the last 24 hours in the face of modest US dollar strength does not fill me with confidence. Further US dollar strength could see gold face one of its ugly downside shakeouts. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Gold has nearby support at USD 1842.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. On the topside, gold has resistance at USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Follow FXMAG.COM on Google News
Commodities Update: Strong Russian Oil Flows to China and Volatility in European Gas Market

OPEC+ Meeting Takes Place This Week! BRENT Crude Oil Climbed Really High Last Week Reaching Over $119. Weaker US Dollar (USD) Let Metals Get Stronger | ING Economics

ING Economics ING Economics 30.05.2022 08:24
Your daily roundup of commodities news and ING views Tank farm for storage of petroleum products in Volgograd, Russia Energy Oil finished last week off strongly. ICE Brent settled above US$119/bbl, which took its gains for the week to more than 6%. Tightness in the refined products market continues to prove supportive for crude oil prices, as healthy refinery margins should see refiners maximize their run rates. Last week, there were also reports that the US administration was talking to the domestic industry to see whether they could bring back shut refining capacity in order to help improve refined product supply. Over the weekend, EU diplomats failed to come to an agreement on the EU’s proposed ban on Russian oil ahead of a 2-day summit with EU leaders starting today. There are reports that despite concessions provided to Hungary, which would exclude oil that flows through the Druzhba pipeline from the ban, Hungary is still blocking the agreement. Hungary wants EU funding in order to help them increase pipeline capacity from Croatia and also for refiners to be able to switch to alternative crude. Diplomats are expected to meet ahead of the summit today, however, it’s unlikely that members come to an agreement when they meet, given that talks have not progressed enough.   The latest positioning data show that speculators increased their net long positions in ICE Brent by 12,639 lots over the last reporting week, which left them with a net long of 197,072 lots. This is the largest position that speculators have held since early March. However, it is still some distance from the roughly 333k lots they held back in October last year. The move over the week was driven predominantly by fresh longs, with the gross long increasing by 8,831 lots. Given the move that we have seen in the market since last Tuesday, the current net-long position is likely to be even larger. OPEC+ are set to meet on Thursday to discuss their production policy for July. We continue to expect no change in the group’s approach and expect confirmation that they will increase output levels by a little over 400Mbbls/d over the month. However, as we have seen for several months now, it is unlikely that members will produce anywhere near their agreed output levels. Metals Base metals rebounded on Friday along with other risk assets. A weaker dollar last week offered a temporary boost to the metals complex. LME nickel jumped over 7% at one stage on Friday, which saw the market hit an intraday high of US$29,100/t (highest since May 9). Total open interest in the LME nickel market dropped to 161,884 contracts on Wednesday last week, the lowest since 2012. Over the weekend, Shanghai said it would remove ‘unreasonable curbs’ on businesses and manufacturers from 1 June. The city also unveiled fresh economic support measures. It is set to abolish the so-called whitelist, allowing more businesses to resume from 1 June; however, some doubt that workers will be able to leave their compounds to return to work from this week. Among the 50 policy measures announced by Shanghai officials, the city will cut some purchase taxes, issue more quotas for car plates, and subsidise electric vehicle purchases. These policy measures for Shanghai may provide some relief, but are unlikely to turn around the overall slowdown in demand.  The focus will be on how quickly economic activity improves following the easing of restrictions. More importantly, the scale of stimulus is an important factor to keep an eye on. Major base metal inventories have remained in a downward trajectory in the China onshore market after logistics improved, and are still low compared to historical levels. This suggests that markets have a relatively smaller pile of metal to work with if business returns to normality. However, as market dynamics move back towards a favourable import arb, the scale of import flows remains to be seen. Agriculture CBOT corn saw speculators liquidating longs over the last reporting week with a pick-up in US corn plantings. CFTC data shows that money managers reduced their net long position by 48,242 lots over the last week to 291,469 lots. The move was predominantly driven by longs liquidating. Money managers reduced gross longs by 30,976 lots over the week, whilst increasing fresh shorts by 17,266 lots. The speculative net long in CBOT corn has now dropped to the lowest level in more than six months. Read this article on THINK TagsRussian oil ban Russia-Ukraine Refined product Nickel China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
GBP: Softer Ahead of CPI Risk Event

EUR/USD Performs Quite Well, Euro Is Supported By ECB. US Jobless Data Incoming, So Does NFP- How Will They Affect (USD) US Dollar Index (DXY)? Bank Of Canada (BoC) May Boost Canadian Dollar (CAD)! Is It Time To Buy (AMZN) Amazon Stock? | Swissquote

Swissquote Bank Swissquote Bank 30.05.2022 10:03
The week starts on a positive note after the rally we saw in the US stocks before last week’s closing bell. European futures hint at a positive open. The US 10-year yield stabilized around the 2.75% mark, and the US dollar index is now back to its 50-DMA level, giving some sigh of relief to the FX markets overall. Bonds and Equities One interesting thing is that we observe that the equities and bonds stopped moving together since the 10-year yield hit 3% threshold, suggesting that investors started moving capital to less risky bonds if they quit equities, instead of selling everything and sitting on cash. Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM US Jobs Data, Expensive Crude Oil   That’s one positive sign in terms of broader risk appetite and should help assessing a bottom near the actual levels. But the end of the equity selloff depends on economic data. Released on Friday, the US PCE index fell from 6.6 to 6.3% in April. Due this week, the US jobs data, and the wages growth will take the center stage in the Fed talk. Weak dollar pushes the major peers higher, but the rising oil prices preoccupy investors this Monday. The barrel of US crude is above $117, and the news flow suggests further positive pressure. But till where?   Watch the full episode to find out more! 0:00 Intro 0:24 Market update 1:04 Equity, bond correlation is down since US 10-yield hit 3%! 2:58 Economic data is key: what to watch this week? 4:22 BoC to raise rates 5:09 EURUSD pushes higher 6:10 Oil under positive pressure: OPEC, UK windfall tax 9:19 Corporate calendar: GME, HP earnings, Amazon stock split Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. Follow FXMAG.COM on Google News
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

Will Stock Market Performs Equally Well As In The Previous Week? Next Earnings (e.g. HPQ, GME) Are Printed, Brent Crude Oil Trades Higher | Saxo Bank

Saxo Bank Saxo Bank 30.05.2022 12:29
Summary:  Today we look at the squeeze in equity markets that extended aggressively into the close of last week, with this week off to a strong start, in part on hopes for a shift in Chinese covid policy. We also look at the dissonances in the narrative should China drive new global demand that reaggravates inflationary dynamics as some of the recent market rally has been on hopes that inflation fears and anticipated Fed tightening policy have peaked for the cycle. We also highlight the stress in the VC space, Hungary's Orban boxing above his weight class, the dynamics in the crude market as Brent crude posted its second highest weekly close for the cycle last week, earnings ahead and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast and have a look at today’s slide deck. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Saxo Bank
Tepid BoJ Stance Despite Inflation Surge: Future Policy Outlook

We Could Say High Prices Of Crude Oil, Metals And Other Commodities Are About Not Only Negative Effects, But Also About A Profit For Some People | Saxo Bank

Saxo Bank Saxo Bank 30.05.2022 12:42
Summary:  Commodities have seen hefty prices increases in the past two years, which is bad for inflation and for life in general but is one of very few asset classes where a profit can be made in very depressed markets.​ It’s hardly news that the cost of living – or inflation – is going up at a rate which the world hasn’t seen for decades. Food is getting more expensive, electricity is going up, it is more costly to buy and build stuff. In short, everything you want to do and consume costs (a lot) more than it did a year ago.There is one area – or in finance lingo, asset class – which is the root cause of this situation, and it has politicians and economists scratching their heads to find solutions: commodities. Commodities are the basic input to everything we do. It covers energy production, raw materials, metals, food, etc.When you look at commodities from a societal point of view, there isn't a lot of good news:“In short, what happens in the commodity sector is troubling. The Bloomberg Commodity Index is up 24% on the first quarter and if you look at average annual returns it has almost doubled since 2020,” says Ole Hansen, Head of commodity strategy at Saxo. In this quote, Hansen points to something interesting when dealing with an asset class like commodities, because it affects both the financial markets, and day-to-day life. When investing in an index, which is up that much in such a short time, you would usually be celebrating, but it isn’t always a good thing for commodities to climb so high, so fast.“Commodities are the basic input for everything we do, which means that when they get more expensive, so does everything else. Commodities need to find a more stable level for consumers and companies alike to feel comfortable, which no one is now,” says Hansen.As Hansen describes, surging commodity prices can have grave effects on society at large especially in less wealthy parts of the world, and its solution can be a self-fulfilling prophecy. “Most people will have to wind back on their spending. This will cause an economic slowdown, which hurts, but unfortunately seems to be the only cure right now against high inflation,” he says.The other edge While commodities need to become more stable for its societal impact, the asset class remains an enticing investment opportunity in a market where it seems like it is almost the only one you can look for a profit, even if there’s an economic slowdown. This is due to the supply and demand dynamics we are experiencing right now.Central banks are hiking rates to kill – or slow – the demand side, which is yet another reason why companies and thus equities are struggling. This should, in theory, also push the prices of commodities down, but then let’s turn our heads towards the supply side.Here, especially the Russian invasion of Ukraine, and the strict COVID-19 lockdowns in China, suppress the supply of many key commodities. This creates a dramatic imbalance between supply and demand, which means that even a global economic slowdown most likely wouldn’t bring it back to an equal footing.“If I had to pick one area to look for inspiration, it would be the metal industry. There’s a lot of amped up construction in China due to the lockdowns, which means that once they are lifted, the metal space could see a substantial increase in demand from them,” says Hansen.Queued up construction in China can push metal prices, which also could be a long play on the mining sector within equities."The equity market is probably the most difficult since the 2007-2009 financial crisis years due to a combined factor of persistently high inflation and equity valuation compression from higher interest rates. We believe that the world will be in a commodity super cycle and thus should be exposed to this through mining companies both short and long term. China's slowdown is just short-term noise. It changes nothing regarding mining companies over the coming years," says Peter Garnry, Head of Equity strategy.
5% for the US 10-Year Treasury Yield: A Realistic Scenario

S&P 500 (SPX) Rallied, So Did Nasdaq And Dow Jones (DJI), In Europe Sentiment Can Be Affected By Very High Crude Oil Price Caused And Russian Oil Ban | Oanda

Jeffrey Halley Jeffrey Halley 30.05.2022 12:55
Asian markets rally on positive Wall Street and China hopes S&P 500, Nasdaq And Dow Jones US markets closed out the week on another positive note after US data alleviated inflation fears and thus, future Fed tightening, and showed strength among US consumers still. Realistically, after such a positive week, it would have taken a lot to knock the FOMO gnomes of Wall Street off their path of bottom-picking nirvana. The S&P 500 rallied by 2.48%, while the Nasdaq leapt by an impressive 3.33%, with the Dow Jones climbed by 1.76%. The rally has continued in Asia, with Nasdaq futures 0.90% higher, with S&P 500 futures up 0.40%, and Dow futures edging 0.10% higher. US OTC markets are closed for Memorial Day. End Of COVID Restrictions? Asia is also turning in a positive performance, following the impressive New York close, and boosted by hopes that China’s Beijing and Shanghai hubs are reopening from virus restrictions and a package of stimulus measures released by the Shanghai local government. Nikkei 225 And CSI 300 Japan’s Nikkei 225 has coat-tailed the Nasdaq 2.10% higher today, with South Korea’s Kospi gaining 1.25%, and Taipei rallying by 1.60%. In mainland China, the Shanghai Composite is a more cautious 0.30% higher, with the CSI 300 rising by just 0.40%. The ever-optimistic Hong Kong, however, had leapt 2.50% higher, boosted by hopes of an Evergrande bond deal. Follow FXMAG.COM on Google News Metals In regional markets, Singapore is up just 0.20%, while Kuala Lumpur has fallen 0.25%, and Jakarta is 0.60% lower. A Goldman Sachs report suggesting metals prices have peaked is likely weighing on all three markets, as risk sentiment swings back to more growth-stock orientated markets. Bangkok has gained 0.65%, while Manila has rallied by 1.25%. Australian markets have also liked what they have seen with Wall Street and China, the ASX 200 and All Ordinaries climbing by 1.25% today. Read next: Altcoins: Tether (USDT), What Is It? - A Deeper Look Into The Tether Blockchain| FXMAG.COM Russian Oil Friday’s New York close and Asia’s rally today should be enough to lift European equity markets this afternoon, although the still simmering EU import ban on Russian oil and Brent crude above USD 120.00 a barrel will temper bullish animal spirits. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

WTI And Brent (Crude Oil) Trade Really High, OPEC+ Is Expected Not To Support The Price. (XAUUSD) Gold Price Seems To Pausing And Resembling "The Calm Before The Storm" | Oanda

Jeffrey Halley Jeffrey Halley 30.05.2022 14:54
Brent crude rises above USD 120.00 The disconnect between energy prices and optimism in equity markets continues today in Asia. On Friday, oil prices surged once again, driven by an unrelenting squeeze on refined products, notably diesel and gasoline, globally, with the US driving season about to begin in earnest. Brent crude rose by 1.63% to USD 119.20 a barrel on Friday, rallying another 0.70% to USD 120.05 this morning. WTI rose by 0.85% to USD 115.10 a barrel on Friday, rallying another 0.83% higher to USD 116.05 in Asia today. Markets pricing in peak virus in Beijing and Shanghai are behind the rally in oil prices today, with a China reopening likely leading to increased oil consumption. Unlike recent times, markets seem unconcerned about oil moving back to March highs, emphasising how much pent-up risk-sentiment demand there appears to be out there. We can expect no solace from OPEC+ on production increases on Thursday. The grouping cannot pump to meet its present quotas as it is, and a 430,000 bpd increase is all we can expect. Additionally, the EU Russian oil import ban is still a work in progress and if it gets over the line this week, expect supplies to tighten again. As such, the risks are now increasing of a move towards the post-Ukraine highs we saw in February. Both Brent crude and WTI are at the top of my expected medium-term ranges at USD 120.00 and USD 115.00 respectively. A weekly close above these levels would be a major signal indicating more gains ahead. Brent crude’s next technical resistance is at USD 124.00 a barrel, and then USD 132.00, with support at USD 116.00. WTI has resistance nearby at USD 116.70 a barrel, with nothing afterwards until USD 127.00 a barrel. Support is at USD 115.00 and USD 113.00 a barrel. Gold trades sideways Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It finished Friday 0.13% lower at USD 1853.00 an ounce, before gaining 0.44% to USD 186.75 an ounce in Asia today. Gold’s price action continues to suggest caution, with the US dollar sell-off not translating to any meaningful gold strength. If global risk sentiment turns lower, gold could quickly follow. Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance here at USD 1862.00, ​ then USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
EUR: Testing 1.0700 Support Ahead of ECB Meeting

It's Time For Markets To Discount EU Ban On Russian Oil! EUR/USD And AUD/USD Have Gone Up. How Will Euro Exchange Rate Change In The Following Days? Let's Watch Eurozone Inflation! | ING Economics

ING Economics ING Economics 31.05.2022 08:01
EU partial ban on oil and hawkish commentary from Fed's Waller were the headlines with the US out on holiday. Indian GDP for 1Q22 out later.  Source: shutterstock Macro outlook Global: With the US out on vacation yesterday, there isn’t too much overnight catch-up to do for Asia, though commodity markets are responding to the partial EU ban on Russian oil agreed upon yesterday. FX markets continued their recent gains against the USD though. EURUSD  has now risen to 1.0787, bringing it close to resistance levels just above 1.08. The AUD also continued to make gains, and is currently flirting with 0.72. Within the Asia FX pack, the KRW led the charge, shooting lower to 1238, with the CNY close behind in terms of gains at 6.66. Despite the holidays, the Fed’s Waller struck a more hawkish tone at a speaking engagement than his colleague, Raphael  Bostic, who had recently advocated a possible September pause in hikes. Waller, in contrast, suggested that 50bp hikes should remain on the table until inflation was closer to 2%. Newswires continue to run with stories looking for the trough in the equity sell-off, but also suggesting that the bond sell off is also over. One of those views is likely to be wrong. But whichever is the case, it is a good reflection of the current market sentiment which is looking for turning points. More choppiness ahead seems likely as a result. It is a relatively light day for G-7 macro data today. The EU’s May inflation should show a rise from 7.5% to 7.8%. But ECB rate hike intentions have been clearly flagged for now, so this shouldn’t make too many ripples. And in the US, we have house price figures and consumer confidence numbers. Consumer confidence has barely any correlation with consumer spending, so we can probably give it only a cursory examination. House prices appear to be reaching a peak in year on year growth, but until or unless they show a marked reversal in direction, can probably also be glossed over. India: 1Q22 GDP, which is released at 8pm SGT tonight, should come in at about 4.0%YoY (consensus is 3.9%YoY). That should bring the annual fiscal-year GDP growth for 2021/22 to 8.7%. For the 2022/23 fiscal year, we are forecasting 7.2% GDP growth. Rising prices and tighter monetary policy as well as global disruptions and a less helpful base comparison account for the apparent slowdown.  China: Official PMIs will be released this morning. We expect both the manufacturing and non-manufacturing PMIs will come in under 50, i.e. signalling monthly contraction. That result will mainly reflect the fact that Beijing was in lockdown for most of May, adding extra pressure on activity while Shanghai was also still in lockdown. Unemployment should remain high and will add uncertainty to the non-manufacturing PMI even if Shanghai residents resume work and production starting from 1st June.   Korea:  April monthly activity data signals that China’s lockdown dragged down Korean manufacturing production while local reopening supported services, construction, and consumption activity. Manufacturing production plunged -3.3%MoM (vs -1.3% market consensus), the first monthly drop in seven months. Meanwhile, the construction and services sectors rose modestly for the second straight month, with notable rises in hotels & restaurants and personal services (11.5% and 8.7%) respectively. Consumption fell -0.2% but mainly due to a decline in pharmaceutical consumption, while durable goods, including automobiles, rose slightly. Overall, the April data was on weak side, yet the recent approval of a supplementary budget (62 trillion KRW) and the reopening of China should boost the recovery in the coming months.  Japan: April Industrial production fell -1.3% MoM sa (vs -0.2% market consensus) the first fall in three months, with China’s lockdown hampering supply chains and production activity. However, consumer sales were relatively sound with retail sales and department store sales up by 2.9% YoY and 4.0% respectively. Meanwhile, labour conditions also improved. The jobless rate in April dropped to 2.5% (vs 2.6% market consensus and March) and the job-to-application ratio ticked up to 1.23 (vs 1.22 in March). We ought to be on the watch for tighter labour market conditions leading to wage growth, which is the key that the Bank of Japan has been looking for to gauge a sustainable inflation trend. What to look out for: EU inflation and US non-farm payrolls South Korea industrial production (31 May) Japan retail sales and job-applicant ratio (31 May) China PMI manufacturing (31 May) Thailand trade balance (31 May) Eurozone CPI inflation (31 May  US Conference board expectations (31 May) South Korea trade (1 June) Regional PMI manufacturing (1 June) Australia 1Q GDP (1 June) US ISM manufacturing (1 June) Indonesia CPI inflation (2 June) Australia trade balance (2 June) US ADP jobs, initial jobless claims, durable goods orders (2 June) South Korea CPI inflation (3 June) US non-farm payrolls and ISM services (3 June) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil extends decline, gold edges lower

Seaborne Russian Oil Has Been Banned By The EU, But Crude Oil Prices Seems To Have Already Discounted This News. Gazprom Stopping Delivery To Netherlands | ING Economics

ING Economics ING Economics 31.05.2022 08:08
Your daily roundup of commodities news and ING views Source: Flickr Energy EU members have finally agreed to a ban on Russian oil. However, the agreement has been watered down quite a bit from the original proposal. Instead of targeting all Russian crude oil imports, the EU will ban imports of Russian seaborne crude oil over the next 6 months. This would ensure supply to landlocked countries in the CEE, which are very dependent on Russian pipeline supplies. In theory, this should mean that around two-thirds of the roughly 2.3MMbbls/d of Russian oil imported will be affected. However, in practice, we believe that volumes will fall even further. The largest recipients of oil from the Druzhba pipeline are Germany and Poland, and both countries have already said that they aim to reduce Russian imports to zero. So, the ban could target closer to 90% of Russian flows to the EU. It is unlikely that this will be the final deal, as the EU will work towards reducing the dependency of Hungary and other CEE countries on Russian oil in the longer term. The full details of the agreement are yet to be published. This move is supportive for prices. However, the market has had a month to digest the potential ban, and so we suspect it is largely priced in already. This is reflected in the price action in early trading in Asia this morning. There were also further developments in the European natural gas market yesterday. Gazprom is set to halt gas flows to the Netherlands starting today after GasTerra refused to agree to Russia’s new payment terms. The amount of gas supply affected will be around 2bcm between now and October, which is when the supply contract was set to expire anyway. The Netherlands should be able to make up for these lost flows, given the strong LNG imports that we have seen this year. In addition, we are also seeing stronger gas flows from the UK via the BBL pipeline. The Netherlands is the fourth country after Poland, Bulgaria and Finland to see Russian gas flows halted. On an annual basis, these countries import roughly 20bcm of Russian gas, which is around 13% of total Russian gas flows to the EU. This will likely increase in the coming days, and it looks as though Denmark will also see flows stop, with Danish firm, Orsted, also refusing the new payment terms. Orsted has a long-term contract with Gazprom for 2bcm per year. Metals Shanghai's reopening plan and relatively benign dollar conditions spurred a rally across the industrial metals sphere. Beijing unveiled fresh guidelines to boost high-quality growth in clean energy during the new era. The country vowed to speed up the construction of major wind and solar farm projects while reiterating the aim of having 1.2 bln kilowatts of such capacity by 2030. The latest guidelines were put together by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) and were published by the General Office of the State Council. The support from authorities should increase the odds that the renewable energy sector will continue to see strong growth and support the demand for metals such as copper and aluminium. Nickel continued its strength from last Friday and broke above US$30,000/t on Monday amid a very thin market. The 3M contract touched an intra-day high of US$30,610/t, the highest since 5 May. Speculation has grown that Indonesia may throw tariffs on nickel exports with a nickel content below 70%, which was mentioned by an official last week at a conference. However, there hasn't been any confirmation on the details of the tariff and the timing. According to MySteel, the China market continues to see inventory drawdowns in aluminium ingots and billets. Total ingot inventory has declined to 954kt as of Monday (-14kt from 26 May), while billets fell to 152.5kt. Meanwhile, LME total aluminium stocks have fallen to more than a two-decade low of 467kt. Read this article on THINK TagsRussian oil ban Russia-Ukraine Nickel Natural gas Gazprom Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Extra Gains Of The WTI Crude Oil Appear On The Cards

Germany Meets Really High Inflation - How Will ECB And Euro (EUR) React? Bitcoin Has Increased, So Does Oil, DAX And FTSE | Swissquote

Swissquote Bank Swissquote Bank 31.05.2022 09:58
German inflation hit a fresh record high of 8.7% in May, above the 8.1% penciled in by analysts. The data gave a boost to the European Central Bank (ECB) hawks and helped the EURUSD extend gains to 1.0780. Crude oil extended rally as the European leaders finally announced their decision to partially ban the Russian oil. Can The EU Affect OPEC's Move? Bitcoin's Rally And people started asking, would the European decision to ban the Russian oil would impact the OPEC’s decision about production; would the OPEC nations pump more to replace the Russian oil for European exports? Elsewhere, the softish US yields help gold consolidate above 200-DMA, while other precious metals also gain, Bitcoin rallies above $31K and the US markets are back after a long-weekend break!   Watch the full episode to find out more! 0:00 Intro 0:25 German inflation hits record, revives ECB hawks 1:31 Europe announces to partially ban Russian oil, oil rallies 4:08 Go deeper: will EU decision affect OPEC strategy? 5:38 US LNG stocks extend rally 6:32 DAX, FTSE recover¨ 8:00 Precious metals update. Gold, platinum, palladium 9:07 Bitcoin rallies, but gains remain vulnerable Read next: Altcoins: Ripple Crypto - What Is Ripple (XRP)? Price Of XRP | FXMAG.COM Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. Follow FXMAG.COM on Google News  
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

The EU's Ban Affects Crude Oil Price, Gold Price (XAU/USD) Wouldn't Have Become A Blockbuster | Oanda

Jeffrey Halley Jeffrey Halley 31.05.2022 22:31
Europe’s ban on Russian oil sends black gold higher The announcement that a partial EU ban on Russian oil imports has made it over the finish line sent oil prices higher overnight. Recovering PMI data from China today, and by default recovering energy consumption, has seen the rally continue in Asia. The price action by oil this past week has been ominous, suggesting that supplies of refined products is getting worse, and not better. The EU oil ban on Russia further complicates that picture and I am wondering how long markets can continue bottom-fishing elsewhere while ignoring oil’s price rise. Overnight, Brent crude rose by 2.05% to USD 121.65 a barrel, and today, it has rallied another 1.20% to USD 123.10. WTI rallied by 2.20% to USD 177.65 overnight, gaining another 0.80% to USD 118.55 in Asia today. Brent crude is now a hair’s breadth away from resistance at USD 123.80, after which there is no resistance on the charts until USD 131.60 a barrel. Support lies at USD 116.00 a barrel. WTI has taken out resistance at USD 116.70 a barrel, which now becomes support, followed by USD 116.00. The USD 120.00 region will provide some psychological, and possibly option-related resistance, but there is now nothing on the charts until USD 126.80 barrel. Markets will find no solace from this week’s OPEC+ production meeting, as outlined in yesterday’s note. If China is reopening, and Europe is limiting Russian oil, there is only one obvious direction from here, for too long, ignored by markets. Only a surprise Iran deal, unlikely as they are seizing tankers at the moment, or a capitulation to Venezuela’s autocratic government, could change the supply/demand dynamic. Neither would alleviate the squeeze in refined products underpinning the rally. Gold trades sideways Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It probed resistance around USD 1860.00 an ounce overnight but retreated to finish just 0.14% higher at USD 1855.80 an ounce, marking another inconclusive session. Ominously, gold has fallen in Asia at the first sign of US Dollar strength, Gold has eased by 0.13% to USD 1853.50 an ounce. ​ Gold’s price action continues to suggest caution, with the US dollar sell-off not translating to any meaningful gold strength. If global risk sentiment turns lower, gold could quickly follow. Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance here at USD 1862.00, then USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
India's RBI Keeps Repo Rate Unchanged Amid Tomato-Driven Inflation Surge

Will OPEC Suspend Russia!? Price Of Crude Oil Rises. Is Economic Slowdown Incoming? | Conotoxia

Conotoxia Comments Conotoxia Comments 01.06.2022 16:23
WTI crude oil futures rose more than 1.5 percent on Wednesday to over $116.5 a barrel, marking the sixth consecutive month of gains. The EU's decision to partially ban Russian oil sales and China's reopening after the lockdown may more than offset reports that OPEC may suspend Russia from the production agreement. Reports emerged yesterday that some producers are considering suspending Russia's participation in the OPEC+ production agreement, which could pave the way for other producers to pump more oil to markets, and that some Gulf members are planning to increase production over the next few months. Investors await weekly US crude inventories data, with markets expecting US crude inventories to have fallen last week, while gasoline and distillate inventories rose. Learn more on Conotoxia The price of crude oil in global markets appears to be fluctuating widely. Yesterday, three-month peaks were established, with a barrel of WTI already costing over $118. Later in the day, prices sharply turned back below $113. As a result, oil price volatility may still remain relatively high. Meanwhile, in the real economy, this could mean high fuel prices. We are feeling this in Poland, but Americans are also feeling it. The price of gasoline there has soared to its highest level ever at USD 4.2 per gallon.More expensive fuels are one of the main components of rising consumer inflation, and at the same time a factor for decreasing demand in other categories. The more we spend on fuel because we need to get to work, for example, the less we spend in terms of unnecessary needs, recreation or entertainment. This, in turn, is a ready recipe for an economic slowdown, which the financial markets seem to have been pricing for quite some time now. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Eyes On Iran Nuclear Deal: Oil Case. Gold Price Is Swinging

OPEC+ Leaves Investors And Markets Confused As Russia May Not Hit its Crude Oil Output Quota. Gold Price (XAU/USD) Interacts With Fed's Rate Hike Fears | Oanda

Ed Moya Ed Moya 01.06.2022 23:00
Oil Oil prices are rallying as the crude fundamentals continue to turn bullish, while uncertainty persists with how OPEC+ will handle Russia’s output quota and if the group will be able to deliver more output in the coming months. Economic data from the US shows the economy is holding up, which supports the idea that crude demand should improve and that this will be a strong driving season. OPEC+ needs to figure out how they will handle Russia’s crude output quota, but regardless the group as a whole has limited spare capacity.  This oil market will remain tight until demand destruction becomes an issue, but right now that doesn’t seem like that will happen anytime soon.  Oil rallies, gold turns positive - MarketPulseMarketPulse Gold rises on market jitters Gold is getting its groove back on safe-haven flows as investor worries return that the Fed may not be easing up its rate-hiking campaign anytime soon. Wage pressures in the US are not easing and that should keep inflationary pressures going for a few more months. The war in Ukraine could see an escalation after the US has signaled they will give Ukraine advanced rocket systems.  Gold could thrive as safe-haven flows will only grow as geopolitical risks remain elevated and over fears of aggressive global central bank tightening. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

Oil steady, gold range-trades | Oanda

Jeffrey Halley Jeffrey Halley 07.06.2022 12:33
Oil is steady in Asia Oil’s intraday gains overnight were pared back in New York as US yields and the US dollar climbed, leaving both Brent crude and WTI slightly lower for the session. Brent crude finished 1.05% lower at USD 119.95 a barrel, and WTI finished 1.10% lower at USD 119.00 a barrel. Asian markets are very much in wait-and-see mode, with Brent crude slightly higher at USD 120.15 a barrel and WTI edging higher to USD 119.25 a barrel. Whichever way you look at it though, both Brent and WTI prices are nearing post-Ukraine highs, stripping at the days of the initial hostilities themselves. Returning Venezuelan and Libyan production to Europe and North America, should it occur, will not be material enough in the shorter term to force prices lower. Refining margins globally suggest that demand for petrol and diesel remain in heavy demand, with the refining logjam in refined products backstopping crude prices. Additionally, the damp squib OPEC+ meeting outcome, with some production bones thrown to some angry dogs, and a potential recovery in demand from mainland China has got on top of omicron, provides yet more reasons to believe that physical demand will keep prices elevated. Brent crude has resistance at USD 122.00, and USD 124.00, with support distant at USD 116.00 and USD 112.50 a barrel. WTI has resistance at USD 121.00, with distant support at USD 115.00 and USD 111.25 a barrel. Gold’s flip-flop ranging continues Gold continues to bore traders to death as range trading and reversals by a thousand cuts continue. Overnight, a stronger US dollar and firmer US yields pushed gold 0.50% lower to USD 1842.00 an ounce, where it remains in yet another moribund Asian session. The chart picture shows gold is now eroding resistance at USD 1870.00, touching USD 1874.00 an ounce on Friday. But overall, resistance at USD 1870.00 remains intact, followed by the 100-DMA at USD 1889.00, and then USD 1900.00. Support at USD 1844.00 has given way, opening further falls to USD 1830.00  and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. Gold remains at the mercy of intraday directional moves by the US dollar and US yields. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Oil extends decline, gold edges lower

Oil clutching to US 120, gold drifting | Oanda

Craig Erlam Craig Erlam 07.06.2022 18:39
Oil struggling to hold above USD 120 Oil is continuing to struggle around USD 120 on Tuesday, with Brent and WTI very slightly lower. We’ve seen USD 120 broken on a few occasions over the last week but each time it’s been quickly repelled in a sign of momentum starting to run a little thin. The fundamentals remain bullish for oil prices as China continues to reopen and the OPEC+ “production hike” does little to alleviate the tightness in the market. Still, it’s been a very strong run over the last month, with the price up more than 20% from the May lows. We could potentially see some profit-taking in the short-term but it’s hard to imagine it being too severe, barring significant growth downgrades or a surge in Covid cases in China. Gold consolidation continues As has so often been the case in recent weeks, gold is continuing to fluctuate around USD 1,850 today and showing little sign of a burst in either direction. It struggled once more around USD 1,870 on Friday, reinforcing it as a key area of resistance to the upside, while USD 1,830 continues to be the first line of support below. We may have to wait for the inflation data at the end of the week for an interesting move in either direction. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil clutching to US 120, gold drifting - MarketPulseMarketPulse
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Crude Oil: Both Brent And WTI Increased, Gold Prise Rose, But Still It Trades Quite Low | Oanda

Jeffrey Halley Jeffrey Halley 08.06.2022 14:03
Oil is steady in Asia Oil prices rose slightly overnight as tight refined supplies persist in the US, and industrial action in Norway and a shutting down of a Libyan oil field continued supporting prices at recent highs. Brent crude finished 0.75% higher at USD 120.75 a barrel, and WTI rose 0.30% to USD 119.75 a barrel. Asia is once again adopting a wait-and-see position, with Brent and WTI unchanged in regional trading. Oil prices remain at post-Ukraine invasion highs if you strip out the days when tanks rolled across the borders. Returning Venezuelan and Libyan production to Europe and North America, should it occur, will not be material enough in the shorter term to force prices lower. Refining margins globally suggest that demand for petrol and diesel remain in heavy demand, with the refining logjam in refined products backstopping crude prices. A reopening China is also supportive of oil prices. Brent crude has resistance at USD 122.00, and USD 124.00, with support at USD 116.00 and USD 112.50 a barrel. WTI has resistance at USD 121.00, with current support at USD 115.00 and USD 111.25 a barrel. Gold’s flip-flop ranging continues A weaker US dollar into the end of the New York session saw yet another mechanical response by gold, which rose 0.56% to USD 1852.50 an ounce in another snooze-fest session. In Asia, some US Dollar strength had sent it 0.25% lower to USD 1848.00 an ounce in an automatic response. Until we get a material move one way or the other by the greenback, gold’s range trading looks set to persist. Gold has resistance at USD 1870.00, followed by the 100-DMA at USD 1889.00, and then USD 1900.00. Support is at USD 1837, USD 1830.00, and then USD 1780.00 an ounce. I do not discount a disorderly retreat if the latter fails. The wider USD 1830.00 to USD 1870.00 range seems set to continue until Friday. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges higher, gold directionless - MarketPulseMarketPulse
Inflation In Philippines Hit 6.1%, Its Pace Is Record-Breaking. What Are The Predictions Of BSP (Bangko Sentral ng Pilipinas) Monetary Policy?

Gold Price Or FX - What's More Volatile Now? What's Ahead EURCHF And USDCHF After SNB Decision? Price Of Crude Oil Dropped. Awaiting Powell's (Fed) Testimony | Saxo Bank

Saxo Bank Saxo Bank 20.06.2022 10:26
Summary:  Equity markets tried to end last week’s grueling sell-off with a positive flourish on Friday, as oil prices dropped by the most in several weeks and firmness in safe haven bond markets kept bond yields at the low end of the week’s range. But are those developments down to investor concern that a recession is incoming? The week ahead features semi-annual testimony from Fed Chair Powell before Congress and global preliminary June PMI surveys.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Despite extreme volatility in cryptocurrencies and another “stablecoin (USDD)” losing its peg to the USD, US equities futures are starting the week on mild positive note. S&P 500 futures are trading slightly higher at the 3,690 level and will likely try to test the opening price from last Wednesday’s session at around the 3,743 level if risk sentiment remains positive today. There are no important macro events today so trading will be light, also due to today being a holiday in the US so cash equity markets are closed, and potentially take their lead from cryptocurrencies, although we expect the correlation to begin to decline with cryptocurrencies reducing itself to a small and isolated pocket of the market again. Hong Kong’s Hang Seng and China’s CSI300 Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) were fluctuating between modest gains and losses. Chinese property names surged with COLI (00688) and CR Land (01109) rising 9% and 8% respectively. According to Beke Research, secondary market home sales volume in China’s top 50 cities rose more than 20% in the first 10 days of June from last month. June Emerging Industries PMI came at 52.5, 3.6pp higher than May. With COVID outbreak, Macao gaming stocks fell. China’s 1-year and 5-year Loan Prime Rate remain unchanged. EURCHF and USDCHF The Swiss franc was in for a positive shock last week after a surprise hike – and a large 50-basis point one – from the Swiss National Bank altered the landscape for CHF traders, suggesting the central bank is less concerned with always lagging the ECB in its policy move and a moderating of concerns about the CHF level versus EUR, as a strong franc is potentially one tool that can help ease inflationary pressures. EURCHF reset lower to sub-1.0200 levels after trading between 1.04-1.05 before last week’s meeting. Focus now is on the parity level that was briefly touched in the wake of the Russian invasion of Ukraine. USDCHF is another focus, trading below 0.9700 after trading as high as parity before the decision. The 0.9500-0.9550 area is the next technical focus area there. USDJPY and JPY pairs A very challenging backdrop here for JPY traders, as the Bank of Japan’s insistence on maintaining its negative 0.10% policy rate and more importantly, the yield-curve-control policy by which it caps 10-year Japanese government bond yields at 0.25%, was seen as very JPY negative last week in the wake of a US Fed hiking the most since 1994 and the SNB executing a surprise large hike etc. At the same time, global bond markets rallied hard to close the week, particularly in the dominant US treasury market, with oil markets in a nosedive on Friday, both supportive developments for the Japanese yen. Focus for USDJPY traders remains on the 135.00+ cycle top, which may hold as long as US longer treasury yields are capped below cycle highs. To the downside, last week’s low near 131.50 was close to the prior major pivot high of 131.35. Crude oil Crude oil (OILUKAUG22 & OILUSJUL22) plunged almost 7% on Friday after growth worries signaled by the FOMC aggressive action to bring down inflation spread from the stock market and industrial metals to fortress oil and fuel. A sector which up until now has seen limited contagion risks given the tight supply outlook amid Russian sanction, OPEC+ producers struggling to raise production and lack of refinery capacity. Speculators turned net sellers of WTI in the week to June 14 following several failed attempts to break higher, potentially a signal we have entered another period of consolidation, but still with the underlying risk of eventually moving higher.  Gold Gold (XAUUSD) remains rangebound following a week of high drama that saw dramatic yield spikes being offset by growing unease about the economic outlook with recession worries on the rise as central banks step up their efforts to curb inflation. Focus on the dollar and Fed Chair Powell’s semi-annual testimony before the Senate Banking Committee on Wednesday (see below). Speculators cut bullish futures to a nine-month low ahead of last week’s FOMC rate hike announcement while total bullion-backed ETF holdings on Friday dropped to three months low, both highlighting the current uncertainty about the short-term direction. Copper HG Copper (COPPERUSSEP22) has returned to the key $4/lb support area after falling around 10% during the past two weeks on China and global growth worries. Iron ore (SCON2) traded in Singapore and metallurgical coal in Shanghai, both key inputs to the production of steel have lost around 20% during the same period. China’s slumping property market and the country’s inability to put the coronavirus behind it remain a major headwind, and one that inadvertently is supporting the efforts to curb inflation through lower input costs. Copper, rangebound for more than a year, is in the short-term at risk of breaking lower with the next level of support at $3.86 before $3.50. US Treasuries US treasuries (TLT, IEF) remained firm on Friday, keeping yields at the lower end of the week’s range and near the important tipping point around 3.20% for the 10-year Treasury yield benchmark, which was the prior yield high on the way up. US data surprises have tilted increasingly negative of late and a huge sell-off in crude oil on Friday may drive slightly lower inflation expectations if the lower prices stick. US Fed Chair Powell is up this week with semi-annual testimony before Senate and House committees on Wednesday and Thursday, respectively. Crypto rout extends with Bitcoin The largest and one of the more stable crypto assets, plunging below the critical 20k level over the weekend after it slid 15% on Saturday. This signals not just further stress in the crypto space but also broader stress in financial markets as liquidity conditions tighten. What is going on? French President Macron loses absolute majority in Parliament After the second round of parliamentary elections completed yesterday, President Macron’s centrist coalition will only win about 245 of of the 277 seats, with a leftist coalition headed by Jean-Luc Melenchon taking 131, and Marine Le Pen’s right populist National Rally at 89 seats.  The euro is taking the news in stride, but this result will hamper President Macron’s reform agenda, including his intent to raise the retirement age and reform the pension system. The tug of war between inflation and recession means room for policy error With the central banks bucking up on the tightening bandwagon last week, we are seeing a more serious fight against inflation which is set to rise further above 9% levels in the UK this week and remains in the 8% range for the US. However, this historic tightening pace following the Fed’s 75bps rate hike last week has meant further fears of an economic slowdown. A slew of weak US data reported last week also aggravated those concerns. Markets will continue to be choppy as investors weigh inflation/recession concerns, but the long-term bear trend is here to stay. The abrupt policy turn also means an increasing scope of policy error. Keeping an eye on corporate credit markets... ... after at least one measure of US high yield corporate spreads rose to a new cycle high last week above 500 basis points above US Treasury yields, above the mid-May high of 482 basis points and up over 100 basis points from the lows in early June. The two most widely tracked high yield ETF’s, HYG and JNK, closed sharply lower last week and are down around 15% (less in total return terms) from their late 2021 highs. What are we watching next? US Fed Chair Powell semi-annual testimony this week before House and Senate committees The Fed Chair will be in the hot seat this week in the required semi-annual testimony before Congress, where politicians on the committees often take a chance to grandstand on their own political positions and observations, but after several months of decades-high inflation and record gasoline prices, will this week’s testimony show that the political pressure on the Fed is mounting? The market will also watch for any new comments from the Fed Chair, although we are just a few days removed from the FOMC press conference. U.S. housing data are out on Tuesday The housing market is in a vulnerable position. Prices are up almost 40 % since the outbreak, mostly reflecting stimulus-fueled demand. But with high inflation across the board pushing consumer confidence downward and mortgage rates surging following the U.S. Federal Reserve’s tightening cycle, the risks of hard landing are tilted on the upside. Over the past few weeks, several large real estate firms such as Redfin Corporation have warned against the risk of slowdown. Expect a drop in May’s existing home sales and perhaps a new plunge in the number of new home sales after disappointing data in April (minus 16.6 %). The U.S. housing market is certainly the most vulnerable segment of the U.S. economy at the moment. It will be key to monitor the upcoming data in order to assess whether there is a material risk of recession or not. May UK CPI is out on Wednesday This will be painful. Expect a new increase to 9.1 % year-over-year in May against 9.0 % in April. Last week, the Bank of England (BoE) hiked rates by 25 basis points. This was expected. But political pressure is increasing on the central bank to do more while other developed market central banks have embraced a more hawkish tone (U.S. Federal Reserve, Reserve Bank of Australia, National Bank of Hungary, for instance). If inflation continues to rise (which is our baseline), we would not be surprised if we see the BoE go for an inter-meeting 25 basis points hike before the 4 August meet. Other central banks have done it recently, such as the National Bank of Hungary which decided a surprise 50 basis point hike to support the HUF last week. This only eased temporarily downward pressure on HUF. Earnings Watch This week’s earnings calendar is light but there are three important earnings releases to watch and those are Lennar, FedEx, and Accenture providing insights into the US housing market, logistics, and business spending dynamics (if you believe management consultancy is part of business spending). Today: Kanzhun Tuesday: Lennar Thursday: FedEx, Accenture, Darden Restaurants, FactSet Friday: Carnival, China Gas, CarMax Economic calendar highlights for today (times GMT) 0800 – Switzerland Weekly Sight Deposits 0800 – UK BoE’s Haskel to speak 1300 – ECB President Lagarde to speak 1500 – ECB President Lagarde to speak 1645 – US Fed’s Bullard to speak 1930 – ECB Chief Economist Lane to speak 0000 – Australia RBA Governor Lowe to speak 0130 – Australia RBA Meeting Minutes Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – June 20, 2022 | Saxo Group (home.saxo)
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Oil moves higher, gold range-trades | Oanda

Jeffrey Halley Jeffrey Halley 21.06.2022 12:17
Oil prices start reversing the Friday slump As I outlined above, oil futures have started reversing the Friday price slump as speculative capitulation collides with the reality of tight energy markets in the real world. Brent crude held USD 112.00 overnight, finishing 0.92% higher at USD 114.05 a barrel. It has added another 0.85% to USD 115.15 a barrel in Asian trading today. WTI held USD 108.50 overnight, finishing 0.20% higher at USD 110.05 a barrel. It has jumped 1.20% higher to USD 111.50 a barrel in Asian trading.   Friday’s falls have bought my six-month support lines back into focus. On Brent crude, that is at USD 107.00 a barrel today, just below its 100-day moving average (DMA) at USD 107.95. Ahead of this, it has support at USD 112.00, with resistance at USD 116.00 a barrel. WTI’s six-month support line is at USD 106.25 a barrel, just ahead of its 100-DMA at 105.25. It has interim support at USD 108.50, and resistance at USD 112.50 a barrel.   Of the two, WTI looks the more vulnerable, having fallen further and closed closer to its multi-month support zone. If the US cuts federal fuel taxes this week, or US housing data is very soft, that could be enough to tip the scales lower. It is hard to see either contract moving lower than USD 100.00 a barrel given the state of the physical market. From a technical perspective, I would like to see one of either contract tracing out a couple of daily closes below the longer-term support lines and the 100-DMAs, before reassessing my longer-term bullish outlook.   Gold range continues It was another wax-on, wax-off day for gold overnight thanks to US markets being closed. It edged 0.11% lower to USD 1839.00 an ounce. In Asia, it has gained slightly by 0.12% to USD 1840.60 an ounce as comatose trading conditions continue.   Despite the noise of the past week, it remains anchored in the middle of its one-month range. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever.   Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil moves higher, gold range-trades - MarketPulseMarketPulse
Investing In Gold? XAUUSD - Can Gold Price Reach $1700!? | FxPro

Investing In Gold? XAUUSD - Can Gold Price Reach $1700!? | FxPro

Alex Kuptsikevich Alex Kuptsikevich 21.06.2022 11:45
Despite attempts at rebounding equity markets, moderate pressure on gold has persisted for the third consecutive trading session. This pressure is directly linked to rising long-term bond yields on US debt and several other developed countries. Bonds and gold work like communicating vessels: rising real long-term yields draw capital to the debt markets away from gold. Over the last two years, the inverse correlation between gold and US 10-year Treasury yields has been very strong: gold prices peaked in August 2020, while yields rose from 0.5%. Last week, when the 10-year Treasury yield was rising temporarily to 3.5%, it tested the $1800 area. However, there are several essential points to understand in this correlation. First, the 10-year Treasury yields touched 11-year highs last week, while gold has retreated only to the levels last seen at the start of the year. In other words, an active capital outflow from gold only occurs when yields decline sharply, whereas the long-term trend favours the shiny metal. This correlation can easily be explained by inflation, which eats into the purchasing power of money in the long term. Secondly, 10-year yields are not so much influenced by short-term Fed interest rates as economic growth forecasts. Increased chances of a recession in the foreseeable future have dampened long-term yields. In addition, there are signs that the upward movement in UST yields was too fast, setting up a corrective pullback in the near term. In our opinion, the potential danger for gold is a further tightening of the Fed’s tone, i.e. hints of new steps of a 75-point rate hike and a willingness to keep rates above inflation. But so far, we have seen a significant outperformance of inflation over key rates, and comments from FOMC members indicate a willingness to stop with a tightening in the 3.5-4.0% area, with no attempt to ride out inflation and a reversal to a rate cut as early as 2024. Such outlooks are keeping long-term bond yields in check and, at the same time fuelling interest in a strategy of buying gold during intense downturns. Locally, creeping upward bond yields are working for sellers of gold. This also has a bearish signal in the form of consolidation below the 200-day moving average. However, gold’s resilience drew attention when markets overestimated expectations of a rate hike from 50 to 75 points and multiple buying gains on dips under the 200-day moving average since December last year.
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Crude Oil prices recover, gold price stuck in range | Oanda

Craig Erlam Craig Erlam 21.06.2022 16:21
Oil risks remain tilted to the upside Oil prices are around 1% higher, continuing to recover from Friday’s sharp sell-off. The oil market remains extremely tight but it seems the rising threat of recession created a compelling argument for it to correct lower last week. There’s no doubt that a recession could help rebalance the market and pull prices lower but for many, that is not the base case. So any corrections are still likely to quickly see a flurry of buyers, as we’re now seeing. In the same way that Chinese lockdowns slowed rallies in recent months, the increasing threat of recession could do similar over the summer. That said, the risks remain tilted to the upside as supply simply can’t keep up with demand. Gold could be rangebound for a while We’re still seeing plenty of indecision and choppiness in gold. It struggled to build on the momentum of last week’s surge and is now on course for a third day in the red. That’s not a particularly bearish signal, more a reflection of how the week has started in the markets. The absence of the US makes it hard to read too much into the moves until now. The key level to the downside remains USD 1,800, with USD 1,870 the big test above. It wouldn’t be a surprise to see the yellow metal fluctuate between these two levels for a while longer yet.   For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices recover, gold stuck in range - MarketPulseMarketPulse
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Crude Oil Rebounds, Gold Price Struggles | Oanda

Ed Moya Ed Moya 21.06.2022 22:34
Oil rallies on tight supplies Oil prices are rallying as last week’s selloff was overdone given how the short-term crude demand outlook remains for the US and China. ​ The oil market remains too tight over the short-term and rising expectations over tougher sanctions with Russian crude should keep demand especially strong here. Energy traders saw oil prices slide almost 15% in just a week, despite a very tight market. ​ The paid-for crude prices wasn’t justified and more of a reflection of the risk aversion mood that sank global equities. WTI crude should easily be supported above the USD 100 level throughout the summer, which means any dips will be bought into. Gold Gold prices are anchored as investors await to see how aggressive central banks will be with their tightening cycles and if the bond market will sway them into larger-than-expected hikes. ​ Gold is struggling today as Wall Street buys up beaten-down stocks and cryptos. ​ Demand for safe-havens is not the vibe on Wall Street and that could have bullion remaining vulnerable here to the lower boundaries of its new USD 1800 to USD 1880 trading range. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rebounds, gold struggles - MarketPulseMarketPulse
A Look At S&P 500, Crude Oil And Copper | Monica Kingsley

A Look At S&P 500, Crude Oil And Copper | Monica Kingsley

Monica Kingsley Monica Kingsley 23.06.2022 15:48
Deterioration, that is – be it in S&P 500 market breadth or the jobs data. More to come, obviously, the disappearing liquidity is making itself felt broadly, and the real economy weakness hasn‘t yet arrived in earnest. This is still the environment of relatively fine but perceptibly slowing growth where technical recession can be declared as in, literally any moment (thanks to monetary tightening). Notably, we never escaped manufacturing recession in similar circumstances, and I had been clear on the hard landing realities recognition to spread like wildfire in the mainstream over the months to come. So far, no signs of systemic risk – but real estate and commodities are feeling the pinch seriously already. VIX is also trending higher rather continuously – the 25 level was indeed vigorously defended by the bears. That has all facilitated yesterday‘s sharp turn in my calls, namely in putting the spread trades to rest. Gold is treading patiently while cryptos can‘t obviously take off. Forces of short-term gravity are taking over.... Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Promising upper knot, very promising. Maybe the 3,830s zone wouldn‘t be even tested – all that‘s needed, is for bonds to cooperate. And given the dollar showing today, it‘s perfectly imaginable. Credit Markets The much awaited turn in long-dated Treasuries higher, is here. That‘s where the engine of further recognition of darkening skies in stocks, would come from. HYG is slowly getting the message, and it would be great if it led to the downside now. Crude Oil Crude oil is pausing, making up its mind – the backdrop is richly described in the caption. Energy certainly holds better very short-term prospects than base metals or even some agrifoods. Copper Economically sensitive commodities are losing altitude, a bit too readily. That‘s a sign of more downside to come, and copper is arguably the best example thereof. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
Chinese Data Shakes Dollar, US Stocks Higher Amid Disinflation Concerns and Bank Earnings Awaited

Can Bitcoin And Crypto Bounce Back!? Black Gold (Crude Oil) Markets Recovery!? What About BTC/USD?

Jeffrey Halley Jeffrey Halley 27.06.2022 10:55
Disconnect or Rebound? Jonny Hart speaks to APAC Senior Market Analyst Jeffrey Halley about news impacting the market and the week ahead. It’s another blockbuster episode today, and we are covering a LOT of ground. Firstly, the stock markets are rallying impressively despite recession expectations rising. Is this a dead cat bounce? A bear market rally? Or is the worst over? Jeff discusses the reasons behind the stock market rally and what’s happening in Asia, then ponders its sustainability. Then it’s over to oil markets which have recovered after the sell-off early last week. Jeff takes us through the nuances of oil futures curves and why backwardation matters! We discuss oil’s recovery in the context of the global economy and what lies ahead for black gold. As an add-on, the discussion moves to the G-7 meeting and the commodities space, where base metals have fallen heavily in June. Then it’s Jeff’s old favourite, Bitcoin. We discuss the crypto space and Bitcoins recovery. Jeff then delves into the Bitcoin chart and what it’s suggesting could happen this week. (hint: for once, Jeff isn’t a mega-bear) Finally, it’s back to planet earth and the main data points for the week ahead for markets, led by the global PMI releases at the end of the week.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Market Insights Podcast (Episode 346) - MarketPulseMarketPulse
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Crude Oil Recovers, Gold Price (XAUUSD) Inches Higher. Has US Dollar (USD) Slowed Down? | Oanda

Jeffrey Halley Jeffrey Halley 27.06.2022 11:39
Oil prices bounce Oil prices rose on Friday and Brent crude and WTI has unwound most of early last week’s losses. The futures curves remain in very firm backwardation and in the real world, supplies are as tight as ever with increasing risks around Russia and European natural gas exports. As I said last week, we are unlikely to see Brent crude below USD 100.00 in this environment, whatever noise we are hearing from other asset classes. OPEC should be a non-event this week, having increased production slightly last month. A potential full loss of Ecuadorian production is having no impact on markets today.   Brent crude rose by 2.55% to USD 112.40 on Friday, gaining 0.75% to USD 113.30 a barrel in Asia. WTI rose by 3.45% to USD 107.50 on Friday, edging 0.15% higher to USD 107.70 a barrel in Asia.   Notably, Brent crude tested and held its rising longer-term support line, today at USD 107.70, in the early part of last week. It did not reach the 100-day moving average DMA either. That is a technical development that should be respected and talk emerging from the G-7 about a cap on Russian oil prices, is likely to be more supportive of Brent crude over WTI.   WTI’s technical picture continues to look the more vulnerable. Having closed below its rising 2022 support line and its 100-DMA last week, the rally on Friday has only lifted it back to this region today. The support line is at USD 107.10, with the 100-DMA at 105.85 a barrel. Although the worst may be over for the WTI sell-off as well, we can’t rule out more corrections lower this week. It has resistance at USD 110.00 a barrel.   Gold rises on Russian gold ban Gold rose with general investor sentiment on Friday, as the US dollar eased. It ground out a modest 0.25% gain to USD 1827.50 an ounce, adding another 0.45% to USD 1835.50 an ounce in Asia today. The gains today have been driven by a G-7 announcement of a formal ban on Russian gold imports. In reality, this is a mere rubber-stamping exercise of unofficial policies already in place and is unlikely to meaningfully change the outlook for gold. ​ It remains adrift in the month-long USD 1800.00 to USD 1880.00 range.   Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at  USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil recovers, gold inches higher - MarketPulseMarketPulse
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Commodities: Crude Oil Price Rallies, Gold Price (XAUUSD) Steady | Oanda

Ed Moya Ed Moya 28.06.2022 16:26
Oil rises as China eases Covid rules Crude prices rallied after China reduced the quarantine time for inbound visitors and as Beijing and Shanghai declared zero COVID cases for the first time in months. ​ China is showing they realize they can’t keep their strict COVID controls. Earlier, Chinese authorities triggered some alarm after noting that the zero-COVID policy could be in place for the next five years. ​ The crude demand outlook is getting a major boost after China cut the mandatory isolation time in half to seven days. ​ The easing of China’s quarantine times could support the idea that Beijing might be getting closer to pivoting away from its zero-COVID policy, but that shift probably can’t happen till closer to the end of the year. Earlier oil edged higher over expectations Libya would not be able reliably export crude as protests spread and as risk appetite returned to Wall Street. The supply side of the oil equation should remain supportive for prices even if OPEC+ sees the Saudis deliver a little more crude to help cover the shortfall from Nigeria and Angola. ​ President Biden’s July trip to Saudi Arabia is mostly for political theater and won’t really lead to a meaningful increase beyond the planned OPEC+ boost of 648K b/d of supply in July and August. ​Gold Gold is struggling for direction today as risk appetite returns to Wall Street as global bond yields rise. ​ Fixed income has been under pressure after ECB’s Lagarde affirmed they are poised to raise rates by 25 bps in July while they can kick off their new bond-purchasing operation. The G7 actions against Russia aren’t hard hitting as they won’t see involvement from China. Gold seems like it will struggle until the peak inflation question is answered. If Treasury yields can retest the earlier highs seen this month, gold might be vulnerable to one last test sub-USD 1800 before the bullish bets return. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rallies, gold steady - MarketPulseMarketPulse
Oil extends decline, gold edges lower

Crude Oil's Reaction To The US Inflation, Gold Demand Assumption

Craig Erlam Craig Erlam 13.07.2022 21:34
Crude slides as recession risks build The US inflation data caused shockwaves throughout financial markets, with oil also sliding on the back of the release. A recession is now the primary bear case for crude given the tightness in the market and it’s clear here as much as anywhere how serious the economic risk is being taken. Both Brent and WTI are now back below USD 100, down around 20% over the last month, and they may well remain below there which would have been inconceivable in mid-June. Central banks are in panic-tightening mode and the inflation data isn’t easing up. Throw in more Chinese Covid restrictions and the market will start to look far more balanced, just not in the way anyone wanted. Will gold demand soon return? Gold has recovered the post-CPI release losses after threatening at one stage to break below USD 1,700. While this may come as a relief to some, it may not last considering the moves we’ve seen in interest rate expectations, yields and the dollar. The yellow metal is looking pretty vulnerable at the minute but if a recession becomes the base case, that may change. It is a safe haven after all and there may come a point where the economy buckles under the weight of inflation and interest rates and gold will increasingly find itself in demand. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Crude slumps on inflation, gold recovers - MarketPulseMarketPulse
Extra Gains Of The WTI Crude Oil Appear On The Cards

Crude Oil And Gold: Let's Have A Look At Jeffrey Halley's Commentary - 05/08/22

Jeffrey Halley Jeffrey Halley 05.08.2022 13:58
Oil prices slump overnight Although OPEC+ was a damp squib, rising recession fears saw oil prices slump once again overnight after a negative global outlook from the Bank of England policy meeting. Both Brent crude and WTI have now comprehensively broken lower through their 200 DMA’s, a negative technical development. Although Saudi Arabia continues raising prices for their crude grades to Asian and US customers in the real world, futures markets suggest this may be a last hurrah. Brent crude slumped by 3.55% to USD 93.55 a barrel overnight. WTI fell by 3.10% to USD 88.00 a barrel. In Asia, the overnight dip in prices has been irresistible to local buyers, sending Brent crude 0.75% higher to USD 94.25 and WTI 1.00% higher to USD 88.90 a barrel. Brent crude broke below its 2022 uptrend at USD 109.00 in early July, and it seems unlikely we will see USD 110.00 Brent again this year, barring Eastern European shocks. The 200-DMA at USD 98.35 is the initial resistance, followed by USD 102.50 a barrel. Support is at USD 93.55, and failure clears the road to USD 90.00 a barrel. Failure of USD 90.00 could trigger another wave of capitulation selling. WTI’s 2022 trendline failed at USD 108.35 in early July, never to be seen again. US recession fears continue to weigh on WTI prices. Resistance lies at USD 95.20 barrel, the 200-DMA, followed by USD 102.00. Support is at USD 87.50 and then USD 82.00 a barrel. As noted in earlier newsletters, the avalanche of USD 200.00 a barrel, end of the world Brent crude forecasts, proved an uncannily accurate indicator of the impending peak in oil prices. Gold rallies, did I just say that? My four days away in Bali have seen gold’s impressive recovery rally continue. Overnight gold rose an impressive 1.45% to USD 1791.50 an ounce, edging to USD 1792.00 an ounce in Asian trading. It continues to benefit from a weaker US dollar, in turn, driven by falling US bond yields, as markets continue to price in peak inflation and a US recession. Notably, gold prices based, mid-July, at critical long-term support at USD 1680.00 an ounce. The ensuing rally remains a powerful bullish technical pattern which seems to be now attracting plenty of interest. Gold should remain well supported on dips to USD 1775.00 now, with a test of USD 1800.00 imminent. ​ Gold’s technical picture suggests it will continue grinding towards the USD 1900.00 region in the coming weeks. Until such a time as bond markets decide that inflation will be stickier than anticipated and yields start to rise again. The first test of that will come in the form of the US Non-Farm Payrolls this evening. A soft US payroll number, though, will likely support gold’s upward momentum, as it is likely to result in another bout of US dollar weakness as yields fall. My last commentary closes with a bullish outlook on gold; who would have thought? And with that, dear readers, all I can say is thank you very much; you’ve been a wonderful audience. Jeff has left the building……. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil slides, gold rally continues - MarketPulseMarketPulse
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Oil is tired of falling

InstaForex Analysis InstaForex Analysis 09.08.2022 15:05
Relevance up to 10:00 2022-08-14 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Strong statistics on American employment crossed out the hopes of pessimists for an early recession. Stock markets are growing by leaps and bounds, safe-haven assets are being sold, but the fall in oil suggests that not everything is so simple. Black gold still does not rule out a recession in the global economy. The 24% collapse of Brent from the levels of June highs is associated with fears about a slowdown in global demand. Fears that supply could increase due to Iran pushed the North Sea grade below $100 a barrel. According to Goldman Sachs, normalizing supply chains and eliminating other one-time factors will reduce US inflation to 4%, but after that, there will be a lot of excess heat in the economy, which will be very difficult to eliminate. The Fed will be forced to raise the federal funds rate above 4% and hold it there longer than currently expected. This will trigger a recession, but later. Probably in 2023. The oil market remains in an unsustainable deficit at current prices. They are too low to significantly reduce demand. The bank is forecasting Brent to rally to $110 in the third quarter. Dynamics of the stock market and oil     Fears that consumption will not be as strong as expected really dropped the futures quotes very much. The black gold market is on the verge of transition from a "bullish" conjuncture, backwardation, to a "bearish" contango. Spreads between nearby contracts narrowed over the week from $1.9 to $1.54 per barrel. In my opinion, a significant share of the negative about global demand has already been priced in, and factors such as a strong labor market, falling gasoline prices in the US, which will increase interest in buying cars and oil products, as well as the growth of Chinese oil imports to 8.79 million b/d, more than June's 4-year low, gives hope to Brent bulls. Another thing is that the supply may increase. Investors are actively discussing the possibility of a deal between the West and Iran, which is ready to throw an additional 1.5 million b/d of exports on the market, equivalent to 1.5% of world supply. This factor has so far been ignored by the market, so the signing of the agreement will be a real blow to fans of the North Sea variety.     As for ousting Russia, investors seem to have gotten used to the idea that this is unrealistic. Moscow is reorienting the flow of black gold from West to East. China and India accounted for 41.4% of Russian exports in July 2022 compared to 21.7% of the same month last year. At the same time, the appetites of Beijing and Delhi are beginning to fall—in the second month of summer, China purchased 843,000 b/d of oil from the Russian Federation, while in June and May, this figure reached 1.33 million b/d. Technically, a Wolfe Wave pattern was formed on the Brent daily chart. We take profits on the shorts formed on the rebound from $102.4 and use the rebound from the $89–91 convergence zone or break through the resistance at $97.2 per barrel for purchases.   Read more: https://www.instaforex.eu/forex_analysis/318434
What Did Support GDP? | Should Eurozone Worry!? Energy Prices May Weaken Production

What Did Support GDP? | Should Eurozone Worry!? Energy Prices May Weaken Production

ING Economics ING Economics 12.08.2022 11:37
Fading supply chain problems have led businesses to increase production in recent months. But with backlogs of work shrinking and new orders falling, there is not much reason for optimism in the months ahead  A factory in the Netherlands   The June data for industry looks rather upbeat at face value with growth for a third month in a row and production at the highest level since December 2017. This means that industrial production contributed positively to GDP in the second quarter. The improvement in the supply of inputs is causing supply to catch up with previous demand, which has been significant over the course of the pandemic. Still, in June, growth in production was mainly driven by a continued surge in capital goods production while consumer- and intermediate goods production shrank month-on-month. This shows that the base on which production was growing in June was more feeble than the headline figure leads us to believe. The outlook for eurozone manufacturers remains worrying. Weakening demand seems to be ongoing as purchasing power issues continue and while supply chain problems are easing they have by no means been solved. On top of that, soaring energy prices are set to hinder production and margins for manufacturers from here on. This means that while June looked decent in terms of production, the months ahead are likely to see further weakening. That fits our view of a contacting eurozone economy in the second half of this year. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
American Drivers Fuel Less! Crude Oil: What Do We Learn From OPEC's Forecast?

American Drivers Fuel Less! Crude Oil: What Do We Learn From OPEC's Forecast?

Jing Ren Jing Ren 12.08.2022 10:06
Yesterday, OPEC and the IEA provided their monthly reports on the oil industry. What got quite a bit of headlines was OPEC's forecast that crude demand would decrease during the remainder of the year. With both Brent and WTI below the $100/bbl mark, does this mean triple digit crude prices are a thing of the past? Not necessarily, because the IEA and OPEC are somewhat contradicting themselves in their reports. While OPEC cut its outlook for demand, the IEA raised its outlook. So, who's right? Well, it could have more to do with the initial assessment and converging on a realistic number. And that's rather important, because it appears to coincide with expected supply, even with OPEC raising production. Where this is going The IEA had a more pessimistic outlook for crude demand this year, setting it at 99M bpd, while OPEC had a more optimistic assessment of over 101M bpd. Since then, however, both have been converging on the 100M bpd mark, with the IEA raising demand forecasts and OPEC lowering. But both agree in their forecast that production will be around 100.1M bpd. Why the disagreement on one and agreement on the other? Because tracking production capacity is a lot easier. It's just a matter of counting all the wells and how much they produce. But how much people will decide to spend in a changing environment is a much harder thing to do. Furthermore, as the IEA noted in their report, there can be surprises. For example, Russian production has remained much higher than anticipated despite sanctions. Re-balancing shipments to take into account the sanctions appears to have been easier than anticipated, and happened quicker. Figuring out the price direction This has two implications for prices. One, the expectation for the price to fall once the infrastructure is set up for Russia to export around the sanctions might not pan out. Simply because is already managing to do that. And secondly, as Europe slowly weans itself off Russian supply, the potential for increasing price pressures might not materialize. This is because there appears to be more elasticity in global supply that allows for shifting demand. Speaking of which, high prices are pushing down consumer demand. A study by the AAA in the US, for example, showed that most Americans are cutting back on their driving. So much, in fact, that demand for gasoline has slipped below to the levels it was in 2020 during the pandemic. American drivers are the largest group of crude products consumers in the world. And it's not just fuel prices that are keeping them from driving, a majority said they were shopping less, as well. Suggesting that higher inflation overall, and not just strictly higher fuel prices, is contributing to slowing demand. So recession? With the BOE warning of a recession, and the US having two quarters of negative growth by the White House insisting it isn't a recession, that could be the key to potentially crude continuing its downward trajectory. Daimler Trucks, for example, is already setting up for lowering energy consumption ahead of potential supply shortages in Europe during the winter. Meaning that supply interruptions might not necessarily lead to higher demand, but simply less consumption. While demand might be waning, it still doesn't eliminate the possibility of a surprise on the supply side. Such as a rise in geopolitical tensions, or a natural event. So far, hurricanes in the Gulf of Mexico have been relatively scarce this year, but the season lasts for another four months.
Eurozone Bank Lending Under Strain as Higher Rates Bite

Higher Crude Oil Demand Is Expected! Some Countries Swaps Gas For Oil

Craig Erlam Craig Erlam 12.08.2022 13:55
Brent eyes $100 after mixed headline week The oil market has bounced back this week, with Brent once more flirting with triple-figures. There’s been a lot to digest this week, with Iran nuclear talks ongoing, US inventories rising, US output also rising, the Druzhba pipeline saga and the various forecasts. Even the forecasts themselves offered contrasting views, with OPEC downgrading demand growth and expecting the oil market to tip into surplus this quarter. The IEA, meanwhile, anticipates stronger demand growth due in part to the gas to oil switch as some countries react to sky-high prices. All things considered, the price moves highlight just how tight the market remains and how sensitive it therefore still is to spikes. A deal between the US and Iran could go some way to changing that but I think it’s clear traders are not banking on that given how the talks have gone until this point. A compelling bullish case for gold Gold is holding onto gains despite struggling to capture $1,800. The yellow metal briefly traded above here after the inflation data but it seems traders quickly changed their minds, with risk assets instead being favoured. The fact that it continues to hold onto the bulk of the gains without any significant correction may suggest there’s still an appetite for it, with slower tightening seen as a favourable outcome. This will be an interesting test for gold as $1,800 could represent an interesting rotation point from a technical perspective if there is no desire to see it above here but ultimately the case for bullish gold remains quite compelling. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rebounds, gold consolidates - MarketPulseMarketPulse
Chile's Lithium Nationalization and the Global Trend of Resource Nationalism: Implications for EV Supply Chains and Efforts to Strengthen Battery Metal Supply

Commodities: Prices Are Rising, Heatwaves In US And China Affect The Production Of Cotton

Ole Hansen Ole Hansen 12.08.2022 16:00
Summary:  The correction that for some commodities already started back in March has since the end of July increasingly been showing signs of reversing, driven by recent economic data strength, dollar weakness and signs inflation may have peaked. With the broad position adjustments having run their course, the focus has returned to supply which in many cases remains tight, thereby providing renewed support, especially across the sectors of energy and key agriculture commodities. The correction that for some commodities already started back in March has since the end of July increasingly been showing signs of reversing. According to the Bloomberg commodity sector indices, the correction period triggered peak to bottom moves of 41% in industrial metals, 31% in grains and 27% in energy. The main reason for the dramatic correction following a record run of strong gains was the change in focus from tight supply to worries about demand. Apart from China’s slowing growth outlook due to its zero-Covid policy and housing market crisis hitting industrial metals, the most important driver has been the way in which central banks around the world have been stepping up efforts to curb runaway inflation by forcing down economic activity through aggressively tightening monetary conditions. This process is ongoing but recent economic data strength, dollar weakness and signs inflation may have peaked have all helped support markets that have gone through weeks and in some cases months of sharp price declines, and with that an aggressive amount of long liquidation from financial traders as well as selling from macro-focused funds looking for a hedge against an economic downturn.With the broad position adjustments having run their course, the focus has returned to supply which in many cases remains tight, thereby providing renewed support and problems for those who have been selling markets looking for even lower prices in anticipation of recession and lower demand. Backwardation remains elevated despite growth worries The behaviour of spot commodity prices, as seen through first month futures contracts, rarely gives us the full fundamental picture with the price action often being dictated by technical price-driven speculators and funds focusing on macroeconomic developments, as opposed to the individual fundamental situation. The result of this has been a period of aggressive selling on a combination of bullish bets being scaled back but also increased selling from funds looking to hedge an economic slowdown.An economic slowdown, or in a worst-case scenario a recession, would normally trigger a surplus of raw materials as demand falters and production is slow to respond to a downturn in demand. However, during the past three months of selling, the cost of commodities for immediate delivery has maintained a healthy premium above prices for later deliveries. The chart below shows the spread measured in percent between the first futures and the 12-month forward futures contract, and while the tightness has eased a bit, we are still seeing tightness across a majority, especially within energy and agriculture. A sign that the market has sold off on expectations more than reality, and it raises the prospect of a strong recovery once the growth outlook stabilises. Crude oil The downward trending price action in WTI and Brent for the past couple of months is showing signs of reversing on a combination of the market reassessing the demand outlook amid continued worries about supply and who will and can meet demand going forward. The recovery from below $95 in Brent and $90 in WTI this week was supported by signs of softer US inflation reducing the potential peak in the Fed fund rates, thereby improving the growth outlook. In addition, the weaker dollar and improving demand, especially in the US where gasoline prices at the pumps have fallen below $4 per gallon for the first time since March.In addition, the International Energy Agency (IEA) lifted its global consumption estimate by 380 kb/d, saying soaring gas prices amid strong demand for electricity is driving utilities to switch from expensive gas to fuel-based products. Meanwhile, OPEC may struggle to raise output in the coming months due to limited spare capacity. While pockets of demand weakness have emerged in recent months, we do not expect these to materially impact on our overall price-supportive outlook. Supply-side uncertainties remain too elevated to ignore, not least considering the soon-to-expire releases of crude oil from US Strategic Reserves and the EU embargo of Russian oil fast approaching. With this in mind, we maintain our $95 to $115 range forecast for the third quarter. Gold (XAUUSD) The recently under siege yellow metal was heading for a fourth weekly gain, supported by a weaker dollar after the lower-than-expected US CPI and PPI data helped reduce expectations for how high the Fed will allow rates to run. However, rising risk appetite as seen through surging stocks and bond yields trading higher on the week have so far prevented the yellow metal from making a decisive challenge at key resistance above $1800/oz, and the recent decline in ETF holdings and low open interest in COMEX futures points to a market that is looking for a fresh and decisive trigger. We believe the markets newfound optimism about the extent to which inflation can successfully be brought under control remains too optimistic and together with several geopolitical worries, we see no reason to exit our long-held bullish view on gold as a hedge and diversifier. Gold has found some support at the 50-day moving average line at $1783, and needs to hold $1760 in order to avoid a fresh round of long liquidation the short-term. While some resistance is located just above $1800 gold needs a decisive break above $1829 in order to trigger the momentum needed to attract fresh buying in ETFs and managed money accounts in futures. Source: Saxo Group Industrial metals (Copper)   Copper has rebounded around 18% since hitting a 20-month low last month, thereby supporting a general recovery across industrial metals, the hardest hit sector during the recent correction. Supported by a softer dollar, data showing the US economy remains robust, easing concerns about the demand outlook in China and not least disruptions to producers in Asia, Europe as well as South America potentially curtailing supply at a time when exchange-monitored inventories remain at a decade low. All developments that have forced speculators to cut back recently established short positions.The potential for an improved demand outlook in China and BHP's recent announcement that it has made an offer for OZ Minerals and its nickel and copper-focused assets, is the latest in a series of global acquisitions aimed at shoring up supplies of essential metals for the energy transition. With its high electrical conductivity, copper supports all the electronics we use, from smartphones to medical equipment. It already underpins our existing electricity systems, and it is crucial to the electrification process needed over the coming years in order to reduce demand for energy derived from fossil fuels.Following a temporary recovery in the price of copper around the beginning of June when China began easing lockdown restrictions, the rally quickly ran out of steam and copper went on to tumble below key support before eventually stabilizing after finding support at $3.14/lb., the 61.8% retracement of the 2020 to 2022 rally. Since then, the price has recovered strongly but may temporarily pause after reaching finding resistance in the $3.70/lb area. We maintain a long-term bullish view on copper and prefer buying weakness instead of selling into strength. Source: Saxo Group The grains sector traded at a five-week high ahead of Friday’s supply and demand report from the US Department of Agriculture. The Bloomberg Grains Index continues to recover following its 28% June to July correction with gains this past week being led by wheat and corn in response to a weaker dollar and not least hot and dry weather in the US and another heatwave in Europe raising concerns about yield and production. Hot and dry weather at a critical stage for yield developments ahead of the soon-to-be-harvested crop has given the World Agricultural Supply and Demand Estimates report some additional attention with surveys pointing to price support with the prospect of lower yields lowering expectations for the level of available stocks ahead of the coming winter. Cotton, up 8% this month has seen the focus switch from growth and demand worries, especially in China, to deepening global supply concerns as heatwaves in the US and China hurt production prospects. Friday’s monthly supply and demand report (WASDE) from the US Department of Agriculture was expected to show lower US production driving down ending stocks by around 10% to 2.2 m bales, an 11-year low. Arabica coffee, in a downtrend since February, has also seen a steady rise since bouncing from key support below $2/lb last month. A persistent and underlying support from South American production worries has reasserted itself during the past few weeks as the current on-season crop potentially being the lowest since 2014. Brazil’s drought and cold curbed flowering last season and severe frosts in July 2021 led farmers to cut down coffee trees at a time of high costs for agricultural inputs, notably fertilizer. In addition, Columbia another top producer, has seen its crop being reduced by too much rainfall. Source: WCU: Commodity correction may have exhausted itself
The Commodity Sector Has Dropped Significantly

People Are Buying Gold. SIlver And Copper Stopped? Crude Oil Weakness

Ole Hansen Ole Hansen 16.08.2022 09:23
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to August 9. A relatively quiet week where a continued improvement in risk appetite drove stocks higher while softening the dollar. Some commodity positions, with crude oil the major exceptions, showed signs of having reached a trough following weeks of heavy selling Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 9. A relatively quiet summer holiday impacted week where stocks traded higher ahead of last week’s CPI and PPI print after better than expected economic data helped reduce US recession fears while the market was looking for inflation to roll over. The dollar traded a tad softer, bond yields firmed up while commodities showed signs of having reached a trough following weeks of heavy selling.    Commodities Hedge funds were net buyers for a second week with demand concentrated in metals and agriculture while the energy sector saw continued selling. Overall the net long across 24 major commodity futures rose for a second week after recently hitting a two-year low. Buying was concentrated in gold, platinum, corn and livestock with crude oil and wheat being to most notable contracts seeing net selling. Energy: Speculators responded to continued crude oil weakness by cutting bullish bets in WTI and Brent crude by a combined 14% to a pre-Covid low at 304.5k lots. The reductions were primarily driven by long liquidation in both contracts following a demand fear driven breakdown in prices. Gas oil and gasoline longs were also reduced. Metals: Buying of metals extended to a second week led by gold which saw a 90% jump in the net long to 58.2k lots. Overall, net short positions were maintained in silver, platinum and copper with the latter seing a small amount of fresh selling due to profit taking on recently established longs. Agriculture: Grains were mixed with corn and soybeans seeing continued buying ahead of Friday's WASDE  report while the CBOT corn net short jumped 36% to 20k lotsand the Kansas net long was cut to a two-year low. The total grain long rose for second week having stabilised around 300k lots having collapse from a near record 800k lot on April 22.Soft commodities saw elevated short positions in sugar and cocoa being maintained with price gains in coffee and not least cotton supporting a small increase in their respective net longs. This before Friday's surge in cotton which left it up 13% on the week after the US Department of Agriculture slashed the US crop forecast by 19% to a 12-year low. Driven by a high level of abandonment of fields in the drought-stricken Southwest.      Forex In the week to August 9 when the dollar traded close to unchanged against a basket of major currencies, speculators increased to three the number of weeks of continued dollar selling. The pace of selling even accelerated to the highest since January after the gross long against ten IMM futures and the Dollar Index was slashed by 20% to $17.4 billion, a nine week low. Most notable selling of the greenback was seen against GBP and JPY followed by EUR and CHF. The Japanese yen, under pressure for months as yield differentials to the dollar widened saw its net short being cut by 22% to a 17-month low.     What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming  Source: COT: Speculators cut oil long to pre-covid low
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Energy: What Could Make Crude Oil Price Reach Low Levels?

Craig Erlam Craig Erlam 16.08.2022 13:26
Two-way risk for oil as a decision on JCPOA nears? Oil prices are sliding once more after tumbling on Monday following some woeful Chinese data. The unexpected MLF rate cut from the PBOC may have further spooked traders as it’s unlikely to have any positive impact and just looked a little desperate. Throw in the country’s disappointing refinery data – with output falling to 12.53 million barrels per day – and things aren’t looking particularly good in the world’s second-largest economy. ​ It’s hard to say how much of a factor the Iran nuclear talks are as a deal looks both close and unlikely depending on who’s talking. It’s possible that with an agreement or not imminent, the potential for a deal is being priced in which creates two-way risk for the oil price if a final announcement does come this week. But the primary driver of the weakness, which could keep prices around $90 or lower is the threat of recession around the world and the Chinese lockdowns. Positive signs for gold? There’s been a lot of pushback in gold early this week, with the yellow metal trading in the red for a second day. This comes amid another day of gains for the US dollar even as yields remain relatively flat. The fact that gold isn’t shedding too much of its recent gains could be a positive sign over the medium term, although it would have to overcome what has become a strong barrier of resistance this past week. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil extends decline, gold edges lower - MarketPulseMarketPulse
USA: People Are Not Interested In Buying New Houses! Equities Are Still Trading High As The Hopes For Iran Nuclear Deal Are Still Alive

USA: People Are Not Interested In Buying New Houses! Equities Are Still Trading High As The Hopes For Iran Nuclear Deal Are Still Alive

Saxo Strategy Team Saxo Strategy Team 16.08.2022 14:00
Summary:  Equities traded higher still yesterday as treasury yields fell further back into the recent range and on hopes that an Iran nuclear deal will cement yesterday’s steep drop in oil prices. The latest data out of the US was certainly nothing to celebrate as the July US Homebuilder survey showed a further sharp drop in new housing interest and a collapse in the first regional US manufacturing survey for August, the New York Fed’s Empire Manufacturing.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended their gains yesterday getting closer to the 200-day moving average sitting around the 4,322 level. The US 10-year yield seems well anchored below 3% and financial conditions indicate that S&P 500 futures could in theory trade around 4,350. The news flow is light but earnings from Walmart later today could impact US equities should the largest US retailer lower their outlook for the US consumer. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hong Kong and mainland Chinese equities were mixed. CSI300 was flat, with electric equipment, wind power, solar and auto names gained. Hang Seng Index declined 0.5%. Energy stocks fell on lower oil price. Technology names were weak overall, Hang Seng TECH Index (HSTECH.I) declined 0.9%. Sunny Optical (02382:xhkg) reported worse than expected 1H22 results, revenues -14.4% YoY, net profits -49.5%, citing weakening component demand from the smartphone industry globally. The company’s gross margin plunged to 20.8% from 24.9%. Li Auto’s (02015:xhkg/LI:xnas) Q2 results were in line with expectations but Q3 guidance disappointed. The launch L9 seems cannibalizing Li ONE sales. USD: strength despite weak US data and falling treasury yields and strong risk sentiment Yesterday, the JPY tried to make hay on China cutting rates and as global yields eased back lower, with crude oil marked several dollars lower on hopes for an Iran nuclear deal. But the move didn’t stick well in USDJPY, which shrugged off these developments as the USD firmed further across the board, despite treasury yields easing lower, weak data and still strong risk sentiment/easy financial conditions. A strong US dollar is in and of itself is a tightening of financial conditions, however, and yesterday’s action has cemented a bullish reversal in some pairs, especially EURUSD and GBPUSD, where the next important levels pointing to a test of the cycle lows are 1.0100 and 1.2000, respectively. Elsewhere, USDJPY remains in limbo (strong surge above 135.00 needed to suggest upside threat), USDCAD has posted a bullish reversal but needs 1.3000 for confirmation, and AUDUSD is teetering, but needs a close back below 0.7000 to suggest a resurgent US dollar and perhaps widening concerns that a Chinese recession will temper interest in the Aussie. Crude oil Crude oil (CLU2 & LCOV2) trades lower following Monday’s sharp drop that was driven by a combination softer economic data from China and the US, the world’s top consumers of oil, and after Iran signaled a nuclear deal could be reached soon, raising the prospect of more Iranian crude reaching the market. The latest developments potentially reducing demand while adding supply forced recently established longs to bail and short sellers are once again in control. Brent needs to hold support at $93 in order to avoid further weakness towards $90. Focus on Iran news. Copper Copper (COPPERUSSEP22) led the metals pack lower, without breaking any key technical levels to the downside, after China’s domestic activity weakened in July. Meanwhile, supply side issues in Europe also cannot be ignored with surging power prices putting economic pressure on smelters, and many of them running at a loss. HG copper jumped 19% during the past month and yesterday’s setback did not challenge any key support level with the first being around $3.50/lb. BHP, the world’s top miner meanwhile hit record profits while saying that China is likely to offer a “tail wind” to global growth (see below). EU power prices hit record high on continued surge in gas prices ... threatening a deeper plunge into recession. The latest surge being driven by low water levels on Europe’s rivers obstructing the normal passage for diesel, coal, and other fuel products, thereby forcing utilities to use more gas European Dutch TTF benchmark gas futures (TTFMU2) has opened 5% higher at €231/MWh, around 15 times higher than the long-term average, suggesting more pain ahead for European utility companies. Next-year electricity rates in Germany (DEBYF3) closed 3.7% higher to 477.50 euros ($487) a megawatt-hour on the European Energy Exchange AG. That is almost six times as much as this time last year, with the price doubling in the past two months alone. UK power prices were also seen touching record highs. US Treasuries (IEF, TLT) see long-end yields surging. Yields dipped back lower on weak US economic data, including a very weak Empire Manufacturing Survey (more below) and another sharp plunge in the NAHB survey of US home builders, suggesting a rapid slowdown in the housing market. The survey has historically proven a leading indicator on prices as well. The 10-year benchmark dipped back further into the range after threatening to break up higher last week. The choppy range extends down to 2.50% before a drop in yields becomes a more notable development, but tomorrow’s US Retail Sales and FOMC minutes offer the next test of sentiment. What is going on? Weak Empire State manufacturing survey and NAHB Index Although a niche and volatile measure, the United States NY Empire State Manufacturing Index, compiled by the New York Federal Reserve, fell to -31.3 from 11.1 in July, its lowest level since May 2020 and its sharpest monthly drop since the early days of the pandemic. New orders and shipments plunged, and unfilled orders also declined, albeit less sharply. Other key areas of concern were the rise in inventories and a decline in average hours worked. This further weighed on the sentiment after weak China data had already cast concerns of a global growth slowdown earlier. Meanwhile, the US NAHB housing market index also saw its eighth consecutive monthly decline as it slid 6 points to 49 in August. July housing starts and building permits are scheduled to be reported later today, and these will likely continue to signal a cooling demand amid the rising mortgage rates as well as overbuilding. China's CATL plans to build its second battery factory in Europe CATL unveiled plans to build a renewable energy-powered factory for car battery cells and modules in Hungary. It will invest EUR 7.34 billion (USD 7.5bn) on the 100-GWh facility, which will be its second one in Europe. To power the facility CATL will use electricity from renewable energy source, such as solar power. At present, CATL is in the process of commissioning its German battery production plant, which is expected to roll out its first cells and modules by the end of 2022. Disney (DIS) shares rise on activist investor interest Daniel Loeb of Third Point announced a significant new stake in Disney yesterday, helping to send the shares some 2.2% higher in yesterday’s session. The activist investor recommended that the company spin off its ESPN business to reduce debt and take full ownership of the Hulu streaming service, among other moves. Elliott exits SoftBank Group The US activist fund sold its stake in SoftBank earlier this year in a sign that large investors are scaling back on their investments in technology growth companies with long time to break-even. In a recent comment, SoftBank’s founder Masayoshi Son used more cautious words regarding the investment company’s future investments in growth companies. BHP reports its highest ever profit, bolstered by coal BHP posted a record profit of $21.3bn supported by considerable gains in coal, nickel and copper prices during the fiscal year ending 30 June 2022. Profits jumped 26% compared to last year’s result. The biggest driver was a 271% jump in the thermal coal price, and a 43% spike in the nickel price. The world’s biggest miner sees commodity demand improving in 2023, while it also sees China emerging as a source of stable commodity demand in the year ahead. BHP sees supply covering demand in the near-term for copper and nickel. According to the company iron ore will likely remain in surplus through 2023. In an interview Chief Executive Officer Mike Henry said: Long-term outlook for copper, nickel and potash is really strong because of “unstoppable global trends: decarbonization, electrification, population growth, increasing standards of living,” What are we watching next? Australia Q2 Wage Index tonight to determine future RBA rate hike size? The RBA Minutes out overnight showed a central bank that is trying to navigate a “narrow path” for keeping the Australian economy on an “even keel”. The RBA has often singled out wages as an important risk for whether inflation risks becoming more embedded and on that note, tonight sees the release of the Q2 Wage Index, expected to come in at 2.7% year-on-year after 2.4% in Q1. A softer data point may have the market pulling back expectations for another 50 basis point rate hike at the next RBA meeting after the three consecutive moves of that size. The market is about 50-50 on the size of the RBA hike in September, pricing a 35 bps move. RBNZ set to decelerate its guidance after another 50 basis point move tonight? The Reserve Bank of New Zealand is expected to hike its official cash rate another 50 basis points tonight, taking the policy rate to 3.00%. With business and consumer sentiment surveys in the dumps in New Zealand and oil prices retreating sharply the RBNZ, one of the earliest among developed economies to tighten monetary policy starting late last year, may be set for more cautious forward guidance and a wait and see attitude, although wages did rise in Q2 at their second fastest pace (+2.3% QoQ) in decades. The market is uncertain on the future course of RBNZ policy, pricing 44 bps for the October meeting after tonight’s 50 bps hike and another 36 bps for the November meeting. US retailer earnings eyed After disappointing results last quarter, focus is on Walmart and Home Depot earnings later today. These will put the focus entirely on the US consumer after the jobs data this month highlighted a still-tight labor market while the inflation picture saw price pressures may have peaked. It would also be interesting to look at the inventory situation at these retailers, and any updated reports on the status of the global supply chains.   Earnings to watch Today’s US earnings focus is Walmart and Home Depot with analysts expecting Walmart to report 7% revenue growth y/y and 8% decline y/y in EPS as the US retailer is facing difficulties passing on rising input costs. Home Depot is expected to report 6% growth y/y in revenue and 10% growth y/y in EPS as the US housing market is still robust driving demand for home improvement products. Sea Ltd, the fast-growing e-commerce and gaming company, is expected to report revenue growth of 30% y/y in Q2 but worsening EBITDA margin at -16.2%. The previous winning company is facing headwinds in its gaming division and cash flow from operations have gone from positive $318mn in Q1 2021 to negative $724mn in Q1 2022. Today: China Telecom, Walmart, Agilent Technologies, Home Depot, Sea Ltd Wednesday: Tencent, Hong Kong Exchanges & Clearing, Analog Devices, Cisco Systems, Synopsys, Lowe’s, CSL, Target, TJX, Coloplast, Carlsberg, Wolfspeed Thursday: Applied Materials, Estee Lauder, NetEase, Adyen, Nibe Industrier, Geberit Friday: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere Economic calendar highlights for today (times GMT) 0900 – Germany Aug. ZEW Survey 0900 – Eurozone Jun. Trade Balance 1200 – Poland Jul. Core CPI 1215 – Canada Jul. Housing Starts 1230 – US Jul. Housing Starts and Building Permits 1230 – Canada Jul. CPI 2030 – API Weekly Report on US Oil Inventories 2350 – Japan Jul. Trade Balance 0130 – Australia Q2 Wage Index 0200 – New Zealand RBNZ Official Cash Rate announcement 0300 – New Zealand RBNZ Governor Orr Press Conference  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – August 16, 2022
Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

Oh My! Commodities Prices Are Affected By Stronger USD (US Dollar) And Chinese Data

ING Economics ING Economics 16.08.2022 15:43
Commodities have come under pressure. Poor macro data from China and a rebound in the USD have weighed heavily on the complex. Specifically for oil, the prospect of an Iranian nuclear deal is certainly not helping   Energy - edging closer to a nuclear deal Oil is under further pressure. ICE Brent settled more than 3% lower yesterday, whilst WTI broke below US$90/bbl. This weakness has carried through into early morning trading today. Weaker than expected Chinese data has raised demand concerns once again, not just for oil, but for the broader commodities complex. As mentioned in yesterday’s note, refinery activity in July fell to its lowest levels since March 2020, whilst apparent demand was down around 10% YoY. These demand concerns have coincided with a recovery in the USD, which surged yesterday. Prospects of an Iranian nuclear deal have only weighed further on the market. Iran has reportedly responded to the EU’s proposal for a resumption of the Iranian nuclear deal. And the Iranians expect to receive a response in the next couple of days. The Iranian foreign minister is of the view that a deal could be reached in the next few days, although it will require some ‘flexibility’ from the US. As for the US’ stance, they will reportedly relay their views directly to EU negotiators. A revival of the deal and lifting of oil sanctions could potentially see Iran increasing oil supply in the region of 1.3MMbbls/d over time, which would help to ease some of the expected tightness in the oil market over 2H23. While the short term outlook appears more negative, the longer term outlook is still somewhat constructive. US drilling activity is increasing, although the pace has been slower than we have seen in previous upcycles. US producers still seem to be relying on drilled but uncompleted wells (DUCs). The latest drilling productivity report released by the EIA yesterday shows that DUC inventory fell by 20 over July, to leave the total number of DUCs at 4,277- the lowest since at least December 2013. We have seen 25 consecutive months of declines in the DUC inventory, falling by 4,530 over that period. US producers have relied on DUCs to sustain production post Covid, however, given the low inventory, producers will be unable to rely on DUCs moving forward, instead we will need to see a further increase in drilling activity.   Hot weather in Europe has provided a boost to European natural gas prices. TTF settled almost 6.8% higher yesterday, whilst prices hit EUR230/MWh at one stage yesterday- levels we have not seen since early March. However, European gas storage continues to edge higher, reaching almost 75%, which is in-line with the 5-year average and well above the 62% seen at this stage last year. Assuming we do not see any further reductions in Russian gas flows, the EU should hit its target of having storage 80% full by 1 November. However, that is a big assumption to make in the current environment. Metals - power shortages in Sichuan province The announcement of an interest-rate cut from the People's Bank of China (PBoC) failed to stop a slide in the metals complex yesterday. Instead market participants continue to be concerned about the demand outlook, following the latest poor economic data from China, as well as the domestic Covid situation. A stronger USD only applied further pressure to metal markets. Whilst there are clear demand concerns, supply risks are growing. Sichuan province in China has ordered some industrial plants to halt activities from 15 August until 20 August, as heat waves have led to power shortages. The region has been struggling with high temperatures and dry weather since July, and relies heavily on hydro for power generation. According to the Shanghai Metals Market, around 390ktpa of capacity in Sichuan province has been affected by the power shortages. Turning to ferrous metals, the SGX’s most active iron ore contract fell close to 4% yesterday, given the weaker macro data from China. The latest data from the National Bureau of Statistics shows that crude steel output fell 6.4% YoY to 81.43mt in July, as demand from the property sector continues to worsen. Cumulatively, output fell 6.4% YoY to 609.3mt over the first seven months of the year. Shandong province (the third largest steel producing hub) in East China, plans to cap steel output at around 76mt in 2022, slightly lower than the 76.5mt produced last year. Agriculture - Russian grain exports off to a slow start The latest numbers from the Russian Grain Union shows that Russia exported 4.67mt of wheat in the season that began on 1 July, down 13% compared to a year earlier. It is also estimated that the number of nations buying Russian wheat has reduced from 43 a year ago to just 23. Total grain exports declined 12% YoY to 5.6mt over the same period. The USDA’s latest weekly crop progress report for the US shows that 90% of the winter wheat crop was harvested as of 14 August, compared to 86% a week ago and 97% at the same stage last season. For corn, the USDA rated 57% of the crop in good-to-excellent condition, down from 58% a week ago and 62% last year. 58% of the soybean crop was rated good-to-excellent, marginally down from 57% last year. Read this article on THINK TagsRussia Power shortages Oil Iran nuclear deal Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Volume Of Crude Oil Rose For The Second Session In A Row

The Cheapest Oil In Six Months!!! How Will It Affect The Global Economics?

Conotoxia Comments Conotoxia Comments 16.08.2022 11:55
The price of WTI crude oil remained below $90 per barrel at the beginning of the week, the level before Russia's attack on Ukraine. Oil today is the cheapest in six months. It seems that the topic of a global economic slowdown or recession and how long it may last may be important for the oil market. Chinese and U.S. economic data seem to show a weaker condition in both economies and thus could affect the decline in oil demand. This, in turn, could put downward pressure on prices. According to published data, factory activity in China declined enough in July to force the central bank to cut lending rates to keep demand from collapsing. In the United States, on the other hand, the market may have been taken by surprise by the second-largest drop in the history of the New York Empire State Manufacturing Index. The above indicators may affect the market from the demand side, but this is only one part of the puzzle. On the supply side, long-awaited changes may be brewing. Once the embargo is lifted, oil from Iran may start flowing into the market again. Iran has responded to the European Union's proposal. It may seek to re-implement the 2015 nuclear agreement. The EU is also calling on the US to show more flexibility in implementing the agreement. Saudi Arabia may also be preparing to increase its oil supply. The chairman of Saudi Aramco, the state-owned oil giant, stated over the weekend that his company is ready to increase production to 12 million barrels per day, the company's current production capacity limit. Only a decision by the Saudi Arabian government is needed to increase production. According to the EIA agency's forecast, the United States can also increase its production. US oil production in the August forecast averages 11.9 million barrels per day (b/d) in 2022. It could rise to 12.7 million b/d in 2023. If this forecast comes true, the US could set a production record next year. The current one is 12.3 million b/d and was set in 2019.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Oil near six-month lows
Walmart And Home Depot Did Better Than Expected. S&P 500 Reaches The 4,3k Level

Walmart And Home Depot Did Better Than Expected. S&P 500 Reaches The 4,3k Level

Saxo Strategy Team Saxo Strategy Team 17.08.2022 08:35
Summary:  S&P500 index broke above the key 4,300 resistance level while the NASDAQ pushed lower amid mixed economic data and better-than-feared earnings from Walmart and Home Depot. US housing data continues to worsen, but the focus now turns to FOMC minutes due later today, as well as the US retail sales which will be next test of the strength of the US consumer. Asia session may have trouble finding a clear direction, but Australia’s wage price index and RBNZ’s rate hike may help to provide some bounce. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. equities were mixed. Tech names had an initial pullback, followed by short-coverings that narrowed the loss of the Nasdaq 100 to 0.23% at the close. S&P500 edged up 0.19% to 4,305 on better-than-feared results from retailers, moving towards its 200-day moving average (4,326). Walmart (WMT:xnys) and Home Depot (HD:xnys) reported Q2 results beating analyst estimates. Walmart gained 5% on strong same-store sales growth and a deceleration in inventory growth. Home Depot climbed 4% after reporting better than expected EPS and same-store sales but with an acceleration in inventory buildup. The declines in housing starts and building permits released on Monday and the downbeat comments about the U.S. housing market from the management of Compass (COMP:xnys), an online real estate brokerage, highlighted the challenges faced in the housing sector.  Short-end U.S. treasury yields rose as the long-end little changed The bigger than expected increases in July industrial production (+0.6% MoM), manufacturing production (+0.7% MoM), and business equipment production (+0.6%) triggered some selling in the short-end of U.S. treasury curve, pushing the 2-year yield 8 bps higher to 3.25% as 10-year yield edged up 1bp.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) China internet stocks were sold off on Tuesday afternoon after Reuters ran a story suggesting that Tencent (00700:xhkg) plans to divest its 17% stake (USD24 billion) in Meituan (03690:xhkg).  The shares of Meituan collapsed 9% while Tencent gained 0.9%.  After the close of the Hong Kong market, Chinese media, citing sources “close to the matter” suggested that the divesture story is not true. However, the ADRs of Meituan managed to recover only 1.7% in New York trading. The newswire story also triggered selling on Kuaishou (01024:xhkg), -4.4%, which has Tencent as a major investor. The decline in internet stocks dragged the Hang Seng Index 1% lower. On the other hand, Chinese developers soared on another newswire report that state-owned China Bond Insurance is going to provide guarantees to new onshore debts issued by several “high quality” developers, including Country Garden (02007:xhkg) +9%, Longfor (00960:xhkg) +12%, CIFI (00884:xhkg) +12.9%, and Seazen (01030:xhkg) +7.6%.  Shares of Chinese property management services also surged higher.  GBPUSD bounced off the 1.2000 support, NZD eyeing RBNZ A mixed overnight session for FX as the US yields wobbled. Risk sentiment held up with the mixed US data accompanied by a less bad outcome in the US retailer earnings than what was expected. This made the safe-haven yen a clear underperformer, and USDJPY rose back above 134. But a clear trend in the pair is still missing and a break above 135 is needed to reverse the downtrend. Cable got lower to remain in close sight of the 1.2000 big figure, but rose above 1.2100 subsequently. UK CPI report due today may confirm the need for further BOE action after labor data showed wage pressures. NZDUSD remains near lows of 0.6320 but may see a knee-jerk higher if RBNZ surprises on the hawkish side. Crude oil prices (CLU2 & LCOV2) Crude oil prices remain under pressure due to the prospect of Iran nuclear deal, and printed fresh lows since the Ukraine invasion. Some respite was seen in early Asian session, and WTI futures were last seen at $87/barrel and Brent is below $93. The EU submitted a final proposal to salvage the Iran nuclear deal, and prospects of more energy supply are dampening the price momentum. It has been reported that Iran’s response was constructive, and they are now consulting with the US on a way ahead for the protracted talks. The API reported crude inventories fell by 448,000 barrels last week, while gasoline stockpiles increased by more than 4 million barrels. Government data is due later Wednesday. European Dutch TTF benchmark gas futures (TTFMU2) touched €250/MWh, but has cooled off slightly recently, but still signals the heavy price that Europe is paying for the dependence on Russian gas. Copper holding up well despite China slowdown concerns Despite reports of weaker financing and activity data from China earlier this week, Copper remains well supported and registered only modest declines. BHP’s results provided some offset, as did the supply side issues in Europe. Only a break below the key 350 support will turn the focus lower. Meanwhile, zinc rallied amid concerns of smelter closures in Europe. What to consider? US housing scare broadens, industrial production upbeat Housing starts fell 9.6% in July to 1.446 mn, well beneath the prior 1.599 mn and the expected 1.537 mn. Housing starts are now down for five consecutive months, and suggest a cooling housing market in the wake of higher borrowing costs and higher inflation. Meanwhile, building permits declined 1.3% in July to 1.674 mn from 1.696 mn, but printed above the expected 1.65 mn. There will be potentially more scaling back in construction activity as demand weakens and inventory levels rise. On the other hand, industrial production was better than expected at 0.6% m/m (prev: -0.2%) possibly underpinned by holiday demand but the outlook is still murky amid persistent inflation and supply chain issues. US retailer earnings come in better than feared Walmart (WMT:xnys) and Home Depot (HD:xnys) reported better-than-feared results on Tuesday. Walmart’s Q2 revenues came in at USD152.9 billion (+8.4% YoY, consensus USD150.5bn). Same-store sales increased 8.4% YoY (vs consensus +6.0% YoY).  EPS of USD1.77, down 0.8% from a year ago quarter but better than the consensus estimate of USD1.63. While inventories increased 25.5% in Q2, the rate of increase has moderated from the prior quarter’s +32.0%. The company cited falls in gas prices, market share gain in grocery, and back-to-school shopping key reasons behind the strength in sales.  Home Depot reported Q2 revenues of USD43.9 billion (vs consensus USD43.4bn), +6.5% YoY.  Same-store sales grew 5.8%, beating analyst estimates (+4.9%).  EPS rose 11.5% to $5.05, ahead of analyst estimates (USD4.95). However, inventories grew 38% YoY in Q2, which was an acceleration from the prior quarter. The management cited inflation and pulling forward inventory purchases given supply chain challenges as reasons for the larger inventory build-up. Target (TGT:xnys) is scheduled to report on Wednesday. Eyes on US retail sales US retail sales will be next test of the US consumer after less bad retailer earnings last night. Retail sales should have been more resilient given the lower prices at pump improved the spending power of the average American household, and Amazon Prime Day in the month possibly attracted bargain hunters as well. However, consensus expectations are modest at 0.1% m/m compared to last month’s 1.0%. A cooling labor market in the UK UK labor market showed signs of cooling as job vacancies fell for the first time since August 2020 and real wages dropped at the fastest pace in history. Unemployment rate was steady at 3.8%, and the number of people in employment grew by 160,000 in the April-June period as against 256,000 expected. There was also a sprinkle of good news, with the number of employees on payrolls rising 73,000 in July, almost triple the pace expected. Also, wage growth was strong at 4.7% in the June quarter from 4.4% in the three months to May, which may be key for the BOE amid persistent wage pressures. Australia Q2 Wage Index to determine future RBA rate hike size? The RBA Minutes out on Tuesday showed a central bank that is trying to navigate a “narrow path” for keeping the Australian economy on an “even keel”. The RBA has often singled out wages as an important risk for whether inflation risks becoming more embedded and on that note, today sees the release of the Q2 Wage Index, expected to come in at 2.7% year-on-year after 2.4% in Q1. A softer data point may have the market pulling back expectations for another 50 basis point rate hike at the next RBA meeting after the three consecutive moves of that size. The market is about 50-50 on the size of the RBA hike in September, pricing a 35bps move. RBNZ set to decelerate its guidance after another 50 basis point move today? The Reserve Bank of New Zealand is expected to hike its official cash rate another 50 basis points tonight, taking the policy rate to 3.00%. With business and consumer sentiment surveys in the dumps in New Zealand and oil prices retreating sharply the RBNZ, one of the earliest among developed economies to tighten monetary policy starting late last year, may be set for more cautious forward guidance and a wait and see attitude, although wages did rise in Q2 at their second fastest pace (+2.3% QoQ) in decades. The market is uncertain on the future course of RBNZ policy, pricing 45bps for the October meeting after today’s 50bps hike and another 37bps for the November meeting. FOMC minutes to be parsed for hints on future Fed moves The Federal Reserve had lifted rates by 75bps to bring the Fed Funds rate at the level that they consider is neutral at the July meeting, but stayed away from providing any forward guidance. Meeting minutes will be out today, and member comments will be watched closely for any hints on the expectation for September rate hike or the terminal Fed rate. The hot jobs report and the cooling inflation number has further confused the markets since the Fed meeting, even as Fed speakers continue to push against any expectations of rate cuts at least in ‘early’ 2023. We only have Kansas City Fed President Esther George (voter in 2022) and Minneapolis Fed President Kashkari (non-voter in 2022) speaking this week at separate events on Thursday, so the bigger focus will remain on Jackson Hole next week for any updated Fed views.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 17, 2022
Crude Oil Inventories Decreased, What Make The Prices Go Up! Iranian Nuclear Deal Talks

Crude Oil Prices Decrease Because Of Nuclear Deal! Gazprom Produced Over 10% Less Gas!

ING Economics ING Economics 17.08.2022 10:03
European natural gas prices continue to strengthen, which is having an impact on industrial output in the region. Yesterday, yet another metal smelter in Europe announced that it would halt production due to "external factors" Zinc ingots at a warehouse Energy - expectations for a nuclear deal grow Downward pressure on the oil market continued yesterday, with expectations of a positive outcome in Iranian nuclear talks growing. The market is positioning itself as though a deal is on the cards, but the risk is that if parties fail to come to a deal, we would likely see a reversal in the recent price action. While Iran appears fairly positive on a deal, it is still unknown where the US stands with the proposal. Given the more recent weakness that we have seen in oil and gasoline prices, the US may be less willing to make big concessions. API numbers released overnight have provided some support to the market this morning. US crude oil inventories are reported to have declined by 448Mbbls - the drawdown in gasoline stocks was more significant, falling by 4.48MMbbls over the week. It is the gasoline number which is providing some support to the market this morning.  The more widely followed EIA numbers will be released later today and the market is expecting a crude build of around 800Mbbls and a gasoline draw of around 1MMbbls. Similar numbers to the API could provide some further immediate support to prices. European gas prices have continued to strengthen. TTF briefly traded above EUR250/MWh yesterday, as the ever present supply concerns are coupled with stronger demand due to the ongoing heatwave in the region. While EU members last month agreed on the Commission’s proposal for a voluntary demand cut of 15% vs. the 5 year average between 1 August 2022 and 31 March 2023, countries will likely not need to enforce this. This is due to the fact that the current high price environment will likely ensure that we see the necessary demand destruction.  Meanwhile, reduced Russian gas flows are unsurprisingly having an impact on Russian gas output. Gazprom reported yesterday that its YTD gas production (until 15 August) declined by 13.2% YoY, whilst exports over the period were down 36.2% YoY. Metals - high EU power prices lead to further smelter closures LME zinc 3M prices jumped to an intra-day high of US$3,819/t yesterday and settled more than 3% up on the day. This is after Nyrstar announced that it would halt operations at its Budel smelter in the Netherlands. The smelter will be placed on care and maintenance starting from 1 September and for an indefinite period. The smelter, which has a nameplate capacity of 315ktpa and accounts for around 2% of global supply, was already operating at reduced rates due to the ongoing power crisis in Europe. LME exchange inventories are already tight, having fallen by more than 124kt since the start of the year, leaving them at just 75kt. Therefore, the market has a very thin buffer to sustain any further supply shocks. It appears as though it will be a challenging environment for metal producers in Europe (from a cost perspective) for the foreseeable future, given that energy prices are likely to remain elevated. The London Metal Exchange yesterday banned the delivery of Russian nickel brands (including Nornickel) into its approved UK warehouses. The ban is imposed on any nickel exported after 20 July. The move shouldn’t come as too much of a surprise, given that we had previously seen the same action taken for a number of other LME metals. Given that there is no nickel in approved LME UK warehouses affected by the suspension, this move should have no impact on nickel prices.        Agriculture - Ukraine grain exports remain weak in 1H August The latest data from Ukraine’s agricultural ministry shows that Ukraine exported 948kt in the first half of August, down from 1.88mt in the same period last year. Cumulative exports have fallen 46% YoY to 2.65mt in the 2022/23 season, despite unblocked ports.  Bloomberg reports that Ukraine shipped 563kt of crops in 1H August under the Black Sea export corridor from Odesa, Chornomorsk and Pivdennyi. Corn made up the bulk of these volumes, with 451kt exported, whilst just 42kt of wheat was shipped. Turkey, Iran and South Korea were the top destinations for these shipments. Ukraine’s deputy infrastructure minister believes that 3mt of grains could be exported from ports in September. Read this article on THINK TagsZinc Russia-Ukraine Power shortages Nickel Natural gas Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: US Equities Continue To Trade Up, Natural Gas In Europe, Bank of Japan Meeting Ahead And More

Natural Gas Is More Valuable Than Crude Oil!? Carbon Emission Is Almost The Highest In History!!!

Kim Cramer Larsson Kim Cramer Larsson 17.08.2022 16:02
Dutch TTF Gas is resuming uptrend taking out July peak testing the 0.618 Fibonacci retracement at around €242.75.RSI has broken its falling trend and is likely to trade out/cancel the divergence since mid-July. If Dutch gas closes above the 0.618 retracement the 0.764 retracement at around 281.82 is next level likely to be reached. The upper rising trend line is likely to be reached and possibly broken in a gas price that seems to accelerate.To reverse the uptrend a close below 187.50 is needed.However, a correction over the next couple of days is not unlikely given the Spinning Top Candle formed yesterday. IT is often a top and reversal indicator but needs to be confirmed by a bearish candle the following day. IF Dutch Gas closes above its peak the potential top and reversal is demolished. Source: Saxo Group Henry Hub Gas has taken out resistance at the 0.618 retracement at around $8.90 and now also 0.764 retracement indicating previous highs at $9.66-9.75 are likely to be tested. If Henry Hub Gas closes above previous highs new price targets Source: Saxo Group Brent Crude oil continue its downtrend closing in on support at around $90. RSI is testing previous lows. There is divergence indicating a weakening of the downtrend but if RSI makes a new low the $90 support could be broken. Next support would be at around the 0.764 retracement at 85.76To set the downtrend on pause a close above 100.38. That will most likely not reverse the trend but merely just put it on pause. Source: Saxo Group WTI Crude oil was rejected at the short-term falling trendline and is now back below the 0.618 retracement. Next support at 81.90. There is divergence on RSI indication the downtrend is weakening. However, if RSI closes below If WTI closes back above the 200 SMA i.e. above $95 thereby also breaking above the short-term falling trendline, a larger correction to around 105-110 is likely. Source: Saxo Group Carbon Emissions broke its falling trendline last week and has now also broken above resistance at 92.75 closing in on its all-time high just below €100. RSI is entering over-bought territory but there is no divergence indicating higher levels (above 100) is likely. However, do expect a correction from just below previous highs.            Source: Saxo Group   Source: Technical Update - Natural Gas powers higher. Oil downtrend weakening, close to and end? Carbon Emission close to all-time highs
Nuclear Power Emerges as Top Theme for 2023, Bubble Stocks Under Pressure

We Need To Build Our Green Energy Future. Here Is Why

Peter Garnry Peter Garnry 17.08.2022 16:26
Summary:  We are used to not think about the energy sector, but the galloping global energy crisis has illuminated our deficits in primary energy due to years of underinvestment in fossil fuels and renewable energy sources inability to scale fast enough with the green transformation and electrification of our economy. It seems more likely now that the non-renewable and the renewable energy sector will both provide attractive returns as we will need both to overcome our short-term energy crisis and long-term aspirations of a greener energy future. The energy crisis keeps getting worse Electricity prices in Europe are nine times higher than the historical average since 2007 as lack of investments and cutting the ties to Russia’s energy supplies are severely constraining available energy in society. Since before the pandemic we have written many equity notes on the green transformation which involves building out renewable energy sources and electrifying everything in the economy to reduce the carbon emissions involved with our current living standard. Switching a large part of the transportation sector to electricity or green fuels, switching the heating source from natural gas to renewable energy through electrification (air-to-water heat pumps) etc. is very difficult as our rising wealth (measured by GDP) is finely mapped to carbon emissions over the past 300 years. We described this in our note The inconvenient truth on energy and GDP. Decoupling our wealth generating function from that of carbon emissions is probably the greatest task humans has ever set out to do. German baseload electricity 1 year forward | Source: Bloomberg There is not ‘one solution’ that fixes our energy crisis As BP’s 2022 Statistical Review of World Energy pictures primary energy demand in 2021 eclipsed 2019 suggesting the world’s demand for energy is now higher than before the pandemic and the usage of fossil fuels (82%) is only slightly down compared to five years ago (85%). We very much still live in a fossil fuel based economy. Things will change over time and the share of fossil fuels will likely decline, but the idea that the world can do the green transformation by electrifying everything based on renewable energy sources is naïve. Investors should also remember that the change in primary energy demand is mostly driven by the non-OECD countries. Renewable energy does not scale fast enough for a complete transition due to the speed on electrification and recently the CEOs of Orsted and Vestas complained about bureaucracy related to get new offshore wind power projects approved. The recent Climate & Tax Bill is acknowledging that we will need oil and gas for longer than expected just three years ago and thus our current energy crisis will allow both renewable energy and fossil fuel energy to be good investments in parallel. Renewable energy is the third best theme basket this year while the commodities basket (which includes oil & gas and mining companies) is the best performer. Our view of the future of energy is that there is no ‘one solution’ to our energy problem. We must move to a mindset of energy diversification. We will need many different sources of energy and never rely too much on one source. Germany’s reliance on natural gas for its economic model has proved fragile. Even France’s concentrated bet on nuclear power has proved to be fragile due to corrosion and now too hot rivers. The world must invest in all types of energy and thus our view is that investors mut get broad exposure to energy going forward. The non-renewable energy sector at a glance In this equity note we will focus on the non-renewable energy because this is the part of the energy sector which has changed the most relative to market pricing and expectations and where there is more room for valuations changing. Despite high oil and gas prices the energy sector is still relatively cheap as we described already back in May in our note Global energy stocks are the cheapest in 27 years where we measured valuation on the free cash flow yield. The high oil and gas prices have also led to record profits for refiners and recently the highest quarterly profit ever recorded in the global energy sector which we described in our note Earnings hit new all-time high as inflation lifts all boats. The global energy sector (defined by GICS and being the non-renewable energy sector) is still cheap relative to the global equity market with the 12-month EV/EBITDA being two standard deviations below the average valuation spread since 2005. In terms of total return the global energy sector has delivered a higher return than the global equity market since 1995 (see chart). It is also worth noting that measured on the 12-month forward EV/EBITDA the renewable energy sector has twice the valuation level compared to the non-renewable energy sector reflecting the different in expectations for the future priced in the market. As we described in our Q1 Outlook the current dividend yield and expected dividend growth suggest that the global energy sector has an expected long-term return of 10% annualised subject of course to a large degree of uncertainty related to equity valuation compression in the industry or lower dividend growth in the future than expected today. Global energy vs global equities | Source: Bloomberg The easiest way to invest in the energy sector is through ETFs tracking the sector and most investors should do that. A different approach is investing in specific parts of the non-renewable energy sector. The tables below show the top five company on market value in each of the GICS industries in the GICS energy sector. As the five-year total returns in USD column show, the industries related only to drilling and providing equipment for drilling activities have done the worst because the decline in capital expenditures since 2015 has dried up activity for this industry. The integrated oil and gas majors have done better due to refining and trading businesses. Over the past five years, the best performing industries in the energy sector have been refining and marketing due to the crack spreads (the difference between crude oil and refined products) have expanded during the pandemic. The global coal industry has also done very well which in terms of climate change and reducing carbon emissions is a sad observation but we should be aware of that the primary fuel source for power generation globally is still coal. GICS industries in the energy sector | Source: Bloomberg and Saxo Group Source: How to invest in energy and the unfolding energy crisis?
China's Property Debt Crisis, Economic Momentum, and Upcoming Meetings: A Market Analysis

A Pick Up In Yields May Come, The Question Is Open As US Treasury Yields Remain Rangebound

Saxo Bank Saxo Bank 18.08.2022 11:38
Summary:  Today we note a further softening in sentiment, in part on a pick up in yields, but that story has yet to really trigger as long US treasury yields remain rangebound, if teasing important levels. We note important supports for the crude oil outlook, the crack spread picture in the energy complex, the still very low valuation of energy stocks relative to the broader market, stocks and earnings on our radar, FX developments as we keep the USDCNH chart front and center as a potential aggravator of weakening risk sentiment and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: As risk sentiment rolls over, is crude oil set to rally?
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Energy: US Crude Oil Inventories Released By EIA Showed A Significant Fall!

ING Economics ING Economics 18.08.2022 15:06
The US saw large oil inventory declines over the last week. However, commodities are still struggling to find direction. A number of markets are trying to balance weaker demand with growing supply risks. This is particularly the case for metals, where yesterday another European smelter announced it would suspend operations due to high energy prices Source: Shutterstock Energy- large US crude inventory draw Yesterday’s EIA numbers provided some support to the oil market. However, sentiment remains largely negative, with lingering demand concerns and a potential Iranian nuclear deal casting a shadow over the market. The EIA reported larger than expected draws in crude and product. Over the last week, commercial crude oil inventories declined by 7.06MMbbls, which is the largest drawdown since mid-April. However, when SPR releases are taken into account, total US crude oil inventories fell by a significant 10.46MMbbls. The large decline in inventories was due to a substantial increase in crude oil exports over the week. Exports grew by 2.89MMbbls/d to hit a record 5MMbbls/d. This makes up for the weak export number last week, while the wider discount that we have seen in WTI/Brent for several weeks now should be supportive for US export volumes. On the products side, while a build of 766Mbbls was reported for distillate fuel oil, gasoline inventories fell by 4.64MMbbls. This fall was driven by stronger implied demand, which grew by 225Mbbls/d over the week. The more recent weakness that we have seen in pump prices appears to have provided some support to demand. Metals- more closures for European smelters Base metals came under further pressure yesterday, with the exception of LME aluminium, which managed to settle marginally higher on the day. This is after Norsk Hydro announced that it would suspend primary aluminium production at the Slovalco smelter in Slovakia due to surging power prices. The smelter had already reduced output late last year and early this year, which left it operating at 60% of its 175ktpa capacity. Separately, Hydro has also said that production will be affected at its Sunndal smelter in Norway due to strike action which is set to start on 22 August. The planned strike is estimated to idle around 20% of primary production capacity for four weeks starting from Monday. Hydro Sunndal has a capacity of 450ktpa. While supply risks continue to grow in the aluminium market (both in Europe and China), the market still seems more focused on the poorer demand story. Agriculture - Chinese imports off to a weak start in 2H22 The latest trade data from China’s Customs shows that corn imports fell 46% year-on-year to 1.5mt in July, while year-to-date imports are down 16.7% YoY to 15.1mt. Similarly, wheat imports also came under pressure, falling 11.7% YoY to 780kt over the month. Cumulative wheat imports declined 8.4% YoY to 5.7mt over the first seven months of the year. Weaker Chinese import demand has provided some relief to grain markets, which have had to deal with Ukrainian supply disruptions.  Read this article on THINK TagsPower shortages Oil EIA China demand Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

Crude Oil Price Probably Not Reach 100$(USD) Shortly

Swissquote Bank Swissquote Bank 18.08.2022 15:56
The equity rally in the US didn’t pick up momentum after the Federal Reserve (Fed) released its latest meeting minutes, which sounded more hawkish-than-expected, or more hawkish-than-what-was-needed-to-give-another-boost to the US stock markets. The biggest take was that the Fed will continue tightening its policy until it sees that inflation is ‘firmly on path back to 2%’. The S&P500 fell 0.72% as Nasdaq gave back 1.20%, although the jump in the US 2-year yield was relatively soft, and the Fed funds futures scaled back the expectation of a 75 bp hike in the next meeting. Crude price completed an ABCD pattern, and it is more likely than not we see the price rebound to the $100 level in the medium run. In China, Tencent announced its first ever revenue drop as government crackdown continued taking a toll on its sales, and the pound couldn’t gain even after the above 10% inflation data boosted the Bank of England (BoE) hawks and the call fall steeper rate hikes to tame inflation in the UK. Watch the full episode to find out more! 0:00 Intro 0:28 As expected, Fed minutes were more hawkish-than-expected 3:39 Crude oil has more chance to rebound than to fall 6:02 Tencent posts first-ever revenue drop 7:14 Apple extends gains, but technicals warn of correction 8:38 Pound unable to extend gains despite rising Fed hawks’ voices Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #minutes #USD #GBP #inflation #Tencent #Alibaba #earnings #crude #oil #natural #gas #coal #futures #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Oil Is An Indicator Of The Health Of The Global Economy

Crude Oil Has A Selling Weariness? Europe Prefers Oil Over Gas!?

Ole Hansen Ole Hansen 18.08.2022 16:14
Summary:  Crude oil, in a downtrend since June, is showing signs of selling fatigue with the technical outlook turning more price friendly while fresh fundamental developments are adding some support as well. The energy crisis in Europe continues to strengthen, most recently due to lower water levels on the river Rhine preventing the movement of barges carrying coal and fuel products such as diesel. The result being an increased gas-to-fuel switching supporting the demand outlook for crude oil. Crude oil, in a downtrend since June, is showing signs of selling fatigue with the technical outlook turning more price friendly while fresh fundamental developments are adding some support as well. Worries about an economic slowdown driving by China’s troubled handling of Covid outbreaks, and its property sector problems as well as rapidly rising interest rates, were the main drivers behind the selling seen across commodities in recent months. Crude oil with its strong underlying fundamentals, with tight supply driven by Russia sanctions and OPEC struggling to lift production, was the last shoe to drop and since the mid-June peak, speculators and macroeconomic focused funds have been net sellers of both WTI and Brent crude oil futures. With most of these market participants using the front of the futures curve, the selling has seen the forward curve flatten, a development that is normally viewed as price negative as it signals reduced tightness in the market. However, for that to ring true we should see inventory levels of crude oil and fuel products rise while refinery margins should ease. None of these developments have occurred and it strengthens our belief that the weakness sign has more to do with position adjustments and short positions being implemented by traders focusing on macro instead of micro.  In the week to August 9, the combined net long in Brent and WTI slumped to 304k lots a level last seen in April 2020, and 209k lots below the mid-June peak.  While the macro-economic outlook is still challenged, recent developments within the oil market, so-called micro developments, have raised the risk of a rebound. The energy crisis in Europe continues to strengthen, most recently due to lower water levels on the river Rhine preventing the movement of barges carrying coal and fuel products such as diesel. The result being surging gas prices as utilities are forced to buy more gas to keep the turbines running. This week the cost of Dutch TTF benchmark gas reached $400 per barrel of crude oil equivalent. Such a wide gap between oil and gas has and will continue to attract increased demand for fuel-based product at the expense of gas and this switch was specifically mentioned by the IEA in their latest update as the reason for raising their 2022 global oil demand growth forecast by 380k barrels per day to 2.1 million barrels per day. Since the report was published the incentive to switch has increased even more, adding more upward pressure on refinery margins, so called crack spreads (EU diesel crack shown below as an example) As mentioned, the recent selling pressure together with a deteriorating macro-economic backdrop have been the main drivers behind crude oils near 40-dollar slump since mid-June. The WTI chart below points to support at $85.50, a level almost reached on Tuesday. The price action is currently confined within a declining wedge and a break to the upside could trigger a strong buying response. For that to happen the price first needs to go back above $92 and the 21-day simple moving average, currently at $92.85. Source: Saxo Bank   How to invest in energy and the unfolding energy crisis? By Peter Garnry, Head of Equity StrategySummary:  We are used to not think about the energy sector, but the galloping global energy crisis has illuminated our deficits in primary energy due to years of underinvestment in fossil fuels and renewable energy sources inability to scale fast enough with the green transformation and electrification of our economy. It seems more likely now that the non-renewable and the renewable energy sector will both provide attractive returns as we will need both to overcome our short-term energy crisis and long-term aspirations of a greener energy future.   Source: Refinery margin jump lends fresh support to crude
German Business Confidence Dips, ECB's Lagarde Hosts Central Banking Conference in Portugal, EUR/USD Drifts Higher

Fed's Plan Is To Push For More Rate Hikes To Boost Dollar (USD)!?

Saxo Strategy Team Saxo Strategy Team 19.08.2022 10:37
Summary:  Better than expected economic data continued to support sentiment in US in contrast to Europe, where ECB’s Schnabel's warning on the growth/inflation picture aggravated concerns. Fed speakers meanwhile continued to push for more rate hikes this year, aiding dollar strength despite lack of a clear direction in long end yields. EUR and GBP broke below key support levels, but oil prices climbed higher amid improving demand outlook but sustained supply issues. Focus now on Jackson Hole next week. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  In its second lightest volume session of the year, U.S. equities edged modestly higher, S&P 500 +0.23%, Nasdaq 100 +0.26%. As WTI crude climbed 2.7%, rebounding back above $90, the energy space was a top gainer aside from technology. Exxon Mobil (XOM:xnys) gained 2.4%.  Cisco (CSCO:xnas) surged 5.8% after reporting better-than-expected revenues. Nvidia (NVDA:xnas), +2.4% was another top contributor to the gain of the S&P 500 on Wednesday.  95% of S&P 500 companies have reported Q2 results, with about three-quarters of them managing to beat analyst estimates. On Friday there is a large number of options set to expire.  The U.S. treasury yield curve bull steepened on goldilocks hope The U.S. 2-10-year curve steepened 7bps to -32bps, driven by a 9bp decline in the 2-year yield.  In spite of hawkish Fed official comments and the August Philadelphia Fed Index bouncing back to positive territory, the market took note of the falls in the prices paid diffusion index and the prices received index from the survey and sent the short-end yields lower.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Both Hang Seng Index and CSI300 declined about 0.8%.  Tencent (00700:xhkg) rose 3.1% after reporting results that beat estimates as a result of better cost control and adverting revenues. Other China internet stocks traded lower, Bilibili (09626:xhkg) -4.2%, Baidu (09888:xhkg) -4.5%, Alibaba (09988:xhkg) -2.1%, JD.COM (09618:xhkg) -2.5%. The surge of Covid cases in China to a three-month high and the Hainan outbreak unabated after a 2-week lockdown, pressured consumer stocks.  Great Wall Motor (02333:xhkg) led the charge lower in autos, plunging near 6%.  Other automakers fell 2% to 4%.  Geely (00175:xhkg) fell 3.1% after reporting 1H earnings missing estimates.  A share Chinese liquor names declined, Kweichow Moutai (600519:xssc) -1.2%, Wuliangye Yibin (000858:xsec) -1.6%. Chinese brewers were outliner gainers in the consumer space, China Resources Beer (00291:xhkg) +4.8%, Tsingtao Brewery (00168:xhkg) +1.9%. Chinese property developers traded lower with Country Garden (02007:xhkg) losing the most, -5.2% , after warning that 1H earnings may have been down as much as 70%. The China Banking and Insurance Regulatory Commission (CBIRC) is looking at the quality of real estate loan portfolios at some financial institutions.  EURUSD and GBPUSD break through key support levels Dollar strength prevailed into the end of the week with upbeat US economic data and a continued hawkish Fedspeak which continued to suggest more Fed rate hikes remain in the pipeline compared to what the market is currently pricing in. EUR and GBP were the biggest loser, with both of them breaking below key support levels. EURUSD slid below 1.0100 handle while GBPUSD broke below 1.2000 despite a selling in EGBs and Gilts. USDJPY also broke above 136 in early Asian trading hours despite lack of a clear direction in US 10-year yields and a slide in 2-year yields. AUDUSD testing a break below 0.6900 as NZDUSD drops below 0.6240. Crude oil prices (CLU2 & LCOV2) Oil prices reversed their drop with WTI futures back above $90/barrel and Brent futures above $96. Upbeat US economic data has supported the demand side sentiment in recent days. Moreover, President Xi’s comment that China will continue to open up the domestic economy also aided the demand equation. Supply concerns, meanwhile, were aggravated by geopolitical tension around a potential incident at the Zaporizhzhia nuclear plant in Ukraine. Meanwhile, Shell hinted at reducing the capacity of Rhineland oil refinery due to the lower water level on the Rhine river and said the situation regarding supply is challenging but carefully managed. Gold (XAUUSD) still facing mixed signals The fate of gold has been turned lower again this week with the yellow metal facing decline of 2.5% so far in the week and breaking below the $1759 support, the 38.2% retracement of the July to August bounce. Stronger dollar, along with Fed’s continued hawkish rhetoric, weighed. Silver (XAGUSD) is also below the key support at $19.50, retracing half of its recent gains. The short-term direction has been driven by speculators reducing bullish bets, but with inflation remaining higher-for-longer, the precious metals can continue to see upside in the long run. What to consider? Existing home sales flags another red for the US housing market US existing home sales fell in July for a sixth straight month to 4.81 mn from 5.11 mn, now at the slowest pace since May 2020, and beneath the expected 4.89 mn. Inventory levels again continued to be a big concern, with supply rising to 3.3 months equivalent from 2.9 in June. This continues to suggest that the weakening demand momentum and high inventory levels may weigh on construction activity. US economic data continues to be upbeat The Philly Fed survey outperformed expectations, with the headline index rising to +6.2 (exp. -5.0, prev. -12.3), while prices paid fell to 43.6 (prev. 52.2) and prices received dropped to 23.3 (prev. 30.3). new orders were still negative at -5.1, but considerably better than last month’s -24.8 and employment came in at 24.1 from 19.4 previously. While this may be a good signal, survey data tends to be volatile and a long-term trend is key to make any reasonable conclusions. Jobless claims also slid to 250k still suggesting that the labor market remains tight. Fed speakers push for more rate hikes St. Louis Federal Reserve President James Bullard flagged another 75 basis point rate hike at the September meeting and hinted at 3.75-4% Fed funds rate by the end of the year with more front-loading in 2022. Fed’s George, much like Fed’s Daly, said that last month’s inflation is not a victory and hardly comforting. Bullard and George vote in 2022. Fed’s Kahskari said that he is not sure if the Fed can avoid a recession and that there is more work to be done to bring inflation down, but noted economic fundamentals are strong. Overall, all messages remain old and eyes remain on Fed Chair Powell speaking at the Jackson Hole conference on August 25. Japan’s inflation came in as-expected Japan’s nationwide CPI for July accelerated to 2.6% y/y, as expected, from 2.4% y/y in June. The core measure was up 2.4% y/y from 2.2% previously, staying above the Bank of Japan’s 2% target and coming in at the strongest levels since 2008. Upside pressures remain as Japan continues to face a deeper energy crisis threat into the winter with LNG supplies possibly getting diverted to Europe for better prices. Still, Bank of Japan may continue to hold its dovish yield curve control policy unless wage inflation surprises consistently to the upside. Cisco’s revenues came in flat, beating a previously feared decline Cisco Systems reports July 2022 quarter revenues of USD13.1 billion, down 0.2% YoY but better than the consensus of a 3% decline.  Net income came in at USD3.4 billion, -3.2% YoY but more than 1 percentage point above consensus.  The fall in product order was also smaller than feared.  The company guided the fiscal year 2023 revenue growth of +4% to +6%, ahead of the 3% expected and FY23 EPS of USD3.49 to USD3.56, in line with expectations as gross margin pressures are expected to offset the impact of higher sales.  NetEase’s Q2 results beat NetEase (09999:xhkg/NTES:xnas) reported above-consensus Q2 revenues, +13% YoY, and net profit from continuing operations, +28%.  PC online game revenues were above expectations, driven by Naraka Bladepoint content updates and the launch of Xbox version.  Mobile game segment performance was in line.  Geely Automobile 1H earnings missed estimates on higher costs Chinese automaker Geely reported higher-than-expected revenue growth of 29%YoY in 1H22 but a 35% YoY decline in net profit which was worse than analyst estimates.  The weakness in profit was mainly a result of a 2.6 percentage point compression of gross margin to 14.6% due to higher material costs and production disruption, higher research and development costs, and the initial ramping-up of production of the Zeekr model.  The company maintains its sales volume target of 1.65 million units, an growth of 24% YoY, for the full year of 2022.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 19, 2022
Ukraine Saves The Day For The World As The Corridor Shipping Crops Is Opened. Other Countries Harvest Is Quite Low Therefore To Weather Issues

Ukraine Saves The Day For The World As The Corridor Shipping Crops Is Opened. Other Countries Harvest Is Quite Low Therefore To Weather Issues

Saxo Strategy Team Saxo Strategy Team 19.08.2022 11:33
Summary:  Equity markets managed a quiet session yesterday, a day when the focus is elsewhere, especially on the surging US dollar as EURUSD is on its way to threatening parity once again, GBPUSD plunged well below 1.2000 and the Chinese renminbi is perched at its weakest levels against the US dollar for the cycle. Also in play are the range highs in longer US treasury yields, with any significant pull to the upside in yields likely to spell the end to the recent extended bout of market complacency.   What is our trading focus?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures bounced back a bit yesterday potentially impacted by the July US retail sales showing that the consumer is holding up in nominal terms. The key market to watch for equity investors is the US Treasury market as the US 10-year yield seems to be on a trajectory to hit 3%. In this case we would expect a drop in S&P 500 futures to test the 4,200 level and if we get pushed higher in VIX above the 20 level then US equities could accelerate to the downside. Fed’s Bullard comments that he is leaning towards a 75 basis point rate hike at the September meeting should also negatively equities here relative to the expectations. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Index edged up by 0.4% and CSI300 was little changed. As WTI Crude bounced back above $90/brl, energy stocks outperformed, rising 2-4%. Technology names in Hong Kong gained with Hang Seng Tech Index (HSTECH.I) up 0.6%. Investors are expecting Chinese banks to cut loan prime rates on Monday, following the central bank’s rate cut earlier this week. The China Banking and Insurance Regulatory Commission (CBIRC) is looking at the quality of real estate loan portfolios and reviewing lending practices at some Chinese banks. The shares of NetEase (09999:xhkg/NTES:xnas) dropped more than 3% despite reporting above-consensus Q2 revenue up 13% y/y, and net profit from continuing operations up 28%.  PC online game revenue was above expectations, driven by Naraka Bladepoint content updates and the launch of Xbox version. Mobile game segment performance was in line. USD pairs as the USD rally intensifies The US dollar rally is finding its legs after follow up action yesterday that took EURUSD below the key range low of 1.0100, setting up a run at the psychologically pivotal parity, while GBPUSD slipped well south of the key 1.2000 and USDJPY ripped up through 135.50 resistance. An accelerator of that move may be applied if US long treasury yields pull come further unmoored from the recent range and pull toward 3.00%+. A complete sweep of USD strength would arrive with a significant USDCNH move as discussed below, and the US dollar “wrecking ball” will likely become a key focus and driver of risk sentiment as it is the premiere measure of global liquidity. The next key event risk for the US dollar arrives with next Friday’s Jackson Hole symposium speech from Fed Chair Powell. USDCNH The exchange rate is trading at the highs of the cycle this morning, and all traders should keep an eye out here for whether China allows a significant move in the exchange rate toward 7.00, and particularly whether CNH weakness more than mirrors USD strength (in other words, if CNH is trading lower versus a basket of currencies), which would point to a more determined devaluation move that could spook risk sentiment globally, something we have seen in the past when China shows signs of shifting its exchange rate regime from passive management versus the USD. Crude oil Crude oil (CLU2 & LCOV2) remains on track for a weekly loss with talks of an Iran nuclear deal and global demand concerns being partly offset by signs of robust demand for fuel products. Not least diesel which is seeing increasing demand from energy consumers switching from punitively expensive gas. Earlier in the week Dutch TTF benchmark gas at one point traded above $400 per barrel crude oil equivalent. So far this month the EU diesel crack spread, the margin refineries achieve when turning crude into diesel, has jumped by more than 40% while stateside, the equivalent spread is up around 25%, both pointing to a crude-supportive strength in demand. US natural gas US natural gas (NGU2) ended a touch lower on Thursday after trading within a 7% range. It almost reached a fresh multi-year high at $9.66/MMBtu after spiking on a lower-than-expected stock build before attention turned to production which is currently up 4.8% y/y and cooler temperatures across the country lowering what until recently had driven very strong demand from utilities. LNG shipments out of Freeport, the stricken export plant may suffer further delays, thereby keeping more gas at home. Stockpiles trail the 5-yr avg. by 13%. US Treasuries (TLT, IEF) The focus on US Treasury yields may be set to intensify if the 10-year treasury benchmark yield, trading near 2.90% this morning, comes unmoored from its recent range and trades toward 3.00%, possibly on the Fed’s increase in the pace of its quantitative tightening and/or on US economic data in the coming week(s). Yesterday’s US jobless claims data was better than expected and the August Philadelphia Fed’s business survey was far more positive than expected, suggesting expansion after the volatile Empire Fed survey a few days earlier posted a negative reading.   What is going on?   Global wheat prices continue to tumble ... with a record Russian crop, continued flows of Ukrainian grain and the stronger dollar pushing down prices. The recently opened corridor from Ukraine has so far this month seen more than 500,000 tons of crops being shipped, and while it's still far below the normal pace it has nevertheless provided some relief at a time where troubled weather has created a mixed picture elsewhere. The Chicago wheat (ZWZ2) futures contract touch a January on Thursday after breaking $7.75/bu support while the Paris Milling (EBMZ2) wheat traded near the lowest since March. Existing home sales flags another red for the US housing market while other US economic data continues to be upbeat US existing home sales fell in July for a sixth straight month to 4.81 mn from 5.11 mn, now at the slowest pace since May 2020, and beneath the expected 4.89 mn. Inventory levels again continued to be a big concern, with supply rising to 3.3 months equivalent from 2.9 in June. This continues to suggest that the weakening demand momentum and high inventory levels may weigh on construction activity. The Philly Fed survey meanwhile outperformed expectations, with the headline index rising to +6.2 (exp. -5.0, prev. -12.3), while prices paid fell to 43.6 (prev. 52.2) and prices received dropped to 23.3 (prev. 30.3). New orders were still negative at -5.1, but considerably better than last month’s -24.8 and employment came in at 24.1 from 19.4 previously Fed speakers push for more rate hikes St. Louis Federal Reserve President James Bullard 2.6% with more front-loading in 2022. Fed’s George, much like Fed’s Daly, said that last month’s inflation is not a victory and hardly comforting. Bullard and George vote in 2022. Fed’s Kashkari said that he is not sure if the Fed can avoid a recession and that there is more work to be done to bring inflation down, but noted economic fundamentals are strong. Overall, all messages remain old and eyes remain on Fed Chair Powell speaking at the Jackson Hole conference on August 26, next Friday.  Japan’s inflation came in as expected Japan’s nationwide CPI for July accelerated to 2.6% y/y, as expected, from 2.4% y/y in June. The core measure was up 2.4% y/y from 2.2% previously, staying above the Bank of Japan’s 2% target and coming in at the strongest levels since 2008. Upside pressures remain as Japan continues to face a deeper energy crisis threat into the winter with LNG supplies possibly getting diverted to Europe for better prices. Still, Bank of Japan may continue to hold its dovish yield curve control policy unless wage inflation surprises consistently to the upside.   What are we watching next?   Strong US dollar to unsettle markets – and Jackson Hole Fed conference next week? The US dollar continues to pull higher here, threatening the cycle highs versus sterling, the euro and on the comeback trail against the Japanese yen as well. The US dollar is a barometer of global liquidity, and a continued rise would eventually snuff out the improvement in financial conditions we have seen since the June lows in equity markets, particularly if longer US treasury yields are also unmoored from their recent range and rise back to 3.00% or higher.  The focus on the strong US dollar will intensify should the USDCNH exchange rate, which has pulled to the highs of the cycle above 6.80, lurch toward 7.00 in coming sessions as it would indicate that China is unwilling to allow its currency to track USD direction. As well, the Fed seems bent on pushing back against market expectations for Fed rate cuts next year and may have to spell this out a bit more forcefully at next week’s Jackson Hole conference starting on Thursday (Fed Chair Powell to speak Friday). Earnings to watch The two earnings releases to watch today are from Xiaomi and Deere. The Chinese consumer is challenged over falling real estate prices and input cost pressures on food and energy, and as a result consumer stocks have been doing bad this year. Xiaomi is one the biggest sellers of smartphones in China and is expected to report a 20% drop in revenue compared to last year. Deere sits in the booming agricultural sector, being one of the biggest manufacturers of farming equipment, and analysts expect a 12% gain in revenue in FY22 Q3 (ending 31 July).   Today: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere Economic calendar highlights for today (times GMT) 1230 – Canada Jun. Retail Sales 1300 – US Fed’s Barkin (Non-voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 19, 2022
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

Hello Drivers! Brent Crude Oil Prices Are Expected To Decrease, So Fuel May Be Cheaper!

ING Economics ING Economics 19.08.2022 11:42
Russian crude oil output has held up better than expected which has meant that the oil market is not as tight as originally thought. In addition, weaker demand means the oil balance is looking more comfortable for the remainder of the year. We have revised our forecasts lower The likes of China and India have been able to absorb larger volumes of Russian oil as European demand has fallen Oil price forecast revisions Stubborn Russian oil output and weaker than expected demand growth mean the oil market is likely to remain in surplus for the remainder of this year and into early next year, which should limit the upside in oil prices. Time spreads also point towards a looser market, with the backwardation in the prompt spreads narrowing significantly in recent weeks. As a result, we have revised lower our oil price forecast for the remainder of this year. Although, given that inventories are at historically low levels, we still believe that prices will remain elevated, whilst limited OPEC spare capacity and uncertainty over how Russian flows will evolve once the EU ban comes into full force should also limit downside in the medium term. We have lowered our 3Q22 and 4Q22 Brent forecasts from US$118/bbl and US$125/bbl to US$100/bbl and US$97/bbl respectively. Our full year 2023 Brent forecast has been revised down from US$99/bl to US$97/bbl.   ING oil price forecasts Source: ING Research Stubborn Russian output Since Russia’s invasion of Ukraine, it has become more difficult to get transparency on Russian oil output with the government no longer publishing monthly data. However, the IEA estimates that Russian oil production was around 310Mbbls/d below pre-war levels in July. The decline in output has been much more modest than many in the market were expecting, despite sanctions. IEA numbers suggest that Russian oil exports came in at 7.4MMbbls/d in July, which is only slightly below the 7.5MMbbls/d exported over 2021. The likes of China and India have been able to absorb larger volumes of Russian oil as European demand has fallen. China imported a record 1.99MMbbls/d of Russian crude oil in May, whilst in June Russian oil made up 20% of total Chinese oil imports, making it China’s largest supplier. These stronger Russian flows to China come despite overall weaker domestic oil demand due to Covid-related lockdowns. Whether China has the appetite to increase Russian oil purchases even further will depend on how quickly we see a recovery in domestic demand. However, whilst Russian output has held up well until now, we would expect production to start coming under more meaningful pressure once the EU ban on Russian seaborne crude oil and refined products is fully implemented in February 2023. For now, we are assuming that Russian output declines by a little more than 2MMbbls/d once the ban comes into full force. In addition, if for any reason India and China are unable to sustain the volumes of Russian oil they have imported, there is the risk that Russian oil output will eventually fall more aggressively, which would lead to a tighter market. Similarly, the US has been pushing for a price cap on Russian oil, and if enforced (which will be difficult), there is always the risk that Russia reduces its output in response. Russian oil flows are holding up well for now Source: IEA, NBS, ING Research Weaker demand offers a helping hand The higher price environment that we have seen for much of the year has done its job in terms of ensuring demand destruction to try to balance the oil market. Demand growth forecasts have been downgraded consistently as we have moved through the year. And EIA data provides clear evidence of demand destruction. US implied gasoline demand has underperformed since early June. Generally, we would expect demand to trend higher over the summer driving season, but higher prices have led to US gasoline demand trending quite some distance below the 5-year average (and this average includes 2020 data – a period of weaker demand due to Covid). EIA data shows that from early June through to early August, implied gasoline demand (4-week rolling average) in the US has lagged the 5-year average by almost 450Mbbls/d. In addition, Chinese demand has clearly disappointed this year, which has led to significant revisions in global demand estimates. There had been expectations that demand would come back strong following the easing of lockdown measures in Beijing and Shanghai in the second quarter. However, demand continues to suffer due to further Covid outbreaks and China’s insistence on following its Zero-Covid policy. Cumulative Chinese oil imports are down 4% over the first seven months of the year, whilst apparent domestic demand over the same period is down almost 11% YoY. In 2022, global oil demand is expected to grow by a little over 2MMbbls/d, whilst a similar growth number is expected for 2023. This would mean that in 2023, global oil demand will exceed pre-Covid levels. However, growth next year will depend largely on a recovery in China, and also on how severe any potential recession in the US and Europe is. An upside risk for oil demand comes from the gas market. European natural gas and Asian spot liquefied natural gas (LNG) prices are trading at elevated levels. In fact, the Dutch gas, TTF, is trading at an oil equivalent in excess of US$400/bbl, whilst spot Asian LNG is trading at an equivalent of close to US$330/bbl. Therefore, where there is capacity, we will likely be seeing gas-to-oil switching from the power sector. This will include the Middle East, Asia, and even Europe, where there have been reports of increased oil-fired power generation. Higher oil prices have weighed on demand Note: US implied gasoline demand numbers are 4-week rolling average Source: EIA, IEA, ING Research OPEC has limited room to pump more OPEC+ has been reluctant to deviate away from its planned monthly production increases, although the group finally agreed on larger supply increases for July and August, whilst also allowing for a 100Mbbls/d supply increase over September. And with hindsight, it seems as though OPEC+ made the right decision not to give in to pressure to increase output more aggressively, given the market is expected to be in a more comfortable state for the rest of the year. However, regardless of the state of the market, OPEC members have very limited capacity to increase output significantly more. The group has failed for almost the last 12 months to hit its production target, with a number of producers having faced disruptions or simply not having the capacity to increase output further. Spare capacity within the OPEC-10 (excludes Iran, Libya and Venezuela) stands at around 2.7MMbls/d and is in the hands of a few. Saudi Arabia and the UAE hold more than 80% of this spare capacity. Shrinking spare capacity leaves the market more vulnerable to supply disruptions OPEC struggles to hit output targets Source: OPEC, IEA, ING Research SPR releases coming to an end The SPR releases that we have seen from the US this year have helped the oil market. With 1MMbbls/d of crude being released, it has limited the drawdown in commercial crude oil inventories in the US. Had we not seen these SPR releases, commercial inventories would have been significantly tighter. However, the releases are set to continue only until the end of October. Therefore, there is the potential that from November we start to see some sizeable drawdowns in US commercial inventories. And given that US inventories are more visible to the market, this could provide some support to prices. US draws down strategic petroleum reserves Source: EIA, ING Research Iran a key downside risk to the market Iranian nuclear talks have been on and off for the last 18 months. However, the potential for a deal is looking more promising. The EU has provided its proposal for a nuclear deal with the US and Iran, and up until now there has not been a rejection by either party – although the Iranians have said that the US will need to show some ‘flexibility’. If we were to see a deal and the eventual lifting of sanctions, there is the potential for a significant increase in supply from Iran. Over time Iran would be able to increase production by around 1.3MMbbls/d, which would help ease the tightness that is expected over the second half of 2023. While in the short term, it will be able to boost exports from crude held in storage, and so could put some pressure on prices in the short term. Despite the more positive tone around a deal, we are still assuming in our balance sheet that we do not see an increase in Iranian supply. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Latam FX Outlook 2023: Brazil's Local Currency Bonds Can Be Very Attractive

Mexican Gold - Peso Is Climbing High. Russia Is Building Nuclear Plant In Turkey!?

Marc Chandler Marc Chandler 19.08.2022 14:26
Overview:  The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week. The New Zealand dollar, where the RBNZ hiked rates this week by 50 bp, is off the most with a 3.5% drop. Emerging market currencies are mostly lower on the day and week as well. The JP Morgan Emerging Market Currency Index is off for the fifth consecutive session, and ahead of the Latam open, it is off 2.1% this week. Asia Pacific equities were mostly lower, and Europe’s is off around 0.4%. It was flat for the week coming into today. US futures are lower, and the S&P and NASDAQ look poised to snap its four-week advance. Gold, which began the week near $1800 is testing support near $1750 now. Next support is seen around $1744.50. October WTI is consolidating in the upper end of yesterday’s range, which briefly poked above $91. Initial support is pegged near $88. US natgas is softer for the third successive session, but near $9.04 is up about 3.2% for the week. Europe’s benchmark is up 1.7% and brings this week’s gain to almost 20%. Demand concerns weigh on iron ore. It was off marginally today, its fifth loss in six sessions. It tumbled 8.8% this week after a 1.15% gain last week. Copper is up fractionally after rising 1.3% yesterday. September wheat is trying to stabilize. It fell more than 4% yesterday, its fifth loss in a row. It is off around 8.5% this week. Asia Pacific Japan's July CPI continued to rise  Th headline now stands at 2.6%, up from 2.4% in June, up from 0.8% at the start of the year and -0.3% a year ago. The core measure that excludes fresh food accelerated from 2.2% to 2.4%. It is the fourth consecutive month above the 2% target. Excluding both fresh food and energy, Japan's inflation is less than half the headline rate at 1.2%. It was at -0.7% at the end of last year and did not turn positive until April. The BOJ's next meeting is September 22, and despite the uptick in inflation, Governor Kuroda is unlikely to be impressed. Without wage growth, he argues, inflation will prove transitory. With global bond yields rising again, the 10-year, the market may be gearing up to re-challenge the BOJ's 0.25% cap. The yield is finishing the week near 0.20%, its highest since late July. Separately, we note that after divesting foreign bonds in recent months, Japanese investors have returned to the buy side. They have bought foreign bonds for the past four weeks, according to Ministry of Finance data. Last week's JPY1.15 trillion purchases (~$8.5 bln) were the most since last September.  China surprised the markets to begin the week with a 10 bp reduction in the benchmark 1-year medium-term lending facility rate  It now stands at 2.75%. It was the first cut since January, which itself was the first reduction since April 2020. Before markets open Monday, China is expected to announce a 10 bp decline in the 1- and 5-year loan prime rates. That would bring them to 3.60% and 4.35%, respectively. These rates are seen closer to market rates, but the large banks that contribute the quotes are state-owned. There is some speculation that a larger cut in the 5-year rate. The one-year rate was cut in January, but the 5-year rate was cut by 15 bp in May. The dollar is rising against the yen for the fourth consecutive session  It has now surpassed the JPY137.00 area that marks the (61.8%) retracement of the decline from the 24-year high set-in mid-July near JPY139.40. There may be some resistance in the JPY137.00-25 area, but a retest on the previous high looks likely in the period ahead. The Australian dollar is off for the fifth consecutive session and this week's loss of 3% offset last week's gain of as similar magnitude and, if sustained, would be the largest weekly decline since September 2020. The Aussie began the week near $0.7125 and recorded a low today slightly below $0.6890. The $0.6855-70 area is seen as the next that may offer technical support. The PBOC set the dollar's reference rate at CNY6.8065 (median in Bloomberg's survey was CNY6.9856). The fix was the lowest for the yuan (strongest for the dollar) since September 2020. Yesterday's high was almost CNY6.7960 and today's low was a little above CNY6.8030. To put the price action in perspective, note that the dollar is approaching the (61.8%) retracement of the yuan's rise from mid-2020 (~CNY7.1780) to this year's low set in March (~CNY6.3065). The retracement is found around CNY6.8250. Europe UK retail sales surprised to the upside but are offering sterling little support  Retail sales including gasoline rose by 0.3% in July. It is the second gain of the year and the most since last October. Excluding auto fuel, retail sales rose by 0.4%, following a 0.2% gain in June. It is the first back-to-back gain since March and April 2021. Sales online surged 4.8% as discounts and promotions drew demand, and internet retailers accounted for 26.3% of all retail sales. Separately, consumer confidence, measured by GfK, slipped lower (-44 from -41), a new record low. Sterling is lower for the third consecutive session and six of the past seven sessions. The swaps market continues to price in a 50 bp rate hike next month and about a 1-in-5 chance of a 75 bp move. Nearly every press report discussing next month's Italian elections cited the fascist roots of the Brothers of Italy, which looks likely to lead the next government  Meloni, who heads up the Brothers of Italy and has outmaneuvered many of her rivals, and may be Italy's next prime minister, plays the roots down. She compares the Brothers of Italy to the Tory Party in the UK, the Likud in Israel, and the Republican Party in the US. The party has evolved, and the center-right alliance she leads no longer wants to leave the EU, it is pro-NATO, and condemns Russia's invasion of Ukraine. The center-right alliance may come close to having a sufficient majority in both chambers to make possible constitutional reform. High on that agenda appears to transform the presidency into a directly elected office. The Italian presidency has limited power under the current configuration, but it has been an important stabilizing factor in crisis. Ironically, the president, picked by parliament, stepped in during the European debt crisis and gave Monti the opportunity to form a technocrat government after Berlusconi was forced to resign in 2011. Fast-forward a decade, a government led by the Conte and the Five Star Movement collapsed and a different Italian president gave Draghi a chance to put together a government. It almost last a year-and-half. Its collapse set the stage for next month's election. The center-left is in disarray and its inability to forge a broad coalition greases the path for Meloni and Co. Italy's 10-year premium over German is at 2.25%, a new high for the month. Last month, it peaked near 2.40%. The two-year premium is wider for the sixth consecutive session. It is near 0.93%, more than twice what it was before the Draghi government collapsed. Some critics argue against the social sciences being science because of the difficulty in conducting experiments  Still an experiment is unfolding front of us. What happens when a central bank completely loses its independence and follows dubious economic logic?  With inflation at more than two decades highs and the currency near record lows, Turkey's central bank surprised everyone by cutting its benchmark rate 100 bp to 13% yesterday. Governor Kavcioglu hinted this was a one-off as it was preempting a possible slowdown in manufacturing. Even though President Erdogan promised in June rates would fall, some observers link the rate cut to the increase in reserves (~$15 bln) recently from Russia, who is building a nuclear plant in Turkey. The decline in oil prices may also help ease pressure on Turkey's inflation and trade deficit. The lira fell to new record-lows against the dollar. The lira is off about 7.5% this quarter and about 26.4% year-to-date. Significant technical damage has been inflicted on the euro and sterling  The euro was sold through the (61.8%) retracement objective of the runup since the mid-July two-decade low near $0.9950. That retracement area (~$1.0110) now offers resistance, and the single currency has not been above $1.01 today. We had suspected the upside correction was over, but the pace of the euro's retreat surprises. There is little from a technical perspective preventing a test on the previous lows. Yesterday, sterling took out the neckline of a potential double top we have been monitoring at $1.20. It is being sold in the European morning and has clipped the $1.1870 area. The low set-in mid-July was near $1.1760, and this is the next obvious target and roughly corresponds to the measuring objective of the double top.  America With no dissents at the Fed to last month's 75 bp hike, one might be forgiven for thinking that there are no more doves  Yet, as we argued even before Minneapolis Fed President Kashkari, once regarded as a leading dove, admitted that his dot in June was the most aggressive at 3.90% for year-end, hawk and dove are more meaningful within a context. Kashkari may be more an activist that either a hawk or dove. Daly, the San Francisco Fed President does not vote this year, suggested that a Fed funds target "a little" over 3% this year would be appropriate. She said she favored a 50 bp or a 75 bp move. The current target range is 2.25%-2.50%. and the median dot in June saw a 3.25%-3.50% year-end target. St. Louis Fed President Bullard says he favors another 75 bp hike next month. No surprise there. George, the Kansas, Fed President, dissented against the 75 bp hike in June seemingly because of the messaging around it, but it's tough to call her vote for a 50 bp hike dovish. She voted for the 75 bp move in July. She recognizes the need for additional hikes, and the issue is about the pace. George did not rule out a 75 bp hike while cautioning that policy operates on a lag. Barkin, the Richmond Fed President, also does not vote this year. He is the only scheduled Fed speaker today.  The odds of a 75 bp in September is virtually unchanged from the end of last week around a 50/50 proposition.  The October Fed funds implies a 2.945% average effective Fed funds rate. The actual effective rate has been rocksteady this month at 2.33%. So, the October contract is pricing in 61 bp, which is the 50 bp (done deal) and 11 of the next 25 bp or 44% chance of a 75 hike instead of a half-point move. Next week's Jackson Hole conference will give Fed officials, and especially Chair Powell an opportunity to push back against the premature easing of financial conditions  The better-than-expected Philadelphia Fed survey helps neutralize the dismal Empire State manufacturing survey. The median from Bloomberg's survey looked for improvement to -5 from -12.3. Instead, it was reported at 6.2. Orders jumped almost 20 points to -5.1 and the improvement in delivery times points to the continued normalization of supply chains. Disappointingly, however, the measure of six-month expectations remained negative for the third consecutive month. Still, the plans for hiring and capex improved and the news on prices were encouraging. Prices paid fell to their lowest since the end of 2020 (energy?) and prices received were the lowest since February 2021. The Fed also asked about the CPI outlook. The median sees it at 6% next year down from 6.5% in May. The projected rate over the next 10-years slipped to 3%. Canada and Mexico report June retail sales today  Lift by rising prices, Canada's retail sales have posted an average monthly gain this year of 1.5%. However, after a dramatic 2.2% increase in May, Canadian retail sales are expected (median in Bloomberg' survey) to rise by a modest 0.4%. Excluding autos, retail sales may have held up better. Economists look for a 0.9% increase after a 1.9% rise in May. Through the first five months of the year, Mexico's retail sales have risen by a little more than 0.5% a month. They have risen by a 5.2% year-over-year. Economists expected retail sales to have slowed to a crawl in June and see the year-over-year pace easing to 5.0%. The greenback rose the CAD1.2935 area that had capped it in the first half of the week. It settled near CAD1.2950 yesterday and is pushing closer to CAD 1.2980 now. Above here, immediate potential extends toward CAD1.3035. The US dollar is gaining for the third consecutive session against the Canadian dollar, the longest advancing streak in a couple of months. Support is seen in the CAD1.2940-50 area. The Mexican peso is on its backfoot, and is falling for the fourth session, which ended a six-day rally. The dollar has met out first target near MXN20.20 and is approaching the 20-day moving average (~MXN20.2375). Above there, the next technical target is MXN20.32. The broader dollar gains suggest it may rise above the 200-day moving average against the Brazilian real (~BRL5.2040) and the (38.2%) of the slide since the late July high (~BRL5.5140) that is found near BRL5.2185.    Disclaimer   Source: The Dollar is on Fire
Commodities: Deglobalization, Green Transformation, Urbanization And Other Things That Got Involved

Commodities: Deglobalization, Green Transformation, Urbanization And Other Things That Got Involved

Ole Hansen Ole Hansen 19.08.2022 15:50
Summary:  Commodities traded with a softer bias this week as the focus continued to rest on global macro-economic developments, in some cases reducing the impact of otherwise supportive micro developments, such as the fall in inventories seen across several individual commodities. Overall, however, we do not alter our long-term views about commodities and their ability to move higher over time, with some of the main reasons being underinvestment, urbanization, green transformation, sanctions on Russia and deglobalization. Commodities traded with a softer bias this week as the focus continued to rest on global macro-economic developments, in some cases reducing the impact of otherwise supportive micro developments, such as the fall in inventories seen across several individual commodities. The dollar found renewed strength and bond yields rose while the month-long bear-market bounce across US stocks showed signs of running out of steam.The trigger being comments from Federal Reserve officials reiterating their resolve to continue hiking rates until inflation eases back to their yet-to-be revised higher long-term target of around 2%. Those comments put to rest expectations that a string of recent weak economic data would encourage the Fed to reduce the projected pace of future rate hikes.The result of these developments being an elevated risk of a global economic slowdown gathering pace as the battle against inflation remains far from won, not least considering the risk of persistent high energy prices, from gasoline and diesel to coal and especially gas. A clear sign that the battle between macro and micro developments continues, the result of which is likely to be a prolonged period of uncertainty with regards to the short- and medium-term outlook.Overall, however, these developments do not alter our long-term views about commodities and their ability to move higher over time. In my quarterly webinar, held earlier this week, I highlighted some of the reasons why we see the so-called old economy, or tangible assets, performing well over the coming years, driven by underinvestment, urbanization, green transformation, sanctions on Russia and deglobalization. Returning to this past week’s performance, we find the 2.3% drop in the Bloomberg Commodity Index, seen above, being in line with the rise in the dollar where gains were recorded against all the ten currencies, including the Chinese renminbi, represented in the index. It is worth noting that EU TTF gas and power prices, which jumped around 23% and 20% respectively, and Paris Milling wheat, which slumped, are not members of the mentioned commodity index.Overall gains in energy led by the refined products of diesel and US natural gas were more than offset by losses across the other sectors, most notably grains led by the slump in global wheat prices and precious metals which took a hit from the mentioned dollar and yield rise. Combating inflation and its impact on growth remains top of mind Apart from China’s slowing growth outlook due to its zero-Covid policy and housing market crisis hitting industrial metals, the most important driver for commodities recently has been the macro-economic outlook currently being dictated by the way in which central banks around the world have been stepping up efforts to curb runaway inflation by forcing down economic activity through aggressively tightening monetary conditions. This process is ongoing and the longer the process takes to succeed, the bigger the risk of an economic fallout. US inflation expectations in a year have already seen a dramatic slump but despite this the medium- and long-term expectations remain anchored around 3%, still well above the Fed’s 2% target.Even reaching the 3% level at this point looks challenging, not least considering elevated input costs from energy. Failure to achieve the target remains the biggest short-term risk to commodity prices with higher rates killing growth, while eroding risk appetite as stock markets resume their decline. These developments, however, remain one of the reasons why we find gold and eventually also silver attractive as hedges against a so-called policy mistake. Global wheat prices tumble The prospect for a record Russian crop and continued flows of Ukrainian grain together with the stronger dollar helped push prices lower in Paris and Chicago. The recently opened corridor from Ukraine has so far this month seen more than 500,000 tons of crops being shipped, and while it's still far below the normal pace, it has nevertheless provided some relief at a time where troubled weather has created a mixed picture elsewhere. The Chicago wheat futures contract touched a January low after breaking $7.75/bu support while the Paris Milling (EBMZ2) wheat traded near the lowest since March. With most of the uncertainties driving panic buying back in March now removed, calmer conditions should return with the biggest unknown still the war in Ukraine and with that the country’s ability to produce and export key food commodities from corn and wheat to sunflower oil. EU gas reaches $73/MMBtu or $415 per barrel of oil equivalent Natural gas in Europe headed for the longest run of weekly gains this year, intensifying the pain for industries and households, while at the same time increasingly threatening to push economies across the region into recession. The recent jump on top of already elevated prices of gas and power, due to low supplies from Russia, has been driven by an August heatwave raising demand while lowering water levels on the river Rhine. This development has increasingly prevented the safe passage of barges transporting coal, diesel and other essentials, while refineries such as Shell’s Rhineland oil refinery in Germany have been forced to cut production. In addition, half of Europe’s zinc and aluminum smelting capacity has been shut, thereby adding support to these metals at a time the market is worried about the demand outlook.An abundance of rain and lower temperatures may in the short term remove some of the recent price strength but overall, the coming winter months remain a major worry from a supply perspective. Not least considering the risk of increased competition from Asia for LNG shipments. Refinery margin jump lends fresh support to crude oil Crude oil, in a downtrend since June, is showing signs of selling fatigue with the technical outlook turning more price friendly while fresh fundamental developments are adding some support as well. Worries about an economic slowdown driven by China’s troubled handling of Covid outbreaks and its property sector problems as well as rapidly rising interest rates were the main drivers behind the selling since March across other commodity sectors before eventually also catching up with crude oil around the middle of June. Since then, the price of Brent has gone through a $28 dollar top to bottom correction. While the macro-economic outlook is still challenged, recent developments within the oil market, so-called micro developments, have raised the risk of a rebound. The mentioned energy crisis in Europe continues to strengthen, the result being surging gas prices making fuel-based products increasingly attractive. This gas-to-fuel switch was specifically mentioned by the IEA in their latest update as the reason for raising their 2022 global oil demand growth forecast by 380k barrels per day to 2.1 million barrels per day. Since the report was published, the incentive to switch has increased even more, adding more upward pressure on refinery margins. While pockets of demand weakness have emerged in recent months, we do not expect these to materially impact on our overall price-supportive outlook. Supply-side uncertainties remain too elevated to ignore, not least considering the soon-to-expire releases of crude oil from US Strategic Reserves and the EU embargo of Russian oil fast approaching. In addition, the previously mentioned increased demand for fuel-based products to replace expensive gas. With this in mind, we maintain our $95 to $115 range forecast for the third quarter. Gold and silver struggle amid rising dollar and yields Both metals, especially silver, were heading for a weekly loss after hawkish sounding comments from several FOMC members helped boost the dollar while sending US ten-year bond yields higher towards 3%. It was the lull in both that helped trigger the recovery in recent weeks, and with stock markets having rallied as well during the same time, the demand for gold has mostly been driven by momentum following speculators in the futures market. The turnaround this past week has, as a result of speculators' positioning, been driven by the need to reduce bullish bets following a two-week buying spree which lifted the net futures long by 63k lots or 6.3 million ounces, the strongest pace of buying in six months. ETF holdings meanwhile have slumped to a six-month low, an indication that investors, for now, trust the FOMC’s ability to bring down inflation within a relatively short timeframe. An investor having doubts about this should maintain a long position as a hedge against a policy mistake. Some investors may feel hard done by gold’s negative year-to-date performance in dollars, but taking into account it had to deal with the biggest jump in real yields since 2013 and a surging dollar, its performance, especially for non-dollar investors relative to the losses in bonds and stocks, remains acceptable. In other words, a hedge in gold against a policy mistake or other unforeseen geopolitical events has so far been almost cost free.   Source: WCU: Bearish macro, bullish micro regime persists
The Outlook Of Gold By FXSTreet’s Dhwani Mehta

Commodities Amid Turbulent Times | Gold, Silver And Crude Oil In Eyes Of Jason Sen (DayTradeIdeas) - 22/08/22

Jason Sen Jason Sen 22.08.2022 08:37
Gold Spot broke 1765 for a sell signal targeting 1740/35 this week. Silver breaks back below support at 2030/10 to turn the outlook negative again. WTI Crude crawls higher, but difficult to hold longs. We could reach strong resistance at 9460/9500. Shorts need stops above 9550. Remember when support is broken it usually acts as resistance & vice-versa. Update daily by 05:00 GMT Today's Analysis. Gold outlook negative so we are looking to sell at resistance on any bounce. First resistance at 1755/60. Unlikely but if we continue higher look for strong resistance at 1770/75. Shorts need stops above 1780. Prices are expected continue lower this week initially targeting 1740/35 then 1729/27 & perhaps as far as 1715/10. Silver collapsed from resistance at 2020/30 as expected hitting my targets of 1980, 1960/55 & 1920/15. Further losses are expected to 1880/70 & eventually a retest of the July low at 1820/10. A break below 1795 is the next sell signal. Gains are likely to be limited with first resistance at 1940/50. Shorts need stops above 1965. Se 2000/20. Shorts need stops above 2040. WTI Crude September minor resistance at 9150/9200 but above here we could reach strong resistance at 9460/9500. Shorts need stops above 9550. Holding minor resistance at 9150/9200 (in what is probably a bull flag pattern) targets 9070/50 then 8900. On further losses look for 8850/8800.
China Rolled Out A Special Loan Program! Fed's News

China Rolled Out A Special Loan Program! Fed's News

Saxo Strategy Team Saxo Strategy Team 22.08.2022 12:33
Summary:  Equities closed last week on the defensive as a rising US dollar and especially US treasuries weighed. The US 10-year yield is threatening the 3.00% level for the first time in a month ahead of the important US July PCE inflation data and Fed Chair Powell’s speech on Friday. How forcefully will Powell push back against the virtual melt-up in financial conditions after the market felt the Fed pivoted to less tightening at the July meeting?   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are still rolling over as the US 10-year yield zoomed to 3% on Friday with the index futures trading just above the 4,200 level this morning. The next levels on the downside sit around the 4,100 to 4,170 range, but in the longer term the 4,000 level is the big level to watch. Energy markets are still sending inflationary signals which is key to watch for sentiment this week. In terms of earnings, Palo Alto Networks and Zoom Video will report earnings. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Index and CSI300 were moderately higher, +0.2% and +0.8% respectively. Chinese developers gained on today’s larger-than-expected cut in the 5-year loan prime rate and last Friday’s report that the PBoC, jointly with the Housing Ministry and the Ministry of Finance to roll out a program to make special loans through policy banks to support the delivery of stalled residential housing projects. Great Wall Motor (02333:xhkg) soared 11%. In A-shares, auto names were among stocks that outperformed. Xiaomi (01810:xhkg) dropped 3% after reporting Q2 revenues -20% YoY and net profit -67% YoY, largely in line with expectations.  US dollar dominates focus in forex this week The US dollar rally picked up speed last week, with key levels falling in a number of USD pairs last week that now serve as resistance, including 1.0100 in EURUSD and 1.2000 in GBPUSD, both of which now serve as resistance/USD support. A significant break of EURUSD parity will likely add further psychological impact, and more practically, an upside break in yields at the longer end of the US yield curve is playing a supportive roll, one that will intensify its driving roll if the benchmark 10-year US Treasury yield follows through higher above the 3.00% level it touched in trading overnight. A complete sweep of USD strength also threatens on any significant follow through higher in USDCNH as it threatens an upside break here (more below). The next key event risk for the US dollar arrives with this Friday’s Jackson Hole symposium speech from Fed Chair Powell (preview below). USDCNH Broad USD strength is helping to drive a move to new cycle highs above 6.84 as the week gets underway, but CNH is not weak in other pairings with G10 currencies, quite the contrary. Still, a move in this critical exchange rate will remain a focus, and the contrast between an easing PBOC (moving once again overnight) and tightening central banks nearly everywhere else is stark. The USDCNH moving higher will receive considerable additional focus if the 7.00 level. Crude oil prices (CLU2 & LCOV2) Crude oil turned lower in the Asian overnight after modest gains last week as the focus continues to alter between demand destruction fears and persistent supply shortages. Fears of an economic slowdown reducing demand remains invisible in the physical market but it has nevertheless seen crude oil give up all the post Russia invasion gains while speculators or hedge funds have cut bullish bets on WTI and Brent to the lowest since April 2020. WTI futures trades back below $90/barrel while Brent futures dipped below $96. Still, the gas-to-fuel switch led by record gas prices in Europe has seen refinery margins strengthen again lately and it now adds to the fundamental price-supportive factors. Focus may turn back to Iranian supply early in the week though, with reports that a deal is ‘imminent’. Cryptocurrencies The crypto market took a major hit on Friday with the total crypto market cap diving by more than 9 %, but prices have stabilized over the weekend. The total market cap is now close to the psychological $1 trillion level. US Treasuries (TLT, IEF) Rising US Treasury yields are pushing back against the strong improvement in financial conditions of recent weeks after the US 10-year Treasury yield benchmark jumped to new highs on Friday, well clear of the prior range after a few teases higher earlier in the week and bumping up against the psychologically key 3.00% level. Any follow through higher toward the 3.50% area highs of the cycle would likely add further pressure to financial conditions and risk sentiment more broadly. What is going on? German PPI shocks on the upside Germany’s July PPI smashed expectations to come in at 5.3% MoM, the biggest single gain since the Federal Republic started compiling its data in 1949 and above the consensus estimate of 0.7%. The data suggests potentially a lot more room on the upside to Eurozone inflation, and a lot more pain for German industries. European PMIs due this week will gather attention, as will Germany’s IFO numbers. Berkshire Hathaway wins approval to acquire Occidental Petroleum Warren Buffett’s industrial conglomerate that recently increased its stake in Occidental Petroleum to over 20% following the US Climate & Tax bill which adds more runway for oil and gas companies has now won regulatory approval for acquiring more than 50% the oil and gas company. This means that Berkshire Hathaway is warming up to its biggest acquisition since its Burlington acquisition. The power shortage in China China is currently being hit by a heatwave with a large part of the country experiencing -degree Celsius temperatures since the beginning of August. The surge in air conditioning caused electricity consumption to soar. To make things worse, drought has reduced hydropower output.  Some provinces and municipalities, especially Sichuan, are curbing electricity supply to industrial users in order to ensure electricity supply for residential use. This has caused disruptions to manufacturing production and added to the headwinds faced by the Chinese economy. China cut its 5-year loan prime rate loan prime more than expected China’s National Interbank Fund Center, based on quotes from banks and under the supervision of the PBoC, fixed the 1-year loan prime rate (“LPR”) 5 bps lower at 3.60% and the 5-year loan prime rates (“LPR”) 15 basis points lower at 4.30%. The larger-than-expected reduction in the 5-year LPR, which is the benchmark against which mortgage loan rates in China are set at a spread, may signal stronger support from the PBoC to the housing market.  The Chinese authorities are coming to the developers’ aid in delivering pre-sold homes Last Friday the Housing Ministry, the Ministry of Finance, and the PBoC, according to Xinhua News, jointly rolled out a program to make special loans through policy banks to support the delivery of presold residential housing projects which are facing difficulties in completion due to lack of funding.  Investors will monitor closely this week to gauge if there is additional information about the size of the program and if the PBoC will print money to fund it.  The resurgence of Covid cases in China Daily locally transmitted new cases of Covid-19 in China persistently stated above 2,000 since August 12, 2022, with Hainan, Tibet, and Xinjiang being the regions most impacted. The constituent companies of the Hang Seng Index will increase to 73 from 69 Hang Seng Indexes Company announced last Friday to add China Shenhua Energy (01088:xhkg), Chow Tai Fook Jewellery (01929:xhkg), Hansoh Pharmaceutical (03693:xhkg), and Baidu (09888:xhkg) to the Hang Seng Index, bringing the latter’s number of constituent companies to 73 from 69. The changes will take effect on September 5, 2022. In addition, SenseTime (00020:xhkg) will replace China Pacific Insurance (02601:xhkg) as a constituent company of the Hang Seng China Enterprises Index.  Australian share market at a pivotal point After rising for five straight weeks including last week's 1.2% lift, many market participants hold their breath this rally will continue. However, standing in the way are profit results from a quarter of the ASX200 companies to be released this week. For the final week of profit results, we hear from Qantas (Australia's largest airline), Whitehaven Coal (Australia's largest coal company), as well as other stocks that are typically held in Australian superannuation funds; including Coles, Woolworths, Wesfarmers, Endeavour. And lastly about 20 companies trade ex-dividend this week, however they are not expected to move the market's needle. Money managers increased their commodity exposure for a third week to August 16 The Commitment of Traders (COT) Report covering positions and changes made by money managers in commodities to the week ending August 16 showed a third week of net buying with funds adding 123k lots to 988k lots, a seven-week high. The buying was broad led by natural gas, sugar, cattle and grains with most of the selling concentrated in crude oil and gold. More in our weekly update out later. Prior to the latest recovery in price and positions hedge funds had been net sellers for months after holding 2.6 million lots at the start of the year. What are we watching next? USD and US Treasury yields as Jackson Hole Fed conference is the macro event risk of the week Friday The US dollar strengthened sharply, with EURUSD challenging near parity, USDCNH breaking higher today after another PBOC rate cut, and USDJPY not far from cycle highs. US Treasury yields have supported the move with the entire curve lifting over the last couple of weeks and longer yields pulling to new local highs last week. The Fed has pushed back consistently against the market’s pricing of a Fed turnaround to easing rates next year with partial success, as expectations for rate cuts have shifted farther out the curve and from higher levels. This week, the key test for markets is up on Friday as the US reports the Fed’s preferred measure of inflation, the July PCE inflation data, while Fed Chair Powell will also speak on Friday, offering the most important guidance on how the Fed feels about how it feels the market understands its intentions.   Earnings to watch Plenty of important earnings releases this week with the largest ones listed below. Today’s key focus is Palo Alto Networks, Zoom Video, and XPeng. Cyber security stocks have done reasonably well over the past year despite valuations coming down as demand is still red hot, Analysts expect Palo Alto Networks to report revenue growth of 27% y/y. Zoom Video, which was the pandemic superstar, is also reporting today with estimates looking for 9% revenue growth, down considerably from 54% y/y growth just a year ago. Monday: Palo Alto Networks, Zoom Video, XPeng Tuesday: CATL, Intuit, Medtronic, JD.com Wednesday: LONGi Green Energy, Royal Bank of Canada, PetroChina, Ping An Insurance Group, Nongfu Spring, Mowi, Nvidia, Salesforce, Pinduoduo, Snowflake, Autodesk Thursday: South32, Toronto-Dominion Bank, Fortum, Delivery Hero, AIA Group, China Life Insurance, CNOOC, CRH, Dollar General, Vmware, Marvell Technology, Workday, Dollar Tree, Dell Technologies, NIO Friday: Meituan, China Shenhua Energy, China Petroleum & Chemical Economic calendar highlights for today (times GMT) 0800 – Switzerland SNB weekly sight deposits 1230 – US Jul. Chicago Fed National Activity Index 2300 – Australia Aug. Flash Manufacturing/Services PMI 0030 – Japan Aug. Flash Manufacturing/Services PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 22, 2022
Gold Has A Chance For Further Downside Movement - 30.12.2022

Gold Is At Risk Of Being Liquidated!? Ukraine Shipment Accelerates

Ole Hansen Ole Hansen 22.08.2022 13:47
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to August 16. A week that potentially saw a cycle peak in US stocks and where the dollar and treasury yields both traded calmly before pushing higher. Commodities meanwhile continued their recent recovery with funds being net buyers of most contracts, the major exceptions being gold and crude oil Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 16. A week that potentially saw a cycle peak in US stocks with the S&P 500 reversing lower after reaching a four-month high, and where the dollar and treasury yields both traded calm before pushing higher. Commodities meanwhile continued their recent recovery with all sectors, except precious metals and grains recording gains. Commodities Hedge funds were net buyers for a third week with the total net long across the 24 major commodity futures tracked in this update rising by 14% to reach a seven week high at 988k lots. Some 56% below the recent peak reached in late February before Russia’s attack on Ukraine drove an across-the-board volatility spike which forced funds to reduce their exposure. Since then and up until early July, worries about a global economic slowdown, caused by a succession of rapid rate hikes in order to kill inflation, was one of the key reasons for the slump in speculative length.Returning to last week, the 123k lot increase was split equally between new longs being added and short positions being scaled back, and overall the net increase was broad led by natural gas, sugar, cattle and grains with most of the selling being concentrated in crude oil and gold. Energy: Weeks of crude oil selling continued with the combined net long in WTI and Brent falling by 26k lots to 278k lots, the lowest belief in rising prices since April 2020. Back then the market had only just began recovering the Covid related energy shock which briefly sent prices spiraling lower. While funds continued to sell crude oil in anticipation of an economic slowdown the refined product market was sending another signal with refinery margins on the rise again, partly due surging gas prices making refined alternatives, such as diesel, look cheap. As a result, the net long in ICE gas oil was lifted by 24% to 62k lots while RBOB gasoline and to a lesser extent ULSD also saw net buying. The net short in Henry Hub natural gas futures was cut by 55% as the price jumped by 19%. Metals: Renewed weakness across investment metals triggered a mixed response from traders with gold seeing a small reduction in recently established longs while continued short covering reduced bearish bets in silver, platinum and palladium. With gold resuming its down move after failing to find support above $1800, the metal has been left exposed to long liquidation from funds which in the previous two weeks had bought 63.3k lots. Copper’s small 1% gain on the week supported some additional short covering, but overall the net short has stayed relatively stable around 16k lots for the past six weeks. Agriculture: Speculators were net buyers of grains despite continued price weakness following the latest supply and demand report from the US Department of Agriculture on August 12, and after shipments of grains from Ukraine continued to pick up speed. From a near record high above 800k lots on April 19, the net long across six major crop futures went on to slump by 64% before buyers began dipping their toes back in to the market some three weeks ago. Buying was concentrated in bean oil and corn while the wheat sector remained challenged with the net long in Kansas wheat falling to a 2-year low. The four major softs contract saw strong buying led by sugar after funds flipped their position back to a 13.4k lots net long. The cocoa short was reduced by 10% while the coffee long received a 25% boost. Cotton’s 18% surge during the week helped lift the long by 35% to 44.7k lots.     Forex A mixed week in forex left the speculative dollar long close to unchanged against ten IMM futures and the DXY. Selling of euro saw the net short reach a fresh 2-1/2-year high at 42.8k lots or €5.3 billion equivalent while renewed selling of JPY, despite trading higher during the reporting week, made up most of the increase in dollar length. Against these we saw short covering reduce CHF, GBP and MXN short while CAD net long reached a 14-month high.    What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Source: COT: Gold and oil left out as funds return to commodities
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Reuters Found Out That Oil Prices Have Been Fluctuating Much More Significantly Than In The Previous Year!

InstaForex Analysis InstaForex Analysis 22.08.2022 14:03
Relevance up to 11:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.     Price volatility is a trader's bread and butter, but in the case of oil, volatility becomes excessive, alienating traders and making life difficult for many companies that routinely use oil price hedging to provide some price stability vital to their operations. According to Reuters analysis, oil prices have become so wild in their daily fluctuations that hedge funds are leaving the oil market en masse. And over the past seven years, their activity has fallen to the lowest level. So it turns out that volatility is only good up to a certain point, and that point seems to be a daily price range of five times the normal range. According to Reuters analysis, between February 24 and August 15 this year, the daily range of Brent crude averaged $5.64 per barrel. This is up from $1.99 a barrel last year.     The exit of speculators is only one of the problems with such high volatility in oil prices. The fact that food companies, for example, are hesitant to hedge against further price fluctuations affects their business. And it also affects the business of the oil industry itself. Oil companies fear capital expenditures due to excessive volatility in the oil markets. And as they exercise caution, these companies are postponing projects that could help rebalance the oil market. Speaking of the oil industry, it's not just the current volatility that's hindering potential production growth. There is also uncertainty about future demand as the transition momentum picks up. Predicting oil demand is becoming increasingly difficult amid events such as the famous Inflation Reduction Act that Congress passed earlier this month. With all these incentives to electrify transport and move towards renewable electricity generation, the future of oil demand is uncertain. One might argue that most major oil companies are actively involved in the energy transition, which could cloud the credibility of their forecasts for oil demand. However, the fact remains that many governments are determined to transition, no matter how much it costs, and this has a negative impact on oil demand. The recent push towards green energy in Europe and the US likely worsened the situation by clouding the demand outlook. However, it is clear to all that the oil demand right now is higher than many expected, especially as some utilities in Europe are switching from gas to oil due to prices. It turned out to be too much not only for speculators, but also for industry players in the oil market. What will happen in the future, as always, is impossible to say, but it is unlikely that the price situation will change soon. This means that the negative effect that this price volatility has on businesses across industries will continue, fueling the aforementioned fluctuations in oil prices. Businesses will continue to need energy, which is limited, but high energy prices will continue to threaten their growth prospects and that of their respective economies. In the meantime, governments will continue to invest money and create laws for a green energy transition, further discouraging the oil industry from doing something about the supply.   Read more: https://www.instaforex.eu/forex_analysis/319540
iPhones Banned in Chinese Offices: Tech Tensions Escalate

China's Plan For Dying Property Markets. Nasdaq 100 And S&P 500

Saxo Strategy Team Saxo Strategy Team 23.08.2022 08:37
Summary:  Equities were sold off on Monday, continuing a slide from their summer rally high, in the midst of position adjustments ahead of the Jackson Hole central banker event later this week. U.S. 10-year yields returned to above 3%. China cut its 5-year loan prime rates and plans to extend special loans to boost the ailing property markets. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. equities lost ground and continued to retrace from the high of the latest rally since mid-June.  The market sentiment has become more cautious ahead of Fed Chair Powell’s speech this Friday at the Jackson Hole symposium and a heavy economic data calendar, S&P 500 – 2.1%, Nasdaq 100 -2.7%.  The rise of U.S. 10-year bond yield back to above 3% added to the selling pressures in equities.  Zoom Video (ZM:xnas) fell 8% in after-hours trading as the company reported Q2 revenues and earnings missing estimates and cut its full year revenues guidance. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Bonds were sold off as traders adjusted positions ahead of the Jackson Hole.  The treasury yield curve bear flattened with 2-year yields surging 8bps to 3.30% and 10-year yields climbing 4bps to 3.01%, above the closely watched 3% handle.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng fell 0.6% while CSI300 climbed 0.7% on Monday. Chinese developers gained on today’s larger-than-expected cut in the 5-year loan prime rate and the Chinese authorities plan to provide special loans through policy banks to support the delivery of stalled residential housing projects, CIFI (00883:xhkg) +11.5%, Country Garden (02007:xhkg) +3.2%.  China extended EV waivers from vehicle purchase tax and other fees to the end of 2023, but the share price reactions of Chinese EV makers traded in Hong Kong were mixed.  Great Wall Motor (02333:xhkg) soared 11%, benefiting from launching a new model that has a 1,000km per charge battery while Nio (09866:xhkg) and Li Auto(02015:xhkg) fell 4.2% and 1.4% respectively. Xiaomi (01810:xhkg) dropped 3.3% after Q2 revenues -20% YoY and net profit -67% YoY, on lower smartphone shipments (-26% YoY).  Smartphone parts suppliers, AAC Technologies (02018:xhkg) and Sunny Optical (02382:xhkg) declined 5.6% and 4.2% respectively.  The share price performance of the four companies that will be added to the Hang Seng Index was mixed, Baidu (09888:xhkg) +0.9%, China Shenhua Energy (01088:xhkg) +2.1%, Hansoh Pharmaceutical (03692:xhkg) +3.2% but Chow Tai Fook Jewellery (01929:xhkg) -0.6%.  SenseTime (00020:xhkg) gained 4.2% as the company will replace China Pacific Insurance (02601:xhkg) -2.8% as a constituent company of the Hang Seng China Enterprises Index.  ENN Energy (02688:xhkg) plunged more than 14% after reporting H1 results below market expectations.  China retailer Gome (00493) collapsed 20% after resuming trading from suspension and a plan t buy from the controlling shareholder a stake in China property assets.  EURUSD falls below parity, eyes on 0.9500 The latest concerns on the European energy crisis weighed on the Euro which was seen sipping below parity to the US dollar. Higher US yields and gains in the US dollar also underpinned, taking EURUSD to lows of 0.9926. The European recession is coming hard and fast, and the PMIs today will likely signal increasing pressure on the region. Also on the radar will be Fed Chair Powell’s speech at the Jackson Hole later this week, with a fresh selloff in the pair likely to target 0.9500 next. USDCNH heading to further highs After PBOC’s easing measures on Monday, the scope for further yuan weakness has increased. USDCNH broke above 6.8600 overnight and potentially more US dollar strength this week on the back of a pushback from Fed officials on easing expectations for next year could mean a test of 7.00 for USDCNH. Still, the move in yuan is isolated, coming from China moving to prevent the yuan from tracking aggravated USD strength rather than showing signs of desiring a broader weakening. EURCNH has plunged to over 1-month lows of 6.8216 on the back of broader EUR weakness. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a recovery overnight despite the strength in the US dollar. A global shift from gas to oil, from Europe to Asia, has taken a deeper hold amid gas shortage fears accelerating in the wake of another upcoming maintenance of the Nordstream pipeline. Diesel and refinery margins have also been supported as a result, with Asia diesel crack rising to its previous high of $63 amid low inventory levels. WTI futures reversed back to the $90/barrel levels and Brent were back above $96. Comments from Saudi Energy Minister threatening to dial back supply also lifted prices, but these were mis-read and in fact, focused more on the mismatch between the tightness in the futures and the physical market. Gold (XAUUSD) and Silver (XAGUSD) Gold broke below the key $1744 support and is now eying $1729, the 61.8% retracement of the July to August bounce. Dollar strength and a run higher in US yields weighed on the shine of the yellow metal, which has seen downside pressures since last week after touching the critical $1800-level. Hawkish Fed talk this week could further weigh on the short-term prospects for Gold. Silver also dipped below the key 19 handle, erasing most of the gains seen since late July.   What to consider?   German year-ahead power prices hit a fresh record high German year-ahead power prices surged to EUR 700/MWh with Dutch TTF gas prices close to EUR 300/MWh. The surge came on the back of another leg higher in natural gas prices which rose over 8% in Europe amid concerns around the next scheduled 3-day maintenance of the Nordstream pipeline. It appears that demand destruction remains the most obvious but painful cure right now, along with a longer-term focus on ensuring a broad-based supply of energy from coal, gas, nuclear, solar, hydrogen, and more.  Australia and Japan services PMIs plunged into contraction Australia saw its services PMI drop to 49.6 in August in a flash print, from 50.9 in July. Manufacturing PMI, however, held up at 54.5, just weakening slightly from last month’s 55.7. The spate of rate hikes seen from Reserve Bank of Australia is likely taking its toll on demand and manufacturing. Meanwhile, prices remain elevated amid the persistent supply chain issues, and more rate hikes are still on the cards. Japan’s flash manufacturing PMI for August came in lower at 51.0 from 52.1 previously, nut stayed in expansion territory. Services PMI however plunged into the contraction zone below 50, coming in at 49.2 for a flash August print from 50.3 in July. The fresh COVID wave in Japan, although comes without any broad-based new restrictions, is impeding the services demand and will likely weigh on Q3 GDP growth. Europe and UK PMIs may spell further caution The Euro-area flash composite PMI and the UK flash PMI for August are both due to be released on Tuesday. Following a slide in ZEW and Sentix indicators for July, the stage is set for a weaker outcome on the PMIs too. July composite PMI for the Euro-area dipped into contractionary territory at 49.9, while the UK measure held up at 52.1. The surge in gas and electricity prices continue to weigh on GDP growth outlook, with recession likely to hit by the end of the year. China’s plan to provide loans to ensure delivery of presold residential projects is said to be of the size of RMB 200 billion Last Friday, Xinhua News reported that the PBoC, jointly with the Housing Ministry and the Ministry of Finance rolled out a program to make special loans through policy banks to support the delivery of stalled residential housing projects but the size of the program was not mentioned.   A Bloomberg report yesterday, citing “people familiar with the matter”, suggested the size of the support lending program could be as large as RMB 200 billion.  Beijing municipal government rolled out initiatives to promote hydrogen vehicles The municipal government of Beijing announced support for the construction of hydrogen vehicle refueling stations with RMB500 million for each station, aiming at building 37 new stations by 2023 and bringing the adoption of fuel-cell cars to over 10,000 units in the capital. Earlier in the month, the Guangdong province released a plan to build 200 hydrogen vehicle refueling stations by 2025. Since last year, there have been 13 provinces and municipalities rolling out policies to promote the development of the hydrogen vehicle industry.  Earnings on tap Reportedly there have been shorts being built up in Dollar Tree (DLTR:xnys) as traders are expecting that discount retailer missing when reporting this Thursday.   On the other hand, investors are expecting Dollar General (DG:xnys) results to come in more favourably, , which also reports this Thursday.  Key earnings scheduled to release today including Medtronic (MDT:xnys), Intuit (INTU:xnas), JD.COM (09618.xhkg/JD.xnas), JD Logistics (02615:xhkg), Kingsoft (02888:xhkg), and Kuishaou (01023:xhkg). Singapore reports July inflation figures today Singapore's inflation likely nudged higher in July, coming in close proximity to 7% levels from 6.7% y/y in June. While both food and fuel costs continue to create upside pressures on inflation, demand-side pressures are also increasing as the region moves away from virus curbs. House rentals are also running high due to high demand and delayed construction limiting supplies. The Monetary Authority of Singapore has tightened monetary policy but more tightening moves can be expected in H2 even as the growth outlook has been downwardly revised.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 23, 2022
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

The Commodities Feed: Potential for OPEC+ supply cuts

ING Economics ING Economics 23.08.2022 09:25
Oil prices had a volatile day yesterday. Brent recouped almost all of its losses from earlier in the day after comments from the Saudi energy minister. Meanwhile, European natural gas prices continue to move higher Energy - possible OPEC+ action The Saudi energy minister has warned that the oil futures market is becoming increasingly disconnected from the physical market, which is not helped by the lack of liquidity and high volatility in the futures market.  The increased volatility has also meant that price discovery has become a lot more difficult for the market. The minister suggested that the divergence between the physical and paper market could force OPEC+ to take action by cutting oil production. It might be difficult to justify supply cuts when Brent is trading above US$90/bbl, but possibly the minister’s comments were an attempt to put a floor under the market. While the oil market is tight in the medium to long term, and there is limited spare capacity, our balance sheet shows that the oil market will be well supplied for the remainder of this year and into early next year. A return of Iranian supply would improve the supply/demand picture even further. European natural gas continues to strengthen. TTF rallied more than 13% yesterday, which saw it settle at almost EUR277/MWh, a record high settlement. Although on an intraday basis, the market traded higher back in March. The market continues to fret about supply following Gazprom’s announcement that it would stop flows along Nord Stream for 3 days to carry out maintenance at a compressor station. While EU gas storage continues to increase and is 77% full at the moment (not far from the EU target of 80% by 1 November), there are real concerns about how Russian gas flows will evolve as the region moves into winter. The uncertainty means that prices will likely remain elevated and volatile. Metals – European metal output declines Data from the International Lead and Zinc Study Group shows that the zinc market was in a surplus of 26kt in the first half of 2022, compared to a balanced market during the same period a year earlier. Total refined production fell 2.6%YoY to 6.8mt (largely due to declines from Europe), whilst consumption declined by 3%YoY to 6.7mt in the first six months of the year. Supply is likely to come under further pressure for the remainder of the year after more European smelter cuts were recently announced. The latest numbers from the International Aluminium Association (IAI) show that global daily primary aluminium output fell to 188.6kt in July, from 189.1kt a month earlier. Total monthly output stood at 5.85mt, up 2.1%YoY, while cumulative production remained largely flat at around 39.5mt over the first seven months of the year. Chinese output rose 3.3%MoM to 3.5mt last month, whilst Western and Central European output fell 10%YoY to 251kt in July. Global production is likely to come under further pressure in the months ahead due to the power issues in Sichuan province in China, along with further smelter cuts in Europe. Agriculture – Early feedback from crop tour suggests lower yields The USDA’s latest weekly crop progress report shows that 95% of the US winter wheat crop was harvested as of 21 August, up from 90% a week ago, but still down from year-ago levels of 99%. As for crop conditions for corn and soybeans, 55% of the corn crop was rated good-to-excellent, down from 57% a week ago and 60% last year, whilst 57% of the soybean crop was rated good-to-excellent, down from 58% a week ago. Early feedback from the Pro Farmer Midwest Crop Tour suggests that the US corn and soybean crop in parts of South Dakota is not in great condition due to dry weather, which is expected to weigh on yields.   Read this article on THINK TagsSaudi Arabia Russia-Ukraine OPEC+ Natural gas Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Do We Have To Prepare For Explosion Of Crude Oil Prices?

Energy: Crude Oil Supply Concerns Drive Prices Higher

Craig Erlam Craig Erlam 23.08.2022 16:09
Saudi Arabia has no appetite for lower oil prices Oil prices are rising again on Tuesday, building on the recovery at the start of the week following output warnings from Saudi Arabia. Considering what we’ve seen in oil markets this year, the repeated inability of producers to hit output targets and the record profits of oil companies, it’s quite staggering that the largest member of the OPEC+ alliance is even considering cutting production to address the falling price. It begs the question; even if a nuclear deal is reached between the US and Iran, how much of a positive impact will it actually have if OPEC+ will pare back production in order to prop up the price? It seems any hope of sub-$90 oil for a prolonged period of time is out of the window and producers won’t be happy unless it’s closer to, or above, $100. One eye on Jackson Hole Gold is marginally higher but still struggling to generate any upward momentum, after being crushed by a stronger dollar and higher US yields. The yellow metal flirted with $1,800 briefly earlier this month but it’s been one-way traffic since. It appears to have stabilised around $1,730, marking a 61.8% retracement of the July lows to August highs, which could now be an interesting test. It could be an interesting rotation point if it can get a helping hand from Powell later in the week while a break may suggest a run at $1,680 is more likely. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil moves higher, gold eyes Jackson Hole - MarketPulseMarketPulse
Do We Have To Prepare For Explosion Of Crude Oil Prices?

Brent Crude Oil Prices Soared, Supported By Frailer US Dollar (USD) And Supply Concerns

ING Economics ING Economics 24.08.2022 08:25
ICE Brent rallied yesterday. A weaker USD coupled with a number of supply concerns has helped to push the market higher. Meanwhile, European natural gas prices have fallen from their highs Energy: further Kazakh oil supply concerns While the oil market digests comments from the Saudi energy minister that OPEC+ may need to cut output, the market is faced with yet further potential supply disruptions. The CPC terminal on the Black Sea, which exports Kazakh oil, is facing some bottlenecks, with only one of the three moorings at the terminal operating. Damage on the other two moorings was detected and repair work is expected to take several months. The CPC terminal has experienced a number of disruptions so far this year, which has weighed on volumes. Numbers released by the API overnight were fairly supportive. The API reported that US crude oil inventories declined by 5.63MMbbls over the last week, although, small builds were reported elsewhere. Cushing crude oil inventories increased by 679Mbbls, whilst gasoline and distillate fuel oil stocks grew by 268Mbbls and 1.05MMbbls respectively. European gas prices eased somewhat yesterday. And this is despite Freeport LNG announcing that the partial restart of its LNG facility on the US Gulf Coast will be delayed from October to mid-November. This announcement provided some relief to US natural gas prices, given that more gas will stay in the domestic market. However, it is not good news for Europe, which has been relying increasingly on LNG to make up for the shortfall in Russian supply. Metals: potential for further supply cuts Soaring energy prices in Europe continue to put pressure on industry. In recent weeks, we have seen a number of metal smelters announcing that they would shut down operations due to high energy prices. According to Bloomberg, Aluminium producer, Speira, has now warned that it may have to cut production at its German smelter to just 50% of capacity due to power costs. Speira has a capacity of 160ktpa, although is currently producing below this level. A decision on cuts will be made in September. The latest data from the World Steel Association shows that global steel output fell 6.5%YoY to 149.3mt in July, due to lower production from China and Europe. Cumulative crude steel production declined 5.4%YoY to 1.1 billion tonnes over the first seven months of the year. The EU produced 11.7mt of crude steel in July, down 6.7%YoY given the ongoing power crisis. Chinese steel production declined 6.4%YoY to 81.4mt last month, as industrial activity slowed due to the resurgence of covid cases in multiple regions, along with the worsening property market. Among other Asian nations, India’s steel output rose 3.2%YoY to 10.1mt in July, leaving YTD output at 73.3mt, up 8%YoY. Read this article on THINK TagsSteel Power shortages Oil Natural gas Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil Rally Driven by Saudi and Russian Cuts Continues Amid Economic Considerations

"Futures Market Is Disconnected From Underlying Fundamental Developments," Said The Saudi Energy Minister

Saxo Strategy Team Saxo Strategy Team 24.08.2022 09:49
Summary:  US equities continued to push sharply lower yesterday as the strong US dollar is in focus as EURUSD dropped well below parity yesterday. US Treasury yields are playing their part in pressuring sentiment as the US 10-year yield benchmark rose above 3.00%. The next important event risk is this Friday’s Jackson Hole, Wyoming speech from Fed Chair Powell, as the Fed is expected to remind the market that it remains in full inflation-fighting mode, pushing back against the impression that it may be set to cut rates next year.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended their losses yesterday as the US 10-year yield moved above the 3% level and the Fed Funds futures curve moved lower across the whole curve (meaning less rate cuts expected next year). Markets are beginning to second-guess their aggressive bets in July on inflation cooling fast enough to warrant rate cuts next year as the galloping energy crisis makes it difficult for inflation to cool. Tangibles-driven themes such as commodities, logistics, energy storage and financials were the relative winners in yesterday’s session. S&P 500 futures are now in the support zone from before the last leg up that started on 10 August; we see the 4,100 level as the next level to watch on the downside and then the 100-day moving average at 4,085. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Index and CSI300 were both down about 0.6%. A Bloomberg report yesterday, citing “people familiar with the matter”, suggested the size of the central bank and other authorities’ support lending program to developers could be as large as RMB 200bn. The reaction of the share prices of Chinese Property developers were mixed, Country Garden (02007:hkg) +3.1%, Longfor (00960:xhkg) -1.4%. Postal Savings Bank of China (01658:xhkg) plunged 5.5% after the Chinese bank reported net profit miss with a 10 bps y/y fall in net interest margin to 2.27% in H1. Gross loans grew 13% y/y in H1 but at a more tepid growth of 3% q/q.  Non-performing loans ratio overall was steady at 0.8% but mortgage NPL ratio climbed by 8 bps to 0.52%. US dollar rally following through The US dollar rally continued apace yesterday, as EURUSD traded well below parity and closed at its lowest level in nearly twenty years yesterday. GBPUSD has teased below 1.1760, its lowest level since a one-off pandemic-outbreak spike in early 2020, while other USD pairs are not yet at extremes of the cycle, including AUDUSD, still well above the sub-0.6700 lows of July, and USDJPY, which has not yet challenged the cycle high north of 139.00. There is clearly a reflexive situation at the moment in the US dollar, risk sentiment and US treasury yields. USDCNH Broad USD strength remains behind the weaker CNH in the USDCNH exchange rate as the CNH continues to rise versus, for example, the EUR, while the CNHJPY exchange rate trades near the important 20.00 area. Any more significant move in this critical exchange rate could quickly steal some of the focus away from the US dollar. The contrast between an easing PBOC (moving once again earlier this week) and tightening central banks nearly everywhere else is stark. The next important level for the pair is 7.00, with the range high of the last decade near 7.20. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a sharp U-turn higher on Monday after the Saudi Energy Minister talked about a potential production cut after saying the futures market has become increasingly disconnected from underlying fundamental developments, a view that we share. His comment supported the market on a day where risk appetite generally took a knock from the stronger dollar and falling equity markets. A global shift from gas to oil, from Europe to Asia, has taken a deeper hold amid gas shortage fears accelerating in the wake of another upcoming maintenance of the Nord Stream 1 pipeline and heatwaves in China. Diesel prices trades higher supported by refinery margins, the so-called crack spread hitting seasonal highs around the world. Gold (XAUUSD) and Silver (XAGUSD) Gold broke below the key $1744 support on Monday before finding support at $1729, the 61.8% retracement of the July to August bounce. Dollar strength and a run higher in US yields weighed on the shine of the yellow metal, which has seen downside pressures since last week after touching the critical $1800-level. Hawkish Fed talk this week could further weigh on the short-term prospects for Gold. Silver also dipped below the key 19 handle, erasing most of the gains seen since late July. German year-ahead power prices hit a fresh record high German year-ahead power prices surged to EUR 700/MWh with Dutch TTF gas prices close to EUR 300/MWh. The surge came on the back of another leg higher in natural gas prices which rose over 13% in Europe amid concerns around the next scheduled 3-day maintenance of the Nord Stream 1 pipeline. It appears that demand destruction remains the most obvious but painful cure right now, along with a longer-term focus on ensuring a broad-based supply of energy from coal, gas, nuclear, solar, hydrogen, and more. US Treasuries (TLT, IEF) US treasury yields rose yesterday, with the 10-year benchmark closing above 3.00% for the first time in over a month yesterday. Rising yields are likely an important driver of weaker risk sentiment after the melt-up in the wake of the late July FOMC meeting, but practically, a move toward the cycle highs from June near 3.50% (in the lead-up to the FOMC meeting on June 16) is needed to seize the spotlight. The behavior of the treasury market in the wake of the Jackson Hole conference speech from fed Chair Powell this Friday is an important next step, particularly if Powell provides strong guidance on the pace or importance of the Fed’s balance sheet tightening (QT). What is going on? EURUSD falls below parity, eyes on 0.9500 The latest concerns on the European energy crisis weighed on the Euro which was seen sipping below parity to the US dollar. Higher US yields and gains in the US dollar also underpinned, taking EURUSD to lows in the low 0.9900’s this morning. The European recession is coming hard and fast, and the PMIs today will likely signal increasing pressure on the region. The next step for the US dollar is the Fed Chair Powell speech this Friday as discussed below. Australia and Japan services PMIs plunged into contraction Australia saw its services PMI drop to 49.6 in August in a flash print, from 50.9 in July. Manufacturing PMI, however, held up at 54.5, just weakening slightly from last month’s 55.7. The spate of rate hikes seen from Reserve Bank of Australia is likely taking its toll on demand and manufacturing. Meanwhile, prices remain elevated amid the persistent supply chain issues, and more rate hikes are still on the cards. Japan’s flash manufacturing PMI for August came in lower at 51.0 from 52.1 previously, nut stayed in expansion territory. Services PMI however plunged into the contraction zone below 50, coming in at 49.2 for a flash August print from 50.3 in July. The fresh COVID wave in Japan, although comes without any broad-based new restrictions, is impeding the services demand and will likely weigh on Q3 GDP growth. Palo Alto outlook remains strong The cyber security company reported last night Q4 revenue and EPS above estimates and Q1 outlook is slightly above estimates while the FY outlook is well above consensus estimates. Q4 networks billing growth was 44% vs est. 25% suggesting demand is accelerating and bolstering our view that the cyber security industry is a high growth and counter-cyclical industry in the years to come. Shares were up 9% in extended trading. Zoom shares were down 8% in extended trading The popular video conferencing software that rose to prominence during the pandemic is lowering its FY outlook relative to previous announcements. The slowdown in their business is due to slower enterprise growth which could be a function of Microsoft and other major technology companies that have entered the enterprise business for video conference. What are we watching next? Europe and UK PMIs may spell further caution. The Euro-area flash composite PMI and the UK flash PMI for August are both due to be released on Tuesday. Following a slide in ZEW and Sentix indicators for July, the stage is set for a weaker outcome on the PMIs too. July composite PMI for the Euro-area dipped into contractionary territory at 49.9, while the UK measure held up at 52.1. The surge in gas and electricity prices continue to weigh on GDP growth outlook, with recession likely to hit by the end of the year. USD and US Treasury yields as Jackson Hole Fed conference is the macro event risk of the week Friday The US dollar and yields are setting risk sentiment on edge as EURUSD has plunged well through parity. US Treasury yields have supported the USD rally with the entire curve lifting over the last couple of weeks and longer yields closing at new one-month highs. The Fed has pushed back consistently against the market’s pricing of a Fed turnaround to easing rates next year with partial success, as expectations for rate cuts have shifted farther out the curve and from higher levels. The next focus is this Friday’s Jackson Hole symposium speech from Fed Chair Powell, who is expected to stay on message and maintain credibility on fighting inflation after the two large 75 basis point hikes at the last two meetings. The Fed’s attitude toward quantitative tightening may be a focus in the speech as well, with the pace of QT supposedly set to pick up in coming weeks to $95B/month. So far, the QT has been slow out of the gates, with the balance sheet currently only some $115B smaller than at its mid-April peak. Earnings to watch Today’s earnings focus is on CATL and JD.com, with especially CATL being important as the world’s largest battery manufacturer to the car industry and thus pivotal for the electrification of the transportation sector. CATL is expected to report revenue growth of 126% y/y in Q2 as EV adoption is accelerating, but key risks ahead are rising input costs across lithium and energy. JD.com is expected to report 3% revenue growth in Q2 as growth is grinding to a halt on very weak consumer confidence in China. Today: CATL, Intuit, Medtronic, JD.com Wednesday: LONGi Green Energy, Royal Bank of Canada, PetroChina, Ping An Insurance Group, Nongfu Spring, Mowi, Nvidia, Salesforce, Pinduoduo, Snowflake, Autodesk Thursday: South32, Toronto-Dominion Bank, Fortum, Delivery Hero, AIA Group, China Life Insurance, CNOOC, CRH, Dollar General, Vmware, Marvell Technology, Workday, Dollar Tree, Dell Technologies, NIO Friday: Meituan, China Shenhua Energy, China Petroleum & Chemical Economic calendar highlights for today (times GMT) 0715-0800 – Eurozone Aug. Flash Manufacturing and Services PMI 0830 – UK Aug. Flash Manufacturing and Services PMI 1000 – UK Aug. CBI Trends in Total Orders and Selling Prices 1100 – ECB's Panetta to speak 1345 – US Aug. Flash Manufacturing and Services PMI 1400 – US Aug. Richmond Fed Manufacturing 1400 – Eurozone Aug. Flash Consumer Confidence 1400 – US Jul. New Home Sales 2300 – US Fed’s Kashkari (non-voter) to speak  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 23, 2022
The Organization Of Petrolum Exporting Countries May Decide To Cut Oil Production!

The Organization Of Petrolum Exporting Countries May Decide To Cut Oil Production!

Conotoxia Comments Conotoxia Comments 24.08.2022 10:34
WTI crude oil futures rose above the $93 per barrel level today. The price increase may be supported by both macroeconomic data and statements from Saudi Arabia and OPEC. The Organization of Petroleum Exporting Countries may decide to cut oil production in the event of a global recession, representatives of several countries in the alliance told The Wall Street Journal on Tuesday. OPEC and its partners, led by Russia, have been closely coordinating oil production volumes, especially since the initial impact of the coronavirus pandemic in the first half of 2020. The alliance's members will meet again on September 5 to set an oil production rate, according to the BBN news service. Meanwhile, crude inventories in the United States fell by 5.6 million barrels last week, according to data released by the American Petroleum Institute (API). The market consensus was for a much lower decline of 0.9 million barrels. The EIA's official government data will be released today. It is expected to reduce reserves by 933,000 barrels. Probably by a combination of the above two factors, oil prices rose almost 4 percent on Tuesday. Counting from the June peak, however, oil has lost about 25 percent, probably due to growing concerns that a global economic slowdown could dampen consumption. Does the Fed need to be aggressive? The U.S. dollar index rebounded on Wednesday to near 108.7 and rose again toward its highest level in 20 years. USD appreciation may have been influenced by comments from US Federal Reserve officials. Minneapolis Fed Chairman Neel Kashkari said that his biggest concern is that the extent of price pressures has been underestimated and that the central bank will have to be more aggressive for a longer period if inflation persists. This could mean tightening monetary policy even as the specter of a stronger brake on the economy looms. Kashkari added that the central bank may ease interest rate hikes when it becomes clear that inflation is heading toward 2 percent. Further clues about the Federal Reserve's action plans may emerge later this week, when Jerome Powell, chairman of the Fed, addresses the annual symposium in Jackson Hole. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Oil rises in price, dollar rises in strength
OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

Saudi's Are Threatening The World By Reducing Oil Supply!?

Marc Chandler Marc Chandler 24.08.2022 12:57
Overview:  A simply dreadful flash US PMI stopped the dollar's four-day rally in its tracks. It followed news that the eurozone, Japan, and Australia's composite PMIs are below 50 boom/bust level. However, the dollar recovered, even if not fully as the market seemed unconvinced that the data could change Fed Chair Powell's message at Jackson Hole on Friday. A consolidative tone is evident today. Asia Pacific equities were mixed. China and Hong Kong fell more than 1% while South Korea, Australia, and India posted gains. Europe’s Stoxx 600 is off for the fourth consecutive session, the longest spill in a couple of months. US futures are straddling unchanged levels. The US 10-year yield is around 3.04%, little changed, while European benchmark rates are 2-4 bp higher. Japan’s 10-eyar yield edged up near 0.22% is once again drawing close to the cap. Gold is firm near $1750, but unable to build much on yesterday’s nearly $12 rally. October WTI is extending its rally since the Saudi’s threatened to reduce supply and Israel is pushing back against the US-Iran deal. US natgas fell 5% yesterday and is about 1.75% firmer today. The European natgas benchmark has jumped almost 7% today to recoup fully yesterday’s 6.5% pullback, which snapped a four-day rally. Iron ore rose 0.5%. It was the third advancing session, the longest rally this month. September copper is giving back about half of yesterday’s 1.2% gain. September wheat is up 2% to bring the gain to 9% since last Thursday.   Asia Pacific In addition to the usual corporate analysis and credit, ESG ratings and investment orientation have become increasingly important. However, the meaning of ESG and ratings not uniform. Arguably, it is where "organic" was a couple of decades ago, and it is still evolving. Some of dismissive and suggest it is a "woke” fad. Japan's Government Pension Investment Fund (GPIF), the largest pension fund in the world, reports that seven of the eight ESG funds it invests in beat the benchmarks in the fiscal year that ended in March. Over the past five years, it said that all eight funds have outperformed. Since US Pelosi's visit to Taiwan, a few other US elected officials have visited Taiwan. UK officials and Japanese officials have either visited or planned to visit Taipei. China has continued its aerial harassment of the island. and repeatedly crossing the median line in the Taiwan Straits. In a recent report, the Atlantic Council argued that one of the lessons from Ukraine, is that the US "strategic ambiguity" is not an effective deterrence, and that the US should be unequivocal in its support. These developments, alongside reports that US military advisors have been in Taiwan since before the 2020 election and the number of "misstatements" by President Biden that were clear signs of support that were "walked back", all play into the hardliners in Beijing who think the US is trying to change the status quo. Congress is considering a bill that would codify some of it. The US strategic ambiguity is ostensibly not about one-China but on how the US would respond to Beijing's use of military power to unite the country. This was not meant to deter China as the military planners would have to game out the US response no matter its declaratory policy. The chief function is to deter Taiwan from declaring independence unilaterally and dragging the US into a war of its making. However, Taiwan, as it stands now, is not a member of organizations based on state sovereignty, like the UN and IMF. The bill that is likely to get more attention in Q4 proposes to recognize Taiwan as an important non-NATO ally and seek to promote Taiwan's membership in international forums. Both sides are giving the other reason to think that they are trying to change the status quo. The dollar is in a narrow range against the Japanese yen today of around a third of a yen on either side of yesterday's settlement, which was slightly above JPY136.75. US yields are slightly softer, and the dollar is closer to session lows (~JPY136.35) in the European morning. The greenback can spend the North American session on the JPY136-handle. The Australian dollar is also in a narrow range as the market awaits fresh news. It has spent most of the local session and the European morning below yesterday's $0.6930 settlement. Meanwhile, the greenback has edged higher against the Chinese yuan. It made a marginal two-year high almost at CNY6.8680. In the past two week, the yuan has fallen by a little more than 2% against the dollar, which has risen broadly. The setting of the PBOC's reference rate today could be the first sign that officials want the market to go slowly. The dollar fix was at CNY6.8388, a wider than usual gap and below the market (Bloomberg survey) estimate for CNY6.8511. Of note, the US dollar did not make a new high against the offshore yuan today. Yesterday's high of almost CNH6.8850 held. Europe On top of the energy crisis, and extreme weather, an economy seemingly slipping inexorably toward a recession, while inflation is still accelerating, Italy's national election is a month away. The three-party alliance on the right continues to dominate drawing about 47% support. The Brothers of Italy remains the largest, accounting for a little more than half that support. Many observers assume that the success of the right reflects a shift in the Italian politics. However, the simpler explanation is the disarray of the center-left. The Democratic Party draws second highest support, less than half a percentage point (within the margins of error) of the Brothers of Italy. The problem is that the center-left has been unable to form a pact like the right has done. The once populist power, the Five Star Movement, the largest party in the current parliament, appears to have lost its way, a partly the cause and effect of its fragmentation. There are several other small groupings that would be more at home with the center-left but have been able to coalesce into an alliance. Still, it is notable that Brothers of Italy leader Meloni argued for more Europe in her debate with the Democratic Party leader Letta. Letta sounded like the nationalist, advocating a temporary price control for gas. Meloni backed an EU-wide cap, which Draghi supported. As Benjamin Franklin told the thirteen colonies on the east coast of the North American continent they prepared to fight against the greatest empire at the time, "hang together or hang separately."  Italy's 10-year premium over Germany is near 2.35%. It reached a two-year high in mid-June slightly above 2.40%. In late July, it also tested 2.40%. Italy offers around 100 bp more than Germany for two-year borrowing. The peak since the Covid panic in March 2020, was set late last month near 1.30%. The extra that is demanded from Italy is not about inflation. Italy's two-year breakeven (difference between the conventional yield and inflation-protected security) is about 4.40% compared with Germany's two-year breakeven near 7.10%. Italy's 10-year breakeven is slightly below 2.25%. Germany's is near 2.45%. Both report August's EU harmonized CPI next week. In July, Italy's inflation stood at 8.4%, just below Germany's 8.5%. Not only is Italian inflation lower than Germany's and is expected to remain so, but it is also growing faster. On a workday adjusted basis, the Germany economy grow 1.4% year-over-year in Q2. Italy expanded by 4.6%. The UK's online paper, The Independent, reported that UK imports from Russia have plummeted by nearly 97% since the invasion. They totaled GBP33 mln in June, it noted, citing data from the Office of National Statistics. The collapse reflected government sanctions and actions of companies seeking alternatives to Russian goods beyond the official sanctions. Today' s is Ukraine's Independence Day and marks the sixth month since the Russian invasion. Reports suggest the US will announce a new $3 bln arms package for Kyiv. The euro was squeezed to almost $1.0020 yesterday after the disappointing US data, but it was short-lived, and it finished the North Americans session near $0.9970. The single currency is in about a third of a cent range today and has not been able to resurface above $1.0, where there are large options that expire there tomorrow (2 bln euros) and Friday (1 bln euros). An expiry today for 720 mln euros at $0.9950 has likely been neutralized. Sterling traded in a broad range yesterday (~$1.1720-$1.1880) and exceeded both sides of Monday's range. However, the close was neutral, well within Monday's range, which set the tone for today's quiet session. Sterling has been confined to less than half a cent range above $1.1800. It settled near $1.1835 and has spent most of the Asian session and the European morning below it. The next level of support is seen in the $1.1760-80 band. America There can no explaining away the weakest composite US PMI since May 2020 and drop in new home sales five-times more than the median forecast in Bloomberg's survey. Yet did not seem to be bipolar as conventional wisdom has it, swinging between recession and inflation anxiety. The implied yield of the October Fed funds contract rose two basis points to 2.95%, unchanged on the week. Another way to look at it, the odds of a 75 bp hike in September stands at almost 60% compared with 52% at the end of last week and slightly less than 50% the prior week (August 12). Nor did equities recover from Monday's gap lower opening. Indeed, while the S&P 500 and NASDAQ largely traded within Monday's range, the Dow Industrials continued to sell off. It is approaching the (38.2%) retracement of the rally off the mid-July low (~30144) found near 32700. A similar retracement in the S&P 500 is near 4095. The NASDAQ found support near its retracement around 12350. The US reports the preliminary estimate of July durable goods orders. The real sector data has held up better than the survey data. One element of durable goods orders that may not be appreciated by economists yet is what appears to be a surge in US arms sales abroad. There seems to be a synchronized arms build-up and demand for US-made weapons is clear. Separately, today's report will be flattered by the jump in Boeing orders. The company reported 130 orders last month, the most since June 2021 after 50 orders in June. Of those orders 27 came from foreign companies up from 20 in June, and the most since January. On the other hand, its deliveries fell to 26 from 51, the least since February. The focus is on the Fed's Jackson Hole symposium that begins tomorrow. Fed Chair Powell is set to speak Friday (10 am ET). Some observers expect him to play up the element in the minutes that recognized the risk that the central bank would tighten too much. However, in the minutes, it was set up in contrast to the bigger risk that inflation getting embedded into business and household expectations. We recognize the market's penchant for reading/hearing a dovish twist to Powell and the Fed even though they are tightening policy faster than most observers had imagined even a few months ago. The pace of the balance sheet adjustment is also set to double starting next month. Separate from the FOMC minutes, the minutes from the discount rate meeting were reported yesterday, and both the Minneapolis and St. Louis Feds called for 100 bp hike in the discount rate before the July 26-27 FOMC meeting but did not convince their colleagues. Nine favored a 75 bp increase, while the KC Fed called for a 50 bp increase. George, the President of the KC Fed supported a 75 bp increases in the Fed funds target at last month's meeting.   The US dollar posted a big outside down day yesterday against the Canadian dollar, trading on both sides of Monday's range and settling below Monday's low. However, there has been no follow-through today and a consolidative tone is evident. It settled near CAD1.2955 and has spent no time below it so far today. It has been capped around CAD1.2985. With softer equities, we ae inclined to see the greenback push back above CAD1.3000 and see resistance near CAD1.3020-30. The US dollar fell yesterday for the second day against the Mexican peso. Its 0.80% drop was the most in nearly two weeks. Selling today has extended its loss to around MXN19.9365, a four-day low. Mexico reports CPI for the first half of August. It is expected have accelerated, with the year-over-year rate rising to 8.55% form 8.14%. The core rate is seen slightly above 7.8% from 7.75%. The central bank meets late next month and another 75 bp hike seems most likely.      Disclaimer   Source: New Recession Worry Stalls Dollar Express but Doesn't Derail It
TEST

Brent - Gas Oil (Diesel) Crack Spread Jump 55% This Month!

Ole Hansen Ole Hansen 24.08.2022 14:12
Summary:  Crude oil’s bounce from a six-month low has so far seen Brent crude oil return above $100 per barrel while WTI following a brief dip to the mid-80’s has turned higher to trade around $95 per barrel. With oil fundamentals still very supportive, the market seems to be realizing the energy market is not the best hedge against an economic slowdown, and it has raised the risk of a response from specualators who recently cut bullish oil bets to an April 2020 low. Crude oil’s bounce from a six-month low has so far seen Brent crude oil return above $100 per barrel while WTI following a brief dip to the mid-80’s has turned higher to trade around $95 per barrel. In our previous update we mentioned the fact that crude oil, in a downtrend since June, had started to show signs of selling fatigue as the technical outlook had started to turnmore price friendly while fresh fundamental developments added some support as well. After finding support below $94 per barrel, the 61.8% retracement of the December to March surge, Brent crude oil now trades back above its 200-day simple moving average with the next key upside hurdle being an area below $102.50 per barrel. Source: Saxo Group While the macro-economic outlook remains challenging due to the lower growth outlook and renewed dollar strength, recent developments within the oil market, so-called micro developments, have raised the risk of a rebound. The energy crisis in Europe continues to strengthen, with gas and power prices surging to levels that measured in dollars per barrel of crude oil equivalent equates to $470 and $1,050 per barrel respectively. The latest surge being driven by recent low-water level disruptions on the river Rhine and Gazprom announcing a three-day closure of the Nord Stream 1 pipeline due to maintenance, starting on August 31.  Should Gazprom (Putin) decide for geopolitical reasons to keep the pipeline shut after maintenance ends, the risk of further spikes remains, thereby extending the already wide price gap between gas and crude oil. A development that will further support an already very visible increase in demand for fuel-based product, especially diesel, at the expense of gas. This gas-to-fuel switch was specifically mentioned by the IEA in their August update as the reason for raising their 2022 global oil demand growth forecast by 380k barrels per day to 2.1 million barrels per day. Since the report was published the incentive to switch has increased even more, and the result being sharply higher refinery margins for diesel across the world, led by Europe which so far this month has seen the Brent – Gas Oil (diesel) crack spread jump 55%.  The trigger which eventually sent crude oil higher this week where comments from the Saudi Energy Minister flagging possible cuts to production amid an increased disconnect between falling futures markets and a physical market that has yet to show weakness. While his comment sent the ball rolling, yesterday’s API report gave it an extra spin, resulting in the rally back above $100 per barrel. A recovery at this point may force money managers to reassess their exposure in Brent and WTI with a potential short-squeeze brewing. During a three-week period to August 16 these speculative traders increased their gross short positions in Brent and WTI by 43k lots to 125k lots, while cutting gross longs by 61k lots to 403k lots, developments that has reduced the net long to 278k lots, the lowest since April 2020.          Later today the EIA publishes its weekly oil and fuel stock report and expectations for a bigger-than-expected draw in crude oil stocks has risen after the American Petroleum Institute reported a 5.6 million barrel drop together with small increases in gasoline and diesel stocks. Traders will also be watching implied gasoline demand which reached a high for the year in the previous week. Crude oil hungry refineries around the world, balking at buying Russian crude, helped drive US exports to a record 5 million barrels per day, and the market will be watching this pace as well as signs of a recovery in production which dipped 100k barrels per day during the previous reporting week.  The result of the EIA report will be published on my Twitter profile: @ole_s_hansen.    Source: Brent on watch for short squeeze above $100
Shell's Income In The First Half Of 2022 Is Bigger Than The Full Year 2021!

Shell's Income In The First Half Of 2022 Is Bigger Than The Full Year 2021!

Conotoxia Comments Conotoxia Comments 24.08.2022 15:58
Very high commodity prices caused by the war in Ukraine may have presented a major opportunity for the energy sector. Oil & gas companies were trying to meet the rapidly growing demand caused by the interruptions and halting of Russian gas and oil deliveries to Europe. How did energy companies perform? Shell Plc (SHELL) and BP Plc (BP) are Europe's largest petrochemical companies, extracting, processing and selling oil and natural gas. They control almost all stages of the extraction, processing and distribution process, which can be an advantage with high volatility in the fuel market. This way, companies are relatively well protected against the need for switching suppliers, partners' commissions and margin reduction. "With volatile energy markets and the continued need for action to combat climate change, 2022 continues to pose a huge challenge for consumers, governments and companies alike," - said CEO Ben van Beurden in a statement. However, despite "volatile energy markets," energy companies were able to make extraordinary gains. Shell reported a whopping $100.1 billion in Q2 revenue, up from $84.2 billion in Q1. To show magnitude, H1 2022 revenue is more than the revenue for the whole of 2021. BP, on the other hand, reported $67.9 billion in revenue against a forecast of $60.9 billion. The company's strong performance in oil refining and sales contributed to this spectacular beat in expectations, according to the company. Shell and BP's revenues rose 65.3% and 85.9% year-on-year, respectively. Other companies in the sector such as Chevron, Exxon and TotalEnergies also posted giant increases in revenues and profits. Earnings per share (EPS) were as high as $3.08 for Shell, almost 10% higher than the expected $2.80 EPS. BP surprised the market with $2.61 in earnings per share (EPS), significantly beating forecasts of $0.34 per share (a 658.5% surprise). Shell and BP increased their net profits by as much as 109.1 and 215.8% year on year. The extraordinary profits will be used for buybacks. Shell and BP announced that they spent $8.5 billion and $3.5 billion, respectively, on share buybacks in the first half of the year. Shell plans to spend another $6 billion and BP $3.5 billion for this purpose. BP additionally decided to raise its dividend by 10%. According to the Bloomberg news service, the buybacks are evidence that the war in Ukraine has brought significant profits to the sector. However, high fuel prices can pose the threat of a cost crisis and strangle the economy, as recent readings of energy prices and GDP changes in major economies have proven. The price of energy in Germany is now at record levels of more than 700 euros per MG of energy for next year, and according to the U.S. Bureau of Statistics, U.S. GDP in the second quarter once again recorded negative growth, this time at -0.9%. This could affect the future performance of the fuel giants.   Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Energy companies' earnings summary - record profits for the sector
Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

XAUUSD: Price Of Gold Amid Jackson Hole Meeting | Crude Oil Prices

Ed Moya Ed Moya 24.08.2022 23:42
Oil poised to rise Despite global recession fears, oil prices are poised to be supported as energy investments have been depressed. â€‹ The tug-of-war between crude demand destruction and a plethora of drivers on why the oil market will remain tight should still suggest prices won’t fall much lower. Oil’s outlook still looks positive here as shale is not taking off, ESG constraints remain, and strong demand for refined product exports. ​ US stockpiles will likely continue to decline over the coming weeks over strong export demand. â€‹ Oil prices could surge over the next few weeks if OPEC+ is forced to cut output and if Iran nuclear deal talks falter again. â€‹ The Saudis don’t want to see oil prices disconnected from market fundamentals and that should suggest this oil market will remain very tight. â€‹ Crude prices dipped after the EIA crude oil inventory report showed a dip with exports and as gasoline demand reversed. â€‹ Optimism for an Iran nuclear deal revival is growing and that is also weighing on prices today. The longer-term outlook for oil is still much higher as the writing is on the wall for energy costs to be very high this winter especially as the risk for further disruptions remains elevated. â€‹ Energy traders saw prices get a boost after cracks were found with the key route for exporting crude from Kazakhstan to international markets. â€‹ It will take a month to replace the broken parts and they still have to find a contractor. Gold Gold firmed up after the dollar softened in what is a very low volume trading session. ​ Gold’s slide might not be over, but no one wants to aggressively be short right now. ​ Gold is forming its pre-Jackson Hole range and it looks like it could be in the $1740 to $1780 zone. Post Jackson Hole, traders should know enough as to whether the rise in yields continues and that will dictate what happens with gold. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil's outlook, gold steadies - MarketPulseMarketPulse
Bitcoin Has Strong Sign That Buyers Are In Control

Nvidia Stocks Dived 4,5 % In The Afterhours Trading! Swissquote

Swissquote Bank Swissquote Bank 25.08.2022 12:13
Nvidia earnings released after the market close were in line with the downside-adjusted market expectations, but the current quarter sales forecast fell $1 billion short of expectations. Nvidia stock dived 4.5% in the afterhours trading, and brought forward the pricing of the ‘end of the chip shortage’. But, it is still too early to call the end of the rare chips, as chips for industrial use, cars and machineries remain difficult to find. Here is, as promised, more on that subject: https://medium.com/swissquote-educati... Elsewhere, stocks were flat yesterday. Even though the US futures are up this morning, the direction remains unclear, and conviction low before the much-expected Jerome Powell speech at the Jackson Hole meeting in the coming hours. The dollar is off the early-week peak, gold and Bitcoin consolidate, while crude oil is preparing to test the 200-DMA to the upside. Hence, energy stocks extend gains along with nat gas and nuclear stocks! Watch the full episode to find out more! 0:00 Intro 0:27 Nvidia’s sales forecast falls $1 billion short of expectations! 1:40 Is the chip shortage over yet? 2:40 Market update 3:56 Crude up, oil, nat gas & nuclear stocks race to the top 6:46 USD softer, EUR firmer before ECB minutes 8:00 Gold & Bitcoin traders await Powell speech for direction Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Nvidia #chip #shortage #Fed #Jerome #Powell #JacksonHole #enegry #crisis #crude #oil #natural #gas #nuclear #stocks #USD #EUR #ECB #minutes #XAU #Gold #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH   Source: Nvidia upsets, again. But chip shortage is not over yet! | MarketTalk: What’s up today? | Swissquote
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

US Herny Hub Natural Gas As The Biggest Component In The Bloomberg Commodity Index!

Ole Hansen Ole Hansen 25.08.2022 13:33
Summary:  US Henry Hub Natural gas has following a 160% year-to-date surge become the biggest component in the Bloomberg Commodity Index, and it highlights just how extreme market moves and developments have been during the past year across the commodity sector. In this we look at what it means and what investors in commodity tracking funds should be aware of US Henry Hub Natural gas (ticker: NG) has following a 160% year-to-date surge become the biggest component in the Bloomberg Commodity Index (BCOM), the first time this has occurred in the index’ +30 year history, and it highlights just how extreme market moves and developments have been during the past year across the commodity sector. The BCOM index which together with the S&P GSCI and DBIQ Optimum Yield Diversified Commodity Index belongs to the heavy weights within the global investment industry, tracks the performance of 23 major commodity futures targeting a one-third exposure in the main sectors of energy, metals and agriculture. The target weights are set once a year every January and if prices shift significantly during the year, a reweighting will not occur until the following January. The mentioned 160% year-to-date surge in US natural gas futures has more than doubled its weight to 17.2% from 8%, and in the process made it the biggest component in the BCOM index, more than double that of WTI and Brent combined. From a sector perspective, and given strong gains across the other energy components, especially fuel-based products, it has lifted the total energy exposure by 9.2% to 40.9%. All other sectors and sub-sectors share the reduction with the biggest seen in metals with industrial and precious down by a combined 7.5%. What it means?The BCOM index is likely to become more volatile with its performance increasingly dependent on developments within the energy sector, especially natural gas. Recently the price hit $10 per MMBtu before suffering a 10% setback due to a further delay of the restart of the Freeport LNG export plant which has been closed for months following an explosion. The expected restart will increase demand for US gas and with that slow the process of adding stockpiles before the winter extraction season starts in a couple of months’ time. The biggest threat to the energy sectors strong performance is the combination of a deep recession eroding demand and a peaceful solution to the war in Ukraine sending EU gas prices sharply lower in anticipation of flows from Russia normalizing. What should investors in commodity tracking ETF’s do?The short answer is nothing as the reasons for investing in tangible assets such as commodities has not changed. The other commodity tracking funds mentioned earlier, and which also include the CRB Index will all be affected depending on their individual exposure to natural gas. Overall, the BCOM has from the outset the largest exposure and is therefore the index impacted the most. From an investor perspective these types of futures tracking commodity funds remains a cheap solution to gain exposure to commodities. With natural gas being notoriously volatile some increased price swings on the index can be expected, and if the strong gains are being maintained we should expect a very active rebalancing next January where gainers will be sold, and losers bought in order to reset the target weights. Source: Bloomberg, Saxo Group   Source: NatGas surge weighs heavily in commodity indices
Nuclear Power Emerges as Top Theme for 2023, Bubble Stocks Under Pressure

Green Transformation Being Inflationary In The Years To Come

Peter Garnry Peter Garnry 25.08.2022 13:44
Summary:  Central banks have been very late to the inflation game as the they have underestimated the effects from the stimulus during the pandemic. Supply chains and generally the supply side of the economy were expected to normalise much faster than what has been the case and our main thesis now is that if central banks focus too much on the core inflation a big mistake might be the outcome. Food and energy will be at the center of our crisis years with climate change and the green transformation being inflationary in the years to come. Investors should increasingly invest in the tangible world to offset these inflationary risks. The energy crisis will drive everything Around 30 central banks around the world have adopted inflation targeting using the headline inflation indices which in the US is the US Personal Consumption Expenditures Index and was officially announced in January 2012. The official targeting is the headline inflation indices, but many central banks and economist are often putting more weight on the core inflation indices. These indices remove energy and food from the price index. This practice is likely what made central banks react to slowly to current inflation impulse; remember, at Jackson Hole one year ago Jerome Powell said: “We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2% inflation on a sustainable basis”. At that point US CPI and core CPI stood at 5.4% y/y and 4.3% y/y respectively. Core inflation indices remove the energy and food items because they are seen as volatile and mainly not driven by the trend change in overall prices, and the key assumption is also that they have temporary factors behind that will reverse later on (see quote below from Federal Reserve Bank of San Francisco). This argument was the same for our disrupted supply chains although in reality it has taken much longer than expected. “However, although the prices of those goods may frequently increase or decrease at rapid rates, the price disturbances may not be related to a trend change in the economy’s overall price level. Instead, changes in food and energy prices often are more likely related to temporary factors that may reverse themselves later.” Food and energy will add to inflation going forward Our team has written a lot about the physical world and lately we introduced indices of tangibles- vs intangibles-driven industry groups. We have shown many times how the world underinvested in the global energy and mining industry, and why this will haunt the world for years. Food and energy are also intertwined and connected which we have seen today with Yara International reducing its ammonia production in Europe to just 35% of potential production due to elevated natural gas prices. Lower ammonia production will lead to less fertilizer for farmers and thus lower food production, which again can lead to higher food prices. It should be clear by now, that ignore food and energy could be a grave mistake by central banks. Climate change will make global food production more volatile and push up prices, and the green transformation will for years keep energy prices elevated. Our main thesis is that the coming decade will in many ways be a replay of the 1970s as politicians will intervene in the economy to mitigate the pain from higher prices, but these decisions will only keep the nominal economy growing fast and thus keeping inflation and the readjustments going for longer. The Fed’s core inflation measure is currently at 0.4% m/m measured over six months suggesting a core inflation rate annualized at around 5% which means that short-term interest rates must be set much higher to tame inflation. The headline inflation is currently twice as high as the core inflation. PCE core CPI m/m | Source: Bloomberg Nominal wages will underpin inflation for a lot longer In this ECB paper from August 2002, the authors conclude that central banks should give substantial weight to the growth in nominal wages when monitoring inflation. If we look at nominal wage growth in the US the chart below shows the three-staged acceleration we have observed in the US economy since 2009. The first phase during 2009-2015 saw only 2% annualized wage growth as the economy was suffering from low demand in the subsequent years after the Great Financial Crisis. The second phase was the period 2015 to early 2020 where years of loose monetary policy and slowly healing economies lifted US nominal wage growth to 2.9% annualized. The third phase is the period from early 2020 until today and is driven by the extraordinary monetary and fiscal stimulus that were put in place after the global Covid pandemic broke out. The combined stimulus was on par with the post-WWII years and were unleashed into a global economy that in hindsight was much closer to a hard physical supply limit than understood at the time. Subsequently demand has been running much stronger than trend growth and as a result nominal wages have accelerated to 5.2% annualized growth rate. Indeed, it seems we have a serious problem on our hands where inflation become unanchored from 2%. US hourly earnings index | Source: Bloomberg Invest in the tangible world In an inflationary environment the tangible world must increase dramatically, so investors should invest in the tangible world to offset the inflation risk in order to preserve wealth in real terms. In our note from yesterday about the Tangible world is fighting back we highlight the industry groups that are part of the tangible world, but our theme basket performance overview also show which tangible parts are doing well which this year has been commodities, defence, renewable energy, logistics, and energy storage. Saxo clients can find the companies in each of these theme baskets on our trading platforms. Source: Core inflation is unofficially dead
Volume Of Crude Oil Rose For The Second Session In A Row

The Biggest Two-week Drawdown In A Year As US Oil Inventories Lost 10 mln barrels!

Marc Chandler Marc Chandler 25.08.2022 14:20
Overview: It seems that many market participants had the same thing in mind, cut dollar longs before the Jackson Hole gathering. The Antipodeans lead the majors move, encouraged perhaps by China’s new economic measures, with around a 1% gain. The euro and sterling are up about 0.35% and are the laggards. Emerging market currencies are higher as well, with the notable exception of India and Turkey, which are nursing small losses. Equities are having a good day. All the major bourses, but India, rose in the Asia Pacific area, led by the 3.6% surge in HK. South Korea’s 25 bp hike did not prevent the Kospi from rallying over 1% today. The Stoxx 600 is up by about 0.3%, and US futures are 0.5%-0.6% better. European 10-year benchmark yields are 4-7 bp lower and the periphery is doing better than the core. The 10-year US Treasury yield is off a couple basis points to 3.08%. Gold is rising for the third consecutive session. Near $1765, it has retraced half of its losses since the mid-month high above $1800. October WTI is little changed after rallying 5% in the past two sessions. US oil inventories have fallen by about 10 mln barrels in the past two weeks, the biggest two-week drawdown in a year. The market also appears to be getting more skeptical that Iranian oil is going to come back soon. US natgas is giving back half of yesterday’s 1.5% gain, while Europe’s benchmark is up 8.7% on top of yesterday’s 10.8% increase. It is up by more than a quarter this week. China’s infrastructure plans did nothing for iron ore, which snapped a three-day advance by pulling back 0.5%. On the other hand, September copper has fully recovered yesterday’s 1.4% fall. September wheat is off for the first time in four sessions.  Asia Pacific Japan's government wants to double down on nuclear power. Prime Minister Kishida wants a committee of government ministers and outside advisers to consider calling for building new nuclear plants in its report due later this year. Before the Fukushima nuclear accident in 2011, nuclear power provided almost 30% of Japan's electricity. In 2020, nuclear power accounted for less than 5% of Japan's electricity. Russia's invasion of Ukraine, the volatility of the global energy market, and the need to boost sustainable growth favors nuclear power, according to this line of thinking. Japan's Ministry of Economy, Trade, and Industry is a strong proponent of developing nuclear power. Still, it is not an immediate solution of any problem. New, large-scale plans would take a decade or more to construct. Smaller nuclear plans, using the newest technology might not be operational until early 2040s, according to some estimates. Japan currently has seven nuclear plants operating. The prime minister wants more existing plants to re-open. A poll earlier this year found that for the first time since that 2011 accident a slim majority (53%) in Japan favor re-opening nuclear plants. Responding to a string of data which suggests that the Chinese economy may struggle to grow by even 3% this year, the State Council announced 19 measures yesterday to support the economy. The measures included almost CNY1 trillion (~$146 bln) of new borrowing/spending for state policy banks and local governments for infrastructure projects, and some deferment of payments due to the government. These measures plus the small rate cuts that have been delivered in the past week or so are seen as modest palliatives to what is increasingly a stressed economy. The NASDAQ Golden Dragon China Index of PRC companies that trade in the US jumped 2.5% yesterday, anticipating today's surge in Hong Kong's Hang Seng (~3.6%) and CSI 300 (~0.8%) The Chinese yuan is off about 1.7% so far this month. This is almost as much as it depreciated in the May-July period. While Chinese officials seem to have accepted the decline, they seem to be wary of unintended consequences. The PBOC's dollar fix yesterday and today was weaker than expected and some saw this as a warning shot. Consistent with this was a Reuters report that China's foreign exchange regulator warned several banks against shorting the yuan. There are at least two reasons why Chinese officials want to move gradually. First is that price pressures may be mounting and second is to avoid a vicious cycle of weaker yuan spurring capital outflows, which weakens the yuan. Foreign holdings of Chinese bonds (sovereign and policy bank bonds) appear to have fallen by a little more than 1% last month to CNY3.6 trillion (~$525.5 bln). The dollar is inside yesterday's range against the Japanese yen (~JPY136.15-JPY137.25). It has drifted to the lower end of the range in Europe. Yesterday's range was within Tuesday's range (~JPY135.80-JPY137.70). The greenback appears nesting as the market awaits Fed Chair Powell's comments at Jackson Hole tomorrow. Note that the US two- and 10-year yields are around two-month highs ahead of it. This has helped lift the greenback to around JPY137.70. Follow-through yield gains may be needed for it to re-challenge high set last month near JPY139.40. The Australian dollar is up over 1% to a seven-day high a little below $0.7000, which corresponds roughly to the (50%) retracement objective of the slide since the month's high on August 11 around $0.7135. Like China's rate cut, so too with the new spending announcement, many trade the Aussie as if it were a proxy sometimes for China. The intraday momentum indicators are stretched. Initial support is seen around $0.6960. The PBOC set the dollar's reference rate at CNY6.8536. The market (Bloomberg survey median) expected CNY6.8656. The dollar has largely been confined to yesterday's range. While it eased a little more than 0.10% against the onshore yuan, it slipped more than twice as much against the offshore yuan. Lastly, as expected South Korea's central bank delivered the expected 25 bp hike (lifting the seven-day repo rate to 2.5%). Headline CPI is running north of 6% and additional hikes are likely. The won rose by 0.5%, its second consecutive gain, after falling for the previous six sessions. Europe While Japan is pushing nuclear, Germany is set to boost coal-fired power generation this year. Steag GmbH will add 2.3 gigawatts to its system within three months to replace about a quarter of the natural gas it uses to generate electricity. More broadly, the government is planing to re-open 6.9 gigawatts of coal and 1.9 gigawatts of lignite and push back planned for another 15 years. Uniper SE, is set to re-start an 875-megawatt coal plant in northern Germany next week. Yesterday, the German government announced it will give preference to transport fuels by rail to accelerate the access of power plants. Berlin also announced some conservation measures, including a ban on heating private swimming pools, and some areas in public buildings. The minimum office temperature will be reduced to 66 Fahrenheit (19 Celsius) and banning most outside lighting for monuments and buildings. Economic Minister Habeck says the measures announced will reduce natural gas use by 2% (saving 10.8 bln euros) over the next two years. German economic news was less poor than expected today. The initial estimate of no growth in Q2 was revised to show 0.1% growth. Consumption and government spending were stronger than expected, but capital investment was considerably weaker. The IFO investor survey seemed surprisingly resilient. The current assessment slipped to 88.5 from 88.7 and expectations were practically unchanged too (80.3 vs. 80.4). The overall business climate metric stands at 88.5 (from 88.7). Still to come is the record of last month's ECB meeting and the market will be looking for more color on the new Transmission Protection Instrument. The euro is firm. After holding below parity yesterday, it popped up in Asia to poke slightly above $1.0030. The week's high was set Monday closer to $1.0045. Yesterday's push lower, the new 20-year low set Tuesday near $0.9900 held and sparked what appeared to be a short-covering bounce into the European close. We suspect that some euro bears moved to the sideline ahead of Jackson Hole. There are options for 2.5 bln euros that expire today at $1.00. Some of the buying may be to neutralize the option. Initial support is seen around $0.9980. Sterling is trading firmer, and like the euro, it has held below the week's high (almost $1.1880). It may make another run for it, but the momentum indicators are getting stretched. Yesterday, the Office of National Statistics showed that for the first time, the UK did not import fuel from Russia in June. Prior to Russia's invasion of Ukraine this year, Russia accounted for almost a quarter of UK's refined oil imports, 6% of crude imports, and almost 5% of its gas imports. America Despite the US five-year yield rising to its best level in nearly two months (~3.25%), the concession did little to induce participation in yesterday's $45 bln five-year note auction. It generated a full basis point tail, stopping at 3.23% and a poor bid-cover (2.3), Earlier yesterday, the re-opening of the two-year floating rate note with a $22 bln offering, also saw a weak bid-cover (2.57 vs. 3.13 last and a 3.2 average in the last 10 such auctions. We are tempted to write-off the lackluster participation to the summer and ahead of Chair Powell's speech on Friday. In addition to $110 bln in four-and eight-week bills to be sold today, the US Treasury also will sell $37 bln of seven-year notes. The yield has risen by almost 50 bp over the past month and still the concession may not be sufficient to draw strong demand. The next long maturity is not until September 12-13 and the re-opening of the 10-year note and 30-year bond. The US reports weekly jobs claims today, which appear to have stabilized recently around 250k. Yesterday's benchmark revisions added about 571k private sector jobs to the job growth reported in the year through March. This translates to an average of around 47.5k jobs a month. Also today, Q2 GDP revisions and the 0.9% contraction is expected to be shaved, with knock-on effects on productivity and unit labor costs later. The Kansas Fed's manufacturing survey is on tap too, but it is not a market mover. Lastly, the Atlanta Fed's GDPNow tracker sees Q3 growth at 1.4%, down from 1.6% previously.  Brazil's IPCA CPI measure for the first half of August fell to 9.6% year-over-year from almost 11.4% last month. The market had hoped for a slightly larger decline (Bloomberg median 9.49%). It was the first month-over-month decline since May 2020. It was the third consecutive drop in the year-over-year rate, which peaked at 12.2%. The full month's report is due September 9. It peaked at 12.13% in April and stood at 10.07% last month. The government has pushed through several anti-inflation measures, including caps on utility and fuel taxes and the effect was seen with a nearly 17% drop in gasoline prices and a 5.25% fall in transportation costs. The central bank meets on September 21. It hiked the Selic rate by 50 bp earlier this month to 13.75% and said it would review the need for a "residual adjustment" in September. The central bank may stand pat without declaring an end of the tightening cycle as price pressures remain elevated. In contrast, Mexico mid-August CPI accelerated more than expected with the headline rising to 8.62% from 8.14%. The core rate rose to 7.97% from 7.75%. Banxico hiked rates five times so far this year. The first three moves were half-point increments and the last two were 75 bp steps. It meets a week after the Fed next month. At the bare minimum it can be expected to match the US move but could go 75 bp even if the Fed does not. Today, Mexico is expected to shave its preliminary Q2 GDP rise of 2.0% and minutes from last month's meeting. After consolidating against the Canadian dollar yesterday, the US dollar has been sold today. It slipped marginally through CAD1.29 to meet the (50%) retracement objective of the rally that began off the August 11 low near CAD1.2730. The low was set in the European morning but was not confirmed by the intraday momentum indicators, a warning not to chase the greenback lower, at least immediately. Initial resistance is seen around CAD1.2950. The US dollar is easing against the Mexican peso for the fourth consecutive session, which followed a four-day gain last week. It is finding bids today around MXN1985, and a break could see a test on the MXN19.81-82 area that marked the low in late June and again near the middle of this month. The low for the year was set in late May around MXN19.4140.     Disclaimer   Source: Dollar Longs Pared as Jackson Hole Gathering is set to Start
German Business Confidence Dips, ECB's Lagarde Hosts Central Banking Conference in Portugal, EUR/USD Drifts Higher

The US Dollar Trades Near Cycle Highs Ahead Of The Speech

Saxo Strategy Team Saxo Strategy Team 26.08.2022 09:55
Summary:  Markets are steady ahead of a widely anticipated speech at the US Federal Reserve’s Jackson Hole, Wyoming conference from Fed Chair Jerome Powell, although he may do little more than remain on message on the Fed’s plans for tightening policy. The US dollar trades near cycle highs ahead of the speech, with US treasury yields having eased back a bit yesterday on a strong 7-year treasury auction. In Europe, power and natural gas prices continue their ascent from already dire levels, thereby supporting demand for fuel-based products.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures bounced back 1.4% to the 4,200 level in what seems to have been a technical move ahead of Jerome Powell’s keynote speech at Jackson Hole which is expected today. For equities the main question is how central banks are seeing structural in the years to come because that will be linked to the terminal rate the Fed sees as neutral for the economy and inflation. The US 10-year yield is trading around the 3.05% level this morning and we expect a quiet session in US equities unless Powell’s speech delivers a hawkish tone which could then erase yesterday’s gains. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) After staging an impressive bounce from the trough of a 2-month losing streak yesterday, Hong Kong equities opened higher before giving back much of its gains to end the morning session 0.7% higher. Yesterday’s 3.6% rally in the Hang Seng Index and 6% surge in Hang Seng TECH Index were fueled by initially chatters among traders about unverified progress on resolving the audit working papers access issue in the heart of the Chinese ADR delisting risk. During New York hours, the Wall Street Journal ran an article, suggesting that the U.S. and China are nearing a deal to allow American regulators to inspect in Hong Kong the audit working papers of Chinese companies listed in the U.S. The news sent Chinese ADRs soaring, the NASDAQ Golden Dragon China Index +6.3%. US dollar steady on the strong side ahead of Jackson Hole Yesterday saw some tactical chopiness in USD pairs, as the greenback sold off to support in places and criss-crossed parity in EURUSD terms before settling back to the strong side ahead of Fed Chair Powell’s speech at the Jackson Hole conference today. Powell is widely expected to stay on message on the Fed’s hopes to get ahead of the curve, but surprises are possible if his language is a bit more pointed than expected or he brings stronger guidance on the importance of QT, etc. Next event risks for the USD in the wake of today’s Powell speech (and July PCE inflation print as noted below) are next Friday’s payrolls/earnings report, the Sep 13 Aug. CPI data release, and then the Sep 21 FOMC decision. AUDNZD The Antipodean currency pair closed yesterday at its highest level since 2017 in a bid to escape the range that has prevailed since then, with a bit more range toward 1.1300 that stretches all the way back to 2013. If the pair can make a notable foray above these levels, it might suggest that traders are viewing the pair from a current account perspective, as Australia has been running record surpluses on its formidable complex of commodity exports, while New ZEaland is running unprecedented deficits on rising costs for energy imports. In the longer term perspective, AUDNZD has traded above 1.3500 as recently as 2011. Crude oil (CLV2 & LCOV2) Crude oil trades steady with Brent trading around $100 per barrel with a tightening supply outlook offsetting the recessionary drums that have been banging ever louder in recent weeks. Focus on today’s Jackson Hole speech from Fed Chair Powell and its potential impact on bond and currency markets, and with that the general level of risk appetite in the market. EU gas and power reached new peaks on Thursday on worries about Russian gas supplies following the upcoming 3-day maintenance supporting demand for crude-based products like diesel and heating oil. The prospect of a revived Iran nuclear deal still receiving some attention although a deal may only have a small immediate impact, small change compared with the soon to expire US SPR release program which saw 8 million barrels pumped into the market last week. In Brent, the next level of upside interest can be found at $102.50. Copper (COPPERUSDEC22) Copper has settled into a $3.55 to $3.73 range after making a steady recovery from the June/July +30% collapse. The primary focus remains on China and the government’s efforts to shore up its troubled property sector and its slowing economy in general. This past week we have seen rate cuts and the announcement of a 1 trillion-yuan economic stimulus program, including a 300-billion-yuan investment in infrastructure projects, which will boost the consumption of industrial metals, including copper. Above the current range copper may target $3.85/lb next but it will likely require a rally above $4/lb before speculators reverse the net short they have held since April. US Treasuries (TLT, IEF) US treasury yields fel back a few basis points, but the 10-year benchmark still trades above 3.00% today ahead of Fed Chair Powell’s speech. (More below – special focus on longer end of the yield curve on any QT guidance in the speech). A strong auction of 7-year treasuries yesterday helped bring support to the market after the weak 5-year auction the prior day. What is going on? ECB meeting minutes suggest another 50-basis points hike The meeting minutes point to another 50-basis point hike at the September 8 ECB meeting, a move that is actually more than fully priced in by the market. At the same time, the ECB minutes noted that it saw “no evidence of significant second round effects” in which wages drive an inflationary spiral. The central bank’s “TPI” or Transmission Protection Instrument meant to prevent peripheral sovereign yield spreads from widening excessively was widely discussed and is clearly a hot potato politically. An FT article noted that hedge funds have built up a nearly EUR 40 billion speculative short in Italian BTPs Additional hawkish Fed comments before we get to Powell Several Fed speakers were on the wires echoing the same message on inflation and more rate hikes. The markets are still holding their breath for what Powell has to say later today. James Bullard (2022 voter) reiterated his year-end target of 3.75% to 4% and market expectation is not too far from that now. Esther George (2022 voter) was more open about rates going above 4% but stayed away from a specific guidance for the September meeting. Patrick Harker (2023 voter) said rates need to be lifted into restrictive territory. Raphael Bostic (2024 voter) told the WSJ it's too soon to call inflation’s peak and that he hasn't decided yet on a 50 or 75bps rate hike next month. German business sentiment is not that bad in August The headline IFO Survey reading was out at 88.5 versus 86.8 expected and 88.6 prior. This is only a bit softer than the previous month. The same goes as well for the current conditions (out at 97.5 in August versus prior 97.7) and expectations (80.3, unchanged compared to July). Overall, business sentiment remains soft. But given the quick economic deterioration, it could have been much worse. We still expect sentiment to further fall in the coming months as the German economy sinks into a recession. The energy crisis is hitting consumers and companies very hard – thus leading to lower demand and corporate investment. Yesterday, Germany’s benchmark year-end power kept rising (+13% in one day) to a new record of EU725/MWH. So far, the German government has spent roughly €60bn to limit the impact of higher energy prices on households and corporations. This represents about 1.7% of GDP according to the calculations of the Belgium-based think tank Bruegel. In percentage of GDP, this is still much less than many other European countries (3.7 % of GDP for Greece, 2.8 % for Italy and 2.3 % for Spain, for instance). In any case, this is unsustainable, of course. The US and China are getting closer to resolve Chinese ADR audit papers inspection issue According to a Wall Street Journal article, Chinese securities regulators “are making arrangements for US-listed Chinese companies and their accounting firms to transfer their audit working papers and other data from mainland China to Hong Kong” and “would allow American accounting regulators to travel to Hong Kong to inspect the audit records”. It is important to note that an agreement has yet to be reached and the regulators on both sides remain silent about it so far. One of the hurdles to the proposed arrangement of transfer of audit working papers from the mainland to Hong Kong will be whether it can satisfy the US regulators, particularly the SEC Chair Gensler who has emphasized “full access”. If this turns out to happen, it will not only benefit the Chinese companies that are listed in the US but also sets the US and China in a more conciliatory mood at least in some financial matters, and shows case the uniqueness of the position of Hong Kong U.S. discount retailers reported mixed Q2 results, highlighting pricing pressures ahead Dollar General (DG:xnys) reported revenue growth of 9% y/y to $9.4bn, in line with the consensus estimate, and EPS of $2.98, +10.6% y/y, above the consensus estimate of $2.94.  Same-store sales in Q2 grew 4.6% y/y, above the consensus at +3.8%. In the company’s guidance for 2022, revenue growth was raised to +11% from previously +10.0-10.5% and the same-store-sales growth was raised to +4.0-4.5% from +3.0-3.5%. Q2 results from another discount retailer, Dollar Tree (DLTR:xnys) were however weaker, with revenue growth of 6.7% y/y to $6.77bn, slightly below the consensus estimate of $6.79bn.  EPS came in at $1.60, in line with expectations. Same-store-sale for the quarter was +4.9%, below the consensus estimate at +5.0%.  The company lowered its 2022 full-year EPS guidance to $7.10-$7.40 and said that 60% of the cut was due to cutting prices. The management said that they “expect the combination of this pricing investment at Family Dollar and the shoppers’ heightened focus on needs-based consumable products will pressure gross margins in the back half of the year”. The comments from Dollar Tree cast a shadow over the health of consumers in the US in general.  Meituan is scheduled to report Meituan (03690:xhkg) is scheduled to report Q2 results on Friday after the market close. Analysts are upbeat about the food and grocery delivery platform’s potential benefitting from the recovery of consumer demand amid the reopening and cost control initiatives.  The consensus estimate (as per the Bloomberg survey) for Q2 revenue is to grow 11% YoY to RMB48.59 billion and an adjusted net loss of RMB2.17 billion What are we watching next? The Kansas City Fed hosts its annual symposium in Jackson Hole This year’s theme is “Reassessing Constraints on the Economy and Policy”. The symposium will last until Saturady. Fed Chair Jerome Powell will speak today. Given the loosening of financial conditions since the June FOMC meeting, the market has been concerned that Powell will echo the pushback against the notion that the Fed knows that it is set to materially slow its pace of policy tightening after the September 21 FOMC rate decision (majority looking for another 75 basis points). Data dependency will likely be underlined in his speech, but any guidance on the Fed’s approach to QT could also garner considerable attention as longer treasury yields pull back higher toward the cycle highs from June. Softer July US PCE print would not derail Fed’s tightening After a softer CPI report in July, focus will turn to the PCE measure – the version of the CPI that is tracked by the Fed to gauge price pressures. Lower gasoline prices mean that PCE prints could also see some relief, although we still upside pressures to inflation given that energy shortages will likely persist and easing financial conditions mean that inflation could return. We would suggest not to read too much into a softer PCE print this week, as the stickier shelter and services prices mean that the 2% inflation target of the Fed remains unachievable into then next year. This suggests that the aggressive tightening by the Fed will likely continue, despite any likely softness in the PCE this week. Earnings to watch Today’s earnings focus is Meituan which is expected to see 11% y/y revenue growth with estimates expecting to see growth accelerating into Q3, so this will be the market’s focus in today’s earnings release. The latest stimulus efforts by the Chinese government and lifting of mobility restrictions could provide tailwind for the consumer into Q3. Today: Meituan, China Shenhua Energy, China Petroleum & Chemical Next week’s earnings releases: Monday: Fortescue Metals, Haier Smart Home, Foshan Haitian Flavouring, Agricultural Bank of China, BYD, Pinduoduo, Trip.com, DiDi Global Tuesday: Woodside Energy, ICBC, China Yangtze Power, Midea Group, Tianqi Lithium, Bank of Montreal, China Construction Bank, Bank of China, Great Wall Motor, COSCO Shipping, Partners Group, Baidu, Crowdstrike, HP Wednesday: MongoDB Thursday: Pernod Ricard, Broadcom, Lululemon Athletica, Hormel Foods Friday: BNP Paribas Economic calendar highlights for today (times GMT) 0800 – Italy Aug. Consumer/Manufacturing Confidence surveys 1230 – US Jul. Personal Income/Spending 1230 – US Jul. PCE Inflation 1400 – US Fed Chair Powell to speak at Jackson Hole, Wyoming 1400 – US Aug. Final University of Michigan Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 26, 2022
The British Pound Faces Further Breakdown Amidst Dollar Strength and Government Shutdown Risks

USD: Would Jerome Powell (Fed) Spill The Tea About On The Interest Rate Decision?

Ed Moya Ed Moya 25.08.2022 22:49
Oil Crude prices initially edged higher as we get further reports that OPEC+ is seriously considering lowering production and after the latest round of US economic data and Fed speak suggests the economy is still in a good position to handle more rate increases. Oil will start to form a key trading range until Fed Chair Powell’s speech at Jackson Hole. We could get a major move in the dollar post-Powell and that could trigger a major one-way move for commodities. ​ The oil fundamentals still support crude prices to make a move above the $100 a barrel level, but first, we will have to wait-and-see if the dollar cooperates. Oil is seesawing ahead of Jackson Hole and that will probably continue until we hear from Fed Chair Powell. ​ Gold Gold got a limited boost as the dollar softened ahead of Fed Chair Powell’s speech at Jackson Hole. ​ Another round of US economic data and Fed speak supported the idea that the Fed will remain aggressive tightening policy until inflation is under control. ​ Investors want to see if Fed Chair Powell locks the Fed in for another massive 75 basis point rate increase in September, but he will likely stick to the data-dependency script and leave it up to the September 13th inflation report. Gold will likely consolidate between the $1750 to $1780 zone leading up to Fed Chair Powell’s speech. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil seesaws, gold edges higher - MarketPulseMarketPulse
Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

Droughts In China - Asia Is Forced To Buy Corn From The US. Prices Are Growing

Saxo Strategy Team Saxo Strategy Team 29.08.2022 09:43
Summary:  The 8-minute speech from Powell focused on one message: no pivot to easing in 2023. The hawkish remarks sent U.S. equities sinking the most since June and down more than 3% across major indices. Policymakers in the ECB also sent out hawkish comments and brought a 75 basis point hike to the table at the September ECB meeting. The U.S. and China regulators announced a deal on audit work papers and removed for the time being the risk of compulsory delisting of Chinese companies from U.S. bourses. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. equities sank last Friday after Powell spent all his Jackson Hole speech on one thing: pushing back on the market’s speculation that the Fed would pivot and start easing next year.  The tech-heavy Nasdaq dropped 4.1%, leading the charge lower, Alphabet (GOOG:xnas) -6.4%, Amazon (AMXN:xnas) -4.8%, Nvidia (NVDA:xnas) -9.2%. Apple (AAPL:xnas) fell 2.8% after the U.S. Department of Justice announced working on a potential antitrust case against the company. S&P 500 had its worst day since June and plunged 3.4%, Dell Technologies (DELL:xnys) -13.5%, HP (HPQ:xnys) -8.9%. The post-Powell speech selloff capped off a two-week losing streak of the markets and turned major indices’ performance in August into the red.  Earlier in the week, the market sentiment was dampened by downbeat comments from the management of retailers on a glut of inventory and plans to cut prices.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) After Fed Chair Powell’s hawkish comments about the need to keep raising rates until inflation is under control regardless of pains incurred to the economy and employment, the U.S. yield curve twisted and flattened, with the 2-year to 5-year yield rising by 3bps to 3.37%, 10-year nearly unchanged at 3.04%, and the 30-year yield falling by 5bps to 3.19%.  The money market continued to unwind the 2023 rate cut bet and the SOFR Dec 22-Dec 23 (SR3Z2 vs SR3Z3) spread narrowed to -24bps.  Weakness on the front ends began even before Powell’s comments as the market took notice of the ECB’s readiness to consider a 75bp rate hike in its meeting in September due to a deterioration in the inflation outlook.    Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng Index, +1% last Friday and +2% for the week staged an impressive bounce from the trough of a 2-month losing streak on Thursday and continued to charge higher on the back of reports that the U.S. and China regulators were reaching a deal to avoid the delisting of Chinese companies from U.S. bourses due to disagreement on access to audit work papers.  Later on Friday after the Hong Kong market close, the U.S. and China regulators separately announced that an agreement had been signed and released some details.  Chinese ADRs opened higher in the U.S. session but finished the day 0.7% lower as being dragged down by the sharp decline in the U.S. equity market.  CSI 300 was little changed last Friday and was down 1% for the week.  With U.S. index futures continuing to decline this morning in Asia, the markets’ focus today is likely to be shadowed by the development in the U.S. markets rather than much follow-through from the confirmation of the U.S.-China deal on audit working papers.  Dollar’s post-Jackson Hole gains extend into Asia The dollar continued its run higher in the early Asian hours on Monday after a hawkish tone from Fed Chair Powell on Friday resulted in some volatility but eventual dollar bid. AUDUSD was the weakest in the Asian morning, sliding below 0.6900 amid volatile commodity prices. USDJPY broke above 138 to 1-month highs and USDCNH surged to 6.9000+ levels. EURUSD ended last week below parity and slid further lower to 0.9936 this morning with a tough week ahead as Nord Stream 1 maintenance will likely cause a step up in energy supply concerns. With corporate month end on Monday, and a UK holiday, the scope for further dollar gains remains. Crude oil prices (CLU2 & LCOV2) Crude oil prices ended last wee in gains on supply concerns taking centre stage again, primarily with Saudi Arabia flagging the risk that OPEC+ may cut production to stabilise volatile markets. Demand picture stabilized, and higher gas prices increased the gas-to-fuel switching demand. But oil prices eased in the Asian morning session with Brent futures back at $100/barrel and WTI futures below $93. A warmer winter in the early weeks is putting a lid on demand, and hawkish central bank messages have also hinted at slowdown concerns. Meanwhile, OPEC+ member states, including Iraq, Venezuela and Kazakhstan, suggested readiness within the 23-strong oil producing alliance to intervene and restore balance in the oil market. This is building up concerns on a potential OPEC cut at its Sept 5 meeting. Corn futures surging at Asia open US corn futures rose to a fresh 2-month high in early Asian hours, following last week’s gains supported by concerns that hot and dry weather in the Midwest during the final crop development period may limit the production outcome. USDA’s crop progress report found a 2% decline in the share of the crop rated good or excellent, with 55 percent of fields falling in those two categories. The rating was a new five-year low for this time of year and the second lowest rating since the drought year of 2012. This comes on top of slow shipments from Ukraine and drought in China. The world's fourth largest iron ore miner, Fortescue releases 2nd highest profit on record Fortuecue Metals (FMG) posted a 40% drop in full-year profits. Despite posting record shipments to China, the steep declines in iron ore prices saw the company record a A$6.2 billion profit, down from the A$10.35 billion last year. The result still marked Fortescue’s second-highest profit on record, with the company to pay a final dividend of A$1.21 per share, taking the total payout to A$2.07 (which is a 75% payout on NPAT). So what’s next for Fortescue, the world’s 4th largest iron ore miner? Fortescue sees iron ore shipments being 187m-192m tones in the year ahead (that's another record). Fortescue also overhauled its management and wants to accelerate its push into clean energy. Its clean energy business, Fortescue Future Industries aims to produce an initial 15 million tons a year of green hydrogen by 2030, to help sectors including heavy industry and long-distance transport, decarbonize. $600-$700 million will be spent on clean energy in the coming financial year. As we covered last week in our BHP interview, iron ore demand is likely to slow over the coming 30 years (that’s where Fortescue’s income comes from). Meanwhile, the world requires double the amount of green metals. So the question remains; can Fortescue diversify its business in time? Fortescue’s shares are up 21% from their July low, with investors hoping China infrastructure stimulus will support iron ore demand and boost the company’s earnings.   What to consider? Powell’s message at Jackson Hole gets serious While Powell still stayed away from clearly defining a rate path or the expected terminal rates for the Fed, his strong message did suggest that the fight against inflation is far from over. Powell reiterated that the decision on September 21st on whether the Fed will lift rates by 50bps or 75bps will be driven by the “totality” of data since the July meeting. That puts a great deal of emphasis on the US jobs report due on September 2nd, and the US CPI report due September 13th. There was also some emphasis on rates being held at the peak rate for some time, but there isn’t a substantial change to the market’s expectation of the Fed path yet, with cuts still seen for next year by the money markets. Other Fed speakers still see higher terminal rates Inflation remains the overarching theme in all the Fed talk, and no comfort is being taken from the softening in July inflation. Mester (2022 voter) accepted Fed hasn’t reached neutral rates yet, and said that rates need to go above 4% and held there for some time. Bostic (2024 voter) also suggested a higher terminal rate of 3.5-4.75% compared to what was reflected in the June dot plot, and said rates need to be held there for some time and rate cut talks are premature. The deal between U.S. and China on ADRs Market chatters about a deal between the U.S. and China regulators regarding the allowance to the U.S. regulators access to audit work papers of the auditors of Chinese companies listed on U.S. bourses first emerged last Thursday and the deal was announced by the U.S. and China regulators on Friday.  According to the Public Company Accounting Oversight Board (PCAOB), the agreement gives the U.S. regulator, “complete access to the audit work papers, audit personnel, and other information [the PCAOB] need[s] to inspect and investigate any firm ‘the [PCAOB] choose[s], with no loopholes and no exceptions. But the real test will be whether the words agreed to on paper translate into complete access in practice”. On the other hand, in its announcement and Q&As with reporters, China Securities Regulatory Commission emphasized “the principle of reciprocity” and that “the two sides will communicate and coordinate in advance to plan for inspections and investigations”. The materials such as audit work papers that the U.S. regulator need[s] access to will be obtained by and transferred through the Chines side.  The Chinese side will also take part in and assist in the interviews and testimonies of relevant personnel of audit firms requested by the U.S. side.” Meituan delivered solid Q2 results Meituan (03690:xhkg) reported a 16% YoY growth in revenues to RMB 51 billion, above market expectations across segments better performance.  Adjusted net profits turned positive to RMB 2.1 billion versus a loss of CNY 2.2 billion in Q1 and analyst consensus of an over RMB 2 billion loss.  The company’s food delivery business a strong recovery and the management said that the recovery continued into July and August, with order volumes rising in low-teens YoY in July and at about 20% YoY in August month to date. Soft US PCE confirms the CPI message Lower pump prices cooled price pressures in July, and this has been re-confirmed by the PCE print on Friday. Headline came in at 6.3% YoY (vs. 6.8% expected) while core was at 4.6% YoY (vs. 4.7% expected). The market reaction to these softer numbers was however restrained as the hawkish message from Powell at Jackson Hole took the limelight. The magnitude of the September rate hike still remains a coinflip, but the Fed members have refused to take comfort with the softer CPI print and continue to push for an aggressive fight against inflation. ECB speakers remain committed to inflation despite recession risks A host of ECB speakers on the weekend continued to push for aggressive rate hikes to fight inflation. Schnabel, speaking at Jackson Hole, said rates must be raised, even into a recession. Kazaks also emphasised on further front-loading of rate hikes after the 50bps rate hike announced by the central bank in July. In fact, there were hints of a 75bps rate hike. There were also some concerns on a weaker EUR, as that fuels further inflationary pressures and the benefit of cheaper exports is diminished by supply chain disruption. Villeroy said that the neutral rate should be reached before the end of the year while Kazaks said he would get there in the first quarter of next year. Australian retail trade surged to another record; with dining out and a winter clothing sprees fueling the charge  Australian retail sales data showed how resilient the Aussie consumer is, with retail spending rising for the 7th straight month, up 1.3% vs the +0.3% consensus expected. As electricity bills in Australia are at a record high, and likely to rise, people are layering up this Aussie winter, so retail spending surged to another new record high, A$34.7 billion in July. The Australian winter spending spree saw Department Stores sales surge 3.8% and clothing (footwear and personal accessory retailing) rocket up 3.3%. Australians are living through one of their coldest winters in history; as such spending rose the most in the coldest climates; Victoria and the ACT. Yet spending at cafes and restaurants remained strong, surging to yet another brand new record high (A$5 billion in July), up from 1.8% from the prior month. All this, is despite a softening Australian housing market and the quickest succession of rate hikes in history.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 29, 2022
Saxo Bank Members Talks About Commodities, Intervention From Japan And More

Commodities Condition After Fed Chair Powell's Speech

Ole Hansen Ole Hansen 29.08.2022 13:39
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to August 23. A week that saw financial markets trade increasingly nervous with stocks selling off while the dollar and yields rose ahead of Friday’s speech by Federal Reserve Chair Jerome Powell. Developments that triggered fund selling in precious metals while energy and grains was in demand due to a tightening supply outlook Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.   Link to latest report   This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 23. A week that saw financial markets trade increasingly nervous ahead of Friday’s Jackson Hole speech from Federal Reserve Chair Jerome Powell. Stocks sold off while the dollar and bonds yields rose in anticipation of a hawkish message. In the end that was exactly what Powell delivered on Friday when he cautioned about loosening monetary conditions prematurely while flagging the likely need for restrictive monetary policy for longer than the market had priced in to curb high inflation. Commodities The Bloomberg Commodity index rose 1.6% during the reporting week with concerns about the impact on demand from central banks hiking rates to curb economic growth being more than offset by concerns about a tightening supply outlook, especially across energy and key food commodities. Precious metals being the only sector struggling amid the mentioned dollar and yield strength. Overall hedge funds increased their exposure for a fourth consecutive week, this time by 13% to 1.1 million contracts, some 264k above the end of July low point.  Energy: Funds increased bets on rising crude oil prices for the first time in five weeks with the combined long in WTI and Brent being lifted by 22% to 338k lots. This in response to a near +8% rally during the week as the focus returned to a continued tight supply outlook with the gas-to-fuel switching providing an additional layer of support. While the combined gross long was increased by 20k lots, it was a 40k lots capitulation among short sellers that provided the main input to the change.Surging gas prices driving increased demand for diesel helped lift gas oil by 10% and the net long by 24% to 76.5k lots, still only half the 152k lots peak seen from last October. Natural gas traders cut their net short by 66% with the bulk of the change being driven by fresh longs being added. Metals: Precious metals saw renewed selling ahead of Jackson Hole with the stronger dollar and rising yields triggering a fresh round of short selling by funds. The result being a 34% reduction in the gold long to 30k while silver and platinum saw big increases in already established net short positions. Copper found support after China’s government announced fresh initiatives to support an economy struggling with Covid lockdowns and a property sector crisis. The result being a 71% reduction in the net short to -4.8k lots, an 11-week low. Agriculture: The grains sector, led by corn and soybeans, continued to recover from the June to July 25% correction. Buyers bought the sector for a fourth consecutive week with an improved fundamental outlook due to adverse weather in the US and China triggering fresh buying interest. The bulk of the 111k lots increase during this time has been driven by corn with the soybean complex also picking up steam while the two wheat contracts have seen net selling during this time.     Forex The forex market responded to a 1.6% increase in the Dollar index ahead of Jackson Hole by turning broad buyers albeit in small size of dollars against nine IMM currency futures. The two exceptions being GBP and CHF where short covering reduced the net short in both. The euro net short reached 44k lots or €5.5 billion, the highest since March 2020 when the market was in covid panic mode. Overall the gross dollar long reached a three week high at $18 billion, down 24% from last months peak and high for the year at $23.8 billion.   What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Source: COT: Crude oil and grains bought despite Jackson Hole jitters
Swiss Pension Fund Publica Will Increase Its Share Of Gold To 1%

Commodities: Gold Amid Stopped Rise Of US Dollar (USD)

Ed Moya Ed Moya 29.08.2022 21:55
Gold edges higher as dollar rally halts Non-interest-bearing gold got crushed early as more global central bank rate hikes are getting priced in. ​ Gold is edging higher as the dollar rally halted as the euro rises on expectations the ECB will deliver more rate hikes than investors initially thought. ​ If the dollar does not rally here, that could provide some relief for gold. ​ If equities remain in risk aversion mode as the speculative money that bought risky assets this month grows nervous that economic growth is about to collapse, gold might be able to stabilize here. ​ Gold was vulnerable to a plunge towards $1700 but it is starting to show some resilience. â€‹ With the UK on holiday, today’s moves might be meaningless. â€‹ The true test for gold will come tomorrow. â€‹ Oil The one trade that everyone can agree upon is that the oil market will likely remain tight. â€‹ Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production. â€‹ What is also helping oil today is that despite risk aversion running wild, the dollar rally is on hold. â€‹ Oil has been trending lower but the supply side risks are too great and prices need to find a home above the $100 a barrel level. â€‹ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Gold benefits on dollar rally break, oil rises - MarketPulseMarketPulse
The Japanese Yen Retreats as USD/JPY Gains Momentum

After The Speech Global Equity Markets Are Not Risking Anymore! Nasdaq 100 Below Its 50-day Average!

Saxo Strategy Team Saxo Strategy Team 30.08.2022 09:06
Summary:  The rise in U.S. treasury yields pressured growth stocks with the Nasdaq 100 falling below its 50-day average, which puts it back in a precarious position. Fed Kashkari said he was glad to see the markets fell after Chair Powell’s Jackson Hole speech to tighten financial conditions. Global equity markets have certainly got the message and are in a risk-off mood. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  US Stocks fell for the second day, but modestly compared to Friday’s sell-off that was triggered by Fed Chair Powell vowing rates will stay higher for longer to cool runaway inflation while suggesting there will be no pivot to cutting rates in 2023, S&P 500 -0.7%, Nasdaq 100 -1%.  Minneapolis Fed president Kashkari said that “he certainly was not exited to see the stock market rallying” after the last FOMC meeting and “people now understand the seriousness of our commitment to getting inflation back down to 2%.” Tech stocks dragged the markets lower, Nvidia -2.8%, Tesla -1.1%.  Twitter (TWTR:xnys) dropped 1.1% after Elon Musk ad subpoenaed a Twitter whistleblower to share information.  Meanwhile, gains in value stocks somewhat held up the market last night, with the oil, gas, and agricultural sectors rising 1-2%. It comes as Oil prices rose 4% on Monday as potential OPEC+ output cuts and conflict in Libya helped to offset a strong U.S. dollar. While the Ag sectors were supported higher after the wheat price jumped 4.9% and corn rose 2.2% (at its highest level in 2 months) after heat damage worsened US crops more than expected. As such it appears markets are back to their risk off modus operandi, selling down growth names (which are based on future earnings which gets diminished amid higher rates), and instead, buying value (commodities), with rising cashflows. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) US treasury yield rose across the curve.  The 2-year yield rose to as high as 3.48% during the day, the highest level since November 2007, before paring the rise to settle 3bps higher at 3.42%.  The 10-year yield rose 7bps to 3.11%,  taking the 2-10 year curve steepened by 3bps to -32bps.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities traded relatively calm in the midst of a large post-Jackson Hole selloff in the U.S., Hang Seng Index -0.7%, CSI 300 -0.4%.  The deal made between the U.S. and China regulators last Friday regarding access to audit work papers did not trigger much new buying in China internet stocks on Monday as it had already been well wired before the official announcement.  Further, there is much remained to be seen if the agreement will be implemented to the satisfaction of both sides as the U.S. and China regulators seem to differ in their interpretation.  Meituan (03690:xhkg) gained 2.6% after reporting solid Q2 results, which Hang Seng Tech Index dropped 1.2%. China’s industrial profits slumped to contracting 14.5% YoY from (v.s. +1.1% in June) and a fall of 11.3% sequentially from June.  The weakness was mainly driven by upstream sectors.  Coal mining stocks initially slumped but rallied later in the days and finished higher in Hong Kong and mainland bourses.   Geely (00175:xhkg) rose 1.7% as the automaker’s Zeekr line of EVs will be the first to use a new battery from CATL that provides over 1,000km range per charge.  SMIC (00981:xhkg), -2.1%, announced spending USD7.5 billion to build a plant in Tianjin to make 12-inch wafers. Chinese banks traded weak as Reuters reported that China’s central bank and bank regulators had been making calls to banks to push them to make more lending to support the real economy than put their funds in financial investments.  USDJPY weakness to bring back pressure on Bank of Japan USDJPY is back to testing its record July highs despite little change in money market pricing of the Fed rate path following Powell’s hawkish speech at Jackson Hole. The peak Fed funds rate is still priced in at 3.8%, while some of the Fed speakers have started to suggest 4%+ levels that may be needed to combat inflation. This brings the September dot plot in focus, but we get the jobs and CPI data before that as well. Any further upward re-pricing of the Fed path, if resulting in gains in US 10-year yields, could very well take USDJPY to new highs with Japanese yields still remaining capped due to the Bank of Japan’s yield curve control policy. If however, US data underwhelms, the room on the downside for USDJPY is tremendous. USDCNH made a new high at 6.9327 Wider interest rate differentials between the U.S. dollar and the renminbi and a weaker economic outlook in China continued to pressure the renminbi weaker. USDCNH surged to as high as 6.9327 on Monday during Asian hours before paring it as the greenback fell against most of the G10 and emerging market currencies in London hours.  In Asia this morning, USDCNH is trading at 6.9066. Crude oil prices (CLU2 & LCOV2) Crude oil prices saw their best day in a month amid threats of a decline in supply from OPEC cuts and production outages in Libya. Brent futures rose above $105/barrel although some softening was seen in the Asian morning, while WTI rose to $97/barrel. This follows news from last week that Kazakhstan’s exports of crude may be impacted for months because of damage to its port facility. Meanwhile, negotiations between Iran and the US over the revival of the 2015 nuclear deal could drag on for weeks, easing fears of an imminent surge in supply. What to consider? The volatility index rises to its highest level in 9 weeks, suggesting more volatility is coming. And the fundamentals back this up with US yields spiking After the Fed’s 8-minute Jackson Hole speech, the volatility index surged to its highest level in 9-weeks, forming an uptrend pattern, suggesting more market volatility is ahead. We believe the market is only just beginning to price in higher for longer interest rates and inflation. The bond market is affirming this with yields spiking again. But what is also alarming, is that the futures market is still pricing in that the Fed will cut rates in 2023. This is despite the Fed suggesting it won’t pivot to cutting rates. The other issue is keeping markets on notice is that; if the Fed makes more hawkish remarks and hikes rates more than expected, then the market will face further volatility, and selling in growth sectors and names that are interest rate sensitive, are likely to come under pressure. Shell CEO cautions against a prolonged European gas crisis Shell CEO Ben van Beurden gave comments from Norway’s ONS conference, suggesting that Europe could face gas shortages for a number of winters. This disproves reports suggesting that Europe has already built reserves for the winter demand, and reaffirms our belief that a move to broad-based energy supply will continue to be top of mind in the long run. In the near term, demand destruction appears to be the only possible solution, and Van Beurden stressed need for efficiency savings as well as rationing. Eurozone inflation and Nord Stream maintenance will be key for the ECB There is no question on the direction in Eurozone inflation, given the extensive reports on gas prices and power costs in the region over the last few days. However, some softening may be warranted after an all-time high of 8.9% was reached on the Eurozone inflation print in July, given the easing in pump prices in August. Still, gas supply concerns continue to remain top-of-mind for Germany with Gazprom announcing another leg of maintenance for the Nord Stream pipeline this week. Food prices are also seeing another pickup, and further gains in the headline print in Q4 cannot be ruled out. Calls for a 75 basis points rate hike by the European Central Bank have already picked up, and these could gain further traction if we see a strong CPI print this week. However, if Nord Stream supply comes back on time after its 3-day scheduled maintenance, and with some potential increases in capacity as has been hinted, that could mean a substantial decline in European gas prices and relief in utility costs in the months to come. ECB Lane tones dials back on jumbo rate hike expectations ECB chief economist Lane was on the wires on Monday, and hinted at a more steady pace of rate hikes in a “step-by-step” manner rather than jumbo rate hikes. This appears to be a pushback against calls for a 75bps rate hike at the September meeting, as he made the case to allow the financial system to absorb the rate changes. Moreover, on inflation, Lane said long-term inflation expectations remain close to the two per cent target, while near-term inflation expectations are quite elevated. BYD reported 1H earnings at the high end of the preannounced range Chinse auto maker BYD (01211) reported 1H revenues growing 66% YoY to RMB 151 billion.  In terms of segments, auto revenues surged 130% YoY while mobile handset revenues contracted 4.8% YoY. Net profits jumped 206% to rMB3.595 billion, at the top end of the preannounced range of CNY2.8-3.6 billion. Volume growth (353K new energy passenger vehicles in 2Q, +265% YoY) beat market expectations despite two rounds of price increases in 2022 and supply chain disruptions.  The company’s EV market share rose to 29% (vs 17% in 2021).  Pinduoduo delivered Q2 results showing stronger than peer sales growth Pinduoduo (PDD:xnas), a leading eCommerce platform with strong penetration into agricultural products and online shoppers from rural areas., reported 1H total revenue growing at 36% YoY, far exceeding the 3% YoY consensus estimate.  The company attributed the revenue growth to a recovery in consumption since mid-May, successful promotion campaigns, and 48-hour daily necessity supply packs for people facing lockdown.  The company’s strong market position in rural areas and agriculture-related products also help it stand out from its rivals.  In Q2, the company achieved a 20 percentage point improvement in margins, reaching 33.5%, but the management cautioned investors that the margin compression was attributed to temporary cost savings early in the quarter and spending had increased since mid-May.  Non-GAAP EPS came in at Rmb7.54, +161% Uranium companies and other nuclear-related companies are back in the spotlight  Elon Musk said countries should not shut down existing nuclear power plants as Europe grapples with an energy crisis “If you have a well-designed nuclear plant, you should not shut it down - especially right now”, said Musk during an energy conference in Norway. That resulted in the Global X Uranium ETF climbing 7.4% on Monday to its highest level since June 8, supported by US uranium stocks rising. Uranium stocks in the Asia-Pacific region to watch include Australia’s Paladin, Deep Yellow and Boss Energy, as well Japan’s Kansai Electric Power and Tokyo Electric Power, as well as Mitsubishi Heavy Industries. In South Korea watch Doosan Enerbility, Kepco. And in Europe, monitor Yellow Cake and Kazatomprom.      For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 30, 2022
Natural Gas Prices Extended The Recovery

Natural Gas Prices Still Fell Besides Russia Shuts The Key Nord Stream Pipeline Down. Dependence Coming To An End?

Saxo Strategy Team Saxo Strategy Team 30.08.2022 09:18
Summary:  Markets traded mostly sideways yesterday as the US dollar’s advance was stymied and US yields pushed back slightly lower. China continues to allow its currency to trade toward the lows for the cycle versus the US dollar as the 7.00 area nears in USDCNH. The euro bobbed back up toward parity versus the US dollar yesterday as natural gas prices fell even as Russia shuts the key Nord Stream pipeline down for a purported few days of maintenance.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities stabilised yesterday following that knee-jerk reaction on Friday to the Jackson Hole presentations with S&P 500 futures touching and bouncing off the 50-day moving average closing above the critical 4,000 level. S&P 500 futures are trading around the 4,044 level this morning sandwiched between the 100-day moving average above this level and the 50-day moving average below suggesting a bigger move is shaping up in either direction. The next big shift in sentiment will be when we get the US August CPI print on 13 September as that is the key data point to shape expectations from current levels. Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities pulled back moderately, Hang Seng Index -0.9%. Tech names were weak. Hang Seng Tech Index plunged as much as 3% before bouncing off the lows to finish the morning session down 1.7%.  According to the Ministry of Industry and Information Technology, smartphone sales in China fell 2.9% YoY in the period between Jan and July. Despite reporting solid 1H results, China automaker, BYD (01211:xhg) slid 0.6%. In A-shares, mining stocks, gas, electric equipment, and auto parts underperformed, CSI 300 -0.5%. Pinduoduo (PDD:xnas), a leading Chinese eCommerce platform listed on Nasdaq reported strong 2Q results, showing stronger than peer gross merchandise value growth and better-than-expected margin improvement. US dollar and especially USDCNH The US dollar tried higher, but failed to follow through as risk sentiment stabilized and US Treasury yields eased back lower. The USDCNH rate, however, continues to push toward the high of the cycle, trading near 6.92 this morning. EURUSD trades near parity this morning after natural gas prices fell sharply in Europe yesterday and despite ECB Chief Economist Lane arguing for steady rate increases (pushing back against the pricing of a possible 75 basis point move at next week’s ECB meeting). Incoming data this week will be critical for USD direction. JPY weakness to bring back pressure on Bank of Japan USDJPY is back to testing its record July highs despite little change in money market pricing of the Fed rate path following Powell’s hawkish speech at Jackson Hole. The peak Fed funds rate is still priced in at 3.8%, while some of the Fed speakers have started to suggest 4%+ levels that may be needed to combat inflation. This brings the September dot plot in focus, but we get the jobs and CPI data before that as well. Any further upward re-pricing of the Fed path, if resulting in gains in US 10-year yields, could very well take USDJPY to new highs with Japanese yields still remaining capped due to the Bank of Japan’s yield curve control policy. If, however, US data underwhelms, the room on the downside for USDJPY is tremendous. Crude oil prices (CLU2 & LCOV2) Crude oil prices saw their best day in six weeks amid threats of a decline in supply from OPEC and production outages in Libya. Brent futures rose above $105/barrel although some softening was seen in Asia overnight, while WTI rose to $97/barrel. This follows news from last week that Kazakhstan’s exports of crude may be impacted for months because of damage to its port facility. Meanwhile, negotiations between Iran and the US over the revival of the 2015 nuclear deal could drag on for weeks, easing fears of an imminent surge in supply. Pro Farmer tour see lowest US corn production since 2019 The just completed Pro Farmer tour across the US grain belt helped drive corn futures in Chicago to a two-month high on Monday after the tour saw the US corn crop at 13.76 bn bushels, below USDA forecasts for 14.36 billion bushels. Pro Farmer predicted a soybean crop of 4.54 billion, in line with the USDA’s latest forecast. Wheat, supported by corn’s rally, touched its highest since July 12 despite news that Ukraine agricultural exports could rise to 6.5 million ton in October, double the volume in August.  The soybean vs corn ratio needs to stay low (favouring corn) ahead of the South American planting season in order to persuade farmers there to plant more of the fertilizer intensive crop. US Treasuries (TLT, IEF) US treasury yields eased lower yesterday. An interesting paper presented at the Jackson Hole conference at the weekend suggests that the Fed will have a hard time delivering on quantitative tightening without causing harm to financial market functioning, which could mean less supply of treasuries from the Fed if its shies away from reducing its balance sheet at the previously touted pace of $95 billion/month. Otherwise, incoming US data is the focus through the August CPI release on September 13. What is going on? Shell CEO warns of prolonged European gas crisis Shell CEO Ben van Beurden gave comments from Norway’s ONS conference, suggesting that Europe could face gas shortages for a number of winters. This disproves reports suggesting that Europe has already built reserves for the winter demand and reaffirms our belief that a move to broad-based energy supply will continue to be top of mind in the long run. In the near term, demand destruction appears to be the only possible solution, and Van Beurden stressed the need for efficiency savings as well as rationing. ECB Lane dials back on jumbo rate hike expectations ECB chief economist Lane was on the wires on Monday and hinted at a steady pace of rate hikes in a “step-by-step” manner rather than jumbo rate hikes. This appears to be a pushback against calls for a 75bps rate hike at the September meeting, as he made the case to allow the financial system to absorb the rate changes. Moreover, on inflation, Lane said long-term inflation expectations remain close to the two per cent target, while near-term inflation expectations are quite elevated. BYD reported 1H earnings at the high end of the preannounced range Chinese automaker BYD (01211) reported 1H revenue up 66% y/y to RMB 151bn. In terms of segments, auto revenue surged 130% y/y while mobile handset revenues contracted 4.8% y/y. Net profits jumped 206% to RMB 3.6bn, at the top end of the preannounced range of RMB 2.8-3.6bn. Volume growth (353K new energy passenger vehicles in 2Q, +265% y/y) beating market expectations despite two rounds of price increases in 2022 and supply chain disruptions. The company’s EV market share rose to 29% (vs 17% in 2021). Pinduoduo delivered Q2 results showing stronger than peer sales growth Pinduoduo (PDD:xnas), a leading eCommerce platform with strong penetration into agricultural products and online shoppers from rural areas, reported 1H total revenue up 36% y/y, far exceeding the 3% y/y consensus estimate. The company attributed the revenue growth to a recovery in consumption since mid-May, successful promotion campaigns, and 48-hour daily necessity supply packs for people facing lockdown. The company’s strong market position in rural areas and agriculture-related products also help it stand out from its rivals. In Q2, the company achieved a 20 %-point improvement in margin, reaching 33.5%, but the management cautioned investors that the margin compression was attributed to temporary cost savings early in the quarter and spending had increased since mid-May. Non-GAAP EPS came in at RMB 7.54, +161% y/y. Shares in Uranium companies and other nuclear-related companies are back in the spotlight Japan has signaled its openness to more nuclear power, at the same time, Tesla founder Elon Musk has applauded uranium as an energy alternative, during an energy conference in Norway. Uranium stocks moved higher as a result on Monday in the US, which boosted the Global X Uranium ETF up 7%, to its highest level since June 8. Shares in the Asia-Pacific region followed. Australian stocks saw the most significant moves given the country has the largest uranium reserves globally. Australia’s Paladin rose 11%, Deep Yellow 15% and Boss Energy 10%, while Rio Tinto (which owns a deposit) rose over 1%. Japan’s Mitsubishi Heavy Industries and Tokyo Electric Power gained 3%. Companies to watch in Europe, include Yellow Cake and Kazatomprom. What are we watching next? August U.S. job report is out on Friday There should not be a major surprise. The economist consensus expects a 300,000 payrolls increase in August and a stable unemployment rate at 3.5 % - this is a five-decade low. If this is confirmed, it all points to a healthy labor market (despite the moderate pace of job increases). Today, the U.S. government will also release July data on vacancies and quits. Expect job openings to remain elevated, thus pointing to resilient demand for labor. These figures are unlikely to play a major role at the September FOMC meeting since it is well-known that labor market data are lagged indicators. Inflation remains the main point of concern, as mentioned by Fed Chair Jerome Powell last week at Jackson Hole Symposium. August EZ CPI will be painfully high The consensus expects a new increase of 9 % year-over-year when the data will be released on Wednesday. This should convince European Central Bank (ECB) policy makers to raise borrowing costs by a sizable increase on September 8. At Jackson Hole, ECB’s executive board member Isabel Schnabel indicated the central bank has no other choice but to act with ‘determination’. This is a matter of credibility. According to Bloomberg, traders now price a 50 % chance of a 75-basis points rate hike in September. Earnings to watch Today’s earnings focus is China are lithium miners Tianqi Lithium and Ganfeng Lithium as the growth in electric vehicles sales is putting enourmous pressure on availability of lithium and prices of lithium carbonate. Baidu is another Chinese earnings release to watch today as the company’s footprint in online advertising will give insights into economic activity. Later in the US, earnings to watch are Crowdstrike in the cyber security industry and HP in computing hardware. Today: Woodside Energy, ICBC, China Yangtze Power, Muyuan Foods, SF Holdings, Shaanxi Coal, Midea Group, Tianqi Lithium, Ganfeng Lithium, Bank of Montreal, China Construction Bank, Bank of China, Great Wall Motor, COSCO Shipping, Partners Group, Baidu, Crowdstrike, HP Wednesday: MongoDB, Brown-Forman, Veeva Systems Thursday: Pernod Ricard, Broadcom, Lululemon Athletica, Hormel Foods Friday: BNP Paribas Fortis Economic calendar highlights for today (times GMT) 0700 – Spain Flash Aug. CPI 0830 – UK Jul. Net Consumer Credit 0830 – UK Jul. Mortgage Approvals 0900 – Euro Zone Aug. Confidence Surveys 1115 – ECB's Vasle to speak 1200 – Hungary Rate Decision 1200 – US Fed’s Barkin (Non-voter) to speak 1200 – Germany Aug. Flash CPI 1300 – US Jun. S&P CoreLogic Home Price Index 1400 – US Aug. Consumer Confidence 1400 – US Jul. JOLTS Job Openings 1500 – US Fed’s Williams (voter) to speak 1600 – ECB Speakers Holzmann and others 2030 – API's Weekly Crude and Fuel Stock Report 0130 – China Aug. Manufacturing/Non-manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 30, 2022
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

Brent Crude Oil, WTI, Dutch TTF Gas And Henry Hub Situation. Shortly Gains And Long-Time Situation

Kim Cramer Larsson Kim Cramer Larsson 30.08.2022 14:04
Brent Crude oil has broken above its short-term falling trendline and seems to start reversing the down trend trading around the 0.382 retracement level at USD104.38. Next key resistance is 110.67-112.32, the latter is the 0.618 retracement of the June-August Bearish move. A close above those levels 120-125 is in the cards.If Brent oil drops back below the falling trend line the uptrend is likely to be reversed. If closing below 98.14 it is reversed and 90 is likely to be tested. RSI is still below 60 and needs to close above to underline the uptrend. Source: Saxo Group On the weekly chart we can see that Brent Oil retraced 0.382 of the bullish trend since 2020. RSI is testing its falling trend line and a close above is an indication of Brent resuming its medium- to long-term uptrend Source: Saxo Group WTI Lights Sweet Crude oil that broke out of its falling trendline last week is now in a confirmed uptrend (higher highs and higher lows). However, RSI has not yet confirmed the trend by closing above 60. Resistance at around USD100.23. If buyers can lift WTI above that level the big test is can it move above 55 and 100 SMA’s. If that scenario plays out a move to 0.618 retracement at around 109.18 is likely.If WTI closes below 91.13 the downtrend is likely to resume Source: Saxo Group WTI only retraced around 0.236 of the 2020 extreme low (where WTI oil went to minus 40.32) till (so far) 2022 peak. RSI is still above i.e. in positive sentiment and could test its falling trend line with in a week or so.If WTI loses steam and closes below 85.41 a bearish move to 75.27 and even 65.25 could be seen. Source: Saxo Group Dutch TTF gas has peaked out a few Euros below previous peak at EUR345 – at least short-term - and has since retraced. A correction down to around 240 which is the 0.382 retracement level and a test of the short-term rising trendline is likely. However, a correction down to test the medium-term (black) rising trendline is not unlikely before uptrend quite possibly resumes.RSI is at the time of writing below its rising lower trend line but there is no divergence indicating we could see higher price levels in coming weeks. Source: Saxo Group Henry Hub Gas is having trouble closing above USD10 and could be set for a correction. If breaking the steep rising trendline and drops below 8.87 a correction down to 8.23 is likely but could spike down to around 7.68-7.55 key support.RSI is at the time of writing breaking below its rising trendline and if closing below it support the correction picture. However, there is no divergence on RSI indicating higher levels after a possible correction. Source: Saxo Group   Source: Technical Update - Oil breaking falling trendline, building uptrend. Gas rejected at previous peaks but higher prices are in the cards
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Gold Is Failing To Bounce Back, Crude Oil Prices Are Lower And Lower

Craig Erlam Craig Erlam 30.08.2022 16:14
Saudi Arabia reinforces support Oil prices are easing a little with Brent potentially settling around $100 and WTI a little below around $95. While there remain many moving parts in the oil market at the moment, the comments last week from Saudi Arabia have reinforced support below the current price. It seems OPEC+ isn’t interested in the oil price slipping much below $100 a barrel and while those warnings would be put to the test in the event of a nuclear deal, which still looks very challenging, or a global recession, the words alone could keep prices high for now. Gold failing to bounce back Gold continues to struggle in the aftermath of Powell’s comments on Friday, even though the dollar is falling on Tuesday and US yields are a little lower. The yellow metal continues to test $1,730 today, a sign that not all are on board with the recovery trade we’re seeing elsewhere. A significant break of $1,730 would be a real blow for gold, with the next area of notable support falling around $1,680-$1,700. A move back above $1,765 could get gold bulls excited once more but that may be easier said than done if trading over the last few sessions is anything to go by. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.   Source: Oil prices dip, gold under pressure
Navigating the New Normal: Central Banks Grapple with Policy Dilemmas

Risk Appetite Across Markets Taking A Hit After Fed Chair Powell's Hawkish Speech

Ole Hansen Ole Hansen 31.08.2022 14:10
Summary:  Crude oil’s bounce from a six-month low has faded fast with risk appetite across markets taking a hit after Fed chair Powell's hawkish speech once again raised concerns that the central banks aggressive stance towards combatting runaway inflation will drive down growth and demand for crude oil and fuel products. In addition, the energy market has to deal with long liquidation into a low liquidity market, reduce gas-to-fuel focus as EU gas prices drop as well as Iraq, Libya and Iran developments. Crude oil’s bounce from a six-month low has faded fast following Friday’s hawkish message from Jerome Powell, the Federal Reserve Chairman, which once again raised concerns that the central banks aggressive stance towards combatting runaway inflation would mean lower growth and with that lower demand for crude oil and fuel products. The battle between these macro concerns continues to battle with micro developments, the majority of which still point to tightness during the coming months. In Europe, the gas and power crisis continue with punitively high prices attracting substitution demand into fuel products like diesel and heating oil. In the short-term the price of gas into the autumn month will continue to be dictated by Russian flows, and not least whether Gazprom (and Putin) as announced will resume flows on the Nord Stream 1 pipeline following the three-day maintenance shutdown that ends at 0100 GMT on September 3. Other developments currently impacting the market: China’s continued battle with Covid infections which is currently found in 31 provinces, and which has led to fresh curbs being implemented, among others in two of southern China’s most economically vibrant areas. Deadly turmoil in Baghdad after Moqtada Al-Sadr, a prominent cleric, decided to resign from politics, thereby deepening a political crisis that has left the country without a government since last October’s election. For now, the clashes have not spread to oil-rich area and exports from one of OPEC’s biggest producers remain uninterrupted. Clashes in Libya’s capital Tripoli over the weekend which left at least 32 people dead have raised risks of a civil war in Libya, a very volatile producer which has seen its output swing between 0.7 and 1.2 million barrels per day during the past year. On the supply side, the market will be watching the impact of the EU embargo on Russian oil which will begin impacting supply from December and the 180-million-barrel release, at a rate of one million barrel per day, from US Strategic Reserves that look set to run until October 21. In the following months the US government plans to buy back 60 million barrels, a decision that is likely to be delayed given the prolonged war in Ukraine. Finally, an Iran nuclear deal has yet to be reached, but if successful it could lead to millions of barrels of on and offshore stored oil being released into the market. WTI Crude Oil: Following Monday’s short squeeze the subsequent sell-off has forced recently established longs to reduce their exposure. Developments that from a technical perspective have opened the risk of a return towards key support around the mid-August low at $85.5/b. Source: Saxo Group Lack of liquidity and speculative positions being wrongfooted have both added to the latest gyration which saw the biggest jump in six weeks on Monday being  followed by a near 9% two-day drop. In the week to August 23, hedge funds added 80k lots of crude oil and fuel exposure, the biggest weekly increase since January, and the latest tumble may have forced many too hastily exit those recently established and now loss-making positions.            With the summer holiday driving season winding up we are seeing gasoline refinery margins trading sharply lower while demand for diesel as a substitute for expensive gas has supported diesel margins, both in the US and especially in Europe. However, since Friday’s peak in EU gas prices we have seen softer but still elevated margins there as well.              The weekly oil and fuel stock report from the US Energy Information Administration will be watched closely given its frequency and with that the ability to provide an up-to-date snapshot of the current supply and demand situation across crude oil and fuel. Last night the API reported a 600k barrels increase in oil stocks and a combined 5.1 million barrels drop in gasoline and distillates stocks. The report will also provide the EIA’s assessment of production, which has been adjusted lower for the past two weeks to 12 million barrels a day, and somewhat short of the EIA’s latest end of year forecast of 12.45 million. Crude and distillates exports will also be watched after the combined figure hit a record last week. As per usual I will post the charts and tables on Twitter once the report has been released at 14:30 GMT.               Source: Oil drops as hawkish Fed drives fresh demand concerns
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Gas Crisis Is Not Enough For Europe, Is The Power Crisis Coming?

ING Economics ING Economics 03.09.2022 08:11
  While weaker oil prices in recent months have provided some relief to consumers, the same cannot be said for European natural gas. Gas prices have seen significant strength as fears over how Russian gas flows evolve only grow as we move closer towards heating season In this article Oil market more comfortable for now No respite for the natural gas market A perfect storm for power markets Oil market more comfortable for now Oil demand has disappointed so far this year. Higher prices helped lead to some demand destruction, evident when looking at US implied gasoline demand over the summer. However, the big drag on demand this year is China and its insistence on following its zero-Covid policy. There had been expectations that oil demand would bounce back following the easing of lockdowns in Shanghai and Beijing in towards the second half of the year. However, clearly, we continue to see restrictions across parts of China weighing on demand. Global oil demand is expected to grow by around 2MMbbls/day this year, which is quite a bit lower than the more than 3MMbbls/d growth expected at the start of 2022. Russian oil supply has held up better than expected and Russian oil exports are down only marginally from pre-war levels. This is despite a number of countries imposing sanctions on the country. Several buyers have taken advantage of the large discounts available for Russian oil. This is particularly the case for China and India, which have both increased their Russian purchases significantly. In addition, the EU ban on seaborne Russian oil and refined products only comes into full effect early next year, so we have not seen a significant drop in flows just yet, but this will obviously happen once the ban is in place. As a result of slower than expected demand growth and sticky Russian oil output, we expect that the oil market will be in surplus for the rest of this year and into early 2023.  Therefore, we have revised lower our oil forecast. We expect that ICE Brent will average US$97/bbl in 4Q22 vs. a previous forecast of US$125/bbl. And for 2023, we lowered our Brent forecast from US$99/bbl to US$97/bbl. Upside risks to this view are if Russian oil flows to the likes of China and India slow from current levels, US supply growth falls short of expectations and demand surprises to the upside - not impossible given that high natural gas prices could lead to some gas-to-oil switching. The key downside risk for the market is a positive outcome in Iranian nuclear negotiations. Discussions appear to be progressing well and a deal could see in the region of 1.3MMbbls/d of supply added to the market over the course of next year. Although, recent comments from the Saudi Energy minister about the possible need to reduce output, suggest that the floor for the market is not too much further below the recent lows. Russian oil exports holding up better than expected Russian oil exports (MMbbls/d) Source: IEA, ING Research No respite for the natural gas market The European natural gas market has seen significant strength over August, up more than 70% at one stage over the course of the month and hitting record levels (on a settlement basis). Concerns over Russian gas flows have only intensified after Gazprom made a surprise announcement that flows along Nord Stream will be stopped for three days for maintenance. The pipeline is only operating at about 20% of capacity right now and there are fears over whether flows will actually restart. Strong LNG inflows into Europe continue to ensure that storage fills up, despite lower Russian flows. European gas prices trade at a significant premium to Asian LNG, whilst the same trend is seen along the forward curve, which suggests strong LNG imports should continue through the winter. European storage is still filling up at a good pace and the EU has already hit its 80% storage capacity target ahead of the actual date of 1 November. However, if Russia were to end its gas flows to the EU completely, this would still leave the market extremely tight as we approach winter. We can expect some countries to continue increasing storage levels by as much as they can in the coming months despite that 80% target being reached.  Higher prices are already leading to a large amount of demand destruction. EU gas consumption over the first half of the year is down around 6% from the 5-year average for the same period. And this will fall further. In recent weeks, several metal smelters and fertilizer producers have announced further production cuts. If these higher prices are sustained, it is clear that we will see even further demand destruction, particularly as power/gas hedges expire for some industrials, leaving them exposed to higher spot prices. So, the strength of the market comes with increasing economic costs. The most recent strength in the gas market has not only been driven by Gazprom’s announcement regarding Nord Stream. The power market in Europe has also dragged natural gas prices higher. This is evident when looking at clean spark spreads, which have strengthened. Despite rallying gas prices, it is still profitable to burn gas as power prices are also sky high. This will not help lower gas demand from the power sector. It is clear that the gas market will remain extremely volatile in the coming months; not only is there uncertainty over Russian gas flows, but also around the demand outlook (in the absence of mandatory demand cuts). Low liquidity caused by volatility in markets has led to only further volatility. This is unlikely to change anytime soon and makes it near impossible to come up with sensible price forecasts. However, we believe that European gas prices will need to continue to trade at elevated levels so that the market can balance itself through the winter, by ensuring an adequate amount of demand destruction from industrials and households. EU hits 80% storage target early as demand comes under growing pressure Source: GIE, Eurostat, ING Research A perfect storm for power markets If a gas crisis were not enough for Europe, the region is also dealing with a broader power crisis. Yes, this is partly a result of what is going on in the gas market but there are a number of other factors which have helped to see power prices skyrocket. France has experienced prolonged periods of nuclear capacity outages. This is partly due to regular maintenance and refuelling, but reactors have also been taken offline due to more serious weld issues and signs of corrosion. Nuclear output now stands at around 25 GW as a result, well below levels of more than 40 GW seen in August last year. In addition, nuclear output is not helped by high water temperatures limiting the amount of cooling water that can be returned to waterways. Heat restrictions are expected to continue to depress nuclear output as river temperatures are forecast to remain above seasonal norms. France is now facing the highest power prices in Europe, while it used to have the lowest when nuclear power operated at full capacity. The distress in the French power market is also impacting Germany due to lower exports of electricity to the industry-rich southern part of the country. Forward prices for the winter recently reached €1,000/MWh as a result, but have come down strongly in the past days after the President of the European Commission, Ursula von der Leyen informed the market that the EC is working on “an emergency intervention and a structural reform of the electricity market”. Although details are not yet known, the announcement had a sizeable impact with winter prices now trading around €600/MWh. Europe’s hydropower market is also negatively impacted by severe droughts that limit replenishment and increase the evaporation of water reservoirs. Hydro stocks in France, Spain, Italy and Portugal are all below the 5-year average. Hydro stocks in the Nordics are still at decent levels historically. But countries are taking steps to preserve hydro reservoirs ahead of winter as fears of a long dry period mount. Norway for example is taking steps to limit electricity exports to the northern power markets on the European continent. And operators of hydropower plants have been told to preserve reservoir stocks. Finally, Rhine water levels are now below the record lows last seen in 2018. Water levels also came down much earlier in the year compared to 2018. As a result, some river-based coal plants are facing supply issues and cannot generate as they would like. All in all, record low nuclear power production, hydro stocks and Rhine water levels aggravate an already tight power market with power prices settling at all-time highs. This further fuels the gas market, as power plants continue to be profitable. Power prices have reached new highs this summer and Norway is now following the rest of Europe Base load power price in euro per MWh on a weekly basis Source: Refinitiv   Russia-Ukraine Power Crisis Oil Natural gas Electricity   Source: https://think.ing.com/articles/hold-for-monthly-energy-worries-intensify/?utm_campaign=September-01_hold-for-monthly-energy-worries-intensify&utm_medium=email&utm_source=emailing_article&M_BT=1124162492   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
What Is Going On Financial Markets Today? Russia Will Not Resume Deliveries Of Gas

What Is Going On Financial Markets Today? Russia Will Not Resume Deliveries Of Gas

Saxo Bank Saxo Bank 05.09.2022 10:57
Summary:  Markets were spooked late Friday by news that Russia would not resume gas flows through the Nord Stream 1 pipeline, pressuring the outlook for the European economy as governments grapple with soaring energy costs and scramble to cap prices and ration power to get through the upcoming winter. The euro weakened toward the cycle low versus the US dollar and equities tumbled. Today, US markets are closed for Labor Day.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities actually rallied on Friday in the wake of the US jobs report, likely as US treasury yields moved lower in the wake of the data after a recent march higher in yields that had clearly pressured equity market sentiment. But later in the session the Russian pipeline news in Europe spooked sentiment and equities reversed lower, trading not far from the lows of the cycle ahead of the three-day-weekend (no cash session today in the US due to Labor Day holiday). The focus in the S&P 500 is the key support just above 3,900, the last notable area ahead of the June lows, and similarly the Nasdaq 100 focus is on the recent 12,000 area lows. Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China stocks retreated, Hang Seng Index -1.3%, CSI300 -0.4%. A Bloomberg report, citing people familiar with the matter, said that the Biden administration is considering to impose restrictions over US investments in Chinese technology companies. In addition, the U.S. Trade Representative said that it received requests from more than 350 American companies to plead for keeping the “Section 301” tariff on goods imported from China.  Chengdu, the largest city in western China, extended its pandemic control lockdown for another three days. BYD (01211:xhkg) fell 5.4% as exchange filing showed that Berkshire Hathaway sold 1.72 million BYD shares on Thursday, trimming its stake further down to 18.87% from 19.02% of BYD’s H-shares. August Caixin China Services PMI came in at 55.0, edging down slightly from 55.5 in July but above market expectations.  USD as outlook for Europe darkens further The US dollar traded in choppy fashion on Friday but was generally weakening as US treasury yields pushed lower in the wake of the US jobs data. But US yields were thrown from the driver’s seat in favour of risk sentiment, which soured badly on the news that Russia will not resume deliveries of gas through a key pipeline. The risk-off took EURUSD back lower and to new lows for the cycle today below 0.9900 as Europe suffers the fallout from the darkening outlook on energy/power that ECB rate tightening can do nothing to address. Elsewhere, GBPUSD plunged to a new low below 1.1500. Focus this week may intensify on China, as USDCNH held relatively steady last week but jumped to new highs today well above the former 6.93 high. JPY crosses as US treasury yields push lower USDJPY was capped after another run higher on Friday as US treasury yields pushed back lower after the US jobs report and then sharply lower still in reaction to the Russian pipeline news in Europe. But the USDJPY pair remains above the 140.00 level, elsewhere in JPY crosses, the drop in yield brought some more sustained relief for the JPY in the crosses as EURJPY reversed sharply back below 140.00 and even AUDJPY was capped after a poke toward the cycle highs on Friday. JPY crosses are likely to remain a proxy for global sovereign bond yields. EU gas and power prices open sharply higher ... after Gazprom on Friday announced the Nord Stream pipeline will remain shut indefinitely. While an oil leak at the last compressor unit still in operation was used as explanation, the surprise decision came shortly after the G7’s announcement to initiate a price cap on Russian oil. The energy war has therefore escalated further, and Europe look set to lose around 30 mcm/d or 4% of its gas supply. While storage levels across the Euro area have grown rapidly in recent weeks due to surging imports of LNG, the prospect for rationing and further initiatives to curb demand for gas and power prices will be the focus this week. In addition, demand destruction from soaring prices has already lowered demand, but more is needed, especially if the winter turns out to be a cold one. Dutch TTF gas (TTFMV2) down 37% to €215/MWh last week on assumption supply would return jumped by around 30% on the opening to trade around €280/MWh. Crude oil (CLV2 & LCOX2) Crude oil reversed higher on Friday following a three-day drop of close to 12 dollars, and the recovery has continued today and is being led by a 4% jump in diesel prices, both in New York (HEATINGOILOCT22) and Europe (GASOILUKSEP22) as the European energy crisis adds further support to gas-to-fuel switching activity. In addition, OPEC+ meets later today in is expected to make no change, but the market is wary following a recent Saudi comment about cutting supply to stabilize then falling prices. An in-theory price bearish G7 plan to cap prices on Russian oil could turn into a “bullish shock” according to Goldman Sach as Russia, just like it has done with gas, may halt shipments to Europe and other Nato buyers. Focus on today’s OPEC+ meeting, China lockdowns hurting demand, gas-to-fuel switch boost to diesel and Wednesday’s Short-Term Energy Outlook from the EIA. US Treasuries (TLT, IEF) The run-up in US treasury yields last week was reversed in the wake of the US jobs report Friday, perhaps as the report failed to show any new aggravated rise in earnings. The move lower was cemented by an ugly turn lower in risk sentiment in the wake of the Russian natural gas pipeline news. Still, it will take a move back below 3.10-3.00% in the US 10-year yield benchmark to suggest that this run up from the 2.50% area lows of early August is turning more firmly back lower. The upside focus is on 3.50%, should the 3.25% area sticky point of last week fall. What is going on? Russia announces it will not resume deliveries of natural gas through the Nord Stream I pipeline Russian sources claimed a leak was found in the pipeline, although Germany’s Siemens disputed that claim as it is fairly obvious that Russia is using natural gas deliveries as a tool of economic war.The news broke already on Friday and sent risk sentiment plunging across global markets, taking the EURUSD to new cycle lows on Monday below 0.9900 and sending longer yields lower globally. Moderate cooling of the U.S. labor market In August, the U.S. economy added 315k jobs, slightly more than expected, but the 2 prior months of data were revised over 100k lower. The average hourly earnings rose moderately at 0.3 % month-over-month (below the 0.4 % pace of the prior three months). On a yearly basis, the increase is stable at 5.2 %. The unemployment rate rose to 3.7 %, up from its 50-year low of 3.5 %, but this was on the somewhat positive rise in the participation rate (more people seeking work) as the Household Survey showed 442k more Americans were in work in August. Overall, this labor market report is not a source of major concern. It should not weigh much on the monetary policy decision of the FOMC in September. Many economists also pointed out the fact that the August payroll growth is usually subject to higher revision than any other month. Over the past five years, the first release has undershot the third by 119k, compared to an average undershoot of 23k for all months. Therefore, we should avoid over-interpreting past Friday’s figures. Commodity traders' response to Jackson Hole speech The Commitment of Traders (COT) Report on commodities covering the week to August 30 showed the initial response from hedge funds to Federal Reserve Chairman Powell’s hawkish speech at Jackson Hole. A speech that helped drive the dollar and bond yields higher, and the general risk appetite lower. All sectors except for grains and soft commodities were sold with selling concentrated in natural gas, WTI crude, gold, platinum, and livestock. The few exceptions were Brent crude, corn, sugar, and coffee. More in our weekly update, posted later today on www.analysis.saxo. Biden administration considering initiatives to restrict US investment in Chinese tech firms Bloomberg cites unnamed sources on this story, with limitations possibly set to come via executive order in the months ahead. After the recent move to limit NVidia exports of AI-related chips to China, the US Commerce Department may look to look to limit export of other AI tech. What are we watching next? Energy summit in EU on Friday EU leaders will powwow this Friday to discuss a cap on energy prices across EU countries to limit the disruptions from soaring and illiquid pricing markets, although given limits on generation capacity, much of them due to Russia’s cutting off of gas supplies - possibly semi-permanently in the case of the Nord Stream 1 pipeline – some sort of rationing plan may be required. See our Christopher Dembik’s look at the difficult choices Europe faces on this issue here.  RBA meets tonight – set to hike 50 basis points The RBA is set for a monthly meeting tonight and is widely expected to hike the policy rate 50 basis points at its fourth consecutive meeting, although this is not fully priced in. Besides the headline decision, there will be considerable focus on the bank’s forward guidance as the market anticipates that the RBA will soon decelerate the pace of rate hikes after Tuesday’s decision. Reaction in sterling as Liz Truss set to become next Prime Minister of the UK The UK Conservative party will announce the results of its leadership election today, with Liz Truss universally expected to win the vote and become Britain’s next prime minister. Truss has promised tax cuts and rapid action on the UK’s energy emergency, a combination that is likely to leave gaping new holes in the country’s balance sheet at a time when sterling is already collapsing. How will market’s great the next PM’s policy initiatives this week? Earnings to watch The earnings calendar is running light this week. The two earnings releases of importance for the week are DocuSign on Thursday and Dollar Stores on Friday. Tuesday: Ashtead Group Wednesday: People’s Insurance Co Group, Exor, Copart, NIO Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) US Markets Closed for Labor Day Holiday 0715-0800 – Eurozone Final Aug. Services PMI 0800 – Switzerland Weekly SNB Sight Deposits 1530 – UK Bank of England’s Catherine Mann to speak 2301 – UK Aug. BRC Sales Like-for-like 0430 – Australia RBA Cash Rate Target Announcement  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Energy: Natural Gas News Scares Markets, OPEC+ Meeting Takes Place Today!

ING Economics ING Economics 05.09.2022 14:59
There is plenty going on in energy markets at the moment, which should keep prices volatile . The market has largely ignored the G-7 agreeing to a Russian oil price cap, instead focus is on today’s OPEC+ meeting. In addition, supply concerns in the European natural gas market have grown once again, with Nord Stream gas flows not resuming Energy - OPEC+ likely to keep output targets unchanged G-7 nations agreed on a price cap for Russian oil at the end of last week. This is an idea that has been pushed for several months now by the US with the hope that it would offer some relief to the oil market. However, looking at the price action since the announcement (prices have moved higher), it is pretty clear that the market is not convinced that the cap will work. The idea of the cap is to allow buyers to access G-7 and EU insurance and shipping services for Russian oil, if the price is at or below the price cap. However, there are still a lot of obstacles and unknowns regarding the cap. Firstly, EU members will have to accept the proposal and changes will need to be made to the sanctions package. It could be difficult getting all member states to agree to this latest proposal. Secondly, and even if all EU members agree to the cap, G-7 nations need to ensure that buyers are willing to take part in the price cap plan to make it effective. This means that larger buyers such as China, India and Turkey would need to take part. There is no guarantee they will, particularly after Russia has said that it will not supply any country who follows the price cap. In addition, a big unknown is what price level the cap will be set at. It is pretty clear that it will need to be set above Russian production costs, otherwise there is little incentive for Russia to maintain production at current levels. Finally, monitoring and enforcing the price cap will be a significant challenge as well. While there is plenty of uncertainty over Russian flows, there is also quite a bit of uncertainty over OPEC+ output policy and what the group will decide today at its monthly meeting.  Previous comments from the Saudi energy minister suggested that the group may have to cut output due to a dislocation between the physical and paper markets. Several OPEC producers have since echoed these comments. However, we believe that OPEC+ will leave output targets unchanged for next month. It is difficult to justify cutting output when the market is trading near US$100/bbl. In addition, Russia is reportedly against cutting output as it sends the wrong signal to the market about the supply and demand picture. Furthermore, it would make more sense for OPEC+ to wait for further clarity on Iranian nuclear talks before taking any action. These talks appear to have taken a turn for the worse, with the US saying that Iran’s latest response was “not constructive’. Finally, we are likely to see further volatility in the European gas market this week. And this is after gas flows along the Nord Stream pipeline did not resume over the weekend, following maintenance. Gazprom claims that an oil leak at the Portovaya compressor station means that the Nord Stream pipeline will be fully shut down “until the operational defects in the equipment are eliminated”. Prior to last week’s maintenance, Nord Stream was operating at only 20% of capacity. The halting of flows means that Europe will lose close to 1bcm of natural gas supply per month. The market will now likely become increasingly nervous about flows via Ukraine as well as TurkStream. What is clear is that the more Russia reduces gas flows to Europe, the less leverage they have over Europe. Metals - more supply woes for aluminium While most industrial metals ended lower on Friday, LME aluminium managed to eke out a small gain due to persistent supply risks (especially from Europe and China as the power crisis lingers). As per the latest reports, Dutch aluminium smelter Aldel is going to suspend its remaining capacity due to high energy prices and a lack of government support. The smelter has an annual production capacity of 110kt for primary aluminium and 50kt for recycled aluminium. Meanwhile, there are some concerns that Yunnan province in China could see some similar power rationing to what has been seen in Sichuan province, due to lower hydro power output. Yunnan province is home to a large amount of aluminium smelting capacity, which stands at around 5.6mtpa, accounting for 12.7% of China’s total installed aluminium smelting capacity according to Shanghai Metals Market. Novelis Inc. joins the list of industrials trying to avoid exposure to Russian metal since the invasion of Ukraine. A new tender issued for 2023 supply to its European plants specifies that no metal of Russian origin would be allowed as part of any deal. Existing Novelis contracts won’t be affected by the new conditions and would allow the supply of Russian metal. The latest CFTC data shows that speculators increased their bearish bets in COMEX copper by 3,544 lots over the last reporting week, leaving them with a net short position of 8,312 lots as of last Tuesday. Moving to precious metals - speculators decreased their bullish bets in COMEX gold by 9,600, to leave them with a net long of 20,726 lots at the end of the last reporting week. Agriculture – speculative interest in corn remains high It was another week of strong buying interest from speculators in CBOT corn as adverse weather in the US and parts of Europe is keeping current crops in poor condition and is weighing on supply prospects. CFTC data shows that money managers increased net longs in CBOT corn by 39,251 lots over the last week, with them holding a net long of 221,467 lots as of 30 August. The move higher was predominantly driven by fresh longs, with the gross long position increasing by 30,446 lots.  Meanwhile, the managed money net long in CBOT soybeans fell by 2,670 lots over the week to 101,801 lots last week, whilst the managed money net short in CBOT wheat declined by 3,822 lots over the week, to leave net shorts at 22,247 lots. Ukraine has increased exports of agricultural products to around 5mt in August according to Ukraine’s Ministry of Infrastructure, which has been driven by a ramping up of shipments through sea ports. Ukraine reportedly shipped around 1.7mt of product through the three ports that opened after the Russia-Ukraine deal, around 1.6mt through the Danube port, and rest by rail and road . Ukraine aims to increase exports to around 8mt in September. Read this article on THINK TagsRussian oil price cap Russia-Ukraine OPEC+ Nord Stream Gazprom Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Gazprom Threathening To Cut Gas Transits Via Ukraine

It's Said That Gazprom Could Compensate The Nord Stream 1 Shutdown By Rising Deliveries Via Ukraine

Craig Erlam Craig Erlam 05.09.2022 15:49
European stock markets are plunging at the start of the week following a day of mixed trade in Asia, with Gazprom’s announcement on Friday weighing heavily on the bloc. In the USA there is a bank holiday, Euro goes down as Nord Stream 1 is shut down A bank holiday in the US often results in relatively quiet trade everywhere else but that’s certainly not looking the case today. The decision not to restart gas flows via Nord Stream 1 after an oil leak was apparently discovered has created enormous uncertainty in Europe going into the winter. The euro slipped to a new 20-year low against the dollar in response to the shutdown. The decision conveniently came hours after the G7 agreed to an oil price cap and as countries announced they’re ahead of schedule in filling gas reserves. Many would argue it was only a matter of time until the decision was taken, with Europe having been squeezed over a number of months for one reason or another. There have been reports that Gazprom could increase deliveries via Ukraine as a result of the shutdown but it’s not clear whether this would be enough to offset the loss of Nord Stream 1. And considering Siemens has claimed that such a leak would not ordinarily affect the operation of a turbine and is easily fixed, you have to wonder whether Russia would actually take that decision. A painful winter lies ahead. A massive job for the incoming UK PM The UK will discover who its new Prime Minister will be today, with Liz Truss the standout favourite to win the run-off against Rishi Sunak. Whoever is victorious, the job facing them is enormous, with the economy facing a long recession and eye-watering inflation. Alleviating one while not exacerbating the other will be the first job for the incoming Prime Minister and it won’t be easy, to put it mildly. There’s a huge amount of pessimism around the UK at the moment, as evident by the pound, which looks on course to fall to its lowest level since 1985 against the dollar. Chinese headwinds strengthen China is also facing numerous headwinds going into the end of the year, with Covid once again creating huge uncertainty. Beijing’s commitment to its zero-Covid policy has created major challenges for the economy this year and with mass testing taking place over the weekend and lockdowns being extended in Chengdu, that’s going to persist. ​ The pressure is being felt in the yuan which fell for a sixth month in August and is continuing to fall against the dollar. That’s despite the best efforts of the PBOC which continues to set the yuan fix stronger than markets expect. To make matters worse, US President Biden is reportedly weighing up measures to limit US investment in Chinese tech firms. The US is becoming increasingly hawkish toward China and the latest move is another blow to its tech space. Major support being tested Bitcoin is continuing to show resilience around $20,000 but that’s really being put to the test as risk aversion sweeps through the markets once more. It’s down 1% so far today and trading a little below that crucial support level. A significant break at this point could be really damaging, with the following key level below here being the June lows around $17,500. Considering the outlook for risk appetite in the near term, it’s not looking good. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Risk aversion sweeps across Europe - MarketPulseMarketPulse
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Crude Oil: What Is The Expected OPEC+ Decision On The Output?

Craig Erlam Craig Erlam 05.09.2022 16:02
OPEC+ meets after price cap announcement Today’s OPEC+ meeting has been somewhat overshadowed by all the talk of oil price caps and Nord Stream 1. The group is expected to leave output targets unchanged but it’s likely that a cut will be at least discussed which, if followed through on, would create more volatility and uncertainty at a time of considerable unease. The economic outlook and potential for a new nuclear deal have weighed on prices recently, much to the frustration of Saudi Arabia in particular. An output cut won’t make them any friends at a time when the world is facing a cost-of-living crisis already and the group has failed to keep up with demand this year. The more sensible option may be to hold this month and revisit in the future when there’s more clarity; something that is seriously lacking at this moment in time. ​ Gold holding up for now Gold is treading water at the start of the week even as the dollar rallies strongly once more. Traders are favouring the safety of the greenback this morning but that’s not damaging appeal for the yellow metal. It’s come under considerable pressure in recent weeks as yields have risen and the dollar has bounced back and it’s now trading around a key area of support, which may be why we’re seeing more resilience. While $1,700 looks like a psychological barrier, $1,680 is key. A break of that could signal further pressure on gold, especially if accompanied by more aggressive tightening from central banks. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil eyes OPEC and Nord Stream 1, gold steady - MarketPulseMarketPulse
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Energy: OPEC+ Surprise To Markets And Its Meaning

ING Economics ING Economics 06.09.2022 08:14
OPEC+ members surprised the market yesterday by agreeing to cut their output target by 100Mbbls/d for October. However, given that OPEC+ has been producing well below production targets for some time now, the impact of this cut on actual supply is limited What was agreed? OPEC+ agreed to cut production in October by 100Mbbls/d, which would take production targets back to the same levels as in August. The group highlighted volatility and reduced liquidity in the market as justifications for the move by helping improve stability and ensuring that the market functions in an efficient manner. Given the volatility in the market coupled with plenty of uncertainty, OPEC+ has not ruled out further action if and when it is needed. Is a 100Mbbls/d cut really a 100Mbbls/d cut? While the headline number is for a 100Mbbls/d cut, in reality, the actual cut will be much smaller. It is important to remember that OPEC+ have failed to hit their production targets all year. In July, OPEC+ output was actually more than 2.7MMbbls/d below the target production. Most producers have not been able to hit their targets and are producing quite some distance below where they should be. It is only Saudi Arabia, the UAE and Kuwait that have been producing at or near their agreed output levels. Therefore, it will likely be only these producers that will need to reduce output by their share of the 100Mbbls/d. Combined, these three producers would need to reduce output by around 40Mbbls/d from September levels. What does this mean for the market? Fundamentally this changes little in our supply and demand balance, and we will be keeping our oil price forecasts unchanged for the remainder of this year and 2023. However, the action from OPEC+ does seem to confirm that the floor for Brent is not too far below US$90/bbl. And while little changes in the supply/demand balance, it does not send a great message to the US administration, which has been putting pressure on OPEC for much of the year to increase output more aggressively. Read this article on THINK TagsSaudi Arabia Russia-Ukraine OPEC+ Oil Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Tesla Does Not Say Much Directly About The Demand Situation, Ally Financial Sees A Slowdown In Car Loans

This Week's Tesla Stock Split Could Be The Best Moment To Buy The Stock! Twitter Stock Price Plunged!

Swissquote Bank Swissquote Bank 24.08.2022 11:27
The US dollar bounced lower, yesterday, following the weak economic data in the US, which showed that the new home slowed, and business contracted. The ugly PMI data also hammered the mood among the European stock traders, as well. The DAX already gave back half of summer gains. But, situation in the British FTSE 100 is different, as the FTSE 100 has a solid exposure to energy and mining stocks, and having exposure to energy stocks is still one of the most interesting hedging options. Crude Oil Price Speaking of oil, oil stocks were boosted again yesterday, by firmer oil prices after crude rebounded past the $93 level on news that OPEC could cut production as they feel that the prices fell too much over the past two months. Also, the latest API data came to support the oil and oil stock bulls, as the latest figures suggested another bigger-than-expected decline in the US oil inventories. We can now say that there are signs of a positive momentum building among the oil bulls despite the recession woes. The rebound in oil prices, along with the surge in nat gas futures could have two effects depending on the market’s actual mood. In one hand, the higher energy prices dampen the economic activity, and therefore could revive the Fed doves. But on the other hand, the rebound in energy prices boost inflation and inflation expectations, and therefore could keep the Fed hawks alert. Which scenario is more likely to influence the market pricing?   Watch the full episode to find out more! 0:00 Intro 0:34 Stocks under pressure as weak data couldn’t revive Fed hawks 1:38 DAX gave back half of summer gains on deepening energy crisis 3:22 But FTSE remains a good hedge against soaring energy 5:20 What does rebound in oil means for market pricing? 6:17 Hedge funds increase bets against S&P500 companies 7:44 Tesla’s 3-for-1 stock split is about to happen! 8:15 Twitter down 7% on whistle-blower complaint 8.57 What we will be watching today? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #market #selloff #Fed #JacksonHole #USD #EUR #DAX #FTSE #enegry #crisis #inflation #USD #EUR #crude #oil #natgas #energy #stocks #XOM #Chevron #BP #Tesla #stocksplit #Twitter #ElonMusk #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Crude Oil Inventories Decreased, What Make The Prices Go Up! Iranian Nuclear Deal Talks

Crude Oil Inventories Decreased, What Make The Prices Go Up! Iranian Nuclear Deal Talks

ING Economics ING Economics 25.08.2022 08:06
A large decline in US crude oil inventories has supported prices, while the market continues to wait for further detail on how Iranian nuclear talks are progressing Source: Flickr Energy- hefty US crude draw EIA numbers released yesterday were fairly constructive. US commercial crude oil inventories fell by 3.28MMbbls over the last week. However, when taking into account releases from the strategic petroleum reserve, total US crude oil inventories declined by a significant 11.37MMbbls. While crude oil exports fell by 823Mbbls/d over the week to 4.18MMbbls/d, these historically are still fairly strong flows. In fact, when looking at total oil and product exports over the week, they hit a record 11.08MMbbls/d, due to strong product exports. Gasoline inventories saw a marginal decline of 27Mbbls, while distillate fuel oil stocks fell by 662Mbbls. We are in a period where we should be seeing distillate stocks building. Instead, the gap to the 5-year average continues to grow. Total US distillate stocks are around 35MMbbls below the 5-year average. This tightness in middle distillates is something that we continue to see in all regions around the world. The one bearish factor from the EIA release was implied demand. Total implied demand for products fell by 1.88MMbbls/d over the week, while gasoline demand declined by 914Mbbls/d. There was further progress on the Iranian nuclear deal yesterday. The US finally replied to the EU’s proposal for reviving the deal. And while clearly, negotiations appear to be moving in the right direction, the US has said that “we’re not there yet” and that there are still “gaps” that remain. We are currently not assuming an increase in Iranian supply in our balance sheet, and so a deal would mean the need for us to make revisions to our current price forecasts. Metals – aluminium stocks jump higher LME aluminium yesterday gave up much of the gains made earlier in the day after a sudden jump in LME inventories was reported. The latest data from the LME shows that aluminium stocks jumped by 10.6kt - the largest daily increase since 10 February. The majority of the inflows were reported at Malaysia’s Port Klang warehouses. The latest monthly update from the International Copper and Study Group shows that the supply deficit for copper stood at 66kt in June, compared to a deficit of 34kt in the previous month. Over the first half of the year, the market was in a deficit of 72kt, compared to a deficit of 130kt during the same period last year. Global mine and refined production increased by 3%YoY and 3.2%YoY respectively, while overall apparent consumption over the same period grew by 2.7%YoY. Agriculture – grains benefit from adverse weather conditions CBOT grains have been trading firm this week as weather and crop reports from China and the US added to supply concerns. Weather reports show that China has witnessed severe heatwaves over the past few weeks which could negatively impact crop production for the current season. China’s National Meteorological Services warned again of high temperatures and drought in large parts of the country, with the government issuing notices to several provinces to use water resources conservatively. Similarly in the US, dry and hot weather was seen impacting corn yields, especially in the Midwest region. Read this article on THINK TagsIran nuclear deal Grains EIA Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: First US crude draw this year

Is The OPEC+ Decision Only Economic? Oil Is Caught Between Fears Of A Reduction In Demand

InstaForex Analysis InstaForex Analysis 06.09.2022 11:56
What caused the first OPEC+ decision to cut production in more than a year? Why was the verdict so symbolic? 100,000 bpd is a negligible amount, especially given that the alliance has been producing about 3 million bpd below its quotas in recent months. Only because of Nigeria and Angola, it was missing 1 million bpd. Investors are scratching their heads over the outcome of the meeting of the cartel and its allies, which forces Brent to stabilize near the $95 per barrel mark. At first glance, the OPEC+ decision is purely economic in nature. Over the past three months, oil has lost about a quarter of its value. The West is going to restart the nuclear deal with Iran, which will increase the supply by more than 1 million barrels per day. Meanwhile, China's COVID-19 lockdown expansion has already reduced the country's apparent oil consumption by 9.7% in July and threatens global demand. The revenues of Saudi Arabia and other producing countries are falling, and a signal must be given to prevent further declines. The 100,000 bpd is ideal. Such a symbolic sum is reminiscent of a warning shot in the air. If the markets do not listen, it will be possible to shoot point-blank. On the other hand, politics may be involved in the OPEC+ verdict. Russia intends to take revenge on the West for sanctions, which it has already proved by first reducing the capacity of the Nord Stream to 20% and then completely ceasing to supply gas to Europe. It is more difficult with oil since the eurozone is less dependent on this raw material than on blue fuel. It easily replaced Moscow with the United States and Africa, and together with the United States, is making plans to punish the Russian Federation for its interference in the life of Ukraine. Dynamics of Russian oil flows The discussion by the G7 countries of the price ceiling mechanism for Russian oil also does not look like a good idea. Moscow is already reorienting its oil flows from West to East, and the creation of a cartel of European and American buyers, on the one hand, will accelerate this process, on the other hand, will challenge OPEC+. And the alliance can easily respond to what it hinted at by deciding to cut production. Without the backing of India and China, the G7's price flow plan doesn't look deadly, and Asian giants joining it is doubtful. Thus, oil is caught between fears of a reduction in demand from China and the EU and the intention of OPEC+ to support prices by reducing supply. Given the modest steps taken by the alliance, Brent is likely to continue to be under pressure. At the same time, consolidation in the range of $89.5–103.5 per barrel looks quite real. Technically, on the daily chart, the failure of the North Sea variety to break above the $97.2 pivot point, where the moving averages are also located, is a sign of bullish weakness. Only a successful test of this resistance will make it possible to buy oil. On the contrary, the fall of Brent below $92.7 is a reason for sales.   Relevance up to 09:00 2022-09-11 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/320917
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

OPEC+ Switch To 100K Barrels Has Affected Brent Crude Oil Price

Craig Erlam Craig Erlam 06.09.2022 12:18
Brent steadies after OPEC+ boost Brent crude is a little lower today after seeing decent gains at the start of the week following the OPEC+ output announcement. The decision to reverse the 100,000 barrel per day increase in September was more symbolic than fundamentally significant, in that it doesn’t really change the dynamics in the market but it will make traders think twice about driving prices lower in the way they have recently. Read next: Interest rates hiked. The most important indicators continue their downward trend| FXMAG.COM The disturbing global economic outlook combined with the prospects for a nuclear deal between the US and Iran created a bearish case for oil prices, something that hasn’t been the case for much of the year. But the cartel has sought to quash that quickly by not just signalling a willingness to cut output but also leaving the door open to emergency meetings in order to address market volatility. In other words, if the market tries to drive the price much lower again, or the fundamentals change, the group will cut again and it won’t wait until 5 October. As far as Brent is concerned, that may have reinforced support around $90, with the group clearly favouring a price closer to $100. It will be interesting to see if the market tries to test the group’s resolve again or if this initial warning shot will prove enough. Recovering but for how long? Gold is enjoying a bit more of a recovery today, this time aided by a pullback in the US dollar. The greenback has been a strong headwind for the yellow metal and, along with rising yields, has driven it back towards $1,680 where it has once again run into firm support. While some may be encouraged by the rebound we’ve seen, I wonder how much appetite there’ll actually be for a significant and sustainable rebound. We’re seeing it face its first test now around $1,730 which until recently was a key area of support. If it overcomes this, further resistance could be found around $1,750-1,760 which would be a big test. A move above here could inspire some optimism but in this environment, that will be easier said than done. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Brent edges lower after OPEC, gold rises - MarketPulseMarketPulse
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EUR/USD Is Vigilant To The Highly Awaited Jerome Powell's (Fed) Speech. Rise Of Monthly Bond Sales Could Make Stock Market Decrease By Over 20%!

Alexander Boltyan Alexander Boltyan 06.09.2022 14:21
The head of the Federal Reserve (Fed) Jerome Powell is expected to deliver a speech on Friday at Jackson Hole annual symposium. Investors are completely focused on Powell’s testimony mostly ignoring incoming macroeconomic data. However, some economic data was a matter of concern. Shocking PMI Prints PMI indexes in the United States and in some other countries came out shocking as Services PMI in the U.S. dropped in august to 44.1 points, while Production PMI in the United Kingdom fell to 46.0 points. The3se are worst reading since 2020. PMI’s in other countries with a minor exclusion are pointing to a global economic slowdown. Some positive tunes were brought by the Q2 2022 second GDP estimate in the U.S. and Germany. Estimates were upgraded to -0.6% from the previous -0.8% in America and to 0.1% from 0.0% in Germany. This could hardly comfort investors, but together with lower Initial Jobless Claims in the U.S. it leveled up the market before the weekend. Read next: Interest rates hiked. The most important indicators continue their downward trend| FXMAG.COM Stock Market Could Plunge! S&P broad market index lost around 2% this week. Major investment houses are warning its clients that a rise of monthly bond sales by the Fed to $95 billion in September would plunge the stock market by another 25-30%. Technical picture of the S&P 500 index demonstrates a downside patter of the index with primary target at 3900-4000 point. The U.S. stock market benchmark fell below the support at 4220 points close to the gap of the beginning of this week. It is quite possible this gap could be closed after Powell’s testimony. . During two previous week short positions for the 70% of targeted amount for S&P 500 index were opened at the average price at 4285-4290 points. The rest of the targeted volume would be used once new technical signals would emerge. The target area is located at 2100-2300 points that is expected to be reached by the end of 2022. Technical Analysis Suggest Brent Crude Oil Could Even Hit $50-60 Oil market is short of time to active an upside scenario with targets at $135-145 per barrel of Brent crude benchmark. There are no triggers for such a scenario to become real at the moment. Moreover, if Brent prices would close this week below $106 per barrel an aggressive downside formation could pressure prices to $75-85 per barrel, and even to the extreme targets at $50-60 per barrel by the end of November. So, the Powell’s speech at Jackson Hole could be the last chance for bulls to avoid this scenario. What Are Gold's Downisde Targets? Gold prices slightly rebounded from the support at $1700-1730 per troy ounce to $1760. However, it does not change much as the decision to open short positions has to be made in the first half of September either from $1800-1820 per ounce, or after prices drop below the support at $1700-1730. Both scenarios have downside targets at $1350-1450 per ounce.  Powell's Can Make EUR/USD Go Much Below Parity! EURUSD met its primary target at 0.99500-1.00500, and has missed a chance for a rebound. The pair is likely to continue diving deep below after it tested 0.99500 support level several times this week. Next week the euro may fell to 0.98500 is Powell’s speech would be disappointing. GBP/USD - It Seems It's Not The Best Moment To Start GBPUSD continues aggressive downside with the completed primary target at 1.18000-1.19000 with the remaining secondary targets at 1.15000-1.16000 that are becoming more as the Euro goes down. However, there are no good entry points to open any trade positions so far. Read next: ECB Will Continue To Hike Rates To Slow Inflation? | FXMAG.COM
Gazprom Threathening To Cut Gas Transits Via Ukraine

Gas Supplies To Europe Via The Nord Stream 1 Pipeline Will Not Resume In Full. Gold And Silver Trades Higher

Saxo Bank Saxo Bank 06.09.2022 09:57
Summary:  Markets poked around with little conviction yesterday as US markets were closed for Labor Day. Overnight, the JPY dropped to new lows versus the US dollar and weakened broadly even as global bond yields bounced around in a range, a sign of mounting pressure on the Bank of Japan to abandon its policy of capping bond yields. In Europe, the focus this week is on plans to cap gas and power prices and new UK Prime Minister Liz Truss has announced a 130 GBP billion plan to deal with soaring energy costs - more than 5% of UK GDP.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are trying to find some stabilisation in the short-term trading higher this morning at around the 3,935 level with the 3,903 being the key level to watch on the downside. The US 10-year yield is still seeing upward momentum sitting at 3.24% this morning and consensus is slowly moving on ECB in favour of significant tightening to reign in inflationary pressures in the economy. Today’s ISM Services print for August is the key macro figure to watch today. A negative surprise in the US services sector could be a positive for equities as it could cool inflation expectations and longer-term US yields. EURUSD and USD outlook for Europe moves to cap energy prices With the US out on holiday yesterday, the US dollar backed off a bit, not including the move in the Japanese yen to new cycle lows, which is more about the BoJ’s reluctance to change policy (more below). The greenback is at a technically pivotal spot here in EURUSD (trying but so far failing to separate from parity after posting a marginal new low in the wake of the as Europe attempts its move against soaring energy prices, which will require some energy rationing and therewith a reduction in real GDP even if successful and as the ECB scrambles to gain credibility in its fight against inflation, with expectations for the policy rate through the December ECB meeting rising nearly 70 basis points since mid-August. JPY crosses suggest mounting pressure on Bank of Japan USDJPY has rallied to new 24-year highs overnight, trading nearly 141.00 this morning, even as US long treasury yields remain a few basis points below their recent peak, suggesting that the market is set to challenge the Bank of Japan policy of capping yields. A Bank of Japan that continues to hold the line on capping yields could create a pressure cooker of a situation on the yen and tremendous volatility, particularly if US 10-year treasury yields continue back higher toward the 3.50% peak from June. The next important economic data points for the US are today’s ISM Services survey for August and Monday’s August CPI. EU gas and power EU gas and power market rallied on Monday following Putin's decision to further weaponize its energy supplies to Europe by closing Nord Stream 1. However, the sense it can hardly get much worse saw the market turn its attention to the EU and Friday’s energy summit where proposals to mitigate Russia’s hostile actions will be discussed. After surging to €290/MWh on the opening, the Dutch TTF benchmark gas contract ended the day at €245/MWh, up 14% and well below the €350 peak seen when the Nord Stream 1 maintenance was announced. German year ahead power closed at €570 after failing to get anywhere near the panic peak above €1000 seen last Monday, an indication the market is looking for a new pricing structure and speculators worrying about the derivative market being shut down for a period. Crude oil (CLV2 & LCOX2) Crude oil rallied on Monday after the OPEC+ group of producers in a surprise move took away the token 100k b/d production increase that was added last month in response to lobbying from the US President. Additional action to keep prices stable (read supported above $90) could be enacted at short notice, the group said. Other developments traders must deal with is the prospect of an unlikely revival of the Iran nuclear deal until after the November US Midterm elections, further lockdowns in China hurting demand, and a deepening energy crisis in Europe where punitively high gas prices will likely support demand for refined products such as diesel and heating oil. The EIA will publish its monthly Short-Term Energy Outlook on Wednesday. Brent is currently stuck between support at $91.50 and the 21-day moving average, last at $97.15. Gold and silver Gold and silver trades higher supported by selling fatigue and short covering following last week’s rout, especially silver that was dragged down by copper’s slump on China growth concerns. All three metals have, however, managed to find a bid but the question remains how much further they can recover without the support from a weaker dollar and yields pausing following their recent ascent. Copper needs to hold support at $3.38/lb, the 61.8% retracement of the July to August bounce while silver needs a solid break above $18.40 and gold above $1728/oz. US Treasuries (TLT, IEF) The dip in US treasury yields from Friday has so far proven a one-day affairs as yields have rebounded slightly ahead of the next important couple of important US macro data points, the August. SM Services survey today and the August CPI data on Monday. Technically, the remainder of the range from 3.25% to 3.50% in the US 10-year treasury benchmark is critical for whether rising global yields once again become the market’s primary focus. What is going on? Liz Truss won the contest to become the next UK Prime Minister Her promises range from quick action on energy security to alleviating the cost-of-living crisis for the hardest hit by price rises, all while cutting corporate and other taxes. She has announced a GBP 130 billion plan to freeze energy bills, which is around 5% of currently rapidly rising nominal UK GDP and a recipe for ballooning fiscal deficits, an issue that is already an ingredient in sterling’s steep fall this year, so an even steeper recession is in the wings. This could come either from a drop in real GDP due to soaring inflation aggravated by further sterling declines or as demand is crushed by a steep recession due to the need for the Bank of England to accelerate its pace of rate hikes or more likely a combination of the two. Longer term, investments in fracking shale gas and new North Sea exploration could pay dividends. For the moment, sterling is enjoying a modest relief rally. Russia makes a clear case of weaponizing gas supplies While the Kremlin had earlier said that they were halting gas supplies on Nord Stream 1 for a technical fault, it has now clearly stated that gas supplies to Europe via the Nord Stream 1 pipeline will not resume in full until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine. Russia is still supplying gas to Europe via Soviet-era pipelines through Ukraine that have remained open despite the invasion, as well as the South Stream pipeline via Turkey. But supplies along the northern pipeline routes, including Nord Stream 1 and the pipelines through Ukraine, have fallen by more than 90% since September last year. Higher supplies from Norway, the UK, north Africa and increased imports of LNG have helped to an extent offset the loss of Russian supplies. PBOC cuts currency deposit reserve requirement ratio by 200 bps The PBoC announced that the central bank is cutting the reserve requirement ratio for foreign exchange deposits (the “FX RRR”) to 6% from 8%, effective September 15. The cut is expected to release about USD 19bn (2% of the USD 954bn FX deposits outstanding) in FX liquidity for banks to make loans in foreign currencies. The PBoC last cut the FX RRR to 8% from 9% on 15 May, to send a signal to the market to put a pause to the depreciation of the USDCNY which had weakened from 6.40 to 6.80 in one month (15 April to 13 May). After the surge of the USDCNY from 6.75 to above 6.90 in about half a month since 15 Aug, the PBoC apparently wants to send a signal again to the market to slow the speed of the renminbi depreciation against the USD. OPEC+ announced a production cut of 100k bpd A token cut by OPEC+ last night of 100k barrels per day just reverses the output increase agreed to last month. The decision was ‘symbolic’, with the new quotas taking effect in October. The amount is significantly small compared to a 100 million bpd market but it shows that OPEC+ wants to set a floor near $100/barrel in Brent. Saudi Arabian oil minister Prince Abdulaziz bin Salman had warned last week that a cut was a possibility given what he said was a disconnect between financial and physical oil markets. Newcastle Coal futures price hits a new record high As Europe is facing an energy crisis this winter, it will need to increase energy imports. The UK is already importing Australian LNG. In anticipation of such a scenario, this might explain why the Australia coal price trades at a record, along with the futures price. The Australian energy supply is already likely to run low in 2023, meaning inflation will continue to worsen and for coal companies, their earnings and free cash flow will likely increase. Australia’s hikes 50 basis points as expected, says it is not on a pre-determined route from here. The property sector is already struggling to absorb the hikes already in the bag from this cycle, so we will be watching signs of further strain in the banking sector, along with property stocks and property ETFs, given Australia’s private debt to GDP is one of the highest in the world. What are we watching next? Explosion in JPY volatility ahead? It appears that the market is ready to challenge the Bank of Japan more directly again on its yield-curve-control policy as the entire developed market complex ex-Japan has been marked to continue tightening policy, while the Bank of Japan tries to remain an unmovable object, and this is without a notable further jump in the important longer yields . Even GBPJPY is tearing higher this morning as sterling catchs a bit of a relief rally in the wake of PM LIz Truss’ arrival on the scene. US August ISM Services vs. S&P Global Aug. Services PMI – which shows the true state of US Services economy? Already in July, there was a significant contrast between the two surveys, with the S&P Global survey suggesting that the US services sector is in contraction, with a reading of 47.3, a number that dropped to 44.1 for the preliminary August release of the survey. Meanwhile, The July ISM Services survey surprised to the upside with a strong 56.7 reading in July and the August release later today is expected in at 55.4. Which is correct? Australian economic growth data in focus Australian economic growth is expected to show 1.2% growth q/q in the second quarter and 3.8% y/y. Second quarter GDP will likely get a boost from record retail sales, and a pickup in overseas travel. However, construction costs and hampered residential construction activity could weigh on the headline GDP figure. Earnings to watch While the earnings release date for NIO has been moved around multiple times it should be final now so tomorrow one of China’s largest EV-makers will report Q2 earnings. Investors will focus on the Q3 outlook for revenue growth and margins in order to gauge when NIO can break even on its operations. Today: Ashtead Group Wednesday: People’s Insurance Co Group, Exor, Copart, NIO Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) 0830 – UK Aug. Construction PMI 1345 – US Aug. S&P Global Services PMI 1400 – US Aug. ISM Services 2105 – New Zealand RBNZ’s Silk to speak 0130 – Australia Q2 GDP Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-6-2022-06092022
Oil Is An Indicator Of The Health Of The Global Economy

Liz Truss As The New Party Leader. OPEC+ And Production Cut

Saxo Bank Saxo Bank 06.09.2022 09:50
Summary:  While the US markets were closed overnight for Labor Day, the futures this morning in Asia are indicating some respite after weeks of red. The US dollar was also softer in early Asian hours, while the focus remains on the European energy crisis and the EU emergency meeting scheduled for Friday. A token cut by OPEC+ and diminishing hope of a revival of the Iran nuclear deal supported oil prices, although China’s tightening restrictions continue to pose demand concerns. Sterling made a sharp recovery after new UK PM Liz Truss announced plans to freeze energy bills, easing some short-term concerns. Consensus expects another 50 basis points rate hike from Reserve Bank of Australia today, and US ISM services will be on the radar later. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. stock markets were closed for Labor Day. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) The treasury market was closed for Labor Day. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng TECH Index (HSTECH.I) plunged 1.9% as a Bloomberg story, citing people familiar with the matter, said that the Biden administration is considering imposing restrictions on US investments in Chinese technology companies, Bilibili (09626:xhkg) -3.2%, JD.COM (09618:xhkg) -3.0%, Tencent (00700:xhkg) -2.9%, Alibaba (09988:xhkg) -2.4%. Hang Seng Index fell 1.2%. Chengdu, the largest city in western China, extended its pandemic control lockdown for another three days. The spread of Covid-19 cases and pandemic control measures fueled risk-off sentiment in the market.  Over the weekend, the U.S. Trade Representative said that it received requests from more than 350 American companies to plead for keeping the “Section 301” tariff on goods imported from China, and the Biden administration will remain in place during the review. BYD (01211:xhkg) fell 5.9%, as exchange filing showed that Berkshire Hathaway continued to off-load its stake in BYD.  Other car makers lost as well, Geely (00175) -7%, NIO -6,9, Li Auto 02.3(August).  Thermal coal prices surged in China, following the news that Russia’s Gazprom suspended the supply of natural gas to Germany on the Nord Stream pipeline.  Share prices of coal miners gained, Yancoal Australia (03668:xhkg) +6.6%, Yankuan (01171:xhkg) +12.2%, China Coal (01898:xhkg) +8.3%.  Caixin China Services PMI came in at 55.0, edging down slightly from 55.5 in July but above market expectations. CSI300 spent the day in range-bound trading.  GBPUSD falls to fresh lows, EUR in focus this week The USD lost some ground early in Asia on Tuesday with GBPUSD making the most gains to rise towards 1.1600 as the appointment of new Prime Minister and her plan to freeze energy bills spelled some short-term relief. EURUSD saw a brief drop to 20-year lows below 0.99 yesterday but rose back to 0.9960+ levels in early Asian trading. EURGBP seen sliding slower to 0.8600 but downside may be limited if ECB decides to go for a 75bps rate hike today. But the energy situation and the EU summit on Friday certainly garners more attention with some tough decision ahead. USDJPY retreated from Friday’s 24-year highs of 140.80 to 140.30-levels with Japan’s household spending underperforming expectations at 3.4% y/y vs. expectations of 4.6% y/y. Wage pressures, which remain a key focus for Bank of Japan, also eased with labor cash earnings up 1.8% y/y from last month’s 2.0% y/y. Crude oil prices (CLU2 & LCOV2) Crude oil prices rose on Monday as OPEC+ announced an output cut of 100k bpd in October (more details below). The intention appears to be to keep Brent prices capped at $100/barrels. WTI futures rose to $89/barrel while Brent was above $95/barrel. Price action was also supported by a diminishing hope of a revival of the Iran nuclear deal. US and Iranian positions have diverged in recent days, and it is now expected that the negotiations could stretch beyond the US midterm elections in November. Still, it is key to watch the demand concerns picking up as well, particularly as China lockdowns were extended and will likely remain strict ahead of the CCP meeting on October 16. What to consider? OPEC+ announced a production cut by 100k bpd A token cut by OPEC+ last night of 100k barrels per day just reverses the output increase agreed to last month. The decision was ‘symbolic’, with the new quotas taking effect for October. The amount is significantly small compared to a 100 million bpd market but it shows that OPEC+ wants to set a floor near $100/barrel in Brent. Saudi Arabian oil minister Prince Abdulaziz bin Salman had warned last week that a cut was a possibility given what he said was a disconnect between financial and physical oil markets. The RBA meets today, and is expected to raise rates to 2.35% regardless of the property market struggling Consensus expects the RBA to hike rates by 0.5% which will take Australia’s official interest rate to 2.35%. That will be the highest rate since 2015. However, interest rates futures are pricing in a smaller hike, of just 0.4%. The RBA will likely then proceed to rise rates over the rest of 2022 and then continue to rise rates into the 2023, in a bid to stave off inflation. The issue is, the RBA only has one tool to fight inflation, which is rising rates. But the property market is already struggling to absorb the 1.75% in hikes from May, with property prices falling at their quickest pace since the 80s and construction seeing its biggest decline since 2016. This has seen banks margins (profits) be squeezed, and they face a further squeeze. Why? Australia has one of the highest debt levels in the world (Debt to GPD is 126%). So if the RBA keeps rising rates to slow inflation, it could cause a credit issue and debt to income levels are at risk of hitting GFC highs. RBA outcomes for investors, traders and the macro landscape We highlighted sectors to watch and why yesterday in the Saxo Spotlight. That's worth a quick read. Today, we will be watching what the RBA estimates inflation to be, at the end of the year, remembering the RBA previously said it expects inflation to peak at under 8%. But consider, we traditionally see peak energy (coal) demand later this year, which is likely to support coal prices higher. As such, we think the RBA will rise its inflation target and may allude to commentary about keeping rates higher. For investors and traders, we will be watching energy stocks, which will likely get extra bids today and see momentum rise (not only because of the energy crisis in Europe), but also because Australian energy prices (coal) remains supported, with Australian energy reserves expected to also run out next year. For traders, the currency pair that we are watching is the AUDEUR for an extension to the upside, on the basis that Europe will need to increase energy imports and its balance of trade will likely continue to worsen, vs the Australian balance of trade, likely to hit another record high, with Australian LNG and coal exports to see a lift in demand.    PBOC cuts FX deposit reserve requirement ratio by 200 bps to restrain yuan weakness The PBoC announced that the central bank is cutting the reserve requirement ratio for foreign exchange deposits (the “FX RRR”) to 6% from 8%, effective September 15.  The cut is expected to release about USD19 billion (2% of the USD954 billion FX deposits outstanding) in FX liquidity for banks to make loans in foreign currencies.   The PBoC last cut the FX RRR to 8% from 9% on May 15, in an attempt to send a signal to the market to put a pause to the depreciation of the USDCNY which had weakened from 6.40 to 6.80 in one month (April 15 to May 13, 2022).  After the surge of the USDCNY from 6.75 to above 6.90 in about half a month since Aug 15, the PBoC apparently wants to send a signal again to the market to slow the speed of the renminbi depreciation against the U.S. dollar. Liz Truss won the contest to become the next UK Prime Minister In the UK, the Conservative party has voted for Liz Truss as the new party leader, making her the UK’s next Prime Minister. Her promises range from quick action on energy security to alleviating the cost-of-living crisis for the hardest hit by price rises, all while cutting corporate and other taxes. She has announced a GBP 130bn plan to freeze energy bills, a recipe for ballooning fiscal deficits, an issue that is already an ingredient in sterling’s steep fall this year, so an even steeper recession is in the wings. This could come either from a drop in real GDP due to soaring inflation aggravated by further sterling declines or as demand is crushed by a steep recession due to the need for the Bank of England to accelerate its pace of rate hikes or more likely a combination of the two. Longer term, investments in fracking shale gas and new North Sea exploration could pay dividends. Russia makes a clear case of weaponizing gas supplies While the Kremlin had earlier said that they were halting gas supplies on Nord Stream 1 for a technical fault, it has now clearly said that gas supplies to Europe via the Nord Stream 1 pipeline will not resume in full until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine. Russia is still supplying gas to Europe via Soviet-era pipelines through Ukraine that have remained open despite the invasion, as well as the South Stream pipeline via Turkey. But supplies along the northern pipeline routes, including Nord Stream 1 and the pipelines through Ukraine, have fallen by more than 90% since September last year. Higher supplies from Norway, the UK, north Africa and increased imports of LNG have helped to an extent offset the loss of Russian supplies. Energy summit in EU on Friday EU leaders will meet this Friday to discuss a cap on energy prices across EU countries to limit the disruptions from soaring and illiquid pricing markets, although given limits on generation capacity, much of them due to Russia’s cutting off of gas supplies - possibly semi-permanently in the case of the Nord Stream 1 pipeline – some sort of rationing plan may be required. See our colleague Christopher Dembik’s piece on at the difficult choices Europe faces on this issue here. US ISM services PMI due today With the services sector of the US economy slowing, there are expectations of a slight retreat in August US ISM services, but it should still remain above the 50-mark which differentiates between expansion and contraction. The S&P services PMI for August had also shown a slight decline to 44.1, with the payroll data hinting at still-strong labor market conditions in the services economy.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-6-sept-2022-06092022
Energy Crisis May Be Too Much For UK Economics, Australian Dollar (AUD) Loses As Risk Is Reduced

Energy Crisis May Be Too Much For UK Economics, Australian Dollar (AUD) Loses As Risk Is Reduced

Jing Ren Jing Ren 07.09.2022 08:27
AUDUSD struggles for bids The Australian dollar takes a hit as risk appetite continues to recede across markets despite the RBA’s 50bp hike. A bearish MA cross on the daily chart shows a deterioration in sentiment. A fall below the demand zone near 0.6800 has left the aussie vulnerable. A lack of buying interest may send the pair to the recent lows around 0.6680, which is a critical floor to keep the price afloat in the medium-term. 0.6830 is a fresh hurdle but rebounds have so far been opportunities to sell at a better price. USOIL tests critical floor WTI crude weakens due to lingering concerns over demand. The recent bounce has failed to clear the daily resistance at 109.00, given back all its gains instead by retesting the base at 91.50. As sentiment remains pessimistic, the path of least resistance might still be down. A bearish breakout would force the bulls to bail out and attract momentum sellers, exacerbating volatility in the process. A drop below the psychological level of 90.00 could extend losses beyond 85.00. A recovery may be brief with 97.20 as the first resistance.   UK 100 in limited recovery The FTSE 100 struggles as the UK's finances might over-stretch with the energy crisis. On the daily chart, the index is going sideways between two boundaries 7000 and 7640. A breakout on either side would dictate the next direction in the weeks to come. In the meantime, range trading could be the name of the game. The short-term recovery is heading up to 7380, but 7480 from a faded bounce could be a tough level to crack. On the downside, 7180 is the immediate support and 7050 a major level to test the bulls’ resolve.
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

OPEC+ Plan For October Assumes Reduced Supply, Europe Considers Gas Price Cap

ING Economics ING Economics 07.09.2022 08:54
Oil prices came under further pressure yesterday, despite OPEC+ agreeing on a small supply cut for October. Meanwhile, supply disruption in the metals market continues to grow, with further aluminium supply cuts in Europe due to high energy prices Source: Shutterstock Energy- OPEC+ cut does little to support the market The decision by OPEC+ to cut output by 100Mbbls/d over October does not appear to have had the intended impact on the market. Instead, Brent settled a little over 3% lower yesterday. And this pressure has continued in early morning trading in Asia today. As we wrote yesterday, while on paper the cut is small, in reality, it is even smaller, given that most OPEC+ members are already producing below their target production for October. If this downward pressure continues we cannot rule out OPEC+ holding an emergency meeting, which they have made very clear could happen if necessary. The Saudis released their official selling prices (OSP) for October and there were some fairly large cuts for Asia and Europe. Arab Light into Asia was lowered by US$3.95/bbl MoM to US$5.85/bbl over the benchmark. Expectations were for an even larger reduction, given the narrowing that has been seen in the Brent/Dubai spread. All other grades into Asia also saw reductions, whilst all grades into Europe were also cut. It seems that Europe is moving closer toward a gas price cap, as Russia continues to reduce gas flows to the region. According to reports, the European Commission is looking at options including a price cap on gas imported from Russia and a country-by-country cap system, which would depend on a country's energy mix. While price caps may offer some much-needed relief in terms of prices, it will do little to help balance the market through demand destruction. If we look to Spain, which introduced a price cap on gas for the power market earlier in the year, gas demand in June increased by more than 14% MoM and 7% YoY. Metals - aluminium stocks jump higher LME exchange inventories for aluminium rose by 31.3kt (the largest daily addition since 10th February) to 308kt yesterday; with the majority of inflows at Malaysia’s Port Klang warehouses. These large inflows have put pressure on the market, with prices settling a little more than 1% lower yesterday. However, this weakness comes despite further aluminium supply cuts in Europe. France’s largest aluminium smelter, Aluminium Dunkerque, announced that it will cut production by 20% due to soaring power prices. The smelter, which has a capacity of 285ktpa, is expected to operate at a reduced rate until early next year. In addition, Norsk Hydro said that it will not restart operations at its Karmoey and Husnes plant (after completing maintenance), as demand for the metal remains sluggish. The producer said that “a few tens of thousands of tonnes” could be impacted out of the 1.1mt of aluminium produced annually in Norway. The difficulty in the aluminium market at the moment is trying to balance the number of supply cuts we are seeing with weaker downstream demand. In mine supply, copper output in Peru fell 1.6% MoM to 195kt in July. The majority of the decline was due to production losses from the Cia Minera Antamina mine (-9.1%) and the Southern Peru Copper Corporation mine (-14.5%). Among other metals, zinc production fell 2.9% YoY, while silver output declined 15.4% YoY last month. Agriculture – favourable weather conditions in Australia Australia’s Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimates that winter wheat production in Australia will reach 32.2mt in 2022/23, slightly below the all-time high of 36.3mt reported last year. The latest forecast is 6.3% higher than the previous estimate of 30.3mt, as overall crop production has benefited from favourable weather conditions. Australia is expected to export 25.8mt of wheat to global markets in 2022/23, marginally lower than last season’s record 26mt. The  USDA’s weekly export inspection data shows that demand for US corn and wheat remained soft over the last week. US weekly inspection of corn for export fell to 518kt over the last week, compared to 689kt in the previous week. Similarly, wheat shipment inspections fell to 478kt over the last week, compared to 631kt from a week ago. However, soybean inspections rose last week from 440kt to 496kt; while also coming in well above the 94kt seen for the same week last year. Read this article on THINK TagsWheat OPEC+ Natural gas Energy crisis Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
USD/JPY: Japanese Authorities Signal Intervention Amid Rapid Currency Appreciation

The AUD/USD Currency Pair Trading At Its Lowest Level Since Two Years, Hang Seng Index Was Flat

Saxo Bank Saxo Bank 07.09.2022 09:54
Summary:  Good news to the US economy spells bad news to the bond markets and equities. Crude oil prices stumble on restricted movements in the city of Guiyang in China, while the Newcastle Coal price moves to its own beat roaring to a brand new record high. With this in light, Australian GDP data will be a focus today with Australian coal exports hitting $100 billion. USDJPY at record highs again, so what's next for that FX pair, plus why to watch the AUDUSD. Plus what to expect from the Bank of Canada today, and NIO earnings. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  Good news to the economy is bad news to the bond markets and the stock market.  The solid ISM Services data removed the little remaining hope of a soft landing from the mind of bond traders and pushed up yields and the higher bond yield in turn dragged down the stock markets.  After the end of the reporting season and companies headed for the blackout period, stock traders spent their days mulling over what the Fed is going to do next and turned deeper into the belief that the summer rally might end up being a bear market rally and decided to trim long positions amid low liquidity and lack of retail participation. The unfolding of an energy crisis across the pond in Europe added to the negative sentiment.    S&P500 was down 0.4% and Nasdaq100 declined 0.7% on Tuesday. Bed Bath & Beyond (BBBY:xnas) tumbled 18.4% following the news that the company’s CFO committed suicide, the announcement of firing 20% of its workforce and selling 12 million of new shares.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) After the much strong than expected ISM Services prints, treasuries were sold off, 2-year yields +12bps to 3.5%, 10-year yields +16bps to 3.35%; 30-year yields +16bps to 3.50%. The money market curve is pricing in over a 70% chance of a 75bp hike at the September FOMC and a terminal rate of about 3.90%. The long-end of the curve was also pressured by the announcement of 19 investment grade new issues with a total amount over USD35 billion.   Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) A-Shares in the mainland markets noticeably outperformed shares traded in the Hong Kong bourse.  CSI300 surged almost 1% but Hang Seng Index was flat. The escalated natural gas price in Europe cast doubts on the resilience of the European chemical industry to maintain its output level of basic chemicals and encouraged expectations of Chinese basic chemical makers to export more to Europe. The A-share basic chemical space gained over 3%.  Increases in lithium carbonate prices caused a rise in the share prices of lithium miners.  The National Energy Administration released a consultative paper that encourages the development of the national electric grid to enable the taking up of more solar power onto it.  The non-ferrous metal names gained after the Ministry of Industry and Information Technology issued draft guidelines on reaching the stage of intelligent manufacturing for the non-ferrous metal industry by 2025.  Intelligent manufacturing is solve optimization problems in production by utilizing real-time data analysis, artificial intelligence, and machine learning.   Shares of Chinese property developers listed in Hong Kong surged after Guangzhou R&F (02777:xhkg) sold a hotel for RMB550 million and CIFI (00884:xhkg) sold a Hong Kong site.  These asset disposals stirred up optimism about improving the balance sheet and liquidity of Chinese developers, Country Garden (02007:xhkg) +9.3%, Longfor (00960:xhkg)+5.8%, and China Resources Land (01109)+4.5%. Electric vehicle manufacturers rebounded from 1% to 3%, bringing the industry’s week-long meltdown in share prices to a halt.Newcastle Coal prices hit new record highsAs Europe is facing an energy crisis this winter, it will need to increase energy imports. So, in anticipation of such a scenario, this might explain why the Australian coal price trades at a record, along with the futures price. We already know the UK importing is Australian LNG, so consider Australian coal could be heading to Europe more broadly next. Australian energy supply is already likely to run low in 2023, which also supports coal prices running higher. But for coal companies, their earnings and free cash flow will likely increase. Coal companies have been the best performers in global equities this year, after delivering the most earnings growth, with some companies like Whitehaven Coal (WHC) seeing 1,500% earnings growth YoY. Coal loaded at Australia’s Newcastle port hit $436.71, an all-time high. And triple the price this time last year. Coal futures prices are $463, implying the coal price will move up.USDJPY at record highs againA run higher in US yields, with 30-year yields touching 3.5%, underpinned a further move lower in the Japanese yen. USDJPY inched higher to 143.55 this morning in Asia, printing a fresh 24-year high. The market is challenging the Bank of Japan’s yield-cap policy yet again, and with no resistance in sight, the move and volatility is set to rise further. While the FX weakness alone may not be enough for the BOJ to pivot in order to maintain its credibility, higher oil prices and weakness in yen is spelling immense trouble on the inflation story as well. That could feed some pressure from the government on the BOJ policy.    The offshore yuan weakened to 6.98 At the back of the spreading of pandemic lockdowns and the strong U.S. dollar, USDCNH rose to 6.9800 and is set to challenge the 7 handle. USDCNY fixing will be on watch today, as a sharp depreciation of the currency is unlikely to be accepted just ahead of the 20th party congress that starts on October 16.  Crude oil prices (CLU2 & LCOV2) Demand concerns seemed to take over the supply issues yet again with China’s lockdowns extending further. The city of Guiyang joined Chengdu in restricting movement by the public amid renewed outbreaks of COVID-19. WTI futures slumped below $87/barrel while Brent dropped below $93. Global demand slowdown concerns also picked up after rate hikes this week. The Reserve Bank of Australia announced a 50bps rate hike on Tuesday, with Bank of Canada expected to go today and European Central Bank on the cards for tomorrow. A fresh surge in dollar also weighed on commodity prices.    What to consider? US ISM services in further expansion While the S&P services index continued to signal weakness with a 43.7 revised print for August, the ISM services on the other hand expanded further to 56.9 from 56.7 in July and came in above expectations. Business activity accelerated to 60.9 from 59.9, while the prices paid component remained elevated at 71.5, in contrast to the decline we saw to 52.5 for the manufacturing sector. New orders rose to 61.8 from 59.9 and employment rose into expansionary territory at 50.2 from 49.1.  China’s exports in August are expected to have slowed China’s exports in August would probably come in weaker (Bloomberg consensus: 13% YoY vs 18.0% YoY in July) as container throughput data suggested. The resurgence of pandemic control restrictions, production disruptions due to power rationing, and a high base last year could have contributed to the deceleration.  Economists are expecting China’s imports in August to slow (Bloomberg consensus: 1.1% vs 2.3% in July). South Korea’s August export data released last week showed a 5.4% YoY decline in total exports and a 3.4% YoY decline in chip exports to China.  Slower commodity inflation could have depressed China’s import growth as well in August. Australian economic growth data is a big focus today down under. If weaker than expected AUD could weaken Australian economic growth is expected to show 1% growth q/q in the second quarter and 3.5% y/y. GDP will likely get a boost from record commodity exports (which will likely account for 1% of GPD YoY), record retail sales, and a pickup in overseas travel. However, construction costs and hampered residential construction activity could weigh on the headline GDP figure. AUDUSD is on watch with the currency pair trading at its lowest level since June 2020. If the figures today are better than expected, we could see a knee-jerk short-term rally up. However, over the medium to longer term, the fundamentals support the USD moving up and the AUD potentially continuing to lose out with the favored FX currency, the USD gaining momentum and strength amid the energy crisis and Fed hawkishness. The technical indicators suggest the AUDUSD could also retest the March 2020 low of 0.61380, which is the currency pairs lowest level in 19 years. Australia’s Reserve Bank rose rates 0.5% to 2.35%, but it will do little to slow inflation The RBA hiked rates by 0.5% as expected yesterday, in a bid to stave off inflation, taking Australia’s official cash rate to 2.35%. The only thing that the RBA has slowed after hiking rates 1.75% so far since May is the property market. Property prices have seen their biggest drop since the 80’s and construction made its biggest decline since 2016. This is a credit concern as Australia has one of the highest debt levels in the world (debt to GPD is 126%). If the RBA keeps rising rates as they suggest, debt-to-income levels could hit GFC highs. The RBA’s rate hikes have done nothing to slow inflation, and coal prices, which are the biggest contribution to Australian CPI. What you need to consider, is how can the RBA's hikes fix the commodities supply/demand imbalance. We also think coal momentum is likely to rise in anticipation of demand picking up with peak energy season around the world, and Europe is likely to tap on Australia's shoulder for energy.   Australia’s trade surplus surged up for the 13th month, propelled by coal exports  Australia’s trade surplus rocked up to A$18.3bn in the June quarter, bolstering Australia’s balance on goods and services to A$43.1bn, which is the highest level on record. This was fueled by commodity exports and Australia’s trade balance (exports less imports) rising to a record after commodity exports hit a record high, with coal exports exceeding A$100bn annually for the first time. Bank of Canada to hike rates today After a July rate hike of 100bps, Bank of Canada meets again today. The consensus is calling for a 75bps rate hike to bring rates to a restrictive territory, given that inflation continues to run well above target and economic demand is holding up well. The pace of tightening is however likely to slow down in October, and so the messaging will be key to watch at today’s meeting.  NIO earnings ahead While the earnings release date for NIO has been moved around multiple times it should be final now so tomorrow one of China’s largest EV-makers will report Q2 earnings. Investors will focus on the Q3 outlook for revenue growth and margins in order to gauge when NIO can break even on its operations. California’s blackout threat worsens, and the state keeps nuclear power on standby  Amid a massive heatwave and wildfires sweeping the state, power use in California has hit an all-time high and officials have again warned residents to prepare for rolling blackouts. We first wrote about this on Monday but now the state’s grid operator issued another round of warnings, calling on consumers to limit energy demand while the state issued a level-2 energy emergency alert. Officials expect to ratchet the emergency warning up to level 3, which would mean blackouts are imminent. The prospect of outages underscores how grids are becoming vulnerable amid extreme weather as they transition from fossil fuels to renewable energy.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – September 6, 2022 | Saxo Group (home.saxo)
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

The Bank Of Japan Must Change Policy For JPY, Crude Oil Hits Lowest, Norway Is Open To Discussing Gas Delivery

Saxo Bank Saxo Bank 07.09.2022 10:11
Summary:  Markets are jumpy, with US equities trading back and forth over the key supports at the former lows of the cycle in the major indices. The action settled near those important support levels and then futures traded softer overnight in an Asian session that saw the downward spiral in the Japanese yen accelerating despite stern words from Japan’s Ministry of Finance. It seems only a change of course from the Bank of Japan has the chance of slowing the yen’s slide.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued to slide lower yesterday as the US 10-year yield advanced to close at 3.35% getting closer to the recent high of 3.5%. The culprit was the much stronger than expected ISM Services yesterday pushed the Fed Funds forward curve lower indicating higher policy rates for longer. S&P 500 futures fell 0.9% and is trading lower again this morning in early European trading hours sitting around the 3,897 level. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong stocks notably underperformed their mainland counterparts for the second straight session. Hang Seng Index lost 1.7% and Hang Seng Tech Index dropped 2.4% while CSI300 was flat. Heavyweight financial names HSBC (00005:xhkg) and AIA Group (01299:xhkg) tumbled nearly 3%. China internet names traded in the Hong Kong bourse also contributed to leading the indices lower, Alibaba (09988:xhkg) and Tencent (00700:xhkg) dropped about 2%, and Bilibili (09626:xhkg) fell by almost 6%. The Covid19-related lockdowns, a weakening yuan, the disappointing August trade data from China, and the rise in US interest rates hurt the market sentiment. Strong USD on the rampage once again While the focus is chiefly on the cratering Japanese yen (see more below), the US dollar is broadly stronger again and thriving on higher US treasury yields after a strong US August ISM Services data point yesterday, as well as on weaker risk sentiment. EURUSD found more separation from parity and traded to new lows briefly yesterday ahead of the ECB meeting tomorrow, while AUDUSD, for example, trades this morning below its lowest daily close for the cycle, if not below the intraday low of 0.6682 from July. The USDCNH bears watching as well, as 7.00 has now rolled into view. JPY downward spiral intensifies as global yields jump The USDJPY spike accelerated again yesterday in the wake of strong US data, as Market the world wonders how long Japan can allow the pressure from rising yield differentials globally to pile into the country’s currency, given the Bank of Japan’s insistence on capping yields out to 10 years under its yield-curve-control policy.  The situation has created a pressure cooker of a situation on the yen and tremendous volatility, which could get worse still if US 10-year treasury yields continue back higher toward the 3.50% peak from June. The next important economic data point for the US is Monday’s August CPI – and the next chart focus in USDJPY is 147.66 the 24-year high of 1998. Stern verbal warnings from Ministry of Finance officials overnight hardly even registered on the market. The BoJ must change policy for JPY to find its lows. Crude oil (CLV2 & LCOX2) Crude oil hits lowest since January as demand concerns have once again overtaken worries about supply with China lockdowns and restrictions on movements now impacting 46 cities. In addition, a surging dollar, weaker equity markets and central banks in hiking mode continue to negatively impact the general level of risk appetite. In Europe the energy crisis has raised concerns about a ‘Lehman’ moment with utilities buckling under the weight of growing margin calls. Instead of supporting prices, the token 100k b/d OPEC+ production cut announced on Monday has had the opposite effect with the market concluding the group worries about demand going forward. WTI futures slumped below $86/barrel while Brent dropped below $92. Focus on EIA’s Short-Term Energy Outlook for September and API’s weekly inventory data. US Treasuries (TLT, IEF) US Treasury yields rose sharply in the wake of the strong US ISM Services survey for August, which suggests that the US’ dominant services sector remains in strong expansion, while price pressures for the month eased. The 10-year yield benchmark traded near 3.33% this morning, above all but the highest two daily closes back in a mid-June spike to 3.50%. Above current levels, US treasury yields are likely to dominate focus across markets, likely driving US dollar and risk sentiment direction. What is going on? Signs of a flagging world economy send commodities lower One week into September, the Bloomberg Commodity Index trades down more than 4% with losses seen across all sectors led by energy and industrial metals. The prospect of aggressive Federal Reserved Monetary tightening has lifted the dollar to a record against a broad basket of currencies while the yield on ten-year US government bonds has climbed to 3.34%, just below the 3.5% June peak. In addition to rising interest rates, soon also from the European Central Bank, the market is also dealing with an energy crisis in Europe and lockdowns in China hurting growth and demand in both areas. With the stock market suffering declines and geopolitical tensions being elevated, some safe-haven demand has helped cushion precious metals, the best performing sector so far this month. Xi Jinping invokes “whole nation system” With the recent US restrictions on Nvidia selling its most advanced AI chips to Chinese customers Xi Jinping invoked the so-called whole nation system to coordinate and allocate resources for China to become fully independent from the technologies that the US is trying to curb going to China. This speech bolsters our view that the world is moving towards a bipolar world with more fragmented supply chains and economies. US ISM services in further expansion While the S&P Global Services PMI survey continued to signal weakness with a 43.7 revised print for August, the BLM’s historically more close watched ISM Services survey on the other hand expanded further to 56.9 from 56.7 in July, slightly above expectations. Business activity accelerated to 60.9 from 59.9, while the prices paid component remained elevated at 71.5, in contrast to the decline we saw to 52.5 for the manufacturing sector. New orders rose to 61.8 from 59.9 and employment rose into expansionary territory at 50.2 from 49.1. Norway says it is open to discussion of energy price caps in Europe Norway is the largest supplier of natural gas to Europe and the country’s prime minister Jonas Støre said the country is open to discussing shorter- and longer-term gas delivery arrangements that cap prices, saying that the discussions would have to occur with the country’s oil and gas producers, chiefly Equinor, but that it is important to not jeopardize production levels. France’s nuclear energy production is in free fall More than half of the fifty-six nuclear reactors are down due to corrosion issues on reactors which could take years to solve. Nuclear production is now at its lowest point, around 23,000 MWh per day on average versus 40,000 MWh in the same period last year. So far, this has not created a power emergency as electricity demand is usually not elevated during the summer (around 45 GWh per day). But it might become an issue when higher winter consumption will push electricity demand around 80-90 GWh on average. This could cause an electricity shortage at the worst time ever (see Chart of the Week : The energy crisis is hitting France, 29 August 2022). China’s exports in August slowed more than expected In U.S. dollar terms, China’s exports in August come in weaker at +7.1% y/y (Bloomberg consensus: +13% y/y; July: +18.0% y/y). The resurgence of pandemic control restrictions, production disruptions due to power rationing, weaker demand from U.S. consumers, and a high base last year contributed to the deceleration. 46 cities in China are implementing various degrees of lockdowns or restrictions on mobility, affecting nearly 300 million people and close to 25% of the country’s GDP. Imports also were slower than expected, coming in at +0.3% y/y (Bloomberg consensus +1.1% y/y; July: +2.3%). Australia assures it will remain a reliable LNG supplier Australia’s Minister for resources has again been called on to ‘pull the trigger’ and limit gas exports given the projections show Australia will have an energy shortage next year. The Minster said although it has the matter under control, it cannot guarantee it won’t be limiting exports. Japan imported AUD 17bn of the fossil fuel from Australia last year. As such Japan says it’s watching the situation closely. What are we watching next? Bank of Canada to hike rates today After a July rate hike of 100bps, Bank of Canada meets again today. The consensus is calling for a 75bps rate hike to bring rates to a restrictive territory, given that inflation continues to run well above target and economic demand is holding up well. The pace of tightening is however likely to slow down in October, and so the messaging will be key to watch at today’s meeting. Canada’s Ivey PMI for August is also out today after dipping sharply in July to just below 50. ECB meeting on Thursday A 75-bp hike that takes the policy rate to 0.75% is the favoured scenario, although not fully priced. To surprise the market and bolster its claim that it is serious about getting ahead of inflation, the ECB will have to move 100 basis points. Guidance will also be important, as the ECB is expected to take the rate to at least 1.5% through the December meeting (two more meetings after the meeting tomorrow). Several key points will be discussed at the EU emergency energy meeting on 9 September According to Reuters, the EU energy ministers will try to find an agreement on a gas price caps (yesterday, European gas jumped 31 % as Russia kept Nord Stream link shut) and on providing companies facing high margin calls emergency liquidity support (several utilities are already on the edge of bankruptcy in Germany and in Austria, for instance). The ministers will also focus on reforming more deeply the European electricity market. Two main options are on the table: the ‘Iberian exception’ and the Greek non-paper (see EU Emergency Energy Meeting : A Never Ending Story, 31 August 2022). Earnings to watch Today’s key earnings release is NIO which one of the most prolific EV-makers in China. Revenue growth is expected to slow down to 16% y/y in Q2 as Covid restrictions slowed down consumer markets in Q2. Expectations are looking for revenue growth to accelerate to 66% y/y and a narrower EBITDA loss of CNY 1.7bn. Today: People’s Insurance Co Group, Exor, Copart, NIO Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) 0900 – UK Bank of England Governor Bailey and others testify before Parliament Poland Rate Announcement 1230 – US Jul. Trade Balance 1230 – Canada Jul. International Merchandise Trade 1300 – US Fed’s Barkin to speak 1400 – Bank of Canada Rate Decision 1400 – Canada Aug. Ivey PMI 1400 – US Fed’s Mester (Voter) to speak 1600 – EIA's Short-Term Energy Outlook 1640 – US Fed Vice Chair Brainard to speak 1800 – US Fed Beige Book 1800 – US Fed’s Barr (Voter) to speak on Financial System Fairness & Safety 2030 – API's (delayed) Weekly Report on US Oil Inventories 2301 – UK Aug. RICS House Price Balance 0130 – Australia Jul. Trade Balance 0305 – Australia RBA Governor Lowe to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher       Source: Financial Markets Today: Quick Take – September 7, 2022 | Saxo Group (home.saxo)
Poland's Inflation Expected to Reach Single Digits in August, but Disinflation to Slow Down

Australia’s Economy, ECB Decision In Focus, The UK Has Problem With A Dockers

Saxo Bank Saxo Bank 08.09.2022 09:27
Summary:  The combination of a nearly 6% drop in crude oil price, a retracement of the dollar to close to parity with the Euro and a 8bp fall in the 10-yar treasury yields have jointly put together an environment for the stock market to rally and snap a 7-day losing streak since the Jackson Hole. The Bank of Canada raise its policy rate by 75bps, as expected. August trade data from China was much weaker than expectation with both exports and import falling. Excluding inflation, real export growth was estimated to be negative and crude oil import growth in volume terms was negative in August. The news contributed to the fall in crude oil price yesterday. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  The U.S. equity markets bounced off from the trough of the post-Jackson Hole decline and snapped a 7-day losing streak to finish Wednesday decisively higher, S&P500 +1.8%, Nasdaq 100 +2.1%.  The move higher was largely driven by a confluence of macro factors: lower bond yields, and announcing new products at the company’s annual event.  lower US dollar, and lower crude oil price plus short covering and call option delta hedging. With a 5.7% decline in crude price, the energy space was the only sector in the S&P 500 that fell. Twitter (TWTR:xnys) surged 6.6% following a Delaware court rejected Elon Musk’s request to delay a trial into the reclination of his offer to acquire Twitter. Snap (SNAP:xnys) jumped 6.4% after the Verge magazine cited an internal memo from CEO Spiegel stating the company’s goals to grow its user base by 30% and bring up revenue by 20% by the end of 2022. Apple (AAPL:xnas) gained 1.4% after a new line of products at its annual event. Apple did not raise prices for its new iPhone 14 series.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Nick Timiraos at the Wall Street Journal (who is believed to be the Fed’s mouthpiece to guide market expectations) suggested that Fed Chair Powell’s “public pledge to reduce inflation even if it increases unemployment appears to have put the central bank on a path to raise interests by 0.75 percentage point rather than 0.50 point this month”. Fed Vice Chair Brainard pledged to fight against inflation “for as long as it takes” but also mentioned risks that might potentially be caused by over-tightening. The money market curve is pricing in a 78% chance a 75bp hike at the September FOMC. Treasury yields however fell across the curve as crude oil price went sharpy lower, 2-year yields -7bps, 10-year yield -8bps. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong stocks notably underperformed their mainland counterparts second day in a row.  Hang Seng Index lost 0.8% and Hang Seng Tech Index dropped 1.3% while CSI300 was little changed. Heavyweight financial names HSBC (00005:xhkg) and AIA Group (01299:xhkg) tumbled about 2%.  The short video and live streaming names dragged on the China Internet space, Kuaishou (01024:xhkg) -3.7%, Bilibili (09626:xhkg) -4.2%.  U.S. House Representative Dusty Johnson (Republican, South Dakota) introduced the Block the Tok Act, a bill that would if enacted, prohibit Tik Tok from accessing U.S. citizen’s user data from within China and block Tik Tok’s apps on U.S. government devices.  Tencent (00700:xhkg) is increasing its stake in French video game developer Ubisoft (UBIP:xpar) but the latter’s founder retaining majority control.  Following President Xi Jinping stressing China’s determination to “mobilize resources nationwide to achieve breakthroughs in core technologies in key fields” in a high-level reform planning meeting on Tuesday, semiconductor leader SMIC (00981:xhkg) gained 1.2%. China developer Soho China (00410:xhkg) jumped 11% after Chairman Pan Shiyi and CEO Pan Zhangxin Marita resigned.  The Covid-19-related lockdowns, a weakening yuan, the disappointing August trade data from China, and the rise in U.S. interest rates continued to pressure the sentiment of the stock market.     USDJPY holding up despite softer yields USDJPY eased after hitting highs of 145, but still remained above 144 in early Asian hours on Thursday despite softer US yields overnight. The threat of intervention remains as Japan’s final Q2 GDP released this morning suggests markets may continue to test the Bank of Japan’s resolve to keep an accommodative policy. Q2 GDP was revised higher to 3.5% q/q annualized from 2.2% earlier. 10Y JGB yields are also at 2-month highs and in close sights of the 0.25% cap. Verbal intervention has had little effect, and real intervention will need a coordinated effort and will only increase the volatility as long as the US yields are on the rise. The only real scope of a yen recovery will be seen if US economic data starts to deteriorate or Bank of Japan tweaks policy. Crude oil prices (CLU2 & LCOV2) Oil prices steadied in the Asian morning after steep declines in the last few days amid demand concerns especially with China pushing further with its zero Covid policy. Chengdu extended a lockdown in most of its downturn areas, raising concerns the restrictions will hurt oil consumption. A stronger dollar, despite softer yields, also weighed on investor appetite. Supply issues made little impact, even as EIA lowered its annual oil production targets, with domestic production now expected to reach 12.6mb/d, and raised its demand outlook, with annual petroleum usage rising 2mb/d through next year. The likelihood of an Iran nuclear deal in the near term is also fading. What to consider? Fed speakers, and another possible WSJ leak? Federal Reserve Vice Chair Brainard noted rates will need to rise further and policy will need to be restrictive for some time. She needs to see several months of low inflation readings to be confident inflation is moving down to 2% but how long it takes to get back to target will depend on a combination of continued easing in supply constraints, slower demand growth, and lower markups, against the backdrop of anchored expectations. Mester (2022 voter) reaffirmed that she is not yet convinced about inflation peaking yet, and she also spoke on the August jobs report, where she said they are beginning to see some moderations but labour market conditions remain strong. Besides, WSJ's Nic Timiraos wrote: "The Federal Reserve appears to be on a path to raise interest rates by another 0.75 percentage point this month in the wake of Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment." While the Fed is not yet in a blackout period, with Chair Powell set to be on the wires later today, there is little chance this could be a leak like last time. Still, money market pricing of a 75bps rate hike at the September meeting has picked up from 68% on Tuesday to 81% now. China’s exports in August slowed In U.S. dollar terms, China’s exports in August come in much weaker at +7.1% YoY (Bloomberg consensus: +13% YoY; July: +18.0% YoY).  Once adjusting the data with export price inflation, the real growth of exports may have turned negative in August YoY.  Export growth decelerated across destinations, except Russia (having risen to 26.4% YoY in August from 21.4% in July).   The growth of export to the U.S. was particularly weak, having turned to minus 4.2% YoY in August from a growth of 10.9% in July.  Imports growth was also slower than expected, coming in at +0.3% YoY (Bloomberg consensus +1.1% YoY; July: +2.3%). The weakness in import growth tends to indicate weak domestic demand.  The growth of imports from the U.S. slowed to -7.5% YoY in August from -4.3% YoY in July. Import volume growth for crude oil was negative at -9.4% YoY in August, little changed from -9.5% in July but import volume of coal bounced to a growth of 5.0% YoY in August from -22.1% in July. Import volume of iron ore declined to -1.3% YoY in August from a growth 3.1% in July.  The import volume of copper, however, increased to +26.4% YoY in August from 9.3% in July.     Australia’s economy grew stronger than expected YoY vindicating more rapid hikes are coming Australia’s A$2.2 trillion economy grew at 0.9% q/q in the second quarter (beating Bloomberg estimates), while growing 3.6% y/y also beating the 3.4% expected. Australia’s economic firepower came from record high commodity exports, with exports now accounting for 1% of GPD YoY. The data also showed the economy strengthened by a boost in retail sales with department store sales at record pace. Services and economic earnings were also able to offset the pull back in savings rates, which fell for the third straight quarter to 8.7%, as households are having to dive into their bank accounts to pay record high energy prices. AUDUSD vulnerable of another pull back The USD against the Aussie popped to its highest level since June 2020, after a Wall Street Journal article suggested Fed Chair Powell is committed to reducing inflation with a 0.75% hike likely in September. What also supports this is that stronger than expected US economic data continues to come through (with the most recent data showing the US services sector is healthy), validating the Fed has room to rise rates. Basically, the market is thinking the Fed has room to be more aggressive, while the RBA’s hikes are more subdued. Bottom line, you can’t fight the Fed. The technical indicators suggest the AUDUSD could also retest its lows, while the USDAUD could touch its April 2020 high. Australia assures its Asian customers it will remain a reliable LNG supplier; but it won’t guarantee anything Australia’s Minister for resources has again been called on to ‘pull the trigger’ and limit gas exports given the projections show Australia will have an energy shortage next year. The Minster said although it has the matter under control, it cannot guarantee it won’t be limiting exports. Japan imported A$17 billion of the fossil fuel from Australia last year. As such Japan says it’s watching the situation closely. Bank of Canada raised rates As expected, Bank of Canada hiked rates by 75bps bringing the rate to 3.25% into restrictive territory, given the central bank’s estimate of neutral rate is 2-3%. The tone remained hawkish, but lacked clear guidance as it reiterated that further hikes will be necessary to bring inflation to target, implying the BoC is not done yet and will move even further into restrictive territory. While growth is slowing and housing prices are down 18% since February, but short-term inflation expectations remain high, signalling a risk that elevated inflation becomes entrenched. NIO earnings Chinese EV maker NIO (NIO:xnys/09866:xhkg) reported better-than-expected revenue of RMB 9.57 billion due to pent-up demand. The company delivered 25,059 vehicles in Q2, a 14.4% growth from last year. Gross margins, however, decreased to 16.7% from 18.1% in Q1 this year and 20.3% in Q2 last year. Management’s guidance for Q3 delivery was 31,000 to 33,000 vehicles, below analyst expectations.  ECB rate hike in focus; what could it mean for EURUSD? The European Central Bank meeting will be in focus after plenty of chatter around front-loading rate hikes in the last few days. Most members have come out in support of a 75 basis point rate hike for the September, and the market pricing suggests 125 basis points between September and October meetings (so one 75bps and one 50bps). Only Philip Lane seemed to strike a different tone, saying that he would prefer step-by-step hikes to make sure the financial markets have time to absorb the tightening in a measured manner. August inflation for the Euro area, reported last week, also suggested further price pressures with a 9.1% YoY print from 8.9% YoY previously. Market pricing suggests a 67bps rate hike today, and a cumulative hike of 129bps by October or 157bps by year-end. With a 75bps rate hike not fully priced in for September, such a move along with commitment to do more front-loading could be positive for EURUSD in a knee-jerk. Still, with energy crisis in focus and EU emergency meeting scheduled for tomorrow, it may remain hard for EURUSD to stay above parity. Only a 100bps rate hike will really count as a hawkish surprise. If ECB decides to go for 50bps, we could see EURUSD test the cycle lows. New dockers strike in the United Kingdom (UK) The UK has been facing recurring transport disruptions over the past few years. This is related to Brexit, Covid and now higher cost of living. A dockers strike at Felixstowe port (the country’s first container port) ended a few days ago. But a new one is looming at the port of Liverpool. The dockers trade union is calling for a strike from 19 September to 3 October (at least) after negotiations to raise salary failed. This matters a lot. The port of Liverpool is a key hub for transatlantic sea transport. If inflation continues to rise (which is likely), expect much more strikes to come and not only in the transport industry. Social tensions will probably increase sharply in the coming months.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – September 8, 2022 | Saxo Group (home.saxo)
Yen (JPY) Takes A Stab At Resilience, The Grains Sector Has Survived Well

Concerns About Global Supply On The Wheat, Apple Without Price Increases

Saxo Bank Saxo Bank 08.09.2022 09:39
Summary:  US Treasury yields retreated sharply yesterday, bringing relief to equity markets and turning the US dollar back lower. The soaring USDJPY found resistance near 145.00, while EURUSD backed up toward parity ahead of today’s ECB meeting, which is set to deliver the largest rate hike in the central bank’s history of 75 basis points as the bank seeks to catch up with global peers in its fight against inflation. Crude oil slumped below support on demand concerns, especially in China.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities rallied hard yesterday with S&P 500 futures surging 1.8% in what mostly looks like a technical rebound across many asset classes as positions maybe are trimmed ahead of the US CPI report on Tuesday. The obvious key level to watch in S&P 500 futures on the upside is the 4,000 level with the futures trading around the 3,988 level this morning. The 50-day moving average at 4,027 is currently colliding with the 100-day moving average making the 4,030 level a key area to test in the short-term. Apple unveiled a low-risk update to its iPhone suite introducing the iPhone 14 with a few hardware updates. The cost-of-living crisis may jeopardize Apple’s expected upgrade cycle that the market is currently expecting. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Despite the S&P 500 rallied by nearly 2% and the Nasdaq Golden Dragon China Index surged by 2.3% overnight in the US, Hang Seng Index (-0.4%) continued its multi-session decline since the beginning of September. In mainland China, the CSI300 had a lackluster day fluctuating between small gains and losses. The weakness in Tencent (00700.xhkg), -2.3%, dragged down the benchmark index in Hong Kong. According to filings to the stock exchange, about $7.6bn worth, or 2% of the market cap, of Tencent shares have been transferred to the exchange’s clearing and settlement system. The news stirred up speculation that Prosus, a majority shareholder holding over 28% of Tencent, is selling Tencent shares.  In June, Prosus (PRX:xams) announced that the company was going to offload its stake in Tencent to raise cash to buy back its own shares and Naspers’ (NPN:xjse) shares (Prosus’ parent) at a discount to NAV. Strong USD tamed by treasury yields. EURUSD focus today in FX on ECB The latest leg higher in the US dollar was driven by a sharp move higher in US Treasury yields, a move that reversed yesterday and took the US dollar back a few notches with it. An important test ahead for the broader US dollar picture today is in EURUSD as the ECB is expected to deliver a 75-bp rate hike, the largest hike in its history, in an attempt to play catchup with global peers in its inflation fight – will the move support the Euro further or does Europe’s grinding energy emergency keep a lid on EURUSD for now? The market has priced more than 50/50 probability of a 75-bp move versus a 50-bp move and would need to hike 100 basis points to really impress the market. JPY downward spiral as global yields jump The USDJPY spike finally found resistance at the 145.00 level yesterday as US Treasury yields reversed lower. The move higher has been aggravated by the rising tide of global yields that contrasts with the Bank of Japan policy of standing pat with its yield-curve-control (YCC) policy. Often, a weak JPY encourages hedging activity by the Japanese holders of enormous savings held abroad but hedging activity has been low this time as Japanese investors abroad have enjoyed strong returns. The cycle top in EURJPY just above 144.00 is also a focus today as the ECB is set to hike as noted above. Given the scale of JPY weakening in recent days, Japanese officials will likely be out soon with a more determined response, generating two-way volatility. Crude oil (CLV2 & LCOX2) Oil prices steadied in the Asian morning after steep declines in the last few days amid demand concerns especially in China where its zero Covid policy is now impacting areas and a population that accounts for around 25% of GDP. Before the slump below $90 in Brent and WTI $85 the market had briefly rallied on Putin threats that he would cut supplies to countries agreeing on a price cap for Russian oil and gas. Supply issues had little impact, even as EIA lowered its annual oil production forecast for this and next year while raising its global demand outlook amid rising gas-to-fuel switching activity, mainly in Europe. The likelihood of an Iran nuclear deal adding supply is also fading. Focus on further OPEC+ action with Brent sliding further away from $100/b. Resistance: WTI at $85.75 and Brent at $91.50. Gold (XAUUSD) Gold once again managed to find buyers below $1700 thereby avoiding another attempt at challenging key support around $1680, a level from where the price has bounced multiple times during the past two years. Main source of directional input continues to be provided by yields and the dollar, both of which trade softer overnight (see above and below comments). Gold’s best chance of a further bounce at this point would come from short covering from recently established short positions, but for that to happen, the price as a minimum would need to break above $1735. Focus today on today’s expected ECB rate hike and its impact on EURUSD. US Treasuries (TLT, IEF) US Treasury yields reversed much of the previous day’s gains yesterday and followed through a bit lower still, taking the 10-year treasury yield below 3.25% this morning. The move helped bring relief to global risk sentiment as the USD also edged lower. The persistent move higher in US longer yields from the early August base allows for a test all the way to the 3.00% yield area in that 10-year benchmark without reversing the trend. The focus to the upside is the 3.50% peak from mid-June, around the timing of the June FOMC meeting. What is going on? Putin supply threat lifts wheat futures The Chicago and Paris contracts both jumped by more than 3% on Wednesday with the US traded contract reaching the highest level in nearly two months, after Putin criticized the UN-brokered Ukrainian grain export deal, saying the developing world had been “cheated” with the bulk of the shipments going to Turkey and Europe. Comments that could see Russia trying to revise its term to limit countries that can receive shipments. Paris Milling wheat, the high protein variety used for human consumption, still trades 25% below the May panic peak but any developments that reduces flow from Ukraine may add to global supply worries and lift the price further. New dock workers strike in the United Kingdom The UK has been facing recurring transport disruptions over the past few years. This is related to Brexit, Covid and now higher cost of living. A dockers strike at Felixstowe port (the country’s biggest container port) ended a few days ago. But a new one is looming at the port of Liverpool. The dockers trade union is calling for a strike from 19 September to 3 October (at least) after negotiations to raise salaries failed. This matters a lot. The port of Liverpool is a key hub for transatlantic sea transport. If inflation continues to rise (which is likely), expect many more strikes to come and not only in the transport industry. Social tensions will probably increase sharply in the coming months. Apple unveils iPhone 14 models If investors were hoping for a major product release of the most popular and iconic smartphone on the market they were left disappointed yesterday. Apple delivered a low-risk upgrade to its iPhone series with the iPhone 14 delivering some few hardware upgrades and no change to its overall design. The computer chip A15 Bionic is also staying the same. The biggest positive was probably no price increases which is quite telling, but also underscoring the cost-of-living crisis that many consumers are facing and in fact is jeopardizing the expected upgrade cycle of the iPhone. US retail investor readings still rock-bottom The AAII investor readings are still dire reading for the market with the spread between bullish and bearish readings hitting -35.2 in its latest data point which is worse than during the lows in 2020 and on par with the darkest hours during the Great Financial Crisis. This very negative sentiment of course could be fuel for a sharp rebound in the case Tuesday’s US inflation print turns out lower than expected. Dovish speech from Reserve Bank of Australia chief Philip Lowe In Australia overnight, RBA Governor Lowe delivered perhaps the first somewhat dovish speech in a long while from a non-BoJ developed market central bank, arguing that “the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises”. This lowered anticipation that the October RBA meeting will deliver another 50-bp hike after four consecutive half-point increases that have taken the policy rate to 2.35%. Australia’s trade surplus halves as coal and iron ore exports fall from record highs Australia’s trade surplus almost halved in July, plunging from A$17.1b to a A$8.7b surplus, when the market expected the surplus balance to fall to just A$14.5b. It comes as exports of coal and iron ore fell from their record highs, dragging down total exports by 10%. Coal export earnings fell 17% with the northern hemisphere in peak summer, while iron ore export earnings fell 15% tarnished by China’s slow down. Australian imports (covering outbound tourists) rose 5% with Aussies escaping the record cold winter to enjoy European sun. Fed speakers, and another possible WSJ article “guiding” for the September FOMC Meeting? Federal Reserve Vice Chair Brainard noted rates will need to rise further and policy will need to be restrictive for some time. She needs to see several months of low inflation readings to be confident inflation is moving down to 2% but how long it takes to get back to target will depend on a combination of continued easing in supply constraints, slower demand growth, and lower markups, against the backdrop of anchored expectations. The Cleveland Fed’s Mester (2022 voter) reaffirmed that she is not yet convinced about inflation peaking yet, and she also spoke on the August jobs report, where she said they are beginning to see some moderation, but labour market conditions remain strong. Elsewhere, the WSJ's Nick Timiraos wrote: "The Federal Reserve appears to be on a path to raise interest rates by another 0.75 percentage point this month in the wake of Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment." After a Timiraos article triggered a spike in anticipation that the June FOMC meeting would deliver 75 basis points rather than 50 bps, the market may have taken note, as money market pricing of a 75bps rate hike at the September 21 FOMC meeting has picked up from 68% on Tuesday to 81% now. Bank of Canada hikes 75 basis points As expected, the Bank of Canada hiked rates by 75bps bringing the rate to 3.25% and into restrictive territory, given the central bank’s estimate of neutral rate is 2-3%. The tone remained hawkish, but lacked clear guidance as it reiterated that further hikes will be necessary to bring inflation to target, implying the BoC is not done yet and will move even further into restrictive territory. While growth is slowing and housing prices are down 18% since February, short-term inflation expectations remain high, signaling a risk that elevated inflation becomes entrenched. What are we watching next? Japan’s Ministry of Finance, Bank of Japan and FSA to hold first three-way meeting since June This is clearly in response to the breathtaking weakening in the Japanese yen this week. We can expect some form of more determined intervention from here and with it, more two-way volatility. ECB interest rate hike today The ECB will have no other choice but to send a strong signal to the market regarding its commitment to lower inflation (expect a 75-basis point interest rate hike today). We forecast the ECB will need to keep increasing rates in the coming months for at least four main reasons: 1) inflation is high and it is not just about energy prices. Core inflation stands at 4.3 % year-over-year and is likely to continue rising in the short-term; 2) inflation expectations are up sharply. In the space of only eight months, inflation expectations for 2023 have risen from 1.5 % to 4.2 %; 3) the economy is able to cope with higher interest rates (eurozone consumer credit growth is steady which seems to indicate that monetary policy is not tight enough); and 4) the low euro exchange rate is a headache (since it increases imported inflation). The ECB will need to convince the markets they are able to curb the decline of the single currency. This is not an easy task. EU proposes five measures to curb gas demand and prices Ahead of Friday’s emergency energy meeting, European Commision President Ursula von der Leyen proposed five radical steps to curb costs and demand: 1) Smart savings of electricity by mandatory targets to reduce peak hour demand for electricity; 2) Cap on revenues of companies producing electricity with from low-cost sources such as wind and solar with profits being re-channeled to vulnerable people and companies; 3) Solidarity contribution from fossil fuel companies; 4) Liquidity support for energy utility companies in order for them to cope with elevated market volatility; 5) Cap on Russian gas revenues on the remaining 9% Russia supplies  to Europe, down from a pre-war level around 40% Earnings to watch Today’s key earnings release is DocuSign which was a pandemic darling but has since been seeing growth coming down dramatically and its valuation hit by higher interest rates. Analysts expect FY23 Q2 (ending 31 July) to show revenue growth of 17.7% y/y with a significant jump in operating income which the company must deliver to avoid further downward pressure on its valuation. Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) 1100 – Mexico Aug. CPI 1215 – ECB Rate Announcement 1245 – ECB President Lagarde Press Conference 1300 – Poland central bank governor Glapinski press conference 1310 – US Fed Chair Powell to speak at a conference (includes Q&A) 1430 – EIA Natural Gas Storage Change 1500 – EIA's Weekly Crude Oil and Fuel Stock Report (delayed by a day) 1525 – Canada Bank of Canada’s Rogers to deliver report 1600 – US Fed’s Evans (voter 2023) to speak 1820 – US Fed’s Kashkari (voter 2023) to speak 1900 – US Jul. Consumer Credit 0130 – China Aug. PPI/CPI  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher     Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-8-2022-08092022
Industrial Metals Outlook: Assessing the Impact of China's Stimulus Measures

Podcast: Forex Market Is Focus On The Yen, Power Prices In EU

Saxo Bank Saxo Bank 08.09.2022 11:45
Summary:  Today we ponder whether yesterday's bounce in sentiment after technical support once again survived offers room for at least tactical optimism. Certainly, investor sentiment in the US is in the dumps, nearly matching record low levels according to at least one survey. Elsewhere, we breakdown the impact of EU proposals to cap power prices, particularly on alternative energy equities, the latest on crude oil and Putin boosting wheat prices with threats to revisit Ukraine export deal. In FX, the focus is on the JPY as officialdom there is getting religion on the need to do something soon and on the EUR as the ECB is likely set to hike 75 basis points today. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Share       Source: https://www.home.saxo/content/articles/podcast/podcast-sep-8-2022-08092022
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

Brent Crude Oil Price Hit Surprising Levels Yesterday, In Chengdu (China) Lockdowns Has Been Extended

ING Economics ING Economics 08.09.2022 10:35
The broader strength seen in the USD has weighed heavily on the commodities complex, whilst Chinese demand concerns are certainly not helping. For oil, we will need to keep an eye on OPEC+ and how they might react to the more recent weakness in the market Energy - Brent breaks below $90/bbl The oil market continues to come under pressure. Brent settled more than 5% lower yesterday at US$88/bbl. This morning we are seeing somewhat of a relief rally. The strength that we have seen in the USD is not helping oil or the broader commodities complex, whilst there are clear demand concerns, particularly when it comes to the continued Covid-related lockdowns that we are seeing across parts of China. Chengdu has seen another extension to its lockdown. The more recent weakness in oil prices does increase the risk that we see some form of intervention from OPEC+. The group made it clear that further action could be taken if they felt it was necessary, and the market is likely trading towards levels where they are starting to get a bit uncomfortable.   While there are clear demand concerns in China, imports of crude oil rebounded in August. Imports averaged 9.54MMbbls/d over the month, up 8.1% MoM and the highest import volumes seen since May. These flows are still down 9.4% YoY, while cumulative imports over the first 8 months of the year are down 4.7% YoY. We will get a better idea on how much of these imports in August went towards stock building once output data is released. In its latest Short Term Energy Outlook, the EIA made revisions lower to its US oil production forecasts. US crude oil output in 2022 is expected to average 11.78MMbbls/d, up around 540Mbbls/d YoY. In August the EIA was forecasting output to average 11.86MMbbls/d. As for 2023, output is expected to grow by around 850Mbbls/d to average 12.63MMbbls/d. This is down from a previous forecast of 12.7MMbbls/d. Finally, comments from Putin yesterday were a clear sign of an escalation in the use of energy as a weapon. The Russian president threatened that any country which adopts the G-7 oil price cap would see all flows of Russian energy stop - including oil, refined products, natural gas and coal. While Russia may be able to afford taking this action if big buyers don’t take part in the cap, it becomes a little bit more difficult to follow through with this threat if the likes of China and India were to join the price cap. Clearly that is a big "if", as it could be a significant challenge for G-7 nations to convince China and India to take part in a price cap. Metals - rising USD weighs on the complex Weaker-than-expected trade data from China along with a stronger USD weighed on the metals complex yesterday. Copper settled lower on the day, whilst aluminium fell to an intra-day low of US$2,233/t (the lowest levels since April 2021) yesterday. Aluminium supply cuts in Europe continue to get more severe as yet another smelter announced production cut plans yesterday. Speira GmBH announced it will curb production by 50% at its smelter in Germany due to elevated energy costs. The smelter expects the curtailment process to be completed in November for an indefinite period. Speira's plant in Germany can produce about 160ktpa of aluminium, however, current output is around 140kt. The market continues to ignore these cuts, with the market of the view that downstream demand is taking a bigger hit than supply. The latest trade numbers from China Customs shows that imports for unwrought copper rose 7.4% MoM and 26.4% YoY to 498kt in August. Cumulative imports over the first 8 months of the year are up 8.1% YoY to total 3.9mt. Meanwhile, copper ore and concentrate imports rose 19.5% MoM and 20% YoY to a record high of 2.27mt last month. Iron ore imports saw somewhat of a recovery, rising 5.4% MoM to 96.2mt in August and reaching their highest levels since February. Lower prices and peak construction season are likely to have supported imports. However,  YTD inflows are still down 3% YoY to total 723mt. Agriculture – Putin questions Ukrainian grain deal Wheat prices surged higher yesterday, trading almost 7% higher at one stage during the day. This comes after Putin questioned the Ukrainian grain export deal from the Black Sea, claiming that poorer countries are not benefiting from this supply and that instead the bulk of these supplies are going to Europe. Ukraine has pushed back on these comments, saying that two thirds of shipments from the deal have gone to Africa, Asia and the Middle East. The latest trade data from China Customs shows that soybean imports fell by 24.5% YoY (down 9% MoM) to 7.17mt in August, as higher prices and softer demand for edible oils weighed on import requirements. Soybean crushing margins in China have been in negative territory for quite some time now, with current margins at around negative CNY170/t. Although a significant improvement in hog farming profits in recent months should support soymeal demand in the latter half of the year. Read this article on THINK TagsRussian oil price cap Russia-Ukraine OPEC+ Energy crisis China Trade Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

Situation On Crude Oil Market Is Really Absorbing

Craig Erlam Craig Erlam 08.09.2022 16:20
OPEC+ will be watching closely Oil prices are rebounding slightly on Thursday, up almost 1%, after collapsing more than 5% a day earlier on renewed global growth concerns. With policymakers around the world still hawkish on interest rates, most notably in the US, and China locking down major cities in its zero-tolerance fight against Covid, the demand outlook is weakening. After such a long period of supply driving the crude price, it’s demand that appears to be dominating now with traders anticipating a slowdown, maybe even a recession next year. I can only imagine how OPEC+ is taking the recent price moves, with its warnings and token cut seemingly falling on deaf ears. An emergency meeting may well be on the cards ahead of its scheduled October gathering. Gold recovers as dollar pares gains Gold enjoyed a little reprieve on Wednesday, as yields pared recent gains and the dollar pulled off its highs. I’m not sure we should get too excited about gold’s resurgence just yet, in fact, it’s already slipping a little today. The rebound means crucial $1,680 support continues to hold for now but given the backdrop of hawkish central banks and immense uncertainty in the markets, I’m not sure traders are ready to abandon the dollar just yet. That said, it will be interesting if gold can manage to catapult itself back above $1,730 as that would suggest – in the short term at least – it has found some favour in the markets. With a double bottom perhaps forming in gold, a break of $1,730 could indicate a much more significant corrective move, even if the longer-term trend is still very much against it. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil bounces back, gold recovers - MarketPulseMarketPulse
EUR: Range-bound Outlook Amid Tightened Swap Rate Gap

The AUD/USD Lost After RBA Governor Remarks, The End Of An Era For The UK

Saxo Bank Saxo Bank 09.09.2022 09:11
Summary:  U.S. Treasury yields rose 6-7bps after the ECB hiked 75bps and Fed Chari Powell’s speech. U.S. equity markets were quiet and managed to finish the session moderately higher. Reserve Bank of Australia Governor Lowe said interest rates were not on a “pre-set path” as the economic outlook was uncertain. Crude oil bounced by 1%. In Japan, a meeting between the MOF, BoJ, and FSA sent signals that FX intervention remains on the cards. The European Union is holding an emergency meeting to discuss measures to tackle the energy crisis in Europe and China is scheduled to release CPI and PPI today. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S. stock markets closed higher in a choppy session, S&P 500 +0.7%, Nasdaq 100 +0.5%.  Trading was quiet after the well-anticipated ECB 75bp hike and Powell’s now consistent hawkish script.  The 6-7bp rise in bond yield did not move stocks.  VIX edged down further to 23.6. On the corporate front, T-Mobile (TMUS:xnas) announced a buyback program authorization for 7.5% of the company’s market cap and expected to complete the buyback by Sep 2023. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Following a 75bp hike by the ECB and Fed Chair Powell sticking to his hawkish stance in a speech yesterday, U.S. treasury yield jumped 6 to 7 bps across the curve.  Money market rates are pricing in a 85% chance of a 75bp hike on September 22.  Chicago Fed President Evans said the Fed “could very well do 75 in September” but his mind “is not made up” yet. The Treasury Department announced the size of next week’s 3/10/30-year auction at a total size of USD91 billon.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index underperformed its major Asian peers which advanced more than 1% across the board to continue its multi-session decline since the beginning of September and finished the day 1% lower.  The weakness in Tencent (00700.xhkg), -3.1%, Chinese developers, and energy stocks dragged down the benchmark index in Hong Kong.  According to filings to the stock exchange, about USD7.6 billion worth, or 2% of the market cap, of Tencent shares have been transferred to CCASS, the Stock Exchange of Hong Kong’s clearing and settlement system.  Prosus, Tencent’s largest shareholder holding 27.99% of shares outstanding, confirmed that it has transferred 192 million shares of Tencent to CCASS and is selling Tencent shares.  In June, Prosus (PRX:xams) announced that the company was going to offload its stake in Tencent to raise cash to buy back its own shares and Naspers’ (NPN:xjse) shares (Prosus’ parent) at a discount to NAV. The Chinese developer space was once again under selling pressure.  CIFI (00884:xhkg) tumbled 13.6% following credit agency S&P downgraded the long-term rating of the company’s senior unsecured debts by 1 notch to BB- from BB. Country Garden (02007:xhkg) plunged by 6.8%.  Energy stocks declined on sharp fall in crude oil price, CNOOC (00883:xhkg) -3.6%, PetroChina (00857:xhkg) -1.9%.  The Chinese automaker space was sold, Great Wall Motor (02333:xhkg) -4.7%, Geely (00175:xhkg) -3.1%, BYD (01211:xhkg) -3.0%, Li Auto (02015:xhkg) -3.0%, XPeng (09868:xhkg) -2.6%. After the Hong Kong market close, Bilibili (09626:xhkg/BILI:xnas) reported a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins.  The company’s ADR plunged 15%.     USDJPY paid little heed to Japan’s three-party meeting USDJPY stuck close to 144-levels on Thursday despite stronger signs of concern from the Japanese authorities. The meeting between Japan’s MOF, central bank and FSA ended with some strong verbal signals that direct intervention remains on the cards, but even if that was to happen, it will only increase the volatility in the yen and cannot possibly reverse the move as long as the monetary policies of the US and Japan continue to diverge. EURUSD gained some bids in early Asian morning to rise to 1.002, but the move remains fragile especially with the emergency meeting scheduled for today. GBPUSD reversed the overnight weakness to rise to 1.1540 with dollar losing some momentum in early Asian trading hours.  Crude oil prices (CLU2 & LCOV2)  A slight recovery was seen in crude oil prices overnight despite the hawkish Fed rhetoric and a further surge in the dollar. Supply side dynamics remained in focus, with the EIA saying that crude inventories rose by 8.85 million barrels last week, while supplies dropped in the largest storage hub of Cushing. Gasoline inventories also gained, but there was no change to oil production. Putin warned that Russia will not supply energy to any nation that backs a US-led price cap on its crude oil sales. However, with WTI futures now priced at ~$83/barrel and Brent futures below $90, eyes are again on OPEC+ which hinted earlier this week the intention was to keep crude oil prices around the $100-mark. Demand concerns have picked up since the OPEC meeting due to widening China lockdowns and more aggressive central bank rate hikes.   Copper (HGc1) Copper is showing signs of stabilizing despite demand concerns from China as Covid restrictions continue to be tightened. Copper rose above $3.50 per pound overnight, as supply concerns remain top-of-mind with mining companies continued to struggle to meet their production targets with top producer Chile has seen its exports slump to a 19-month low due to water restrictions and lower ore quality - while demand from China, surprisingly is showing signs of strengthening as infrastructure push ramps up. Having found support last week at $3.36/lb, after retracing 61.8% retracement of the July to August rally, copper is currently staring at resistance in the $3.54 area where recent lows and the 55-day moving average merges. For a real upside and trend reversal to occur the price needs to break above $3.78/lb while a break below $3.36/lb could see the metal take aim at $3/lb.  What to consider? The Queen of England has passed away and Charles has taken the throne  It’s the end of an era for the UK with the passing of Queen Elizabeth, age 96. Some of the Queen’s key moments since reigning from the 1980s to today include: in 1986 Elizabeth became the first monarch to visit China. It was an important piece of Britain’s diplomatic effort as it prepared to return Hong Kong to Chinese control. In 2011, The Queen became the first British monarch to set food in Ireland in 100 years, with the trip being widely praised as a historic moment of reconciliation. In 2012 the Queen celebrated 60 years on the throne and in 2022 Elizabeth became the first and only British monarch to reach 70 years on the throne. Politicians from the Commonwealth and across the world paid tribute to the Queen. UK Parliament will pay tribute to Queen Elizabeth on Friday and Saturday. Australian Parliament will not sit next week.   ECB’s 75bps rate hike As was generally expected, the European Central Bank went ahead with a 75bps rate hike on Thursday, taking the deposit rate to 0.75%. President Lagarde said risks to inflation are on the upside and growth are on the downside, but did not rule out further tightening. The ECB raised projections for inflation (5.5% in 2023 now vs 3.5% earlier), lowered growth for 2023 (0.9% vs 2.1%), and 2024 (1.9% vs 2.1%) while raising growth for 2022 by a notch. Lagarde said that 75 bps was not the norm, but “moves will not necessarily get smaller” as policy was dependent on data and on a meeting by meeting basis, echoing Lane’s comments from last week. ECB’s Lane was however noted to be more hawkish yesterday than what his previous comments suggested. This keeps the door for another 75bps rate hike still open.  Fed Chair Powell stays in the chorus Fed Chair Jerome Powell stuck to the tune that the Federal Reserve members have been singing, suggesting a 75bps rate hike at the September meeting as inflation reins. He noted that the labor market is “very, very strong” and wages are elevated, while also signaling that growth will likely fall below trend. On inflation expectations, a key concern for Fed officials, the Fed chair said that today they are well anchored over the long-term, but the clock is ticking and the Fed has more concerns that the public will incorporate higher inflation expectations in the short-term. Fed’s Evans also hinted at a 75bps rate hike for September. With the chorus on inflation getting louder and market pricing for September being very close to a 75bps rate hike, a softer headline inflation print next week likely has the potential to usher in a relief rally. If, however, inflation remains high, we could see another leg down in equities.   Australia’s trade surplus halves as coal and iron ore exports fall from record highs. What next? Australia’s trade surplus almost halved in July, plunging from A$17.1b to an A$8.7b surplus, when the market expected the surplus balance to fall to just A$14.5b. It comes as exports of coal and iron ore fell from their record highs, dragging down total exports by 10%. Coal export earnings fell 17% with the northern hemisphere in peak summer, while iron ore export earnings fell 15% tarnished by China’s slowdown. Australian imports (covering outbound tourists) rose 5% with Aussies escaping the record cold winter to enjoy the European sun. The market responded to the drop in exports, with the Coal futures price falling to a 3-day low, losing 1.7%, taking the two-day loss to 7%, which pulls the price away from its record. For investors it’s a timely reminder, energy commodity prices are seasonally impacted, and could remain volatile before picking up later this year when we think peak buying is expected. Australian bonds and equities price in the RBA will be less aggressive, so it’s risk-on again RBA Governor Phillip Lowe sees a slower pace of rate hikes while conceding a sharp slowdown in global growth will make it hard to avoid a soft landing. The AUDUSD lost 0.4% after his remarks. While short-term rates as measured by the 3-year Australian bond yield fell 0.17% - supporting the risk assets rally. As such, the Australian Technology Sector surged to its highest level in a week. But sophisticated Australian investors seem skeptical that the RBA will slow the pace of hikes. Australian interest rate futures suggest rates could peak at 3.6% by mid-next year. We think the market would also be especially rate rises will slow as Australia’s Resources Minster was tapped for the second time to restrict Australian energy exports, as the nation is tipped to run out of energy in 2023. EU proposes five measures to curb gas demand and prices Ahead of Friday’s emergency energy meeting, European Commission President Ursula von der Leyen proposed five radical steps to curb costs and demand: 1) Smart savings of electricity by mandatory targets to reduce peak hour demand for electricity; 2) Cap on revenues of companies producing electricity with from low-cost sources such as wind and solar with profits being re-channeled to vulnerable people and companies; 3) Solidarity contribution from fossil fuel companies; 4) Liquidity support for energy utility companies in order for them to cope with elevated market volatility; 5) Cap on Russian gas revenues on the remaining 9% Russia supplies to Europe, down from a pre-war level around 40%. China’s PPI is expected to have risen as CPI remained stable in August PPI is expected to fall sharply to 3.2% (Bloomberg consensus) in August from 4.2% in July.  Base effect and a decline in coal prices in August could be factors contributing to the deceleration in producer price inflation.  CPI, however, is expected to edge up to 2.8% in August from 2.7% in July.  Analysts suggest that favourable base effect was offset by vegetable price increases amidst the heatwave. Bilibili reported below expectation earnings on margin compression   Bilibili (09626:xhkg/BILI:xnas) reported a worse than expected adjusted loss per share of RMB4.98 (Bloomberg consensus: loss per share RMB4.37, 2Q2021: loss per share RMB2.23). Revenue came in at RMB4.91 billion, largely in line with analyst estimates. The larger-than-expected loss came from disappointing margins.  Gross margin contracted to 15.3% from 16.4% in 1Q2022 and 22.4% in 2Q2021 due to the weak performance of the mobile game business (segment revenue -15% YoY).  Operating margin deteriorated to -39.4% in 2Q2022 from -33.9% in 1Q2022 and -20.9% in 2Q2021 which are attributable to higher general and administrative expenses +44% YoY) as well as research and development expenses +68% YoY).   The company’s revenue guidance of RMB5.6bn-5.8bn for 3Q was below market expectations.  A lender appointed receivers to siege Evergrande’s Hong Kong headquarters premises The Financial Times said that a lender had appointed receivers to siege the headquarters building of China Evergrande (03333:xhkg, suspended) and looked to force a sale of the premises.  The distressed developer’s Hong Kong headquarter has been pledged to secure a loan from a syndicate of lenders led by China Citic Bank International.  Evergrande has previously been served a winding-up petition and is scheduled to have a hearing on the petition at the High Court on 28 Nov 2022. Separately, the Wall Street Journal reports that a consortium of Chinese state-owned banks and private enterprises agreed to pay USD1.05 billion in a court-arranged auction for Evergrande’s 14.6% in Shengjing Bank, a regional bank based in Shenyang, Liaoning province. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: APAC Daily Digest: What is happening in markets and what to consider next – September 9, 2022 | Saxo Group (home.saxo)
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

The United Kingdom's Anti­-inflation Plan, The ECB Doesn't Expect A Recession In The Eurozone

Saxo Bank Saxo Bank 09.09.2022 09:19
Summary:  The USD weakened sharply overnight, led by a tumbling USDJPY on comments from Bank of Japan governor Kuroda after he met with Prime Minister Kishida. Risk sentiment was buoyant yesterday and overnight on the weaker US dollar and after the ECB hiked by 75 basis points as most expected, the most in the central bank’s history. EURUSD has backed up well above parity again ahead of an EU Summit that will attempt to outline a common approach to soaring power/gas prices amidst limited supplies ahead of winter.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued to rally yesterday with S&P 500 futures pushing above the 4,000 level to close at 4,005, and even more impressively momentum is extending this morning in early European trading hours. The rally still seems to be mostly technically driven, but there was some support for US equities in yesterday’s initial jobless claims data showing little negative pressures in the US labour market. After the US market close, DocuSign shares rose 17% as the technology company delivered a strong result and raised its outlook breathing some fresh optimism into the technology sector. The next big event for US equities is the US August CPI report on Tuesday. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index soared 2.6% today, snapping a six-day losing streak, following August inflation data in China surprised on the downside and raised hope for more monetary easing to come from the Chinese policymakers. Mega-cap internet stocks strongly, Meituan (03690:xhkg) +5.5%, Netease (0999:xhkg) +4.8%, Baidu (09888:xhkg)+3.6%, Alibaba (09988:xhkg) +3.1%, Tencent (00700:xhkg) +1.7%. One notable underperformance in the internet space was Bilibli (09626:xhkg/BILI:xnas) which plunged nearly 17% after reporting a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins. Ahead of the mid-autumn festival, catering stocks gains, Jiumaojiu (09922:xhkg) +6.7%, Haidilao (06862:xhkg) +2.6%. Chinese property names rallied, led by Country Garden (02007:xhkg) which jumped 14%. CSI 300 climbed 1.3%, led by property names, financials and dental services.  USD broadly weaker after ECB meeting and USDJPY correction overnight Bank of Japan Governor Kuroda commented on the undesirability of sharp JPY moves in comments overnight after meeting with PM Kishida. This took USDJPY back below 143.00 two days after it nearly touched 145 in its latest surge higher. The threat of intervention may not hold the JPY higher for long if global yields continue higher again. Elsewhere, the USD was sharply lower despite a solid bounce-back in US treasury yields and EURUSD traded well north of parity again after an initially choppy reception of the expected 75-basis point hike from the ECB and President Lagarde’s press conference. The action took EURUSD back to the cusp of important resistance in the 1.0100 area, which has been the resistance of note for more some three weeks. The move was supported by surging European short yields, although the energy/power situation will remain the focus for the euro. Crude oil (CLV2 & LCOX2) The oil price weakness seen this week following the break below $91.5 and $85 in Brent and WTI may still end up being a temporary development with the dollar weakness seen overnight, especially against the yen and euro, adding a bid back into the market. Dr. Copper meanwhile is recovering as demand from China show signs of improving. Potentially a signal to the energy market of not getting too carried away by a temporary lockdown related slowdown in Chinese demand. However, with US implied gasoline demand falling below 2020 levels last week, a potential recovery above the mentioned level is likely to be muted. Focus on Putin and his threat to cut supply to nations backing the US-led price cap on crude sales and OPEC+ which may intervene should price weakness persist. Copper (COPPERUSDEC22) Copper trades higher with the futures market signaling increased tightness, primarily due to a pickup in Chinese demand and imports, which despite lockdowns has seen the infrastructure push ramping up. In addition, a lower-than-expected August CPI and PPI may give the PBoC more room to ease conditions. Exchange monitored inventory levels has dropped to an 8-month low at a time where mining companies struggle to meet their production targets with top producer Chile seeing its exports slump to a 19-month low due to water restrictions and lower ore quality. Speculators have increased short positions in recent weeks as a hedge against recession and China weakness, and they are now increasingly exposed. Support at $3.54 and for a real upside and trend reversal to occur the price needs to break above $3.78/lb. Bitcoin This morning Bitcoin rose the most in more than a month, surpassing the psychological $20k level and now trading at around $20.5k. This is despite a report published by the White House Office of Science and Technology Policy yesterday, stating that cryptocurrencies make a significant contribution to energy usage and greenhouse gas emissions in the US, and that they recommend monitoring and potential regulation. It could have a significant impact on cryptocurrencies using the proof-of-work consensus mechanism such as Bitcoin. US Treasuries (TLT, IEF) US Treasury yields bounced back toward the top of the range after the previous day’s decline, keeping the attention on the cycle highs for the 10-year yield near 3.50%. The treasury sell-off was sparked around the time of Fed Chair Powell firm comments on fighting inflation, which sent 2-year treasury yields some 8 basis points higher. The latest weekly jobless claims figures was out around the same time and showed the lowest level of claims since late May. What is going on? The ECB hiked interest rates by 75 basis points This was a unanimous decision of the ECB governing council. This is a major signal sent to the market. The move was aimed to catch up with the neutral rate (though the ECB acknowledges they don’t know where the neutral rate is). The ECB also revised upward its inflation forecasts sharply (from 6.8 % to 8.1 % this year). Growth forecasts were also revised. But the ECB still doesn't expect a recession in the eurozone (GDP growth expected at 0.9 % versus prior 2.1 % this year). During the press conference, ECB president Christine Lagarde opened the door to further interest hikes. This is no surprise. She committed to keep hiking over 2, 3 or 4 meetings (including today’s). This implies further hikes until October, December or February, followed by a pause. Forward guidance is not dead, finally. Expect a 50 basis point hike in October, in our view. The German 2-year Schatz yield rose over 20 basis points to yesterday to close at new cycle high of 1.33%. The United Kingdom announces a massive anti­-inflation plan Yesterday, the new prime minister Liz Truss announced a major plan to fight the high cost of living related to energy prices. There are five major measures: 1) capping household bills at £2500 per month. 2) a new £40bn liquidity scheme with the Bank of England for energy firms who need it. 3) no further windfall tax (a tax levied on an unforeseen or unexpectedly large profit). 4) speeding up the deployment of clean energy but at the same time granting more oil and gas licenses for North Sea. and 5) commitment to net zero 2050. If this is successful, it means that the peak in UK inflation will certainly be lower (by 4-5 %). So far, the government believes that the peak could be between 13 and 18 %. This is a broad range. But it shows the level of uncertainty about the short-term economic outlook. Finally, Truss refused to evaluate the total cost of the new plan. Several experts believe it could be close to £150bn, over 6% of UK GDP. DocuSign shares up 17% in extended trading Q2 revenue was much better than expected but confirmed its fiscal year outlook on revenue which was better than the underlying consensus which was clearly below analyst estimates. The company sounded optimistic on the billing outlook, which is the key indicator for future growth, and as a result traders pushed shares 17% higher in extended trading. Apple warned by US government against using Chinese chips Congressional Republicans including Senator Marco Rubio of the Senate intelligence committee and Michael McCaul of the House foreign affairs committee expressed alarm at reports that Apple cited Yangtze Memory Technologies as one of its suppliers of flash memory chips used for phone storage.  “Apple is playing with fire”, said Senator Rubio, threatening scrutiny of the company. Apple said it would not sell iPhones using the chips outside China. What are we watching next? EU Summit today on emergency intervention in power markets and possibly to cap imported Russian gas prices The EU may be able to cap electricity prices, but this could mean a shortage of output relative to demand, i.e., forcing rationing over the winter period when demand surges. Russian leader Putin has called any plan to cap prices “another stupidity”. Swedish election this weekend Swedes go to the polls on Sunday, with the right populist Sweden Democrats expected to become the second-largest political party. In the past, the right-leaning main parties have been unwilling to consider alliances with the Sweden Democrats, as their positions were seen as too extreme, but this has made for very fragile left-coalitions in recent years because of the lack of a sufficient plurality in Parliament. Earnings to watch Today’s key earnings release is Kroger which is a large US supermarket chain with a strong competitive position in the current inflationary environment. Analysts are expecting revenue growth of 8.6% y/y in FY23 Q2 (ending 31 July) and lower operating margin expected due to rising input costs. Today: Kroger Earnings releases next week: Monday: Oracle Tuesday: DiDi Global Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0930 – ECB President Lagarde to speak 1230 – Canada Aug. Net Change in Employment / Unemployment Rate 1600 – US Fed’s Waller (Voter) to speak 1600 – US Fed’s George (Voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher         Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-9-2022-09092022
Copper prices hit lowest level this year. Crude oil decreased second day in a row. BoE went for a 25bp hike

Commodities: Metals Boosted, It's Time To Talk Energy Crisis In The EU

ING Economics ING Economics 09.09.2022 15:08
Metals have received somewhat of a boost, with supply risks growing and some optimism in Chinese construction. For energy markets, all attention will be on EU energy crisis talks today Source: Shutterstock Energy - EU energy crisis talks today The oil market yesterday managed to recoup some of its declines from earlier in the week. ICE Brent continues to trade below US$90/bbl and the market will be watching for any signs from OPEC+ of possible intervention. The partial recovery in the market comes despite fairly bearish EIA numbers. The EIA reported that US commercial crude oil inventories increased by 8.85MMbbls over the last week - the largest increase seen since April. When you factor in the SPR release, total US crude oil inventories increased by a more modest 1.32MMbbls. An increase in crude imports, lower exports and lower refinery utilization (due to the BP Whiting outage) over the week all contributed to the crude build. Despite lower refinery activity, gasoline and distillate fuel oil stocks increased by 333Mbbls and 95Mbbls respectively. European gas prices continue to trade in a volatile manner, with TTF breaking below EUR200/MWh at one stage yesterday, only to finish the day above EUR220/MWh. The market will be sensitive to developments today, given that EU ministers will be meeting to go through proposals to tackle the energy crisis. These proposals include various forms of a price cap, along with potentially mandatory demand cuts not just for gas but also the power market. Liquidity measures for European power companies will also be pretty high on the priority list. As we have mentioned before - while price caps will offer some relief to consumers, it doesn’t help the market try to balance itself through demand destruction.   Metals – Escondida strike lifts copper prices LME copper prices ended the day higher, amid reports of potential mine strikes in Chile. Workers at BHP’s Escondida, the world’s largest copper mine, voted to go on a partial strike from next week over safety concerns, according to the mine’s union. The strike will result in a partial stoppage on 12 and 14 September and will be followed by an indefinite strike lasting until a deal with BHP is reached. Spread action also suggests a tightening in the prompt copper market. The LME copper cash/3m backwardation reached US$145/t (highest since November) yesterday, compared to a backwardation of US$76/t a day earlier and a contango of US$7.75/t at the start of 2H22. Vale SA raised its nickel production guidance to reach 230-245kt per year in the medium term, higher than its previous forecast of 200-220kt in May, the battery metal producer announced. In the long-term, Vale expects annual nickel production to reach over 300kt to tap into the growing demand for the metal. In ferrous metals, the most active SGX iron ore contract moved above US$100/t yesterday amid hopes of a recovery in construction activity in China. According to the latest market reports, the Chinese city of Zhengzhou will resume all stalled housing projects by 6 October, by making use of special loans, asking developers to return misappropriated funds, and encouraging some real estate firms to file for bankruptcy, according to Reuters reports. Read this article on THINK TagsOil Nickel Natural gas Energy crisis Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Crude Prices Are Rallying On Supply Risks, Gold Is Higher

Kenny Fisher Kenny Fisher 10.09.2022 15:00
As the world mourns the death of Her Majesty Queen Elizabeth II, world leaders pay tribute for her incredible service and leadership. The UK enters a 10-day mourning period that will see some events delayed or suspended. ​ The BOE announced they will push back their interest rate decision to September 22nd. UK train strikes will be delayed as three British trade unions will suspend their scheduled strike action. ​ The Office of National Statistics confirmed the upcoming economic publications are due to go ahead. ​ That includes UK trade, GDP, unemployment, inflation, housing, and retail sales data. Wall Street is finishing the week on a positive note as the dollar’s rally has run out of steam as optimism grows for inflation to continue to come down. Economists are slightly lowering their inflation forecasts and that could mean the Fed won’t have to take rates above 4%. Another round of hawkish speak from both the Fed’s Bullard and Waller was not able to derail today’s stock market rally. ​ ​ It is looking like traders are growing confident they will soon see the end of the Fed’s interest rate hiking cycle. ​ Supporting the risk-on narrative was softer-than-expected Chinese consumer and producer inflation data that could pave the way for more easing by the PBOC. Oil Crude prices are rallying on supply risks and as the dollar has tentatively peaked. Lately it has been mostly bad news for oil prices as demand concerns worsened given China’s deteriorating COVID situation, a surprise jump in stockpiles, and on expectations world leaders will continue to exhaust emergency measures to send energy prices lower. Energy Secretary Granholm said President Biden is considering the new releases from the US Strategic Petroleum Reserve (SPR). Russia President Putin’s threat to cut off all energy supplies is a growing risk as Ukraine recaptures territory. ​ The risk of some supply disruptions over the next few months remains elevated and that should help oil prices stay above the $90 a barrel level. Gold Gold is higher as the historic run higher in the dollar appears to have run out of steam. It seems Wall Street is getting comfortable with the idea of another 75-basis point rate hike by the Fed. ​ Fed’s Bullard supports a third straight 75-bp interest rate hike even if next week’s inflation reports show price pressures continued to ease. ​ Fed’s Waller also supports another significant rate hike this month. Gold is finding a home above the $1700 level and that could continue if investors continue to look beyond hawkish central bank speak. Gold’s fate could be determined after this next inflation report. ​ If consumer prices come in hotter-than-expected, gold might see selling pressure target the $1680 region. ​ A sharp deceleration with pricing pressures might only provide a modest boost higher for gold as policy makers. Bitcoin Bitcoin is welcoming the return of risk appetite and a falling US dollar. ​ The broad market rally has rejuvenated cryptos and that could continue if investors continue to look beyond hawkish central bank overtures and lingering recession risks. ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Commodities Feed: China's 2023 growth target underwhelms markets

Power Producers Need To Buy Carbon Permits, In China Loans To Households Remained Sluggish

Saxo Bank Saxo Bank 12.09.2022 10:01
Summary:  Ukrainian success in taking back significant territory from Russia over the weekend has driven a cautious further recovery in the euro and sterling at the open of trade this week. Elsewhere, yields have jumped higher, helping drive new yen weakness and taming risk sentiment as the US 10-year treasury benchmark trades near the cycle highs since June. Focus this week is on tomorrow's US August CPI release, the most important data point ahead of next week’s FOMC meeting.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities Friday on a strong note up 1.5% and S&P 500 futures have extended their gains overnight touching the 4,100 level because before receding to around the 4,085 level in early European trading hours. The US 10-year yield continues to move higher trading at 3.34% and if it sets a new high for the recent cycle it will probably cause headwinds for US equities so watch the US bond market. Next big macro event is tomorrow’s US August CPI report which is expected to print –0.1% m/m suggesting inflation is beginning to cool. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong, Shanghai, and Shenzhen are closed today for the mid-autumn festival holiday. Last Friday, Hang Seng Index soared 2.7%, snapping a six-day losing streak following China’s August inflation data surprising to the downside and raising hope for more monetary easing to come from the Chinese policymakers. Chinese property names rallied on market chatters about unconfirmed stimulus measures from policymakers to boost the ailing property sector. Ahead of the mid-autumn festival, catering stocks gained. CSI 300 climbed 1.4%, led by property, dental services, infrastructure, and digital currency.  Northbound inflows into A-shares reached USD2.1billion equivalent last Friday, the largest inflow in a single day since the beginning of the year. Ukrainian success on the battlefield drives EUR and GBP strength The surprise offensive and the re-capture of a key transport hub in the northeastern sector of the front after recent focus on operations in the south caught the market by surprise and has seen the euro and sterling rebounding versus the US dollar in early trading this week, with EURUSD trading to new local highs well clear of 1.0100 briefly overnight before edging back lower. Likewise, GBPUSD pulled north of 1.1650 before treading water back toward 1.1600. It will take some time and further developments to assess whether Ukraine can capitalize on its gains and this in turn triggers a new stance from Russia on its energy policy. JPY crosses back higher as yields rise The USDJPY correction on Friday inspired by somewhat stern language from Bank of Japan Governor Kuroda has mostly faded, as USDJPY bobs back above 143.00 overnight on US treasury yields challenging cycle highs. EURJPY pulled back close to the cycle high well above 144.00 overnight on hopes that the war in Ukraine is turning in the Ukrainians favour. New highs in USDJPY may bring more two-way volatility again if Japanese officialdom backs up its concern on the situation with market intervention (buying JPY). Crude oil (CLV2 & LCOX2) Crude oil starts the week in defensive mode with the focus staying with demand concerns amid continued lockdowns in China hurting demand from the world's top importer and a rapid succession of interest rates from major central banks negatively impacting the global economic outlook. Into the mix a US-backed plan to cap prices on Russian oil sales from December 5, a stranded Iran nuclear deal, strong demand for fuel products such as diesel at the expense of punitively high gas prices and a softer dollar. In addition, the collapse of Russian defenses in Ukraine and the response from Moscow will be watched closely. Monthly oil market reports from OPEC tomorrow and IEA on Wednesday should provide some further guidance on the supply/demand outlook. Brent’s current range: $92.75 and $87.25 US Treasuries (TLT, IEF) The 10-year US Treasury benchmark edged higher toward the local range high north of 3.3% overnight, with only the June peak at 3.50% remaining as the focus to the upside (this was the highest yield for the cycle since early 2011 and the run higher in yields in June coincided with the major low of the equity bear market this year. Tomorrow’s US August CPI number is the next key test for sentiment and yield direction, while the US Treasury will also auction both 3-year and 10-year treasury notes today and will auction 30-year t-bonds tomorrow. What is going on? France’s manufacturing production contracted in July According to the latest estimate released by the French Institute of National Statistics (INSEE), the manufacturing production decreased by a stunning 1.6 % month-over-month in July. It remains in expansion on a yearly basis (+0.2 %). Without much surprise, the drop is mostly explained by higher prices, especially higher energy prices. The INSEE does not forecast a recession in France this year. Nonetheless, growth is likely to decelerate very sharply in the coming quarters. The institute forecasts that growth will be around 0.2 % in Q3 and will be stagnant in Q4 2022. India’s rice export ban risk aggravating global food crisis After a ban on wheat exports earlier this year, India has now announced restrictions on rice exports, aggravating concerns of a global food crisis. Bloomberg reported India imposed a 20% duty on white and brown rice exports and banned shipments of broke rice. The new curbs apply to about 60% of India's rice exports and go into effect Friday. India’s rice output has been depressed due to the severe heatwaves, but also possibly to cap domestic price pressures. If these measures are duplicated by other key rice exporting countries like Thailand and Vietnam, there could potentially be a severe grain shortage globally, especially weighing on poor rice importing nations. We continue to see a threat of climate change to global agricultural output, which along with a prolonged energy crisis, suggested price pressure will stay in the medium-to-long term despite some cooling off from the recent highs. European carbon price drops as EU considers sale of permits from reserves The December ECX emissions contract (EMISSIONSDEC22) has fallen by around one-third since hitting a record high last month above €99 per tons. Given the current energy crisis, EU energy ministers are moving towards a deal to sell surplus permits from its Market Stability Reserve (MSR) in order to support a reduction in the cost of producing power and heating within the region. Power producers need to buy carbon permits to offset the polluting impact of using coal and gas over renewables. Occidental Petroleum shares rise on Berkshire accumulation In a filing on Friday, Berkshire Hathaway announced that it has lifted its stake to 26.8% in Occidental Petroleum. The move comes after the investment firm got regulatory approval for increasing the stake to over 50%. Berkshire’s move in Occidental Petroleum shares is seen as a move of confidence in the oil and gas industry as a much-needed industry for bridging the gap during the green transformation. Semiconductors are in focus as the US is expected to announce more curbs on exports The US Commerce Department is expected to publish new regulations curbing exports of semiconductors to China with companies such as KLA, Lam Research, and Applied Materials likely being impacted by the upcoming regulation. The move by the US further confirms the deglobalisation under the rule of self-reliance applied by increasingly more countries. China’s medium to long-term corporate loans picked up in growth  Over the past months, Chinese policymakers instructed policy banks and gave window guidance to commercial banks to extend credits to support infrastructure construction and key industries of the economy. Some results showed up in the August loan data which recorded a growth of 16% m/m annualized in the outstanding medium to long-term loans to the corporate sector. The amount of new medium to long-term loans to corporate was RMB 735bn in August versus RMB 346bn in July and RMB 522bn in August 2021. Loans to households remained sluggish. PBoC issues a list of 19 systemically important banks The People’s Bank of China and the China Banking and Insurance Regulatory Commission issued a list of 19 systematically important banks.  These 19 banks will face between 0.25% and 1% higher minimum capital requirements and additional leverage requirements. They are also asked to prepare contingency plans for major risk events. These 19 banks are Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, China Minsheng Bank, China Everbright Bank, Ping An Bank, Hua Xia Bank, Ningbo Bank, China Guangfa Bank, Jiangsu Bank, Bank of Shanghai, Bank of Beijing; China CITIC Bank, China Postal Savings Bank, Shanghai Pudong Development Bank, Bank of Communications, China Merchants Bank, and Industrial Bank. The CPC is set to amend the party constitution at its upcoming national congress The Political Bureau of CPC Central Committee said in a readout last Friday that the Communist Party of China (CPC) is set to “work out an amendment to the Party Constitution that facilitates the innovative development of Party theories and practices and meets the need of advancing the great new project of Party building in the new era” at the CCP’s national congress to convene starting on October 16.  It further elaborates that “the latest adaption of Marxism to China's context and new circumstances will be fully epitomized and so will the new ideas, new thinking and new strategies of governance developed by the CPC Central Committee since the Party's 19th National Congress in 2017. What are we watching next? The Bank of England (BoE) will need to go big on 22 September The meeting initially scheduled for this week is postponed following the Queen Elizabeth II. Last week, both the Bank of Canada and the European Central Bank hiked their benchmark interest rate by 75 basis points. All eyes are turning to the BoE now. Pressure is mounting for the BoE to go big this week – meaning a 75-basis points hike. In August, the central bank hiked rates by 50 basis points to 1.75 %. Despite prime minister Liz Truss’s new anti-inflation plan (which will likely lower the peak in inflation), we think the BoE will need to show its commitment to fight inflation. The Bank forecasts that UK CPI will increase to 13.3 % year-over-year in Q4 2022. But the peak in inflation is only expected in 2023. This means that the cost of living will continue increasing in the short term, anyhow. Fed speakers stay hawkish before the blackout period begins and ahead of US CPI release tomorrow Fed rate hike expectations have picked up strongly since Jackson Hole, and we have heard an extremely unanimous voice from the Fed speakers since then. Some of them have clearly made the case for a 75bps rate hike in September, with Bullard on Friday even saying that Tuesday’s CPI report is unlikely to alter the incoming 75bps rate hike in September. Governor Waller leaned hawkish as well, but did not specify the size for September’s decision, but a “significant” hike still points to that. Esther George stayed away from guiding for individual meetings but made the case for sustained rate hikes. Ethereum merge The second-largest cryptocurrency, Ethereum, is scheduled to undergo a major upgrade this week (estimated on Thursday) which, if successful, will fundamentally change the way the cryptocurrency is working. It will go from the computationally intensive proof-of-work consensus to the more energy-friendly proof-of-stake, as well as introducing a mechanism to limit the inflation in Ethereum. The crypto community is looking very much forward to this upgrade, although some are concerned about the security in the new framework. Earnings to watch Today’s key earnings release is Oracle which a better-than-expected earnings result on 13 June surprising the market on EPS by 12% as the legacy database and software maker is gaining momentum in its cloud offering. Analysts expect FY23 Q3 (ending 31 August) revenue growth to accelerate to 18% y/y, which includes its recent acquisition of Cerner in the health care sector, which is impressive for the previously low growth company despite some of the growth being driven by acquisitions. If the outlook remains strong a longer-term repricing of the company’s valuation could be in the making. Today: Oracle Tuesday: DiDi Global Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0730 – ECB's Guindos to speak 0800 – Switzerland Weekly SNB Sight Deposits 1200 – ECB’s Schnabel to speak 1530 – US 3-year Treasury auction 1700 – US 10-year Treasury auction 2100 – New Zealand Aug. REINZ House Sales 0030 – Australia Sep. Westpac Consumer Confidence 0130 – Australia Aug. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean engraver Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-12-2022-12092022
Belarusian opposition leader proposed a collaboration to Ukraine

The Military Activities In Ukraine Are Also Supporting The Markets

Saxo Bank Saxo Bank 12.09.2022 10:23
Summary:  Amid depressed sentiment, with Fed officials reiterating their consistent hawkishness, US equities managed to close higher on the week for the first time in four weeks. It comes as technical trading, short-covering is at play. Meanwhile, fuel shortages see more investment moguls buy in, with Occidental Petroleum shares rising after hours. The volatility index, as measured by the VIX index dropped to its lowest level in 10 days (to 22.8), supporting risk-on sentiment, while Bitcoin moved up 10% to $21,704, after breaking above the $20,000 psychological level. However markets are ready to pivot, with a full calendar of data on tap that with provide clues on the Fed's tightening path. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rally amid another bear market bounce US equities rallied for the third day closing off Friday at the highest level since August 26, while also ending higher over the five days, for the first time in four weeks. S&P 500 gained 1.5% on Friday, 3.7% on the week, Nasdaq 100 2.2% Friday, 4.1% on the week. We think a technical quant rally is at play and short-covering, which is why there is a risk-on mode, in the midst of depressed sentiment, with Fed officials reiterating their consistent hawkish chorus. The last three trading days have also seen dealers report larger buying from long-funds and hedge funds buying into information technology, banks, pharmaceutical, and consumer discretionary (in particular luxury brands), while there has also been unusually large volume in option activity. The volatility index, as measured by the VIX index dropped to its lowest level in 10 days (to 22.8) while Bitcoin moved above the $20k psychological level, after moving up 10% to $21,704. Companies big moves in the US   The Grocer Kroger (KR:xnys) soared 7.4% after the company updated its full-year EPS guidance to USD4.05 from the previous forecast of USD3.95, citing strong demand for fresh food and a shift to private-label products. RH (RD:xnys) gained 4.5% despite the upscale home retailer lowering its sales and operating income guidance due to weaker demand and delayed store openings. While the CEO of RH said the US it would not lower prices to boost salesas it fears discounting will erode its luxury brand, this is despite saying the US is already in a recession. Shopify (SHOP:xnys) jumped 8.9% following the company appointing a Morgan Stanley investment banker to take up the role of CFO. Fuel shortages see more investment moguls buy in. Occidental Petroleum shares, one of the hottest shares to watch After hours one of the biggest movers in the US was Occidental (OXY.xnys) after Warren Buffett increased his stake in the company, pushing up Occidental shares 1.6% to ~$66.68 (after hours). On Friday night, data filings showed Berkshire Hathaway increased its stake to 26.8%, up from the 20% holding the fund held previously (according to Bloomberg data). It comes as Buffett won regulatory approval to buy up to 50% of the stock, after he has been growing his stake in the company over the last three years. So will Buffett take over the oil and gas giant? A Wall Street Journal article quashed such theories, but one thing is certain, Buffett is bullish on energy amid the energy crisis. So why is Occidental attractive to some? Its price to earnings (PE) ratio is 6.2 times, meaning its relatively cheap, and is expected to report another record profit in 2023 (according to Bloomberg data). Plus, its gas production is forecast to rise in the coming years, as the US bolsters LNG exports to Europe who is weaning itself off Russian fuel. Currently Occidental only makes 50% of its revenue from gas. Also note, Occidental is the best performer in S&P500 this year, up 126%, and you’d think if Buffett increases his stake from ~27% up to 50%, this would excite shareholders. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) With another round of fed talks, this time from Fed Governor Waller, St. Louis Fed President Bullard, and Kansas Fed President George reiterating the Fed’s intention to go for another significant rate hike, i.e. 75 basis points on Sept 21, and auctions of USD42 billion 6-month T-bills, USD41 billion 3-year T-notes, and USD32 billion 10-year (fronted loaded) scheduled for Monday, and USD18 billion 30-year T-bonds on Tuesday, the 2-year yield rose 5bps to 3.51%.  The treasury yield curve flattened as the 10-year yield remained unchanged last Friday.  Tuesday’s August CPI will be the last key economic data release before the Sept FOMC meeting.  While traders are eagerly awaiting the CPI report to get some hints about the Fed’s path of rate hikes, Bullard said on Friday that a “good CPI report shouldn’t affect September Fed call”. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index soared 2.7% last Friday, snapping a six-day losing streak, following China’s August inflation data surprised on the downside and raised hope for more monetary easing to come from the Chinese policymakers. Mega-cap internet stocks strongly, Meituan (03690:xhkg) +4.9%, Netease (09999:xhkg) +4.8%, Baidu (09888:xhkg)+3.9%, Alibaba (09988:xhkg) +3.0%, Tencent (00700:xhkg) +1.7%.  One notable underperformance in the internet space was Bilibli (09626:xhkg/BILI:xnas) which plunged 16.3% after reporting a larger than expected loss in 2Q2022 on the deterioration of gross and operating margins.  Chinese property names rallied, Country Garden (02007:xhkg) +16.8%, Longfor (00960:xhkg) +7.4% on market chatters about unconfirmed stimulus measures from policymakers to boost the ailing property sector. CSI 300 climbed 1.4%, led by property, dental services, infrastructure, and digital currency. Ahead of the mid-autumn festival, catering stocks gained, Jiumaojiu (09922:xhkg) +8.9%, Haidilao (06862:xhkg) +2.8%. Lepu Biopharma (02157:xhkg) jumped 284%. After the market closed, the Center for Drug Evaluation posted on their website that a targeted antibody-drug conjugate co-developed by Lepu Biopharma and Keymed Biosciences has obtained breakthrough therapy designation status from the Chinese drug regulator.  Northbound inflows into A shares reached USD2.1billion equivalent last Friday, the largest inflow in a single day since the beginning of the year.  Hong Kong, Shanghai, and Shenzhen are closed today for the mid-autumn festival holiday. EURUSD boosted by Ukraine progress The US dollar ended the week on a backfoot after printing fresh YTD highs earlier in the week. EURUSD took a look above 1.01 once again early on Monday, amid optimism after military progress was made by Ukraine and talks of ECB considering quantitative tightening by year-end (see below). Gains were however reversed later. USDJPY optimism was also braked with the verbal intervention from the authorities getting louder late last week. Crude oil prices (CLU2 & LCOV2) Oil prices are lower to start the week with sentiment somewhat supported by Ukraine recapturing some of the key cities from Russia, and making military progress. Still, concerns on Russia’s war tactics getting bigger will continue to underpin caution, and Biden administration is now mulling whether to stop releasing oil from the US Strategic Reserves. WTI in Asian trading hours is 0.5% lower at $86.34/barrel.     What to consider? Fed speakers stay hawkish before the blackout period begins Fed rate hike expectations have picked up strongly since Jackson Hole, and we have heard an extremely unanimous voice from the Fed speakers since then. Some of them have clearly made the case for a 75bps rate hike in September, with Bullard on Friday even saying that Tuesday’s CPI report is unlikely to alter the incoming 75bps rate hike in September. Governor Waller leaned hawkish as well, but did not specify the size for September’s decision, but a “significant” hike still points to that. Esther George stayed away from guiding for individual meetings, but made the case for sustained rate hikes. EU minsters split on Russian price cap At the EU energy summit that kicked off on Friday, several key issues pertaining to energy supplies and liquidity were discussed, but decisions have been postponed as proposals are only likely to be delivered in the next few weeks. Consensus could not emerge on whether and how to impose a price cap on Russian natural gas, and members differed on whether a price cap should apply only to Russia or to other producers too. Tensions also bristled over proposed mandatory cuts in power demand and German calls for a mechanism to share any excess supply. India’s rice export ban to aid the galloping global food crisis After a wheat ban earlier this year, India has now announced restrictions on rice exports, aggravating concerns of a global food crisis. Bloomberg reported India imposed a 20% duty on white and brown rice exports and banned shipments of broke rice -- parboiled and basmati rice were excluded from the export duty and/or trade restrictions. The new curbs apply to about 60% of India's rice exports and go into effect Friday. India’s rice output has been depressed due to the severe heatwaves, but also possibly to cap domestic price pressures. If these measures are duplicated by other key rice exporting countries like Thailand and Vietnam, there could potentially be a severe grain shortage globally, especially weighing on poor rice importing nations. We continue to see a threat of climate change to global agricultural output, which along with a prolonged energy crisis, suggested price pressure will stay in the medium-to-long term despite some cooling off from the recent highs. Record volumes of Australian wheat go to China Despite trade disputes over other agricultural commodities, data shows China is importing a record amount of Australian wheat, as farmers gear up for a third consecutive bumper grain harvest. Industry sources estimate China will import about 6.3 million tonnes of Australian wheat for the year to September 30, making China by far Australia’s biggest customer. Indonesia is in second place with 3.7 million tonnes. The trade with China is up 186% from 2.2 million tonnes last year. Australian Federal government forecaster, ABARES expects farmers across Australia will have harvested 32.2 million tonnes of wheat, just shy of last year's record, 12.3 million tonnes of barley and a near-record 6.6 million tonnes of canola. Australian Agricultural stocks to watch include Graincorp (GNC), Elders (ELD), which are trading flat this year. China’s medium to long-term corporate loans picked up in growth while mortgages remained sluggish Over the past months, Chinese policymakers instructed policy banks and gave window guidance to commercial banks to extend credits to support infrastructure construction and key industries of the economy.  Some results showed up in the August loan data which recorded a growth of 16% MoM annualized in the outstanding medium to long-term loans to corporate. The amount of new medium to long-term loans to corporate was RMB735 billion in August versus RMB346 billion in July and RMG522 billion in August 2021.  Loans to households however remained sluggish. New medium to long-term loans to households (which were primarily mortgage loans) were RMB 266 billion in August, still much lower than the RMB426 billion level in August 2021.  The outstanding medium to long-term loans to households grew 5.3% MoM annualized in August. Outstanding aggregate financing grew 10.5% YoY in August, slightly below the 10.7% YoY in July. M2 grew 12.2% in August, edging up from July’s 12.0% YoY.  China’s PPI and CPI surprised on the downside China’s PPI slowed to 2.3% YoY (Bloomberg consensus: 3.2% ) in August from 4.2% in July.  The deceleration was largely attributable to the base effect and a decline in energy and material prices. CPI unexpected fell to 2.5% YoY in August from 2.7% in July while economists surveyed by Bloomberg had expected a rise to 2.8%.  Rises in both food prices (down to 6.1% YoY in August from 6.3% YoY in July) and the prices of non-items decelerated (down to 1.7% YoY in August from 1.9% YoY in July).  Excluding food and energy, consumer prices were unchanged at 0.8% YoY and Services inflation was also unchanged at 0.7% YoY in August. China’s central bank and banking regulator issued a list of 19 systemically important banks The People’s Bank of China and the China Banking and Insurance Regulatory Commission issued a list of 19 systematically important banks.  These 19 banks will face between 0.25% and 1% higher minimum capital requirements and additional leverage requirements.  They are also asked to prepare contingency plans for major risk events.  These 19 banks are Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, China Minsheng Bank, China Everbright Bank, Ping An Bank, Hua Xia Bank, Ningbo Bank, China Guangfa Bank, Jiangsu Bank, Bank of Shanghai, Bank of Beijing; China CITIC Bank, China Postal Savings Bank, Shanghai Pudong Development Bank, Bank of Communications, China Merchants Bank, and Industrial Bank. The Communist Party of China (CPC) is set to amend the party constitution at its upcoming national congress The Political Bureau of CPC Central Committee said in a readout last Friday that the Communist Party of China (CPC) is set to “work out an amendment to the Party Constitution that facilitates the innovative development of Party theories and practices and meets the need of advancing the great new project of Party building in the new era” at the CCP’s national congress to convene starting on October 16.  It further elaborates that “the latest adaption of Marxism to China's context and new circumstances will be fully epitomized and so will the new ideas, new thinking and new strategies of governance developed by the CPC Central Committee since the Party's 19th National Congress in 2017. The amended Party Constitution will also clarify the new requirements for upholding and strengthening Party's leadership and advancing the Party's full and rigorous self-governance under new circumstances, so as to better navigate the great social revolution with vigorous self-reform”. ECB set to announce Quantitative Tightening by year-end After the European Central Bank’s 75bps rate hike this month, chatter on quantitative tightening to begin by year-end has gathered pace. Wall Street Journal reported that the ECB members agreed to  start discussions on quantitative tightening in early-October at a non-decision meeting in Cyprus on October 5, and will also likely be debated at subsequent meetings. Decision is expected to be made before year's end and will most likely see the beginning of balance sheet run-off in the first quarter of 2023. Whether the move will tighten financial conditions a lot will depend on details, especially pace of reduction in the €5 trillion balance sheet. Interestingly, ECB President Lagarde said last week that now is not the time for such measures to be implemented   For a look ahead at markets – tune into our Saxo Spotlight.For a global look at markets – tune into our Podcast.           Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-12-sept-2022-12092022
The Commodity Sector Has Dropped Significantly

The Commodity Sector Has Dropped Significantly

Saxo Bank Saxo Bank 12.09.2022 13:14
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, September 6. A week that saw a sharp deterioration in risk appetite with global stock markets responding negatively to concerns about global growth and sharply higher bond yields as central banks signalled willingness to hike rates agressively. The commodity sector dropped by more than 4% in response to these developments, resulting in a broad reduction in hedge funds positions, most notably in crude oil, natural gas, gold and soybeans Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, September 6. A week that saw a sharp deterioration in risk appetite with global stock markets responding negatively to concerns about global growth, not least in China where lockdowns spread again. In addition, the prospect of sharply higher rates by central banks to combat runaway inflation saw US bond yields spike while the Bloomberg Dollar Index hit a fresh record high.  Commodities The commodity sector dropped by more than 4% in response to the deteriorating growth outlook with the stronger dollar adding an additional layer of uncertainty. All sectors suffered losses led by energy and industrial metals and speculators reacted accordingly by cutting bullish bets across 19 out of the 24 major commodity futures markets tracked in this report. The 138k lots reduction was the result of 74k lots of longs being sold and 64k lots of fresh short positions being added. A development that supported the bounce that followed last Tuesday’s reporting deadline when the dollar reversed lower, thereby supporting a general recovery in risk appetite.   Energy:  Funds sold a combined 38k contracts of crude oil and fuel products in a week where China and global demand worries, as well as the stronger dollar helped trigger steep losses across the five crude oil and fuel product futures tracked in this update. In addition, the overall market participation continued to decline with the total open interest falling to 4.8 million contracts, the lowest level of open interest since November 2014.Crude oil drifted lower during the reporting week to last Tuesday and with key support not being challenged until the following day, the main change was a 17.5k lots reduction in the Brent gross longs while the WTI held steady with both and long and short positions seeing small increases. The natural gas net short more than doubled to 49k lots after the notoriously volatile contract slump around 10% below $8 per MMBtu just two weeks after hitting $10 per MMBtu for the first time in 14 years. Metals: The metal sector, led by gold, saw broad selling in response to multiple headwinds, the most important being the stronger dollar, rising treasury yields and China growth worries. The latter hitting copper and with that also silver, the result being additional short selling lifting the silver net short to a 40-month high at 24.6k lots. The overall net reduction of 30k lots was driven by a 4k lots reduction in longs and fresh short selling of 26k lots, a development which just like energy raised the risk of a short-covering rebound should the technical and/or fundamental outlook become more supportive. This is what happened after Thursday’s ECB meeting and verbal intervention by Bank of Japan officials helped weaken the dollar.   Agriculture Funds turned net sellers of the grain and soybean sector for the first time in six weeks. The relatively small 15k lots reduction was driven by reductions across the three soybean contracts. Buying of corn meanwhile extended to a sixth week while speculators maintained an overall short position in CBOT and Kansas wheat futures. In softs, some of the recent strong buying was reversed led by sugar and cocoa.   Forex Speculators responded to continued dollar strength in the week to September 6 by increasing bullish bets via the Dollar index and against nine IMM futures. The 10% jump in the combined dollar long to $20.2 billion, a five-week high, was primarily driven by heavy selling of GBP and JPY. The Sterling net jumped 63% to 50.4k lots ($3.6 bn) while the 3% depreciation of the JPY drove a 52% increase in the net short to 58.2k lots ($5.1 bn). It was however interesting to note that renewed EURUSD selling below parity helped attract the first major round of short covering in four weeks. Fading momentum and negative divergence between the falling price and rising RSI pointed to selling fatigue and traders growing wary ahead of Thursday ECB rate decision.  What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming       Source: https://www.home.saxo/content/articles/commodities/cot-commodity-short-sellers-left-exposed-as-dollar-drops-12092022
The Commodities Feed: OPEC+ meeting ahead

Crude Oil Price Can Get Back In The Game, Gold Price May Go Above $1,730 If The US Dollar (USD) Keeps The Downtrend

Craig Erlam Craig Erlam 12.09.2022 15:00
Oil higher despite demand concerns Oil has recovered earlier losses to trade around 1% higher on the day. Crude could extend its winning run to three sessions if it holds on, recovering from the lows which came on the back of lower global growth expectations and Covid lockdowns in China. Those restrictions could see annual Chinese demand fall for the first time in 20 years in a further sign of the struggles facing the world’s second-largest economy. While the focus may be on the demand side at the minute, we can’t ignore OPEC+ and its recent warnings about volatile price action and the disconnect with fundamentals. The group sent a warning shot earlier this month and may be tempted to send another prior to the October meeting. The recovery in the price may be supported by that, alongside a broader improvement in risk appetite in the markets and a weaker dollar. Gold’s cautious recovery Gold is continuing to enjoy a small recovery, albeit one that is not without resistance. Since hitting a bottom earlier this month, it’s been a stuttered rebound in gold which perhaps highlights the hesitance to get behind it in the markets. The dollar has pared gains in recent days which has helped gold to add to those gains but even now it’s seeing strong resistance around $1,730 which was previously a key level of support. We could see it overcome that if the dollar continues to trend lower but that ultimately depends on the US inflation data tomorrow. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Reduction In Demand For Power In UK, Bank of Japan Plans To Maintain Current Policy

Reduction In Demand For Power In UK, Bank of Japan Plans To Maintain Current Policy

Saxo Bank Saxo Bank 13.09.2022 09:26
Summary:  Equity sentiment remained upbeat and the US dollar weakened further despite a surge higher in US Treasury yields. Globally sustained inflation pressures, such as those in Japan’s producer prices and New Zealand’s food prices, continues to raise concerns. US inflation print for August takes all the attention today with impact likely to reverberate through markets but unlikely to change the Fed’s upcoming rate hike at the September meeting. Precious metals tested key resistance levels and crude oil prices made a recovery as well. The lack of consensus on EU energy proposals may spark some concerns. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) extend their bear market bounce U.S. equities extended the bear market bounce for the fourth day amid a relatively uneventful and light volume day. The S&P 500 rose 1.1%, Nasdaq 100 up 1.2%. It comes despite bond yields rising, with the 30-year yield hitting a new high of 3.53%. Meanwhile the volatility index, the VIX rose for the first time in four days to 23.9, suggesting uncertainty could be brewing. Noteworthy moves in US stocks   Apple (AAPL:xnas) contributed to the days move, accounting for more than 60 points of the 151 points in Nasdaq 100, after the stock surged 3.9% on strong pre-order data of the new iPhone 14. A larger number of call options were traded on Apple shares on Monday. Twitter (TWTR:xnys) lost 1.7% after it sent a letter to Elon Musk and said the company intends to enforce Musk’s agreement to buy the company. Oracle (ORCL:xnys) reported sales growth of 18% to $11.4 billion, with higher contributions from cloud computing and the newly acquired Cerner, a health records provider. Adjusted EPS came in at $1.03, below the analyst consensus of $1.06 as per the Bloomberg survey. Oracle shares gained 1.3% in after-hours trading. Gilead Sciences (GILD:xnas) surged 4.2% following the settlement of an HIV drug intellectual property dispute. Bristol-Myers Squibb (BMY:xnys) gained 3.2% as regulators approved the company’s psoriasis drug.  US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) The treasury yield curve bear steepened on Monday, with the 30-year yield finishing the day at 3.51%, a new high just a little above the previous high print in June. The long-end, yields of the 10-years through 30-years jumped 5 to 6 bps after the poor 3-year notes and 10-year notes auctions, in particular the latter. The 10-year auction stopped at a yield of 3.33%, which was 2.7 bps higher than the notes were trading at 1:00 pm New York time when the results were announced. The 10-year notes weakened to finish the day at 3.36%. In addition to the USD41 billion 3-year and USD32 billion 10-year auctions, eight corporate new issues with a total size of about USD12 billion came to the market yesterday. The decline in the inflation expectations print in the New York Fed’s survey of consumer expectations did not move the treasury markets which had the day’s focus on supply. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong and China markets were closed on Monday for a public holiday.  Overnight in U.S. trading, the Nasdaq Golden Dragon China Index bounced by 2.8%.  Chinese EV maker, NIO (NIO:xnys) soared 13.7% following Deutsche Bank and BoA Merrill Lynch analysts reiterating “buy” rating as well as reiterating and raising price targets respectively.  EURUSD recovery extended, but risks ahead EURUSD tested highs of 1.02 on Monday amid some optimism on Ukraine’s military advances and Bundesbank President Joachim Nagel signaling support for further interest-rate hikes in Europe. Gains however cooled later with ECB's Scicluna suggesting the central bank will continue with rate hikes but they are unlikely to be as large as the 75bps hike seen last week. Meanwhile, EUR/GBP printed a fresh YTD high of 0.8722 before unwinding the gains later. Pressure could build on EUR as the EU energy proposals will likely face some opposition, and US CPI data today will also be on watch. Russia may also increase the energy pressure on Europe if Ukraine’s advances stick. Crude oil prices (CLU2 & LCOV2) Crude oil prices saw some recovery on Monday amid a softer USD as well as weaker US inflation expectations from the NY Fed offset some of the weaker dollar concerns. Iran nuclear deal also seems to be making little progress, delaying any possible relief on the supply side. WTI futures rose to $88/barrel while the Brent futures were up at $94/barrel. US CPI data due later today is key to further gauge the path of Fed’s rate hikes from here, and the EU energy proposals will also be a key catalyst. Gold (XAUUSD) and Silver (XAGUSD) Gold rose on Monday as the dollar extended its retreat from a record high ahead of US inflation data due later today, which could potentially slow down the pace of Fed’s rate hikes if the headline print is softer than expected. Gold tested $1734, the 21-day SMA and 38.2% retracement of the August slump, but was rejected and back below $1730 in early Asian trading. Silver also rallied sharply to touch the $20-mark supported by a weaker dollar, higher gold prices and signs of tightness supporting the copper market. Last Tuesday speculators held the largest short position in three years and the continued rally is now forcing broad short covering.   What to consider? US CPI print will point to higher and stickier price pressures With the labor market remaining strong in the U.S. over the last few months, the focus has remained on the inflation data to predict the path of the Fed’s rate hikes. Clearly, all of the Fed’s members have had a unified hawkish stance since the Jackson Hole conference, and many have clearly hinted at a 75bps rate hike for September. Tuesday’s US CPI report is the one to watch, as it can move the market pricing of the Fed’s rate path and is the last key data point scheduled to release ahead of the September 21 Fed meeting. After some softening in July, it can be expected that the headline print may ease further in August as well given the decline in gasoline prices. Still, the inflation print is likely to stay elevated due to the stickier shelter and services costs, as well as still-high energy and food prices. Consensus estimates point to a mild decline of 0.1% MoM while the core remains strong at 0.3% MoM. EU proposes mandatory cuts to power use and profit levies It is expected that the EU draft energy plan will include mandatory power demand cut, an “exception and temporary” levy on oil, gas, coal and refining companies, as well as revenue caps for non-gas fuelled power generators. There is likely to be opposition from some of the member states, as the plan is detailed out tomorrow. Here is another sign inflation is not peaking; New Zealand food inflation hits a 13-year high New Zealand food prices rose 8.3% over the year to August 2022, which is the biggest annual increase since July 2009, according to data from Statistics New Zealand. The surge was mainly driven by a 8.7% increase in grocery food prices compared to a year ago, after fruit and vegetable prices rose 15%. Prices for staples like, eggs, yogurt, and cheddar cheese saw the largest moves in grocery prices. Companies to look at that sell food and dairy products to supermarkets include Costa Group (CGC), as well as A2 Milk (A2M) and Bega Cheese (BGA) and Synlait Milk (SM1). The New Zealand dollar rose to a two-week high against the USD, on expectation the Reserve Bank of New Zealand (RBNZ) will need to keep hiking rates. Japan producer prices remain above expectations Japan’s August PPI was up 9.0% y/y (vs. 8.9% y/y expected) while last month’s was also revised higher to 9.0% y/y from 8.6% y/y previously. The m/m print was slightly softer at 0.2% vs. 0.4% expected, but continued to show rising cost pressures amid the surge in commodity prices and a weaker yen. This suggests more CPI pain is in the pipeline, and the resolve of Bank of Japan to maintain accommodative policy will continue to be tested. New York Fed 1-year consumer inflation expectations at 10-month lows The latest NY Fed consumer inflation expectation gauges declined sharply, suggesting easing price pressures. Expectations for US inflation three-years ahead fell to two-year lows to come in at 2.8% in August, while the one-year ahead gauge was at 5.7%, a 10-month low. Meanwhile, inflation expectations on a five-year horizon fell to 2% from 2.3% previously, suggesting that inflation expectations remain anchored. Gloomy economic outlook for the United Kingdom According to the Office of National Statistics, UK GDP grew only 0.2% month-over-month in July. This is less than expected (0.4 % month-over-month). The weakness is mostly centered on the industry and the construction sector. This is worrying. There is no big bank holiday effect. However, there is anecdotal evidence of a reduction in demand for power because of cost, but it was also a hot month. In addition, the UK July industrial production fell 0.3% month-over-month versus expected +0.3%. Expect negative print in the eurozone for the same period too. California’s electricity infrastructure is under severe tension According to data released over the weekend by California Independent System Operator, demand on California’s power grid hit an all-time high on 6 September above 50,000 MW. The last two times it was close to this threshold was in 2007 and in 2017. The situation is getting worse and worse. Oracle reported sales in line with expectations but missed EPS estimates Oracle (ORCL:xnys) reported sales growth of 18% to $11.4 billion, in line with expectations. The sales growth was largely attributable to contributions from cloud computing and the newly acquired Cerner, a health records provider. Adjusted income came in at USD1.68 billion, a 33% drop from last year quarter and missing analyst estimates.  Adjusted EPS was $1.03, below the analyst consensus of $1.06 as per the Bloomberg survey. The earnings miss was partly due to FX losses which were results of a stronger dollar. Banking job cuts? Goldman Sachs is getting ready for jobs cuts. Who’s next? Goldman to report a 40% drop in earnings, which will foreshadow job cuts. However, there could be a lot of stake; in July Goldman said it planned to slow hiring and reinstate performance reviews. There is a huge question looming about how banks will get work with global deal volumes having dropped by about $1 trillion from a year ago. Investment banks are reliant on equity capital markets and IPOs and our sense is that more job cuts could be coming with inflation set to continue to rise, and push up the yield curve, and official interest rates into next year. For investors the takeaway here is that while markets remain uncertainty and rates are rising, investment banks will likely continue to face pressure. Banking ETFs, such as Vanguard Financials ETF (VFH) and Financial Select Sector SPDR ETF (XLF) are both down about 13% from their October 2021 peaks. Although they are both rallying amid the bear market bounce lately, we think the sector is likely to pair back again once stronger US data comes out and Fed suggests more rate hikes are coming.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-13-sept-2022-13092022
Asia morning bites - 16.05.2023

Nintendo And Sales Success, Natural Gas Prices In Europe Trade At Their Lowest

Saxo Bank Saxo Bank 13.09.2022 09:35
Summary:  The equity market rally extended further yesterday, in part on hopes that Ukrainian battleground successes bring the chance of the war ending sooner rather than later and as natural gas prices in Europe trade at their lowest in more than a month. Today’s August US CPI release will be the critical event risk for whether the improvement in sentiment can extend. A hot core CPI number could yet spoil the party, while another soft number like July’s could boost the “peak Fed” narrative for a while and see the rally extend if treasury yields also drop in response.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities extended their gains yesterday with S&P 500 futures rallying another 1.5% closing at 4,130. This morning the index futures are continuing higher as the market is clearly positioning itself for a positive US August inflation figure later today which could see S&P 500 futures extend to 4,200. It is worth keeping in mind that the medium-term outlook has not changed much on inflation and a significant slowdown in the US releasing its oil reserves could quickly add renewed pressure on energy prices. But the key event to watch today is the US August CPI report out at 12:30 GMT. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong, Shanghai, and Shenzhen returned from a long weekend and traded moderately higher, Hang Seng Index +0.4%, CSI 300 +0.7%. HSBC (00005:xhkg) climbed 1.8% after its CFO said the bank was considering resuming share buybacks in the second half of next year and raising staff pay in 2023. Alibaba (09988:xhkg) gained 2.4%. NIO (09866:xhkg) jumped 17.2% following analysts reiterating “buy” on the EV maker.  Chinese biotech stocks traded in Hong Kong fell after US President Biden signed an executive order to develop a strategy to “mitigate risks posed by foreign adversary involvement in the biomanufacturing supply chain”, Wuxi Biologics -18.4%, Wuxi AppTec (02359:xhkg) – 14.4%, Genscript Biotech (01548:xhkg) -8.4%.  USD status, please European currencies surged yesterday on hopes that Ukrainian battlefield successes will compound and bring peace sooner rather than later. EURUSD rose up through key local resistance at 1.0100, but the move didn’t well, with plenty of backfilling. Elsewhere, the USD is in technical limbo in pairs like USDCAD (the 1.3000 area refusing to completely let go) and AUDUSD (a strong sense that the choppy bearish trend is ending would be a solid surge-and-hold above 0.7000.) Today’s US CPI release could give us a firmer sense of USD direction, with weaker inflation across the board relative to expectations and an easing back lower of treasury yields likely required to take the USD firmly lower. JPY crosses back higher as yields rise Expect JPY crosses to the be the most sensitive to any sharp move in US treasury yields off the back of the US August CPI data today. After surging to new local highs yesterday, the JPY bounced back a bit. The focus in USDJPY is on the cycle top near 145.00, a break of which likely sets the clock ticking for actual market intervention from Japan’s ministry of finance. Gold (XAUUSD) and Silver (XAGUSD) Gold rose on Monday as the dollar extended its retreat from a record high ahead of US inflation data due later today, which could potentially slow down the pace of Fed’s rate hikes if the headline print is softer than expected. Gold tested $1734, the 21-day SMA and 38.2% retracement of the August slump, and after getting rejected it retraced to $1720 during Asian trading. Silver meanwhile jumped 5% before running into profit taking around $20 with the added support from signs of a tightening copper market and short covering from speculators who in the week to September 6 raised their short bets to a three-year high. Focus on US CPI and its impact on the dollar and future rate hike expectations. Crude oil (CLV2 & LCOX2) Crude oil continues to trade above levels that otherwise could signal additional weakness amid worries about demand from China due to harsh anti-virus restrictions and the world in general as central banks attempt to dampen inflation by lowering economic activity through aggressive rate hikes. Instead, the oil market, just like most other commodities, has received support from a weaker dollar and fading prospect of an Iran nuclear deal anytime soon. However, the potential for a fresh and strong upside push in crude oil has faded as the world is going through a period of lower growth. Focus being the collapse of Russian defenses in Ukraine and the response from Moscow, the impact of a potential price cap on Russian oil, and monthly oil market reports from OPEC today and IEA tomorrow. US Treasuries (TLT, IEF) The 10-year US Treasury benchmark traded steady near the highs for the recent cycle above 3.30% after an auction of 10-year T-notes yesterday saw demand near the lower end of the range of recent months. A 3-year treasury auction yesterday saw better demand metrics. Treasury traders are watching today’s important US CPI release for clues on whether yields will continue to rise toward the cycle top at 3.50% or ease back again. A 30-year T-bond auction is up after the CPI release today. What is going on? Gloomy economic outlook for the United Kingdom According to the Office of National Statistics, UK GDP grew only 0.2 % month-over-month in July. This is less than expected (0.4 % month-over-month). The weakness is mostly centered on the industry and the construction sector. This is worrying. There is no big bank holiday effect. However, there is anecdotal evidence of a reduction in demand for power because of cost, but it was also a hot month. In addition, the UK July industrial production fell 0.3 % month-over-month versus expected +0.3 %. Expect negative print in the eurozone for the same period too. Ocado sees big miss in Q3 on revenue The UK online grocery retailer reports revenue of £532mn vs est. £557mn as the cost-of-living crisis bites the UK consumer. Ocado sees the value of the average basket down by 6% and energy costs are putting pressure on the operating margin. Nintendo shares surge 5% on game launch record The Japanese game developer announced its biggest Switch console game launch success Splatoon 3 with 3.45mn sold units in Japan in its opening weekend. The success is building on the previous years of strong sales figures for its Switch console and games sold on the console. Shares are up 745% over the past 10 years excluding dividends. Oracle hit expectations in Q1 results The software maker was solid in its performance in its FY23 Q1 results (ending 31 August) delivering $11.4bn in revenue up 18% y/y. The 15-17% revenue growth guidance for the current quarter is also in line with estimates and Oracle indicated that the acquisition of Cerner was going according to plan providing the company with more strengths in its cloud offering. California’s electricity infrastructure is under severe tension According to data released over the weekend by California Independent System Operator, demand on California’s power grid hit an all-time high on 6 September above 50,000 MW. The last two times it was close to this threshold was in 2007 and in 2017. The situation is getting worse and worse. EU proposes mandatory cuts to power use and profit levies It is expected that the EU draft energy plan will include mandatory power demand cut, an “exception and temporary” levy on oil, gas, coal and refining companies, as well as revenue caps for non-gas fuelled power generators. There is likely to be opposition from some of the member states, as the plan is detailed out tomorrow. A rare “triple-dip” La Ninã spanning three northern hemisphere winters is coming Changing temperatures around the world have led to several climate emergencies so far in 2022, from historic flooding, above average temperatures and drought. Parts of the world are expected to experience severe weather for the rest of the year and into 2023, as part of a rare "triple dip La Niña" event according to the World Meteorological Organization (WMO). In Australia it may lead to heavy rain and flooding in the coming months while South America and equatorial Africa could see a repeat of the droughts experienced during the past couple of years. A development that could strengthen concerns about a global food crisis with inventories of several key food items falling to a multi-year lows. Japan producer prices remain above expectations Japan’s August PPI was up 9.0% y/y (vs. 8.9% y/y expected) while last month’s figure was also revised higher to 9.0% y/y from 8.6% y/y previously. The m/m print was slightly softer than expected at 0.2% vs. 0.4% but continued to show rising cost pressures amid the surge in commodity prices and a weaker yen. This suggests more CPI pain is in the pipeline, and the resolve of Bank of Japan to maintain accommodative policy will continue to be tested. New York Fed 1-year consumer inflation expectations at 10-month lows The latest NY Fed consumer inflation expectation gauges declined sharply, suggesting easing price pressures. Expectations for US inflation over three years annualised fell to a two-year low at 2.8% in August, while the one-year ahead gauge was at 5.7%, a 10-month low. Meanwhile, inflation expectations on the five-year horizon fell to 2% annualised from 2.3% previously, suggesting that inflation expectations remain anchored. What are we watching next? U.S. August CPI is out today This is a first estimate and the latest release before the Federal Reserve’s September 20-21 meeting. In July, CPI rose 8.5 % on a yearly basis (much slower than the 9.1 % increase in June). The economist consensus expects inflation to continue decelerating at 8.1 % in August. But core CPI will likely be up. This shows that inflation is broad-based and also expanding into the services sector, for instance. At Saxo Bank, we believe the peak in inflation has passed in the United States in June. But this should not influence the path of monetary policy tightening in the short-term. Shanghai Cooperation Organization meeting on 15-16 September This the first time since 2019 that Asian leaders are meeting in person in a bigger strategic forum. Xi Jinping and Vladimir Putin are officially joining the summit and India’s Modi is expected to join as well. Given the recent military success in Ukraine, the pressures are mounting on Russia and Putin Earnings to watch The next important earnings release to watch is Inditex, one of Europe’s largest fashion retailers, which is expected to report revenue growth of 12% y/y in FY23 Q2 (ending 31 July) but with the operating margin expected to show downside pressure. Wednesday: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0800 – Norway Aug. Region Survey 0900 – Germany Sep. ZEW Survey 1000 – US Aug. NFIB Small Business Optimism 1230 – US Aug. CPI 1700 – US 30-year T-bond Auction 2030 – API's Weekly Report on US Oil and Fuel Inventories During the day: OPEC’s Monthly Oil Market Report Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-13-2022-13092022
Bank of England Faces Rate Decision: Uncertainty Surrounds Magnitude of Hike

Weaker USD (US Dollar) Has Affected Base Metals And Crude Oil Prices

ING Economics ING Economics 13.09.2022 13:17
Your daily roundup of commodities news and ING views Energy - oil bounces The retreat in the USD has provided a boost to oil prices, with ICE Brent briefly trading back above US$95/bbl at one stage yesterday. Despite this rebound, there are still some clear downside risks for the market. The most important continues to be China’s zero covid policy. The latest data from the US Department of Energy (DOE) shows that US strategic petroleum reserves (SPR) fell by 8.4MMbbls over the last week to 434.1MMbbls, the lowest level that the SPR has seen since October 1984. The current releases are set to come to an end in October. However, there are reports that the US is looking to potentially extend SPR releases. Clearly, the US administration is concerned about what happens to oil prices once the current releases come to an end. EU ministers continue to work towards coming up with a plan to intervene in European energy markets. A draft proposal suggests that the EU will look to enforce mandatory demand cuts for power- overall demand cuts as well as during peak hours. In addition, the EU is also proposing a levy on energy companies’ extra/abnormal profits. Finally, the EU also wants to cap revenues for power generators, with the exception of gas fired power capacity. This is still a proposal, but the hope is that a deal is finalised before the end of September.   Metals - weaker dollar boosts prices Base metals prices started the week higher, boosted by the weaker dollar as the US currency retreated from a record high it reached last week. Aluminium supply risks were exacerbated amid talks of potential power cuts to smelters in China’s Yunnan province. The province, which accounts for more than 12% of the country’s production, may begin reducing operating rates by 20-30% this month amid a drought-induced shortage of hydropower. Meanwhile, the European Union said it will outline this week concrete measures to address the worsening energy crisis, including a proposal for targets to reduce electricity demand as well as aiming to cap excessive revenues of companies producing power from sources other than gas, through a limit on the price of electricity generated from technologies such as renewables, lignite or nuclear energy. Agriculture - USDA revisions push soybeans higher The latest USDA WASDE report shows expectations of further tightening in US corn and soybean supply.  For corn, the USDA has revised its 2022/23 ending stocks to 1.22bn bushels a previous estimate of 1.39b bushels. This was still somewhat higher than the 1.19bn bushels the market was expecting. US corn output was revised down from 14.36b bushels to 13.94bn bushels. This lower output was partly offset by lower domestic demand as well as exports. US soybean production estimates were revised down, from 4.53b bushels to 4.38b bushels, due to lower acreage and yield estimates. As a result, US ending stocks for soybeans were lowered from 245m bushels to 200m bushels for 2022/23, some distance from the 246m bushels the market was expecting. The USDA left US wheat supply and consumption unchanged. For the global market, the USDA estimates corn ending stocks to fall from 306.7mt to 304.5mt for 2022/23, still above the 301.7mt the market was expecting. Global corn production estimates were lowered by 7mt to 1,172.6mt due to supply losses from the US (-10.5mt) and the EU (-1.2mt). Similarly, soybean global ending stocks were lowered from 101.4mt to 98.9mt, lower than market expectations of a little over 101mt. Finally, global wheat ending stocks were increased from 267.3mt to 268.6mt, largely on the back of an increase in production estimates for 2022/23. Read this article on THINK TagsWASDE Oil Energy crisis Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Yen (JPY) Takes A Stab At Resilience, The Grains Sector Has Survived Well

Yen (JPY) Takes A Stab At Resilience, The Grains Sector Has Survived Well

Saxo Bank Saxo Bank 14.09.2022 08:55
Summary:  Equity markets were slammed for their worst losses in more than two years yesterday on a shocking August US CPI print, which showed core inflation rising at twice the anticipated pace for the month. This was a rude shock after a recent strong rally in equities, and US treasury yields jumped, and the US dollar soared as the market rushed to price in the risk that the Fed might hike 100 basis points next week.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities erased most of the gains since 6 September as the market’s positioning ahead of the US August CPI report was completely wrong. Not only did the headline inflation figures not fall m/m, but the core figure is up 0.6% m/m and has been fluctuating around 0.5% m/m for a year suggesting that inflation is getting entrenched at a level suggesting 5-6% annualised inflation in the US. The Fed Funds futures curve immediately shifted downwards lifting peak Fed funds rate at close to 4.5% from around 4% the day before the inflation report. S&P 500 futures tumbled 5.4% from its intraday peak and Nasdaq 100 futures plunged 6.7% from its intraday high. The 3,900 and 12,000 levels are the key levels to watch on the downside in S&P 500 futures and Nasdaq 100 futures respectively. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Shares traded in Hong Kong, Shanghai, and Shenzhen declined on the back of the worst day in more than two years last night in US equities, with Hang Seng Index at -2.6% and CSI 300 -1.2%. Among the top losers, Techtronic Industries (00669:xhkg) plunged 10.6%, Hua Hong Semiconductor (01347:xhkg), Bilibili (09626:xhkg) and Baidu (09888:xhkg) dropped more than 5%, JD.COM (09618:xhkg) and Alibaba (09988:xhkg) slid about 4%. Tencent (000700:xhkg), -1.4%, had an educational game being approved under a company controlled by Tencent’s executives including co-founder Pony Ma. This is the first time Tencent got a game approval this year though being an educational game, it will unlikely be a significant money-making title. CNOOC (00883:xhkg) and COSCO Shipping Energy outperformed, rising 2%-3%. A typhoon is approaching Shanghai and Ningbo causing major container ports in Shanghai and Ningbo to suspend operations. USD rips back higher – suddenly threatening cycle top after CPI data After the shocking August CPI number from the US yesterday, the US dollar soared higher, taking EURUSD all the way back below parity after nearly trading 1.0200 earlier this week. Elsewhere, the USD was universally higher, with a pair like AUDUSD slamming all the way to the low 0.6700's and therefore not far from the cycle low, while NZDUSD actually posted a cycle low, and GBPUSD trading south of 1.1500 after trading north of 1.1700. Moves by the Bank of Japan and verbal intervention from the Japanese Ministry of Finance helped temper the USD move this morning (more below). Now the focus shifts to next week's FOMC meeting, where the market is now pricing the rising risk that the FOMC could hike 100 basis points. JPY takes a stab at resilience on the anticipation of intervention The Bank of Japan carried out a “rate check” in the FX market, which is widely seen as a precursor for actual market intervention. This tamed the USDJPY move higher from sub-142.00 levels to nearly 145, as the gains were pared back to 144.00, with the JPY also firmer broadly. Finance Minister Suzuki said nothing could be ruled out in response to the weakening JPY and that if the current trend persisted, stepping into markets is an option. But as past experience has shown, intervention often only creates temporary volatility if the underlying issue is not addressed - in this case, the Bank of Japan's insistence on maintaining very low rates and controlling yields out to 10 years. If yields continue to rise globally, Japanese officialdom will have an enormous and likely unwinnable fight on its hands if the Bank of Japan fails to change its policy. Gold (XAUUSD), Silver (XAGUSD) and copper (COPPERUSDEC22) ... all tumbled following the stronger than expected US CPI print, thereby reversing some of the recent weak dollar-led gains. Prior to the release copper had been on a tear reaching $3.7/lb as the LME market continued to signal the tightest market conditions since November on increased demand from China. Gold trades near $1700 and close to the current floor around $1680 after the CPI print strengthened the view the FOMC will have to remain hawkish and continue to aggressively hike rates. However, the risk to economic growth while inflation remains stubbornly high may bring back worries about stagflation, a development that may lend support to investment metals. Continued focus on the dollar and the markets pricing of future inflation expectations. Crude oil (CLV2 & LCOX2) Crude oil traded higher on Tuesday before the hotter-than-expected US CPI print helped send most commodity prices, including oil, lower on fears aggressive rate hikes could curb demand. Earlier the market traded up after OPEC maintained their 2023 outlook for a 2.7 million barrel per day increase in global demand. The EIA delivered the same message last week and the IEA is likely to do the same today when their monthly oil market report is released. Developments that highlight the current discrepancy between the (lower) price action and what these major forecasters are seeing. A recovery later in the day was supported by the Biden admin saying it will consider starting refilling strategic reserves when WTI falls below $80. Ahead of today’s EIA stock report, the API reported a 6m bbl crude stock build, a 3.2m bbl drop in gasoline and 1.8m bbl build in distillates. US Treasuries (TLT, IEF) Treasury yields jumped yesterday on the shocking August US CPI data, with the yield curve flattening aggressively as the hot data point saw the market rushing to price in the risk of more aggressive moves to counter inflation at coming meetings. The 10-year yield was taken back toward the cycle top from mid-June at 3.50%. A further rise above this yield level will continue to drive the risk of weaker sentiment and USD strength. What is going on? US August CPI shocks with high core inflation reading The headline US CPI data came in slightly above expectations, with a year-on-year reading of 8.3% vs. 8.1% expected and a month-on-month reading of +0.1% vs. -0.1% expected, a real surprise given sharp drops of late in gasoline prices. But the real shock was the core Ex Food and Energy inflation reading of +0.6% month-on-month, twice what was expected. This triggered an enormous slide in risk sentiment as the market rushed to price the risk that the FOMC might hike as much as 100 basis points next week. As of this morning, about 85 basis points is priced for the meeting. The grains sector maintained a bid on Tuesday ... while most other commodities took a tumble after the US CPI print once again raised concerns about aggressive growth and demand killing rate hikes. With demand being relatively constant the grains sector held up well as the sector continued to focus on supply risks and dwindling inventories. The US Department of Agriculture this week slashed its estimates for soybean supplies from the US, the second-largest producer after Brazil where a lingering “triple-dip” La Nina repeat could bring dry conditions in the coming months. In addition, wheat exports have been cut because of the war in Ukraine, and there’s uncertainty over Ukraine’s grain export corridor after criticism from Putin. Inditex 1H revenue beats estimate The Spanish fashion retailer delivered first-half revenue of €14.9bn vs est. €14.6bn on top of delivering EBITDA margin of 27.1% vs est. 26.8%. Inditex reiterates guidance of online sales exceeding 30% of revenue by 2024. New lockdowns in China Two cities around Beijing announced lockdowns due to Covid risks. Shijiazhuang (over 2.3 million inhabitants) asked all residents of Yuhua district to work from home for a period of three days (expected to end on Friday morning). Sanhe (around 440,000 inhabitants) implemented a full lockdown of its entire population at least until Saturday morning. This underscores the supply chain risks during the winter period in the event China experiences a bigger Covid outbreak. UK August CPI comes in slightly above expectations at core UK inflation came in at 9.9% on the headline versus a slightly higher print expected, but the core inflation level rose to a new cycle high of 6.3%, just above the 6.2% expected. Price pressures are likely to remain elevated this month as well, despite some softening in fuel prices, as food and services costs continue to rise. Further gains in inflation can be expected in October, but the capping of household energy bills may help to soothe inflationary pressures thereafter. Cheniere was the one shining light on Wall Street overnight Cheniere, the US’ biggest LNG exporter, saw its shares rise 3.1% yesterday while markets saw a sea of red when US inflation data came out higher than expected. The highlights the fact that energy companies can and have been able to outperform the market. The largest US exporter of liquefied natural gas boosted its full-year 2022 profit forecast beyond analysts’ expectations as shipments are already set to depart their dock sooner than anticipated. What are we watching next? Shanghai Cooperation Organization meeting on 15-16 September This the first time since 2019 that Asian leaders are meeting in person in a bigger strategic forum. Xi Jinping and Vladimir Putin are officially joining the summit and India’s Modi is expected to join as well. Given the recent military success in Ukraine, the pressures are mounting on Russia and Putin Ethereum merger will draw attention The Ethereum blockchain’s much-anticipated software upgrade, the so-called Merge, is expected to take place tomorrow morning, according to its core developers. The new system, known as "proof-of-stake", will slash the Ethereum blockchain's energy consumption by 99.9%, developers say. Most blockchains, including Bitcoin's, devour large amounts of energy, sparking criticism from some investors and environmentalists. The merge could make Ethereum more favourable to pension funds and other institutional investors that are under the scanner for environmental concerns, but there is also come skepticism on how scalable Ethereum could become and if it becomes more susceptible to attacks by hackers. France is expected to enter a recession next year Barclays is the first major international bank to forecast a recession in France next year (2023 GDP growth at minus 0.7 %). This is highly likely, in our view. But it is certainly too early to assess the depth of the recession at this stage. It will depend on the evolution of the energy crisis and the risk of energy rationing. Forecasting is always a complicated task. This is even more complicated now due to the elevated level of uncertainty regarding the short-term economic path. Expect other European countries to enter a recession next year (the United Kingdom, Germany, Hungary etc.). Earnings to watch Inditex has already reported before the European equity market opens (read earnings review above), so the next earnings release in focus is Adobe tomorrow. Analysts expect revenue growth of 12.6% y/y with operating margin jumping back again following cost reduction exercises. The key risks for Adobe are the strong USD, falling technology spending, and lower advertising growth lowering demand for content creation. Today: Inditex Thursday: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0800 – IEA's monthly Oil Market Report 0900 - Eurozone Jul. Industrial Production 1230 - US Aug. PPI 1230 - Canada Jul. Manufacturing Sales 1430 - US DoE Weekly Crude Oil and Product Inventories 1430 - ECB's Villeroy to speak 2245 - New Zealand Q2 GDP 2350 - Japan Aug. Trade Balance 0120 - China Rate Announcement 0130 - Australia Aug. Employment Data  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher     Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-14-2022-14092022
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Crude Oi: It's Good To Have A Look At What We Learn From The IEA Report

Craig Erlam Craig Erlam 14.09.2022 20:37
A still uncertain outlook for oil demand Oil prices suffered alongside risk assets on Tuesday, albeit to a much lesser extent, with the threat to the US economy of much higher interest rates a downside risk. Of course, it’s yet another risk that I’m sure OPEC+ will be keen to stress it would adapt to in its desperation to ease market volatility and keep prices high. The oil price is a little higher after the IEA monthly report which claimed oil use for power generation will hit 700,000 barrels per day, while at the same time indicating that demand growth will halt in the fourth quarter before rising by 2.1 million barrels per day next year. It, therefore, lowered its forecast for world oil demand growth this year by 110,000 BPD to two million while warning of downside risks including the faltering Chinese economy and a slowdown in OECD countries. Ultimately, the outlook is heavily subject to revisions given the still rapidly evolving environment. A nervy week ahead It won’t come as a surprise to anyone that gold went into freefall following the US inflation report as it became clear that the Fed is in no position yet to ease its foot off the brake. Suddenly the yellow metal is looking down rather than up, with $1,730 remaining strong resistance to the upside but $1,680 now very vulnerable. It’s going to be a nervy week for gold bulls. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil outlook uncertain, gold under pressure - MarketPulseMarketPulse
Gold's Hedge Appeal Shines Amid Economic Uncertainty and Fed's Soft-Landing Challenge

Yen's (JPY) Lack Of Conviction For Strength, Meeting Of President Xi And President Putin, Australia’s Employment Data

Saxo Bank Saxo Bank 15.09.2022 10:00
Summary:  Some respite in US equities last night, amid bottom hunting and a cooler US PPI report. UK CPI also eased from record highs, but there is nothing that could change the downtrend that remains in place globally. The USD remained steady despite threats of direct intervention by the Bank of Japan and downplaying of the 7-handle by Chinese authorities. Oil prices jumped on hopes of easing restrictions in parts of China. Focus today on Australia’s jobs report which could guide the path of rate hikes from here, but also key to watch will be the Xi-Putin meeting and how the geopolitical situation develops. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) clawed back from an intraday sell off on Wednesday US equity markets rebounded in late trade on Wednesday after an intraday sell off. The S&P 500 ended up 0.3%, Nasdaq 100 up 0.8%. Hedge funds did some buying in the technology space, but it wasn’t enough the significantly move the needle. The most gains were seen in the Oil and Gas sector with Energy stocks rising the most after the crude oil price rebounded 2%. The Consumer discretionary followed higher. The bearish tone remains in equities with the market toying with the idea that the Fed will raise rates by 100bps (1%). In fact there is a 25% chance the Fed will raise rates by 1% at their meeting next week. Regardless of how high they hike, 0.75% or 1%, the technical picture looks bearish as well. The S&P 500 may head back to test support at around 3,738 and June lows at 3,636. Noteworthy US market moves Moderna (MRNA:xnas) gained 6.2% after the company said it is open to selling Covid vaccines to China. Starbucks (SBUX:xnas) rose 5.5% after the company raised its sales and profit outlook, expecting 7%-9% p.a. comparable sales growth and 15-20% earnings growth over the next three years. Twilio (TWLO:xnys) jumped 10% after announcing a plan to cut 11% of its workforce. Shares of railroad operators dropped on probable labor strike, Union Pacific (UNP:xnys) -3.7%, CSX (CSX:xnas) -1%. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) The flattening went on for a second day in a row as traders took to their hearts that the Fed would be hawkish for the rest of the year and the odds for cracking the economy down the road increased. While 2-year to 10-year yields climbed 2 to 4 basis points, the yield of the 30-year long bond continued to slide and finished the session 6bps lower at 3.45%.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Shares traded in Hong Kong, Shanghai, and Shenzhen declined on the back of the U.S. stocks’ worst day in more than two years, Hang Seng Index -2.5%, CSI 300 -1.1%. Industrials, semiconductors, and healthcare were among the top losers, Techtronic Industries (00669:xhkg) -10.0%, Hua Hong Semiconductor (01347:xhkg) -5.7%, Wuxi Biologics (02269:xhkg) -4.9%, BeiGene (06160:xhkg) -4.5%. Tech hardware stocks declined following a 31.2% YoY falls in China’s smartphone shipments in July, Sunny Optical (02382:xhkg) -4.2%, Xiaomi (01810:xhkg) -3.3%. China internet stocks traded weak, Hang Seng Tech Index (HSTECH.I) -2.8%, Bilibili (09626:xhkg) -5.2%, Baidu (09888:xhkg) -5.7%, JD.COM (09618:xhkg) -4.2%, Alibaba (09988:xhkg) -4.1%. Fosun (00656:xhkg) tumbled 6.9% on unconfirmed reports claiming that a couple of Chinese regulators had told investors to review their equity and credit exposures to Fosun.  Bank of Japan’s rate-checking: a precursor to direct intervention or just more of verbal intervention? Even as the USD stayed firm overnight, USDJPY retreated from near-145 levels to 143 amid fears of potential FX intervention by Japanese authorities. On Wednesday, the BOJ conducted a so-called rate check in the market, asking for an indicative price at which it could buy yen, a move widely seen as a precursor to intervention. Both the finance minister and the nation’s top currency official also warned that all options were on the table. Japan last intervened to buy the yen in 1998.The 145-level is becoming the tolerance limit for Japanese authorities, but real intervention lack so far and only volatility goes up as threats ramp up. Yen lacks conviction for strength due to fundamental weakness stemming from yield differential with the US. Crude oil (CLU2 & LCOV2) Crude oil prices gained momentum overnight and remained steady in early Asian hours amid reports of the White House looking at refilling its strategic reserves at around $80/barrel. EIA’s weekly inventory report was mixed, with a large build in crude oil and a fall in gasoline. WTI futures rose above $88/barrel while Brent was above $94. Demand side factors also saw a modest improvement with Chinese city of Chengdu looking at easing restrictions from today. However, a looming rail strike in the US is likely to cause some disruption in the commodity markets.   What to consider? US core PPI hotter-than-expected US August PPI relieved some of the pressures seen from the CPI report a day earlier with the headline still in negative territory at -0.1% m/m (exp. -0.1%; prev. -0.4%) and slightly softer on a y/y basis at 8.7% (exp. +8.8%; prev. +9.8%). Core measure however beat expectations at 0.4% m/m (exp. +0.3%; prev. +0.3%) and 7.3% y/y (exp. +7.1%; prev. +7.7%). Lower energy prices helped to cool the headline print, and this may mean somewhat softer CPI prints in the coming months, but still inflation remains uncomfortably higher than the Fed’s 2% target. UK CPI cools but no relief for BOE UK inflation eased slightly to come in at 9.9% y/y (prev. 10.1%, exp. 10.0%) and 0.5% m/m (prev. 0.6%, exp. 0.6%), but it isn’t enough to call for a peak in inflation yet. Prime Minister Liz Truss announced plans to freeze an increase in energy bills due to hit in October, a move economists say will reduce the severity of a further spike in prices this winter. Even with those measures, inflation will remain above the BOE’s 2% goal well into next year. President Xi and President Putin are expected to meet in person for first time since February On the sidelines of the Shanghai Cooperation Organization summit held in Uzbekistan today and tomorrow, President Xi and President Putin are expected to meet up for the first time after Russia’s invasion of Ukraine. Analysts are expecting the two leaders to discuss the sale of Russian oil and natural gas to China and the use of the rubble and the renminbi to settle bilateral trade, in addition to their positions regarding the respective core interest of each side, i.e. Ukraine and Taiwan.  Newswires suggest that the US is considering sanctions on China A Reuters story citing an anonymous source suggests that the U.S. is considering options for a sanctions package against China as part of its attempts to deter China from taking military actions against Taiwan. The story further says that the European Union is under pressure to follow suit.  China’s state-owned media downplayed the importance of the 7-handle in the Yuan State-owned China Securities Journal downplayed the importance of whether the renminbi breaks 7 the figure or not and says that there is no basis for the renminbi to depreciate in the long run. Australia’s jobs data out today will be watched closely by the RBA, when determining how much to rise rates by in October Today’s employment data is expected to show Australia’s unemployment rate remained at 50-year lows, at 3.4% in August. The RBA will also be watching to see how much employment changed in August. In July employment fell from its record high, with 41,000 jobs lost. As for today’s figures to watch; Bloomberg’s survey of economists expect 35,000 jobs to have been added last month. If more jobs are added than expected, you may see a selloff in growth sectors, such as technology, consumer discretionary and property as the RBA will have more room to hike rates. Inversely, employment falls and or unemployment rises, the RBA will have less room to hike and as such you may see an equity rally. Currently RBA interest rate futures expect rates to rise by 0.25% next month. For those watching currency markets, keep in mind the AUDUSD is being pressured to 2-year lows. However if data is stronger than expected, you may see a short lived-knee jerk rally the AUDUSD.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-15-sept-2022-15092022
Stocks to keep an eye on in the second half of 2023

Energy Prices Remain Very Volatile, Activities In The Markets

Swissquote Bank Swissquote Bank 15.09.2022 10:31
US equities eked out small gains yesterday as dip buyers timidly came in, but risks remain tilted to the downside with the disappointing inflation figures, and the risk of the largest rail strike in the US since 1992. Crude Oil Prices Released yesterday, the US producer price data didn’t enchant investors. The headline figure fell for the second consecutive month but the core PPI strengthened, hinting that most of the easing in producer inflation was due to cheaper energy prices – which however remain very volatile, and which, more importantly carries a decent upside risk. The barrel of American crude flirted with the $90 mark yesterday, without however being able to clear resistance at this level. Energy companies gained despite news that Europeans are looking to raise $140 billion euros from energy companies to help households and businesses survive through winter. The situation on the stock market The S&P500 recover a part of losses yesterday, as Nasdaq gained 0.84%. But the risks remain clearly tilted to the downside. The US dollar remains relatively strong near the 20-year highs, the EURUSD consolidates below parity as gold slipped back below $1700 per ounce. The USDJPY retreated on expectation that the Bank of Japan (BoJ) could intervene to stop the yen’s depreciation. Ethereum trades around $1600 as Merger Upgrade is now imminent! Watch the full episode to find out more! 0:00 Intro0:24 Dip buyers return to a risky market2:31 US crude flirts with $90pb3:41 US rail strike risk weighs on sentiment4:55 Energy stocks rally despite EU measures to cope with crisis7:07 Gold under pressure7:50 BoJ could intervene to strengthen the yen8:52 Ethereum Merges today! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #PPI #inflation #rail #strike #USD #EUR #JPY #BoJ #rate #check #Gold #XAU #crude #oil #BP #XOM #Chevron #Coterra #windfall #taxes #energy #crisis #Bitcoin #Ethereum #Merge #update #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
US 20-City house prices decreased by 1.3% month-on-month

Ethereum Is Waiting For Merge, Local Governments In China Are Supporting The Demand For Real Estate

Saxo Bank Saxo Bank 15.09.2022 10:14
Summary:  Yesterday’s session was a muted affair as the market picked up the pieces in the wake of Tuesday’s huge slide in the market after a hot US August CPI number. Tomorrow sees the expiry of options on trillions of notional value in equities and futures, which may have added to the volatility this week. The US dollar remains strong as surging US treasury yields threaten new multi-year highs ahead of the US August Retail Sales release later today.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are scratching around after the enormous sell-off triggered by the hot US CPI release on Tuesday. Some of the scale of the volatility on Tuesday could be due to options exposures, as options of trillions of dollars on notional equities and futures expire on Friday. If the US August Retail Sales release today leads to even higher yields, stocks could find themselves under renewed pressure. The technical focus is on the recent pivot lower just below 3,900 in the S&P 500 and the 12,000 area low in the Nasdaq 100 index.  USD strength continues, threatens cycle highs A bit of consolidation yesterday in USD pairs after the huge comeback strengthening move in the US dollar in the wake of the Tuesday US August CPI release, but the USD rallied anew from late yesterday and overnight, with the action pinned near the cycle highs in some USD pairs, such as USDSEK, USDNOK and NZDUSD, but elsewhere with a bit of range left to play with. The August Retail Sales release today should garner attention as a strong number could underline the risk of higher US yields and a Fed tightening cycle that extends longer and higher than currently expected if US consumers are getting a second wind after the shock of higher gasoline prices has eased notably since the beginning of the summer. USDJPY has rebounded from yesterday’s lows as traders treat JPY crosses with care, knowing that new highs in the key USDJPY pair are likely to bring actual market intervention from the Bank of Japan/Ministry of Finance. Gold (XAUUSD) Gold trades below $1700 and close to an area around $1680 that has provided support on several occasions during the past two years. The yellow metal turned lower after Tuesday’s CPI shocker raised the prospect of a one percent rate hike next week and a terminal Fed Funds target rate around 4.5% (up 2% from the current level) before March next year. Developments and speculation that continue to underpin the dollar while undermining dollar denominated commodities, such as precious and industrial metals. Crude oil (CLV2 & LCOX2) Crude oil trades sideways with the stronger dollar and expectations for higher US rates hurting the prospect for future demand being offset by news that China’s Chengdu, locked down for weeks, plans to ease measures. The impact of China’s zero-Covid tolerance strategy this year has led to the biggest drop in oil demand in more than three decades according to the IEA. In their latest monthly oil market report, they predicted a continued slowdown in global demand ahead of year-end before accelerating to rise by 2.7 million barrels a day in 2023. Oil market tightness at the beginning of 2023 would be led by a potential 1.9 million barrels Year on year drop in Russian production by February due to sanctions. US natural gas US natural gas trades back above $9 per MMBtu and up 13% on the week as a looming rail strike (see below) would reduce supplies of coal, forcing power generators to rely more heavily on natural gas at a time where demand for cooling remains elevated due to expectations for hotter-than-normal weather across the Midwest and Eastern parts of the US. US Treasuries (TLT, IEF) US 10-year yields are now pinned at the highs for the cycle near 3.50% ahead of today’s US August Retail Sales release. Interesting to see how the market treats a strong data point – with a deepening inversion as the market prices a more aggressive Fed (as happened on the surprisingly strong CPI release Tuesday) or with the entire curve lifting. Exceptionally weak data would also be interesting as it would challenge the rising yields trend/narrative. What is going on? U.S. inflation remains broad-based The producer price index (PPI) dipped 0.1 % month-over-month in August. This reflects cheaper gasoline prices (minus 13 % in August compared to July) and to a lesser extent lower freight costs. However, less volatile elements of the index rose more than expected. The core price index was up 0.4 % on a monthly basis. The numbers like those seen in Tuesday’s US CPI report confirm that U.S. inflation is still broad-based and inflation pressures are unbroken. This opens the door to a new interest rate hike by the U.S. Federal Reserve next week. The majority of the market expects a 75 basis point hike but a minority (between 10 % and 20 % of market participants depending on which indicators we monitor) bet on a 100 basis point hike in the cards. Chinese cities move to boost housing demand Local governments across China have moved to encourage property demand after the Chinese central government called for measures to ease the crisis. Some 120 have loosened restrictions on funds for property purchases. This news supported beleaguered Chinese developers’ stocks in trading on Thursday. Ethereum Merge The second-largest cryptocurrency, Ethereum, is very close to its expected Merge, scheduled to be within the next hour. Ethereum will go through a major upgrade which fundamentally changes the way that transactions are validated on the blockchain, and it will reduce the energy consumption for running the network with around 99.95%. What are we watching next? Looming rail worker strike in the United States The two largest railroad trade unions said they will strike if the ongoing negotiations with employers about higher salaries and better work conditions fail. The strike could start as early as tomorrow and could have a very negative impact on the U.S. economy. Estimates suggest this could cost the economy nearly $2bn per day. In the United States, rail freight represents almost a third of the total domestic freight. Shanghai Cooperation Organization meeting today and tomorrow This is the first time since 2019 that Asian leaders are meeting in person in a bigger strategic forum. Xi Jinping and Vladimir Putin are officially joining the summit in Samarkand, Uzbekistan and India’s Modi is expected to join as well. Given the recent Ukrainian military success against Russia, the pressures are mounting on Russia and Putin, which will test a Russian-China "friendship” that at a meeting of Xi and Putin during the Beijing Olympics and just ahead of Russia’s invasion of Ukraine was declared to be “entering a new era” and “without limits”.  Earnings to watch Today, focus is firmly on Adobe’s earnings report today after the close. The company has seen a wild ride in recent years, pumped to remarkable heights by late 2021 due to its steady solid growth and high profitability with a backdrop of seemingly ever falling yields, only to see the share price crushed in half since its 2021 peak, first due to the seismic shift higher in yields, but compounded by faltering growth rates for the company starting two quarters ago. Today: Polestar Automotive, Adobe Economic calendar highlights for today (times GMT) 0900 – Eurozone Jul. Trade Balance 0915 – ECB's Guindos to speak 1230 – US Weekly Initial Jobless Claims 1230 – US Sep. Empire Manufacturing 1230 – US Aug. Retail Sales 1430 – EIA's Natural Gas Storage Change  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-15-2022-15092022
Energy Companies Will Likely Reveal Another Excellent Quarter

China May Need Less Crude Oil - IEA Report Finds. The European Union Considers Limitations On Power Demand

ING Economics ING Economics 15.09.2022 12:56
Sentiment in the oil market remains fairly negative due to continued concerns over Chinese demand Energy - China demand drop Despite concerns over demand, the oil market is holding up relatively well. In its latest monthly market report, the IEA estimates that Chinese oil demand will fall by 420Mbbls/d this year, which would be the first annual decline since 1990. Chinese demand has clearly suffered due to the zero covid policy that China continues to follow. Weaker Chinese demand was partly offset by the expectation that we will see a significant amount of gas to oil switching, given the high gas price environment. As a result, the IEA estimates that global oil demand will grow by 2MMbbls/d this year and by 2.1MMbbls/d in 2023, slightly below their previous forecasts.  With Russian oil flows holding up better than expected, the IEA expects that the global market will be in surplus of close to 1MMbbls/d in 2H22 and then more balanced over 2023 as the EU ban on Russian oil comes into full effect. Weekly EIA data shows that US commercial crude oil inventories increased by 2.44MMbbls over the last week. When SPR releases are taken into consideration, total US crude oil inventories declined by 5.97MMbbls. Gasoline inventories declined by 1.77MMbbls, whilst distillate fuel oil stocks increased by 4.22MMbbls. This is the largest weekly increase in distillate stocks so far this year, which would be welcome to the market given the tightness in middle distillates. Despite the increase, inventories are still around 30MMbbls below the 5-year average. The EU’s final proposal for intervention in the European energy markets was broadly in line with the draft proposal. First, the EU proposes that power demand should be cut, including a mandatory cut of 5% from selected peak hours, as well as aiming to reduce overall power demand by 10% until the end of March next year. Secondly, the EU wants to impose a temporary revenue cap on some power generators (renewables, nuclear and lignite) at EUR180/MWh. Finally, the EU also proposes a levy on excess profits from the oil, gas coal and refining sector. Metals – risk-off sentiment weighs on the complex Copper and aluminium prices fell yesterday as investors continue to digest the high CPI print from the US earlier this week, and what it could mean for Fed policy. Rising LME aluminium inventories only put further pressure on the market, with stocks increasing by 12,700 tonnes to 345,600 tonnes. China is stepping up its efforts to boost its housing sector with more Chinese cities announcing credit support and subsidies for home purchases. This week, China’s Evergrande Group removed most of its construction-project freezes as China enters its peak building season, which traditionally lasts until the end of October.  In precious metals, gold has unsurprisingly come under pressure over the course of the week- trading below US$1,700/oz. Higher than expected US inflation data has reinforced expectations of another big interest-rate increase from the Fed. Read this article on THINK TagsOil demand IEA Gold Energy crisis Covid-19 China Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

What's Going On Crude Oil Market? | USOIL (WTI) And Brent Crude Oil Can Touch $91.50 And $97 Respectively

Alex Kuptsikevich Alex Kuptsikevich 15.09.2022 14:48
US commercial oil inventories rose by 2.4M barrels last week following an increase of 8.8M earlier. This dynamic fits in with seasonal trends, with inventories starting to fill at some point in September. Around the same time and volume levels, net accumulation was reversed in 2018 and 2019. Note, however, that before 2014 (the shale boom), the fluctuations in stocks were mainly within the 300-360M range. So, here we see some business as usual for commercial producers. A vital point of the picture is the 30% drop in strategic reserves over the last year, almost equal to commercial reserves. In other words, a net fall in overall inventories could have stimulated a ramp-up in production. But we see a slow increase in volumes in comparison to the 2011-2015 and 2016-2020 episodes. And there are a couple of significant reasons for this. First, the sale of oil from reserves is aimed at bringing down the final price, which is not to the producers' liking and is holding back investment. In the last couple of weeks, the number of working rigs in the US has been falling, clearly showing that businesses are in no hurry to sell oil at a discount from the free market, topping up reserves. Secondly, production in the Permian Basin - the main shale production region of recent years - is declining. New drilling is going to make up for the exhausted fields. Increased rates and the promise to raise more, combined with rising wages, further hold back the process. As if that were not enough, US producers said Europe should not expect further supply increases. Perhaps this signals that companies following OPEC have switched from fighting for market share to maximising profits. Read next: Australian Dollar (AUD): Reserve Bank Of Australia May Choose Less Aggresive Varaint As Unemployment Increased A Bit| FXMAG.COM As a result, we see gains in oil and gas prices over the last week against a general decline in financial markets. At the same time, we believe that the US government is unlikely to quickly abandon its oil price restraint policy, postponing the restocking momentum. Investors and traders should also remember that a decisive policy tightening, by historical standards, puts additional pressure on prices. In our view, the downward momentum in oil prices is not over yet, although local attempts for WTI to exceed $91.50 and for Brent to return to $97 cannot be ruled out.
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Crude Oil Price Has To Struggle Through A Way Full Of Obstacles

Craig Erlam Craig Erlam 15.09.2022 16:31
Oil steady after inventory data Oil prices have steadied a little after rebounding strongly this past week. There are many forces dictating the price action in oil markets right now, with economic uncertainty right up there alongside a potentially unpredictable OPEC+. The stronger dollar is potentially another headwind, with the rally losing steam earlier this week as the greenback surged in the aftermath of the inflation release. The inventory data on Wednesday didn’t cause much of a wobble despite surpassing forecasts with a 2.442 million barrel build against expectations of something far more modest. Of course, this was still much smaller than what the API number indicated a day earlier so perhaps that limited the surprise factor. Has the damage been done? Gold is still hurting after the inflation data on Tuesday. It was just starting to find its feet again ahead of the data and the report delivered a crushing blow. The yellow metal is off around four-tenths of one percent this morning and comfortably below $1,700. The key level though is $1,680 and a significant break of this could be painful, with it having been a floor over the last couple of years. We could then see some support around $1,660 but at that point, the damage will have been done. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil steady, gold vulnerable - MarketPulseMarketPulse
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

US Economy, Black Gold, China And Strategic Petroleum Reserve | Gold

Ed Moya Ed Moya 15.09.2022 22:53
Oil falls as US economy slows Crude prices got knocked again as demand fears intensified after a wrath of economic data shows the US economy is slowing down. ​ Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and as the inflation fighting Fed seems poised to weaken the US economy. ​ The US Department of Energy also clarified that the restocking of the Strategic Petroleum Reserve (SPR) won’t happen due to prices falling at a certain level and that they won’t take action until after fiscal 2023. ​ This clarification from the DOE tentatively removed any support crude had just ahead of the $80 a barrel level. ​ Despite all the doom and gloom across the world, the oil market remains tight and prices should outperform all the other commodities. Gold Gold got pummeled ruthlessly after another round of economic data supported the Fed’s case to remain very aggressive with fighting inflation. While both Fed regional surveys offered some relief that price increases are slowing, the rest of the data paints a picture of a very strong labor market that is still seeing decent spending and production activity. Until the bond market selloff eases, gold is in trouble. ​ Once gold fell below the prior summer low of $1690, momentum selling took over. ​ If Treasury yields keep going up that will keep the selling pressure on bullion. Gold should find support soon as investors will refrain from any overweight positions until they hear directly from the Fed. ​ The last hurdle for gold is in the University of Michigan inflation expectations. ​ Unless markets are surprised with an increase in inflation expectations, gold should stabilize above the $1650 region. ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Crude lower, gold pummeled - MarketPulseMarketPulse
Steady BoE Rate Expectations Amid Empty Event Calendar in the UK

China Is Ready To Work With Russia, Ethereum Merge Successfully Completed

Saxo Bank Saxo Bank 16.09.2022 09:58
Summary:  U.S. equity markets declined again on the economic good news which added to investors’ worries about more and for longer rate hikes from the Fed. The Chinese Yuan weakened and broke the 7-handle. China's August activity data is scheduled to release today. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) face further pressure as US eco news brightens        US equities closed lower on Thursday with the S&P500 losing 1.1% taking its weekly loss to almost 4%, while the Nasdaq fell 1.4%, losing 4.6% across the week, with both major indices eroding last week’s gain. Investors are growing cautious, as new economic data gives the Fed room to raise rates, and keep them higher for longer to control inflation. Retail sales unexpectedly rose in August, showing consumer spending is far from collapsing and jobless claims fell for the fifth straight week, suggesting employers worker demand remains healthy despite an uncertain outlook. For the market to turn around, it will need to see earnings multiples expand, as that supports share price growth. And we need to see earnings per share move up from a decline, to growth. But if the Fed keeps hiking rates, and the energy crisis continues, this scenario means tech stock earnings multiples are likely to see earnings per share (EPS) growth pressure. On the flip side, EPS in energy continues to gain momentum. Big movers in US shares Adobe shares fell 17%, weighing on the Nasdaq and S&P 500 after the software giant announced $20 billion deal to buy design start up Figma. The weakness flowed through to other tech stocks, with Apple shedding 1.9% and Salesforce sliding 3.4%. Meanwhile oil stocks also copped selling after the WTI oil price fell below $86 after the US announced it would restock oil reserves but without a trigger price. Bank stocks were a bright spot, with Goldman Sachs and JPMorgan rising more than 1% apiece. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) The U.S. short-end yields continued to charge higher, 2-year yields up 7bps to finish the session at 3.86%, flattening the 2-10 year curve to -42bps, as the 10-year yields up 5bps to 3.44%.  The 30-year yields, however remained well anchored at 3.47%, up only 1bp and not far from the pre-CPI release levels. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index edged up by 0.4%, helped by the rise in Chinese developers, while the CSI 300 dropped by 0.9%.  Securities Times reported that more than 120 cities have relaxed providence fund policies to boost the local property markets and other media reported that a large number of cities had loosened home purchase restrictions.  Country Garden (02007:xhkg) surged by 8.7% followed by Guangzhou R&F (02777:xhkg) up 8.6%, CIFI (00884:xhkg) up 7%, China Resources Land (01109:xhkg) up 4.9%, and China Overseas Land & Investment (00688:xhkg) up 4%. Catering names gained on news that Chengdu was relaxing its lockdown, Xiabuxiabu (00520:xhkg) up 5.5%.  Li Auto (02015:xhkg) fell 2.3% as the President of the company reduced his shareholding. EV names overall were also pressured by the news that China’s ambassador to the U.S. warned against the potential risks of the US trying to cut China off the EV supply chains.  Solar names were down following reports about the European Union was going to ban manufactured goods with forced labour in them and raised concerns about much of China’s solar products originated from Xinjiang. Australia’s ASX200 The ASX200 is on tracking lower this week, after losing 0.7% Monday to Thursday with the technical indicators suggesting the market is likely to head lower from here and it could retest the lows set in June. However, it’s not all doom and gloom. We saw commodity stocks march up this week, with coal companies Coronado Global rising 13%, New Hope up 5%. It’s also worth noting these are some of this year’s best performing stocks on the ASX, with Coronado up 82%, New Hope up 182%, while the coal giant Whitehaven is up 266% YTD, supported by the coal price hitting new highs this week, as well as the coal futures price. Meanwhile, with crop prices likely to go higher amid La Nina, Agri business Elders rose 4%. Elsewhere, technical buying picked up in oil and gas companies including Woodside, supporting its shares rise ~4%, with Beach Energy following. USDCNH breaks above 7 handle USDCNH broke 7.00 and the markets is expecting little reactions from the PBOC given the latest state-owned media’s effort to downplay the importance of the 7-handle. Crude oil (CLU2 & LCOV2) Crude oil prices slumped overnight as demand concerns came back into the focus. The International Energy Agency said that China faces its biggest annual drop in demand in more than three decades as COVID-19 lockdowns weigh on growth. Oil demand could fall by 420kb/d, or 2.7% this year. This led to the IEA trimming its estimate of global demand. It now sees consumption rising by only 2mb/d. Further, supply situation also seemed to fluctuate with the US Department of Energy walking back on its SPR refill stance by saying that it didn’t include a strike price (that was said to be around $80/barrel) and it isn’t likely to occur until after fiscal 2023. WTI futures fell below $85/barrel while Brent futures touched lows of $90/barrel. Oil technical levels to watch For traders and investors, for WTI to reverse its downtrend, it needs to close above resistance at $97.66, which is what our technical analyst pointed out here. So the next level for you to watch, is if it breaks above $90.40, it would signal an uptrend, for this to occur, the market will need good news, perhaps even bright news from China, the biggest oil consumer. Regardless, right now, oil is in a bear trend and if it closes below $81.20 the bear run-lower could be extend to $78.48-$74.27. Gold (XAUUSD) The yellow metal saw a drop to $1,660/oz down more than 2% to over 2-year lows, amid expectations of more aggressive rate hikes by the Fed as strong US economic data underpinned. Markets are now pricing in a more than 75bps rate hike by the Fed at the September meeting, and a terminal rate of ~4.5%. What to consider? Mixed US data, but further upward pricing of the Fed rate path US retail sales saw the headline rising 0.3% m/m in August (exp -0.1%, prev -0.4%) but the core retail sales print was weaker than expected at -0.3% m/m (exp 0%, prev 0.0%). The slower retail spending does reflect the current slowdown in goods spending despite services remining strong and supporting the overall consumer strength in the US. Meanwhile, initial jobless claims were lower than expected at 213K (exp 226K, prev 218K). That is the lowest since early June and the 5th consecutive decline (the high reached 262K), suggesting that labor markets still remain tight. Regional Fed indices offset each other The regional Fed indices on manufacturing gave contrasting signals with the Philly Fed index falling -9.9 vs +2.8, but the Empire improving markedly to -1.5 vs -13.0 estimate. For both indices, the prices paid components did fall and has moved markedly lower over the last few months, but still remains with a positive number (i.e., more businesses reporting higher prices vs lower prices). For the Philly Fed, the price paid came in at 29.8 v 43.6. For the Empire, the prices paid came in at 39.6 vs 55.5. Australia’s latest economic news shows employment growth is slowing with the jobless rate rising for the first time in 10 months; giving the RBA less room to hike rates Australia’s unemployment rate unexpectedly rose in August, rising from 3.4% to 3.5% with less jobs being added to economy than expected (33,500 instead of the 35,000). Given employment has fallen from its 50-year peak, and job growth is slowing, the RBA effectively has a solid barrier in its way preventing it from rapidly rising rates over the coming months, with room of a 0.5% hike being taken off the table. For equity investors, this supports risk-appetite slightly increasing in the banking sector, given employment nears its peak and credit might not be squeezed as hard as feared, thus property price growth also might not continue to fall as rapidly as forecast. For currency traders, the AUDUSD sharply fell from its intraday high (0.6769) and now faces pressure back to two-year lows, where support is at 0.61358, implying it may fall 10%. Further to that, the currency pair faces downside simply as the market is pricing in 0.25% RBA hike next month, versus the more aggressive US Fed Reserve’s hike potentially being 100bps (or 1%) next week. Slower export growth, power shortage, and pandemic controls would probably have taken their toll on China’s August activity data China’s activity data for August, scheduled to release today, would probably be at risk of missing the median forecasts in the Bloomberg survey, which has industrial production at 3.8% YoY in August (vs 3.8% YoY in July), retail sales at 3.2% YoY in August (vs 2.7% YoY in July), and fixed asset investment year-to-date 5.5% YoY (vs 5.7% YoY). The heatwave-induced power shortage caused disruption to industrial production in Sichuan. The heatwave might have also caused delays in infrastructure construction which was largely outdoor and offset some of the positive impacts of accelerated credit extension. The pandemic control measures affected the manufacturing and export hub of the city of Yiwu in Zhejiang province in August. The much weaker expected export growth data for August released last week and the continuously weak data in the property market also pointed to potentially downside surprises to these forecasts.  While a favourable base effect and stronger auto sales in August could have boosted retail sales, tightened pandemic control measures might have damped catering and other services and dragged down retail sales growth.  Russian President Putin said he appreciated China’s “balanced position” on Ukraine President Xi and President Putin met on the sidelines of the Shanghai Cooperation Organization summit held in Uzbekistan.  The Russian president said he values China’s “balanced position” on Ukraine and he backs the latter’s “One China” principle and opposes “provocations” by the U.S. on the issue of Taiwan.  On the other hand, the readout released by China only did not touch on Ukraine.  As in the readout, Xi told Putin that “China is ready to work with Russia in extending strong support to each other on issues concerning their respective core interests”. China’s State Council reiterated support for the economy and opening up trade and investment In a meeting chaired by Premier Li Keqiang, China’s State Council rolled out an additional RMB200 billion relending quota to support key industries in the real economy and pledged to support international trade and open up to foreign investment. Ethereum Merge – a new chapter in crypto Yesterday, the second-largest cryptocurrency Ethereum successfully underwent its merge from proof-of-work to proof-of-stake. From consuming around 0.2% of the world’s electricity, Ethereum now consumes a fraction of that. Our Crypto analyst calls it a new chapter not only for Ethereum but crypto in general. Read more here.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-16-sept-2022-16092022
The Forex Market Is Under Strong Pressure From Geopolitical Events And Statistics

The Largest Acquisition In The Adobe’s History, EDF’s Failure, The Drewry Index Is Down

Saxo Bank Saxo Bank 16.09.2022 10:11
Summary:  The US equity market dropped to new local lows and below key support in late trading after Fedex reported a massive miss on profits and dropped its year-ahead-forecast, citing a marked deterioration in activity over the last quarter. Elsewhere, the US dollar rose, USDCNH traded well above 7.00 and US yields remained pinned near the cycle highs after a strong weekly jobless claims report but tepid August Retail Sales data.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities tried to tread water during the cash session yesterday but spilled lower and below the key local support (3,900 area in S&P 500 and 12,000 area in the Nasdaq 100) in late trading after Fedex reported a huge profit miss and dropped its forward revenue forecast (more below). The break below support sets the market on tilt on the quarterly “witching” day for index futures and options today. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index fell 1% in early trading on a weakening Chinese Yuan, USDCNH surging to as high as 7.0350, but pared some losses to be down around half a per cent after the stronger than expected prints of China’s August industrial production, retail sales and fixed asset investment. CSI 300 slid throughout the session and was off 1.6% as of writing.  While other activities improved in August, the decline in the fixed asset investment in the housing sector accelerated in August and reflected a still weak property sector. USD rises to new highs against several currencies The risk off tone yesterday helped support the US dollar despite US yields trading largely sideways and a mixed bag of US economic data. The US dollar rose almost across the board, with the important exception of USDJPY, as the market is wary of the risk of official intervention. GBPUSD is back poking toward the cycle lows, while USDCAD has cleared the big 1.3200 resistance area, USDNOK rose to new local highs and NZDUSD traded to new lows since early 2020 below 0.6000. Any further deterioration in risk sentiment will likely continue to drive USD strength, with US yields also an important coincident indicator. Gold (XAUUSD) Gold slumped below support-turned-resistance at $1680 on Thursday as the market was overwhelmed by momentum and technical-driven selling related to the prospect of a 1% rate hike next week and the terminal rate, expected next March, being lifted to around 4.5%. At a near 2-½-year low, the metal has struggled to find a defense against the FOMC hawkish tone which has driven the dollar and Treasury yields sharply higher. Gold and other investment metals may struggle while the focus remains on FOMC hiking rates and not the increasingly inevitable economic fallout (see FedEx and freight rate comments below) from these actions. A weekly close below $1680 could see the market target the 50% retracement of the 2018 to 2020 rally next at $1618. Crude oil (CLV2 & LCOX2) Crude oil prices slumped again on Thursday with demand concerns once again being the focus as the market prepares for another growth dampening rate hike from the US FOMC next week and demand in China continues to linger after the IEA said the world's largest importer of oil was heading for its biggest annual drop in demand in more than three decades. The US Department of Energy meanwhile walked back on its SPR refill stance by saying that it didn’t include a strike price (that was said to be around $80/barrel) and it isn’t likely to occur until after fiscal 2023. WTI futures trades around $85/barrel with Brent holding above $90/barrel, both well above last week's lows. Ethereum The groundbreaking and long expected upgrade to the second-largest cryptocurrency, Ethereum, was rolled out successfully yesterday morning. Despite this, Ethereum has dropped more than 7 % over the past 24 hours in what seems to be a "sell-the-news" event, as the hype around the upgrade has faded. US Treasuries (TLT, IEF) US yield trade near the cycle highs at the long end of the yield curve, as we await a test of the key cycle top at 3.50%. The short end of the yield curve continues to drift higher, with the 2-10 yield curve inversion below –40 basis points and nearing the cycle low from August which saw the lowest daily close at –49 basis points. Key What is going on? Fedex falls over 15% after hours on big profit miss, withdrawing of 2023 forecasts The company CEO said that “global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the US.” The company expects that business will worsen further in the current quarter. EPS for the quarter were in at $3.44 vs. $5.10 expected despite revenue only narrowly missing expectations. Global container freight rates seeing an accelerated slump The Drewry composite container freight benchmark rate which tracks the cost of shipping containers on the busiest routes, especially from Asia to Europe and the USA slumped 8% this week to $4.9k pr 40ft box. The index is now down more than 50% from the record seen this time last year but remains around 3.5X above the pre-pandemic average. Weakness was seen on all the major China to US and EU routes. Maersk (MAERSKb:xcse), one of the world’s largest container shipping companies has seen its share price slump 38% from a March peak to a 15-month low, another sign that global trade is weakening fast following the pandemic-led boom. Adobe (ADBE:xnas) drops 17% on Figma acquisition announcement The company offered $20 billion for privately held Figma, a company offering tools for collaborating on software development. This was a half-cash, half-stock deal and was the largest acquisition in the company’s history and was some 50 times Figma’s annual revenue (and over 12 months of trailing Adobe revenue). After hours, Adobe reported earnings, with top-line growth of 12.7%, but earnings dropped –2.7%. The Figma deal looks a bit desperate and suggests that Adobe has a hard time seeing organic growth from its core business. Mixed US data, but further upward pricing of the Fed rate path US retail sales saw the headline rising 0.3% m/m in August (exp -0.1%, prev -0.4%) but the core retail sales print was weaker than expected at -0.3% m/m (exp 0%, prev 0.0%). The slower retail spending does reflect the current slowdown in goods spending despite services remining strong and supporting the overall consumer strength in the US. Meanwhile, initial jobless claims were lower than expected at 213K (exp 226K, prev 218K). That is the lowest since early June and the 5th consecutive decline (the high reached 262K), suggesting that labor markets remain tight. Xi and Putin meet in Uzbekistan China’s leader Xi Jinping and Russia’s leader Vladimir Putin met yesterday for the first time since a powwow at the Beijing Olympics in which the two leaders declared that the friendship between the two countries was “without limits”. But apparently, the situation in Ukraine is testing those limits as Putin was forced to acknowledge China’s “questions and concerns” on its invasion of Ukraine. Xi did call Putin an “old friend”, however, and said the “China is willing to work with Russia, display the responsibilities of the major powers, and play a leading role to inject stability and positive energy to a world in chaos”. Still, the general impression was one of China keeping Russia at arm’s length and unlikely to extend support for Russia’s war effort. China’s August activity data improved better-than-expected China’s activity data for August came in at stronger than expected growth rates.  Industrial production grew 4.2% Y/Y in August beating the consensus estimate of 3.8% Y/Y and improving from last month’s 3.8% Y/Y.  Higher output in automobile and power generation offset the impact from slower activities in other industries such as pharmaceuticals and computers.  Retail sales grew 5.4% Y/Y in August, well exceeding the 3.3% Y/Y median forecast from the Bloomberg survey and the 2.7% YoY in July. A favourable base effect and stronger auto sales during the month boosted retail sales and more than offset the drag from tightened pandemic control measures and a slow housing market.  Fixed asset investment grew 6.4% Y/Y in August, notably accelerating from the 3.6% Y/Y in July, led by 14.8% Y/Y growth in infrastructure and 10.7% Y/Y growth in manufacturing investments while investment in properties slowed further to a decline of -13.9% Y/Y in August from July’s -12.1%.  What are we watching next? The French historical energy provider EDF is in a difficult financial situation Last Spring, the company refused to give earnings guidance for the year. Yesterday, it announced that the impact of the shutdown of all of its nuclear reactors (due to structural corrosion issues) will likely lower its 2022 EBITDA by €29bn. In the early 2000s, EDF was one of the largest and most promising companies in the CAC 40 index. Now, it is about to be nationalized. EDF’s failure is mostly explained by poor management and the French state’s pressures over the recent years to channel investments in the green transition (mostly intermittent energy) instead of focusing on nuclear energy. This is a matter of months before the nationalisation is effective. The French state is currently EDF’s main shareholder, owing 83.33 % of the shares. The stock is up 24 % YTD at the Paris Stock Exchange due to the prospect of nationalisation. USDCNH to get increasing attention? The USDCNH rate has risen well above 7.00 now, picking up a bit of pace to the upside again this week on an extension of USD strength. The exchange rate bears watching, as past episodes of CNH volatility, especially including the 2015 shift in China’s exchange rate regime, can aggravate global market volatility and uncertainty. The key level to the upside is the 7.20 level that was nearly touched on two occasions, first in late 2019 and then again in May of 2020. Economic calendar highlights for today (times GMT) 0830 – ECB President Lagarde and ECB’s Villeroy to speak 0900 – Eurozone Final Aug. CPI 1200 – Poland Aug. Core CPI 1215 – Canada Aug. Housing Starts 1400 – US Sep. Preliminary University of Michigan Sentiment Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-16-2022-16092022
EM Index Inclusions and Exclusions: India Thrives, Egypt Faces Challenges

The Markets Are Concentrated On Inflation, Crude Oil Is Down

Swissquote Bank Swissquote Bank 16.09.2022 10:24
US railroad companies and the unions representing their workers reached a tentative agreement early Thursday to prevent a rail strike in the US. Avoiding a rail strike is good news, but not good enough to give a smile to investors. The markets remain too focused on inflation. Increases and decreases The S&P500 closed the session more than 1% lower, as US retail sales and jobless claims – which both hinted that the US economy remains relatively resilient to the Federal Reserve (Fed) rate hikes - didn’t help keeping the Fed hawks at bay. The US 2-year yield spiked to 3.90%, the mortgage rates in the US topped 6%, the US dollar consolidated a touch below the 110 level, Ethereum lost 10% and gold dived to $1660 per ounce. US crude took a good 4% dive. But this time, it wasn’t just the recession talk, it was because the Americans rectified a beginner’s mistake that they have made earlier this week, saying that they will refill their strategic oil reserves if prices fall below $80 per barrel. Waiting For Reports We will likely close this week on a sour note. Next on the economic calendar are the final European CPI read, which will confirm that inflation spiked to 9.1% in August, and the University of Michigan Consumer Sentiment, which will hopefully not print a significantly positive number, because the Fed hawks got strong enough the week before the Fed decision. Watch the full episode to find out more! 0:00 Intro 0:25 US rail strike will likely be avoided! 2:08 But sentiment remains sour on strong US data 3:57 World Bank points at recession 5:04 Crude oil down as Americans understand their mistake 6:41 Strong dollar weighs on major peers 6:55 Joke of the day 7:09 Ethereum down 10% post Merge upgrade 7:51 Adobe dives 17% on Figma acquisition 8:44 Watch EZ final CPI & UoM Consumer Sentiment today! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #rail #strike #inflation #USD #EUR #GBP #Gold #XAU #crude #oil #natgas #energy #crisis #Bitcoin #Ethereum #Merge #update #Bitcoin #Adobe #Figma #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Russia's Crude Oil Still Flows To Japan, Negative Trade Balance In Japan

InstaForex Analysis InstaForex Analysis 16.09.2022 12:26
Japan reported a record $19.7 billion trade deficit last month as higher energy prices and a sharp drop in the yen pushed the value of imports to their highest-ever level. For the thirteenth month straight, Japan imported more than it exported in August. Energy imports from the Middle East accounted for about half of the country's deficit. Analysts say the weaker yen is causing an increase in import prices on the back of soaring energy prices. Energy and grain prices have recently shown signs of stabilization. Imports are growing, commodity prices remain high and supply disruptions have eased, while exports are sluggish. Costs will accelerate if imports expand and the size of the world economy is unchanged. This will trigger a rise in imported inflation, Takeshi Minami, the chief economist at Norinchukin Research Institute, said. Japan is one of the world's largest energy importers. The country also used to be the biggest LNG importer until last year when it was overtaken by China. In addition, Japan is one of the largest crude oil importers in the world, with the Middle Eastern members of OPEC being its main suppliers. Japan started to reduce crude imports from Russia when the Ukrainian crisis broke. Notably, Russia was its fifth-largest crude oil supplier. By July, Japan was already importing 98% of its oil from members of the Gulf Cooperation Council. Although Japan is a member of the G7, which has recently decided to impose a price cap on Russian oil exports to limit Moscow's profits, it continues to buy oil and natural gas from Russia. Relevance up to 09:00 2022-09-18 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/321901
Gold's Hedge Appeal Shines Amid Economic Uncertainty and Fed's Soft-Landing Challenge

Chengdu Returns To Normal Life, The Entry Of Genting Group Into The Competition

Saxo Bank Saxo Bank 19.09.2022 08:30
Summary:  Sentiment in U.S. equities has been dampened by rising expectations of larger rate hikes for the rest of the year and profit warnings and depressed remarks from the management of heavy-weight companies about their business outlook and the economy. All eyes are on the FOMC meeting this Wednesday. China’s August industrial production, retail sales, and infrastructure construction surprised on the upside but housing market activities and home prices remained sluggish. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) are looking bearish again US equities closed off the week with the biggest loss since January after heavy-weight companies were hit by a series of company earnings and guidance woes, with their pain being compounded by rising bond yields. S&P 500 was down 0.7% on Friday and down 4.8% for the week and Nasdaq 100 dropped 0.6% on Friday and 5.8% for the week, wiping out the prior week’s gains. The Nasdaq 100 is now down 29% from its November 2021 peak and the technical indicators on the monthly chart tend to suggest further downside ahead. Big US stock movers   Last week there were a number of industrial titans, first Dow Chemical (DOW:xnys), Eastman Chemical (EMN:xnys), Huntsman (HUN:xnys), Nucor (NUE:xnys), and capped with FedEx (FDX:xnys) warning about grim demand outlook.  FedEx only missed EPS for the August quarter massively but also cut its Nov quarter EPS guidance and completely withdrew the FY2023 guidance, citing significantly worsened macroeconomic trends both internationally and in the US. FedEX tumbled 21.4% on Friday. Amazon (AMZ:xnas) declined 2.2%, following FedEx’ warning. General Electric (GE:xnys) warned the supply chain pressure is having a negative impact on profits.  Uber (UBER:xnys) dropped 3.7% after the ride-hailing services provider following a major data breach in its computer network caused by a hacker.  Amazon (AMZ:xnas) declined 2.2%, being dragged down by the woes in FedEx.  Adobe (ADBE:xnas) slid another 3.1% on Friday and a massive 19.4% in two days since the software maker announced a USD20 billion offer to acquire Figma, collaborated product design platform at 100x of the latter’s recurring revenue. For more discussion on FedEx and Adobe, please refer to Peter Garny’s note here.  Last Friday, over USD3 trillion notional of options expired on Friday and S&P3900 puts traded about 95,000 contracts.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Trading in treasuries on Friday was mixed, with yields of -2-year and 10-year notes unchanged at 3.86% and 3.45% respectively as 5-year yields came off 3bps to 3.63%, and 30-year bonds underperformed for the first time during the week, seeing yield rising 4bps to 3.51%. Treasuries pared their early losses (higher yields) after the 5-10 year inflation expectations in the University of Michigan consumer sentiment survey fell to 2.8%, the lowest since July 2021.  The underperformance in the 30-year bonds was attributable to supply, including a USD12 billion 20-year treasury bond auction on Tuesday and expected corporate issuance of about USD20 billion this week.  The latest data shows that the holding of Japan, the largest foreign holder of U.S. treasury securities, fell USD2 billion to USD1.23 trillion and China, the second largest holder, saw its holdings increase by USD2.2 billion to USD970 billion in July.     Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Shares traded in Shanghai and Shenzhen plunged, with CSI 300 down 2.4%.  The General Office of the State Council issued guidelines to encourage securities firms, funds, and financial guarantee companies to lower fees.  Shares of brokerage firms fell across the board in mainland bourses by nearly 5%.  East Money (300059:xsec) tumbled 10.8%. Chinese brokerage companies listed in Hong Kong also plunged, with GF Securities (01776:xhkg) down by 8.6%, CITIC Securities (06030:xhkg) down by 5.0%, Huatai Securities (06886:xhkg) down by 4.8%.  Chinese property stocks fell in both the mainland bourses and Hong Kong bourse, following the report that new home prices 2nd to 4th tier cities fell sharply again in August despite the recent relaxation of home purchases in a large number of cities.  The weakness of the property sector in the fixed asset investment data in August and the news that the city of Suzhou resumed home purchase restrictions on non-residents in four districts added to the woes in the developer space.  Country Garden (02007:xhkg) tumbled 7.6%.  The EV space declined, falling from 1% to 4.5% following the Ministry of Industry and Information Technology’s Vice Ministry said that there are “blind investments” and overlapping projects in EV in some provinces and municipalities.  In the China internet space, Kuaishou (01024:xhkg) led the charge lower, down more than 7%, as Alibaba (09988:xhkg), Tencent (00700:xhkg), Meituan (03690:xhkg), and Bilibili (09626:xhkg) down from 1.5% to 4.4%.  Australia’s ASX200 has wiped out July’s rally. Focus will be on RBA minutes released Tuesday The ASX200 shed 2.3% last week, erasing July’s gain but faring better than US equities. The market woes have not only come after Australian 10-year bond yield rose to fresh highs, up 0.2% last week, while hovering in 8-year high neighbourhood. But secondly, market sentiment has also been capped as the Fed is set to aggressively hike rates, which pressures Australia’s tech stocks, with many Aussie tech companies making the majority of their revenue from the US. And thirdly, metal commodities have come under pressure again of late, as China’s demand continues to wane. In fact, fresh Chinese export data shows their rare earths and aluminium exports surged yoy. Meanwhile total China’s imports of steel plunged 16% yoy, corn fell 44% and wheat dropped 25% yoy. The trifecta of issues is seeing the ASX200’s technical indicators on the day, week and month charts flag further downside is ahead. Australian dollar on notice with the Fed to hike this week The AUDUSD is under pressure after hitting a new low last week, 0.6727 US cents, which is about a two year bottom. Despite already losing 7% this year, the commodity currency, the AUDUSD is on notice again this week with the Fed expected to hike by 75bps (0.75%) at its Wednesday meet, which will take the Fed funds rate to 3-3.25%. There is also a slim chance (25% chance) of a full percentage hike of 100bps (1%) after the hotter-than-expected August inflation. Either way, the fundamentals support the US dollar gaining momentum against the Aussie, especially as the RBA is limited in its hiking power and likely to only hike by 0.25% next month. Also consider a jump in the US 10-year yield will likely further bolster the USD. A slightly softer USD heading into the FOMC week The USD is slightly softer going into the FOMC week amid some profit-taking, but it still remains the haven of choice with massive amounts of policy tightening packed into the week. AUDUSD pared some of the recent losses amid China reopening optimism and RBA’s Kearns saying that Aussie home buyers could benefit from higher rates. USDCAD rose to near 2-year highs on Friday at 1.3308, partly oil induced, but also due to increasingly sour sentiment and perceptions that BoC-Fed policy will likely diverge in wake of the latest disappointing Canadian employment data vs still-tight US labor markets. USDJPY will be a key focus with both FOMC and BOJ meetings scheduled in the week, and possibility of another round of strong verbal intervention from the authorities is seen. EURUSD is back above parity, as ECB members stay hawkish, but risks remain titled to the downside in the near term. Crude oil (CLU2 & LCOV2) With massive central bank action scheduled in the week, it can be safely assumed that demand concerns will likely remain center-stage. A spate of rate hikes is aggravating concerns of an economic slowdown, but easing of restrictions in China’s Chengdu today will ease some of the concerns. Dalian will also exit restrictions today. Nevertheless, more supply disruptions remain a risk. Germany seized the local unit of Russian oil major Rosneft PJSC, including three refineries. One of those is now preparing for short-term restrictions in crude supplied via the Druzhba pipeline. WTI futures were seen higher above $85/barrel in early Asian hours, while Brent futures were close to $92. Gold (XAUUSD) Gold saw some recovery after touching support of $1660/oz on Friday as interest rate hike bets picked up following the hotter-than-expected August CPI in the US last week. Further resilience in economic data out of the US has further kept interest rates expectations on an upswing, while rising geopolitical and economic risks are doing little to entice haven buying as the US dollar still remains the prime safe-haven choice. Gold was back close to $1680 this morning in Asia. The risk of the FOMC sending the US economy into a recession before getting inflation under control is rising and, once that occurs, the dollar is likely to turn sharply lower, thereby supporting fresh demand for investment metals. What to consider? University of Michigan survey remains optimisticThe preliminary September University of Michigan sentiment survey saw the headline rise to 59.5 from 58.5, just short of the expected 60, but nonetheless marking a fourth consecutive rise. Notably, the rise in forward expectations was starker than in current conditions, with the former also coming in above consensus expectations. Also, key were the inflation expectations, which echoed what was seen in the Fed surveys last week. The 1yr slowed to 4.6% from 4.8% and the 5yr expectations slowed to 2.8% from 2.9%.   China’s August activity data improved better-than-expected China’s activity data for August came in at stronger than expected growth rates.  Industrial production grew 4.2% Y/Y in August beating the consensus estimate of 3.8% Y/Y and improving from last month’s 3.8% Y/Y.  Higher output in automobile and power generation offset the impact from slower activities in other industries such as pharmaceuticals and computers.  Retail sales grew 5.4% Y/Y in August, well exceeding the 3.3% Y/Y median forecast from the Bloomberg survey and the 2.7% YoY in July. A favourable base effect and stronger auto sales during the month boosted retail sales and more than offset the drag from tightened pandemic control measures and a slow housing market.  Fixed asset investment grew 6.4% Y/Y in August, notably accelerating from the 3.6% Y/Y in July, led by 14.8% Y/Y growth in infrastructure and 10.7% Y/Y growth in manufacturing investments while investment in properties slowed further to a decline of -13.9% Y/Y in August from July’s -12.1%.  China’s property prices in lower-tier cities continued to decline in August According to data released by the National Bureau, the weighted average of new home prices in the top 70 cities in China fell 1.1% Y/Y (vs -0.6% Y/Y in July), driven largely by declines in property prices in lower-tier cities.  The easing of home purchase restrictions by local governments has so not been able to stop the decline in property prices in lower-tier cities.  Sequentially, new home prices in Tier-2, Tier-3, and Tier-4 cities dropped by about 5% M/M annualized while new home prices in Tier-1 cities rose by 1.6% M/M annualized.  An unexpected seventh bidder for Macao gambling licenses created uncertainties about incumbent operators In a tender for the six 10-year casino operating licenses, the six incumbent casino operators faced an unexpected rival from the Malaysian Genting Group which submitted a bid into the tender.  As the maximum number of licenses remains at six, the entry of Genting Group into the competition may mean one of the incumbent license holders might be ousted. Chengdu exits lockdown Chengdu, the largest city in Western China ends its nearly 3-week-long lockdown today and allows its 21 million population to leave their home and resume most aspects of normal life.  Residents are required to do PCR tests at least once a week.  Hong Kong considers ending hotel quarantine for inbound travelers The Hong Kong Government is reviewing and considering plans to end the hotel quarantine requirements for inbound travelers.  Currently, travelers to Hong Kong are required to be quarantined in a hotel for 3 nights and followed by four-day medical monitoring at home and then another 3 days of self-monitoring without mobility restriction.  The news may lift the share price of travel-related stocks, such as Cathay Pacific (00293:xhkg).   For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-19-sept-2022-19092022
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

The Net Short In Natural Gas Rose 22%, The Commodity Sector In General Traded Higher

Saxo Bank Saxo Bank 19.09.2022 13:24
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, September 13. A week that ended with the US CPI surprise which helped trigger renewed stock market weakness and bond yield strength while the commodity sector in general traded higher led by industrial linked metals and the grains sector. Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, September 13. A week that ended with the US CPI surprise which helped trigger renewed stock market weakness and bond yield strength. The dollar traded softer led by gains in the euro and Swiss Franc while the commodity sector generally traded higher led by the industrial metal and grain sectors. Commodities The Bloomberg Commodity index traded up 2.2% during the reporting week to last Tuesday, September 13 with gains seen across all sectors with the exception of softs. The metal sector was particularly strong, especially those with an industrial link such as silver, platinum and copper. The energy sector was mixed while a US government report supported strong gains across the grains sector led by soybeans.  Responding to these predominantly positive price performances, speculators increased bullish bets in 15 out of the 24 major commodity futures tracked in this by 70k lots to a 1.08 million. The bulk of the change being driven by short covering (49k lots) as opposed to fresh longs (21k lots), reflecting a market that remains concerned about the global economic outlook and its impact on demand for key commodities. Energy Crude oil’s current rangebound behavior was reflected in the limited changes seen in the overall net long. A week of small gains helped lift the net long in WTI and Brent crude by 13.4k lots to 341.5k lots and within the narrow 328k to 345k range seen during the past four weeks. The three fuel product contracts saw light net selling while the net short in natural gas rose 22% to 60k lots. Metals The sector saw an unusual strong amount of switching from gold to metals with an industrial link. The gold position flipped back to a net short of 11.3k lots, just a few hundred lots above a 40-month low, with additional selling likely to have been triggered by the technical break below $1680 that followed a couple of days later. The near 9% rally in silver from a two-year low helped trigger a 70% reduction in the net short to 17.1k while the platinum net short was cut in half to 9.3k lots while speculators turned the least negative on copper in three months after cutting their short by 61% to 4.4k lots.      Agriculture: The latest supply and demand (WASDE) update on September 12 together with concerns about the Ukraine grain deal helped support another week of buying across the grains sector with the combine long rising 10% to 492k lots. Especially the steep drop in soybeans ending stocks forecast by the US Department of Agriculture helped drive strong gains and net buying across the three soy contracts of beans, oil and meal. Corn was bought for a seventh week while wheat traders, despite a 5.3% rally maintained a net short in CBOT following a small reduction in the net short of less than 5%.  Softs were mixed with the sugar long getting a 75% boost to 30.5k while the cocoa net short jumped to a 2 ½-year high at 36.4k lots, this despite having trading sideways for the past three months, most of the time between $2300 and $2400 per tons. Global growth concerns helped trigger a second week of long liquidation in both coffee and cotton.  Forex Speculators increased bullish dollar bets for a fourth week with the aggressive adding of fresh shorts in the yen (-22.5k) and sterling (-17.7k) being partly offset by significant and continued short-covering in the euro (+24.5k). Overall the dollar long against nine IMM currency futures and the Dollar index reached a six-week high at $21.3 billion.  During the last two reporting weeks which included the euro’s unsuccessful attempt to break lower through €0.99, the net short has seen a 75% reduction to a near three-month low at 11.8k on a combination of fresh longs and short positions being reduced.  A widening gap between FOMC and Bank of Japan policies helped weaken the Japanese yen by 1%, the result being a 39% increase in the net yen short to 80.7k lots, a 14-week high.  What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming Source: https://www.home.saxo/content/articles/commodities/cot-speculators-rotate-from-gold-to-industrial-metals-19092022
Middle Distillate Inventories Are Tight Around The Globe

Commodities: Crude Oil And Gold Commented By Ed Moya

Ed Moya Ed Moya 19.09.2022 23:42
Oil Crude prices were under pressure as fears of an aggressive central bank tightening are driving concerns for a quickly weakening global economy and as the UAE plans to increase oil output. ​ The global economy is slowing and that has been troubling for the crude demand outlook. ​ Oil pared losses as Wall Street saw a broad reversal at the NY open. While pessimism remains elevated for global growth, extreme positioning before the Fed seems unlikely. ​ Gold Gold is breaking as surging real rates show no signs of easing and as it fails to act like a safe-haven. ​ This is a brutally tough weak for bullion as so many central banks this week are contemplating jumbo-sized interest rate hikes. It is hard to get a handle on what will be the peak for the Fed and until that happens, gold will remain vulnerable. ​ Gold will eventually resume its role as a safe-haven, but the peak in the dollar needs to be put in place and that won’t happen for a couple of meetings. ​ What is driving the hesitation for scaling into a long-term position with gold is that investors are not convinced that even when the Fed pauses, that might not guarantee they are done hiking. ​ The risk that the Fed will pause and then have to restart raising rates is elevated and that has completely upended the gold trade. ​ Gold is due for a bounce and even if that happens post-Fed this week, a sustained rebound will only occur if more signs emerge that inflation is easing. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. - MarketPulseMarketPulse
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Tesla, Apple And Nike Rose, The United States Can Send Military Forces To Taiwan

Saxo Bank Saxo Bank 20.09.2022 08:53
Summary:  Ahead of the Fed’s interest rates decision with rates expected to rise by 0.75%, the price of the 10-year yield rose to 3.5% for the first time since 2011. Normally this puts equities in a precarious position, however, investors looked past this as a big red flag. The most buying overnight in US equities was in the Materials sector after commodity prices rallied, while sizeable moves were also in big tech names. Sentiment flowed to the ASX, with lithium and coal stocks being bid the most, after their commodity prices hit new record highs. And as such, the risk-on mood is set to flow through the Asia-Pacific today. Ahead, all eyes are on Australia's RBA meeting minutes and the reaction to Japan's CPI hitting a 31-year high. For the latest in markets and what to consider next, read today's APAC DD. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Ahead of the Fed’s Wednesday interest rates decision with rates expected to rise by 0.75%, the price of the 10-year yield rose to 3.5% for the first time since 2011 and the 2-year note popped to a 15-year high of 3.96%. Normally this would put equities on the back foot and in a precarious position. As such this remains a big red flag for equities that are interest rate sensitive (tech, property, consumer spending). However, overnight equities looked past the noise and ended on a high note. But indeed, it was a volatile session. The S&P500 was down 1% earlier in the day, but marched higher in the final hour, supported by strong moves in big tech names. The S&P500 not only wiped out the day’s earlier loss but Friday’s fall too, closing up 0.7%. We saw 9 of the 11 sectors rise, led my Materials, Consumer Discretionary, and Industrials, while Heath Care was a laggard. Nasdaq 100 gained 0.8%. Big US stock movers Tesla (TSLA:xnas) gained about 2% on plans to increase the price of its supercharger stations in Europe. Apple (AAPL:xnas) rose 2.5% on news of Apple planning to fix the shaking iPhone 14  camera. Nike (NKE:xnys) gained 3% with investors betting their results later this week might not be as bad as feared. We think there could also be an upside scenario in 2023 for Nike if mainland China strengthens with its easing of lockdowns over the next 12 months, which would likely boost sportswear sales and margins. Afterhours Ford (F:xnys) warned that inflation had caused supplier costs to rise by $1 billion in the current quarter, joining a chorus of major companies experiencing the same macro challenges ripping through the economy. Ford shares fell 4.4% after hours, suggesting they will open lower when normal trading resumes. Moderna (MRNA:xnas), BioNTech(BNTX:xnas), and Novavax (NVAX:xnas) fell 7% to 8% after President Biden said in a CBS 60 Minutes interview that “the Covid pandemic is over”. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) hit new highs The 10-year yield briefly exceeded 3.5% to 3.52% intraday for the first time since 2011, in an otherwise quiet session with the cash treasuries market being closed in London and Tokyo for holiday. The 10-year notes managed to pare some of their losses and finished the day at 3.49%, up 4bps from last Friday. The short end of the curve underperformed ahead of Wednesday’s FOMC, with 2-year yields climbing 7bps to a new closing high at 3.94%.  Australia’s ASX200 hits a two-day high, supported by Lithium and Coal stocks Today the Australian share market opened 1% higher in the first 10 minutes of trade, following Wall Street’s rally. Some of the biggest moves are in lithium and coal. Lithium companies are surging after the lithium price rallied to a brand-new record high, with the lithium carbonate price hitting a new record of $73,315 a ton in China (according to Asia Metal Inc). Core Lithium (CXO) is a stock to watch after it agreed with Tesla (TSLA) to extend the termination date for its binding offtake (sales) agreement to October 26. The extension allows the companies to negotiate a full form binding offtake agreement. Other lithium stocks to watch include Pilbara Minerals (PLS) after its shares rallied 3.6% in early trade, to a brand new record high of A$4.80. Elsewhere, Fortescue (FMG) rose about 1% on plans to decarbonize its business with a A$6.2 billion plan. Also, keep an eye on Oz Minerals (OZ) with the copper miner seeking a $10 billion potential sale to BHP (BHP). Speaking of BHP (BHP), its shares are up 1.8% after the NYSE listed BHP rallied overnight amid the risk-on mood. Risk-on mood setting up in Asian trade today Despite expectations of massive tightening moves being delivered globally this week and the surge in US 10-year yields above 3.5% overnight, the Asia session kicked off with risk-on sentiment. US equity futures extended gains and the USD was weaker, with the Japanese yen stronger at 143 despite CPI touching 3% in August. GBPUSD surged higher to 1.1460 while EURUSD extended gains to get close to 1.0050 levels amid ECB’s hawkishness and some relief on gas prices as well. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Yesterday the Hang Seng Index dropped 1%, dragged down by technology and China property stocks. Hang Seng Tech Index (HSTECH.I) declining 2.1 % with Alibaba (09988:xhkg) down 3.6%, Bilibili (09626:xhkg) down 5.6%.  In the China property space, Longfor (00960:xhkg) dropped 6.1% and Country Garden (02007:xhkg) slid 3.3%.  EV makers underperformed, with NIO (09866:xhkg), Li Auto (02015:xhkg), and Xpeng (09868:xhkg) plunging from 4% to 6%. U.S. President Joe Biden’s affirmative response to the question about sending U.S. forces to fend Taiwan off Chinese military actions added to investors’ concerns about an escalation in Sino-American tension.  Following the news that the Hong Kong Government is reviewing and considering plans to end the hotel quarantine requirements for inbound travelers, Hong Kong tourism and retail stocks rallied, Cathay Pacific Airways (00293:xhkg) up nearly 1%, travel agency EGL (06882:xhkg) soaring 11.5%, Chow Tai Fook Jewellery (01929:xhkg) rising 6.2%.  In mainland bourses, the approaching of the National Day golden week holiday and the Ministry of Culture and Tourism’s public consultation on promoting cross-border tourism pushed up tourism, catering, and beverage stocks. Coal mining stocks also gained. Solar power, semiconductors, and beauty care stocks dropped. CSI300 finished the day little changed.  Crude oil (CLU2 & LCOV2) Some support was seen to crude oil demand on Monday despite the risks of massive central bank tightening this week. A somewhat softer USD as well hoped of easing movement restrictions in China helped crude oil eke out a modest gain, despite the potential for increased supply. The US announced that it will offer an additional 10mbbl from its strategic reserve. Only last week it was reported that the Department of Energy was looking at plans to start replenishing the stockpile. UAE also said it was accelerating its plan to produce 5mb/d of crude oil by 2025. WTI futures rose back towards $86/barrel while Brent futures were above $92. What to consider? US NAHB in its ninth month of decline NAHB Housing Market Index reported its ninth consecutive decline to 46.0, beneath the prior 49.0 and expected 47.0. The weaker-than-expected data highlighted the pessimism hitting the US housing market due to the rising mortgage rates, and housing starts may be set to cool further in the coming months. However, no systemic risks are seen as the housing market remains a lagged indicator. Australia’s RBA expected to increase inflation expectations as coal pushes up and La Nina hits The RBA meeting minutes released today at 11.30am Sydney time, will be dissected for clues that the RBA will be increasing its inflationary expectations. Particularly as the coal price, where Australia gets the majority of its energy from, hit another record high (and coal is not in peak demand season yet). On top of that the RBA will probably allude to La Nina’s threat on Australia. We think the RBA may touch on wheat prices picking up again, given they are up 16% from August. Frost and rain in South America has impacted their wheat supply, dryness in the US will reduce their supply, plus heavy rains are headed for Australia for the third year in a row. So global wheat supply is expected to be short again and push up inflationary pressures. The AUDUSD might see a knee jerk reaction higher if the RBA alludes to this. However, we expect the AUDUSD to come under pressure, as the magnitude of the Fed’s hike supports the favoured currency, the USD moving up. Japan CPI hits a 31-year high Japan’s August CPI touched the dreaded 3% YoY mark from 2.6% previously, coming in at the strongest levels in over three decades and significantly above the Bank of Japan’s 2% target level. The core measure, which excludes fresh food and energy, also come in higher-than-expected at 1.6% YoY. With the wage growth remaining restrained, this may mean nothing for Bank of Japan which remains committed to maintaining its yield curve control policy. However, the markets may start to test the BoJ’s resolve once again, especially with US 10-year yields also touching 3.5% overnight while JGB yields remain capped at 0.25%. Hong Kong’s unemployment rate came in at 4.1% Hong Kong released the city’s unemployment rate which came in at 4,1% for the June to August period, 0.2 percentage points lower from last the May to July period. The underemployment rate fell to 2.0% from 2.2%.  U.S. President Joe Biden gave an affirmative response regarding sending forces to fend Taiwan off from mainland China When being asked in a CBS 60 Minutes interview whether the U.S. would send forces to defend Taiwan in case of military actions from mainland China, President Biden replied: “Yes, if in fact, there was an unprecedented attack.”  In answering a follow-up question about if the U.S, unlike in Ukraine, would send forces men and women to defend Taiwan, Biden said: “Yes.”   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-20-sept-2022-20092022
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Energy: The Situation On Crude Oil Market Is Still Very Acute

Alex Kuptsikevich Alex Kuptsikevich 20.09.2022 11:24
WTI oil suffered an intraday drop of more than 4.5% to $81.70 yesterday but managed to regain all losses by the end of the day, trading now at $85.40. The $85 area has repeatedly acted as the Rubicon since 2007. In 2008, the failure was provided by the near collapse of the financial system. Oil only fell below that level after the bankruptcy of Lehman. At that time, oil didn’t get firm footing until $35. In 2014, the world feared a then unknown “tapering” from the Fed, but Saudi Arabia had the final knockdown for prices, temporarily switching to fight for oil market share. A return to the firm ‘quota’ policy, but now with Russia, did not occur until early 2016, and prices went as low as $30. On the other hand, we saw prices steadily above $85 between 2010 and 2014, when the global economy was recovering strongly from oil consumption thanks to stimulus and near-zero interest rates. In 2022, the move above resulted from Europe’s severe energy crisis and fears of production cuts due to Russia’s rapid oil abandonment. And now, the price remains above that level, despite heightened equity market volatility and a stronger dollar in forex. However, these are the most influential factors affecting the price. A high-profile event or shock in geopolitics or financial markets could break the steady support of oil buyers on the downturn in the coming days. For example, it could be a new round of tightening Fed rhetoric consisting of a 100-point rate hike at once or a hint of further hikes as long as the rate markedly exceeds inflation. Read next: How High Will The Bank Of England Raise Rates?| FXMAG.COM The converse cannot be ruled out either: the Fed could hint at a move to more fine-tuning policy in the future, promising less harsh decisions. Such a bullish market reversal could validate fundamental price support at current levels. However, knowing how central bankers like to leave all doors open, it is also worth being prepared for the Fed to try to soften the effect on the markets by extending the period of uncertainty as much as possible. In the latter case, geopolitics could prove decisive. However, there are still no clear signals of a change in the geopolitical setup around the energy market. Gas prices in Europe and the USA have retreated from their highs; OPEC+ made a symbolic move in early September by limiting production, and the USA continues to sell off reserves.
Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

Crude Oil Market Is Surely Looking Forward To The Fed Meeting, Crude Oil - 100MMbbls From SPR Will Be Sold By DOE

ING Economics ING Economics 20.09.2022 12:07
Markets have been trading in a fairly choppy manner, while sentiment remains relatively negative for risk assets. Participants will be focused on the Fed meeting later this week and expectations in the lead-up to the meeting have been fairly hawkish Energy - US SPR release The oil market continues to trade in a relatively choppy manner. ICE Brent traded in a US$4/bbl range yesterday, and managed to settle higher on the day, after trading weaker earlier in the session. A weaker USD would have provided some support to oil prices. However, like for most risk assets, market participants will be waiting for some clarity from the Fed when it meets later this week. The big question is how aggressive will it be in terms of hiking. Our US economist is of the view that we will see the Fed hiking by 75bps at this week’s meeting. Also not helping sentiment in the oil market at the moment is the weakness that we are seeing in refinery margins. Margins have come under pressure, with reports that China could release 15mt of export quotas for refined products. The refined product market, particularly middle distillates, has faced significant tightness for much of the year, and so increased Chinese supply would be welcomed by many in the market. The US Department of Energy (DOE) announced that it will be selling an additional 10MMbbls of crude oil in November from its Strategic Petroleum Reserve (SPR). This sale would be part of the Biden administration’s announcement back in March to release stocks from the SPR to combat higher prices. Under that initial announcement the DOE authorized the release of 180MMbbls of crude oil from the SPR. According to the DOE, roughly 155MMbbls has been released up until now - this further sale would take the total volume to around 165MMbbls. According to Bloomberg the UAE is wanting to bring forward its plans to increase crude oil production. Adnoc is wanting to have the capacity to pump 5MMbbls/d of oil by 2025, rather than by 2030 as previously planned. The UAE currently has production capacity of a little over 4MMbbls/d - due to the OPEC+ supply deal, production is closer to around 3.16MMbbls/d at the moment. Agriculture – Ukraine grain exports According to the latest update from the United Nations, almost 3.9mt of agricultural products have been exported from Ukrainian Black Sea ports under the export corridor deal since early August. Corn makes up almost 50% of these exports, whilst wheat makes up around a quarter of exports under the deal. Latest trade data from China shows that corn imports dropped 44.% YoY to 1.8mt in August, while YTD imports are down 21% YoY to total 16.9mt. Among other grains, China’s wheat imports fell 25% YoY to 530kt over the month, while cumulative imports declined 10% YoY to total 6.25mt over the first eight months of the year. The USDA’s weekly export inspection data shows the demand for US grains remained strong over the last week. US weekly inspection of corn for exports rose to 549kt over the last week, up from 474kt in the previous week and 403kt from the same time last year. Similarly, soybean shipment inspections rose to 519kt over the last week, compared to 342kt from a week ago and 279kt at the same time last year. Read this article on THINK TagsUS Federal reserve UAE SPR Oil Grains Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Acquisition Of Aveva By Schneider Electric, Wheat Prices And More

Acquisition Of Aveva By Schneider Electric, Wheat Prices And More

Saxo Bank Saxo Bank 21.09.2022 10:36
Summary:  Equity markets traded sideways ahead of today’s important FOMC meeting as the Fed is set to bring at least another 75 basis points of tightening and expectations for further tightening are at the highs for the cycle. At the longer end of the yield curve, US yields have risen to new eleven-year highs, helping the US dollar to new highs for the cycle in places, including against the Chinese yuan. The Bank of Japan meets tonight in Asia and has shown no signs of backing down from its cap on bond yields, creating enormous attention as yields have risen again elsewhere. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities came under pressure yesterday as US yields advanced with the 10-year yield reaching as much as 3.6%. The market is split on tonight’s FOMC decision but consensus among economists is still a 75 basis point rake hike. We argued yesterday that if the Fed wants to tighten financial conditions a lot they need a surprise which argues for a 100 basis point hike. In any case, the guidance in the dot-plot and the subsequent press conference will be key for equity sentiment in the near-term. Yesterday’s low in S&P 500 futures at 3,643 is the key support level to watch on the downside and 3,800 after that. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index gave back all its gains yesterday and more, falling over 1% ahead the U.S. FOMC meeting. Mega-cap China interest stocks declined from 1% to 3%, dragging the Hang Seng Tech Index down by over 2%.  Energy stocks outperformed coal mining names up from 1% to 2%.  COSCO Shipping Energy Transportation (01138:xhkg) soared more than 8%. Bloomberg reported that Chinese refiners are applying for quotas from the Chinese government to export as much as 16.5 million tons of fuel oil, such as gasoline and diesel.  CSI 300 fell nearly 1% and making a new low last since May this year. USD traders mull FOMC meeting today A minority of observers are looking for another 75-basis point move from the Fed, as discussed below, with forward guidance also playing a roll, although the market continues to price the end-2023 policy rate at below even the end-2022 rate, with the peak rate somewhere in between, despite FEd pushback. The USD has traded to new highs in places, like against all 5 of the smallest G10 currencies and is near the cycle high versus sterling, while EURUSD and USDJPY still trade slightly away from cycle extremes. The Fed will want to maintain a hawkish tone here, but as US 2-year yields have risen sharply to nearly 4%, the bar is somewhat high for a hawkish surprise. Watching the reactivity in treasury yields and risk sentiment for the impact on the US dollar – particularly how USDJPY might treat a fresh strong surge in longer US yields after the 10-year broke above the former cycle high since 2010 of 3.50% yesterday. USDJPY USDJPY could be set for considerable volatility over the next 24 hours as the Bank of Japan meets tonight in Asia’s Thursday session. The pressure for the Bank of Japan to adjust its yield-curve-control strategy has built further on the surge to new cycle highs in longer US yields yesterday above the 3.50% level. The Bank of Japan and Ministry of finance have recently pushed back rather hard on the latest blast of JPY weakness, but will likely be challenged on where and when they intend to intervene against JPY weakness if the BoJ overnight refuses to adjust its policy and if the Fed surprises hawkish at tonight’s FOMC meeting and the entire US yield curve lifts. The 145.00 area is the cycle high, with 150.00 the next obvious psychological level. Gold (XAUUSD) Gold trades near a two-year low but within a relatively narrow 20-dollar range ahead of today’s FOMC meeting (see below). Weeks of selling have seen speculators accumulate a net short position in COMEX futures, a relatively rare occurrence, and one that could set the stage for a surprise upside move, should the dollar and yield retrace some of their recent strong gains. Resistance however remains firm at $1680 while below $1654, last week's low, the market may target the 50% retracement of the 2018 to 2020 rally at $1618. Crude oil (CLV2 & LCOX2) Crude oil remains rangebound with a slight negative tilt ahead of today’s FOMC rate hike given its impact on the dollar and growth expectations. The Fed decision will be followed by other central banks from Europe to Asia which are also expected to announce growth reducing rate hikes. The long-term outlook remains price supportive with US production struggling to find a higher gear and Saudi Aramco saying lack of investments could see spare capacity being wiped out. Also focus on Russia from where seaborne exports is lower this month and where Putin is looking into his toolbox for ideas to reverse his disastrous war against Ukraine. Ahead of today’s EIA stock report the API reported builds in crude oil as well as fuel products. Wheat sees largest gain since March on Russia tensions Wheat futures in Chicago (+7.6%) and Paris (+4.1%) jumped on Tuesday after Russia said it intended to hold votes on annexing the three regions of Ukraine still under its control (see below). Such a move raises the risk of a full Russian mobilization and would increase tensions with Europe and the US while casting more doubts over grain supplies from the Black Sea area, especially the UN sponsored export corridor from Ukraine which recently has helped ease supply worries for wheat and sunflower oils. Also focus on today’s FOMC rate hike and its impact on the dollar. December wheat (ZWZ2) at $8.88 trades near the highest level since July but may face resistance at $9.14/bu, the 200-day moving average. US Treasuries (TLT, IEF) US treasury yields spilled over to new cycle highs yesterday ahead of tonight’s FOMC meeting as the market has sensed a hawkish determination from the Fed to forge ahead with rate hike and provide no sense that it set to pivot to a more neutral stance, although that would have to come at some point. The 10-year benchmark rose to a new cycle high yesterday above 3.50%, posting the highest yield since 2011. What is going on? Shocking August German PPI According to the German statistics office Destatis, the PPI rose by 7.9 % month-on-month in August. This is much higher than the consensus (2.4 %). This shows that forecasting in the current macroeconomic environment is more challenging than ever. On a year-over-year basis, the increase is at 45.8 %. This is an historical record. The continued jump is explained by higher energy prices (+139% year-over-year). But not only. Actually, inflation is broad-based. Prices for intermediate goods, for capital goods and for non-durable consumer goods are much higher too. This will probably get worse in the short-term. In the eurozone, it is unlikely the peak in inflation has been reached (contrary to the situation in the United States). Russia-Ukraine tensions heat up Heightened geopolitical tensions regarding Russia and Ukraine where the “separatists” are to hold a referendum in Donetsk, Luhansk, Kherson and Zaporizhya on September 23rd-27th, although Ukraine and its allies have denounced the referendums as illegal, and few countries are likely to recognize the results. An update from Putin on the matter is being awaited, where there have been some suggestions that he is considering introducing martial law and full mobilisation of the Russian army - the speech has now reportedly been delayed until 06:00BST/01:00EDT Wednesday. The move threatens to escalate the conflict even further, potentially giving Putin the formal legal basis to use nuclear weapons to defend what Moscow would consider Russian territory. Riksbank’s 100bps rate hike sets the stage for FOMC The Swedish Riksbank surprised yesterday with a 100-basis point hike to take the rate to 1.75%. This, in addition to guidance that the Riksbank would look to continue hiking rates, took Swedish yields higher, but didn’t do much for the currency, which fell to new cycle lows versus the EUR and USD after a kneejerk jump. The decision to hike by 1% was unanimous, prompted by the highest level of CPIF inflation since 1991 and the negative implication it could have on the upcoming wage negotiation which will lock in pay growth for the next three years. However, with global tightening wave turning more hawkish that expectations after ECB’s 75bps rate hike and Riksbank’s 100bps, the stage is being set for the FOMC to deliver above expectations as well. Schneider Electric agrees to acquire Aveva for £9.4bn The French industrial giant is announcing this morning that it has agreed to acquire UK-based engineering and software group Aveva for £31 per share valuing the company at £9.4bn. Schneider Electric already owns 60% of Aveva and a full consolidation will bolster Schneider Electric’s ambitions in software within the engineering industry. Rio Tinto joins BHP in saying Copper’s near-term outlook is challenged Rio Tinto’s CEO has joined a suite of companies, including BHP, saying copper’s short-term outlook faces pressure. From supply-chain issues to 30-year high inflation and restricted demand from China, the metal is seeing less demand, and supply is outpacing supply. However, that is not expected to be the case in the longer term with Goldman Sachs predicting copper demand will exceed supply by 2025 and will push prices to twice their current levels. Copper is used in everything from buildings to automobiles, to wiring in homes and mobile phones. Germany nationalises utility company Uniper The German government is injecting €8bn into Uniper to avoid a collapse of the German utility taking full control of Finland-based utility Forum’s shares in Uniper. What are we watching next? Can the Fed surprise hawkish at FOMC or are we nearing peak tightening expectations? The Powell Fed has kept a hawkish tone in recent communications, clearly indicating a desire to forge ahead with rate hikes. After the strong August US CPI print, a minority of observers are even looking for a 100-bp move from the Fed today, though we are more likely to get 75 basis points. This is a quarterly meeting that will bring the latest Fed forecasts for the economy and for the policy rate, a chance for the Fed to send a further message on where it sees its policy evolving for the remainder of this year and next. The forecast in the “dot plot” of Fed policy rate forecasts for the end of 2022 will receive close attention. Currently the market is looking for a policy rate of about 4.2% through the December meeting, which would mean a 75-bp hike today, another in November, followed by a 50-bp hike in December. The Fed raising the 2023 forecast to a median of 5% might make an impression as well, although the market has persistently priced the Fed to begin easing yields at some point next year, figuring that the economy will be in recession at some point next year. This meeting also brings the first batch of 2025 forecasts for the economy and Fed policy, and another way that the Fed could guide hawkish would be in raising PCE core inflation forecasts for next year and/or 2024 (last two forecasts have kept the last of these at 2.3% YoY) or surprising with its 2025 forecast. Earnings calendar this week This week our earnings focus is on Lennar today as US homebuilders are facing multiple headwinds from still elevated materials prices and rapidly rising interest rates impacting forward demand. Later during this week, we will watch Carnival earnings as forward outlook on cruise demand is a good indicator of the impact on consumption from tighter financial conditions. Today: Lennar, Trip.com, General Mills Thursday: Costco Wholesale, Accenture, FactSet Research Systems, Darden Restaurants Friday: Carnival Economic calendar highlights for today (times GMT) 1400 – US Aug. Existing Home Sales 1430 – EIA’s Weekly Crude and Fuel Stock Report 1800 – US FOMC Rate Announcement / Policy Statement 1830 – US Fed Chair Powell Press Conference 2100 – New Zealand Q3 Westpac Consumer Confidence 2130 – Brazil Selic Rate announcement 2245 – New Zealand Aug. Trade Balance 2300 – New Zealand RBNZ Deputy Governor Hawkesby to speak Bank of Japan meeting Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-21-2022-21092022
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

Commodities: What Has Caused Volatility Of Crude Oil Prices?

Kenny Fisher Kenny Fisher 21.09.2022 23:32
Oil goes on rollercoaster ride Oil prices went on a rollercoaster as energy traders watched President Putin escalate the war in Ukraine and as the EIA report signals some crude demand weakness. ​ The EIA crude oil inventory report was a lot to process, but it really didn’t deliver that many surprises: Production remains steady at 12.1 million b/d, which is impressive considering oil rig counts have been declining, Imports from Canada are roaring back and that should help restore stockpiles, Jet fuel demand is rather soft despite solid TSA passenger throughput data, and the Strategic Petroleum Reserve steadily draws down. ​ WTI crude seems to have solid support at the $80 level and even as the Fed seems positioned to deliver a hard landing, the oil market should still remain tight over the short-term. ​ ​ ​ ​ ​ Gold Gold is breathing a sigh of relief as Fed funds futures are gaining confidence that the Fed will be cutting rates during the latter half of next year. ​ The hawkish Fed projections are a rather grim outlook for the economy and that could eventually trigger a resumption of a safe-haven role for gold. ​ The Fed acknowledged that we’re at the very lowest levels of what is restrictive and that they are prepared to soften this labor market. ​ This inflation fight is going to get ugly for the economy, but right now it seems the Fed will be done hiking in February. Gold will remain vulnerable to selling pressure if inflation does not continue to ease, but it could start to stabilize now. ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. FOMC React: Hard landing will lead to a pause, housing market cools, Putin’s escalation, bitcoin stabilizes - MarketPulseMarketPulse
EU Gloomy Picture Pointing To A Gradual Approach To Recession

How Much Have European Governments Invested In Supporting Businesses And Consumers, The Demand For Copper And More

Saxo Bank Saxo Bank 22.09.2022 08:47
Summary:  The Fed’s 75bps rate hike came with a strong message emerging from the Dot Plot that rate hikes will continue despite risks of slower economic growth and higher unemployment rate. Clear focus remains on tightening the financial conditions, which was reflected in equities and other risk assets. Russia’s partial mobilization has raised geopolitical concerns as well, adding a risk-off bid to the US dollar. EURUSD appears to be heading for 0.98 even as pressure on the Japanese yen remains capped due to lower long-end US yields. Hard to expect Bank of Japan pivot today, but FX comments could be the highlight before focus turns to another jumbo hike from the Bank of England later. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) are looking bearish again The Fed managed to deliver a hawkish surprise without going for a 100bps rate hike, as the message was clear – rate hikes will continue even if economic pain worsens. While the initial reaction from equities was a negative one, some ground was regained with Powell’s presser, once again, lacking further hawkish surprises. However, Powell said in his concluding Q&A response that rates will likely get to levels seen in the Dot Plot, reigniting their signaling power after initially warnings against taking the Dot Plot as Fed’s plan. Whether that was the catalyst or not is hard to tell, but stocks went on to sustain new lows into the close. What’s for sure is the Dot Plot still gives a clearer message on the Fed’s path than Powell. S&P500 fell below 3800 to close down 1.7% while NASDAQ 100 was down 1.8%. General Mills (GIS:xnys) reported better-than-expected earnings and raised its outlook, which helped it to defy the broader market decline, while also lifting other food stocks such as B&G Foods (BGS:xnys) and Kellogg (K:xnys), and supporting the overall consumer staples sector. Another chemical manufacturer joined the chorus of negative pre-announcements. Chemours (CC:xnys) revised down its 2022 EBITDA by 7% from its previous guidance, citing weaker demand from Europe and Asia. Lennar (LEN:xnys), up by 0.9%, reported adj. EPS of USD5.18, beating consensus estimate of USD4.87, primarily due to a lower tax rate and an improvement on margins. Unit orders, however, fell 12% Y/Y, missing expectations of modest growth, signing moderating housing demand, especially in Texas and the West. U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) After the Fed delivering a 75bps hike as expected but signaling a hawkish higher terminal rate of 4.6% in 2023 as well as projecting lower real GDP growth rates (0.2% in 2022, 1.2% in 2023, 1.7% in 2024) and higher unemployment rates (4.4% in 2023, 4.4% in 2024, 4.3% in 2025) than the long-run equilibrium levels (1.8% real GDP growth, 4% unemployment rate) anticipated by the Fed, the treasuries yield curve went further inverted, with 2-10 year spread closing at -54bps. Traders sold the 2-year notes, bring yields up by 7bps to 4.05% in response to clear “no pivot” message from the Fed. On the other hand, long-end yields declined on the Fed’s acceptance of slower growth and higher unemployment for longer as a price to put inflation under control. The 10-year yields fell 3bps to 3.53% and 30-year yields plunged 7bps to 3.50%. The U.S. yield curve’s trend to go deeper into inversion continues. The 3-month bills versus 10-year notes yield spread may go negative (inverted) as the 3-month rates keep rising on Fed tightening and the 10-year yield being anchored by improved inflation expectations. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Stocks in Hong Kong, Shanghai, and Shenzhen bourses continued to decline, with Hang Seng Index and CSI300 Index falling 1.8% and 0.7% respectively, and both making new lows.  Hang Seng Tech Index (HSTECH.I) lost 3%, dragged down by China Internet, tech hardware, and EV names.  Sunny Optical (02382:xhkg) tumbled 10.5% as analysts had concerns over a saturated smartphone market and increased competition in smartphone cameras.  Alibaba (09988:xhkg) and Tencent (00700:xhkg) declined 3.7% and 2.5% respectively.  While real estate stocks gained on the mainland bourses after some Chinese cities relaxed second-property buying restrictions, shares of Chinese developers traded in Hong Kong fell, with CIFI 00884:xhkg) tumbling 11.3%, Country Garden (02007:xhkg) sliding 4%.  The solar power space plunged from 5% to 8%.  Following the news of a partial mobilization in Russia to bolster armed forces, higher crude oil prices boosted the shares prices of energy companies, CNOOC (00883:xhkg) up by 2.2%, PetroChina (00857:xhkg) up by 1.2%.  %.  A tanker shipping company, COSCO Shipping Energy Transportation (01138:xhkg) soared more than 8%.  Bloomberg reported that Chinese refiners are applying for quotas from the Chinese government to export as much as 16.5 million tons of fuel oil, such as gasoline and diesel. A dry bulk shipping company, Pacific Basin (02343:xhkg) surged 7.9% after the Baltic Dry Index jumped over 11%.  The tanker shipping space and natural gas space gained and outperformed in A shares.  Asian markets to face risk-off after a hawkish Fed message Australia holds a National Day of Mourning to honour the Queen. Trading of ASX instruments will not occur as the ASX is closed. Trading resumes Friday September 23. Japan’s Nikkei 225 opened down 1.4%, eying the Bank of Japan meeting later today. Taiwan, Indonesia and the Philippines are also likely to raise rates today. AUDNZD and the NZ trade balance AUDNZD remained supported above 1.1320 and upside tests were seen with the relative current account balances in play. NZ reported August trade data this morning and imports accelerated while exports have declined. The deficit in NZ Trade Balance data has widened further to -$12.28B vs. the prior release of -$11.97B on an annual basis. Also, the monthly deficit has widened to -$2,447M against the former figure of -$1,406M. This is a contrast to Australia which is reporting fresh highs in trade balance due to its bulk of commodity exports. The next focus for AUDNZD is perhaps 1.1516, the high of 2015. EURUSD heading for 0.98 EURUSD broke lower to fresh 20-year lows of 0.9814 amid Putin’s partial mobilization and the strength of the dollar from the hawkish Fed signals. While the ECB stays hawkish as well, the relative hawkishness still tilts in favour of the Fed due to the harsh winter coming up especially for Europe as Russia has cut gas supplies. Stronger case of a recession also continues to bode for more downside in EURUSD in the near-term. Crude oil (CLU2 & LCOV2) Crude oil prices bumped up higher on Wednesday after Putin’s speech but gains faded later in the day amid a hawkish Fed boosting the US dollar and strengthening the case for a deeper economic slowdown. The EIA data saw a 1.1mn barrel build in crude stocks, similar to the private data, although given the 6.9mn barrel SPR release, that was a net 5.8mn draw. WTI futures slid below $83/barrel although some recovery was seen in early Asian hours, and Brent futures attempted to head back over the $90/barrel mark.   What to consider? Powell beats the hawkish drum louder The Federal Reserve delivered its third consecutive 75bps rate hike and showed no sign of easing its push into restrictive territory as it battles to cool inflation. This comes despite Fed’s latest projections showing slower growth and a rise in unemployment next year. The FOMC raised the benchmark rate to 3-3.25% and projected the terminal rate at 4.6% in 2023, suggesting Fed will remain committed to bring inflation down even if that means significant economic pain. Fed members estimate the economy will grow 0.2% in 2022, down sharply from a prior forecast of 1.7%. Growth forecasts were also revised lower for 2023 and 2024 to 1.2% and 1.7% from 1.7% and 1.9%, respectively. The central bank now sees the unemployment rate at 3.8% at year-end, up slightly from a prior forecast of 3.7%. But labor supply and demand may likely be restored in subsequent years, with unemployment expected to reach 4.4% in 2023 and remain unchanged the following year, according to the Fed's projections. That is above the prior June forecast of 3.9% and 4.1% unemployment in 2023 and 2024, respectively. Russia’s partial mobilization spurs risk off Russian President Putin, in his televised speech to the nation Wednesday morning, announced partial mobilization, calling up 300k reserves, whilst threatening the west with “All means of destruction, including nuclear ones”. Referendums in Donetsk, Luhansk, Kherson and Zaporozhye (15% of Ukraine territory) are scheduled September 23-27, and any fighting in these regions will eb considered as attacks on “Russian territory” and thus pave the way for a potential military escalation, justifying the use of mass destruction weapons. Looking out for some FX comments at the Bank of Japan meeting While it is still hard to expect a pivot from the Bank of Japan this week, given that Governor Kuroda remains focused on achieving wage inflation, the meeting will still likely have key market implications. There will likely be increased voicing of concerns by the authorities on yen weakness, and there is also some chatter around the Bank of Japan bolstering its lending programs to support the private sector as high inflation curbs spending. Also watch for intervention risks as highlighted here. Bank of England may tilt to hawkish despite recession concerns The BoE meets on Thursday after last week’s meeting was delayed by a week for Queen Elizabeth II’s funeral. Policymakers are expected to hike rates by another 50bps, which would bring the Bank Rate to 2.25%, although a 75bps hike is still on the table. Beyond September, analysts forecast a 50bps increase in November and 25bps in December, taking the Bank Rate to 3%, where it is expected to stay until October 2023. Also worth highlighting is the “fiscal event” delivered by new Chancellor of the Exchequer Kwasi Kwarteng on Friday. This will be his first statement on how he plans to deliver new Prime Minister Liz Truss' pledge to make the U.K. a low tax economy, which risks stoking inflation in the medium-term. However, short-term plans on energy support package suggests lower inflation to end this year, but that wouldn’t be enough for the BoE to go easy on its inflation fight. Rio Tinto joins BHP in saying Copper’s near-term outlook is challenged Rio Tinto’s CEO has joined a suite of companies, including BHP, saying copper’s short-term outlook faces pressure. From supply-chain issues to 30-year high inflation and restricted demand from China, the metal is seeing less demand, and supply is outpacing supply. However, that is not expected to be the case over the longer term. Goldman Sachs predicts copper demand will be greater than supply by 2025, and will push prices to twice their current levels. Copper is used in everything from buildings to automobiles, to wiring in homes and mobile phones. Chinese media called for Loan Prime Rate Cuts Although the Loan Prime Rates (“LPR”) were fixed at the same level earlier this week, leading Chinese financial newspapers, including the China Securities Journal and Shanghai Securities Journal are calling for LPR cuts in the coming months to boost the economy.  Temporary measures to shield European consumers from high energy prices are becoming permanent According to the calculations of the Brussels-based think tank Bruegel, European governments have allocated about €500bn to protect consumers since September 2021 (see the report). The exact figure is higher because Bruegel has not yet counted the most recent packages from the United Kingdom, Germany and Denmark. We would not be surprised if the total amount will reach at some point next year €1tr. But there is more. European governments have also allocated more to support utilities facing risk of liquidity crisis (several instruments are used including loans, bailouts and fully fledged nationalisation). This represents a total amount of €450bn (this is actually above half of the NexGenerationEU funding which was agreed after the Covid crisis). Dreadful growth forecasts for the eurozone We all know forecasting is a tricky task, even more so in the current macroeconomic environment (the impact of the energy crisis is tough to assess). Yesterday, Deutsche Bank revised downward its 2023 growth forecast for the eurozone, from minus 0.3 % to minus 2.2 %. This is a massive drop in GDP if it happens. It would actually be the third lowest euro area GDP growth since WW2 (behind 2009 and 2020, of course). This shows how expectations are low for the eurozone next year.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-sept-22-2022-22092022
A Bright Spot Amidst Economic Challenges

Forecasts Expect Another Decline In Growth In The Eurozone, A Yen's Volatility And More

Saxo Bank Saxo Bank 22.09.2022 08:56
Summary:  The FOMC meeting triggered a fresh downdraft in market sentiment late yesterday, as they made it explicitly clear in its economic and policy forecasts, that it will continue to hike the policy rate even if the economy begins slowing and labor market conditions materially worsen. The US dollar spiked higher in response across the board, although new highs in USDJPY were tamed by fresh intervention threats from officials in Japan overnight. The US 2-year yield rose above the 4-handle for the first time since 2007.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities were not double thinking the signal from the Fed as Powell said the current level was at the absolute lower level of what is seen as necessary to get inflation under control. The US 2-year yield is trading 4.12% this morning adding renewed pressure on S&P 500 futures trading around the 3,788 level after touching the big 3,800 level in yesterday’s session. A soft landing scenario is increasingly getting difficult in the Fed’s assessment of the economy and the dot-plot also showed that the Fed’s intention of tightening further in 2023 despite the economy cooling. The next big level to watch on the downside in S&P 500 futures is the 3,740 level. USD flies higher after hawkish FOMC meeting As noted below in the comments on the FOMC wrap, the Fed’s hawkish surprise took the US dollar sharply higher across the board, with even EURUSD touching new lows for the cycle towards 0.9800 and USDJPY trying above the former cycle high near 145.00, though some push-back from Japanese officials overnight tamed that move partially. Still, if the move is linked directly to the latest rise in US yields, it may be difficult for short yields to continue rising at anything resembling the pace they have achieved over the last few weeks, with the 2-year rising from below 3% to above 4% since early August. Stronger US data from here suggests a more resilient US economy than expected (potentially lifting the entire US yield curve, importantly at the long end as well as the short end) is one way that the USD bull can continue rampaging. EURUSD heading for 0.98 EURUSD broke lower to fresh 20-year lows of 0.9809 amid Putin’s partial mobilization and the strength of the dollar from the hawkish Fed signals. While the ECB stays hawkish as well, the relative hawkishness still tilts in favor of the Fed due to the harsh winter coming up especially for Europe as Russia has cut gas supplies. The stronger case of a recession also continues to bode for more downside in EURUSD in the near-term. Japan's intervention warnings continue, without much effect on the yen As the Bank of Japan held its policy rates unchanged at ultra-low levels today in-line with expectations, there was a spike in yen volatility with a new 24-year low printed at 145.405 but that was soon reversed and USDJPY corrected back sharply lower to 143.55. The pair has since traded back higher towards 145 again, despite some stark FX warnings including top currency official Masato Kanda saying that the government could conduct stealth FX intervention and will remain on standby. To be fair, pressure on the yen should ease with long-end US yields reacting to recession concerns arising out of the more aggressive near-term rate hike plans of the Fed as was firmly communicated by the latest FOMC dot plot. Governor Kuroda will be on the wires at 3:30pm local time, and more yen volatility can be expected. Gold (XAUUSD) focus alternates between Powell and Putin Gold trades softer following another hawkish FOMC rate hike that helped send the dollar sharply higher. By continuing to raise interest rates while also raising expectations for lower growth and rising unemployment the FOMC is signaling a recession is a price worth paying for getting inflation under control. Putin’s increasingly desperate measures and threats regarding his war in Ukraine helped support gold and shield it from losses as the dollar and yields rose. Geopolitical support aside, the yellow metal may struggle as long yields continue to rise and the market continues to price inflation sub 3% in a year from now. Resistance was confirmed above $1680 while below $1654, last week's low, the market may target the 50% retracement of the 2018 to 2020 rally at $1618. Crude oil (CLX2 & LCOX2) Crude oil prices received a boost on Wednesday after Putin’s speech, but gains faded later in the day amid a hawkish Fed boosting the US dollar and strengthening the case for a deeper economic slowdown, not only in the US but around the world. EIA’s weekly stock report had a softening impact with crude and fuel stocks all rising while the four-week averaged demand for gasoline slumped to the lowest level since 1997 on a seasonal basis, and a measure of diesel demand fell to its lowest since 2009. Geopolitical worries and the EU embargo on Russian imports remain the main source of support for a market that is increasingly worried about an economic slowdown and with that lower demand for crude oil. US Treasuries (IEF, TLT) The more hawkish than expected Fed (more below) inverted the US yield curve further, as the 2-10 inversion fell well below -50 basis points and therefore to its most inverted level since the early 1980’s as the market figures that the Fed’s continue pace of rate tightening will eventually lead to a recession. While the 3.50% yield level was broken ahead of the FOMC meeting, all of the action was at the short-end of the curve yesterday as the Fed made clear it will hike even if economic conditions and the economy deteriorate. So, the surprise at the longer end of the yield curve would be a resilient economy. Either way, longer treasuries will trade nervously around inflation- and growth-related data releases from here. What is going on? Fed surprises hawkish as 2-year yield leaps over 4% The Fed managed to surprise on the hawkish side of expectation at yesterday’s FOMC meeting with the message embedded in the combination of the new set of staff economic projections and policy forecasts for this year and next. The surprise was less about the modestly higher median projections for the Fed policy rate by the end of this year and the end of next year relative to market expectations, and more that the Fed made those forecasts despite a significant lowering of the GDP forecast for this year and next and a sharp rise in the unemployment rate forecast. In other words, the clear message that the Fed is willing to continue hiking even if the economy deteriorates to get ahead of inflation made an impression, taking market expectations for Fed policy some 20 basis points higher by mid next year and spiking the US dollar higher and US yields to new cycle highs – mostly at the front end of the curve. Russia’s partial mobilization spurs risk off Russian President Putin, in his televised speech to the nation Wednesday morning, announced partial mobilization, calling up 300k reserves, whilst threatening the west with “All means of destruction, including nuclear ones”. Referendums in Donetsk, Luhansk, Kherson and Zaporozhye (15% of Ukraine territory) are scheduled September 23-27, and any fighting in these regions will be considered as attacks on “Russian territory” and thus pave the way for a potential military escalation, justifying the use of mass destruction weapons. US earnings recap General Mills rose 5% yesterday on better-than-expected earnings in its fiscal year Q1 on top of raising its outlook on organic revenue growth to 6-7% from 4-5% reflecting higher prices. The US homebuilder Lennar was down 2% on Q3 revenue and earnings in line with estimates and Q4 estimates on deliveries in line with analysts' expectations. But purchase contracts were down 12% from a year ago missing estimates highlighting the pressure from higher interest rates. Temporary measures to shield EU consumers from high energy prices are becoming permanent According to the calculations of the Brussels-based think tank Bruegel, European governments have allocated about €500bn to protect consumers since September 2021 (see the report). The exact figure is higher because Bruegel has not yet counted the most recent packages from the United Kingdom, Germany and Denmark. We would not be surprised if the total amount will reach at some point next year €1tr. But there is more. European governments have also allocated more to support utilities facing risk of liquidity crisis (several instruments are used including loans, bailouts and fully fledged nationalisation). This represents a total amount of €450bn (this is actually above half of the NexGenerationEU funding which was agreed after the Covid crisis). Dreadful growth forecasts for the eurozone We all know forecasting is a tricky task, even more so in the current macroeconomic environment (the impact of the energy crisis is tough to assess). Yesterday, Deutsche Bank revised downward its 2023 growth forecast for the eurozone, from minus 0.3 % to minus 2.2 %. This is a massive drop in GDP if it happens. It would be the third lowest euro area GDP growth since WW2 (behind 2009 and 2020, of course). This shows how low expectations are for the eurozone next year. Bank of England may tilt to hawkish despite recession concerns The BoE meets on Thursday after last week’s meeting was delayed by a week for Queen Elizabeth II’s funeral. Policymakers are expected to hike rates by another 50bps, which would bring the Bank Rate to 2.25%, although a 75bps hike is still on the table. Beyond September, analysts forecast a 50bps increase in November and 25bps in December, taking the Bank Rate to 3%, where it is expected to stay until October 2023. Also worth highlighting is the “fiscal event” delivered by new Chancellor of the Exchequer Kwasi Kwarteng on Friday. This will be his first statement on how he plans to deliver new Prime Minister Liz Truss' pledge to make the UK a low tax economy, which risks stoking inflation in the medium-term. However, short-term plans on energy support package suggest lower inflation to end this year, but that would not be enough for the BoE to go easy on its inflation fight. What are we watching next? Earnings calendar this week Today’s earnings focus is Costco and Darden Restaurants as both companies are exposed to the US consumer. Analysts expect Costco to show 15% y/y revenue growth as the US retailer gains market share on a strong competitive position amid the ongoing cost-of-living crisis. Darden Restaurants is expected to post a growth slowdown as the pent-up demand driven quarters following the reopening after the pandemic are over. Revenue growth is expected to slow to 7% y/y in FY23 Q1 (ending 31 August). Today: Costco Wholesale, Accenture, FactSet Research Systems, Darden Restaurants Friday: Carnival Economic calendar highlights for today (times GMT) 0730 – Switzerland SNB Meeting 0800 – Norges Bank Deposit Rate 1100 – Turkey Rate Decision 1100 – Bank of England meeting 1430 – EIA's Weekly Natural Gas Storage Change South Africa Rate Decision Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-22-2022-22092022
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Fed Rate Hike And Possible Further Tightening Obviously Don't Support Crude Oil Prices. Commercial Crude Oil Inventories Rose

ING Economics ING Economics 22.09.2022 10:17
The macro picture continues to weigh on the commodities complex and the hawkish FOMC meeting certainly hasn't helped. However, there are clear supply risks still facing the market following Putin’s latest escalation Russian President Vladimir Putin Energy: supply uncertainty grows Energy markets had a choppy day yesterday. Overall sentiment in the market remains negative following the US Federal Reserve rate hike and expectations that the Fed will be more aggressive in terms of tightening over the remainder of the year. This does add to a gloomier demand outlook. However, there are still clear supply concerns in the market. This was highlighted yesterday following Putin’s announcement of a “partial mobilisation” and plans for sham referenda across parts of Eastern Ukraine. This is a clear escalation and raises concerns over what the implications could be for Russian energy flows. There is the potential that we see the West having to become more aggressive in terms of energy sanctions or the potential for Putin to weaponise energy even further. For natural gas, Russia has limited leverage left, given that flows to the EU are down around 70% year-on-year. Where Russia has more leverage is oil, but even this will reduce in the coming months as the EU’s ban on Russian oil and refined products comes into effect. Yesterday’s weekly EIA report showed that US commercial crude oil inventories increased by 1.14MMbbls over the last week. However, total US crude oil inventories fell by 5.76MMbbls when taking into account the release of stocks from the Strategic Petroleum Reserve (SPR). This again highlights the effectiveness of the significant SPR releases we have seen this year in limiting the drawdown in commercial inventories. However, when the SPR releases come to an end, there is clearly the risk that we start to see large commercial inventory drawdowns once again, which would be supportive for prices. As for refined products, gasoline and distillate fuel oil stocks increased by 1.57MMbbls and 1.23MMbbls, respectively. Stronger refinery activity and weaker implied demand (for gasoline) likely contributed to these stock builds. There are reports from a local consultant in China that the government has approved 15mt of refined product export quotas. There have been reports circulating for weeks that the government was looking to release further quotas in a bid to support economic growth. If these latest reports are confirmed, this will be a big deal for product markets, with it equating to around 1MMbbls/d of refined product supply for the remainder of the year. This should offer some relief to middle distillate markets, which have been extremely tight this year.   Metals: LME copper stocks jump by most since June Base metals drifted lower yesterday ahead of the US rate hike decision, while a stronger USD put only further pressure on metal prices. Adding to the downbeat sentiment, Rio Tinto commented that copper’s short-term outlook “might look a little bit challenged” as decades-high inflation and snarled supply chains hit demand. Meanwhile, copper inventories held in London Metal Exchange warehouses rose 10%, the biggest increase since 27 June. Large increases in metal immediately available to withdraw were seen in Europe, Asia and the US. Total stockpiles rose to 118,000 tonnes – the highest since August. On-warrant copper inventories increased 12% to 106,125 tonnes. The increase has put some pressure on spreads, with the cash/3M backwardation narrowing from US$68/t to US$59/t. Agriculture: wheat rallies on the back of Putin's comments CBOT wheat rose yesterday as Putin announced a “partial mobilisation” and threats to use “all means available” to defend Russian territory, escalating the ongoing tensions between the nations. The statement also raised further uncertainty over the extension of the ongoing Black Sea grain supply agreement. Looking at shipments, the latest data shows that Ukraine’s wheat exports stood at 2.3mt as of yesterday for the 2022/23 marketing year, down from 7.2mt at this point in the season last year. However, corn shipments reached 3.95mt during the same period, compared to 1.39mt for the same period last year. Meanwhile, reports suggest that China booked as much as 3mt of soybean in the last two weeks from Argentina, which is not far off the total volume that China imported from Argentina last year. A devaluation in the Argentine peso appears to have prompted this stronger buying interest for Argentine beans. Read this article on THINK TagsRussia-Ukraine Refined product Grains EIA Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Worrisome Growth Signals in Eurozone PMI: Recession Risks Loom Amid Persistent Inflation Pressures

Inflation Expectations In Malaysia And Singapore, Costco Shares Fell And More

Saxo Bank Saxo Bank 23.09.2022 08:53
Summary:  Massive tightening was delivered globally after the Fed’s 75bps rate hike, which saw Bank of England, SNB, Norges Bank, and several emerging market central banks joining the race. Bond yields rose to fresh multiyear highs, with 10yr hitting 3.70% and 2yr well above 4%. The strength in the US labor market continues to hint at more room for tightening, and equities slumped. Japan’s intervention to defend the yen put some brakes on the dollar rally, but it would likely be ‘temporary’ at best, and focus shifts to US/UK and Eurozone PMIs today. What is happening in markets?   The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) pressured by bond yields rising. S&P500 experiencing a rare technical breach With a parade of central banks joining the Fed in boosting rates to curb inflation, the US 10-year yield rose to 3.7% (its highest since 2011), while the two-year yield rose for the 11th day (which its longest rally in over three decades). This upward pressure in safe-haven yields is luring investors away from investing in companies exposed to inflation and facing earnings slowdowns. The Nasdaq Composite fell 1.4%, on Thursday, shedding 3% over the week, while the S&P500 lost 0.8% on Thursday, falling 3% Monday-Thursday. Of note, the S&P500 is experiencing a rare technical breach, as it trades under its 200-day moving average for over 100 sessions. The last time this occurred in the last 30 years; was in the tech bubble when the index fell 50% before hitting its trough, and before that, the Global Financial Crisis, when the index fell 40% before hitting its trough. The technical indicators show the index is poised for more downside with the June bottom likely to be retested in the coming weeks, then the next level of support is perhaps about the psychological level 3,500, which is 9.1% lower below current levels. Get to know the best performer in the US stock market this week, with the most momentum, General Mills The US’s biggest wheat producer General Mills (GIS) has outperformed the S&P500 this week and risen 7.4% and claimed the best performing post this week. It’s vital to reflect on why this is the case. We’ve been speaking about the Wheat (WHEATDEC22) price of late, being supported higher due to deteriorating global wheat supply, and now with Russia mobilizing fleet against Ukraine, the wheat price move supported higher again, on concerns Ukraine’s export terminal will be shut once more. Wheat is also in a technical uptrend, so we think stocks General Mills could be a stock to watch ahead, as its earnings are likely to swell. In the S&P500 this week, following General Mills (GIS) higher is; Kellogg and Campbell Soup, as the second and third best performers in the S&P500. Costco (COST) was down over 2% post-market on Thursday despite reporting better-than-expected earnings results.  Australia’s ASX200 (ASXSP200.1) to react to the Fed after being closed yesterday for a public holiday On Friday morning the futures are surprisingly calm, with the ASX200 suggested to only open 0.3% lower. So far this week, the ASX200 has once again outperformed global equities and only lost 0.5%, which is a stark contrast to the S&P500’s drop of 3%.  All eyes will be in cybersecurity stocks with Optus investigating a cyber-attack which may have led to authorized access of customer information. In terms of economic news to watch, S&P Global releases September PMI results. As for stocks to watching Fonterra might see increased bids after its APAC chief executive said she sees strong sales ahead for dairy protein. Rio Tinto will also be on watch after it signed a pact to promote low-carbon solutions for the steel value chain. Rio’s focus areas include low-carbon technology, blast furnace and basic oxygen furnace optimization and carbon capture utilization. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong’s Hang Seng index was at 11-year lows yesterday amid the massive global tightening as well as rising geopolitical tensions. HSI later recovered some of the losses to end the day down 1.6%. Hong Kong's de-facto central bank mirrored the tightening and raised its base lending rate by 75 basis points to 3.5% with immediate effect. Hong Kong’s banks have waited through five rounds of rate hikes this year before moving. More pain is in store for Hong Kong’s borrowers, as the HKMA has been conducting its monetary policy in lockstep with the Fed since 1983 to maintain the local currency’s peg to the US dollar. EV shares tumbled with Xpeng down 11.6% and Nio falling 7.5%. Property sector continued to show weakness, with NWD down 3.4%. Meanwhile, CSI300 ended the day down 0.9% EURCHF ignored the intervention warnings EURCHF surged to 0.9700+ levels from 0.9465 after the SNB’s 75bps rate hike remained short of market’s expectation of a 100bps move. USDCHF also moved higher to touch 0.9850 from sub-0.9650 levels, but that was helped by a weaker US dollar following Japan’s intervention to defend the yen. With higher inflation forecasts, one can argue that there will be more room for the SNB to raise rates, and the CHF’s haven status could also come to its rescue as the case for economic slowdown gets stronger with the massive global tightening being delivered. Crude oil (CLU2 & LCOV2) focus back on supply issues Crude oil edged higher as OPEC warned of additional cuts to output. Nigeria’s oil minister, Timipre Sylva, said that OPEC would consider additional cuts if crude prices fall because current levels are affecting the budget of some member states. This helped the crude oil market to shrug off the massive tightening being delivered. A softer USD in the aftermath of Japan’s intervention also created room for the oil prices to focus on the demand-supply fundamentals. WTI futures rose to highs of $86/barrel before some easing, while Brent touched $92+.   What to consider? SNB delivers a 75bps rate hike The 75bps rate hike by the Swiss National Bank lifted the policy rate out of NIRP to 0.50% but disappointed the markets which had started to look for a 100bps rate hike. Guidance that further rate hikes cannot be ruled out was also accompanied by repeating guidance that they are willing to intervene in FX markets as necessary with Chairman Jordan subsequently stressing they are ready to step in to prevent excessive weakening or strengthening of the Franc. Bank of England goes for a dovish 50bps as recession concerns imminent While the consensus was looking for a 50bps rate hike from the Bank of England, market had started to price in a case for 75bps rate hike as well and so the decision to hike rates by 50bps was a slight disappointment. More so, the decision was not unanimous with three members supporting a 75bps move and one calling for a smaller 25bps move. However, the BoE confirmed that they are going to reduce their holdings of government bonds by GBP 80bln over the next 12 months, although the schedule remains open to amendments. Additionally, the BoE retained its guidance that they will continue to “respond forcefully” as necessary to inflation and while the peak forecast was reduced vs August’s update, it remains elevated and well above target. Finally, the Bank has downgraded its view on the UK economy in the near-term, Q3 2022 is now expected to see GDP declining by 0.1% (vs August projection of +0.4%), for a second quarter of contraction; a forecast which, if confirmed by the ONS release, implies the economy is already in a technical recession. US jobless claims suggests a resilient labor market Initial jobless claims marginally rose to 213k from the revised lower 208k but it was beneath the expected 218k. Meanwhile, continued claims fell to 1.379mln (prev. 1.401mln), also lower than the consensus 1.4mln, and dipped beneath 1.4mln for the first time since mid-July. While the strength in the labor market still remains intact given the large number of open positions in the American job market, some moderation can be expected in the coming months with the rapid pace of tightening and still-strained supply chains affecting output. However, as the Fed noted yesterday, the pace of rate hikes is set to continue despite some economic/labor market pain. Japan’s intervention temporarily strengthens the yen Japan’s first market intervention in over two decades came right after a hawkish FOMC and a steady policy decision by the Bank of Japan, with the widening yield differential between the US and Japan continuing to weigh on the Japanese yen. The intervention announcement came as USDJPY surged above 145 – the level that has been the line in the sand for last several weeks – and pair dropped to 140.36 over the next few hours. But as with most unilateral interventions, the effect was short-lived and USDJPY returned to 142+ levels subsequently, just as we had expected here. More steps remain likely, and the US Treasury said it understood Tokyo's move, but stopped short of endorsing it. Eurozone PMIs on the card to gauge how hawkish ECB can get Eurozone PMIs are likely to dip further into contractionary territory as energy price hikes weigh on spending and business plans. Manufacturing PMIs are likely to ease to 48.8 in September from 49.6 previously, and services are expected to fall to 49.1 from 49.8, according to Bloomberg consensus estimates. A weaker-than-expected number could temper the hawkish ECB bets for the October meeting. Singapore and Malaysia inflation to see further upside pressures Singapore’s headline inflation likely jumped further above the 7% mark in August from a reading of 7% YoY in July, underpinned by higher food and energy prices globally, higher rents due to under-supply, and demand side pressures from regional reopening and a pickup in tourism. Malaysia’s continued ban on chicken exports is also adding to the food inflation, and further tightening from the Monetary Authority of Singapore at the October meeting remains likely. Meanwhile, Malaysia’s inflation also likely rose further in August from 4.4% YoY in July due to higher commodity prices and weaker ringgit, as well as the strength in consumer demand. Bank Negara Malaysia’s next meeting is only scheduled in November, before which we will have another CPI print out. However, it can be assumed that monetary tightening will likely continue. Costco outperforms. Is this a sign of what to expect for fourth quarter earnings season? Costco reported fourth quarter earnings results that beat average analysts forecast, with total revenue hitting $72.09 billion, vs the $70.3 billion expected. It comes as fourth quarter membership fees rose 7.5% year on year, to $1.33 billion and accounted for 2% of the retailer's revenue. Although the company typically raises membership fees every five to six years (with its last fee increase in June 2017), Costco held off on rising fees “at this time”. Costco flagged that it sees some beginnings in the inflation situation improving, while it also expects to sell an overstock of holiday goods this season, which was left over from last year. Costco shares fell 2% post market after their results, implying its shares will sour when the market opens.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-sept-23-2022-23092022
Middle Distillate Inventories Are Tight Around The Globe

The Global Container Shipping Is Weakening, The Bank of England Decisions And More

Saxo Bank Saxo Bank 23.09.2022 09:02
Summary:  Markets continue to absorb the impact of the FOMC meeting and other central banks continuing to tighten yesterday, with the chief concern for risk sentiment actually the leap in long US treasury yields yesterday, which more directly affect asset valuation models. The US 10-year yield benchmark jumped nearly 20 basis points yesterday to above 3.70% and thus to a new 11-year high. Elsewhere, the latest consumer confidence survey in Europe showed record low sentiment ahead of flash September Manufacturing and Services PMI’s out this morning from France, Germany and the Eurozone.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Further weakness in US equities with the S&P 500 futures posting a new lower close for the cycle and continuing down this morning trading around the 3,770 level. The next big level to watch on the downside is 3,740 in S&P 500 futures which was the big support level multiple times back in July. US equities are naturally being dragged lower from the US bond yields pushing higher with the US 10-year yield rallying to 3.71% the highest since early 2010. In addition, the US leading indicators for August were weakening further with the y/y index pushing into the most negative level since the Great Financial Crisis excluding the dip during the pandemic suggesting the US economy could slip into a recession within the next 6-9 months. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong’s Hang Seng index was at 11-year lows yesterday amid the massive global tightening as well as rising geopolitical tensions. HSI later recovered some of the losses to end the day down 1.6%. Hong Kong's de facto central bank mirrored the tightening and raised its base lending rate by 75 basis points to 3.5% with immediate effect. Hong Kong’s banks have waited through five rounds of rate hikes this year before moving. More pain is in store for Hong Kong’s borrowers, as the HKMA has been conducting its monetary policy in lockstep with the Fed since 1983 to maintain the local currency’s peg to the US dollar. EV shares tumbled with XPeng down 11.6% and Nio falling 7.5%. The property sector continued to show weakness, with NWD down 3.4%. Meanwhile, CSI300 ended the day down 0.9%. USDJPY volatile on BoJ intervention Japan’s first market intervention to support the yen in over two decades came right after a hawkish FOMC and a steady policy decision by the Bank of Japan, with the widening yield differential between the US and Japan continuing to weigh on the Japanese yen. The intervention announcement came as USDJPY surged above 145 – the level that has been the line in the sand for last several weeks – and pair dropped to 140.36 over the next few hours. But as with most unilateral interventions, the effect was short-lived and USDJPY returned to 142+ levels subsequently, just as we had expected here. More steps remain likely, and the US Treasury said it understood Tokyo's move, but stopped short of endorsing it. EURCHF ignored the intervention warnings EURCHF surged to 0.9700+ levels from 0.9465 after the SNB’s 75bps rate hike remained short of market’s expectation of a 100bps move. USDCHF also moved higher to touch 0.9850 from sub-0.9650 levels, but that was helped by a weaker US dollar following Japan’s intervention to defend the yen. With higher inflation forecasts, one can argue that there will be more room for the SNB to raise rates, and the CHF’s haven status could also come to its rescue as the case for economic slowdown gets stronger with the massive global tightening being delivered. Gold (XAUUSD) holding up despite the dollar and yield strength Gold has held up well despite multiple rate hikes and the dollar reaching multi-year highs against several major currencies.  By continuing to raise interest rates while also raising expectations for lower growth and rising unemployment the FOMC is signaling a recession is a price worth paying for getting inflation under control. Putin’s increasingly desperate measures and threats regarding his war in Ukraine has helped support gold and shield it from losses but geopolitical support aside, the yellow metal may struggle as long yields continue to rise and the market continues to price inflation sub 3% in a year from now. Resistance has moved to $1690 while below $1654, last week's low, the market may target the 50% retracement of the 2018 to 2020 rally at $1618. Crude oil (CLX2 & LCOX2) Crude oil remains stuck near the lower end of its recent tight range with the Powell versus Putin battle (demand versus supply) not having a clear winner so far. Brent and WTI are nevertheless both heading for a small fourth weekly loss as the global economic outlook grows darker following a week where central banks around the world, led by the US Fed continued to apply the brakes through rate hikes in order to curb runaway inflation. A difficult and potentially volatile quarter awaits with multiple and contradictory uncertainties having their say in the direction. WTI support at $82 and $87.50 in Brent. Wheat futures jump driven by Ukraine and weather concerns Chicago and Paris wheat futures, two of the best performing commodities markets this week, trade at a two-month high supported by risks of a deepening conflict in Ukraine putting the UN supported grain export corridor at risk, and dry weather in crop areas of Argentina and the U.S. Plains. This despite a forecast from the International Grains Council pointing to an increased 2022/23 global wheat production. Paris Milling wheat (EBMZ2) reached €350 per ton on Thursday with support now the previous triple top at €340 per ton. In Chicago the December wheat contract (ZWZ2) reached a $9.22 per bushel high but for a second day in a row failed to close above the 200-day moving average at $9.16 per bushel. US treasuries (TLT, IEF) A key day for longer US treasuries yesterday, with the US 10-year treasury benchmark closing nearly 20 basis points higher yesterday to a prominent new cycle high above 3.70%. Perhaps the most interesting development was that the move sharply steepened the US yield curve, with the 2-10 slope rising to -41 bps from below -50 bps the day before. Are markets concerned the Fed cycle will extend for longer, that more treasury supply will be coming from the Fed’s QT picking up pace or from the Bank of Japan selling treasuries to fund intervention, that the US growth outlook is actually more positive than previously thought or all of the above? Whatever the cause, US long treasury yields are likely to prove a key driver across markets as long as they continue to rise to new cycle highs. What is going on? US jobless claims suggest a resilient labor market Initial jobless claims marginally rose to 213k from the revised lower 208k but it was beneath the expected 218k. Meanwhile, continued claims fell to 1.379mn (prev. 1.401mn), also lower than the consensus 1.4mln, and dipped beneath 1.4mln for the first time since mid-July. While the strength in the labor market remains intact given the large number of open positions in the American job market, some moderation can be expected in the coming months with the rapid pace of tightening and still-strained supply chains affecting output. However, as the Fed noted yesterday, the pace of rate hikes is set to continue despite some economic and labor market pain. SNB delivers a 75bps rate hike The 75 bps rate hike by the Swiss National Bank lifted the policy rate out of NIRP to 0.50% but disappointed the markets which had started to look for a 100bps rate hike. Guidance that additional rate hikes cannot be ruled out was also accompanied by repeating guidance that they are willing to intervene in FX markets as necessary with Chairman Jordan subsequently stressing, they are ready to step in to prevent excessive weakening or strengthening of the Franc. Bank of England goes for a dovish 50bps as recession concerns imminent While the consensus was looking for a 50bps rate hike from the Bank of England, market had started to price in a case for 75bps rate hike as well and so the decision to hike rates by 50bps was a slight disappointment. More so, the decision was not unanimous with three members supporting a 75bps move and one calling for a smaller 25bps move. However, the BoE confirmed that they are going to reduce their holdings of government bonds by GBP 80bln over the next 12 months, although the schedule remains open to amendments. Additionally, the BoE retained its guidance that they will continue to “respond forcefully” as necessary to inflation and while the peak forecast was reduced vs August’s update, it remains elevated and well above target. Finally, the Bank has downgraded its view on the UK economy in the near-term, Q3 2022 is now expected to see GDP declining by 0.1% (vs August projection of +0.4%), for a second quarter of contraction; a forecast which, if confirmed by the ONS release, implies the economy is already in a technical recession. Global container shipping rates are in free fall The collapse in global container shipping rates is gathering pace with the Drewry Composite down 10% on the week to $4,472 per 40 feet box, and lowest since Dec 2020. Down 57% from the Sept 21 peak but still three times higher than the pre-pandemic average, suggesting further downside as the global economy continues to lose steam. All the major China to US and EU routes have slumped. Costco earnings are strong Costco reported fourth quarter earnings results that beat average analysts' forecast, with total revenue hitting $72bn vs est. $70.3bn. It comes as fourth quarter membership fees rose 7.5% y/y to $1.33bn and accounted for 2% of the retailer's revenue. Although the company typically raises membership fees every five to six years (with its last fee increase in June 2017), Costco held off on rising fees “at this time”. Costco flagged that it sees some beginnings in the inflation situation improving, while it also expects to sell an overstock of holiday goods this season, which was left over from last year. The retailer said that the biggest cost pressures were now in labour expenses. General Mills, the best performer in the S&P500 this week The US biggest wheat producer General Mills has outperformed the S&P500 this week and risen 7.4% due to a much better than expected earnings release and strong wheat prices recently related to Russia’s escalation in its war in Ukraine. AUDNZD hit a new high after NZ trade balance disappointed again AUDNZD rallied to fresh 9-year high at 1.1371 with the next potential target in focus being the 2015 high at 1.1430. The uptrend continued after NZ reported its trade balance worsened in August trade data after NZ’s imports accelerated while exports have declined. The deficit in NZ Trade Balance widened further to -$12.28B vs. the prior release of -$11.97B on an annual basis. This is a stark contrast to Australia, which is reporting record surpluses in its trade balance, due to exporting record amounts of coal. What are we watching next? Eurozone PMIs on the card to gauge how hawkish ECB can get Eurozone PMIs are likely to dip further into contractionary territory as energy price hikes weigh on spending and business plans. Manufacturing PMIs are likely to ease to 48.8 in September from 49.6 previously, and services are expected to fall to 49.1 from 49.8, according to Bloomberg consensus estimates. A weaker-than-expected number could temper the hawkish ECB bets for the October meeting. Chicago Fed National Activity Index and US financial conditions With US leading indicators y/y dipping into the most negative territory since the Great Financial Crisis excluding the dip during the pandemic, the Chicago Fed National Activity Index and US financial conditions updates for August and latest week respectively are important to watch for equity sentiment. Earnings calendar this week Today’s earnings focus is Carnival reporting FY22 Q3 results (ending 31 August) with revenue expected to rise 800% y/y to $4.9bn as the cruise line industry is coming back from years of subdued demand due to the pandemic. Today: Carnival Economic calendar highlights for today (times GMT) 0715-0800 France, Germany, Eurozone Flash September Manufacturing and Services PMI 0830 - UK Sep. Flash Manufacturing and Services PMI 1230 - Canada Jul. Retail Sales 1345 – US Manufacturing and Services PMI 1800 - US Fed Chair Powell to speak at event Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-23-2022-23092022
Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

Brent Crude Oil Stayed Quite Strong Yesterday Rising 0.7%, But In The Near Future Commodites May Be Endangered By (USD) US Dollar's Dominance And More

ING Economics ING Economics 23.09.2022 11:25
The complex held up relatively well yesterday, despite a number of central banks hiking rates and the stronger USD. However, commodities are likely to face headwinds in the months ahead with expectations of only a further tightening in monetary policy Energy - Russian oil price cap talks Despite a raft of central banks hiking rates yesterday in a bid to rein in inflation, the oil market held up well. ICE Brent managed to settle 0.7% higher on the day. However, with expectations of only further monetary tightening in the months ahead, commodity markets are likely to face some strong headwinds. The dominance of the USD at the moment will only add to these headwinds. According to reports the EU is trying to push ahead with the G-7 price cap on Russian oil, after Putin’s latest escalation in the war. Member states will apparently be meeting over the weekend to discuss the cap, along with a number of other new potential sanctions. There are suggestions that the aim is to come to a preliminary agreement by early October, ahead of an EU leaders’ meeting. Getting all members to agree on a price cap could prove difficult, just like we saw with the EU ban on Russian oil, which was watered down to include only seaborne trade, given objections from Hungary. EU members will want to come to a final decision by 5 December, which is when the ban on Russian seaborne crude into the EU comes into force. Latest data from International Enterprise Singapore shows that oil product stocks in Singapore increased by 3.64MMbbls over the week to 47.15MMbbls. The increase was driven fully by residues, with them increasing by 3.98MMbbls over the week to 23.4MMbbls. Light and middle distillates both saw small declines over the course of the week. As for Europe, refined product stocks in the ARA region increased by 15kt to 5.34mt. Fuel oil and gasoline stocks fell by 40kt and 20kt respectively, whilst gasoil inventories increased by 30kt over the week. However, like most regions, gasoil stocks are still very tight for this stage of the year and are at their lowest levels since at least 2007 for this time of year. US natural gas prices came under pressure yesterday, falling almost 9%. This weakness came after the EIA reported that US natural gas storage increased by more than expected over the week. The latest data shows that storage increased by 103bcf last week, whilst the market was expecting a number closer to around 95bcf. The build was also significantly larger than the 5-year average of 81 bcf. Metals – LME zinc stocks drop Zinc inventories held in London Metal Exchange warehouses fell by 3,650 tonnes to the lowest since February 2020, while prices rebounded from their lowest in almost two months. The decline was driven by port Klang, Malaysia warehouses, aggravating supply tightness in the zinc market. LME on-warrant copper stockpiles rose to the highest level since 11 July. Earlier this week, data from China showed domestic output sliding more than 5% on the year. In precious metals, the latest data from World Gold Council shows gold prices in Shanghai trading at a premium of more than US$43/oz (highest since 2019) over their London equivalent due to strong demand for the metal in the Chinese market. China’s gold imports jumped to a four-year high in August. Jewellery demand is expected to pick up ahead of the Golden Week at the start of next month. Chinese banks will also receive new import quotas post the October holidays, which are currently only allowed to import quantities set by the People’s Bank of China. Agriculture – wheat production estimates revised upwards The latest update from the International Grains Council was moderately constructive for corn, whilst relatively soft for wheat and soybeans. The council revised down its estimates for 2022/23 global corn production by 11mt to 1,168mt. This was mainly driven by a cut in US production forecasts, which were lowered from 364.7mt  to 354.2mt. Corn ending stocks for 2022/23 were cut to 262m, down from a previous estimate of 265mt. For soybeans, production in 2022/23 is expected to rise by 10% YoY to a record of 387mt, led by South American and Black Sea production. For wheat, the council increased its ending stock estimates for 2022/23 from 275mt to 286mt due to expectations of higher production. Global wheat output is seen  increasing to 792mt in 2022/23 compared to an earlier estimate of 778mt. This increase is party driven by Russia, where output is expected to reach 93.4mt , up from an earlier estimate of 87.6mt. The latest weekly data from the USDA shows that US grain sales remained quite weak for the period ending 15 September. Weekly export sales of wheat dropped to 185kt, well below market expectations of 406kt and week ago levels of 217kt. For soybeans, US export sales declined to 446kt, down from 873kt in the previous week and below expectations of more than 890kt. Similarly, US corn export sales fell to 182kt down from 583kt in the previous week. Read this article on THINK TagsZinc Wheat Russian oil price cap Refined product Henry Hub Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

European Union Has The Crude Oil Price Cap In Mind. How Could Russia Make Price Go Up?

Craig Erlam Craig Erlam 23.09.2022 15:13
European Union's Crude Oil Price Cap Is On The Table The threat of a global recession continues to weigh on oil prices, with widespread monetary tightening over the last couple of days fueling fears of a significant hit to growth. Central banks now appear to accept that a recession is the price to pay for getting a grip on inflation, which could weigh on demand next year. At the same time, the market still remains tight and OPEC+ is perfectly willing to restrict supply further even as it fails to deliver on quotas it has set itself so far. What’s more, a nuclear deal between the US and Iran looks no closer and Russia’s mobilization could pose a risk to its supply. As for the price cap that the EU is working hard towards, that’s a big unknown as it may not even get the unanimous support it needs from member states. If it does, there’s no guarantee it will work without the cooperation of those that Russia has been able to lean on since sanctions came in and if it is effective, Russia could reduce supplies and cause a price spike. With that in mind, very little is probably priced in at this point. Is gold eyeing a correction? It’s been a choppy week for gold amid all of the central bank tightening and yet it hasn’t really progressed in that time. The break below $1,680 was a big deal but it hasn’t really been the catalyst for anything since. While it hasn’t accelerated lower so far, it does continue to see resistance at $1,680. How long for depends on whether all of this tightening becomes a trigger for a correction in the dollar and maybe yields. If we do see a corrective move then the next big test may come around $1,730 which was previously a major level of support and then resistance. A break of this would suggest a much deeper correction may be underway. A break below $1,650 on the other hand could be viewed as a secondary confirmation of the initial breakout and a very bearish signal. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil drifting, gold in choppy waters - MarketPulseMarketPulse
Bitcoin Maintains A Steady Bullish Potential

No One Is Surprised That Bitcoin Is Lower, Wall Street Will Substantially Cut Its S&P 500 Targets

Ed Moya Ed Moya 24.09.2022 13:54
Unsettling market volatility is going to be here for a while as Wall Street broadly downgrades their end of year S&P 500 targets. The bond market is telling us they firmly believe Fed Chair Powell has rolled up his sleeves and is ready for this fight with inflation to get ugly. It appears that a hard landing is becoming more likely and that is driving this current round of risk aversion. Every time we get a better-than-expected economic reading, traders are anticipating that will allow the Fed to be even more aggressive with tightening of policy.  Today’s US flash PMIs showed business activity improved and while input-cost inflation cooled.  The rest of the world is seeing strong contraction readings and that will keep the stock market selling pressure widespread.  With one week left in the quarter, Goldman Sachs had to admit they were wrong with their optimistic stock market outlook and sliced their end of year S&P 500 target from 4,300 points to 3,600, which would be below the June low. A lot of traders expected hints of a Fed pivot at Jackson Hole or at the September FOMC policy, but that never happened. A hard landing is becoming the base case scenario for many and that means more economic pain along with a much weaker stock market is coming. How far we go below the summer lows is anyone’s guess.  Over the next couple of weeks, long-term investors may hesitate buying into weakness because it doesn’t seem like any economic data release or Fed speak will convince markets that a downshift from this aggressive tightening campaign will be happening anytime soon.  Downside targets for the S&P 500 include the 3,470 level, which might look attractive for some long-term investors.  FX The British pound collapsed after Chancellor of the Exchequer Kwarteng’s fiscal statement.  Financial markets abandoned bets on the British pound and UK bonds as foreign investors doubt the government will be able to fund this new round of debt.  The British pound is sharply lower on the markets rejection of this fiscal handout that includes both the biggest tax cut in half a century and investment incentives. Oil Oil tanks as global growth concerns hit panic mode given a chorus of central bank commitments to fight inflation.  It seems central banks are poised to remain aggressive with rate hikes and that will weaken both economic activity and the short-term crude demand outlook. The dollar rally is about to enter another level that could keep the pressure on commodities, especially oil prices.  Rig counts continue their steady rise, climbing by 3 and bringing the total to 602. The steady climb in rigs however has not led to any significant increases with US production.  Once WTI crude broke below the $80 level, technical selling was persistent. Despite all the bearishness that is hitting oil prices, economic activity isn’t falling off a cliff. Next week, energy traders will pay close attention to a tropical depression that could become a hurricane that is headed towards Florida.  If the selling remains strong at the start of next week, major support now resides at the $74 level.  Gold Gold continues to get picked on as global bond yields at the short-end of the curve skyrocket.  Everything is going wrong for gold; Strong dollar, weakening jewelry demand as China’s outlook continues to deteriorate, central banks are not focusing on buying bullion, and the bond market remains its worst enemy. If gold’s selling pressure remains, prices could tumble towards the psychological $1600 level. Crypto It is an ugly day on Wall Street and no one is surprised Bitcoin is lower.  Risky assets are getting hit hard as a wrath of global central bank tightening is leading many to think hard economic times are upon us.  Despite today’s crypto weakness, Bitcoin selling has not made a clear attempt at the summer lows. Bitcoin is only $1000 away from June low, so traders will pay close to attention to what happens over the weekend.  Weekend volatility could be interesting here and if a breach of the summer low occurs, don’t be surprised if that does not last until Asia opens on Sunday night. On a day when stocks are down over 2%, you would expect Bitcoin to be down double or triple that and not just around 3% weaker, which could mean many long-term holders remain unfazed.  This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Bio Twitter Latest Posts  
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

Markets Affected By The Announcement Of Tax Cuts In The UK, The Intervention Of The Japanese Authorities

Saxo Bank Saxo Bank 26.09.2022 09:07
Summary:  The global macro environment took another beating late last week with disappointing Eurozone PMIs and a UK mini-budget causing a havoc in markets as it fueled further debt and inflation concerns. Dollar dominance continued with sterling pressured despite higher UK yields, and risk off tone is likely to continue as Russia-Ukraine tensions in focus. The yen’s intervention risks also on watch as Japan returns from holiday today. Oil prices slid to multi-month lows amid a stronger dollar and demand concerns, with supply factors turning supportive for now, weighing on energy stocks. What is happening in markets?   The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) continue to tumble on rising interest rates  The selloff last Friday continued its long stretch of turbulence, which first kicked off following Powell’s hawkish Jackson Hole speech on August 26, then was exacerbated by a much-stronger-than expected CPI on September 13. And the selloff has most recently been bolstered by the hawkish rate and economic projections released after the FOMC meeting last Wednesday. Adding to the woes, earnings warnings from heavy-weight industrial and transportation companies have warned of weaker demand and an opaque outlook. The S&P 500 lost 12% and Nasdaq 100 dropped 13.9% over the period. Of note, last Friday, financial conditions tightened further, with US 2-year yields soaring to 4.2%, the highest since 2007, while the dollar soared to a new high and dragged down stocks, with both the S&P 500 and Nasdaq ending Friday down 1.7% lower.   Big US stock movers: oil and gas stocks plunge as oil falls to an eight-month low  All 11 sectors in the S&P500 closed lower on Friday, with Energy falling the most, 6.8%, after WTI crude declined by about 5% to an eight-month low after the US dollar hit its highest level in two decades on fears rising interest rates will tip major economies into a recession. APA Corp (APA:xnas) and Marathon Oil (MRO:xnys) fell about 11%. FedEx (FDX:xnys) fell 3.4% with its US$2.7 billion cost-saving by cutting flights, deferring projects, and closing offices facing skepticism. Ford (F:xnys) fell 3.6%, following a WSJ report that Ford delayed vehicle deliveries due to supply chain issues in getting Ford logo badges to put on its vehicles. On the upside, Generac Holdings (GRNC:xyns), Domino’s Pizza (DPZ:xyns) shares rose the most in the S&P 500 on Friday, gaining 3.2% and 3.1% respectively, perhaps with traders closing shorts as their stocks are continuing to hit new lows on a yearly basis.  U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rattled by soaring U.K. bond yields  In London trading hours before New York came in, U.S. treasuries were rattled by the jaw-dropping, emerging market style meltdown in U.K. Gilts, as 5-year UK Gilts soared 50bps and 10-year Gilts jumped 33bps in yields in an hour, following the announcement of a massive loosening of fiscal policy of nearly 2% of GDP by the new U.K. government. Investors are worried as when the U.K. acted similarly last time in 1972, inflation soared and the U.K. had to go to the IMF for a loan in 1976. When New York came in, bids emerged for U.S. treasuries, in particular, for the long end of the curve. 10-year and 30-year yields fell 3bps to 3.68% and 3.61% respectively while 2-year yields finished the session 8bps higher at 4.20%, the highest level since 2007.    Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) glided lower  Hang Seng Index continued its losing streak and tumbled 1.2% to its lowest level last seen in 2011.  Materials, healthcare, China Internet, EV, shipping, and consumer stocks led the market lower.  In the materials sector, Ganfeng Lithium (01772:xhkg) plunged 5%, followed by MMG (01208:xhkg) down 3.6%, and China Shenhua (01088:xhkg)  off 3.4%.  Despite the weakness in international crude oil prices, PetroChina (00857:xhkg) and Sinopec (00386:xhkg) managed to bounce by around 1.5%. Alibaba (09988:xhkg), Tencent (00700), and Meituan (03690:xhkg) declined by nearly 3%. Hong Kong’s end of hotel quarantine requirement lifted the share price Cathay Pacific (00293:hk) by 1% while Chinese airlines declined moderately.  Hong Kong luxury retailers gained, with Oriental Watch (00398:xhkg), Luk Fook and Chow Sang Sang rising from 0.5% to 2.2%. Banks in Hong Kong gained in anticipation of improvement in net interest margins following the lenders increased their prime rates, BOC Hong Kong (02388:xhkg) rising 3.8%, Hang Seng Bank (00011:xhkg) up by 2.5%. In mainland A shares, CSI300 swung between modest gains and losses and finished the day down by 0.3% and declining to within 3% from its April low. In terms of sectors, electronics, semiconductors, autos, coal, and solar power were among the worst laggards, while banks and appliances outperformed. Australia’s ASX200 (ASXSP200.1) to be pressured by oil prices pulling back  This week Australia’s share market will likely take its lead from commodity prices pulling back, with oil stocks like Woodside (WDS:xasx), Santos (STO:xasx) and Worley (WOR:xasx) to take a hair cut. Inversely, the coal price has continued to move higher, along with coal futures, so there is likely to be further upsdise in coal stocks including; New Hope, Whitehaven (WHC:xasx) and Coronado (CRN:Xasx) Washington Soul Patts (SOL:xasx). Dollar dominance continues, sterling battered The dollar rallied broadly, hitting a new all-time high against a currency basket and pushing the euro to a 20-year low while the pound plunged to a fresh 37-year low below 1.10 after the new UK government unveiled a massive fiscal stimulus plan to boost economic growth, which is sure to send inflation soaring even higher and force the BOE to do even more QT. Safe-haven demand also boosted the greenback amid risks from the escalation of Russia tensions and more signs of a slowing Chinese economy, which raised concerns about the outlook for global economic growth.  Crude oil (CLU2 & LCOV2) inches below key supports Crude oil prices fell sharply last week with the focus fixed on demand concerns while supply issues turned supportive. The continued surge higher in dollar and yields, aided by not just the FOMC but also the UK fiscal expansion measures into the end of the week, drove a slump in risk appetite. Brent crude fell to a nine-month low of $86.15/bbl, and this may warrant an OPEC action to support prices. Russia also warned it will not supply commodities to nations that join any agreement to cap prices for its crude. WTI crude traded below $80/bbl in early Asian trading hours as the new week kicked off.   What to consider? US PMIs come in better than expectations US flash PMIs for September surpassed expectations across the board, as manufacturing rose to 51.8 (prev. 51.5, exp. 51.1) and services, despite remaining in contractionary territory, printed 49.2 (prev. 43.7, exp. 45.0). Composite lifted to 49.3 from 44.6. At the same time, the inflation components of the PMIs continue to show some relief, with the report showing that supplier shortages eased and both cost and selling prices for both goods and services were at fresh lows, while still-high compared to the usual levels.  Eurozone PMIs disappoint, but ECB speakers (including Lagarde) will be in focus this week Both manufacturing and services PMIs for the Eurozone came in weaker-than-expected in a flash reading for September, with rising energy costs and decline in purchasing power weighing on manufacturing activity as well as the services sector. The headline reading fell to 48.2 in September from 48.9 in August. New orders disappointed, and the outlook was bleak as well. Manufacturing continues to be hit harder by elevated commodity prices. The reading slipped to 48.5 from 49.6. The services figure came in a bit higher at 48.9, but still fell from 49.8 in the previous reporting period. While supply bottlenecks eased, surging energy prices suggest these could reverse again. UK’s historic tax cuts raise the case for a BOE’s emergency rate hike New UK Chancellor Kwasi Kwarteng announced a mini-budget on Friday, which included wide-ranging tax cuts of the order of GBP 45bn, adding to an estimated cost of GBP 60bn for the energy plan. Instead of stabilizing markets, the announcement sparked mayhem as it promised even more inflation at a time when the UK is set to slide into a crippling stagflationary recession as prices soar. Bank of England last week stuck with a 50bps rate hike as recession is likely on the cards. Bonds were sold off and the sterling dipped to 37-year lows, suggesting UK’s inflation-fighting credibility at stake and demands risk premia.  Investors pile into insurance against further market sells offs. Over the last four weeks money managers have spent US$34 billion purchasing put options, which provides protection against a further fall in stock markets (according to the Financial Times). According to the article, ‘Investors pile into insurance against further market sell-offs', $9.6 billion was spent in the last weeks alone on options protecting against downside risks.  Will Japanese authorities intervene further to defend the yen? The Japanese authorities intervened in the currency markets for the first time in two decades last Thursday. USDJPY’s move above 145 following a hawkish FOMC and a still-accommodative Bank of Japan prompted the intervention, and dragged the pair to sub-141 levels before some of the move was retraced. However, Japan was closed on Friday for a holiday, and returns to trading today. Moreover, Governor Kuroda will make a speech and talk to reporters today. We believe the yen could weaken further given the pressure from yield differentials between the US, which continues to rise to fresh highs, vs. the yields in Japan which continue to remain capped. Meanwhile, the intervention last week has been possibly unilateral, suggesting it may not be long-lasting. This continues to raise the possibility of further intervention from the Japanese authorities, especially if USDJPY rises back above 145. Russia referendums results may create market volatility The four Moscow-held regions of Ukraine – Donetsk, Luhansk, Kherson and Zaporizhzhia – began voting on Friday on whether to become part of Russia, and results may be expected this week. The referendums are reminiscent of one in 2014 that saw Ukraine’s Crimea annexed by Russia. The four regions’ integration into Russia – which for most observers is already a foregone conclusion – would represent a major new escalation of the conflict. The threat of nuclear weapons will also keep risk off on the table, with Putin threatening to use “all means” to protect the annexed Russian territory. Hong Kong ended hotel quarantine for arrivals Effective from today, Hong Kong ended its requirements for people arriving Hong Kong to be under hotel quarantine.  Under the new arrangement, people arrive to Hong Kong from overseas and Taiwan are still required to undergo three days of medical surveillance at home or hotels.  They can go out, including taking public transportation and going to work but are still denied access to some public venues such as restaurants during the medical surveillance as well as required to take RAT daily for seven days plus three PCR tests on day 2, 4 and 6 each.  For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast .     Source: https://www.home.saxo/content/articles/equities/apac-daily-digest-sept-26-2022-26092022
Oanda Podcast: US Jobs Report, SVB Financial Fallout And More

The United States And Investments In New Sources Of Energy, Demand For The iPhone 14 Is Low

Saxo Bank Saxo Bank 26.09.2022 09:25
Summary:  Market sentiment continues to deteriorate as markets test the lows of this bear market on the surging US dollar and US treasury yields, although the latter came down sharply from the highs Friday as the equity market sell-off accelerated. The strong US dollar posted new highs for the cycle against many DM currencies, while sterling is in crisis mode, plunging to an all-time low at one point overnight below 1.0500 to the US dollar.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Last week was hectic with many central bank decisions, BoJ currency intervention and Russian military mobilisation. This morning US equities are not in a better mood with S&P 500 futures down 0.7% trading around the 3,680 level as the US 10-year yield continues to move trading at 3.76%. The VIX Index has also pushed to almost 30 and the VIX forward curve slipped into inversion on Friday signaling a potential panic selloff is in the making. We expect pressures to continue in equities, but with sentiment already historically low, there could be a short-term rebound if S&P 500 futures can hold the line around the June lows at around the 3,640 level. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index fluctuated between modest gains and losses and was 0.4% lower as of writing. HSBC (00005:xhkg) and Standard Charted (02888:xhkg) tumbled around 8% as the Pound Sterling was in turmoil. The market however was supported by rallies in China internet stocks, the China catering space, EV names, and Macao casino stocks. In mainland bourses, tourism, catering, semiconductors, solar power and EV rebounded, CSI300 up by 0.3%. Strong USD, weak GBP The US dollar strength has continued to start this week, as the greenback posted new cycle highs versus most other G10 currencies, with the notable exception of USDJPY, which did trade back higher above 144.00, but continues to respect the threat of official intervention from Japan after last week’s episode. Most intense focus at the moment is on the collapsing pound sterling, which crashed to an all-time low below 1.0500 overnight, down more than 5% in a couple of trading sessions. More on whether sterling’s slide will lead to an emergency move from the Bank of England below. The EURUSD traded to new cycle lows below 0.9600 overnight. There are no real chart points for that exchange rate until the all-time low of 0.8230 from the year 2000. Gold (XAUUSD) under pressure A hawkish Fed and the continued rise in real rates and not least the surging US dollar has seen gold fall towards the lowest since April 2020. Last week’s 1.9% drop, however, was relatively muted given the +3% rally in the dollar index and a 24 basis points jump in the US ten-year nominal and real yield, but as long the dollar continues its relentless rise and until the market reaches peak hawkishness and yields start to top out, gold will struggle to act as a defense against stagflation. Ahead of last week's slump money managers had increased short bets on gold to become the most bearish in more than four years. Having dropped below $1654 on Friday, the market may now target the 50% retracement of the 2018 to 2020 rally at $1618. Focus being the dollar, US inflation data and Russia geopolitical developments. Crude oil (CLX2 & LCOX2) The unrelenting pressure on commodities, including crude oil, continues following Friday’s gloomy session which saw accelerated dollar strength and growth pessimism cause a ripple through markets. The result being a near 5% drop in crude on Friday and weakness remained the theme overnight in Asia as the dollar ripped higher against most major currencies, not least a collapsing sterling. WTI trades below $80 per barrel while a return to the mid-80's in Brent may soon see OPEC+ action to support prices. With Russia repeating its warning of not supplying commodities to nations that join any agreement to cap prices for its crude, and with the market increasingly having priced in a recession, the energy sector could be the first to find support once the dollar stabilises. US treasuries (TLT, IEF) US treasury yields pulled sharply higher on Friday, but treasuries finally found support later in the session before melting lower again to start the week in Asia – taking the 10-year treasury yield back toward the cycle high near 3.80%. The next focus higher for the US 10-year benchmark is 4.00% after the cycle high 3.50% level fell last week. This was the highest yield posted all the way back in the 2009-10 period. What is going on? Right bloc wins Italian election, with Brothers of Italy’s Giorgia Meloni set to be next PM of Italy The bloc will have at least 114 Senate seats, ten more than the level required for a majority.  The three right-leaning parties Brothers of Italy, League and Forza Italia won about 43% of the popular vote, with 25% going to Brothers of Italy. The new government will have to scramble to put together a new budget for approval by the Italian parliament and the EU. Populist pressures could see the new government calling for large deficit spending that former PM Draghi refused to consider. Meloni has promised to roll back some of the reform measures introduced by Draghi, a move that could risk the EU withholding some portion of the EUR 200 billion of extraordinary EU pandemic budget funds targeted for Italy. US PMIs come in better than expected US flash PMIs for September surpassed expectations across the board, as manufacturing rose to 51.8 (prev. 51.5, exp. 51.1) and services, despite remaining in contractionary territory, printed 49.2 (prev. 43.7, exp. 45.0). The Composite lifted to 49.3 from 44.6. At the same time, the inflation components of the PMIs continue to show some relief, with the report showing that supplier shortages eased and both cost and selling prices for both goods and services were at fresh lows, while still high compared to the usual levels.  Eurozone PMIs disappoint, but ECB speakers (including Lagarde) will be in focus this week Both manufacturing and services PMIs for the Eurozone came in weaker-than-expected in a flash reading for September, with rising energy costs and decline in purchasing power weighing on manufacturing activity as well as the services sector. The headline reading fell to 48.2 in September from 48.9 in August. New orders disappointed, and the outlook was bleak as well. Manufacturing continues to be hit harder by elevated commodity prices. The reading slipped to 48.5 from 49.6. The services figure came in a bit higher at 48.9, but still fell from 49.8 in the previous reporting period. While supply bottlenecks eased, surging energy prices suggest these could reverse again. Apple iPhone 14 initial sales below previous introductions According to initial surveys demand for the iPhone 14 is running below previous model instructions suggesting consumers are holding back due to lower disposable income. The lower initial sales figures are in contrast to the pre-orders of the iPhone 14, but these pre-orders do not come with an obligation to buy. It is also worth noting that Apple has begun assembling some of its iPhone 14 in India.  The United States is boosting investments in new sources of energy Over the weekend, the U.S. government has announced it will provide up to $50 million as a reward to private nuclear fusion firms. They will need to provide pre-conceptual nuclear fusion reactor designs within 18 months of receiving their award. Fusion is considered by experts as a clean energy source with less radioactive waste than existing nuclear power plants. If they succeed, this could help accelerate the transition towards a more sustainable and greener economy. At the same time, the United States is the developed country with the most conventional nuclear capacity under construction, according to the latest data of the World nuclear association. While many European countries are debating whether nuclear energy is safe or not, the reality is that it is one of the safer sources of energy. Radioactivity resulting from uranium use diminishes quickly with time. About 40 years after it is done making power, the radioactivity of the fuel bundle falls by over 99 %. Most of the industrial waste we manage never gets less toxic over time…not even in a million years. Investors pile into insurance against further market sell offs During the last four weeks money managers have spent US$34 billion purchasing put options, which provides protection against a further fall in stock markets (according to the Financial Times). US$9.6 billion was spent in the last weeks alone on options protecting against downside risks, according to the Financial Times article ‘Investors pile into insurance against further market sell-offs'. What are we watching next? Sterling crisis after UK’s historic tax cuts may bring emergency rate hike New UK Chancellor Kwasi Kwarteng announced a mini budget on Friday, which included wide-ranging tax cuts approximately GBP 45 billion, adding to an estimated cost of GBP 60bn for the energy plan. Instead of stabilizing markets, the announcement sparked mayhem as it promised even more inflation at a time when the UK is set to slide into a crippling stagflationary recession as prices soar. The Bank of England last week stuck with a 50bps rate hike as recession is likely on the cards. Bonds were sold off and the sterling dipped to 37-year lows, suggesting UK’s inflation-fighting credibility at stake and demands risk premia, in other words, the Bank of England may be forced to announce an emergency rate hike to stabilize the currency. Will Japanese authorities intervene further to defend the yen? The Japanese authorities intervened in the currency markets for the first time in two decades last Thursday. USDJPY’s move above 145 following a hawkish FOMC and a still-accommodative Bank of Japan prompted the intervention, and dragged the pair to sub-141 levels before some of the move was retraced. However, Japan was closed on Friday for a holiday, and returns to trading today. Bank of Japan Governor Kuroda has been out speaking this morning, with no new signals on offer. The yen could weaken further given the pressure from yield differentials between the US, which continues to rise to fresh highs, vs. the yields in Japan which continue to remain capped. Meanwhile, the intervention last week has been possibly unilateral, suggesting it may not be long-lasting. This continues to raise the possibility of further intervention from the Japanese authorities, especially if USDJPY rises back above 145. Earnings calendar this week The Q3 earnings season kicks off in three weeks but there are still earnings releases being released not following the traditional calendar. The action this week will be on Thursday with earnings from H&M, Nike, and Micron Technology, with earnings from Micron being the most interesting to watch as we already know H&M and Nike are seeing weak demand. Micron has exposure to the consumer electronics industry and manufactures memory chips in Asia which means that the company sits in at the intersection of many interesting trends. Tuesday: Ferguson Wednesday: Paychex, Cintas Thursday: Polestar Automotive, H&M, Nike, Micron Technology, CarMax Friday: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0800 – Germany Sep. IFO Survey 0800 – Switzerland SNB Weekly Sight Deposits 1230 – US Chicago Fed National Activity Index 1300 – ECB President Lagarde to speak 1400 – US Fed’s Collins (Voter this year) to speak 1430 – ECB’s Centeno to speak 1600 – US Fed’s Bostic (non-Voter) to speak 1600 – UK Bank of England’s Tenreyro to speak 1835 – New Zealand RBNZ Governor Orr to speak 2000 – US Fed’s Mester (Voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-26-2022-26092022
Turbulent Times for Currencies: USD Dominates, SEK Shines

S&P 500, Nasdaq, EUR/USD, Brent Crude Oil And Gold Trade Lower

ING Economics ING Economics 26.09.2022 10:05
A difficult start to the week beckons as Asian markets eye Friday's G-10 carnage Source: shutterstock Macro outlook Global Markets:  US stocks had a bad end to the week. Both S&P500 and NASDAQ dropped sharply, and despite some slight recovery towards the end of the session, equity futures remain negative today, likely setting the scene for Asia’s markets. EURUSD also continued its losing streak, dropping below 0.97, though Cable was the star underperformer in G-10 FX space, dropping to 1.0824. New all-time lows beckon. This is not exactly a ringing endorsement by markets of the new Truss government and budget proposals. The AUD fared better, but not much, falling to 0.6525 and the JPY is making tentative moves higher again after the BoJ intervened at the end of last week. It probably won’t remain below 1.45 for long. The US yield curve continues to invert more forcefully.  2Y US Treasury yields are now 4.20%, a rise of nearly 8bp on Friday, while the yield on the 10Y Treasury bond dipped by just under 3bp to 3.685%. UK 10Y Gilt yields were up 33.3bp on Friday, a worse performance than the weakest Eurozone member bond.  Asian FX has been outperforming its G-10 peers. Most Asian currencies fell less than one-percent against the USD on Friday, though there could be some more catch-up today. Crude oil joined the general slump on Friday, no doubt helped by the USD’s strength, and front-month Brent crude futures are back below USD90/bbl. Gold is also soft, at $1643/oz, with inflation fears being swamped by interest rate rises. G-7 macro: It’s a very quiet day in the G-10 for macro news after the slew of weak PMI data on Friday. Germany’s Ifo survey may be the main highlight for the day – further falls are expected.  Regional US Fed activity indices provide additional insight into the US economic condition. Otherwise, the OECD’s Economic Outlook will probably garner a few downbeat headlines, though there is a good chance any forecasts will already have been overtaken by events. Singapore: Industrial production data for August is due at 13:00 today. Weakness in the electronics segment is likely behind the consensus -0.6%YoY forecast. The earlier NODX numbers for August were, if anything, a bit weaker than this consensus view, so there may be some downside risk to these estimates. Korea: The foreign exchange authorities (the Bank of Korea, the Ministry of Strategy and Finance) and the National Pension Service have agreed to conduct FX swap transactions within a limit of $10 billion. This is the second FX swap agreement after the 2008 agreement. The maturity of each case is 6 months or 12 months with no rollover and either party has the right to early liquidation. Despite the authorities’ efforts to stabilize the FX market, the KRW depreciation will likely continue for a while given that the market impact of these transactions will be limited. The Bank of Korea will likely take a big step at its October meeting, concerned that the weak KRW will add more pressure on inflation. What to look out for : China PMI Japan Jibun PMI composite (26 September) Singapore industrial production (26 September) Hong Kong trade (26 September) US Dallas Fed manufacturing activity (26 September) South Korea consumer confidence (27 September) China industrial profits (27 September) US durable goods orders (27 September) US Conference Board consumer confidence and new home sales (27 September) Australia retail sales (28 September) Japan leading index (28 September) Bank of Thailand meeting (28 September) US mortgage applications and wholesale inventories (28 September)       South Korea business survey manufacturing (29 September) US initial jobless claims, 2Q GDP and core PCE (29 September) South Korea industrial production (30 September) Japan labour market data (30 September) China official and Caixin PMI manufacturing (30 September) India RBI meeting (30 September) Hong Kong retail sales (30 September) US personal income, personal spending and core PCE (30 September) US University of Michigan sentiment (30 September) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: OPEC+ meeting ahead

Commodities: Wow! Brent Crude Oil Price Reached $85.50 On Friday!

ING Economics ING Economics 26.09.2022 10:11
It was a negative end to the week for commodities. USD strength and a week of numerous central banks hiking rates have weighed heavily on the complex. Macro drivers are clearly in the driving seat when it comes to commodities Energy- Macro pressure ICE Brent came under significant pressure on Friday, trading down to US$85.50/bbl - the lowest level since January and settling almost 4.8% lower on the day. The surge higher in the USD has not been helpful to the oil market, while a raft of central banks tightening monetary policy dims the demand outlook.  Despite the weakness in the flat price, the prompt time spread has held up fairly well in the last couple of days and strengthened to a backwardation of US$1.13/bbl. If the flat price weakness persists, we will need to keep a lookout for possible OPEC+ intervention. The group has made it clear in recent months about the possibility of further action given the apparent disconnect between the physical and the paper market. If it is not there already, the market is trading towards levels where OPEC+ will be getting uneasy. The group are scheduled to meet next week. This could be an interesting meeting. The latest positioning data shows that speculators increased their net long in ICE Brent by 5,635 lots to 162,334 lots as of last Tuesday. This move was exclusively driven by short covering, rather than fresh longs coming into the market. Given the weakness in the market since Tuesday, speculators are likely to have trimmed this position. Similarly, the speculative net long in NYMEX WTI increased by 7,941 lots over the last reporting week to 192,740 lots. As for ICE gasoil, speculators trimmed their net long, selling 20,321 lots over the reporting week, to leave them with a net long of 47,176 lots. Given the recent speculation of China releasing a large amount of refined product export quotas, it shouldn’t be too surprising to see speculators taking risk off the table.   In Iraq, the oil ministry has announced that trial operations at the 140Mbbls/d Karbala refinery have started. Given the tightness in the refined products market (particularly the middle distillate market), the ramping up of new capacity will be welcomed by the market. Supply from the Karbala refinery will help to meet domestic demand. Metals – metals slump on economic concerns The LME metals index slumped more than 3% on Friday as concern over an industrial slowdown, recession fears and a very strong USD, all weighed on sentiment. LME nickel was the worst performer with around a 5% loss for the day, whilst copper also fell more than 3%. Soft economic data out of Europe did not help with the manufacturing PMI falling to 48.5 for September, the lowest level since 2020 and the third consecutive month below 50. LME zinc inventories dropped by another 2,375 tonnes on Friday, taking total weekly inventory withdrawals to around 14,225 tonnes or around 20% of the total available inventory at the end of last week. Most of the withdrawals were seen in Malaysia, where stocks dropped to 8,850 tonnes as of 23 September compared to 22,975 tonnes a week ago. Meanwhile, zinc inventory at SHFE warehouses also dropped by another 2,618 tonnes last week, taking total deliverable zinc stocks to nearly a 1-year low of around 55,789 lots as of 23 September. Rising interest rates along with the surging USD are weighing heavily on the safe haven appeal of gold. The latest CFTC data shows that money managers increased their net short position in COMEX gold by 22,834 lots over the week with their net short position increasing to more than a 3-year high of 32,966 lots as of 20 September. Similarly, total known ETF holdings of gold have dropped by around 0.85m ounces over the past week and around 1.71m ounces so far this month. Agriculture – weak start to the planting season in Argentina The latest update from the Buenos Aires Grain Exchange showed that corn planting in Argentina has been progressing at a very slow pace due to drought concerns. Corn planting was reported to be around 3% complete, compared to around 8.5% at the same stage last season with farmers waiting for the weather to improve before committing to corn planting. Meanwhile, the exchange also reported that 42% of the current wheat crop is in poor-to-very poor condition compared to 34% a week ago, reflecting the impact of dry weather on the crop. Earlier, the Rosario Board of Trade downgraded wheat production forecasts from 17.7mt to 16.8mt due to the ongoing drought. Speculative buying returned in CBOT corn and wheat over the last week as some concerns over the continuity of Ukrainian grain shipments combined with poor weather in South America helped sentiment. CFTC data shows that managed money net longs in CBOT corn increased by 7,266 lots over the week to push net longs to 247,909 lots as of 20 September. Read this article on THINK TagsZinc USD strength Oil Monetary Policy Gold Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Oil Prices Soar on Prospect of Soft Landing, Eyes Set on $80 Breakout

Very Dramatic Moves In Forex Markets With The Euro (EUR) And The Pound (GBP)

Swissquote Bank Swissquote Bank 26.09.2022 11:13
The FX markets kick off the week on an extremely chaotic note. Both the pound and the euro are being severely punished for the political decisions that are taken in the UK and in Italy respectively. Elections in Italy As expected, the far-right candidate Giorgia Meloni won a clear majority in Italy at yesterday’s election, with Brothers of Italy gaining more than 25% of the votes. And Meloni’s right-wing alliance with Salvini’s League and Berlusconi’s Forza Italia got around 43% of the votes: the terrible consequence of the pandemic, the war and the energy crisis. Situation the major currency  The EURUSD has been shattered this morning. The pair dived to 0.9550. But it’s almost worst across the Channel, if that’s any consolation. Investors really hated the ‘mini budget’ announced in UK last Friday. Investors were expecting to hear about a huge spending package from Liz Truss government, but the package has been even HUGER than the market expectations. UK’s 10-year yield jumped more than 20% since last week, the FTSE dived near 2% and Cable tanked below 1.0350 in Asia this morning. Elsewhere, the US dollar index took a lift, and the dollar index is just crossing above the 114 mark at the time of talking. Stock market Outlook Gold dived to $1626 on the back of soaring US dollar. US crude oil plunged below $80 per barrel. The S&P500 fell to the lowest levels since this summer, whereas the Dow Jones fell below the summer dip. Happily, the European equities are better bid this morning, but investors remain tense and worried. Watch the full episode to find out more! 0:00 Intro 0:24 Italy turns right, euro gets smashed 4:15 UK assets treated like EM after the ‘MINI’ budget 7:45 USD rallies, XAU, oil under pressure 8:49 US stocks dive to, or below summer lows on Fed fear Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Italy #election #Meloni #UK #mini #budget #EUR #GBP #selloff #USD #rally #crude #oil #XAU #BP #APA #XOM #recession #energy #crisis #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Steady BoE Rate Expectations Amid Empty Event Calendar in the UK

Podcast: Very Weak Global Sentiment And View Of Gold, Shares And Crude Oil

Saxo Bank Saxo Bank 26.09.2022 11:52
Summary:  Today we look at very weak global sentiment as the US dollar and US treasury yields continue to soar, taking US equities to the key cycle lows as we wonder what shape the capitulation will take - a quick test and reverse or a more profound move driven by poor liquidity? Elsewhere, we note sterling's historic drop and suggest that it is time for the Bank of England to step in with an emergency rate hike - or else. Crude oil, gold, stocks to watch today (including Apple with some concern around iPhone 14 orders) and more are on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean engraver If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-sep-26-2022-26092022
The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

The Grains Sector Saw Continued Demand| Acceleration In The Sale Of Gold

Saxo Bank Saxo Bank 26.09.2022 14:41
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, September 20, a week leading up to the FOMC meeting, Bank of Japan intervention, a Sterling crisis and the dollar surging to levels not seen in decades. Ahead of these events speculators chose to cut their dollar long by one-third, increasing their gold short to a four year high while adding exposure in grains and crude oil Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, September 20. A week that saw financial market adjust positions ahead of the FOMC meeting on September 21. In anticipation of another 75 basis point rate hike, the market sold stocks, bonds and commodities while the dollar was bought. As it turned out, the FOMC was the starting shot to a very volatile end of week that saw heightened recession worries, Bank of Japan intervention to support the yen for the first time in 24 years, and an unfolding crisis in the UK sending the Sterling towards an all-time low.   Commodities The Bloomberg Commodity Index dropped 2.3% during the week to last Tuesday with losses seen across most sectors, the exception being grains and livestock. Selling was particularly felt across the energy sector and in precious metals. Money managers responded to these heightened growth and strong dollar concerns by cutting length in energy and softs while adding to already short positions in precious metals. The only sector continuing to see demand were grains where the speculators have now been net buyers in all but one of the last eight reporting weeks. Energy Money managers raised their combined crude oil net long to a seven-week high despite the recessionary clouds growing ever darker and the dollar continued to strengthen. During the reporting week when oil dropped around 3% the total net long in WTI and Brent was raised by 13.5k contracts to 355k lots. The ICE gas long meanwhile slumped by 30% to a 22-month low while in New York the ULSD (diesel) length was cut by 17% to 15.7k contracts. Despite falling by around 7% only small changes were seen in natural gas. Metals Gold selling accelerated last week with the net short jumping by 225% to 33k contracts to near a four-year low. This the culmination of six consecutive weeks of selling driven by a stronger dollar and rising Treasury yields as well a firm belief the FOMC will successfully manage to bring inflation under control next year. Silver saw no major net change with reductions in both long and short positions offsetting each other. The copper net short was unchanged at 4k contacts, the weakest belief in lower prices since June while platinum’s 3.5% rally supported an 82% reduction in the net short to just 2k contracts, again weakest short bet since June. Agriculture The grains sector saw continued demand with speculators having been net buyers in all but one of the past eight weeks. The increase last week was led by a 16% increase in the soymeal long to 102k contracts, a seasonal high while corn buying extended to an eight week. The wheat market which found support from renewed threats to the Ukraine grain corridor saw net buying of both Chicago and Kansas wheat. Overall however the net exposure remains close to zero with a 16k contracts CBT net short partly offsetting a 19k contracts long in KCB wheat. Renewed selling of sugar cut the net long by 72% to 8.6k contracts, the cocoa net short extended to a fresh 3-1/2 year high while long liquidation continued in both coffee and cotton.   Forex Ahead of the post-FOMC dollar surge to a fresh multi-year high against several major currencies, and the first intervention from the Bank of Japan to support the yen in 24 years, speculators had reduced bullish dollar bets by 35% to $13.9 billion, a six month low. The bulk of the change was driven by the biggest amount of short covering in the euro since March 2020, a change that flipped the position back to a long of 33k lots or €4.2 billion equivalent, up from a €6 billion short three weeks ago.The net short in sterling was reduced by 13k lots to 55k lots just days before tumbling to a 37-year low following the announcement of a historic debt financed tax cuts. The yen meanwhile saw no major changes ahead of Thursday’s USDJPY surge and subsequent    What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Source: https://www.home.saxo/content/articles/commodities/cot-specs-sold-dollar-and-gold-ahead-of-fomc-26092022
The Commodities Feed: OPEC+ meeting ahead

Central Banks' Moves And Crude Oil Market | It's Not The Best Moment For Gold Price

Craig Erlam Craig Erlam 26.09.2022 23:18
Oil slips further amid economic concerns Economic woes continue to weigh on oil prices, with Brent and WTI off around 1% again today and trading at pre-invasion levels. With more and more central banks being forced to take extraordinary measures no matter the cost to the economy, demand is going to take a hit which could help rebalance the oil market. Of course, OPEC+ has made its position on this perfectly clear and should it wait until the next scheduled meeting on 5 October, I expect there’ll be a big discussion about further cuts. Rising yields hit gold prices again Gold hit new two-and-a-half-year lows this morning as the dollar got off to a strong start to the week. Rising yields around the world continue to weigh heavily on the yellow metal, despite the risk-aversion we continue to see. Once we see yields stabilise, we may see more appetite for gold but in the meantime, it just isn’t there. It saw some support this morning around $1,625 but if yields keep rising, I can’t imagine that will hold for long. Showing resilience once more Bitcoin is once again showing some resilience despite the mood in the broader markets being quite pessimistic. It’s flat on the day after making decent gains earlier in the session. The backdrop remains very challenging for risk assets though and despite the resilience we’ve repeatedly seen, it could still come under further pressure putting substantial support around $17,500-18,500 at risk. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil and gold slide, bitcoin resilient - MarketPulseMarketPulse
Tesla’s Shares Are The Most Expensive|Apple Started Production In India

Tesla’s Shares Are The Most Expensive|Apple Started Production In India

Saxo Bank Saxo Bank 27.09.2022 09:27
Summary:  Bond yields surged and the US dollar picked up strength once more, pressuring US equities for the fifth day. The S&P 500 finished Monday at its lowest closing level in 2022. Investors continued to dump the U.K. Gilts and the Pound Sterling. Australia’s ASX200 could be boosted by M&A and earnings, but pressure remains. China’s central bank raised its risk reserve requirement on banks’ forward FX sales. Australia’s Federal government considers new coal mines, we cover what you need to know. For the latest in markets, with trading and investing ideas, read today's market insights. What is happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) trade at their lowest levels in 2022 The sell-off in equities continued as bond yields continued to surge, and the US dollar picked up strength, which pressed the S&P500 lower for the 5th straight day, seeing the index for the biggest 500 stocks fall 1%, while the Nasdaq 100 gave up 0.5%. The S&P500 not only took out June’s low but closed at its lowest level in 2022. VIX jumped to 32.3. And we think the market is now trading at a level that could perhaps see a very short-term relief technical rally, with the market in oversold territory and the S&P500 trading 9% under its 50-day moving average. Although we could see quant traders likely to swoop and trigger a rally, we emphasize that headwinds still remain in place; as bond yields and the USD are still charging, financial conditions and valuation remain pressured by the Fed’s pledge to tighten liquidity, and we are still likely to see more earnings downgrade. So the overarching pressure on equities remains, which is why we think a potential rally will likely be very short-lived. Australia’s ASX200 (ASXSP200.1) rallies, boosted by M&A and earnings, but pressure remains After falling 1.6% on Monday to 6,469, the Australian share market opened 0.4% higher on Tuesday boosted by earnings results and M&A talk. A company to watch might be Santos, after selling down its PNG LNG in a $1.1 billion deal. Another company to watch is Synlait Milk as it tripled its financial 2022 net profit after tax to NZ$38.5 million, after sales rose 21% to $NZ1.66 billion. Over 2021/2022 the average milk price was NZ$9.30 per kilo of milk solid, and it forecasts for that to rise to an average of NZ$9.50 in 2022/2023. The milk company gave few clues about profits ahead with no financial guidance, but it expects a similar level of profitability in financial 2023 as in financial 2021. Selling in U.S. treasuries (TLT:xnas, IEF:xnas, SHY:xnas) continued as yields surged to new highs Continuous melt-down in U.K. government bonds (10-year Gilt yields jumped 42bps to 4.24%) across the pond and a poor 2-year U.S. treasury note auction pushed treasury yields to a new high, with the 10-year note yielding soaring 24bps to finish the day at 3.92%, putting the psychologically important 4% handle within reach.  The 2-year yield rose 14bps to 4.34%.  The 10-year real rate, represented by the 10-year Treasury Inflation-Protected Securities (TIPS) jumped to as high as 1.62% before settling at 1.59%, a new high since 2010. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) ended lower but casino stocks were a bright spot Hang Seng Index fluctuated between modest gains and losses and finished the session 0.4% lower. HSBC (00005:xhkg) and Standard Charted (02888:xhkg) tumbled more than 7% as the Pound Sterling was in turmoil. The market however was supported by rallies in China internet stocks, with Meituan (03690:xhkg) up by 4.5%, and Tencent (00700:xhkg) rising nearing 3%.  Macao said that it will resume receiving tour groups from mainland China in November. The news boosted Macao casino stocks, Sands China (01928:xhkg) soared 15.7%, followed by SJM (00880:xhkg) and Wynn Macau (01128:xhkg) each rising more than 11%.  XPeng (09868:xhkg) jumped 8.7% after the EV maker’s founder bought USD30 million worth of shares in the company.  Ahead of the National Day golden week holiday, China catering stocks surged, led by Xiabuxiabu’s 14.4% surge and followed by Haidilao (06862:xhkg) and Jiumaojiu (09922:xhkg) rising more than 6%. Following the plunge in gold prices, share prices of gold mining companies dropped sharply, led by Zijin Mining (02899:xhkg) falling nearly 9%, Zhaojin Mining declining more than 5%.  In mainland bourses, tourism, catering, semiconductors, solar power, and EV stocks rebounded. CSI300 Index fell 0.5%. GBPUSD reversed Monday’s flash crash, but risks seen ahead Sterling reversed from the flash crash seen in the Asian session on Monday, and thin liquidity conditions may be a reason for the sharp drop. The new all-time lows were set at 1.0350 but GBPUSD recovered later to trade closer to 1.0800-levels even as BOE’s lack of action (read below) continued to weigh on sterling. BOE’s Chief Economist Pill is scheduled to make a statement on Tuesday, and lack of real action may mean further downside in sterling. EURGBP below 0.90 may mean room for further spikes as the UK inflation picture deteriorates significantly. JGB futures test the Bank of Japan’s patience again The 10-year Japanese government bond futures tested the Bank of Japan’s yield cap of 0.25% this morning as global bonds continued to be sold off following the hawkish Fed last week doubled up by the UK fiscal plan. Japan’s 2-year yield also rose above 1% for the first time since 2015, but these are outside the scope of BOJ’s yield curve control policy. This suggests the central bank may need to increase the pace of its bond buying for longer maturities, as it did in June. USDJPY is also back in close sight of 145, the level above which we saw the direct intervention by the Japanese authorities last week. Still, the scope for intervention may be lower this time as the yen has strengthened against most other currencies other than the USD. EURJPY is still below 140 from 143+ levels at the time of intervention, while GBPJPY is down from 164 to ~154. Crude oil (CLU2 & LCOV2) at year-lows Crude oil prices stabilized in the Asian morning after dipping to the lowest levels since January as tighter global monetary policy continues to underpin recession concerns. Meanwhile the rally in the US dollar continues to stretch further, as we had expected, weighing on the overall commodities sector. WTI futures drifted closer to $77/barrel while Brent futures stayed below $85. Hawkish Fed remarks overnight continue to underpin more USD gains, but the question now is at what levels OPEC will step in to pare supplies and stem the rout. What to consider? Bank of England’s lack of action As a fallout from UK’s fiscal plan, the sterling slid to record lows of 1.0350 on Monday and this prompted calls for an immediate action from the Bank of England to stem the slide in the currency or stabilize inflation expectations. However, all that the BOE did was to try to calm the market nerves with some words rather than action, and delayed any hopes of a rate hike to the next meeting scheduled on November 3. The risk of rate hikes being ineffective to restore sterling credibility may be seen, but BOE’s currency reserves are also rather limited and can only cover about two months of imports. This suggests sterling can remain prone to more wild swings. Fed speakers maintain a hawkish rhetoric Cleveland Fed President Mester was on the wires in the late US hours, reaffirming that further rate hikes will be needed and will need a restrictive stance for some time, while she added it can be better to act more aggressively in an uncertain environment and that pre-emptive action can prevent the worst-case outcome. Collins also spoke about getting inflation under control even if that mean deteriorating labour markets, while Logan (2023 voter) also stressed on the 2% inflation goal. Fed’s 2023 rate cuts bets are easing since the hawkish FOMC last week, More Fed speakers are lined up for Tuesday, including Powell, Bullard, Evans and Kashkari. However, focus may be more on what BOE’s Chief Economist Pill has to say. German Ifo survey slips to new lows Germany’s Ifo business-climate index fell to 84.3 points in September from a revised figure of 88.6 points in August, data from the Ifo Institute showed Monday. This is its lowest value since May 2020 and below expectations of 87.1. The Ifo president said that the German economy is slipping into a recession, as business confidence worsened considerably due to the escalating energy crisis. No Russian oil price cap for the moment The EU countries announced they will delay the introduction of an oil price cap on Russian imports. At least two countries, Cyprus and Hungary (the Hungarian government is one of the most vocal European governments criticizing the sanctions against Russia) have expressed opposition to the oil cap proposal. Expect intense negotiations ahead in order to reach a compromise. For this matter, the EU requires unanimity among member countries. Each country has an effective veto. Australia’s Federal government considers new coal mines; pressuring coal equites The Australian Federal government is considering 29 applications for new expanded coal mines. Coal is already a AUD$63 billion export industry for the nation down under and supported its trade surplus growing to a record. The extra capacity will be able to produce 250 million tones a year. If some or all mines are approved, it will likely cause selling in coal equities in the short term. However, given most of Australia’s coal is exported to India, and green resources will not be able to power Australia’s grid until 2024 (off peak for retail Australians only), the coal price remains supported over the longer term. A climate advocacy group said the extra coal capacity will add to half of the world’s emissions. The government is reviewing applications with BHP, and Glencore on the list.  Australia’s economic data this week, is unlikely to stop the AUD from sliding, but the AUDGBP is the pair to watch Australia’s economy has remained resilient despite the global growth slowdown; however the Aussie currency has continued to lose out, and be pressured by the resilient dollar strength, with the USD index moving to 20-year highs and rising 5% since the Fed’s hawkish Jackson Hole speech on August 26. Also keep in mind, Australian economic data; Australian retail sales out tomorrow (Wednesday 28 September) and private sector credit (borrowing) out Thursday 29 September, are both expected to fall. Although the AUDUSD faces further pressure over the medium term, the AUDGBP is perhaps a pair to watch, after hitting six-year highs on the back of the UK’s tax cuts announced. What also supports this pair rising is Australia’s surplus continuing to trade at record highs, vs UK’s deficit likely to widen. Given that’s likely for now, the AUDGBP is a worthy pair to watch that could extend its uptrend. China’s central bank imposed a 20% risk reserve requirement on banks’ forward FX sales The PBOC imposed a 20% risk reserve requirement on commercial banks’ foreign exchange forward sales to their clients. The move requires banks to set aside a 20% reserve of any forward sale of foreign currencies to their clients, including importers who seek to hedge their FX exposure. As banks will pass along the now higher funding costs of these FX forward transactions to their clients, it is estimated that it will be about 600 to 700 pips more expensive for banks’ clients to hedge their FX exposures for 12 months.  The PBOC did use the same tool before in 2015 and 2018 and triggered some selling in USDCNY but did not reverse the depreciating trend then.  PBOC’s move on Monday failed to halt the weakening in the onshore and offshore Yuan in the midst of a super-charged strong dollar against major currencies, with USDCNH rising by 0.4% to 7.17. Tesla’s share price performance rivals Apple’s So far this year, out of the five biggest US firms by market value, Tesla has become the new megacap unlikely rival to Apple. Tesla shares are outperforming Microsoft, Alphabet, and Amazon so far this year, and coming close to Apple’s performance. However, Tesla’s shares are by far the most expensive. For more on what to expect from Tesla ahead, it’s worth reading or watching our update, available here. Apple begins production in India Apple has begun assembling some of its iPhone 14 in India. This may be the start of a manufacturing boom in India, as China transitions to a consumption economy and US-China tensions continue to play out. Meanwhile, India’s push on electronics manufacturing could mean more foreign investments to come, as India seeks to solidify its position in global supply chains in addition to being a large consumption-driven economy. Our India equity theme basket is worth considering as India remains one of the big winners of deglobalization and slowing Chinese economy. Separately, also consider Apple is one of the most traded stocks at Saxo globally this month. We wrote recently on why to expect Apple to perhaps pave out a bullish sales outlook, for more read here.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-trading-and-investing-ideas-to-consider-27-sept-27092022
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

Statement Of Boston Fed Chief|No Move From The Bank Of England (BoE)

Saxo Bank Saxo Bank 27.09.2022 09:37
Summary:  Market sentiment was weak again yesterday, but the price action in the US market managed to avoid a break of key support despite a fresh surge higher in US treasury yields, taking them to new cycle highs. Sentiment has improved slightly overnight as the further USD spike late yesterday eased off the accelerator. The chaotic moves in sterling likewise calmed, despite lack of clarity from the Bank of England on the degree to which an emergency move to shore up the currency is necessary.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities were under a lot of pressure yesterday as the US 10-year bonds saw big moves pushing the 10-year yield closer towards 4% in moves that smelled of thin liquidity and heightened nervousness. S&P 500 futures did the worst close in terms of level for this drawdown cycle but did not go below the intraday lows hit during the June selloff. This morning the mood among investors is stabilising and S&P 500 futures are rebounding 1.1% trading around the 3,710 level. If the USD Index and US yields come down today we could see the VIX forward curve flip back into contango and help push equity futures higher planting the seeds for a short-term rally. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index fell another 1% to its lowest level since 2011, led by the charge lower of the tech sector. Hang Seng Tech Index (HSTECH.I) dropped 1.7% and leading China Internet names fell over 2%. HSBC (00005:xhkg) failed to rally despite the Pound Sterling having stabilized. Ahead of quarter-end and the National Day golden week holiday, the PBoC for two consecutive days in a row this week via open market operations. The year-on-year decline in China’s industrial profits slowed in August. CSI 300 gained 0.5%, led by wind power, solar power, semiconductor, and infrastructure stocks. Sterling (GBPUSD, EURGBP) reversed Monday’s flash crash, but risks seen ahead Sterling reversed from the flash crash seen in the Asian session on Monday, and thin liquidity conditions may have been a reason for the sharp drop. The new all-time low was set at 1.0350 but GBPUSD recovered later to trade closer to 1.0800-levels even as BOE’s lack of action (read below) continued to weigh on sterling. BOE’s Chief Economist Pill is scheduled to make a statement on Tuesday, and lack of real action may mean further downside in sterling. EURGBP traded between 0.8900 and 0.9000 after the wild spike to 0.9200+ on Monday, with the highest weekly close during the 2016-2020 “Brexit limbo” years just above 0.9300. Some USD pairs seeing wild moves on further spike in US yields The US dollar strength spiked higher yesterday, with the extension higher particularly aggressive against some of the G10 weaklings of late like NZD and NOK (USDNOK only has one weekly close above the current level near 10.75 in its history, posted during the pandemic outbreak in early 2020). The move was supported by a further rise in long US treasury yields yesterday, as the 10-year benchmark rose sharply again. Today’s September US Consumer Confidence reading and 5-year treasury auction (more below under US Treasuries) are in focus for next steps for the USD and US yields. Gold (XAUUSD) Gold dropped further on Monday as the relentless dollar and US yields surge left it with nowhere to go but down. It has since bounced back a bit after almost reaching $1618, the 50% retracement of the 2018 to 2020 rally. The short-term direction will be dictated by the dollar and the duration of the current bond market rout which has seen an almost one percent jump in US ten-year real yields this month. With the recent decline in breakeven yields, as investors buy into the Fed’s ability to bring down inflation, real yields have risen strongly thereby challenging gold and other investment metals. Crude oil (CLX2 & LCOX2) Crude oil traded higher in Asia following another day of selling led by a continued rally in the dollar and US Treasury yields driving concerns about tighter monetary policy leading to weaker demand for crude oil and fuel products. Brent and WTI both reached their lowest levels since January after several Federal Reserve policy makers signaled that further rate rises were in store to tame inflation regardless of the economic impact of such actions. The question now is at what levels OPEC+ will step in to pare supplies and stem what increasingly has become a rout, not only in crude oil but across markets. Also focus on hurricane Ian which is gaining power as it nears Cuba on a path toward the eastern part of the Gulf and Florida, leading to a surge in demand for diesel. While it is expected to miss most of the energy infrastructure in the Gulf of Mexico some offshort production has been shut down with employees being evacuated. US treasuries (TLT, IEF) US treasury yields rose sharply once again yesterday, particularly at the longer end of the curve, where the US 10-year treasury yield came within eight basis points of the 4% handle. For perspective, that benchmark has not closed above 4% on a weekly close since 2008. A 2-year US Treasury auction saw surprisingly tepid demand, given the very high yield on offer well north of 4%. Today sees the auction of 5-year treasuries and tomorrow a 7-year auction. What is going on? Bank of England’s lack of action Sterling slid to record lows of 1.0350 on Monday on the fallout from the announcement of new tax cuts late last week, prompting calls for an immediate action from the Bank of England to stem the slide in the currency or stabilize inflation expectations. However, the BOE response was rather lacking, only bringing a few words rather than action, and bringing doubt on whether the BoE would hike rates between now and the next regularly scheduled meeting on November 3. The risk of rate hikes being ineffective to restore sterling credibility may be seen, but BOE’s currency reserves are also rather limited and can only cover about two months of imports. This suggests sterling can remain prone to more wild swings.  The BOE’s Chief Economist Huw Pill will speak today.  Fed speakers maintain hawkish rhetoric Cleveland Fed President Mester (voter this year) was on the wires in the late US hours, reaffirming that further rate hikes will be needed and as the Fed is set to maintain a restrictive stance for some time, while she added it can be better to act more aggressively in an uncertain environment and that pre-emptive action can prevent the worst-case outcome. Boston Fed chief and FOMC voter Collins also spoke about getting inflation under control even if that means deteriorating labour markets, while Logan (2023 voter) also stressed the 2% inflation goal. Fed’s 2023 rate cuts bets are easing since the hawkish FOMC last week, More Fed speakers are lined up for Tuesday, including Powell, Bullard, Evans and Kashkari. German Ifo survey slips to new lows Germany’s Ifo business-climate index fell to 84.3 points in September from a revised figure of 88.6 points in August, data from the Ifo Institute showed Monday. This is its lowest value since May 2020 and below expectations of 87.1. The Ifo president said that the German economy is slipping into a recession, as business confidence worsened due to the escalating energy crisis.  China’s industrial profits declined 9.5% Y/Y in August but slower sequentially In the first eight months of 2022, China’s industrial profits contracted 2.1% y/y. For the month of August, industrial profits declined 9.5% y/y, a slower contraction that July’s -14.5% y/y. The National Bureau Statistics noted that the slower pace of contraction was helped by stronger auto, electrical equipment, electricity generation, and consumer product industries. No Russian oil price cap for the moment Yesterday, the EU countries announced they will delay the introduction of an oil price cap on Russian imports. At least two countries, Cyprus and Hungary (the Hungarian government is one of the most vocal European governments criticizing the sanctions against Russia) have expressed opposition to the oil cap proposal. Expect intense negotiations ahead to reach a compromise. For this matter, the EU requires unanimity among member countries. Each country has an effective veto. What are we watching next? Traders are expecting further tightening from central banks The money markets expect that the European Central Bank (ECB) will go for another 75 basis point interest rate hike in October. Given the plunge of the sterling pound, traders expect that the Bank of England (BoE) could go in with a 100 basis points emergency rate hike before the scheduled November meeting. Hopefully, this will work. If it fails, the Bank would be in a complicated situation and the sterling pound would certainly further weaken. This is one of at least four options the Bank must use to stop the currency slide. The three others are: 1) say and do nothing until the calm comes back in the forex market; 2) say something but do nothing (with might not be the best option so far); and 3) do something small (50 basis point interest hike for instance) but the market might then test the Bank. There is no easy answer, as you can see. Apple begins production in India Apple has begun assembling some of its iPhone 14 in India. This may be the start of a manufacturing boom in India, as China transitions to a consumption economy and US-China tensions continue to play out. Meanwhile, India’s push on electronics manufacturing could mean more foreign investments to come, as India seeks to solidify its position in global supply chains in addition to being a large consumption-driven economy. Our India equity theme basket is worth considering as India remains one of the big winners of deglobalization and slowing Chinese economy. US September Consumer Confidence up later today Confidence according to this survey rebounded in August to 103.20 versus the local low of 95.30 in July, likely as the labor market remains strong and gasoline prices had fallen sharply from the record levels back in June. Today’s number is expected at 104.5, but it is worth noting that while the overall survey has remained well within the range since 2015, the ratio of the very high Present Situation versus very low Expectations was the widest (-81.4) recorded in July since a brief episode in early 2001. Earnings calendar this week The action this week will be on Thursday with earnings from H&M, Nike, and Micron Technology, with earnings from Micron being the most interesting to watch as we already know H&M and Nike are seeing weak demand. Micron has exposure to the consumer electronics industry and manufactures memory chips in Asia which means that the company sits in at the intersection of many interesting trends. Today: Ferguson Wednesday: Paychex, Cintas Thursday: Polestar Automotive, H&M, Nike, Micron Technology, CarMax Friday: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0730 – US Fed’s Evans (voter in 2023) to speak on CNBC 1000 – Sweden Riksbank's Ingves to speak 1015 – US Fed’s Evans to speak 1100 – UK Bank of England Chief Economist Pill to speak 1100 – ECB's Villeroy to speak 1130 – Fed Chair Powell to speak on digital currencies 1230 – US Aug. Preliminary Durable Goods Orders 1300 – US Jul. S&P CoreLogic Home Prices 1315 – ECB's Guindos to speak 1355 – US Fed’s Bullard (voter 2022) to speak 1400 – US Sep. Consumer Confidence 1400 – US Aug. New Home Sales 1700 – US 5-year Treasury Auction 1700 – US Fed’s Kashkari (voter 2023) to speak 2030 – API's Weekly Crude and Fuel Stock Report 2350 – Japan Bank of Japan meeting minutes 0130 – Australia Aug. Retail Sales   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-27-2022-27092022
Much Business May Shift To Eastern Economies

Much Business May Shift To Eastern Economies

TeleTrade Comments TeleTrade Comments 27.09.2022 10:03
Asian stocks have rebounded as the DXY has turned subdued ahead of US Durable Goods data. World Bank has cut growth projections for China amid Covid-19 issues and a real estate crunch. The BOJ has announced an unscheduled bond-buying program. Markets in the Asian domain have rebounded as the US dollar index (DXY) has weakened after failing to sustain above the critical hurdle of 115.00. The DXY is witnessing pressure amid lower consensus for the US Durable Goods Orders data. As per the preliminary estimates, the apparels durables data will tumble by 1.1%. At the press time, Japan’s Nikkei225 gained 0.50%, ChinaA50 added 0.27% while Hang Seng dropped more than 1%. Chinese equities are getting support despite a decline in the growth projections by the World Bank. The giant lender believes that China’s longer zero-tolerance approach towards Covid-19 and the real estate crisis have trimmed its growth rate. Demand for steel, base metals, cement, and other building materials has declined firmly. Also, the eastern developing economies will perform better as much business will shift to them. In today’s session, the US Durable Goods Orders data will be of utmost importance. The economic data will remain subdued as higher interest rates by the Federal Reserve (Fed) and soaring core Consumer Price Index (CPI) numbers have forced individuals to postpone their current purchasing plans. Meanwhile, the Bank of Japan (BOJ) has announced an unscheduled bond-buying program. The central bank is offering to buy JPY 250 billion worth of Japanese Government Bonds (JGBs). On the oil front, oil prices have displayed a less-confident rebound after dropping to nearly $75.00. The pullback move seems a result of a subdued performance by the DXY. The oil prices will continue to remain on the tenterhooks as fears of the global recession are skyrocketing.
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

US Dollar (USD) Overwhelms Everything, Even Black Gold - Crude Oil. Brent Lost 2.4%!

ING Economics ING Economics 27.09.2022 10:07
The move higher in the USD has been unrelenting and this continues to weigh heavily on the commodities complex. Macro drivers remain firmly in the driving seat, while supply risks continue to be largely ignored across markets Source: Shutterstock Energy- Russian oil price cap hits a stumbling block The oil market came under further pressure yesterday as the USD continued to march higher. ICE Brent settled more than 2.4% lower on the day, leaving it to close below US$85/bbl. OPEC+ members have been oddly quiet in this latest sell-off. However, we are likely to hear a growing amount of noise in the lead-up to the OPEC+ meeting on 5 October. The group will likely be getting uneasy with the degree of weakness that we have seen in the market and so there is the very real possibility that we see OPEC+ announce supply cuts in order to support the market. Clearly though, if we are to see cuts, they will need to be quite a bit larger than the 100Mbbls/d agreed at the last meeting in order to have a meaningful impact on the market. It appears that the EU will delay the planned Russian oil price cap due to disagreements between EU members. According to reports, both Cyprus and Hungary oppose the idea of a price cap, and in order to be adopted, all members need to agree. The European Commission had been wanting the price cap to be enforced at the same time as the EU ban on Russian seaborne crude oil, which comes into effect on 5 December. Clearly, given the latest delay, this may not happen now. In the US, Hurricane Ian has led to the shut-in of some oil production in the US Gulf of Mexico. Both Chevron and BP have evacuated and shut a couple of platforms each. European natural gas has also been unable to avoid the weakness across the commodities complex. TTF fell by more than 6% yesterday and recorded its fourth consecutive day of settling lower. Meanwhile, the European Commission is still looking into the possibility of a price cap for natural gas. If the EU was to go down this route, it would not help solve the tightness in the gas market, as this move will likely only support gas demand. Spain introduced a price cap on gas used for power generation earlier this year, which unsurprisingly led to higher demand for gas.   Metals – gold enters bear market A rallying USD and surging treasury yields continue to put pressure on gold prices. Spot gold came off more than 1.3% yesterday, which saw it trading to its lowest levels in more than 2 years. Yesterday’s weakness also meant that the gold market entered a bear market, as it is now down more than 20% from its recent peak in March. Given the expectation that the Fed will continue to aggressively hike through this year, it is difficult to hold a constructive view on gold in the short term. We would need to see inflation coming off significantly before becoming more constructive towards the market. A meaningful fall in inflation could start to signal that the Fed will take a less aggressive approach in terms of hiking. Anglo American has announced the start of commercial operations at its Quellaveco copper mine in Peru with a copper production target of around 80-100kt this year at a c1 cash cost of around US$3,300/t. Previously the company was targeting output of around 100-150kt at a cash cost of around US$3,000/t. However operational constraints appear to have delayed the mine start and ramp-up. However, the miner continues to target around 320-370kt of copper production by 2023 and 2024 as the mine ramps up gradually. Meanwhile, the company has also reduced its copper production target in Chile to around 560-580kt for the current year compared to earlier estimates of around 560-600kt Read this article on THINK TagsUSD strength Russian oil price cap OPEC+ Natural gas Gold Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Eurozone's Improving Inflation Outlook: Is the ECB Falling Behind?

Podcast: Overview Of Yesterday's Market Events And Look At Signals From The US Consumer Confidence

Saxo Bank Saxo Bank 27.09.2022 10:58
Summary:  Today we look at the equity market's precise test of the cycle lows yesterday and brightening sentiment overnight, despite the fresh surge in US treasury yields and the US dollar yesterday. An increasingly inverted VIX forward curve suggests that the market low may be close in time, if possibly not in price. We also look at signals from the US Consumer Confidence as the September reading is due today, break down broader commodity performance since commodities peaked, update the crude oil outlook after the recent price plunge, highlight upcoming event risks on the economic calendar and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-sep-27-2022-27092022
Oil Is An Indicator Of The Health Of The Global Economy

Oil Is An Indicator Of The Health Of The Global Economy

InstaForex Analysis InstaForex Analysis 27.09.2022 13:09
Oil is an indicator of the health of the global economy. And if it is shaken, prices will surely fall. In this regard, the peak of Brent to the area of 9-month lows should not surprise anyone. Aggressive monetary restriction is massive, which increases the risks of a global recession. In such conditions, the demand for black gold is declining, which pushes futures quotes down. In 2022, for every central bank that cuts rates, there are 25 that raise them. +75 bps became the new norm instead of the traditional +25 bps. Regulators around the world have adopted the Fed's mantra of sacrificing their own economy to break the back of inflation. As a result, borrowing costs are mushrooming, consumer demand and GDP are slowing, and a global recession is getting closer every day. The World Bank has lowered its forecast for global economic growth from 4.5% to 3% in 2022 and from 3.2% to 2.2% in 2023. It believes that if gas prices in Europe jump by another 50%, the eurozone will face a prolonged recession next year, and its GDP will shrink by 1.3%. The specter of a looming recession is not the only driver behind Brent and WTI. An aggressive hike in the federal funds rate and a collapse in US stocks pushed the trade-weighted dollar to an all-time high. Since oil is quoted in US currency, the increase in the USD index is a bearish driver for the main grades of black gold. Dynamics of oil and US dollar The picture really looks extremely pessimistic for the Brent bulls, but they are trying to find a reason to rejoice in the sea of negativity. The market is talking about the entry into force of the embargo on Russian oil from December, the fact that OPEC's silence about the collapse in oil prices is reminiscent of the calm before the storm, and the recovery of Chinese demand. Alas, for each trump card of buyers, sellers have their own arguments. According to information from Indian oil companies, discounts on Urals oil from Russia have significantly decreased from $36 per barrel at the beginning of the armed conflict in Ukraine to "teenage" $12–14. This suggests that Moscow has managed to find new buyers, and problems with global supply will in fact turn out to be less than originally thought. According to Trafigura, the world's largest oil trader, despite the short-term weakness, the medium- and long-term prospects for black gold can become "bullish" at any moment. China's victory over COVID-19 is fraught with a surge in demand, and the lack of investment in production suggests that this demand will be difficult to meet. Technically, on the weekly chart of Brent, there are Splash and Reversal patterns with acceleration and Gartley. The breakthrough of the trend line of the Introductory stage by quotes is a wake-up call for the bulls. At the same time, when the levels of $81.5 and $74.0 per barrel are reached, the risks of a reversal will increase. In my opinion, oil should be bought on the rebound from these levels or on the breakout of the resistance at $87.6.   Relevance up to 11:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/322776
Unlocking the Future: Key UK Wage Data and September BoE Rate Hike Prospects

Bitcoin Is Booming, Gold Is Rebounding And Oil Prices Are Rising

Craig Erlam Craig Erlam 27.09.2022 14:42
Oil pares losses ahead of next week’s OPEC+ meeting Oil prices are recovering following the sell-off over the last couple of sessions. The prospect of a deeper economic slowdown, perhaps even global recession, has naturally turned traders more bearish on the price of oil as demand would naturally slump in those circumstances relative to prior expectations. Of course, there is another side to that equation, supply. The message from OPEC+ earlier this month was quite clear; it stands ready to adjust supply if fundamentals change or volatility continues and prices no longer reflect the situation. While it has so far resisted the urge to hold an unscheduled meeting, the next showdown is next week so we should soon have a more updated view in light of everything we’ve seen recently. In the meantime, we could see further pressure on oil prices if economic woes continue to dominate and traders want to test the resolve of the alliance in the face of severe global economic risk. In the midst of an inflation and cost-of-living crisis, you have to wonder why the group would want to keep prices artificially high in the short term as it will only make a global recession all the more likely. Gold bouncing back but risks remain to the downside Gold is rebounding after another terrible start to the week that saw it plunge back to $1,620, its lowest level since April 2020. It just goes from bad to worse for the yellow metal as traders continue to flock to the greenback and yields keep rising. The question for gold traders is how close are we to peak rate pricing and inflation. Obviously, the same question is being asked in all corners of the markets and so far, no one really has the answer. With that in mind, it’s hard to build a bullish case for gold. Once we see signs of hitting that peak, we could see a recovery amid continued demand for safe havens. In terms of levels, it’s hard to say where that will come. The first test to the upside now is $1,640 followed by $1,650 and $1,680 but there still could be further pain ahead, with $1,600 being the next obvious test. What’s driving the recovery in bitcoin? Bitcoin is staging a remarkable recovery amid a mild reprieve elsewhere on Tuesday which will no doubt excite a crypto crowd after another rough period. Turmoil elsewhere appears to have lifted bitcoin which has largely traded as a high-risk asset. This will undoubtedly stoke conversations about its role in the new economy, perhaps even reignite claims of its safe haven status. Naturally, I’m far from convinced but it’s certainly intriguing to watch unfold given the chaos we’re seeing elsewhere. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The French Housing Market Is More Resilient | The Chance Of Republicans Winning The Senate Is Up

Optimistic Forecasts Of The French Government|Three Officials Suggested That The US May Avoid A Recession

Saxo Bank Saxo Bank 28.09.2022 09:24
Summary:  Market sentiment tipped sharply lower late yesterday after an earlier rally attempt in the US session on the news of sabotage of the Nord Stream pipelines in the Baltic sea. Elsewhere, the US 10-year treasury benchmark rose again and is pushing on the major 4.00% level, taking the USD higher and pressuring global liquidity. Adding further to weak sentiment overnight, the Chinese yuan slipped sharply lower as USDCNH broke above its longer term range highs of 7.20 established back in 2019 and 2020.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities jumped higher out of the gates in early trading yesterday, but the action faded all day and the market closed back near the key cycle support, with the S&P 500 index even posting a minor new bear market low intraday below the prior 3637 mark on the cash index, as the news of the Nord Stream pipeline sabotage (see below) weighed, and US yields and the US dollar continued their ascent. Pivotal levels here for equities as we await further developments and consider end-of-quarter flows into Friday. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Stocks traded in the Hong Kong bourse notably underperformed those in Shanghai and Shenzhen. Shares of public utilities fell from 3% to 5%.  U.K. headquartered HSBC (00005:xhkg) and Standard Chartered (02888:xhkg) continued their slide, falling 3% to 4% for the day and 9% to 11% since last Friday’s post-mini-budget turmoil in the Pound Sterling and U.K. Gilts.  Both Hong Kong and China developers plunged across the board,  mostly by 1% to 5%, with CIFI (00884:xhkg) falling over 27% and being the largest casualty in the property space.  CIFI, the 13th largest property developer in mainland China was said to have missed a payment on a project-related debt.  CSI300 fell 1%, dragged by ferrous metal, electric equipment and defence industries while banks, textiles, food and beverage stocks outperformed. Strong USD continues to rage. We have witnessed an historic move in the USD this month, with month-end and quarter-end drawing into view on Friday. Besides the massive, more than 8% meltdown in GBPUSD this month (trading sub-1.0700 this morning), a pair like AUDUSD has lost over 6.5% as of this morning’s exchange rate. The question soon has to be: when does this strong USD finally “break something” and bring an official response, whether coordinated or unilaterally from the Fed or the US Treasury? So far, there seems no sense of emergency, judging from comments yesterday by US National Economic Council director Brian Deese, who pushed back against the idea that the a Plaza Accord-like deal is under consideration. USDCNH reaches all-time highs, intensifying strong USD story. The strong US dollar finally took USDCNH above the 7.20 area that defined major tops on two prior occasions in 2019 and 2020. The exchange rate traded as high as 7.239 overnight, the highest in the history of the offshore CNH currency. USDCNY has not traded this high since early 2008. The move comes ahead of a major holiday next week in China, with markets closed for the entire week, which will leave markets in limbo next week as USDCNY won’t trade. Gold (XAUUSD) remain under pressure from the stronger US dollar and rising US treasury yields, perhaps showing resilience at the margin given that the precious metal failed to post new lows for the cycle yesterday or today even as the USD surges to new highs elsewhere. The next focus is perhaps the round 1,600 level if the selling continues. Crude oil (CLU2 & LCOV2) recovers, European natural gas surges. Crude oil shifted focus back on supply worries with curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian and with reports that Russia is pushing for the OPEC+ alliance to cut production. The group of oil producing nations is due to meet early next month to discuss its production plans. They already announced a cut to output for October by 100kb/d and have warned of further reductions amid falling prices. There has been reports that Russia is pushing for a cut to output of at least 1mb/d. Meanwhile, a pause in USD rally also helped to put a floor to the declines in commodity prices. WTI futures rose but still remained below $80/barrel while Brent futures were above $86. US treasuries (TLT, IEF) US treasury yields rose once again after a brief and relatively sharp stumble yesterday, taking the 10-year yield to the symbolic 4.00% yield. It is worth noting that large round numbers on the yield often provide sticking points – for example, the 3.50% defined the top in June. Is this an important cycle top in yields or can they continue to power higher. The 4.00% level was also the stop for much of late 2008 and 2009. Yesterday saw a weak 5-year treasury auction despite the high yields. What is going on? Nord Stream pipelines severed, presumably an act of sabotage. Enormous upwellings of gas in the Baltic along the Nord Stream 1 and Nord Stream 2 pipelines in the Baltic Sea and detection of seismic activity that resembled explosions rather than earthquakes suggest that the pipelines were sabotaged to prevent the delivery of gas to Germany from Russia. The Nord Stream 2 pipeline was never operational, and the Nord Stream 1 deliveries had recently ceased. EU commissioner joined others in pointing the finger at Russia for the action, promising “the strongest possible response” if it is confirmed that Russia is behind the action. The development saw European natural gas jumping more than 22%, with Gazprom also issuing sanction warnings for Ukraine’s Naftogaz, which would prevent it from being able to pay transit fees, and therefore put at risk whatever little gas is still flowing to Europe via Ukraine. Fed officials continue with a united hawkish voice. While inflation and higher-for-longer interest rates remain a key theme in all Fed commentary these days, there is also another common theme emerging. All three officials on the wires yesterday – Kashkari, Bullard and Evans – suggested that the US may avoid a recession. Kashkari (2023 voter), in an interview with WSJ, said he’s unsure if the policy is tight enough suggesting more rate hikes will be needed to bring down inflation. Bullard (2022 voter) said the US has a serious inflation problem and the credibility of the inflation targeting regime is at risk. Evans (non-voter) is optimistic the terminal rate the Fed has set out (4.6% median in Dot Plot) will be restrictive enough. France releases ‘rosy’ economic forecasts for 2023. Yesterday, the French government published its economic forecast for 2022-23 as part of the parliamentary debate on the 2023 debate. The forecasts are overly optimistic. The Ministry of Finance expects that household investment (which mainly consists of the purchase and renovation of dwellings) will increase by 0.6 point over 2022-23 despite a jump of 250 basis points in the 10-year government bond yield and falling (or at best stagnant) purchasing power. We are a bit skeptical. We think that a sharp decrease in real estate prices is one of the less mentioned risks in France for 2023. This will be something to monitor very closely. It could seriously deepen the expected recession. USDJPY testing 145, but yen crosses lower. Bank of Japan released the meeting minutes from the July meeting, understandably stale, but continuing to signal that easing intentions remain prevalent. Despite a further run higher in US Treasury yields with the 10-year touching the 4% mark, USDJPY has still remained capped below 145. More importantly, the yen is stronger against the EUR, GBP and AUD since the intervention on 22 September, and the contrast with the struggling CNH is particularly notable. The World Bank downgraded its growth forecasts for China while upgrading the growth of Vietnam. The World Bank published its latest economic forecasts on Tuesday, cutting the 2022 growth rate of China to 2.8% from its previous forecast of 5%, and the 2023 growth rate to 4.5% from 4.8%.  On the other hand, the supra-national bank raised Vietnam’s growth rate in 2022 to 7.2% from the 5.3% forecast released in April. It also raised the 2022 growth forecasts for the Philippines to 6.5% from 5.7% and Malaysia to 6.4% from 5.5%. Excluding China, the East Asia, Pacific region is forecasted to grow 5.3% in 2022 and 6.0% in 2023, which will be, for the first time over the past three decades, higher than the growth rates in China. BHP takes advantage of sterling slump and redeems notes more than half a century early. Despite the iron ore (SCOA) price falling 1.4%, to its equal lowest level this year (US$95.90), BHP shares in Australia rallied to a three-day high after the mining giant paid off debts earlier than expected. BHP took advantage of the slump in the sterling against the USD, and used its record profits to redeem pound-denominated notes (due in 2077). This resulted in BHP effectively paying down $643 million of notes early. Last month BHP reported net debt of just $333 million. BHP also announced mining expansion plans. From exploring options to mine copper at Cerro Colorado beyond 2023, with Chilean regulation easing, to also seeing huge commodity upside in Peru, and spending $12m on exploration there over 10 months. Meanwhile, BHP also affirmed it’s working toward bringing forward production for its new potash (fertilizer) business to 2026. BOE Chief Economist Pill also pushed back on inter-meeting rate hike. Huw Pill said the UK’s government’s fiscal announcement and the market reaction that followed it requires a significant monetary policy response, but the best time to assess and react to their impact is at the institution’s next meeting in November. He acknowledged the challenge to the bank’s inflation goal arising from the loose fiscal policy, while also saying that the bank’s program of government bond sales should go ahead as planned next week if the market repricing stays orderly, as has been the case in recent days. However, it is worth noting that BOE’s November 3 meeting is still before the medium-term fiscal strategy is announced, and if that contains significant spending cuts, the budget may prove contractionary, especially given the rise in yields. US consumer confidence beats expectations. Lower petrol prices and a tight labor market possibly aided a rebound in sentiment, but high inflation and interest rates will continue to constrain consumer spending in the fourth quarter. Meanwhile, 1yr consumer inflation expectations declined to 6.8% (prev. 7.0%), but still remaining significantly higher than the Fed’s 2% goal. In other data, US durable goods order fell 0.2% in August, still coming in better than expected while new home sales rose to the strongest pace of sales since March to 685k in August, above the expected 500K and prior 532k (revised up from 511k). What are we watching next? End of quarter rebalancing? We have seen aggressive moves across markets this quarter, to say the least, which brings the question of whether significant rebalancing flows are set for the quarter end this Friday. The relative bond performance has been perhaps worse than that for equities, while in FX the focus may be on possible rebalancing after a tremendous USD upsurge in Q3. Earnings calendar this week The chief action this week is up tomorrow as H&M, Nike, and Micron Technology deliver earnings reports, with the earnings from Micron the most interesting to watch as we already know H&M and Nike are seeing weak demand. Micron has exposure to the consumer electronics industry and manufactures memory chips in Asia which means that the company sits in at the intersection of many interesting trends. Today: Paychex, Cintas Thursday: Polestar Automotive, H&M, Nike, Micron Technology, CarMax Friday: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0715 – ECB President Lagarde to speak 0815 – UK BoE Deputy Governor Cunliffe to speak 0830 – ECB’s Holzmann to speak 1230 – US Aug. Pending Home Sales 1230 – US Aug. Advance Goods Trade Balance 1235 – US Fed’s Bostic (non-Voter) to speak 1400 – US Aug. Pending Home Sales 1410 – US Fed’s Bullard (voter 2022) to speak 1415 – US Fed Chair Powell to speak (opening remarks at conference) 1430 – US DoE Weekly Crude Oil and Product Inventories 1500 – US Fed’s Bowman (voter) to speak 1700 – US 7-year Treasury Auction 0000 – New Zealand Sep. ANZ Business Confidence survey   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-28-2022-28092022
Tuesday's EUR/USD Analysis: Chaotic Movements on 30M Chart

BHP Shares Rose, Parks In Florida Close Due To Hurricane Ian

Saxo Bank Saxo Bank 29.09.2022 10:02
Summary:  Global markets rallied after the Bank of England decided to stage a ‘temporary’ market intervention, sending bond yields and the USD lower. This seems to have tentatively calmed markets, while end of month and quarter rebalancing could lead to significant flows with notable bond moves and USD strength in this quarter. Oil and gold spiked, and APAC equities futures are returning to green. News of Apple’s production cuts is casting further pessimism on the upcoming earnings season. What is happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rallied after BOE soothed nerves The Nasdaq Composite rallied 2.1%, and the S&P500 gained 1.97%, snapping its six-day rout. Treasuries jumped after the BOE gave some respite and that pushed down 10-year yields 21bps to 3.73% after briefly breaching 4.00%. The dollar also weakened across the board supporting gains. Nasdaq was bolstered by gains from Amazon with its shares gaining 3.2% after it pushed further into wellness, security and the auto industry. On the flip side, Apple’s shares sank about 1.3% on news it is not increasing iPhone production, which casts doubt over the outlook for consumer spending. The U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) plunged on BOE bond buying Once again, the action started from across the pond when the Bank of England surprised the market by announcing a “temporary” plan to purchase long-dated UK Gilts starting immediately yesterday through Oct 14.  The announcement pushed 10-year UK Gilt yields 50bps lower to 4.01% and 30-year UK Gilt yields 106bps lower to 3.93% from the prior day’s 4.99%.  U.S. bond traders took note of the fact that the rout in the U.K. bond market and the Pound Sterling caused the Bank of England to blink and reverse course to roll out a QE-like yield curve control policy and sent in bids to U.S. treasuries.  5-year to 10-year U.S. treasury yields plunged most, down about 20bps from the day before, to 3.97% and 3.75% respectively.  2-year yields fell 14bps to 4.14%.  Market implied terminal Fed Fund rate fell to 4.54% from 4.62 a day before. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) On Wednesday, stocks traded in the Hong Kong bourse notably underperformed those in Shanghai and Shenzhen. Hang Seng Index dropped 3.4% and Hang Seng TECH Index plunged 3.8%.  Risk-off sentiment hung over the market as the Renminbi weakened below 7.20 versus the dollar and Apple’s decision to withdraw its plans to increase the production of new iPhones added to the worries of a slowing global economy.  Apple suppliers, Sunny Optical (02382:xhkg) and AAC Technologies (02018:xhkg) dropped 2.8% and 1.5% respectively.  China Internet names fell across the board, with JD.COM and Bilibili (09629:xhkg) leading the charge lower each plunging 5.6%.  Alibaba (09988:xhkg) lost over 4%.  U.K. headquartered HSBC (00005:xhkg) and Standard Chartered (02888:xhkg) continued their slide, each falling nearly 6% for the day and 11% to 12% since last Friday’s post-mini-budget turmoil in the Pound Sterling and U.K. Gilts.  Both Hong Kong and China developers plunged across the board, mostly by 2% to 6%, with CIFI (00884:xhkg) falling over 32% and being the largest casualty in the property space.  CIFI, the 13th largest property developer in mainland China was reported to have missed a payment on a project-related debt.  Another leading Chinese developer, Country Garden (02007:xhkg) plunged by nearly 13%, being the worst performer in the Hang Seng Index.  Automakers were among the laggards.  Great Wall Motor (02333:xhkg) and XPeng (09868:xhkg) tumbled more than 9%, NIO (09866:xhkg) and Li Auto (02015:xhhg) lost over 7%,  CSI300 fell by 1.6%, with materials, industrial, and information technology dragging down the index most.  Non-ferrous metal, electric equipment, auto, and defense stocks were among the biggest losers.  Banks were outperformers in the A-share market with small gains.  Australia’s ASX200 (ASXSP200.1) futures suggest the market will rally 1.5%; monthly CPI and borrowing/credit data ahead. Given the rally on Wall Street, gains in tech are expected, along with a oil and gold stocks. Meanwhile, the iron ore (SCOA) jumped 1.3% to US$96, which should support iron ore companies higher. Today, on economic news watch; will be Private Sector credit (lending) growth, which will give a gauge into if borrowing has continued to slow amid runaway inflation. Bloomberg’s survey suggest credit growth year on year will slow from 9.1% growth to 9.0% growth. So it’s worth watching the big lenders in Australia, CBA, ANZ, WBC, MQG as well as the smaller banks, SUN and BOQ which are seeing the most lending growth.  Secondly, also on the economic news watch, the ABS will publish its first ever monthly CPI reading, with the data out at 11.30am Sydney time. However keep in mind, only about two-thirds of the items in the CPI data basket will have up-to-date prices each month, including food, clothing, rent, petrol, and holiday travel. Sterling resumed its decline in Asia It was a surprise to see a big move higher in GBPUSD on the BOE intervention yesterday, when the BOE action remains temporary and one that will weigh on sterling, much the same way as we have seen the Japanese yen suffer this year due to the yield cap. GBPUSD however reversed the gains to 1.0838 to drop to lows of 1.0540 but the subsequent weakness in the USD took the pair back to 1.0900 in US session. The downside however returned in early Asian trading hours as pair dropped close to 1.0800. EURGBP dropped back from 0.9066 to 0.8950 but a slight upside returned in Asia. Crude oil (CLU2 & LCOV2) rebounds on worsening geopolitics and drop in US inventories Crude oil prices rallied as supply conditions worsened, as suggested by the first drop in US crude inventories in a month. EIA data showed stockpiles fell 215kbbl last week, while West Coast gasoline stockpiles fell to their lowest level in 10 years. Disruption to supplies due to Hurricane Ian are also causing some concerns, with US president Joe Biden warning oil companies not to hike prices for the second time this week. Furthermore, geopolitical situation has turned more fragile once again with the European Union announcing a new round of sanctions against Russia including a ban on European companies from shipping Russian oil to third countries above an internationally set price cap. Brent futures rose close to $90/barrel while WTI futures got in close sights of $82/barrel.   What to consider? Bank of England’s market intervention to avoid systemic risks The Bank of England on Wednesday announced that it would purchase long date UK gilts to stabilize the market in a “temporary operation”. The move forced UK yields sharply lower, with the 10-year UK Gilt yield moving close to 50bps lower, but US yields were also some 30bps lower. While this may be touted as a yield curve control of some sort, BOE has made it clear that it is a time limited event until October 14 with the intention of restoring orderly market conditions. Pressure is building on Chancellor Kwasi Kwarteng, who faces calls to reverse planned tax cuts. Fed speakers maintain optimism on US economy and markets Fed’s Bostic suggested year-end rates of 4.25-4.50% while the market pricing is still at 4.2% suggesting more room for upward pricing. Although not a voter this or next year, he said that his baseline is a 75bps increase at November meeting and 50bps in December. Meanwhile, he continued to be optimistic on the US economic momentum, as well as ruled out any contagion risks from systemic global events (possibly referring to the UK crisis). Meanwhile, Bostic noted no evidence of dysfunction in the Treasury market at this point. Another Fed speaker, Charles Evans, vouched for a further move into restrictive territory, suggesting a terminal rate of 4.5-4.75% by March as suggested by the Fed’s September dot plot. Apple backs off iPhone production boost; casting doubt over the outlook for consumer spending Apple has reportedly backed off plans to increase production of new its iPhones this year, with demand failing to materialize. That means 6 million extra handsets won’t be produced in the second half of the year. Although it’s not confirmed, Apple is said to instead be focusing on its original production target for its summer period, and produce 90 million handsets. Apple shares fell 1.3% on Thursday, and key chipmakers including Taiwan Semiconductor fell 2.2% and Apple’s biggest iPhone assembler, Hon Hai Precision Industry lost 2.9% amid the electronics supplier selloff, on fears demand will slow. According to our colleague Peter Garnry’s analysis, Apple FY22 Q4 (ending 30 September) earnings estimates are down 20% from the peak in March and that is before adjustments from Apple’s own warning. Apple EPS is expected at $1.26 up 1.4% y/y, but factoring in Apple’s warning it could be a decline of 5-10%. Revenue is expected at $88.5bn up 6.1% y/y compared to 1.9% y/y revenue growth in the previous quarter. It is quite likely that revenue could slip into negative growth for the quarter.Walt Disney and Universal are closing their theme parks due to Hurricane Ian Hurricane Ian strengthened to a Category 4 hurricane and hit the west coast of Florida. Walt Disney (DIS:xnys) closed its Orlando theme parks for at least two days and Comcast’s (CMCSA:xnas) Universal Orlando Resort and SeaWorld Entertainment closed their Florida theme parks.  U.S. Q3 earnings are set to miss significantly to the downside As per Peter Garnry, Saxo’s Head of Equity Strategy, analysts may be way off in their estimates for the S&P 500 for Q3.  It is highly probable that there will be significant misses to the downside followed by gloomy comments from company management about the outlook on margins.   China warned banks about one-way bets on the weakening of the renminbi As the onshore and offshore renminbi weakened below 7.20 versus the dollar, the China Foreign Exchange Market Self-Regulatory Body, attended by PBoC Vice Governor Liu Guoquiang, told banks in a meeting to “safeguard the stability of the market and prevent volatile movements in the exchange rate”, in particular not to make one-way bets on the weakening of the renminbi. BHP update: The giant takes advantage of sterling slump, redeems notes more than half a century early, announces exploration expansion BHP shares rallied to a three-day high yesterday and are likely to see some extra bids after the iron ore price rose. BHP shares lifted after the mining giant paid off debts earlier than expected. The world’s biggest commodity company took advantage of the slump in the sterling against the USD, and used its record profits to redeem pound-denominated notes (due in 2077). This resulted in BHP effectively paying down $643 million of notes early. Last month BHP reported net debt of just $333 million. So will this mean BHP has little to no debt when they report? BHP also announced mining expansion plans; from exploring the idea of mining copper at Cerro Colorado beyond 2023, with Chilean regulation easing, to also spending $12m on exploration in Peru over 10 months (as it sees huge commodity there). BHP also affirmed it’s working toward bringing forward production of its new potash (fertilizer) business to 2026. Australian retail trade hit another record high, ahead of next week’s 6th RBA rate hike. What’s next? Australia retail spending hit another record in August, and rose more than consensus expected, showing Aussie consumers aren’t perturbed by the five RBA rate hikes. Aussie retail sales rose 0.6% in August, up 19.2% year-on-year. The most sales growth came from department store sales, up 2.8% in August to a brand-new record. Household goods sales rose 2.6%, perhaps boosted by winter shopping given the most overall retail growth came from the coldest regions of Australia. The retail record figures give the RBA more room to hike rates with a 0.5% hike likely on the cards at the RBA’s meeting on Tuesday (October 4). In our view, we think retailers or consumer discretionary companies; for instance Harvey Norman (HVN), Bunnings and Kmart owner Wesfarmers (WES) or JB Hi Fi (JBH) are doing it tough here, hurt by higher costs (inflation and wages), while they’re also buffering for higher rates to come. This is why those sectors will likely face downside pressure to come. Inversely, we still remain of the view that commodities offer the most cashflow growth, and likely upside in share price growth, particularly in energy. For more see our Australia resources theme, or our global Commodity basket for inspiration. Currency pairs to watch for month-end and quarter-end  With month-end and quarter-end approaching, our head of FX Strategy outlines the currencies to watch. And whether this seasonal time could put some support under the treasury market and or a ceiling on the US dollar, or if even a tactical consolidation in the two markets will require a change of direction from the Fed. John Hardy also details the US dollar rally finally taking the USDCNH above the 7.20 area (which defined a major top on two occasions in 2019 and 2020) and set a new high-water mark for USDCNH in the history of the offshore CNH currency, getting as high as 7.26 at one point. John covers what to watch next. Read on here for more FX pair updates, see how trends are emerging, and what to watch next.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-29-sept-29092022
A Bright Spot Amidst Economic Challenges

The Move Of The Bank Of England Forced British Yields To Plummet

Saxo Bank Saxo Bank 29.09.2022 10:04
Summary:  Equity markets rallied yesterday after the Bank of England announced an emergency QE action to calm a dysfunctional long maturity gilt market, a move that smashed UK gilt yields lower and took major global sovereign yields lower as well. The market’s inference is perhaps that central bank tightening in general has been taken too far and the Bank of England is perhaps the canary in the coal mine. The US dollar also traded weaker yesterday before rebounding slightly overnight.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities rose sharply after posting new intraday lows for the cycle as the Bank of England QE announcement pushed US treasury yields sharply lower, offering the hope of a pivot in the brutal cycle of rising yields. The rally encourages the technical idea that we have created a double bottom as long as these new marginal cycle lows continue to support the price action. The next area of resistance is around 12,000 in the Nasdaq 100 index. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Following the rally in global equity markets overnight, Hong Kong and mainland China stocks gained, with Hang Seng Index up by 1% and CSI300 0.3% higher. HSBC (00005:xhkg) rose 2.8% on the temporary calm of the U.K. bond market and currency.  China internet stocks and the new energy space were among the top gainers. China property developers failed to participate in the rally, with leading names falling from 1.5% to 9%. In the mainland bourses, medical equipment, healthcare, precious metal, coal mining and chemical stocks outperformed while property developers, shipping, tourism, lodging declined.   Strong USD fades as bond yields punched lower The sharp reversal in bond yields yesterday after yields had ground higher in a seemingly inexorable and increasingly rapid pace over the last few weeks saw the USD trading sharply lower, suggesting that the USD and yields will continue to trade in tightly correlated fashion and as important indicators for global risk sentiment. So far, the move has only reversed a portion of the greenback’s recent gains. A more notable reversal would require, for example EURUSD trading back above 0.9900, GBPUSD back above what looks an impossible 1.1250 or higher, and AUDUSD above 0.6700. Huge sterling focus after BoE move The initial reaction to the BoE emergency QE move (more below) was to sell sterling, as all other things equal, an easing move for a central bank in an otherwise tightening world is a negative for the currency. But perhaps as the market saw the move as the start of a possible trend that might spread elsewhere, sterling actually rose sharply later in the session on the improvement in global sentiment after the BoE’s move helped not only UK yields to sharply reverse, but other yields to do likewise, if less so. GBPUSD rose back to above 1.0900 late yesterday after trading 1.0540 earlier in the session. The gains were reversed in early European trading to below 1.0800 as of this writing. Sterling will remain extremely volatile, with EURGBP worth tracking around the pivotal 0.9000 area. Gold (XAUUSD) Gold rebounded reflexively as the pressure from rising yields and a rising US dollar suddenly faded yesterday. After trading near 1,615 yesterday, the price action ripped all the way back to 1,660+, short of the critical resistance zone into 1,680-1,700 that is the departure point for this latest bear market move. It is clear that global bond yields and the USD will continue to lead the way as coincident indicators. Crude oil (CLU2 & LCOV2) prices rallied as supply conditions worsened... ... as suggested by the first drop in US crude inventories in a month. EIA data showed stockpiles fell 215k bbl last week, while West Coast gasoline stockpiles fell to their lowest level in 10 years. Disruption to supplies due to Hurricane Ian are also causing some concerns, with US president Joe Biden warning oil companies not to hike prices for the second time this week. Furthermore, the geopolitical situation has turned more fragile once again with the European Union announcing a new round of sanctions against Russia including a ban on European companies from shipping Russian oil to third countries above an internationally set price cap. Brent futures rose close to $90/barrel while WTI futures got in close sights of $82/barrel. US treasuries (TLT, IEF) US treasury yields fell sharply in sympathy with UK gilt yields on the surprise announcement of an emergency QE programme from the Bank of England that erased most of the enormous spike in yields there that had developed since the UK government announced its new tax cut package late last week. The price action for the 10-year US treasury benchmark settled near 3.75% after trading slightly above the 4.00% mark yesterday. The Bank of England move brings hope that other central banks may ease off the tightening accelerator. The next important yield level to the downside is the cycle top of 3.50% from June. A 7-year treasury auction yesterday What is going on? Bank of England announces emergency QE to counter systemic risks The Bank of England on Wednesday announced that it would purchase long-dated UK gilts to stabilize the market in a “temporary operation”. The move forced UK yields sharply lower, reversing most of the recent spike that had developed after UK Chancellor Kwasi Kwarteng announced tax cuts late last week. The 30-year UK Gilt yield fell over 100 basis points after the announcement to below 4.0%, although it was trading 3.50% a week ago. While this may be touted as yield curve control of some sort, the BoE claimed that it is a time limited event until October 14 with the intention of restoring orderly market conditions. Pressure is building on the Truss government to reverse the planned tax cuts and shore up fiscal credibility. Apple cancels additional iPhone 14 production capacity Apple announced that it would not move forward with plans for additional iPhone production as the demand for the new phone was not living up to expectations. The increase would have been on the order of 6 million iPhones in the second half of this year, suggesting that the running demand for iPhones in the period is on the order of 90 million, about the same as last year. Demand for higher end new iPhone 14 has been stronger than for the entry-level models. Apple fell 1.3% yesterday after trading as much as 4.5% lower intraday. Key chipmakers were also impacted, including Taiwan Semiconductor, which fell 2.2% and Apple’s biggest iPhone assembler, Hon Hai Precision Industry, lost 2.9% amid the electronics supplier selloff, on fears demand will slow. Fed speakers maintain optimism on US economy and markets Fed’s Bostic suggested year-end rates of 4.25-4.50% while the market pricing is still at 4.2% suggesting more room for upward pricing. Although not a voter this or next year, he said that his baseline is a 75bps increase at November meeting and 50bps in December. Meanwhile, he remained optimistic on US economic momentum and ruled out any contagion risks from systemic global events (possibly referring to the UK crisis). Meanwhile, Bostic noted no evidence of dysfunction in the Treasury market at this point. Another Fed speaker, Charles Evans, vouched for a further move into restrictive territory, saying that the FOMC’s current target range is “not nearly restrictive enough”. Australian inflation rose 7% in the year to July, based on new monthly CPI At this rate it doesn’t appear CPI will peak at just shy of the 8% the RBA forecasts, given price pressures have resumed this month from the largest inflation contributors. Based on the ABS’s new monthly CPI print, some of the largest price jumps year-on-year to July were in fuel (+29.2%) and fruit & vegetables (+14.5%). The concern is that, with La Nina set to hit Australia and population growth continuing, food and housing (rent) prices will continue to rise apace. In September alone, contributors to food prices have risen markedly, as the global supply outlook has weakened amid poor crop conditions. This could tilt the RBA back toward a more hawkish stance. China warned banks about one-way bets on the weakening of the renminbi Yesterday as the onshore and offshore renminbi weakened below 7.20 versus the dollar, the China Foreign Exchange Market Self-Regulatory Body, attended by PBoC Vice Governor Liu Guoquiang, told banks in a meeting to “safeguard the stability of the market and prevent volatile movements in the exchange rate”, in particular not to make one-way bets on the weakening of the renminbi. What are we watching next? End of quarter rebalancing? We have seen aggressive moves across markets this quarter, to say the least, which brings the question of whether significant rebalancing flows are set for the quarter end this Friday. The relative bond performance has been perhaps worse than that for equities, while in FX the focus may be on possible rebalancing after a tremendous USD upsurge in Q3. Porsche shares to debut today (P911:xetr) Volkswagen set the listing price for Porsche’s shares at €82.50, which would value the company at €75 billion. The shares will begin trading today for the company and this will be the largest IPO in over a decade. Earnings calendar this week The chief action this week is up with today’s earnings reports from H&M (this morning before market open at 0700 GMT), Nike (after US market close today at 2100 GMT), and Micron Technology (after market at 2030 GMT). The earnings from Micron the most interesting to watch as we already know H&M and Nike are seeing weak demand. Micron has exposure to the consumer electronics industry and manufactures memory chips in Asia which means that the company sits in at the intersection of many interesting trends. Today: Polestar Automotive, H&M, Nike, Micron Technology, CarMax Friday: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0700 – Spain Flash Sep. CPI 0745 – ECB's Centeno to speak 0800-0815 – Multiple ECB speakers 0900 – Eurozone Sep. Confidence surveys 1130 – UK Bank of England Deputy Governor Ramsden to speak 1230 – Czechia Central Bank Rate Announcement 1230 – Canada Jul. GDP 1230 – US Weekly Initial Jobless Claims 1330 – US Fed’s Bullard (voter 2022) to speak 1430 – US Weekly Natural Gas storage change 0130 – China Sep. Manufacturing and Non-manufacturing PMI 0145 – China Sep. Caixin Manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-29-2022-29092022
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Market Focus Will Likely Be On Putin’s Warnings To The West, Nike (NKE) Reported Slightly Better Revenues And More

Saxo Bank Saxo Bank 30.09.2022 08:37
Summary:  Fresh lows return in US equities with more hawkish Fed comments and fear of earnings downgrades picking up as the Q3 earnings season draws closer. Cable extended its rally despite UK PM’s commitment to fiscal plan and weakening BOE hike expectations, while the EUR gained strength on the back of hot German CPI and uptick in ECB rate hike expectations. Talks of OPEC+ production cuts are gaining momentum, and focus today will be on China PMIs. Also watch for Eurozone CPI, US PCE data as well as Putin’s speech in the day ahead. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) fall to 22-month lows US stocks sank to their lowest levels since November 2020 after another round of Fed speakers continued with hawkish remarks, while oil maintained gains on expectations of OPEC+ cuts. Nasdaq 100 was down almost 4% at one point, but trimmed the losses before closing 2.9% lower, while the broader S&P500 met a similar fate nearing 3,600 before ending 2.1% down. All 11 sectors of the S&P 500 dropped, with Utilities falling the most and followed by Consumer Discretionary. Retail favorites Tesla (TSLA) and Apple  (AAPL)  led the declines falling 6.8% and 4.9% while chip makers followed with AMD (AMD) down 6.2% with PC demand falling away. On the upside, oil stocks like Devon Energy (DVN), and Diamondback Energy (FANG) and Occidental (OXY) moved higher. Separately the European Commission announced an eight package of sanctions that would include a price cap on Russia’s oil exports. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) climbed again After plunging sharply the day before on the Bank of England move, yields of U.S. treasury securities rose, with the 10-year note yields rising 6bps to 3.79% on Thursday.  Yields initially crept higher on bounces of U.K. Gilt yields and higher German regional CPI data, but paring their rise in the afternoon.  Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland equity markets opened higher on Thursday and pared the gain through the day and settled moderately lower, with the Hang Seng Index down by 0.5%, and CSI300 little changed. The news of the imposition of a 3-day mandatory PCR test in the financial district, Lujiazui in Shanghai due to one new Covid-19 case triggered some fears among investors. In spite of PBoC’s supportive statement coming out from its quarterly monetary meeting saying that the central bank will expand its special lending program to ensure the delivery of delayed housing projects, Chinese developers declined, with Country Garden (02007:xhkg) plunging 11.6%, Longfor (00960:xhkg) down by 7.5%, and CIFI (00884:xhkg) tumbling 16.3%.  Chinese EV maker, Zhejian Leapmotor (09863:xhkg), tumbled 33.5% in its first day of trading after an IPO priced at the bottom of a guided range.  XPeng (09868:xhkg) dropped 5.3%.  Trading in the China Internet space was mixed with Alibaba outperforming (+2.9%). Australia’s ASX200 (ASXSP200.1) likely to follow Wall Street lower: futures suggest a 0.3% fall today, aluminum stocks to be bright spark As above, on the ASX today, it’s worth keeping an eye on aluminum related stocks on the ASX including Rio Tinto (RIO) and Alumina (AWC). Meanwhile, diversified miners including the major retail favorites, like BHP (BHP) are worth watching after the Iron Ore (SCOA) price remains supported with China ramping up housing support. This morning the iron ore price (SCOA, SCOV2) pushed up ~1.1% to US$96.50. In NY BHP closed 0.6% higher, implying the ASX primary listing of BHP will likely move up, especially after the aluminum and iron ore prices rose. Cable stays bid and Euro follows The US 10-year yields as well as the dollar could not catch a strong bid on Thursday, which helped other G10 currencies gain some ground. Sterling was the strongest on the G10 board, with GBPUSD now testing 1.12 in early Asian hours. BOE’s emergency bond-buying measures however hints at a push lower in gilt yields, and GBP will likely come back under pressure if the surge in global yield resumes. This will need a focus shift back on Fed tightening as we think there is still some room for upward repricing of terminal rate Fed expectations and higher-for-longer rates. Meanwhile, expectations for an ultra-aggressive BOE hike in November cooled slightly. EURUSD also surged above 0.98 with ECB rate hike expectations for October meeting picking up after the hot German inflation, and with the ECB downplaying the chance of an emergency move to prop up Italian bonds. EURGBP was however lower from 0.8950 to 0.88. Aluminum and aluminum stocks on watch It’s worth watching aluminium related shares across the Asian-Pacific region today after the record jump in Aluminum price on the LME after Bloomberg reported plans to discuss a potential ban on new Russian metal supplies. The metal jumped 8.5% (its biggest intraday jump in record) before paring back. Crude oil (CLU2 & LCOV2) prices maintain gains Crude oil prices maintained the momentum with OPEC+ production cuts becoming a key factor going into the next week’s meeting. OPEC+ commenced discussions around an output cut with one saying it a cut is “likely”, according to Reuters sources. This comes after previous reports that Russia will likely propose OPEC+ reduces output by around 1mln BPD. Demand conditions are likely to weaken as global tightening race heats up, and this has prompted expectations for a supply cut as well. Brent futures touched $90/barrel mark but reversed slightly later, while WTI futures rose to $83/barrel before some decline later in the session.   What to consider? German inflation sparks EZ inflation fears German inflation touched double digits, as it came above consensus at 10.9% YoY for September from 8.8% YoY previously. Germany is also preparing to borrow an additional €200 billion to finance a plan to limit the impact of soaring energy costs, which could keep consumption high even as shortages loom. Up today will be the September eurozone inflation print. Expect a new record which will increase the pressure on the European Central Bank to hike interest rates by at least 75 basis points in October. The economist consensus expects that the headline harmonized index of consumer prices (HICP) will reach 9.7% YoY against 9.1% in August. The core rate is expected to climb to 5.6% YoY against 5.5% previously. The spread between the headline and the core inflation figures is mostly explained by a decrease in oil and natural gas prices in recent months. However, this is clear that inflation is becoming broad-based, including in the services sector. This means that inflation is here to stay for long. The HICP is likely to continue increasing in the coming months. A peak in inflation in the eurozone is possible in the first quarter of 2023, in our view. This is much later than in the United States. Fed speakers push for more hikes Loretta Mester remains more hawkish than the Fed’s median dot plot, and said that rate are not in restrictive territory yet and more rate hikes will be needed. No signs of concern on economy or dollar strength were noted, while inflation remained the key point of concern for her. James Bullard also made some key comments on ‘bad idea to mess’ with the inflation target while the labor market conditions remain tight and recession is only a risk. Mary Daly was more cautious, saying officials should work to avoid "inducing a deep recession." However, she still raised the bar on expectations on the Fed funds rate saying that she is comfortable with median Fed rate path projection of 4%-4.5% by year end, 4.5%-5% in 2023 (pointing to upside risks as the dot plot suggested 4.6%, or 4.5-4.75% if we talk in ranges). US initial claims come in strong again Initial claims came in lower than expected at 193k with last week’s also revised lower to 209k from 213k. Continued claims cooled to 1.347mln from 1.376mln despite the expected rise to 1.388mln. The data shows how tight the labour market is in the US and Fed's Bullard labelled today's claims metric as "super low". Meanwhile, the third estimate of Q2 GDP was confirmed to decline 0.6%, notably with consumer spending revised higher to 2% from 1.5% previously. Australian inflation rose 7% in the year to July, based on new monthly CPI At this rate it doesn’t appear CPI will peak at just shy of the 8% the RBA forecasts, given price pressures have resumed this month from the largest inflation contributors. Based on the ABS’s new monthly CPI print, some of the largest price jumps year-on-year to July were in fuel (+29.2%) and fruit & vegetables (+14.5%). The concern is that, with La Nina set to hit Australia and population growth continuing, food and housing (rent) prices will continue to rise apace. In September alone, contributors to food prices have risen markedly, as the global supply outlook has weakened amid poor crop conditions. This could tilt the RBA back toward a more hawkish stance. Australian rents to drive higher, adding to inflation woes Australia’s population growth resumed after borders reopened and business employment remains strong for the time being, at 50-year highs. New office and residential supply is expected be subdued in 2023 as interest rates rise; which supports the notion of falling vacancy rates. According to Colliers and the ABS, Sydney CBD rents rose 3.6% to $5.22 per square foot in the June quarter, driven by competition for top-quality office space. China’s manufacturing PMIs are expected to stay in the contractionary territory China’s September official NBS Manufacturing PMI and Non-manufacturing PMI as well as the Caixin China Manufacturing PMI are scheduled to release today. The median forecast of, economists surveyed by Bloomberg for the NBS Manufacturing PMI is 49.7 for September, a modest improvement from August’s 49.4 but remains in contraction territory.  Economists cite the lockdown of Chengdu and restrictive measures in some other cities during most part of the month and the weak EPMI released earlier as reasons for expecting the NBS Manufacturing PMI to stay below 50.  The Caixin Manufacturing PMI, which has a larger weight in coastal cities in the eastern region, is expected to remain at 49.5 as export-related manufacturing activities and container throughput were weak.  The consensus estimate for the NBS Non-manufacturing PMI is 52.4, staying in the expansionary territory, supported by infrastructure construction but slowing slightly in September from August’s 52.6 due to weakness in the housing sector.  On the other hand, steel production and demand data in September suggest the PMIs may potentially surprise the upside. Buying activity up in food and Agricultural instruments, stocks and ETFs Food prices are supported higher as the global crop outlook dampens for 4 reasons; concern lingers over Ukraine’s exports being cut off, South America has been hit by rains and frosts, the US has been plagued by drought and dry conditions and as Hurricane Ian made landfall in the, US conditions are likely to go from bad to worse. And lastly - La Nina is expected to hit Australia for the third year in a row. So we are seeing clients buy into Wheat and Corn. Both prices are up 20% off their lows. Secondly, buying has been picking up in agricultural stocks like General Mills (GIS) and GrainCorp (GNC). And lastly, clients are biting into agricultural ETFs like Invesco DB Agriculture Fund (DBA) and iShares MSCI Agricultural Producers ETF (VEGI). Fed preferred inflation measure, US PCE, on the radar today The Fed’s preferred inflation measure, the PCE is due today, and it will likely echo the same message as given by the last strong CPI number which has made the Fed even more hawkish in the last few weeks since the Jackson Hole. Headline numbers may be lower due to the decline in gasoline prices, but the price pressure on services side will likely broaden further. Last week, the Fed also raised its forecasts for inflation, with the central bank now seeing core PCE at 4.5% by the end of this year (it previously projected 4.3%), moderating to 3.1% next year and at 2.1% at the end of its forecast horizon in 2025, but thinks that headline PCE prices will be at its 2% target by then. Putin's speech due today after Russia annexed parts of Ukraine Vladimir Putin will address legislators after Russia signs treaties today to absorb four occupied regions, with Ukrainian forces threatening to encircle a pocket of the Donbas region. There is also growing resistance to Putin’s decision to call up 300,000 reservists. Market focus will likely be on Putin’s warnings to the West about any potential threats of using nuclear weapons, which may mean risk aversion getting another leg up. Nike sank on concerns about inventory build-up and margins Nike (NKE) reported slightly better than expected revenues and inline earnings but below expectation gross margins and a 65% surge in inventories for the North American market.  In the earnings call, the company’s CFO pledged to take “decisive action to clear excess inventory” and such efforts will have “a transitory impact on gross margins this fiscal year”.  Investors took note of the implication on demand and profitability and sold stock to more than 9% lower in the extended hour trading. Apple fell on analyst downgrade After being sold on the company’s announcement to back off plans to increase iPhone production this year on the day before, Apple’s shares fell another 4.9% yesterday after an analyst downgrade from a U.S. investment bank.  In this Market Daily Insights piece yesterday, we mentioned the warnings from Peter Garnry, Saxo’s Head of Equity Strategy, about the likelihood that Apple’s revenue could slip into negative growth for the current quarter ending Sep 30 and you can find more details of his analysis from here. In his note, Peter also warns that analysts may be way off in their estimates for the S&P 500 for Q3 and it is highly probable that there will be significant misses to the downside followed by gloomy comments from company management about the outlook on margins.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-30-sept-30092022
Philippines Central Bank's Hawkish Pause: Key Developments and Policy Stance

A Peak In Inflation In The Eurozone Is Possible| H&M’s Challenging Position And Micron's Shocking Forecast

Saxo Bank Saxo Bank 30.09.2022 09:44
Summary:  After celebrating the injection of liquidity from the Bank of England on Wednesday, global markets swooned again yesterday, taking the major US indices. Elsewhere, sterling has recovered most of the lost ground since the announcement of last week’s tax cuts on the stabilization of the gilt market, with other major sovereign yields also easing lower. The drop in yields and a consolidation in the US dollar have supported gold, which is poking higher toward important resistance.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities traded lower yesterday after hawkish remarks from Mester and Bullard that policy rates will stay higher for longer than what the market is expecting (pricing in). In addition, the market is increasingly at edge with the expectation that Russia will annex four regions of Ukrainian territory because the fear is that it could escalate the war to new levels. Nasdaq 100 futures are most sensitive to the hawkish Fed messages and tumbling growth outlook, so watch this index going into the weekend. Nasdaq 100 futures are trading around the 11,265 level this morning and 11,000 is naturally the big next level on the downside in case selling resumes into the weekend. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China markets were treading water ahead of the week-long National Day golden week holiday. Chinese developers rallied to recoup some of the recent losses following PBoC’s supportive statement coming out of its quarterly monetary meeting saying that the central bank will expand its special lending program to ensure the delivery of delayed housing projects. Country Garden (02007:xhkg) rebounded 10% after plunging 11% yesterday. Chinese EV maker, Zhejian Leapmotor (09863:xhkg), tumbled another 11% after having tumbled 33.5% yesterday on its first day of trading. Other Chinese EV names traded in the Hong Kong bourses plunged from 2% to 9%. Strong USD fades as bond yields punched lower The weak US dollar suggests that the market was more focused on rising US treasury yields during the recent upswing than the accompanying risk sentiment deterioration: yesterday, the USD weakened sharply as yields were flat to lower while risk sentiment was in the dumps. Hard to tell if some end-of-month/quarter rebalancing through today might be in play as well. A proper reversal of the recent USD bull move would require far more weakness, for example: EURUSD back above the 0.9900-0.9950 area and AUDUSD above perhaps 0.6700 (more on GBPUSD below). Next week features a full line-up of key US macro data and should bring a test of the USD’s status. Was that the climax for sterling bear market? Too early to draw conclusions here, as sterling has not yet recovered sufficient ground in the most important EURGBP and GBPUSD pairs to suggest that we have seen a climax reversal, although overnight, GBPUSD did reverse the entire plunge sparked by the announcement of the special budget last Friday by Chancellor Kwarteng, which started around 1.1200. Arguably, a close above 1.1200-1.1250 suggests a chance over reversal, though really 1.1500 was a more significant starting point for the recent slide. For EURGBP, the key support/pivot zone is 0.8750-0.8700. While there was nothing specifically supportive about the Bank of England’s emergency QE, if the logic is that the BoE saved the system from a financial crisis and that the exercise demonstrated that quantitative tightening will prove impossible elsewhere eventually (and therefore the BoE is only the first of many), sterling’s situation looks less bad if other central banks eventually follow suit. Gold (XAUUSD) Gold continues to rebound from key support at $1615 with the focus now being the critical resistance zone into 1,680-1,700 that is the departure point for this latest bear market move. While global bond yields and the USD will continue to lead the way as coincident indicators, the market has held up relatively well with geopolitical concerns (Putin’s N threat) and investors increasingly worried the FOMC with its hawkish actions may break the currency and bond market. Some signs of that were seen this week with some extreme moves in local bond and currency markets. Speculators hold a rare net short in COMEX gold futures and any further strength will trigger short covering, while total holdings in ETFs backed by bullion have declined to a 30-month low. Crude oil (CLX2 & LCOX2) Crude oil is heading for its first albeit small weekly gain in five and the first quarterly drop since 2020. The market remains troubled by forces pulling prices in opposite direction, and while the strong dollar, surging yields, and continued lockdowns in China have raised demand worries, the risk to supply continues to be a supporting theme. That focus returned on Thursday when OPEC+ said a production cut would be discussed at next week's meeting with Russia proposing a 1 mln barrels per day cut, a reduction towards which they are unlikely to contribute much as they are already producing below their quota. In addition, the combination of Russian sanctions and embargo and the US pausing its sales from strategic reserves will continue to dampen the downside risks. US treasuries (TLT, IEF) US treasury yields remained calm yesterday as we can infer that the recent wild ride in UK gilts had triggered contagion into US treasury yields, likely aggravating the recent rise toward 4.00% for the 10-year treasury benchmark before the BoE’s emergency efforts took major sovereign yields back lower. US macro data next week, including the ISM surveys and the September jobs report next Friday, will be key for the direction in US yields, with the major 3.50% level, the June high, the key downside pivot point. What is going on? Apple shares (AAPL:xnas) crater after the company announced it will skip production increase and on analyst downgrade Apple shares ended the day nearly 5% lower, helping to drag the broader market lower as it is world’s largest company by market capitalization. A Bank of America analyst cut the rating on the company to “neutral” from “buy”. Apple’s demand is hurt by the cost-of-living crisis and the earnings outlook last night from the chip manufacturer Micron Technology is indicating that demand is coming down fast. Fed speakers push for more hikes Cleveland Fed president Loretta Mester (voter this year) remains more hawkish than the Fed’s median dot plot and said that rates are not in restrictive territory yet and more rate hikes will be needed. No signs of concern on economy or dollar strength were noted, while inflation remained the key point of concern for her. St. Louis Fed president James Bullard, likewise a voter this year, said it was a ‘bad idea to mess’ with the inflation target while labor market conditions remain tight and recession is only a risk. San Francisco Fed president Mary Daly (voter in 2024) was more cautious, saying officials should work to avoid "inducing a deep recession." However, she still raised the bar on expectations on the Fed funds rate saying that she is comfortable with median Fed rate path projection of 4%-4.5% by year end, 4.5%-5% in 2023 (pointing to upside risks as the dot plot suggested 4.6%, or 4.5-4.75% if we talk in ranges). Eurozone inflation is set to hit a new record in September The September eurozone inflation will be released today. Expect a new record which will increase the pressure on the European Central Bank to hike interest rates by at least 75 basis points in October. The economist consensus expects that the headline harmonized index of consumer prices (HICP) will reach 9.7 % year-over-year against 9.1 % in August. The core rate is expected to climb to 5.6 % year-over-year against 5.5 % previously. The spread between the headline and the core inflation figures is mostly explained by a decrease in oil and natural gas prices in recent months. However, this is clear that inflation is becoming broad-based, including in the services sector. This means that inflation is here to stay for long. The HICP is likely to continue increasing in the coming months. A peak in inflation in the eurozone is possible in the first quarter of 2023, in our view. This is much later than in the United States.  Earnings recap (H&M, Nike, and Micron) H&M delivered a big miss yesterday on operating profit as input costs surprised to the upside. H&M is starting charging for online returns to save costs and the demand in China is still weak due to H&M’s challenging position in the country. Nike surprised positively on revenue but missed on earnings against estimates as margin compression has begun, and the company’s inventory is building up fast creating a potential headache going forward as consumer demand is expected to decline in the coming quarters. Micron delivered a shocking outlook for the current quarter with revenue expected at €4-4.5bn vs est. €6bn. CEE currencies under strain, likely on geopolitical unease CEE currencies are under significant pressure since the news of the pipeline explosions this week – this was likely triggered by the sabotage of the Nord Stream pipelines to Germany, which could be a prelude to the cutting off of other pipelines from Russia. EURHUF has pulled above 420 for the first time ever, EURPLN yesterday spiked to the highest level since the timeframe just after the breakout of war in Ukraine.  Hungary continues to not support new sanction efforts against Russian energy imports. In Prague, protests have broken out against the country’s energy policy, while EURCZK remains sedated by heavy Czech central bank intervention. US initial claims come in strong again Initial claims came in lower than expected at 193k with last week’s also revised lower to 209k from 213k. Continued claims cooled to 1.347mln from 1.376mln despite the expected rise to 1.388mln. The data shows how tight the labour market is in the US and Fed's Bullard labelled today's claims metric as "super low". Meanwhile, the third estimate of Q2 GDP was confirmed to decline 0.6%, notably with consumer spending revised higher to 2% from 1.5% previously. Aluminium prices bolt higher; fuelling a rally in major mining companies Aluminum prices on the London Metal Exchange briefly jumped by a record 8.5% on Thursday before retracing lower. The sudden burst which to a minor extent was replicated in zinc and nickel was driven by a Bloomberg report saying that the LME as an option is looking into whether and under what circumstances they might place a ban on Russian metal being cleared via the exchange. Any such move by the LME to block Russian supplies could have significant ramifications for the global metal markets given their importance as a supplier of the mentioned metals, which to a smaller extend also includes copper. What are we watching next? Change of course from UK government after recent events? UK Prime Minister Liz Truss and Chancellor Kwarteng will meet with the Office of Budget Responsibility today for emergency talks before they receive the first draft of fiscal forecasts from the OBR next week. The recent crisis in the UK gilt market and downward spiral in sterling could elicit a response and possible backtracking on some portion of the recent policy announcement, although Truss said as recently as yesterday that she will stay the course. The most recent YouGov political poll release yesterday shows the Conservatives trailing Labour by a whopping 33 points, the largest gap since the 1990’s. Election in Brazil at the weekendBrazilian voters go to the polls on Sunday, with left-leaning former president Lula leading strongly in the polls over the incumbent right-populist Bolsonaro, but with many fearing the risk of disorder and violence as Bolsonaro has already made claims of election fraud and has hinted at not wanting to leave office. A run-off election between the two candidates will be held on October 30 if neither gets more than half the popular vote this weekend. The Brazilian real is at the weak end of the recent range versus the US dollar. Fed preferred inflation measure, US PCE, on the radar today The data point is for August and comes nearly three weeks after the BLS CPI data for the month. It will likely echo the same message as given by the last strong CPI number which has made the Fed even more hawkish in the last few weeks since the Jackson Hole. Headline numbers may be lower due to the decline in gasoline prices, but the price pressure on services side will likely broaden further. At last week’s FOMC meeting, the Fed also raised its forecasts for inflation, with the central bank now seeing core PCE at 4.5% by the end of this year (it previously projected 4.3%), moderating to 3.1% next year and at 2.1% at the end of its forecast horizon in 2025, but thinks that headline PCE prices will be at its 2% target by then. Earnings calendar this week Today’s earnings release to watch is from Carnival which is expected to deliver strong results but there are significant downside risks to the outlook from fuel costs, staffing costs and the cost-of-living crisis hurting disposable income. Today: Carnival (postponed from last week), Nitori Economic calendar highlights for today (times GMT) 0755 – Germany Sep. Unemployment Change/Rate 0800 – Poland Sep. Flash CPI 0800 – Norway Daily FX Purchases 0830 – UK Aug. Mortgage Approvals 0900 – Eurozone Sep. Flash CPI 1230 – US Aug. PCE Deflator/Core Deflator 1300 – US Fed Vice Chair Brainard to speak at Fed conference on Financial Stability. 1345 – US Sep. Chicago PMI 1400 – US Final University of Michigan Sentiment Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-30-2022-30092022
Belarusian opposition leader proposed a collaboration to Ukraine

Podcast: The Influence Of Geopolitical Tensions On The Currencies Of Central And Eastern Europe, The Bad Apple Situation

Saxo Bank Saxo Bank 30.09.2022 12:44
Summary:  Today we look at the market stumbling once again just a day after recovering on the stabilization of global bond markets, in part on rising geopolitical unease linked to Russia, most easily spotted in CEE currencies. Sentiment also dipped on the world's largest company, Apple, seeing its shares trashed in yesterday's session on concerns for the company's growth. A startling outlook from Micron and other weak earnings results also weighed. Elsewhere, we note the interesting weakness in the US dollar as global yields were a pocket of relative calm as risk sentiment deteriorated, a shift from recent behavior. Crude oil, natural gas, metals, thoughts on whether the USD is turning here and more also on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Source: https://www.home.saxo/content/articles/podcast/podcast-sep-30-2022-30092022
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

The Data Will Affect The USD And Provide A Fresh Impetus To The USD/CAD Pair

TeleTrade Comments TeleTrade Comments 30.09.2022 13:04
USD/CAD gains traction for the second straight day, though lacks follow-through. Subdued crude oil prices undermine the loonie and act as a tailwind for the pair. Retreating US bond yields, a positive risk tone weighs on the USD and caps gains. The USD/CAD pair attracts some dip-buying in the vicinity of the mid-1.3600s and sticks to modest intraday gains through the first half of the European session. The pair maintains its bid tone for the second successive day and is currently trading just above the 1.3700 mark, well within this week's broader trading band. A combination of factors drags the US dollar to a one-week low, which, in turn, acts as a headwind for the USD/CAD pair. The spill-over effect of the UK central bank's move to calm the markets drags the benchmark 10-year US Treasury note away from a 12-year high touched on Wednesday. Apart from this, a goodish recovery in the global risk sentiment further weighs on the safe-haven greenback. That said, subdued price action around crude oil prices undermines the commodity-linked loonie and continues to lend some support to the USD/CAD pair, at least for the time being. Worries that a deeper global economic downturn will dent fuel demand offset global supply concerns and fail to assist the black liquid to capitalize on this week's goodish recovery from the lowest level since January 2022. Furthermore, firming expectations for a more aggressive policy tightening by the Fed should limit the fall in the US bond yields and favours the USD bulls. Investors seem convinced that the US central bank will hike interest rates at a faster pace to curb inflation. Hence, the focus remains on the release of the US Personal Consumption Expenditures. (PCE) - the Fed's preferred inflation gauge. Friday's US economic docket also features the release of the Chicago PMI and the revised Michigan Consumer Sentiment Index. The data, along with the US bond yields and the broader risk sentiment, will influence the USD and provide a fresh impetus to the USD/CAD pair. Traders will further take cues from oil price dynamics to grab short-term opportunities on the last day of the week
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

In The Oil Market Prices Are Rising Again And Gold Is Also Gaining

Craig Erlam Craig Erlam 30.09.2022 14:08
Oil edges higher into the weekend Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ meeting next week. There’s been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards; the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year. Brent continues to trade around the March to August lows having traded below here over the last week amid recession fear in the markets. We’re now seeing some resistance around $88, perhaps a sign that traders don’t believe OPEC+ will deliver a large enough cut to make a significant difference. Encouraging but maybe not sustainable Gold is making gains for a fourth consecutive day after a difficult start to the week. While the recovery has been encouraging, it’s hard to imagine it building on it in any significant way as that would probably require rate expectations to have peaked and inflation perhaps to have as well. While that may be the case, it’s hard to imagine pressure easing from here which may maintain pressure on the yellow metal for a little longer yet. Key resistance to the upside lies around $1,680 and $1,700, with $1,620 and $1,600 below being of interest. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude Oil Price:  A Crucial Event Takes Place In The Week Ahead

Crude Oil Price: A Crucial Event Takes Place In The Week Ahead

ING Economics ING Economics 30.09.2022 14:52
Next week all attention will be on OPEC+ as the group decides on output policy amid recent price weakness and the uncertain demand outlook. Meanwhile, the German government has announced a EUR200bn package due to surging energy prices, which includes a price cap for gas Source: Shutterstock Energy - Germany gas price cap There is increasing noise that OPEC+ will be looking to agree on an oil production cut at their meeting next week, given the broader pressure that we have seen on oil prices. However, since reports that Russia had proposed a 1MMbbls/d supply cut, there have been no suggestions from other members on the potential size of any cut. In August, OPEC+ production was estimated at around 3.37MMbbls/d below target production levels. So in reality, any cut in supply will likely be smaller than whatever figure the group announces. The latest refined product inventory data for the ARA region shows that total refined product stocks fell by 139kt over the week to 5.2mt according to Insights Global. All products saw declines with the exception of gasoil. Naphtha saw the largest fall with stocks decreasing by 144kt (or 33%) to 288kt. Although the reported decline seemed to have little impact on the naphtha crack. Meanwhile, for middle distillates, there was some relief with gasoil stocks increasing by 125kt over the week to 1.81mt. The German government yesterday announced a EUR200bn package to address surging energy prices. Part of the package will include a price cap on natural gas with further details expected to be released next month. It is planned that these measures would run through until the spring of 2024. A price cap on gas is a questionable approach, as it will do little to ensure that we see the necessary demand destruction, particularly if Russian gas flows come to a complete halt. Interestingly, Germany’s network regulator yesterday also warned that natural gas consumption was above average last week - coming in 14.5% above the 2018-2021 average. Metals – LME discussing a ban on Russian metals LME nickel and aluminium both spiked higher yesterday after it emerged that the LME is discussing potential plans to ban Russian metals for delivery into exchange warehouses. The LME is looking to launch a discussion paper on the acceptance of Russian metals in exchange warehouses which could potentially lead to tighter restrictions on the delivery of Russian metals. This is purely a discussion for now and no decision has been made yet. Providing further support to LME metals yesterday was the softer USD. However, sentiment across broader financial markets remains negative given concerns over the macro outlook. Glencore is reportedly reviewing the sustainability of operations at its Portovesme lead production plant in Italy as high-power prices affect profitability. The company suspended primary zinc production at the plant last year due to high power prices, although zinc recycling and lead production continued. Glencore produced around 159kt of lead in 2021 from its three facilities in Europe including Portovesme, although exact details of lead production from the plant are not known. Read this article on THINK TagsRussian metals OPEC+ LME Gas price cap Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Energy - Brent Crude Oil: What Could The Level Of $88 Mean?

Craig Erlam Craig Erlam 30.09.2022 16:51
Oil edges higher into the weekend Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ meeting next week. There’s been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards; the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year. Brent continues to trade around the March to August lows having traded below here over the last week amid recession fear in the markets. We’re now seeing some resistance around $88, perhaps a sign that traders don’t believe OPEC+ will deliver a large enough cut to make a significant difference. Encouraging but maybe not sustainable Gold is making gains for a fourth consecutive day after a difficult start to the week. While the recovery has been encouraging, it’s hard to imagine it building on it in any significant way as that would probably require rate expectations to have peaked and inflation perhaps to have as well. While that may be the case, it’s hard to imagine pressure easing from here which may maintain pressure on the yellow metal for a little longer yet. Key resistance to the upside lies around $1,680 and $1,700, with $1,620 and $1,600 below being of interest. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges higher, gold rally continues - MarketPulseMarketPulse
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

OPEC Members Have Started Talking About Cuts With Russia| Markets Continue To Be Beaten Out And More

Saxo Bank Saxo Bank 03.10.2022 08:46
Summary:  There are some big macro worries as we enter the final quarter of the year. We are looking at not just how the UK crisis could develop further, but also which other country/market could succumb to the US yields or dollar strength as market disruptions are likely to widen. Geopolitics also remains a key focus amid Putin’s military losses, as this could mean he could further try to choke Europe and the world of key supplies. A significant production cut from OPEC+ is already making headlines, but China markets are away for the Golden Week. Reserve Bank of Australia may need to delay slowing down its pace of rate hikes, and brace for more profit warnings as well ahead of the Q3 earnings season which goes into full swing in two weeks.   US ISM indices and payrolls data to continue the economic optimism, spurring risk off in the markets As the US economy continues to stay strong despite the aggressive Fed tightening, markets continue to be beaten out. Some respite was seen in the US yields and the US dollar last week, but data due this week could bring further risk-off with markets starting to price out some rate hike expectations for next year with the risks emerging from crisis in UK and possibly more crisis coming due to the run higher in US yields and USD. Data will likely show continued strength in the US economy and labor markets, especially ahead of the midterm elections. ISM manufacturing for September is due in the US session today, and Bloomberg consensus estimates signal some signs of a slowdown to 52.1 in September from 52.8 in August – that should likely be underpinned by improving supply chains, while new orders should remain upbeat and keep the sentiment positive. ISM services follows on Wednesday, and may also moderate as the services sector cools down from a peak, but will stay robust. Finally, the payrolls data on Friday is set for another positive surprise after sub-200k weekly jobless claims last week. Bloomberg consensus estimate as of now stand at gains of 250k for September from 315k last month, with unemployment rate and average hourly earnings steady at 3.7% and 0.3% respectively. Russia’s counter-attack risks Less than a day after Russia’s annexation of four Ukrainian cities and claims for these to be Russian territory, parts of these cities have been recaptured by Ukraine over the weekend. That is another military setback for Russia, and would possibly mean that Putin would be keen to press Europe’s energy nerves further as winter demand for energy starts to flow in. There are two key risks to highlight here: 1) Russia could cut supplies from Ukraine as well further to choke Europe and the world of energy and food supplies; and 2) there is an imminent threat of use of some low-yield nuclear weapons given how desperate Russia is now. Any of these moves could spur further risk off in the markets this week, and potentially, the effect will spill over to energy and agriculture markets, so think oil, gas, wheat, soybeans and the likes. OPEC+ meeting on October 5 may bring production cuts Oil prices were supported at the end of last week amid hopes of a production cut by OPEC+ members at their meeting this week. There were some reports that OPEC members have started talking about cuts with Russia proposing a 1 mln barrels per day cut, a reduction towards which they are unlikely to contribute much as they are already producing below their quota. At its last meeting on September 5, the group agreed a token reduction of 100,000 barrels a day for October, despite calls from consuming nations to help tame rampant inflation by keeping the taps open. With gasoline prices retreating in the US, some of that external pressure may now be easing, and that further raises the prospects of some price-supportive action. Reserve Bank of Australia may step away from moving to a slower rate hike pace The Reserve Bank of Australia is scheduled to announce its next rate decision on Tuesday, October 4. Governor Lowe had previously signalled that the pace of rate hikes is likely to slow from here after four consecutive rate hikes of the magnitude of 50bps. However, money markets and Bloomberg consensus forecast is still calling for another 50bps rate hike at the October meeting suggesting that RBA may delay taking the foot off the pedal just yet. The recent slide in the Australian dollar and worries over a turmoil in global financial markets may prompt the policymakers to front-load more of the rate hikes while the economy is still holding up. Retail sales data last week was upbeat while the first monthly inflation data reading at 6.8% is only slightly off the 7% levels seen in the preceding month. So, even as a monthly meeting can ensure a steady pace of rate hikes even with a smaller 25bps rate move, policymakers would possibly prefer to make a larger move this week to provide some support to the AUD. Likewise, the Reserve Bank of New Zealand is also expected to hike rates by another 50bps at their October 6 meeting. Japan’s Tokyo CPI to see impact of reopening Japan’s inflationary pressures are likely to continue to reign amid higher global prices of food, electricity as well as a weak yen propping up import prices. Bloomberg consensus estimates point to a slightly softer headline print of 2.7% YoY from 2.9% YoY previously, but the core is pinned higher at 2.8% YoY from 2.6% YoY previously. Further, the reopening of the economic from the pandemic curbs likely means demand side pressures are also broadening, and services inflation will potentially pick up as well. Slow earnings week but watch for further profit warnings ahead of the Q3 reporting season Last week, Biogen and its Japanese partner Eisai announced positive results in a phase-3 study on a treatment that slows Alzheimer’s disease. Analysts are eager to learn more about the treatment from the company’s presentation of more data at the Clinical Trails on Alzheimer’s Disease conference on Nov 29. For Q3 results, analysts expect Biogen’s revenue and adj. EPS to fall by around 11% to 12% Y/Y. Analysts are expecting beverage company, Constellation Brands’ (STZ:xnys) revenues to grow at 5.6% Y/Y in the quarter ending Aug 31, led by its core bear portfolio of Modelo Especial and Corona Extra which recent channel surveys from Beverage Bytes and Nielsen suggested outperformance. The consensus estimate is optimistic and anticipates over 18% Y/Y growth on Adj. EPS with margin expansion. Tesco’s (TSCO:xlon) FY23 1H results (ending Aug 31), scheduled to release this week, are worth watching it can let us have a glimpse of the state of U.K. consumers and some insights into the latest development in the inflation in the U.K. Analysts are expecting the U.K. grocer to report margin compression as a result of high energy costs and wage increases.    Key economic releases & central bank meetings this week Monday, Oct 3 Japan Tankan survey (Q3)ISM US manufacturing survey (Sep)Indonesia inflation (Sep) Tuesday, Oct 4 Australia home loans, building permits (Aug)Australia RBA policy decisionEurozone PPI (Aug)US factory orders, JOLTS (Aug) Wednesday, Oct 5 ISM US non-manufacturing survey (Sep)S Korea inflation (Sep)New Zealand RBNZ policy decisionPhilippines inflation (Sep)Thailand inflation (Sep)Australia retail sales (Aug)Germany trade balance (Aug)ECB non-monetary policy meetingUS MBA mortgage applications/30-year mortgage rateUS trade balance (Aug), ADP employment (Sep)Canada trade balance, building permits (Aug) Thursday, Oct 6 Australia trade balance (Aug)Taiwan inflation (Sep)Germany factory orders (Aug)UK & eurozone construction PMIs (Sep)Eurozone retail sales (Aug)US jobless claims Friday, Oct 7 Japan household spending (Aug)Germany industrial production (Aug)UK Halifax house prices (Sep)Canada labour market statistics (Sep)US employment report (Sep)US consumer credit, wholesale inventories (Aug)   Key earnings releases this week   Tuesday: Biogen Wednesday: Keurig Dr Pepper, Aeon, Lamb Weston, Tesco, RPM International Thursday: Seven & I, Conagra Brands, Constellation Brands, McCormick & Co   Source: https://www.home.saxo/content/articles/macro/saxo-spotlight-3-oct-2022-03102022
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

The World’s Top Oil Exporter Expects Demand To Recover

TeleTrade Comments TeleTrade Comments 03.10.2022 09:28
Following the $1.50 bullish opening gap, WTI has entered a phase of upside consolidation just above the $81 mark, as investors digest the reports of sharp output cuts by OPEC and its allies when they meet on October 5. Various media reported cited that the OPEC+ is considering slashing production by more than 1 million barrels a day but the alliance delegates said a final decision on the size of the cuts won’t be made until Wednesday. Further, Reuters reported that Saudi Arabia is considering raising prices for most crude grades it sells to Asia in November, as the world’s top oil exporter expects demand to recover and Chinese refineries to increase output. According to the median of the responses of five refining sources surveyed by Reuters, “the November official selling prices (OSP) for flagship Arab Light crude may rise by 25 cents a barrel.” At the time of writing, the US oil is adding 2.20% on the day to trade at $81.18, having eased from the intraday highs of $81.71. The black gold has kicked off a fresh quarter on the right footing after losing 25% of its value last quarter. On an hourly timeframe, WTI is defending gains above the flattish 50-Hourly Moving Average (HMA) located at $80.97. A sustained break below the latter will call for a retest of the next support levels around $80.50. However, the Relative Strength Index (RSI) holds above the midline, suggesting that the further upside appears more compelling. WTI: Hourly chart
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

What Can Affect Crude Oil Price This Week? OPEC+ Meets This Wednesday

ING Economics ING Economics 03.10.2022 13:20
Oil prices have started the week on a strong footing, with expectations that OPEC+ will announce a large supply cut when they meet on Wednesday. In addition, the European gas market is facing fresh supply disruptions due to Russia making further cuts in gas flows Energy- OPEC+ looking to cut output OPEC+ will meet in person on Wednesday to discuss output policy for November. And growing noise around what the group will do is pushing oil prices higher at the moment. There are growing expectations that the group will announce a large cut, with suggestions OPEC+ could agree on a reduction of more than 1MMbbls/d. This would be the biggest output cut seen from the group since the peak of Covid. However, if the group were to announce a reduction of around 1MMbbls/d, it is important to remember that the group is already producing well below their production targets and so the actual cut would likely be much smaller. There are only a handful of producers who are hitting their production targets and so it is likely that only these producers would have to make a cut. According to IEA numbers, OPEC+ output in August was 3.37MMbbls/d below target output. According to reports, Chinese consultant JLC has said that 15mt of refined product export quotas have been released to refiners. 13.25mt of quotas can apparently be used for clean product exports, whilst the remaining 1.75mt is for low sulfur fuel oil. In addition, it seems as though unused quotas will be able to be rolled over into the first quarter of next year. There has been plenty of market talk about Chinese refined export quotas but still no official confirmation from the government. There have been further European gas supply disruptions over the weekend. Gazprom has halted gas flows to Italy which come via Austria. Gazprom has blamed the stoppage on regulatory changes from Austria and stated that the grid operator did not confirm transport nominations. The Austrian government has said that Gazprom has not signed necessary contracts. Involved parties are apparently looking to fix the issue. In addition, Gazprom is also cutting gas flows to Moldova by 30%, blaming the reduction on Ukraine’s force majeure for gas transit through the Sokhranivka entry point. Furthermore, Gazprom has said that it has the right to terminate the current supply contract for Moldova at any time given that an agreement on the settlement of historic debts has not been reached.   Metals – zinc inventory withdrawals continue Both LME and SHFE zinc have continued to see large inventory withdrawals over the past few weeks. SHFE zinc stocks dropped by nearly 18.1kt over the last week to 37.7kt, whilst stocks over the third quarter have declined by nearly 100kt, reflecting some tightness in the physical market. Meanwhile, LME zinc stocks also fell by around 7.9kt over the last week to 53.6kt- the lowest levels in more than two years. These LME inventory declines have proved supportive for time spreads with the cash/3M spread spiking to a backwardation of US$46.25/t on Friday. Speculators increased their net bearish position in COMEX gold by another 8,334 lots over the last week, pushing their net short position to a fresh 3-year high of 41,300 lots as of 27 September. Meanwhile, investors also continued to liquidate their gold holdings with the total known ETF holdings falling by another 1.1m oz over the last week. ETF gold holdings have dropped by around 2.8m oz over September and around 7.3m oz over the third quarter. Investor demand for gold has dropped significantly over the last few months due to rising interest rates; however physical demand from both central banks and retail consumers continues to be healthy. Agriculture – USDA reports tighter corn stocks In its quarterly grains stocks report, the USDA reported US corn inventory stood at around 1.38b bushels as of 1 September; while this is higher than year ago levels of 1.24b bushels, the market was expecting an even higher number of around 1.5b bushels. The agency also reported that soybean inventories stood at around 274m bushels, which was above market expectation of around 243m bushels. As for wheat, the USDA estimated stocks at around 1.78b bushels, marginally lower than the 1.79b bushels that the market was expecting. Speculative net longs in both CBOT soybean and corn dropped over the last week due to the pessimistic economic environment. CFTC data shows that managed money net longs in CBOT soybean declined by 9,860 lots over the last week to 94,831 lots as of 27 September. Similarly, money managers trimmed their net long position in CBOT corn by 10,055 lots over the last week, leaving then to hold a net long of 237,854 lots. Read this article on THINK TagsZinc Russia-Ukraine OPEC+ Natural gas Grains Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

If OPEC+ Doesn't Apply A Significant Supply Cut, Crude Oil Prices Could Go Down

ING Economics ING Economics 04.10.2022 07:31
All attention remains focused on Wednesday’s OPEC+ meeting, where expectations are for the group to announce a large cut. Failure to deliver this could put some immediate downward pressure on oil prices. Meanwhile, the EU continues to work towards agreeing a price-cap for Russian oil Source: Shutterstock Energy- expectations grow for large OPEC+ cut Oil prices saw significant strength yesterday. ICE Brent managed to settle almost 4.4% higher on the day to close at US$88.86/bbl. Growing noise and expectations of a large supply cut from OPEC+ has pushed the market higher. However, as we have mentioned on a number of occasions, whilst OPEC+ might announce a large cut (in excess of 1MMbbls/d), in reality, the cut could be much smaller. This is due to most OPEC+ members producing well below their target production levels. And so there are only a handful of members who will actually need to reduce output if the group announces a large cut. Wednesday’s meeting will see oil ministers meeting in Vienna and this includes Russia’s deputy prime minister (who is also the former energy minister), Alexander Novak. Whilst the US has sanctioned Novak, as of yet the EU has not done so. According to preliminary numbers from Bloomberg, OPEC supply increased by 230Mbbls/d over September to average 29.89MMbbls/d. This increase was driven largely by Libya, whose output grew by 120Mbbls/d. However, looking at OPEC-10 (OPEC members who are part of the OPEC+ supply deal), their output averaged 25.53MMbbls/d over the month, well below their target production of 26.75MMbbls/d. The EU is still working towards an agreement on a G-7 price cap. The idea is to have a preliminary agreement in place before EU leaders meet on 7 October. But it appears that there are difficulties in reaching a consensus, with Greece, Cyprus and Malta concerned about the impact such a cap will have on shipping oil, given that they have large shipping industries. Hungary has also proved to be an obstacle when it comes to the price cap. The G-7 wants the cap on Russian oil prices to come into effect prior to the EU’s ban on Russian crude oil, which is due on the 5 December.   Metals – aluminium premiums soften in Japan Major aluminium buyers in Japan will likely pay the lowest premiums on imported metal in nearly two years, reflecting weakening consumption, especially from the auto sector. At least two buyers have agreed to pay $99 a tonne for supplies this quarter, 33% lower than the prior three months as demand for the light metal continues to soften amid macroeconomic concerns. Japan's manufacturing PMI has dropped from its recent peak of around 56 in March 2022 to around 50.7 in September, reflecting a slowdown in the manufacturing sector. The trend is largely similar to Western markets, where the European duty-paid aluminium premium has softened to US$390/t compared to US$490/t at the start of September and nearly US$518/t at the end of 2Q22. Iron ore prices came under pressure as China’s latest stimulus measures failed to lift sentiment in the market. China’s financial regulators told the biggest state-owned banks to extend at least 600 billion yuan ($85 billion) of net financing to the real-estate sector as steel demand has been hit by the property slowdown and Covid-19 lockdowns. Agriculture – uncertainty over Black Sea supplies supports wheat CBOT wheat has been trading firm over the past few days and made a fresh 3-month high of more than US$9.3/bu yesterday as Russia’s illegal annexation of some Ukrainian regions has pushed up supply risks for Ukrainian wheat shipments from the Black Sea under the UN’s Black Sea Grain Initiative. Under the deal, Ukraine has shipped around 5.5mt of agri products (mostly grains) through its three ports since the start of August and plans are to increase shipments to 5mt per month. Earlier, Ukraine’s Agriculture Ministry reported that the local grain harvest has dropped by around 44% YoY to 26.1mt in the season so far. The wheat harvest is nearly complete at 19.2mt (down 40% YoY), whilst the corn harvest has just started with 0.9% of harvesting completed so far compared to around 13% at this stage last year. Read this article on THINK TagsRussian oil price cap OPEC+ Iron ore Grains Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

The Weakening Of Confidence In The British Government| Oil Prices Extended Gains And More

Saxo Bank Saxo Bank 04.10.2022 09:09
Summary:  After a series of positive surprises on US economic data last week, the disappointment from the ISM manufacturing was a big deal for the markets. US Treasury yields slumped, with rising expectations of an earlier Fed pivot which we think may be premature. But that helped equity markets close higher, more a signal of positioning rather than expectations. UK’s tax cut U-turn instilled a fresh bid in sterling, but further impeded confidence in the government. Oil prices extended gains and Gold also reclaimed the $1700-mark. On watch today will be how the Reserve Bank of Australia transitions to a slower rate hike pace. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rally over 2% US stocks rallied for the first day of the quarter with the Nasdaq100 up almost 2.4%, and the S&P500 up about 2.6%, which is the best gain since July 27. It comes as the 10-year US Treasury yield rolled over to trade at around 3.65% (after topping 4% at one-point last week). The risk-on mood was fueled by several things; firstly, the UK government did a U-turn and will reverse plans to scrap the top rate of income tax. Secondly, the United Nations called on the Fed and other central banks to halt interest rates hikes. And thirdly, what also boosted sentiment was that two Fed speakers at the weekend, Brainard and Daly were reportedly discussing the downside of hiking too fast. And fourthly, weaker than expected US economic news came out with; US manufacturing falling for the third time in four months. As for the S&P500, the technical indicators; the MACD and the RSI also remain in oversold territory, which supports the notion that some investors believe a short-term rebound may be seen perhaps amid the risk-on mood. However, caution still remains in the air ahead of further Fed's hikes. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) The US Treasury yields retreated on Monday as a subdued ISM manufacturing print led to calls of slower Fed tightening and an earlier Fed pivot, which had already been building last week as well due to the risk of wider market disruptions as things have started to break. The reversal of the UK tax cut also supported Gilts, and some pass-through was seen to the US Treasuries. 2-year yields declined over 16bps to 4.11%, while the 10-year was down 19bps to 3.63%. Australia’s ASX200 (ASXSP200.1) poised to raise 1.5% with a focus on oil stocks Commodities will be focus on the ASX today with Oil and LNG stocks like Woodside (WDS), Santos (STO) set to see some action after the oil and gas prices jumped 5%. Other stocks to watch include Worley (WOR) who services the energy sector. Iron ore companies will be watched as well, supported higher by the iron ore price jumping 1.8% to US$94.50. So it’s worth watching if BHP, RIO and CIA can extend their short-term uptrend. AUDUSD rallies back to 0.6516 ahead of RBA’s expected 0.5% hike Australia’s RBA is likely to make another jumbo rate hike and take rates up by 50 bps (0.5%) to 2.85% on Tuesday (which is what consensus thinking is). And then after that, the RBA is likely to move in smaller increments, according to interest rate futures and what RBA Governor Phillip Lowe signaled he wants. With the majority of Australian mortgages at floating-rates, and wage growth being stronger, the RBA’s thinking is that most Aussies will be able to sustain the higher rates as a lot of Australian made extra mortgage repayments amid the lockdowns, as pulled back on discretionary spending. However there are about 2.5 million Aussies who have no buffer. And 9.8 million Aussies have mortgages. So we still think a property pull back might be on the cards. It’s the magnitude of the pull back that is being questioned. The technical indicator, the MACD suggests the AUDUSD could rally if the RBA proceeds with a likely 0.5% hike. However over the long term, our house view remains bearish on the AUDUSD until Fed hikes cool, and commodity demand picks up from China. GBPUSD made a strong recovery, will it last? Cable was seen advancing above the 1.13 handle in early Asian hours on Tuesday as it extended Monday’s gains following announcement of plans to scarp the tax cut by the UK government. A softer dollar also supported pound’s gains, amid a slide in US Treasury yields. However, more Fed tightening is still in the cards and the lack of trust in the new UK government cannot be ignored even if the tax policy has been reversed for now. Focus on the BOE meeting on November 3 where 115bps rate hike is priced in, lower than last week’s pricing of 150bps. However, a full-budget statement will be released before that and further austerity measures, if included, can bring fresh downside for the sterling. EURGBP slid below 0.8700. Crude oil (CLX2 & LCOX2) extends gains on OPEC+ chatter Crude oil trades higher ahead of Wednesday’s OPEC+ meeting in Vienna as the alliance is considering a production cut of more than 1 million barrels/day to support prices following a 25% slump during Q3 2022. That would be the biggest cut since the pandemic with OPEC+ slashed production by 10 million barrels/day as demand collapsed. WTI futures rose above $83/barrel while Brent was close to $90. With several OPEC+ producers, including Russia, producing below target, and only Saudi Arabia may be able to limit production without a loss in additional market share. Meanwhile, expectations of an earlier Fed pivot also stabilized demand weakness expectations. Gold (XAUUSD) reclaims 1700 on lower US yields Gold extended recent gains as yields on Treasuries continued to decline. After the 10-year yields were seen topping the 4% level at one point last week, they are now off about 40bps to end at 3.63% yesterday. Meanwhile, a softer dollar and rising geopolitical tensions have also brought back investor demand for the yellow metal. A weaker ISM manufacturing print yesterday (read below) has also increased calls for an earlier Fed pivot, which we think may be premature. But the increasing calls for a recession have meant gains for Gold which was last seen back at $1,700/oz.   What to consider? US ISM manufacturing disappoints The headline for September’s US ISM manufacturing came in weaker than expectations at 50.9 from the prior month’s 52.8 and expected 52.2. Both employment and new orders both dropped into contractionary territory printing 48.7 (exp. 53.0, prev. 54.2) and 47.1 (prev. 41.3), respectively. The report showed that higher interest rates are starting to weigh on business investment sentiment, at least in the interest rate sensitive sectors. Still, the inflationary gauge of prices paid declined to 51.7 (exp. 51.9, prev. 52.5) falling for the sixth straight month. Supplier delivery times suggested some easing on the supply chains, but overall the report indicated the case of a slowdown in the US economy as rapid Fed tightening continues. UK scraps plans to cut taxes The UK government confirmed reports it will not go ahead with the abolition of the 45p rate of income tax but they are committed to borrowing extra over the winter to help with the ongoing energy crisis. The Chancellor told BBC the proposal was "drowning out a strong package", which includes support for energy bills, cuts to the basic rate of income tax, and the scrapped increase in corporation tax. However, he saw the abolition of 45p tax rate as a distraction from the overriding mission, and thus decided to remove it. This puts water on the Bank of England’s bond-buying, and exposes further the cracks in UK policymaking, thus suggesting that the UK assets are not out of the woods. A full-budget, which has now been brought forward to before the next BOE meeting on November 3, could include more tax cuts. Fed pushes back on an earlier pivot Fed’s NY President John Williams repeated inflation is too high and the Fed's job is not done, also saying that the monetary policy is still not in restrictive zone, pushing back on some calls for an earlier Fed pivot. He acknowledged signs of a slowdown in the housing sector or the consumer and business investment spending, but nothing that could deter the Fed from fighting inflation. On forecasts, he sees inflation likely down to 3% by next year (median view for Core PCE 3.1%), and the US is likely to see unemployment rise to 4.5% by end of 2023 (median view 4.4%). Thomas Barkin (2024 voter) made the case for more inflation in the post-pandemic world, noting that the Fed must consider global developments, but the focus is on the US. Japan’s Tokyo inflation accelerates further Japan’s September Tokyo CPI came in at 2.8% YoY, a notch softer than last month’s 2.9% YoY and in-line with expectations, but the core-core (ex-fresh food and energy) print accelerated to 1.7% YoY from 1.4% YoY, also coming in ahead of expectations at 1.4% YoY. Higher global food and energy prices along with a record weak yen has brought import price pressures on Japan’s economy, and this print hints at further gains in CPI on the horizon. While the pressure on the Bank of Japan to hike rates may have eased for now as US yields are easing, but there is still more Fed tightening in the pipeline and fresh pressures cannot be ignored. Reserve Bank of Australia may step away from moving to a slower rate hike pace The Reserve Bank of Australia is scheduled to announce its next rate decision on Tuesday, October 4. Governor Lowe had previously signalled that the pace of rate hikes is likely to slow from here after four consecutive rate hikes of the magnitude of 50bps. However, money markets and Bloomberg consensus forecast is still calling for another 50bps rate hike at the October meeting suggesting that RBA may delay taking the foot off the pedal just yet. The recent slide in the Australian dollar and worries over a turmoil in global financial markets may prompt the policymakers to front-load more of the rate hikes while the economy is still holding up. Retail sales data last week was upbeat while the first monthly inflation data reading at 6.8% is only slightly off the 7% levels seen in the preceding month. So, even as a monthly meeting can ensure a steady pace of rate hikes even with a smaller 25bps rate move, policymakers would possibly prefer to make a larger move this week to provide some support to the AUD. Likewise, the Reserve Bank of New Zealand is also expected to hike rates by another 50bps at their October 6 meeting.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-4-oct-04102022
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

Forecasts For Q4: The Power And Gas Crisis Will Reach Its Peak

Saxo Bank Saxo Bank 04.10.2022 09:16
Summary:  The macropolitical and economic landscape has sent freezing weather in over the financial markets. How will you navigate the cold winter? An Executive Summary  Our outlook for Q4 2022 simply recognises the reality that winter is coming, in both the literal and figurative senses. First is the literal sense as Europe and the UK in particular brace for the impact of a winter season that will likely bring with it an economic winter. The power and gas crisis will reach peak impact due to the increased demand during winter heating season, even if prices have fallen considerably. Our macro strategist Christopher Dembik focuses on how Europe can absorb the tremendous headwinds of the energy crisis without turning the lights out entirely, with observers excessively pessimistic on the European outlook. This will include reducing demand through more efficiency, longer-term investments in nuclear, and better buildout of the necessary infrastructure for the green transformation.  In China, our market strategist Redmond Wong notes that the focus on renewables is far less intense. China has moved to secure coal supplies amidst the spike in oil and especially LNG prices in recent quarters, preferring to focus on more efficient use of its coal-fired baseload capacity and the most aggressive buildout of nuclear power of any major economy. For the rest of developed and emerging Asia, market strategist Charu Chanana notes that the soaring prices for LNG have altered the energy security for the region, to the detriment of weaker economies. The response will come in a variety of forms, from Japan’s renewed interest in nuclear despite the 2011 Fukushima disaster, to the intriguing prospect of energy increasingly trading in non-US dollar currencies, as already seen in India’s purchase of Russian crude with roubles. Our Australian market strategist Jessica Amir zeroes in on the factors driving a renaissance of interest in nuclear energy and looks at where to find the companies and ETFs in a rather difficult-to-navigate nuclear investment space.  Now on to the chief driver of asset valuations since the Fed’s dramatic pivot in November of last year: the trajectory of monetary policy. The coming quarter and first part of winter are likely to bring what Saxo CIO Steen Jakobsen dubs “peak tightness”. The market will finally manage to catch up to where the peak Fed rate is likely to rise by early next year, after getting it so wrong in hoping for a policy pivot toward decelerating tightening pressure in Q3. In turn, that policy tightness will lead to a recession, already on the way in Europe but spreading elsewhere next year, eventually even to the US, where the economy has proven far more resilient than the market expected.   In equities, the emphasis from the head of equity and quant strategy Peter Garnry is on how the coming winter will inevitably drive recession risks, as already seen with the pressure on consumer and discretionary stocks. He also explores how the extraordinary pressure on Europe can drive necessary innovation that should allow the continent to come out the other side with a far more competitive economy. Still, an overriding risk for growth and equity valuations is the cost of de-globalisation, which will reverse many of the trends in equities and the supply chains that companies have hyper-tuned over the last 12 years.  Head of commodity strategy Ole Hansen sees less drama for commodities relative to the intense volatility in the months since Russia invaded Ukraine, as ongoing supply concerns vie with shrinking demand concerns for supremacy. One interesting twist in Q4 will be how the crude oil market absorbs a halt of the Biden administration’s release of US strategic reserves if this proceeds according to plan in October.   In the FX outlook, John Hardy, the head of FX strategy, asks whether peak tightness in the anticipated trajectory of the Fed rate hike cycle will likely also bring peak US dollar, which has provided its own wintry pressure on global liquidity and asset prices for the last eleven months.  Elsewhere in FX, will the market force the Bank of Japan to capitulate on its yield-curve-control policy, possibly setting up the yen for spectacular volatility this coming quarter? It’s also worth noting that this is the third quarter running in the massive divergence of the JPY weakness relative to Chinese yuan (CNH and CNY) strength, the latter still in relative terms despite the yuan being allowed to slip considerably lower versus the strong USD in Q3; it’s an important and tense situation that remains unresolved.  In crypto, the market failed to revive in the quarter even with a much-anticipated Ethereum platform shift to proof-of-stake from proof-of-work. As our crypto strategists Mads Eberhardt and quant strategist Anders Nysteen suggest, the risk of a “crypto-winter” continues as global liquidity dries up on the headwind of policy tightening, not to mention the fear of stricter regulation of the space. Still, there are plenty of bright spots, with burgeoning innovation in the industry finding new applications for crypto-related blockchain technology.  Finally, this outlook also features the usual rundown of the longer-term technical outlook for critical assets, as we revisit the critical US 10-year treasury yield chart, the US S&P 500 index and where the ultimate depths of this bear market may lie, and the EURUSD exchange rate after the symbolic parity level was reached—and then some—on the downside in Q3.   We wish you a safe and prosperous Q4. Given the stark challenges that lie ahead for asset markets in a world beset with grinding supply side challenges, and as policymakers clamp down to fight inflation, it’s a difficult time. At the same time, it’s worth keeping in mind that opportunity and longer-term market returns rise as a function of deteriorating current asset prices.      Source: https://www.home.saxo/content/articles/quarterly-outlook/q4-2022-outlook-winter-is-coming-04102022
The release of Chinese GDP, Bank of Canada interest rate decision and more - InstaForex talks the following week (part I)

China Intends To Increase Investment In Green Transformation

Saxo Bank Saxo Bank 04.10.2022 09:27
Green transformation initiatives started in 2007 China has set goals of gradually slowing the growth of carbon emissions toward 2030, when emissions are expected to reach their peak and then start falling, reaching carbon neutrality by 2060 . As early as 2007, China launched its first National Climate Change Programme which raised questions about the country’s long-adopted development model since the 1980s of exporting energy-intensive, pollution-intensive, and resource-intensive products. In a subsequent 2008 policy paper, the Chinese policymakers spelled out plans to limit the growth of high energy-intensive and emission-intensive export industries. China started rolling out measures in 2007 to close down some of the country’s thermal electrical generating, iron-smelting, and steelmaking capacities, as well as thousands of small coal mines, papermaking and chemical plants, and printing and dyeing mills. At the same time, it promoted renewable energy, aiming to bring it up to 10 percent of national primary energy consumption . The proportion of coal in China’s primary energy consumption fell from 72.4 percent in 2005 to 55 percent in 2021; the proportion of renewables reached 15 percent (of which 8 percent was hydropower, and 7 percent mainly solar and wind) . The proportion of oil and natural gas accounted for 19 percent and 9 percent of total primary oil consumption respectively in 2021. (Figure 1) Figure 1: China’s primary energy consumption by fuel Source: Saxo Markets & BP Statistical Review of World Energy 2022 China’s oil production peaked in 2015  The output of oil and natural gas in China peaked in 2015. Finding economically viable domestic new oil and natural gas resources has been difficult, and China’s three oil and gas giants have seen their capital expenditures in oil and gas exploration and development declining since 2014 (Figure 2). Figure 2. PetroChina, Sinopec, and CNOOC combined production and capex Source: Source: Collins, G (2022). China’s Energy Import Dependency: Potential impacts on sourcing practices, infrastructure decisions, and military posture. Heavy reliance on seaborne import of oil and natural gas While China has abundant coal reserves and is close to being self-sufficient in coal, this is not the case for oil and natural gas. As the economy grows, China has become increasingly reliant on importing oil and natural gas (Figure 3). China is importing over 70 percent of its oil consumption and more than 40 percent of its natural gas . Combining these oil and gas imports and presenting them as crude oil equivalent, it will take 2,400 super tankers to ship them annually. Most of the oil and natural gas imports are in fact seaborne (oil tankers or LNG vessels), and not through overland pipelines. Without a formidable blue ocean navy, China’s policymakers are wary about the national security implications of having been so dependent on importing seaborne energy cargos. A question that often comes up is what if adversarial sea powers deny China access to the Strait of Malacca? Figure 3. China’s fossil energy deficit by energy source Source: Collins, G (2022). China’s Energy Import Dependency: Potential impacts on sourcing practices, infrastructure decisions, and military posture. Runaway commodity inflation has accelerated the determination to reduce reliance on importing oil and natural gas National security aside, oil and natural gas are priced and settled in US dollars. The rise in the prices of oil and natural gas, together with increases in the prices of other commodities, have contributed to a sharp deterioration in China’s commodity terms of trade. IMF economists estimated this to have subtracted 4.7 percentage points from China’s GDP between April 2020 and April 2022 (Figure 4).  Figure 4. China’s Commodity Terms of Trade Source: IMF. https://data.imf.org/?sk=2CDDCCB8-0B59-43E9-B6A0-59210D5605D2 Developing clean coal technology is of paramount importance The rise in oil and natural gas prices has further increased China’s determination to accelerate its green transformation, not only resorting to the use of a larger proportion of renewables and nuclear power, but also the development of clean coal technology. Policymakers in China emphasise the reliance on coal as the primary source of energy; the focus of the green transformation is to develop and apply more advanced technology to increase efficiency, lower emissions, and capture carbon when burning coal to generate power . China’s President Xi said carbon reduction in China “must be based on the basic national conditions of rich coal, poor oil and little gas” and that the “coal-dominated energy structure is difficult to fundamentally change in the short term”.   China’s solar plants have on average 1,450 to 1,750 hours a year in which they have sufficient sunlight to generate power. In other words, 80–84 percent of the time solar plants do not have sufficient sunlight to generate power. Windmills fare only slightly better with about 2,000 hours a year (i.e., about 23 percent of the time) on average where the wind is strong enough for power generation; for the other 77 percent of the time windmills are idle . The intermittent nature of solar and wind power requires energy storage which is very expensive. The energy density of a battery is only 260 kWh/m3—much lower than the 8600 kWh/m3 of gasoline. Using batteries to store energy from solar and wind plants will require a huge number of batteries, and will drive the price of lithium, cobalt, and nickel to prohibitive levels. Pumped hydro storage is more economical but it requires lots of space and water if applied on large scale. Both water and space are scarce in China.  Nuclear is a reliable source of baseload electricity, but it has its disadvantages. These include the large amount of initial investment, lengthy years of construction, reliance on imports (on average 15 percent of key components and technology are imported), and the need for a lot of water for cooling. As water is scarce in China, most of China’s nuclear plants are located in coastal areas in which cooling can be done with seawater. In inland China, nuclear power is not feasible.  The recent drought in Sichuan showed very well the limitations of hydropower in China. Per capita available water supply in the North China Plain is about 250 cubic meters, which is nearly 50 percent below the UN definition of acute water scarcity . While hydropower is contributing 8 percent to China’s primary energy, growing it further will be difficult due to the lack of water resources in China.  Replacing fossil fuel vehicles with electric vehicles contributes to improving the air quality in cities, but it does not solve the energy problem of generating the electricity that powers the vehicles. In addition, an electric vehicle needs 53.2 kg copper, 8.9 kg lithium, 39.9 kg nickel, 24.5 kg magnesium, and 13.3 kg graphite. If shifting to hydrogen vehicles, it is important to note that hydrogen is not energy itself but a medium of carrying energy that still needs to be generated in the first place. While China targets bringing the proportion of non-fossil energy, (hydro, solar, wind and nuclear power) to 25 percent of primary energy consumption by 2035 , coal is here to stay at the centre of China’s mix of energy sources and the backbone of baseload electricity generation for the foreseeable future. Investing in China’s green transformation China is determined to pursue green transformation and is pouring both spending and credits into infrastructure related to green transformation. As illustrated in this article, companies that have solid technology and strong market positions in clean coal technology, energy storage, hydropower, nuclear power, battery metals, solar and wind will tend to benefit. An important point to note is that green transformation is not just about renewable energy, i.e., hydro, solar, and wind, as well as electric vehicles. Clean coal, copper and battery metal mining, nuclear power, electric grids and electric equipment makers will also be potential beneficiaries during the green transformation. In addition, oil and natural gas, even during the green transformation, will still do well as China is going to beef up investment in domestic oil and gas exploration and development, while trying to reduce the amount of oil and natural gas that the country needs to import from overseas. Fossil energy, nuclear power, and renewable energy will coexist and prosper together, and the journey of green transformation will be long and gradual. Source: https://www.home.saxo/content/articles/quarterly-outlook/green-transformation-in-china-04102022
Investors Are Worried That Elon Musk Is Losing His Focus | The Eurozone Recession Can Dampen Investors’ Hopes

Tesla Investors Begin To Doubt Growth In 2023|The RBA Hiked Rates And More

Saxo Bank Saxo Bank 04.10.2022 09:33
Summary:  Risk sentiment got a strong boost yesterday from falling treasury yields, with Fed rate hike bets for early next year at their lowest in two years after a rising swell of questions from influential sources on whether the Fed is taking its tightening regime too quickly and a soft September US ISM Manufacturing data point. Overnight, Australia’s central bank, the RBA, surprised many with a hike of only 25 basis points.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities bounced back yesterday as the US 10-year yield fell to 3.64% with S&P 500 futures rallying 2.5% and extending another 1% this morning in trading around the 3,726 level; this is just a few points below the obvious short-term resistance level and a break above this level could push S&P 500 futures higher. The moves across markets likely reflect short covering and that the market was getting too stretched in the short-term and the bond market for now wants to sit idle and wait for more data on US inflation. USD and US yields/risk sentiment The US dollar weakened on the usual combination of falling treasury yields after soft US data yesterday and as the market took treasury yields, particularly at the long end of the curve, sharply lower yesterday. The move is still within the range in many key USD pairs, with 0.9900+ at minimum needed for a bear-market-neutralizing reversal in EURUSD. And AUDUSD dropped overnight on the Australia’s reserve bank only hiking 25 basis points (more below) Elsewhere, the strength in GBPUSD is far more sterling related (see more below on Chancellor Kwarteng’s reversal of the most controversial of his tax cuts) and USDJPY is curiously bid near the top of the range after Japan’s September core, ex Food and Energy Tokyo CPI came in at the highest level in years. The status of the US dollar this week will likely be clear only after the release of the September jobs report on Friday. Gold (XAUUSD) and especially silver (XAGUSD) jumped on Monday … with support coming from multiple sources. A softer dollar and US ten-year bond yields slumping to 3.6% after hitting 4% last week leading to some speculation that we may in fact have hit peak hawkishness, meaning the FOMC faced with recession worries and calls for action to curb the dollar may start easing the tone going forward. Whether or not will be data dependent, but in the short term, these developments and worries about what Putin may do next has been enough to trigger short covering across the investment metal sector, not least in gold where the net short held by money managers reached a near four-year high last Tuesday. Silver is looking at resistance at $20.88, the August high and trendline support in XAUXAG around 81.20 Crude oil (CLX2 & LCOX2) extends gains on OPEC+ chatter, weaker USD Crude oil trades higher ahead of Wednesday’s OPEC+ meeting in Vienna as the alliance is considering a production cut of more than 1 million barrels/day to support prices following a 25% slump during Q3 2022. That would be the biggest cut since the pandemic with OPEC+ slashed production by 10 million barrels/day as demand collapsed. WTI futures rose above $83/barrel while Brent was close to $90. With several OPEC+ producers, including Russia, producing below target, only Saudi Arabia may be able to limit production without a loss in additional market share. Meanwhile, expectations of an earlier Fed pivot also stabilized demand weakness expectations. US treasuries (TLT, IEF) US treasury yields fell all along the curve yesterday, as the market pushed Fed hike expectations for early next year toward the lowest in two weeks and yields at the longer end of the curve fell sharply on the release of a weak September US ISM Manufacturing data point. The fall in yields already has the important 3.50% yield level for the 10-year treasury benchmark coming into view after 3.56% traded yesterday. The next important data points include tomorrow’s September ISM Services survey and particularly the September jobs report on Friday. What is going on? Fed pushes back on an earlier pivot Fed’s NY President John Williams repeated inflation is too high, and the Fed's job is not done, also saying that the monetary policy is still not in restrictive zone, pushing back on some calls for an earlier Fed pivot. He acknowledged signs of a slowdown in the housing sector or the consumer and business investment spending, but nothing that could deter the Fed from fighting inflation. On forecasts, he sees inflation likely down to 3% by next year (median view for Core PCE 3.1%), and the US is likely to see unemployment rise to 4.5% by end of 2023 (median view 4.4%). Thomas Barkin (2024 voter) made the case for more inflation in the post-pandemic world, noting that the Fed must consider global developments, but the focus is on the US. RBA hiked less than expected, signaling peak hawkishness could be behind it The RBA hiked rates by just 25 basis points (0.25%) rather than the 50 bps (0.5%) many expected, which takes the cash rate to 2.6%. The RBA’s hiking power has been diminished as household spending is dropping, along with forward looking projections. We know it typically takes around nine months for central bank policy tightening to felt in the economy, and the RBA said that higher inflation and interest rates are putting pressure on households, with the full effects yet to be felt. The RBA said that although consumer confidence and house prices have fallen, the central bank is still focused on slowing inflation which it sees increasing ‘over the coming months ahead’. In addition, the RBA expects unemployment will continue to fall over the months ahead, before rising. This means, the RBA could slow the pace of hikes after December onwards. Tesla shares plunged in a strong US session With US equities rallying 2.5% yesterday high beta and growth stocks were expected to lead the gains, but our bubble stocks basket was up only 1.5% and Tesla shares fell 8.6%. The EV-maker reported Q3 deliveries of 343,830 vs estimates of 357,938 which Tesla said was due to logistical issues in its supply chain. However, the move yesterday in Tesla indicates that investors are beginning to doubt the growth in 2023 that is priced into the price as the lithium continues to be prohibitively expensive and the cost-of-living crisis is lowering demand. Sterling made a strong recovery, but can it last? Cable was seen advancing above the 1.13 handle in Asian hours on Tuesday as it extended Monday’s gains following announcement by Chancellor Kwarteng of the intent to scrap the most controversial – and least impactful on the budget – recently announced tax cut for the highest income earners. A softer dollar also supported sterling’s gains amid a slide in US Treasury yields. Elsewhere, EURGBP also dropped into the old range below 0.8700. Still, the political situation in the UK remains volatile, the bulk of the fiscally aggressive tax adjustments and energy cap proposals remain in place, so the lack of trust in the new UK government cannot be ignored. Focus now on the BOE meeting on November 3 where 115bps rate hike is priced in, lower than last week’s pricing of 150bps. However, a full-budget statement will be released before then and will offer a further sentiment test for sterling. The Eurozone and the UK PMIs confirm the risk of a recession The manufacturing PMI indexes for September are out. There is no good news. In the eurozone, the final estimate was revised down to 48.4 from 48.5 and 49.6 in August. This is the biggest monthly contraction since June 2020 (when the eurozone was getting out from the Spring lockdown). There is no surprise regarding the main reasons behind the drop. This is related to soaring energy bills which limited production across all eurozone member countries and higher cost of living pushing demand lower. Firms are getting prepared for a tough winter and are starting to discuss the opportunity of lower job hiring (very soon the talk will be about cutting jobs). In the United Kingdom, the manufacturing PMI index is also in contraction territory, at 48.4. It was 47.3 in August. This was a 27-month low. However, it is unlikely to get back into expansion anytime soon, in our view. These indicators tend to confirm there is a material risk of a recession both in the eurozone and in the United Kingdom this year. US ISM manufacturing disappoints The headline for September’s US ISM manufacturing came in weaker than expectations at 50.9 from the prior month’s 52.8 and expected 52.2. Both employment and new orders both dropped into contractionary territory printing 48.7 (exp. 53.0, prev. 54.2) and 47.1 (prev. 41.3), respectively. The report showed that higher interest rates are starting to weigh on business investment sentiment, at least in the interest rate sensitive sectors. Still, the inflationary gauge of prices paid declined to 51.7 (exp. 51.9, prev. 52.5) falling for the sixth straight month. Supplier delivery times suggested some easing on the supply chains, but overall the report indicated the case of a slowdown in the US economy as rapid Fed tightening continues. What are we watching next? Risk sentiment brightens – how far can it extend? A hole in the clouds yesterday as US yields dropped on the weak ISM Manufacturing survey and as a rising tide of observers are concerned that the Fed is tightening policy too rapidly, including one heavily covered tweet from the influential WSJ “Fed whisperer” Nick Timiraos noting that Greg Mankiw, the influential former Chairman of the Council of Economic Advisers under George W Bush had expressed approval of economist Paul Krugman’s view that the Fed is tightening too quickly. Hard to see this as more than a tactical turning point for markets, perhaps on overextended short positioning. The Fed’s tune has not changed, and the strongest pushback of developments over the last couple of sessions would be strong US data, including the September ISM Services tomorrow and the September jobs report on Friday. Earnings to watch The earnings season officially starts next week with the first group of US financials reporting but in the meantime a few earnings are worth watching this week. Biogen reports Q3 earnings (ending 30 September) today with analysts expecting revenue growth of -11% y/y and EBITDA at $847mn down from $959mn a year ago. While the current financial performance of Biogen is volatile and weak, the latest news about its breakthrough in Alzheimer’s with a drug that can slow down the disease is what analysts will focus on in terms of gauging the outlook. On Wednesday, Tesco is in focus as the UK largest grocery retailer is at the center of the current food inflation and insights from Tesco will be valuable from a macro point of view. Today: Biogen Wednesday: Keurig Dr Pepper, Aeon, Lamb Weston, Tesco, RPM International Thursday: Seven & I, Conagra Brands, Constellation Brands, McCormick & Co Economic calendar highlights for today (times GMT) 0900 – Eurozone Aug. PPI 1230 – ECB's Centeno to speak 1300 – US Fed’s Williams (voter) to speak 1315 – US Fed’s Mester (voter) to speak 1400 – US Aug. Factory Orders 1400 – US Aug. JOLTS Job Openings Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-4-2022-04102022
Rafe Resendes' Statement On Diverse Perspectives In Business| Security In Gold And Investors Uncertainty

Rafe Resendes' Statement On Diverse Perspectives In Business| Security In Gold And Investors Uncertainty

Kamila Szypuła Kamila Szypuła 04.10.2022 12:38
New month, new quarter and new information. Twitter is full of them. In this article: Investors uncertainty An interview with Rafe Resendes Oil spare capacity The another purchase of gold Stock market news Gaming business Open-end investment funds Investors seem to have no clear direction Morgan Stanley tweets about investor uncertainty and stresses that Fed policy and economic data are the reason behind it. A hawkish Federal Reserve and conflicting economic data have left investors uncertain heading into the fourth quarter. Here’s how to plan for what’s ahead. https://t.co/kDw406fz8O — Morgan Stanley (@MorganStanley) October 3, 2022   Investors seem to have no clear direction after the third consecutive interest rate hike, and macroeconomic data from the reports exacerbate this uncertainty. Simply put, the paths of interest rates, inflation and corporate profitability remain uncertain. Hence, stock investors should be demanding a higher risk-taking premium. The importance of diverse perspectives in business UBS in its post informs about an interview with Rafe Resendes, co-founder and portfolio manager at Applied Finance on USB Trending. In celebration of #HispanicHeritageMonth in the US, we invited Rafe Resendes, co-founder and portfolio manager at @AppliedFinance, on #UBSTrending to share the importance of diverse perspectives in business. Watch the full interview. #shareUBS pic.twitter.com/hYQrPVh9K8 — UBS (@UBS) October 3, 2022   The main topic of conversation is the importance of diverse perspectives in business. Diversity is becoming more and more popular in the business community. In the work environment you can meet people from many cultures and backgrounds. Its importance in companies and how it is managed can affect individuals and individuals on the whole of companies.Listening to someone who is over 20 years in the business world may be helpful in understanding this environment. Oil spare capacity * Walter Bloomberg quotes the CEO of SAUDI ARAMCO in his tweet SAUDI ARAMCO CEO SAYS OIL SPARE CAPACITY IS EXTREMELY LOWSAUDI ARAMCO CEO SAYS SPARE CAPACITY IS AROUND 1.5% OF TOTAL SUPPLY — *Walter Bloomberg (@DeItaone) October 4, 2022   The topic of oil supplies and its prices is still in the spotlight. Information that spare capacity is ok. 1.5% of total delivery may cause confusion. Central Banks have trust in gold Peter Schiff in his tweet informs that central banks are adding gold again. Central Banks Add Gold for Fifth Straight Month @schiffgold https://t.co/F0QraxkFVL — Peter Schiff (@PeterSchiff) October 4, 2022   The another purchase of gold by banks suggests that countries continue to use gold as collateral in difficult times. The role of gold as long-term collateral of value is a key determinant of central banks' decisions to hold it. This action also has a psychological dimension. Buying gold can make you. strengthening the country's financial credibility and providing it with currency liquidity in the event of a collapse of financial markets. New start on stock market CNBC Now announces the start of stocks and bonds in the new month. Stocks surge to kick off October and a new quarter as bond yields tumble, Dow closes up 760 points https://t.co/ldR3MwccK0 — CNBC Now (@CNBCnow) October 3, 2022   At the start of the new month and quarter, equities rose and bond yields fell. Despite such information, investors may still be unsure of the situation. Sony Group Reuters Business tweets about Sony Group gaming business is looking at fresh investment. Sony Group gaming business is looking at fresh investment to bolster its push into PC and mobile as the PlayStation maker competes for talent with deep-pocketed rivals https://t.co/eFmwjVCEYv pic.twitter.com/szyxsYjjk9 — Reuters Business (@ReutersBiz) October 4, 2022   The competition on the gaming market is still going on. Each company has ambitious plans to attract more customers and investors. It is obvious that such companies are looking for new opportunities for further development, i.e. new investments. Radical changes obviously come at a cost. How can such decisions affect the company known for its single-player console games and whether they will meet customer expectations? Open-end investment funds and their risks for the financial system In its message, IMF encourages discussion on open-end investment funds. How can open-end investment funds holding hard-to-sell assets, but offering daily redemptions, create risks for the financial system? Join us on Oct. 4, 9 AM ET, to discuss this and the launch of Chapter 3 of IMF’s Global Financial Stability Report #GFSR. https://t.co/1YrAYmRZEr pic.twitter.com/Fm1HzoIFwc — IMF (@IMFNews) October 3, 2022   Every investment is at risk. Open-end funds are always open to investments and redemptions, hence the name open-end funds. These funds do not have any lock-in period or maturity; therefore it is open forever. The risks for the financial system are the most dangerous for the market. Getting to know the advantages and disadvantages of a given investment type and the possible risks associated with them.
EUR: Testing 1.0700 Support Ahead of ECB Meeting

Aramco Is Confident It Can Maintain Its Market Share In Asia

InstaForex Analysis InstaForex Analysis 04.10.2022 12:53
The world's largest oil company, Saudi Aramco, reiterated its warning that producers' spare capacity is running out. It said there would be none left once China ends its "Covid Zero" strategy. Aramco and Saudi officials have often criticized Western governments and firms for avoiding investment in fossil fuels and for trying to switch too quickly to renewables. They cited rising oil and natural gas prices as evidence that more exploration projects are needed. Oil has risen above $125 a barrel since the start of the crisis in Ukraine, then has fallen below $90, in part because of severe coronavirus-related restrictions that have squashed demand in China. Analysts say the Aramco's capacity is only about 2 million barrels a day, which could be quickly put on stream in the event of a supply cut. This is equivalent to 2% of the market. Saudi Arabia and the neighboring United Arab Emirates are among the few major oil producers to have increased their maximum production levels. Nasser said Aramco is on track to increase its capacity to 13 million barrels per day, from 12 million by 2027. This is a project that will cost billions of dollars. Nasser also said Aramco is confident it can maintain its market share in Asia, where it ships about 60% of its crude oil shipments.   Relevance up to 12:00 2022-10-05 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to ma Read more: https://www.instaforex.eu/forex_analysis/323360
The RBA Surprised With A Smaller 25 bp Hike , Sterling (GBP) Rose, The USD Has Weakened

The RBA Surprised With A Smaller 25 bp Hike , Sterling (GBP) Rose, The USD Has Weakened

Saxo Bank Saxo Bank 04.10.2022 13:13
Summary:  Markets yesterday show how quickly this hot-tempered market can try to sniff out a Fed that will eventually pivot to a less hawkish stance as a weak US September ISM Manufacturing survey data point engineered a huge decline in US yields and significant USD weakness. More important US data is to come this week through Friday’s jobs report. Elsewhere, the surprisingly dovish RBA battled with supportive developments in commodities to sway the Aussie overnight. FX Trading focus: Desperation for the Fed pivot. Sterling: can it really be that easy? Dovish RBA. Yesterday saw US 10-year treasury yields almost 25 basis points lower from intraday highs, with much of the treasury buying/yield drop coming in the wake of a weaker than expected September US ISM Manufacturing survey, out at 50.9, below the 52.0 expected and 52.8 in August. The New Orders were far worse than expected at 47.1 vs. 50.5 expected and 51.3 in August. Alas, we have to remember that the Manufacturing sector is small in the US and about half of the dips to near or below 50 have not indicated imminent recession in the US. The ISM Services survey – up tomorrow - would be a different matter if it were to show marked deterioration. Elsewhere, a tweet from the WSJ’s Nick Timiraos noting that influential economist Greg Mankiw agreed with economist/pundit Paul Krugman’s assessment that the Fed is tightening too quickly may have helped to drive the sentiment shift at the margin as well. Pushing back against that was Fed Vice Chair Williams out expressing the belief that the Fed must remain on message: “Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done.” Williams speech does suggest that the Fed thinks that it is succeeding, so the strongest risk to markets here would be stronger US data suggesting a still strong pace of activity in services and a still very tight labor market with accelerating wage pressures. The Fed forecast assume a fairly soft landing of weak growth and 4.4% unemployment. Self-feeding cycles in a downturn and the Fed’s focus on lagging indicators like employment are likely to eventually lead to far worse outcomes. The USD has weakened at the outset of the week here – but note EURUSD holding the line so far just ahead of the key 0.9900 level. AUDUSD has far more wood to chop for a reversal, as discussed below. The most remarkably priced pair at the moment, however, may be USDJPY, which remains pinned near 145.00 despite the significant drop in long US treasury yields. Still uneasy about the risk of a blowout market-BoJ/MoF showdown – that’s a very weak performance from the yen today. Chart: AUDUSDThe AUDUSD chart has been an interesting one to watch since yesterday and overnight. Strong risk sentiment and lower US treasury yields weighed on the US dollar and helped boost commodity prices, both strongly Aussie supportive. But then the huge mark-down in Australian yields on a quite dovish RBA (more below) challenged the Aussie overnight. Looks like a battle-zone tactically around the local 0.6530 resistance, which was briefly taken out this morning on the further USD weakness before reversing back into the zone later in trading today. The down-trend is so well established that it would take a surge to at least above 0.6700 to begin challenging the down-trend here. The RBA surprised the majority of observers with a smaller 25 basis point hike to take the policy rate to 2.60%. It’s a reminder of the vast shift relative to the old regime, in which one might have expected an RBA rate at least 100-200 bps higher than the Fed’s. The last time the Fed was hiking to north of 3.00% was in mid-2005, when the RBA cash target had already reached above 5%. The RBA chose to emphasize caution in its latest statement, citing the anticipation that unemployment will eventually rise beyond the near term strength in the labor market as the economy eventually weakens. Governor Lowe and company are clearly uneasy and uncertain on the effects of the sharp tightening in the bag on mortgage rates and future spending, and the statement continues to cite lower wage growth than elsewhere. In addition to AUDUSD note above, also interesting to watch the relative strength in AUDNZD over tonight’s RBNZ, as the sharply lower Australian yields (the year-forward RBA rate has been marked a remarkable 50 basis points lower by the market after this meeting). A surrender below the 1.1250-1.1300 zone would suggest a risk that the attempt to reprice the pair higher on the shift in relative current account dynamics I have cited before has failed for now. Sterling rose further after Chancellor Kwarteng yesterday reversed his decision on the tax cut for the highest incomes in the UK. Interesting that this is was particularly item, while politically unpopular, was one of the least consequential in terms of the fiscal impact. For now, given the soaring risk sentiment backdrop, sterling short covering continues, but surely it’s not this easy? Technically, watching the major resistance zone at 1.1500 zone in GBPUSD and whether the bearish reversal back into the old range below 0.8700 in EURGBP sticks. This is still a government that is very much on the rocks. The latest controversy PM Truss is courting is claiming that she has yet to decide whether UK welfare distributions, outside of pensioners, should be raised with inflation, which has some Tory MP’s up in arms. Chancellor Kwarteng, feeling the rising pressure, will bring forward his fiscal statement to later this month from late November, around the time the Office of Budget Responsibility publishes its forecasts. Table: FX Board of G10 and CNH trend evolution and strength.The USD rose so far in its up-trend before the recent setback, that there is some residual medium term up-trend strength left, though momentum has shifted markedly against the greenback. The opposite is the case for sterling, which has achieved a positive trend reading versus the G10 broadly due to weak G10 smalls of late (note GBPNZD, for example, at a high since late February. Elsewhere, strong risk sentiment, together with concerns of a struggling Swiss bank have brought CHF south in a hurry over the last week. Table: FX Board Trend Scoreboard for individual pairs.CHF on its back foot and our longest surviving trend, the GBPCHF downtrend, is now dead. Sterling upside breaks are spreading, in fact. Also note the shift in US yields taking XAGUSD onto a sudden moonshot, while XAUUSD is eyeing an up-trend as well. Upcoming Economic Calendar Highlights 1230 – ECB's Centeno to speak 1300 – US Fed’s Williams (voter) to speak 1315 – US Fed’s Mester (voter) to speak 1400 – US Aug. Factory Orders 1400 – US Aug. JOLTS Job Openings 1500 – ECB President Lagarde to speak 0100 – New Zealand RBNZ Official Cash Target Announcement Source: https://www.home.saxo/content/articles/forex/fx-update-the-desperation-for-the-fed-pivot-04102022
Extra Gains Of The WTI Crude Oil Appear On The Cards

Crude Oil Supply Problems Are Reflected In JP Morgan's Forecasts

InstaForex Analysis InstaForex Analysis 04.10.2022 13:18
At first glance, the fall in oil prices below the levels that took place before the armed conflict in Ukraine looks paradoxical. The main grades of black gold lost a quarter of their value in the third quarter, despite the fact that world reserves are at a low level, American companies are not increasing production, there are fewer buyers for Russian oil, and OPEC+ is going to announce production cuts at its first face-to-face summit since the start of the pandemic. The expectation of the last event allowed the Brent bulls to launch a counterattack. The decline in exports and falling prices clearly do not suit Russia, whose oil revenues are melting before our eyes. Saudi Arabia is not averse to reducing production, as it fears that by the end of the year it will drop significantly in Russia due to Western sanctions. And in such conditions, it is necessary to save production facilities in order to turn them on later. Moscow and Riyadh are the key figures of OPEC+, so rumors about the Alliance reducing production by 1 million bpd, which is equivalent to 1% of global supply, are likely to turn into facts. The cartel and its allies are taking the fall of Brent as a challenge. They are clearly not thrilled by the prospect of North Sea grade falling to $80 per barrel. It is likely that OPEC+ would like to protect the $90 per barrel level. However, the Alliance is not fulfilling its plans anyway. In August, it received less than 3.6 million bpd. However, its intention to act aggressively is a bullish signal for the market. Also, Russian oil exports are constantly declining. Maritime deliveries to the EU and Britain have fallen by 60% from levels that took place before the armed conflict in Ukraine. At the same time, the process of redirecting black gold from Europe to Asia begins to falter. Three key buyers: India, China, and Turkey imported 2.2 million bpd in June, but by the end of September, this figure fell by 350,000 bpd. Dynamics of Russian oil flows Supply problems are reflected in JP Morgan's forecasts, which sees Brent at $101 a barrel in the fourth quarter. The main arguments cited are a recovery in demand, insufficient investment in field development and other targets by energy companies, the absence of an agreement on supplies from Iran, and OPEC+ production cuts. Alas, the main driver of the fall in oil prices is currently fears of a reduction in global demand against the backdrop of an approaching recession. It is likely to become a reality due to the aggressive tightening of monetary policy by central banks. Technically, there is a steady bearish trend on the Brent daily chart. Nevertheless, the formation of the 1-2-3 pattern increases the risks of a pullback. We build up the longs formed from the level of 87.6 per barrel on the break of the fair value at 90.7. The target is the mark 93.9, located near the upper border of the downward trading channel.   Relevance up to 09:00 2022-10-09 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323336
BSP Maintains Rates Amid Moderate Inflation; Eyes Further Tightening if Needed

Crude Oil And USD: Most Probably Many Will Keep An Eye On This Week's OPEC+ Meeting And The US Jobs Data

Kenny Fisher Kenny Fisher 04.10.2022 16:39
All eyes on OPEC+ Oil prices are continuing to creep higher ahead of the OPEC+ meeting on Wednesday. Markets are now expecting a large output cut in excess of one million barrels per day, for which there is seemingly plenty of support. But with the economic outlook becoming gloomier by the day, will the alliance go far enough to achieve the $90-100 oil they so clearly desire? I suspect any cut will be accompanied by strong language over the prospect of further action which may make up for any shortfall, should they take a more conservative approach. A hot jobs report may spoil the party All this talk of peak rates has excited the gold bulls, with the yellow metal leaping above $1,700 and gaining momentum. The sustainability of any rebound will ultimately depend on how long traders can convince themselves peak rates are priced in. Looking back at past periods of optimism, we may be on borrowed time. Of course, rates can only go so far and the RBA has already taken the decision to take its foot off the brake. But I’m not convinced the Fed is there yet and a hot jobs report may spoil the party once more. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. OPEC+ meeting looms, gold has momentum - MarketPulseMarketPulse
RBA Governor Announces Major Changes at RBA Board as US Inflation Expected to Decline

Musk Revived His Bid For Twitter| OPEC Have Started Talking About Cuts With Russia

Saxo Bank Saxo Bank 05.10.2022 09:11
Summary:  Oil rallies for the second day with OPEC+ considering an output cut as much as 2 million barrels a day, which is more than anticipated. US stocks rallied for the second day, moving off their lows on softer than expected labor market data that supported the notion of central bank peak hawkishness. The Reserve Bank of Australia hikes less than expected, and the Reserve Bank of New Zealand meeting ahead today. Also watch for the US ISM services print later, pivotal for Fed pivot expectations that are gaining momentum prematurely. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rally for the second day, moving off lows US stocks rallied for the second day, rebounding from their deeply oversold levels with the S&P500 seeing its best two-day surge since April 2020. The S&P500 ended up almost 3.1% higher on Wednesday, the Nasdaq 100 up 3.1%. Retail favorite, Tesla (TSLA) shares revved up 2.9% after Cathie Wood scooped up 132,000 more shares in the electric vehicle giant. Tesla was among the biggest contributors to the S&P500’s gains, along with Amazon and Microsoft. For a detailed discussion of Tesla’s challenges ahead, please refer to Peter Garnry’s excellent article here. The Energy sector was the best performer in the S&P 500, gaining 4.3%, followed by Financials which were up 3.8%. Only seven stocks in the S&P500 closed in the red. However, the news of the day was that Twitter’s takeover by Musk is back on. On top of that, softer US economic data out also boosted sentiment, with the market thinking the Fed might not be as fierce with rate hikes later this month. US job openings sank to a 14-month low, following the day prior weaker than expected manufacturing data. So, perhaps a short-squeeze is fueling the rally here. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) declined modestly on the front end Treasury yields fell first on a dovish hike (25bps vs the 50bps expected) from the Reserve Bank of Australia during Asian hours and then on the biggest decline of the JOLTS job opening (10,053K vs prior 11,239K).  10-year yields made an intraday low at 3.56% before paring it and settled little changed at 3.63%.  The curve bull steepened with the front-end 2 to 5-year fell 2-3bps in yield and the 30-year yield edging up 1bp.  Australia’s ASX200 (ASXSP200.1) rallied above 6,700, snapping its downtrend The ASX200 charged 3.75% yesterday (including the 1.2% rise after the RBA’s pivoted to going softer on rate hikes) which took the market to its highest level since September 23 (just shy of 6,700, closing at 6,699). Today the market opened 0.8% up in the first 10 minutes of trading, with the futures implying the market could rise 1.6% on Thursday to 6,803. If the market can hold above 6,700 it means the market will effectively have broken its downtrend and is staging a comeback. This notion was supported by our technical analyst. For more read on here. EURUSD touches parity again Lower US yields and a softer US dollar is turning things around in the FX space, although pricing out the Fed rate hikes from 2023 appears to be premature. Some of this could also be the positioning ahead of key US NFP data due this week. EUR made a strong recovery on the back of a weaker dollar, as it rose from lows of 0.9800 to touch parity. Commentary from the ECB’s Villeroy also helped, as he said that interest rates will be raised as much as necessary to lower core inflation and called for rates to go to neutral by year-end without hesitation. Meanwhile, President Lagarde reiterated her view that inflation was undesirably high, and it is difficult to say whether or not it had peaked. Crude oil (CLX2 & LCOX2) higher on OPEC cut expectations Crude oil prices rose further amid speculation that OPEC is considering an even larger cut to production than first thought. The group is said to be considering a cut of up to 2mb/d, according to media reports. It is also being reported that the cuts will be made from current production levels and not the quotas as most members are already producing below their quota. That, if true, will likely tighten the market especially as European sanctions will kick in from December and US is also pausing the release from its strategic reserves. This tightness could be exacerbated by a rebound in Chinese demand if it can contain outbreaks of COVID-19. WTI futures rose above $86/barrel while brent crossed the key $90-mark. A significant draw was also reported in API inventories, with crude stocks down 1.77mn. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong is set to have some catch-up to do with the 5.7% gain in the S&P 500 and 6.1% rise in the NASDAQ Golden Dragon China Index when it returns from a public holiday today.  The stock markets in Shanghai and Shenzhen remain closed for the rest of the week for public holidays.     What to consider?   US JOLTs signalling the tightness in the labor market may be moderating US JOLTs data was out with a weaker than expected number. The number of job openings in the U.S. declined to 10.1 million in August, the lowest since June 2021, and below expectations of 10.8 million. The job openings rate was down to 6.2% from 6.9% in July, and puts the focus on the ADP data due today in the run upto the NFP data on Friday. OPEC+ meeting to bring production cuts There have been some reports that OPEC members have started talking about cuts with Russia proposing a 1 mln barrels per day cut, a reduction towards which they are unlikely to contribute much as they are already producing below their quota. At its last meeting on September 5, the group agreed a token reduction of 100,000 barrels a day for October, despite calls from consuming nations to help tame rampant inflation by keeping the taps open. With gasoline prices retreating in the US, some of that external pressure may now be easing, and that further raises the prospects of some price-supportive action. FT also reported the production cuts will be from current production levels, not from the quota's which many producers do not meet - emphasising the impact of the production cut. The credit market showed signs of calming down Over the past two days, the sharp rise in investment credit spreads has tentatively reserved, showing some sign of relief in the investment grade credit market.  The Markit CDX North America Investment Grade Index (CDX IG39), which represents an equal-weighted average of credit default swap spreads of 125 North American investment grade corporate, fell more than 6bps on Tuesday to 98bps, a decline of nearly 16bps from its intraday high of 114 last week. The Reserve Bank of New Zealand meeting ahead The RBNZ will announce its latest monetary policy decision today. NZ house prices have seen one of their biggest quarterly drops on record in the three months to September. It’s worth watching the NZD against the AUD (NZDAUD) given their current account trajectories. RBA hiked less than expected, signaling peak hawkishness could be behind it. What does it mean to traders and investors? Yesterday the RBA rose rates by just 25bps (0.25%) instead of the 50bps (0.5%) expected, which took the cash rate to 2.6%. The RBA’s hiking power has been diminished as household spending is dropping, along with forward looking projections. We know it typically takes 3-months for an interest rate hike to be felt by the consumer, and the RBA alluded to this, in saying higher inflation and interest rates are putting pressure on households, with the full effects yet to be felt. The RBA referenced although consumer confidence and house prices had fallen, the central bank is still focused on slowing inflation which it sees increasing ‘over the coming months ahead’. Plus the RBA expects unemployment will continue to fall over the months ahead, before rising. This means, the RBA could slow the pace of hikes after December onwards. This implies peak hawkishness is behind us. AUDUSD fell 1% after the meeting however it since reversed those losses and trades 0.6% higher from the meeting. It’s been supported as the USD continued to roll over on expectations the Fed might not be as aggressive with rate hikes later this month. However if the Fed perhaps hikes by 0.75% the AUDUSD might revert back to a bearish stance. For investors, the RBA pivot supports a risk-on tone in equities which is why all 11 sectors rose yesterday, with tech and mining up the most. Energy markets saw the most gains as they have the most momentum amid the energy crisis. Lithium and agricultural stocks dominated the top 10 risers; with lithium stocks Sayona Mining (SYA), Lake Resources (LKE), Core Lithium (CXO), Pilbara Minerals (PLS) and Allkem (AKE), gaining 10%+ each. Musk revived his $44 billion Twitter bid send Twitter shares up 22% Billionaire Elon Musk revived his bid for the social media giant, at the original offer of $54.20 a share after spending months trying to back out of it. Shares of Twitter (TWTR) jumped almost 22% to $52.00 on the news. US ISM services will be key to watch today With chatter on Fed pivot gaining momentum out of a miss in one ISM manufacturing print, possibly also underpinned by the turmoil in the financial system, it will become more key to watch the services sector data out today. Consensus expects the number to be 56, down from 56.9, as higher interest rates and high inflation begins to eat into services spending after a solid post-pandemic rebound.     For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-5-oct-05102022
Bitcoin Stagnates at $30,000 Level, Awaits US Bitcoin ETF Update and Fed Meeting

Tesco Has Decided To Lock Everyday Items |The US Dollar (USD) Continued To Weaken

Saxo Bank Saxo Bank 05.10.2022 09:32
Summary:  Another banner day for equity markets, which surged further on hopes that central banks will be increasingly easing off the gas pedal in coming weeks and months on signs that the impact of their tightening is wearing on economic growth. It’s counterintuitive and remains to be seen how equity markets will eventually greet recessionary outcomes for earnings and revenue in the quarters ahead. For now, the focus is tactical, particularly on whether the remaining US data this week through Friday’s jobs report will confirm this most recent narrative.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued their rebound yesterday with S&P 500 futures hitting the big 3,800 level, but the index futures are coming down a bit this morning trading around the 3,785 level. The significant declines in US bond yields and chatter about a Fed pivot, this still has a low probability at this point, have been the catalyst behind the rebound and the fact that markets were very stretched added to size of the rebound as short covering have been taking place. In today’s session the ADP employment change and ISM Services Index are the key macro events that could add some fresh energy to the downside. Yesterday’s biggest negative change on record in the JOLTS Report suggests that the labour market is beginning to cool down. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) The Hong Seng Index soared over 5% to catch up with the S&P 500 Index’s 5.7% rally over the past two days after Hong Kong returned from a public holiday. Weaker U.S. economic data recently have helped fuel the notion of peak tightening from the Fed and contributed to the turnaround in global stocks this week. Index heavy-weights jumped, HSBC (00005:xhkg) up 6.3%, AIA (01299:xhkg) up 6.7%, Tencent (000700:xhkg) up 5.8%, Meituan (03690:xhkg) up 7.6%, and Alibaba (09988:xhkg) up 8.2%. BYD (01211:xhkg) soared nearly 10% after the Chinese automaker reported record sales of over 200,000 electric and hybrid vehicles in September, a growth of 183% from last year, and the seventh consecutive month of sales growth. The mainland exchanges remain closed for the rest of the week for the National Day golden week holiday. USD and US yields/risk sentiment The US dollar continued to weaken yesterday, particularly against European currencies as EURUSD touched parity briefly and as GBPUSD rose close to 1.1500 on a further change of tune from UK Chancellor Kwarteng, who is making noises about plans to bring forward debt-cutting measures in the new budget he will present later this month. An important test for the greenback lies ahead through the end of this week on macro data and its impact on US treasury yields, as noted below, as well as on risk sentiment. Gold (XAUUSD) and silver (XAGUSD) rise further Hopes that central banks will begin to ease away from the tightening of the last many months after a deceleration from the ECB and at least one weak US data point this week, saw yields a bit lower and precious metals surging, with Gold rushing higher yesterday after the break above the key 1,680-1,700 from Monday was solidified with a move above 1,725 at one point yesterday. Silver’s enormous jump on Monday was only followed up with a much smaller move yesterday. Next area of focus in gold will be the 1,734 area and then the major 1,800 zone. The strength in US macro data and direction of US yields key through Friday’s US jobs report (weak data and lower yields most gold supportive.) Crude oil (CLX2 & LCOX2) higher on larger OPEC cut expectations Crude oil prices rose further amid speculation that OPEC is considering an even larger cut to production than first thought. The group is said to be considering a cut of up to 2mb/d, according to media reports. It is also being reported that the cuts will be made from current production levels and not the quotas as most members are already producing below their quota. That, if true, will likely tighten the market especially as European sanctions will kick in from December and US is also pausing the release from its strategic reserves. This tightness could be exacerbated by a rebound in Chinese demand if it can contain outbreaks of COVID-19. WTI futures rose above $86/barrel while Brent crossed the key $90-mark. A significant draw was also reported in API inventories, with crude stocks down 1.77mn. US treasuries (TLT, IEF) US treasury yields recovered slightly after a further drop yesterday that took the 10-year benchmark to 3.56% at the lows, just ahead of the key 3.50% area former cycle high from June. Key data this week, including the ISM Services (far more important for the current status of the US economy than the ISM Manufacturing that garnered such a strong reaction on Monday) and the US September jobs report are likely to set the tone. What is going on? Twitter (TWTR:xnas) shares rose more than 20% as Elon Musk agrees to original takeover terms The shares of Tesla (TSLA:xnas) were down sharply on one point on the news before these in turn recovered to positive territory in a torrid rally for US equities yesterday. With Twitter’s closing price yesterday being close to the takeover price at $54.20 the downside risk remains now for Tesla shares in the event that Elon Musk is forced to sell more Tesla shares to finance the deal. US JOLTS job openings surveys signals that the tightness in the labor market may be moderating US JOLTs data was out with a weaker than expected number, declining to 10.1 million in August, the lowest since June 2021, and below expectations of 11.1 million and after 11.2 million in July. The job openings rate was down to 6.2% from 6.9% in July, and puts the focus on the ADP data due today in the run up to the nonfarm payrolls change data on Friday. New Zealand’s RBNZ hikes 50 basis points as expected This was the fifth consecutive meeting to bring a half-point hike and took the official cash rate to 3.5%. The bank signaled more tightening to come in its statement, as it noted that “core consumer price inflation is too high and labor resources are scarce. Still, short NZ rates continue to trade lower, if not falling as rapidly as for Australia after the RBA surprised with only a 25 basis point hike yesterday. The AUDNZD rate dropped below 1.1250 at one point overnight from the 1.1350 range before the announcement. Tesco 1H revenue beats estimate The largest Uk grocery retailer reports like-for-like UK revenue of +0.7% vs est. -0.1% but the company says that cost inflation is still significant. Tesco has also decided to lock over 1,000 everyday items at low prices until 2023 which could be negative for operating margin in the short-term. What are we watching next? Risk sentiment brightens – how far can it extend? Quite a short squeeze on bearish risk sentiment as global equities have backed up sharply, in many cases after touching new bear market lows – is this a bullish reversal with legs or will it fade quickly? Two prior bear market rallies in March and especially June-August impressed. For now, the tactical focus higher in the US equity market would be on the 3,800-3,900 zone, the next hurdle for establishing whether this squeeze will develop into something more, with the most immediate sentiment test likely the ISM Services survey today (more below) in the US and especially the jobs (and earnings) data on Friday, as it appears this rally was kicked off by a soft September ISM Manufacturing survey on Monday. UK Prime Minister Truss to deliver address at Tory conference today This is an important speech after the recent volatility in UK gilt markets, mostly attributable to policymaking from the Truss government, including generous caps on energy prices and tax cuts, that suggest little interest in maintaining long term credibility in government debt. US ISM services will be key to watch today With chatter on a Fed pivot gaining momentum out of a miss in one ISM manufacturing print, possibly also underpinned by the turmoil in the financial system on contagion from the wipeout and recovery in UK gilt markets over the last ten days, it will become more key to watch the services sector data out today. Consensus expects the number to be 56, down from 56.9, as higher interest rates and high inflation begin to eat into services spending after a solid post-pandemic rebound. Earnings to watch We had highlighted that Biogen would report earnings yesterday, but our earnings date data was incorrect, and the date is now set for the 18 October. Tesco has already reported earnings (see review above), so today’s remaining earnings focus is Lamb Weston which is a large US food company with analyst expecting FY23 Q1 (ending 31 August) revenue growth of 16% y/y and stable operating margin. Today: Lamb Weston, Tesco, RPM International Thursday: Seven & I, Conagra Brands, Constellation Brands, McCormick & Co Economic calendar highlights for today (times GMT) 0715-0800 – Eurozone final Sep. Services PMI 0830 – UK final Sep. Services PMI Poland Central Bank Rate Announcement 1215 – US Sep. ADP Employment Change 1230 – US Aug. Trade Balance 1230 – Canada Aug. Building Permits 1230 – Canada Aug. International Merchandise Trade 1400 – US Sep. ISM Services 1430 – US Weekly DoE Crude Oil and Product Inventories 2000 – US Fed’s Bostic (non-voter) to speak 0030 – Australia Aug. Trade Balance Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-5-2022-05102022
Reserve Bank of New Zealand: Kenny Fisher says he expects a 25bp rate hike on May 24th

Reserve Bank Of New Zealand Raised Rates By 50bp Yet Again | In Anticipation Of The Next OPEC Meeting

Kamila Szypuła Kamila Szypuła 05.10.2022 09:27
Today there will be a lot of data from all over the world. The most important decisions and reports may affect the situation of the currency or commodities market. Retail Sales (MoM) Australia has published a retail sales report MoM. The reading has reached the expected level of 0.6%. The previous reading was at 1.3%, which means that it fell this time, but it was an expected drop. RBNZ Interest Rate Decision Today at 3:00 CET another decision on interest rates was made. Reserve Bank of New Zealand (RBNZ) raised rates from 3.0% to 3.5%. In 2022. The market expected such a decision. The RBNZ raised rates by 50bp each time. Source: investing.com UK Purchasing Managers' Index reports At 10:30 CET, the UK will publish its Purchasing Managers' Index (PMI) reports. The first one will concern the activity level of purchasing managers in the both sectors. It is expected to drop from 49.6 to 48.4 in September. This year it will be the second time that U.K. Composite Purchasing Managers' Index is below 50. This will mean another contraction in this sector. Another report will be on the activity level of purchasing managers in the services sector. It is expected to drop below 50 for the first time this year and reach 49.2. This means that the compression of this sector will begin as well. OPEC meeting The monthly OPEC meeting will take place at 12:00 CET. Meetings are attended by representatives from 13 oil-rich nations. They discuss a range of topics regarding energy markets and agree on how much oil they will produce. What kind of decisions can we expect? OPEC aims to change the price of oil by adjusting the volume of supply. If its members want to raise the price of oil, they can lower their production quotas to limit supply. In early September, OPEC surprised the markets and announced a slight reduction in oil production. We can expect that also this time the decision will be made to reduce production by OPEC+. The group may announce that it is expanding a general cooperation agreement between OPEC, Russia and other producing countries, which expires in December. Crude Oil Inventories At 16:30 U.S. will published report about the weekly change in the number of barrels of commercial crude oil held by US firms. This number is expected to increase from -0.215M to 2.052M which means it implies weaker demand and is bearish for crude prices. Source: investing.com ADP Nonfarm Employment Change At 14:15 CET, the U.S. report will appear. ADP Nonfarm Employment Change. It is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. And this time it is expected to reach 200K. This would be a significant increase from 132K. Such a reading would be positive for the US currency (USD). ISM Non-Manufacturing PMI The Institute of Supply Management (ISM) will publish a report on Business, a composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. The reading is expected to be at 56.0. It will be lower than its previous reading of 56.9. Despite expectations of a decline, the situation in this sector is positive, as it is above 50 for the entire period this year. Summary 2:30 CET Retail Sales (MoM) 3:30 CET RBNZ Interest Rate Decision 10:30 CET UK Composite PMI (Sep) 10:30 CET UK Services PMI (Sep) 11:00 CET German Buba Beermann Speaks 12:00 CET OPEC Meeting 14:15 CET ADP Nonfarm Employment Change (Sep) 16:00 CET ISM Non-Manufacturing PMI (Sep) 16:30 CET Crude Oil Inventories Source: https://www.investing.com/economic-calendar/
The Commodities Feed: China's 2023 growth target underwhelms markets

RBA Hike Sent A Wave Of Optimism But The Downside Risks Persist

Swissquote Bank Swissquote Bank 05.10.2022 10:17
Global equities, bonds, commodities and currencies rallied, as the US dollar eased further yesterday. Soft US JOLTS data, and softer-than-expected Reserve Bank of Australia (RBA) hike sent a wave of optimism across the global markets. But the downside risks persist with further US jobs data due today, and OPEC – which may announce a big cut in oil production. The US dollar index slid to 110 mark, the EURUSD advanced to parity, and Cable advanced to 1.1490. The USDCAD fell to the 1.35 on the back of softer US dollar and firmer oil. Commodities Market In commodities, gold tested the 50-DMA to the upside ($1730 per ounce,) while Bitcoin consolidated above the $20K mark. Today, the ADP report is expected to print 200’000 new private job additions in the US. A soft figure is what every investor is secretly praying for. In oil, according to the latest reports, OPEC could announce cutting oil output by 2 million barrels today. But, a big decline in OPEC supplies may not necessarily trigger a further price rally, as higher the energy prices, the sharper the central banks must kill demand to pull the prices lower. Watch the full episode to find out more! 0:00 Intro 0:35 Equities rebound 1:23 Elon will buy Twitter! 2:03 FX update: dollar down, majors, gold & Bitcoin up 2:38 What triggered the latest rally? 6:29 How could it last? 7:20 A big cut from OPEC could, also, backfire! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #OPEC #Russia #output #cut #energy #crisis #crude #oil #Apple #Tesla #market #rally #shortsqueeze #RBA #RBNZ #rate #hike #US #jobs #ADP #JOLT #data #USD #EUR #GBP #CAD #XAU #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Podcast: Resistance In US Markets, The Crude Oil Reversal On The Threats And OPEC Meeting

Saxo Bank Saxo Bank 05.10.2022 11:11
Summary:  Today we look at the short squeeze in equity markets finding surprising further strength yesterday and note that key resistance in US markets has already come into view as the "central bank pivot" narrative may struggle to find further sustenance when most of what we have seen may have just been a temporary improvement after a scary episode driven by UK gilt market contagion that eased. We also look at the status of FX markets, the crude oil reversal on the threats of an actual large production cut from OPEC+ today, Tesla and Twitter after Musk u-turned on his intent to challenge the deal, Tesco and semiconductor stocks and much more. Today's pod features Peter Garnry on equities, with John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-5-2022-05102022
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

The Barrel Of West Texas Intermediate (WTI) Gained More Than 3%

TeleTrade Comments TeleTrade Comments 05.10.2022 13:01
USD/CAD gathered bullish momentum early Wednesday following two-day slide. WTI trades in negative territory as markets wait for OPEC+ to unveil output strategy. The dollar benefits from safe-haven flows amid escalating geopolitical tensions. After having lost nearly 300 pips in a two-day slide, USD/CAD reversed its direction and climbed toward 1.3600 on Wednesday. As of writing, the pair was trading at 1.3570, where it was up 0.45% on a daily basis. WTI turns south ahead of OPEC+ decision The sharp upsurge witnessed in crude oil prices helped the commodity-sensitive loonie outperform its rivals earlier in the week. On reports claiming that OPEC+ could reduce crude oil production by as much as 2 million barrels per day, the barrel of West Texas Intermediate (WTI) gained more than 3% and climbed to its highest level since mid-September at $87 on Tuesday.  The negative shift witnessed in the risk mood, however, seems to be causing oil prices to edge lower mid-week and doesn't allow the CAD to preserve its strength. OPEC+ is set to unveil its output strategy later in the day and the European Union is expected to introduce a new sanctions package against Russia that will most likely include a cap on oil prices. Meanwhile, US stock index futures are down sharply as geopolitical tensions continue to escalate. Russian President Vladimir Putin is reportedly planning to address the nation and announce a change in the status of the "special operation." Russia's ambassador warned earlier in the day that the US' decision to send more military aid to Ukraine would raise the danger of a direct clash between Russia and the west. In the second half of the day, the US economic docket will feature the ADP's private sector employment data and the ISM's Services PMI survey. 
Crude Oil Price: How Big Could The OPEC+ Supply Cut?

Crude Oil Price: How Big Could The OPEC+ Supply Cut?

ING Economics ING Economics 05.10.2022 13:48
OPEC+ meet in Vienna today and a supply cut seems to be a guaranteed outcome. However, what is less clear is the scale of the cut we could see from the group Source: Shutterstock Energy - OPEC+ cut expectations getting larger OPEC+ meet later today to discuss their output policy for November. It is pretty clear that the group will need to cut at their meeting and expectations about the scale of the supply reduction are growing. Initially, it was suggested that the group could reduce production in the region of 1MMbbls/d, however, there are now suggestions that OPEC+ could cut by as much as 2MMbbls/d. It is important to remember that these are paper cuts and that actual cuts would be much smaller. However, if OPEC+ were to announce a paper cut of as much as 2MMbbls/d, it would work out to an actual output decline in the region of 1MMbbls/d, which would mean that the surplus we expect for the rest of this year would likely disappear. This would provide a solid floor to the market. The group will need to manage expectations, if for some reason they announce a paper cut of less than 1MMbbls/d we could see an immediate downward correction in prices. The US Treasury is expecting that the price cap on Russian oil will be formally announced in the coming weeks. EU members are currently working towards an agreement on the cap, however, concern from certain EU members has meant that talks have dragged on. The European Commission still wants to reach a preliminary agreement before EU leaders meet on 7 October. Metals – dollar weakness supports base metals complex Weakness in the US dollar supported the base metals complex as negative economic data from the US eased concern that the Federal Reserve will tighten monetary policy too rapidly. The Institute for Supply Management’s gauge of US factory activity dropped to its lowest level in more than two years in September. US jobs data, which is due later this week, might provide more clues on the Fed’s rate hike trajectory. Iron ore prices also rose on speculation China might ease Covid-19 curbs and take more steps to revive the country’s ailing property market after reports that regulators told the biggest state-owned banks to provide financing worth at least $85 billion to the sector. Nyrstar will close its Port Pirie lead smelter facility in Australia for 55 days for upgrades aimed at reducing emissions and improving operational performance, the Belgian-based company said. Trafigura, the majority owner of Nyrstar, didn’t comment on how much lead Port Pirie produces. The plant produced 160kt of lead in 2018. Read this article on THINK TagsRussian oil price cap OPEC+ Lead Iron ore Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Wow! OPEC+ Cut The Output Significantly! Where Could Gold Be Trading Ahead Of NFP?

Ed Moya Ed Moya 05.10.2022 22:54
OPEC+ agrees to cut production OPEC+ agreed to cut their production target by 2 million barrels a day. OPEC+ is keeping the oil market tight with the biggest output cut since 2020. ​ The production cut was driven by uncertainty that surrounds the global economic and oil market outlooks. The OPEC+ target is now 10.5 million bpd, which according to the Saudis is a real cut between 1 to 1.1 million bpd. ​ The next ministerial meeting will be on December 4th. ​ The plan is now for them to have ministerial meetings every six months and the monthly JMMC meetings will now happen every two months. The EIA crude oil inventory showed crude, gasoline, and distillate inventories continue to fall. ​ This report was mostly bullish given a headline draw, rebound in gasoline demand, steady production, and steady exports above 4 million barrels a day. Oil should remain supported here following the OPEC+ decision and the EIA report, but the upside will be capped well in advance of the $100 a barrel level. ​ After the OPEC+ meeting, Russia’s Novak said it could cut output if an oil price cap is put in place. Novak is signaling that Russia is not desperate for revenues and if this cap moves forward, we could see oil prices extend gains. ​ ​ Gold Gold prices edged lower after the bond market said not so fast with the collapse of global bond rates. ​ A strong private payrolls report reminded investors that there is still strength in the labor market that could allow the Fed to remain aggressive beyond the next two FOMC meetings. Gold needs to see a sharper slowdown in the US and cooler prices for a bullish breakout to form. Gold seems poised to consolidate between $1680 and $1740 until we get both the NFP report and the latest inflation readings. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. OPEC+ delivers, gold pares this week’s gains - MarketPulseMarketPulse
A Significant Change In The Prospects For The Crude Oil Market

A Very Political Move By The OPEC+, The US Dollar (USD) Gains Returned

Saxo Bank Saxo Bank 06.10.2022 08:55
Summary:  A 2 million barrel cut from OPEC+ boosted oil prices. Solid U.S. ISM Services PMI and ADP job report smashed Fed pivot expectations and lifted U.S. bond yields higher, seeing 10-year treasury yields bouncing 12bp to 3.75%. U.S stocks took a pause from their rally and finished the session little changed. The Hong Kong equity market returned from a mid-week holiday and surged 5.9% to catch up with the global markets. The return of the Beijing Marathon on Nov 6 is an encouraging sign of China allowing large public events to resume. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) took a pause in light volume U.S. stocks sold off in early trading after a solid ADP employment report and ISM Services Index which poured cold water onto the notion of Fed pivot. S&P500 managed to pare losses and settled 0.2% higher while Nasdaq 100 was down 0.1%.  Volume was light partly because it was Yom Kippur, a Jewish holiday. Eight of the 11 sectors of the S&P 500 declined with the exception of energy, information technology, and healthcare. Energy stocks were helped by the news that OPEC+ agreed to cut production by two million barrels of crude oil a day.  Exxon Mobil (XOM:xnys) and Halliburton (HAL:xnys) rose by 4% and Occidental (OXY:xnys) climbed 2.4%. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) climbed on solid economic data Yields in U.S. treasuries surged most in the belly of the yield curve, with the 5-year and 10-year yields finishing the session from 11bps to 12bps higher to 3.65% and 3.75% respectively, but a smaller 5bp rise to 4.14% in the 5-year notes.  San Francisco Fed President Mary Daly and Altanta Fed President Raphael Bostic pushed back on the market notion of a pivot.  Across the pond, the Bank of England did not buy any bonds at the buyback operations. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) rallied 5.9% to catch up with the gains in the global markets after a mid-week holiday The Hang Seng Index soared 5.9% to catch up with the S&P 500 Index’s 5.7% rally over the past two days after Hong Kong returned from a public holiday. Weaker U.S. economic data recently have helped fuelled the notion of peak tightening from the Fed and contributed to the turnaround in global stocks this week.  Index heavy-weights jumped, HSBC (00005:xhkg) up 5.7%, AIA (01299:xhkg) up 7.4%, Tencent (000700:xhkg) up 5.8%, Meituan (03690:xhkg) up 8.2%, and Alibaba (09988:xhkg) up 8.4%.  The resumption of the Beijing Marathon this year on Nov 6 boosted sportswear and textile names, with Li Ning (02331:xhkg) up 10.4%, Anta (02020:xhkg) up 10.5%, Shenzhou (02313:xhkg) up 13.7%.  The Beijing Marathon and media stories that some major tourist attractions received high visitor traffic during the Golden Week holiday helped arouse hope of some sort of normalization and boosted mainland catering stocks and Macao casino names. BYD (01211:xhkg) soared nearly more than 9% after the Chinese automaker reported record sales of over 200,000 electric and hybrid vehicles in September, a growth of 183% from last year, and the seventh consecutive month of sales growth.  Nio (09866:xhkg) and Li Auto (02015:xhkg) gained from 6% to 8% but XPeng (09868:xhkg) fell 1% as the latter reported a 19% Y/Y decline in vehicle deliveries. Hong Kong local property names were the laggards following the release of the city’s home sales data that registered a 48.1% Y/Y decline in value in September.  The mainland bourses remain closed for the rest of the week for the National Day golden week holiday. Dollar on the backfoot in early Asian hours The US dollar gains returned on Wednesday as US yields clawed back higher, but was off highs into the NY close and slid further in early Asian trading. Stronger US ISM data and hawkish Fed speak further supported the case for more Fed rate hikes, and the OPEC+ production cut has deteriorated the global inflation picture. EURUSD was therefore unable to move back above parity after testing the key level yesterday, although its back above 0.99 this morning. GBPUSD tested 1.1500 but slid from there amid further concerns on the UK policymakers, as well as a Fitch downgrade of the UK economy. USDJPY stayed short of testing the key 145 level again, with Japan continuing to sound the intervention alarm with warnings such as one from a finance ministry official yesterday saying there is no limitation on funds available for intervention. Crude oil (CLX2 & LCOX2) A big production cut from OPEC+ yesterday boosted crude oil prices, with markets getting nervous about further use of energy as a weapon in the war. The move was met with disapproval by many western countries. US President Joe Biden said that the US would release another 10mbbls from its strategic reserve in response to the cuts. At the same time, the European Union announced a new package of sanctions against Russia, including a price cap on oil sales to third countries. The EIA inventory report also reported a crude inventory decline of 1.36mn barrels last week, with gasoline inventories falling to their lowest levels since November 2014. WTI futures rose towards $88/barrel while Brent was above $93.   What to consider?   Saxo’s Q4 2022 Outlook: Winter is coming In Q4, Europe and the UK brace for the impact of a winter season that will likely bring an economic winter with it as the power and gas crisis reaches peak impact.  Figuratively speaking, economic and financial turbulence is creating a volatile, unaccommodating environment for investment.  It is however worth keeping in mind that it will be spring after winter. The potential for longer-term investment returns increases as a function of declining asset prices.  You can read the Q4 2022 Outlook here and listen to the key highlights of the Outlook here.  OPEC+ production cut to more inflation concerns A very political move by the OPEC+ to cut production by 2 million barrels/day based on current production baselines. The impact is likely to be around 1 million b/d with the majority currently producing below and would not need to cut. These cuts are to be effective from November, while OPEC+ agreed to extend the cooperation deal until end-2023, and the JMMC will meet bi-monthly with OPEC+ ministers set to meet every six months. The White House was unimpressed, with comments saying that the OPEC+ production cut is a 'clear' indication that the bloc is 'aligning with Russia'. The move is likely to add fuel to the inflation fire globally, putting further downside pressure on growth and suggesting an even stronger dollar and more hawkish Fed. US ISM services PMI smashed Fed pivot expectations US ISM services softened slightly to 56.7 in September from 56.9 previously, but was far better than expectations of 56.0. Gains were mostly underpinned by strong employment gains to 53 from 50.2 in August, while business activity slowed to 59.1 from 60.9 and new orders slowed to 60.6 from 61.8. Prices paid also eased, dipping to 68.7 from 71.5, but still showing that prices are picking up, just at a slower pace. This stronger than expected ISM print has smashed expectations of a Fed pivot that were gaining traction after a miss in ISM manufacturing and weaker JOLTs data this week, and an RBA pivot as well. Solid ADP sets the tone for NFP, and Fed members stay hawkish ADP data showed an increase of 208k, suggesting demand for workers remains healthy. Next to watch today will be the weekly jobless claims which dipped to sub-200k last week, before the focus turns to NFP data on Friday. Meanwhile, Fed's Daly noted that the Fed is resolute at increasing rates into restrictive territory before holding rates there for a while, pushing back on talk of a Fed pivot. She added that she doesn’t see a rate cut happening next year “at all”. Raphael Bostic sounded similar notes, saying he favors lifting the benchmark to between 4% and 4.5% by the end of this year, and hold it there. The November 6 Beijing Marathon marked the return of large public events The 2022 Beijing Marathon is scheduled for November 6 and registration has started. The event will allow 30,000 runners to compete in Beijing after being cancelled in 2020 and 2021. It will be the largest public event being held in the Chinese capital city since the Winter Olympics.  Residents from other mainland Chinese cities other than Beijing however are not allowed to attend.  Residents of Taiwan, Hong Kong and Macao, and foreigners plus invited “elite” athletes are allowed to participate. The U.S. Government plans to further restrict China’s access to U.S. semiconductor technology It is reported that the U.S. Commerce Department will launch additional regulations this week to further restrict the exports of semiconductor technologies to China. New Zealand’s RBNZ hikes 50 basis points as expected This was the fifth consecutive meeting to bring a half-point hike and took the official cash rate to 3.5%. The bank signalled more tightening to come in its statement, as it noted that “core consumer price inflation is too high and labor resources are scarce. Still, short NZ rates continue to trade lower, if not falling as rapidly as for Australia after the RBA surprised with only a 25 basis point hike earlier in the week. The AUDNZD rate dropped below 1.1250 at one point overnight from the 1.1350 range before the announcement.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-6-oct-06102022
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Drivers! OPEC+ Decision Is Shocking! Crude Oil Price Expectations Have Changed!

ING Economics ING Economics 06.10.2022 09:18
There was no doubt that OPEC+ was going to cut supply when the group met in Vienna. However, the agreed 2MMbbls/d supply cut was at the top end of expectations. While the actual cut will be quite a bit smaller, it is still enough to dramatically change the oil balance over 2023 What did OPEC+ agree? Given the amount of noise leading up to the OPEC+ meeting and the fact that the group met in person in Vienna for the first time in over two years, it was clear that the group was going to take some meaningful action. Members of the agreement have for the last couple of months voiced their concerns about the disconnect between the physical and paper market, and that the group would possibly need to take action. We recently saw OPEC+ make a symbolic paper cut of 100Mbbls/d at their September meeting, which translated to an even smaller actual cut. Growing demand concerns have left OPEC+ uneasy and in the lead-up to this week’s meeting, expectations of a supply cut grew from around 1MMbbls/d initially to eventually 2MMbbls/d. Had the group announced a cut towards the lower end of this range, the market would have likely been disappointed. Therefore, OPEC+ announced that they would be cutting supply by 2MMbbls/d from November through until the end of 2023, although output policy could be reviewed before then, if needed. This is the biggest supply reduction seen from the group since the peak of Covid However, given that the bulk of OPEC+ members are producing well below their target production levels, the actual cut seen from the group will be smaller than the announced paper cut. Our numbers suggest that the announced cut will lead to an actual cut of around 1.1MMbbls/d from August production levels. It is likely that only Saudi, UAE, Kuwait, Iraq, Gabon, Algeria and Oman will need to cut output. All other members are already producing below their new target production. This action from OPEC+ will raise some eyebrows, given the uncertain macro outlook, an ongoing energy crisis and uncertainty over how Russian oil supply will evolve once the EU ban on Russian oil and refined products comes into force, along with G7 price cap. The move will also do little to help improve relations between the US and Saudi Arabia. A big winner from these supply cuts will be Russia. They do not need to cut output, given they are already producing below their targeted levels, yet they will benefit from the higher prices we are likely to see as a result of the cuts. OPEC+ agreed paper cuts vs. actual cuts by country (Mbbls/d) Note: Actual cuts use August 2022 production levels Source: OPEC, IEA, ING Research What does this mean for oil prices? The announced cut from OPEC+ dramatically changes the oil balance for the remainder of 2022 and the whole of 2023, assuming we see full compliance. We had previously expected that the global market would see a sizeable surplus for the remainder of this year and then a more marginal surplus over the first half of 2023, before returning to deficit over the second half. However, removing around 1.1MMbbls/d of supply means the market is more balanced over the fourth quarter 2022, and in large deficit over the whole of 2023. We had been expecting ICE Brent to trade in the US$90 area for the remainder of this year and through the first half of next year, before trading back above US$100/bbl in the fourth quarter of 2023. However, this latest action from OPEC+ suggests that there is upside to our current full year 2023 forecast of US$97/bbl. What can counter these cuts? The US administration will not be thrilled with the action taken by OPEC+, particularly given that US mid-term elections are just around the corner. Therefore, in the near term, we could see the US tap its Strategic Petroleum Reserves (SPR). However, with the US having already aggressively drawn down the SPR this year, which has left it at its lowest levels since 1984, there will be limits on much more will be released. Ultimately, OPEC+ can cut output for longer than the US can tap into its SPR. The US administration could also put more pressure on domestic producers to increase output more aggressively. However, we have already seen the US call on domestic producers to do so, yet the rig count has been largely flat since early July. The uncertain demand outlook along with rising costs may be holding some producers back. The OPEC+ supply cut could also put more pressure on the US to work towards an agreement for the Iranian nuclear deal. A positive outcome would mean that Iranian supply could increase by as much as 1.3MMbbls/d, which would more than offset the OPEC+ reduction, although admittedly, it would take some time for Iran to ramp up output if a deal were struck. In addition, there is always the risk that OPEC+ reduces production even further in the event of a nuclear deal. These are all supply-side solutions for the market. Clearly, demand destruction could also help to partly offset these supply cuts, although how much demand destruction we see will really depend on the severity of any upcoming recession. Read this article on THINK TagsSPR Russian oil price cap Russian oil ban OPEC+ Iran nuclear deal Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Inflation Rises but Core Inflation Falls to Two-Year Low, All Eyes on ECB Rate Decision on Thursday

Podcast: Review The Market And Consider Whether Bonds Offer Solid Value

Saxo Bank Saxo Bank 06.10.2022 10:43
Summary:  Today we note that the action in yesterday's session seemed to largely shred the central bank pivot narrative, not only because of a robust US ISM Services survey for September, but also as the reaction function across markets, with still resilient equities as yields rose sharply again didn't fit the narrative. We also look at whether bonds are offering solid value here, particularly at the shorter end of the yield curve, discuss Shell's profit warnings yesterday as an interesting harbinger and look at important variables to watch if the Fed is ever to begin pivoting (plot spoiler: not soon). Today's pod features Peter Garnry on equities, with John J. Hardy hosting and on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Share Source: https://www.home.saxo/content/articles/podcast/podcast-oct-6-2022-06102022
EUR: Stagflation Returns Amid Weaker Growth and Sticky Inflation

Scary Forecast For The Global Trade And OPEC Cut Production

Swissquote Bank Swissquote Bank 06.10.2022 10:52
It has been another volatile and undecided trading session yesterday. OPEC did cut its oil production target by 2 million barrels per day. It was the biggest cut since 2020, it was expected, it saw a morose reaction by Joe Biden - who said it was ‘shortsighted’, but a well better enthusiasm than what I expected by the oil bulls. Forecast for the global trade and US crude The barrel of US crude ended the session 1.90% higher, yet, the 50-DMA offers haven’t been cleared just yet. The World Trade Organization gave a scary forecast for the global trade next year. The WTO raised its trade growth estimate from 3 to 3.5% for this year, but they slashed their expectation for next year to 1%, from around 3-4%. Yesterday's market sentiment Yesterday, the investor sentiment was rather bearish. The major indices were under a decent selling pressure, following a strong two-day rally. The data from the US was not very Fed-friendly, but it was ok. The ISM services index showed a faster than expected expansion in the US services sector, and the ADP report printed a slightly higher number than the expectations. Now all eyes are on Friday’s NFP number, and wages growth data. In the FX, the dollar index rebounded, the EURUSD and Cable eased. Watch the full episode to find out more! 0:00 Intro 0:26 OPEC cuts, oil rallies… 2:46 …but WTO spoils rally 3:55 US deficit falls on higher exports despite strong oil 5:15 Market update: waiting for the next critical data 8:07 Morgan Stanley maintains overweight for Rivian Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #OPEC #Russia #output #cut #energy #crisis #crude #oil #natgas #stocks #XOM #Cheniere #Chesapeake #US #jobs #ADP #NFP #USD #EUR #GBP #Rivian #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Terra's Worker Arrested! White House Comment On The OPEC Decision And Success of Deutsche Bank

Terra's Worker Arrested! White House Comment On The OPEC Decision And Success of Deutsche Bank

Kamila Szypuła Kamila Szypuła 06.10.2022 13:21
The flow of information from the markets and the world today varies greatly. From successes to poor results. In this article: Compares the results Desire to buy Twitter First arrest in Terra LUNA investigation Another success of Deutsche Bank White House Commentary The statement Stephanie Cohen Communication Services has underperformed Bespoke in its tweet compares the results of Communication Services with the S&P. Pretty incredible how consistently Communication Services has underperformed the S&P over the last year. Almost a straight line from the upper left to the lower right.From our daily sector snapshot at https://t.co/H4p1RcpfIn. pic.twitter.com/q7wwuRYmsw — Bespoke (@bespokeinvest) October 5, 2022   Stock declines are visible in the market. We can judge the most important players by who and how copes with difficult market situations. It may come as a surprise when a better player achieves much worse results. This is what the author of the tweet mentions. Such a picture may turn out to be important for investors. Elon Musk tries to buy Twitter Cara Lombardo in her post describes situations where Elon Musk tries to buy Twitter. .@WSJ scoop w/⁦@AlexaCorse:⁩ - Musk & Twitter held unsuccessful price-cut discussions in recent weeks- Two sides now at odds over outlines of pact to close at original terms- For now, they agreed to delay Musk’s deposition tmrw $TWTR https://t.co/MjmvoEBYGi — Cara Lombardo (@CaraRLombardo) October 6, 2022   Once again, it grew loud around businessman Elon Musk. When he first announced his desire to buy Twitter, the market took it as a joke. Discussions are currently underway. Many wonder what the purpose of this purchase is and whether it will have a positive result for the giant's users. We can expect this topic to stay in the spotlight for a long time. Terra's head of general affairs has been arrested In his new tweet, CoinGecko announces the arrest of Terra's head of general affairs.   BREAKING: South Korea makes first arrest in #TerraLUNA investigation as they captured #Terra’s head of general affairs.The employee has been issued a bench warrant with charges of violating the capital markets act, fraud, and breach of duty.📰 https://t.co/iJVTndbnhJ — CoinGecko (@coingecko) October 6, 2022 A lot is happening in the cryptocurrency market. South Korea made the first arrest for violations of the Capital Markets Act, fraud and breach of obligations. Such information in the current cryptocurrency market can bring back memories of the beginning of this market where cryptocurrencies were used to hide profits in the world of criminals. Today, there are many supporters of cryptocurrencies, so we can expect that such a situation will have a negative impact on the terra luna market and not on the entire market. The successes of a large bank not only in the European region Deutsche Bank boasts of the successes of his Indonesian team.   Congratulations to our Indonesia team for winning Asiamoney's Best Corporate Bank in Indonesia award! Read more: https://t.co/BXfcD5dNmJ@DBCorporateBank — Deutsche Bank (@DeutscheBank) October 6, 2022 A few days ago, the Deutsche Bank announced that for the second consecutive year, it was awarded the title of the "Investment Bank of the Year of Western Europe" in The Banker's Investment Banking Awards 2022. The bank was successful not only in Europe but also in Asia. Deutsche Bank’s Indonesia team for winning Asiamoney's Best Corporate Bank in Indonesia award. Such a picture is very positive for the bank itself and its clients. Comment on the OPEC decision CNBC Now in its tweet cites a statement by the white house about the OPEC+ decision. JUST IN: White House says it is "disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine" (via @kaylatausche) https://t.co/KbCm80i2D3 pic.twitter.com/fKkP0mjKpI — CNBC Now (@CNBCnow) October 5, 2022   At yesterday's OPEC+ meeting, a decision was made to cut in production. There will be many reactions to this news, not only from the market. According to the White House, this is a bad decision in the face of the situation. The current economy is struggling with many problems, and cutting oil production may have different consequences. The company's commitment to workforce creation Goldman Sachs in his tweet recalls the statement Stephanie Cohen, Global Co-Head of Consumer and Wealth Management, on the company's commitment to workforce creation. Stephanie Cohen, Global Co-Head of Consumer and Wealth Management, discusses our commitment to building a diverse and inclusive workforce, our responsibility to the communities we serve and the strength of our business. Read more here: https://t.co/WzBCJL2o8R pic.twitter.com/UpwHXN4iu3 — Goldman Sachs (@GoldmanSachs) October 5, 2022   Readers can find out what is important to Goldman Sachs in building your workforce. Diversity in this environment is important for many, especially for young employees who count on personal development in such a company. Increasingly, it is becoming important to have a diverse environment that affects individuals as well as groups. Work in such an environment can be developmental for the employee and thus also for the company. The Goldman Sachs member emphasizes that this diversity is part of the responsibility for how they build relationships with customers and how they build their strength in the market. Getting to know this view of the company will positively influence its image.
The USD/CAD Pair Has The Strong Downside Momentum

USD/CAD May Not Feel That Fine After The Release Of Exports, Gold Price May Be Doing The Same As US Dollar Index Has Been Up In The Morning

Jing Ren Jing Ren 06.10.2022 14:42
In this article: USDCAD Gold Price US Crude Oil Price Check out our video comment on RBA decision:   USDCAD consolidates The Canadian dollar struggles over lacklustre August export data. A bearish RSI divergence showed a slowdown in the upward momentum while a double top at 1.3830 further suggested exhaustion in the current rally. The pair is prone to a correction after it fell below 1.3600. The uptrend remains intact but the recent parabolic rise could use some breathing room to let the bulls accumulate again. 1.3420 on the 20-day moving average is an area of interest. The support-turned-resistance at 1.3700 is the first hurdle. XAUUSD hits resistance Gold clawed back losses as the dollar index bounces higher. A sharp recovery has lifted bullion back to September’s high at 1730 which is an important level on the daily chart. As the RSI soared into the overbought area, fresh selling from trend followers in conjunction with profit-taking has kept the rally in check. A bullish breakout would force the short side to cover, stirring up volatility in the process. The psychological level of 1700 is a fresh support and its breach may extend losses to 1660. USOIL tests key resistance WTI crude bounced higher after OPEC+ agreed to cut output. The rebound has gained a foothold after it cleared the supply zone around 83.00. The price is testing the daily resistance and psychological level of 90.00 and stiff pressure could be expected from the sell side. However, sentiment may brighten up in the short-term if the bulls manage to push past this ceiling, clearing the path towards 97.00. As the RSI inches back into overbought territory, 86.00 has turned into a support in case of a pullback.
Commodities: Crude oil price could be supported by technicals

Energy Stocks: ExxonMobil Stock Price Up On The Back Of The OPEC+ Decision To Cut Supply!

FXStreet News FXStreet News 06.10.2022 16:10
XOM stock rallied 4% on OPEC+ supply cut. OPEC+ agreed to cut production by 2 million barrels per day. There is confusion about how the oil barrel production cuts will be implemented. Exxon Mobil stock is nearing a multi-month high. Exxon Mobil (XOM) shares added 4% to close at $99.12 on Wednesday after OPEC+ agreed to cut production by 2 million barrels a day. XOM stock has given up 0.9% in Thursday's premarket though as critics wonder whether the cuts will really be carried out. Exxon Mobil stock news When the news was announced on Wednesday morning, Brent crude shot up from $90.44 to above $93. Bulls could not push the price to $94, however, and oil sold off below $93 later in the day. The US government was unhappy with the cuts and, according to The Wall Street Journal, is considering easing sanctions on Venezuela to allow for more oil exports. These exports would heavily favor Chevron (CVX) though, not Exxon. Additionally, the Biden administration may sell more oil from its strategic petroleum reserve or SPR. Check out our video comment on the latest RBA decision: The critics have begun all but ignoring the headline figure, however. They say that OPEC+ has already been underproducing its target for months and that the actual physical cut will not likely amount to much. An executive from Velandera Energy Partners was vocal about this way of thinking, specifying that his company thinks only 1 million barrels will even be cut. Goldman Sachs was even more defensive, saying the cuts would not top half a million. In August, the oil cartel missed its target by as much as 3 million barrels a day. However, Goldman has been bullish on commodities for months and said it expects Brent to rebound to $110 this quarter. JPMorgan has a price target of $100 on oil. Both prices would buoy the Exxon Mobile share price. The cuts are scheduled to go into effect in November, and both Saudi Arabia and Russia are expected to cut 526,000 barrels a day from their current target of just over 11 million barrels a day. Saudi only produced 10.9 million barrels in August, however, so some of these cuts are just accounting changes regardless. "Other OPEC producers, such as Angola, Congo, Equatorial Guinea, and Nigeria, are already producing below their reduced November quotas, and as such, will not be required to cut production further," according to a report from OilPrice.com. Exxon Mobil stock forecast Two things stick out from the 1-day chart below for XOM stock. First, traders will note the Moving Average Convergence Divergence has crossed over and turned bullish. The second thing to notice is that XOM is already at or near resistance. On Wednesday, Exxon stock gave up right at the $100 level. It would be easy to say that this was just a psychological boundary, but XOM also faced difficulty here back between August 25 and 29. On the last day of that streak, it made it up to $101.56 but was pushed down before the close. Wednesday's close was also right in line with the high from September 12. The high at $105.57 back on June 8 was a decade-long high. It beat out the high from the summer of 2014 at $104.76, but again XOM could not hold this level for long. A likely pattern would see XOM drop back to support at just above $86 from August or $84 from late September before making a run at the June high. XOM daily chart
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Commodities: Ed Moya (Oanda) Comments On Crude Oil And Gold

Ed Moya Ed Moya 06.10.2022 23:15
Oil It is getting hard to bet against higher crude prices. ​ This week’s OPEC+ decision was a game changer for the oil market, as it signals tight conditions will remain throughout this winter. ​ Energy traders are not really believing that the Biden administration will be able to do anything quickly to stop the rally in oil prices. The NOPEC bill seems like it has a lot of barriers and won’t be an immediate course of action. The SPR has been tapped already and the US is dangerously depleting inventories which could make them more dependent on OPEC in the future. Sanction relief for Venezuela won’t come easy and does not seem like a viable option right now. ​ ​ A strong dollar is capping crude’s gains today and it looks like we could see crude continue to consolidate until tomorrow’s NFP report. ​ Gold dips on hawkish Fed Gold prices softened after another round of hawkish Fed speak. ​ Gold is entering consolidation mode as traders await nonfarm payrolls. ​ The lead up to NFP Friday saw a mixed round of employment readings that has many bullion investors on standby. A hot labor market and strong wages could keep the bond market selloff going and should decide what will be gold’s next major move. If nonfarm payrolls does not deliver any major surprises, gold may still be stuck in a trading range between $1700 and $1740 as traders will wait for next week’s inflation report. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil keeps rising, Gold awaits NFP - MarketPulseMarketPulse
Crude oil market affected by news that OPEC+ will enlarge output

Crude Oil Prices Seems To Feel Stronger On The Back Of The Significant OPEC+ Supply Cut

ING Economics ING Economics 07.10.2022 10:02
Supply cuts announced by OPEC+ earlier this week continue to push oil prices higher Source: Shutterstock Energy - supply cuts continue to offer support to oil Oil prices continue to strengthen following the 2MMbbls/d paper cut announced by OPEC+ on Wednesday. ICE Brent settled a little more than 1.1% higher yesterday, leading the market to trade above US$94/bbl. The crude oil market is now on course for its best week since mid-April. Read next: Terra's Worker Arrested! White House Comment On The OPEC Decision And Success of Deutsche Bank | FXMAG.COM  Following the OPEC+ meeting, the Saudis released their official selling prices (OSPs) for November loadings yesterday. Aramco left the OSP for its Arab Light into Asia unchanged at US$5.85/bbl over the benchmark. Meanwhile, Europe saw cuts of US$1.80/bbl for both extra light and light grades. There were smaller cuts of US$1.50/bbl for both medium and heavy grades. All grades to the US saw a marginal increase of US$0.20/bbl. The latest data from Insights Global shows that refined product inventories in the ARA region increased by 131kt over the last week to reach 5.33mt. Fuel oil stocks saw the largest increase, growing 83kt over the week to 1.13mt. Gasoil and jet fuel inventories increased by 27kt and 43kt respectively. Naphtha and gasoline inventories saw some moderate declines over the period. As for the European gas market, noise around a possible price cap continues to grow. According to Bloomberg, Belgium, Italy, Greece and Poland have proposed implementing a price cap on natural gas, which would include a corridor/range that would allow prices to trade within a certain range of the cap. The EU will need to be careful with how they go about trying to cap gas prices. This type of intervention will make it more difficult for the market to balance through needed demand destruction. In the US, natural gas prices continued to edge higher yesterday, despite the EIA reporting the largest weekly increase in inventories since 2015. US natural gas inventories increased by 129bcf, which was above market expectations of around 123bcf and also well above the 5-year average of 87bcf. Despite this large increase, total US natural gas inventories are still 7.8% below their 5-year average. Metals – LME restricts new Russian metal The London Metal Exchange said it will restrict new deliveries of metals from Russia’s Ural Mining & Metallurgical Co. and one of its subsidiaries after the UK placed sanctions on co-founder, Iskandar Makhmudov. Starting immediately, metal from UMMC or the Chelyabinsk Zinc unit can only be delivered to LME warehouses if the owner can prove to the exchange that it won’t constitute a breach of sanctions, including that it was sold before Makhmudov was sanctioned by the UK on 26 September, and that neither company has any economic interest in the metal. The LME said that UMMC copper, which is currently listed in the LME warehouse system, is not subject to the sanctions. There is no zinc produced by Chelyabinsk in LME warehouses. Last week the LME said it planned to launch a discussion paper considering a potential ban on new supplies of Russian material, including aluminium, copper, and nickel. Russia’s Rusal said that any move by the LME to restrict deliveries of its metal would damage the exchange’s standing in the global markets. The aluminium producer made the statement in a letter to customers, as it steps up a lobbying campaign against any possible move to block Russian metal. Rusal said that restricting deliveries of its metal would “create uncertainty around the role of the LME in the market” and make the exchange “less attractive to all participants.” Rusal is the world’s largest aluminium producer outside of China and accounts for about 6% of the world’s production. Although Russian metals, including aluminium, copper and nickel are not officially sanctioned, self-sanctioning could already be disrupting trade dynamics in the global metals markets. Agriculture- Brazilian crop prospects In its first estimates for 2022/23, Brazil’s National Supply Company, CONAB, forecasts domestic soybean production to increase by 21.3% YoY to 152.4mt largely on account of better yields. As Brazil recovers from drought in 2021/22, CONAB estimates soybean yields to increase 17.4% YoY to 3.6t/ha. Meanwhile, soybean acreage could also increase by around 3.4% YoY to 42.9m hectares. Comparatively, in the previous WASDE report, the USDA estimated that Brazil’s soybean production would increase by 18% YoY to 149mt. Considering the higher estimates from CONAB, the USDA could also increase Brazil’s soybean supply estimates in next week’s WASDE report. CONAB expects higher domestic production to support exports as well, with external shipments rising around 22.5% YoY to 95.9mt in 2022/23. Meanwhile, CONAB forecasts corn production to increase 12.5% YoY to 126.9mt, again largely due to better yields as the weather improves. Domestic corn yields are expected to increase 8.4% YoY to 5.7t/ha, whilst corn acreage could also increase 3.8% YoY to 22.4m ha. The Thai Sugar Millers Corp estimates domestic sugar cane production will increase to around 110mt in 2022/23 compared to around 92.1mt in 2021/22 due to better weather and supportive government policies. This would be the largest Thai sugar cane crop over the past three years and would help boost export supply from a key global exporter. Read this article on THINK TagsRussia-Ukraine OPEC+ Natural gas LME metals Grains Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Stronger Oil Prices Boost US Oil Production and Supply

What Would Be The Best Cocktail Of US Job Data Today That Investors Wish For

Swissquote Bank Swissquote Bank 07.10.2022 10:21
Equities retreated, the US yields and the US dollar rebounded as more Federal Reserve (Fed) members threw hawkish comments to defend their fight against inflation. Shell warns of weak Q3 The S&P500 closed 1% lower, while Nasdaq slid 0.68% despite being more sensitive to rate hikes. The US short-term yields rose, and the dollar index gained. Gold eased, while oil extended gains. Yet the rising oil prices fuel inflation and Fed expectations and certainly don’t do good to the overall market mood. Also, Shell warned investors that the Q3 results won’t be as breathtaking as the Q2, as the weaker gas trading and weaker refining will be reflected in the latest quarter earnings. Today, the US will announce its latest jobs data in a tense and volatile environment of energy crisis, persistent inflation, Fed members insisting that what they are doing is right, and markets crying that what they are doing is maybe a bit too much.   A mix of soft data Investors will be watching three main elements. The NFP data, the unemployment and participation rates, and the wages growth. Expectation for today is a NFP read of around 250K, unemployment rate at 3.7%, and wages growth of around 0.3% over the month. A mix of soft data will likely see a bullish kneejerk reaction, as investors are turning more concerned about the aggressive Fed tightening and are ready to bet that the rate hikes would slow down in the next few meetings and even stop, while a strong data could trigger a further selloff, as it would fail to keep the aggressive Fed hawks at bay. Watch the full episode to find out more! 0:00 Intro 0:34 Market update 2:00 Shell warns of weak Q3 2:54 Twitter jitters weigh on Tesla, but… 4:06 What’s the tasty mix of US jobs data look like? 9:03 BoFA thinks S&P500 valuations remain high 10:12 And the rising sovereign debt levels? Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #jobs #data #NFP #unemployment #wages #Fed #USD #Gold #XAU #crude #oil #Shell #XOM #OccidentalPetroleum #Twitter #Tesla #ElonMusk #GBP #UK #gilt #LizTruss #BoE #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Hungary's Budget Deficit Grows, Raising Concerns Over Fiscal Targets

Samsung And Its Decline In Operating Income| Credit Suisse Is Trying To Buy Back Credit

Saxo Bank Saxo Bank 07.10.2022 11:08
Summary:  Risk sentiment was wobbly yesterday, as yields continued to rise, with late Fed speakers in the US yesterday continuing to deliver a hawkish message. The US dollar has come roaring back, especially against the smaller currencies, ahead of today’s September US jobs report. Given Fed forecasts that it will continue to tighten even if unemployment were to begin rising, we may be some months from a pivot in the Fed’s message.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities retreated yesterday with S&P 500 futures declining 1% yesterday as US bond yields are coming back higher towards the 4% as the US economy is still looking robust despite tighter financial conditions. S&P 500 futures are continuing lower this morning trading around the 3,740 level with the 3,700 level being the next natural gravitational point for the market on the downside. US Nonfarm Payrolls for September is of course today’s main event but it will probably not move much unless we see a big surprise to average hourly earnings figure m/m. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hang Seng Index sank for the second day in a row after the sharp rally on Wednesday. Chinese EV stocks tanked, with Li Auto (02015:xhkg) tumbling 16.1%, and Nio (09866:xhkg) and XPeng (09868:xhkg) down from 7% to nearly 9%. Investors were concerned about the severe competition in the EV industry with new entrants to the market and rising battery costs. China developer names plunged from 2% to 11% across the board as sentiment was clouded by CIFI’s (00884:xhkg) discussion with banks about posting an interest payment and a 2-notch downgrade to Caa1 by Moody’s for the developer’s senior unsecured debts. Hang Seng Index lost more than 1% by mid-day. Shanghai and Shenzhen exchanges are closed for a national holiday and will return on Monday. USD and US yields/risk sentiment The US dollar bounced back strongly yesterday on the supportive combination of weak risk sentiment and higher US treasury yields, with EURUSD all the way back to 0.9800 this morning after flirting with parity just a couple of sessions ago. The USD strength was most pronounced against the smaller currencies with a pair like AUDUSD trading near the cycle low below 0.6400 ahead of the US jobs data. That combination of higher US yields and weak risk sentiment provides the strongest support for the greenback, with a strong US jobs report the most likely spark for a further rise. Very interesting ahead of the weekend that USDJPY remains pinned near the critical 145.00 level ahead of the US jobs data – will we see a volatility event and official intervention if strong US jobs data sends the pair over the edge? Gold (XAUUSD) Gold eased back lower on the fresh rise in US treasury yields and a stronger US dollar, but the retracement of the recent massive rally off the cycle low of 1,1615 has been fairly shallow, with the first support zone of note into 1,680-1,700 area. The most significant challenge to gold would be a strong US jobs report and further USD strength, but a full reversal of the latest rally wave would require a significant plunge. To the upside, the next resistance of note is the 1,1734 level (61.8% retracement of the big sell-off wave into the lows) and then the huge 1,800 area and pivot high of 1,808 in August. Crude oil (CLX2 & LCOX2) The energy market tightness concerns continued to underpin further gains in the oil market, with WTI futures now rising towards $89/barrel and Brent above $94 following a 2 million barrels/day cut announced by OPEC+. Other supply issues are also at play with European sanctions on Russian oil coming into effect this quarter, but the US may opt to release more from its strategic reserves to offset some of this decline in supply. US treasuries (TLT, IEF) US treasury yields rose all along the curve ahead of today’s important September US jobs report and the market’s attempts to express hope over the last week that the Fed is set to deliver a pivot to less hawkish guidance. The US 10-year benchmark traded this morning aove 3.80%, less than 20 basis points from the significant 4.00% level that was briefly touched during the UK gilt market wipeout that saw some contagion even into US treasuries. What is going on? AMD blasted on ugly outlook and Samsung shows 11% in operating income Advanced Micro Devices revealed preliminary Q3 sales yesterday ahead of its earnings report in coming weeks. These were at $5.6 billion versus company and analyst estimates of $6.7 billion, an enormous miss.  Weaker demand in the PC market was cited, with writedowns in inventories also playing a role. Shares traded more than 3% lower after hours late yesterday after having lost some 60% from late 2021 highs. Samsung is also part of the semiconductor industry has announced its preliminary Q3 results this morning showing operating income declined 11% as demand for consumer electronics is coming down hard. Fed officials reiterated hawkish comments With the markets anticipating a Fed pivot sooner rather than later, Fed members continue to send stronger hawkish signals with the clear message being higher for longer interest rates. Minneapolis President Kashkari (2023 voter) said the Fed is “quite a ways away from a pause in rate hikes” and “not seeing evidence that underlying inflation peaked”. Fed Governor Cook said “restoring price stability likely will require ongoing rate hikes and then keeping policy restrictive for some time”. Fed Governor Waller joined the chorus saying that the Fed needs to continue to raise rates into early 2023. The Chicago Fed’s Charles Evans (Voter 2023) also reiterated that the Fed is heading to 4.5-4.75% by spring, and another 125bps of rate hikes is seen over the next two meetings. Credit Suisse is trying to bolster sentiment by buying back credit The Swiss-based bank is offering this morning to buy back its own debt up to CHF 3bn. ECB minutes suggest inflation concerns The ECB minutes from the September 7-8 meeting were released yesterday and suggested that another big rate hike after the last month’s 75bps move is in the cards. There was broad consensus that the key policy rates are still below neutral. While the assessment of economic performance sounded bleak, taming inflation remained the overarching objective and therefore further tightening is still expected. Markets currently price heavy odds that the ECB will deliver a 75 bp hike. Hong Kong’s PMI fell to the contractionary territory in September The S&P Global Hong Kong PMI fell to 48.0 in September from 51.2 in August, returning to the contractionary territory for the first time since March this year when Hong Kong was hit hard by an outbreak of COVID-19. The S&P Global Hong Kong PMI surveys activities in manufacturing, wholesale, retail and services, and construction. Among the sub-indices, the new order sub-index fell the most to 46.1 in September from 51.3 in August. The new export orders sub-index deteriorated further to 45.9 from 47.4 in the prior month. The output sub-index fell to 47.3 from 52.2 and the employment sub-index declined to 48.3 from 48.6. What are we watching next? Today's US September jobs report and the fate of the “pivot” narrative Fed speakers of late, including those late yesterday, continue to deliver a consistent message of continuing the current tightening regime, and given the Fed’s forecast that it will continue to tighten even as unemployment begins to rise (September forecasted a rise to a 4.4% unemployment rate next year vs. 3.7% currently), we are likely at least many months from the Fed blinking due to a softening labor market. The Sep. Nonfarm payrolls change is expected near +260k after +315k in August and the Average Hourly Earnings are seen rising +0.3% MoM and +5.0% YoY – the latter would be the slowest pace of wage growth since December. Earnings to watch The Q3 earnings season kicks off next week with the most important day being Friday with seven large US financial institutions reporting. The key focus points will be to what extent US banks are able to increase their net interest margin and the levels of credit provisions. Wednesday: PepsiCo Thursday: Progressive, Fast Retailing, Tryg, Walgreen Boots Alliance, Fastanal, BlackRock, Delta Air Lines, Domino’s Pizza Friday: Shanghai Putailai New Energy, YTO Express Group, PNC Financial Services, JPMorgan Chase, Morgan Stanley, Citigroup, UnitedHealth Group, Wells Fargo, US Bancorp, First Republic Bank Economic calendar highlights for today (times GMT) 1100 – Mexico Sep. CPI 1230 – US Sep. Nonfarm Payrolls Change 1230 – US Sep. Unemployment Rate 1230 – US Sep. Average Hourly Earnings 1230 – Canada Sep. Employment Change/Unemployment Rate 1400 – US Fed’s Williams (Voter) to speak 1500 – US Fed’s Kashkari (Voter 2023) to speak 1600 – US Fed’s Bostic (Voter 2024) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-7-2022-07102022
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The Chances Of The Fed For 75bp Rate Hike Increased After The Strong Report|European Stock Indices Are In A Downtrend

InstaForex Analysis InstaForex Analysis 08.10.2022 08:06
Stocks opened lower and Treasury yields rose as the strong report reaffirmed bets that the central bank would continue to be aggressive with its tightening campaign. Odds of a 75-basis point hike increased to a certainty following the report. Aside from the anxiety that usually precedes these numbers, traders had to digest remarks from a raft of Federal Reserve speakers who sounded unequivocally committed to crushing inflation with rate hikes. The hawkish rhetoric helped push the S&P 500 to its second straight day of losses, while lifting the dollar and Treasury yields. Oil topped $88 a barrel. European stock indices are in a downtrend with the target of updating year lows: This is the last jobs report Fed officials will have before their November policy meeting as they consider a fourth-straight 75-basis point interest rate hike. Fresh inflation data coming out next week will also play a fundamental role in their decision making. The report is projected to show the depth and breadth of the Fed's inflation problem, with a key indicator of consumer prices potentially worsening. The Moscow Exchange Index failed to hold above 2,000 and continued its decline: Key events this week: US unemployment, wholesale inventories, non-farm payrolls, Friday Bank of England Deputy Governor Dave Ramsden speaks at event, Friday Fed's John Williams speaks at event, Friday   Relevance up to 17:00 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323750
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

Forecast That The Global Commodities Market Will Likely Be In Deficit

ING Economics ING Economics 09.10.2022 09:29
Commodity markets have come under pressure due to a strengthening US dollar and a raft of central banks hiking interest rates recently. This has clouded the macro outlook. However, the supply picture for a number of commodities remains fragile In this article The OPEC+ put Price caps and price forecasts Even tighter times ahead for European gas Source: Shutterstock The OPEC+ put Oil prices came under pressure in September, with ICE Brent falling by almost 9% over the month and trading to the lowest levels since January. US dollar strength and central bank tightening have weighed on prices and clouded the demand outlook. From a supply perspective, the oil market has been in a more comfortable position. Russian oil supply has held up better than most were expecting due to China and India stepping in to buy large volumes of discounted Russian crude oil. The demand picture has also been weaker than expected. However, we believe there is a good floor for the market not too far below current levels. Firstly, the EU ban on Russian oil comes into force on 5 December, followed by a refined products ban on 5 February. This should eventually lead to a decline in Russian supply, as it is unlikely that China and India would be able to absorb significantly more Russian oil. Secondly, US Strategic Petroleum Reserve releases are set to end later this year. If not extended, we could start to see large drawdowns in US commercial inventories, which are very visible to the market and could provide more support. Potential OPEC+ intervention should also provide a good floor to the market. Already this week, OPEC+ announced a 2MMbbls/d supply cut through until the end of 2023. However, it is important to remember that given OPEC+  is cutting output from target production levels, the actual cut will be smaller given that most OPEC+ members are already producing well below their target levels. Our numbers suggest that the group’s paper cut of 2MMbbls/d will work out to an actual cut of around 1.1MMbbls/d. Price caps and price forecasts As for the proposed G7 price cap on Russian oil, the EU now appears to have agreed on the mechanism. However, once implemented, there is still plenty of uncertainty over whether it will have the desired effect of keeping Russian oil flowing and limiting Russian oil revenues. Without the participation of big buyers, such as China and India, it is difficult to see the price cap being very successful. In addition, there is always the risk that Russia reduces output in response to the price cap. We currently expect Brent to trade largely within the US$90 area for the remainder of this year and into the first half of 2023, before strengthening over the second half of 2023. However, given the large supply cut recently announced by OPEC+, the global market will likely be in deficit through the whole of 2023, suggesting that there is upside to our current forecasts. Even tighter times ahead for European gas European natural gas prices have come off their highs in August, falling more than 40% from the recent peak. Comfortable inventory levels have helped, with storage 89% full already. The EU has also managed to build storage at a quicker pace than originally planned. In addition, intervention from the EU is likely to leave some market participants on the sidelines, given the uncertainty over how policy may evolve. It also appears that the EU is moving towards a price cap on natural gas in some shape or form. Whilst this will offer some relief to consumers, it does not solve the fundamental issue of a tight market for the upcoming winter. We need to see demand destruction in order to balance the market through the high demand months of the winter, but capping prices will do little to ensure this. It will be difficult to get through this period unless we see demand falling aggressively, and this becomes more of a challenge when we see seasonally higher demand. The latest numbers from Eurostat show that EU gas consumption was 11% below the five-year average over July, falling short of the 15% reduction the EU is targeting. In recent weeks, consumption has also come under further pressure as a result of industrial shutdowns. EU gas storage above target levels while demand comes under pressure Source: GIE, Eurostat, ING Research   It is looking increasingly likely that the trend for Russian gas flows is lower in the months ahead. At the moment, the EU is only receiving Russian pipeline natural gas via Ukraine and through TurkStream, and there is the risk that we will see these flows decline as well. Recently, Gazprom warned that Russia could sanction Ukraine’s Naftogaz due to ongoing arbitration. This would mean that Gazprom would be unable to pay transit fees to Naftogaz, which puts this supply at risk. At the moment, volumes transiting Ukraine are in the region of 40mcm/day. Meanwhile, total daily Russian flows via pipeline to the EU are down in the region of 75-80% year-on-year. The EU should be able to get through the upcoming winter if demand declines by 15% from the five-year average between now and the end of March. The bigger concern, however, will be for the following winter in 2023/24. Earlier this year, we saw some decent flows of Russian gas, which helped with rebuilding inventory. Next year, Russian flows are likely to be minimal, which means that the EU may build inventories at a slower pace. We therefore expect to go into winter in 2023/24 with very tight inventories, which suggests the risk of even higher prices over this period. TagsOil Natural gas Monthly Update Energy crisis Energy Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

Putin's Reaction To The Outbreak | 36.4% Less Passenger Travel In China

Saxo Bank Saxo Bank 10.10.2022 09:22
Summary:  S&P 500 plunged 2.8% following a decline of U.S. unemployment to 3.5% in September, signing a tight labor market and providing cover for the Fed to front-load larger rate hikes. U.S. treasury yields and the dollar continued to charge higher. The AUD dollar fell to a 2.5-year low. WTI crude jumped 5.4% as the OPEC+ production quota cut continued to linger. The U.S. tightened its restrictions on the export of semiconductor technology to China. Putin called an emergency meeting with his Security Council. What is happening in markets?   Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) retreated on a hot labour market After a stronger-than-expected payroll report and a decline in the unemployment rate to 3.5%, U.S. stocks slid throughout the session and managed only to bounce slightly from the lows toward the market close.  S&P 500 plunged 2.8%, with all 11 sectors of the benchmark declining.  The information technology and consumer discretionary sectors fell the most, down 4.1% and 3.5% respectively. On the back of a 5.4% jump in crude oil prices during the day, the energy sector was the best performer, losing only 0.7%. Nasdaq 100 tumbled 3.9%.  Advanced Micro Devices (AMD:xnas) fell the most among the NDX constituents, down 13.9%, following slashing over USD1 billion from its revenue guidance for Q3. Close behind was another semiconductor name, Marvel Technology, falling 11.7%. Intel (INTC:xnas) and NVIDIA (NVDA:xnas) plunged 5.4% and 8% respectively.  The Biden administration issued new rules to restrict American companies from exporting advanced chip equipment to China.  CVS Health (CVS:xnys) plunged 10.5% after being downgraded to a worse-than-average quality rating from Medicare Advantage’s Star Ratings and on its plan to acquire Cano Health (CANO:xnys).  Trading desk talks suggested large short-selling initiated in financials while short-covering was prevailing in the energy space. This week could be another pivotal moment for markets with the U.S. earnings season kicking off, the September FOMC minutes, and the US CPI. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) climbed from 5bps to 7bps across the curve on the fall in the unemployment rate to 3.5% U.S. treasuries sold off on the larger-than-expected +263K print of the non-farm payrolls and the 3.5% unemployment rate (vs 3.7% expected), with the belly of the curve being hit most.  5-year yields jumped 7bps to 4.14%, while 2-year yields climbed 5bps to 4.31% and 10-year yields moved up 6pbs to 3.88%.  The money market curve now prices in a 75bp hike almost a done deal for the November FOMC. The cash treasury bond market is closed on Monday for Columbus Day (but U.S. stock exchanges are open).  Hong Kong’s Hang Seng (HSIU2) fell in light volume with China property and EV stocks underperforming Hang Seng Index sank for the second day in a row after the sharp rally on Wednesday, falling 1.5%. Chinese EV stocks tanked, with Li Auto (02015:xhkg) tumbling 14.8%, Nio (09866:xhkg) plunging 10.5%, and XPeng (09868:xhkg) moving down 6%. The collapse of EV stock prices contributed significantly to the 3.3% decline of the Hang Sent Tech Index (HSTECH.I).  Investors were concerned about the severe competition in the EV industry with new entrants to the market and rising battery costs.  China developer names plunged from 2% to 9% across the board as sentiment was clouded by CIFI’s (00884:xhkg) discussion with banks about posting an interest payment and a 2-notch downgrade to B3 (long-term rating) and Caa1 (senior unsecured debts) by Moody’s. CIFI and Longfor (00960:xhkg), each tumbled over 8%.  Turnover in the Stock Exchange of Hong Kong hit a new 2022 low at HKD57 billion. Shanghai and Shenzhen exchanges were closed for the National Day holiday the whole last week and are returning today.   Australia’s ASX200 (ASXSP200.1) tipped to open the week lower, while focus remains on commodities The ASX200 charged 4.5% last week outperforming global markets, with the rally being supported by commodity prices moving higher, including iron ore. On Monday the Futures indicate the market could fall 0.9% following Wall Street. Trading screens will likely be in the green (black) in the commodity sector, after the oil price rallied 4.7% to $92.62. A focus will also be on iron ore companies as after China’s markets reopen after a weeklong holiday, and China is the largest buyer of iron ore. It’s also worth noting the US listed BHP closed just 0.8% lower on Friday, outperforming US equites. Other stocks to watch might include; Karoon Energy (KAR), after Brazil agreed to lower the royalty rate on the company’s Bauna project. Core Lithium (CXO) and NRW Holdings (NWH) will also be in focus after NRW’s Primero won a contract for Core Lithium’s plant. And Tabcorp (TAH) will also be in view for traders, after investing $33 million for a 20% equity stake in Dabble Sports.  The U.S. dollar climbed modestly on higher bond yields Higher bond yields lifted the dollar, seeing DXY 0.4% higher to 112.795.  USDJPY hovered above 145 but is yet to make a decisive upward move again to test the resolve of Japan’s Ministry of Finance.  EURUSD weakened -.5% to 0.9744 and GBPUSD declined 0.7% to 1.1089. The Australian dollar (AUDUSD) fell to a 2.5-year low, as the Fed gained more ammunition to hike   The AUD/USD fell 0.7% to 0.6361, which is its lowest level since April 2020. This follows the US jobs report coming out on Friday, which gives the Fed more ammunition to rise rates. Keep in mind, a currency generally appreciates when its central bank rises rates. This is in deeded one of the key reasons why the USD is marching up. And when you compare the Fed’s hawkishness to the RBA’s fresh dovish tone, it makes this currency pair an interesting one to watch, particularly with this week’s US economic data and Fed speeches on tap. On the weekly chart it could worth watching the support level at perhaps 0.61670.   Crude oil (CLX2 & LCOX2) surged more than 5% The front-month contract of WTI crude gained 5.4% to USD92.64 despite a modestly higher U.S. dollar. The production quota cut last Wednesday continued to provide support to crude prices.  Since OPEC+ announced the production quota cut, WTI crude oil prices have risen 7.7%.  While many news headlines say it is a production cut of 2 million barrels, we want to clarify here that the 2 million barrels number is referring to the quota, not production.  However, 15 out of the 23 oil-producing countries involved produced below their current levels of allocated quotas in September 2022. 13 of these oil-producing countries produced less oil in the last month than the reduced quotas to be implemented in November.  In other words, the reduced quotas will cut oil production in 10 countries if they adhere to cap the quota.  Having said that, the cut will still be about 1.3 million barrels a day effectively and it is still substantial, from Saudi Arabia (552,000 barrels), UAE (171,000 barrels), Iran (150,000 barrels), Kuwait (144,000 barrels), Libya (100,000 barrels), Iraq (69,000 barrels), Algeria (43,000 barrels), Gabon (28,000 barrels), South Sudan (21,000 barrels, and Oman (21,000 barrels).   What to consider?   US Unemployment Rate fell 0.2 percentage points to 3.5% Nonfarm payroll growth lowered to +263K in September, down from August’s +315K but slightly above the median forecast of +255K of Bloomberg’s survey.  Major areas of strength in the establishment report (i.e. payrolls) were healthcare, leisure, and hospitality while trade and transportation employment was weak. The market moving part in the cluster of data was the 0.2pp decline in the unemployment rate to 3.5% in September from 3.7% in August which the market had expected unchanged at 3.7%.  Part of the fall in the unemployment rate was attributed to a 0.1pp decline in the labor force participation rate to 62.3% from 62.4%. Investors and trades are concerned about the inability of the participation rate to sustain its rally toward 63 or higher so as to dampen upward pressure on wages. Average hourly earnings came in as expected at +0.3% M/M and +5% Y/Y.  FedEx’s ground delivery unit expects a slower volume ahead FedEx Ground, the ground delivery unit of FedEx (FDX:xnys) said in a statement that they are expecting “weakening macroeconomic conditions are causing volume softness. The unit is working with its customers on the latter’s projected shipping needs and making adjustments.  The U.S. tightened restrictions on exporting semiconductor equipment, components, and high-end chips to China The U.S. Department of Commerce rolled out new regulations last Friday to prohibit American companies from exporting to Chinese companies advanced semiconductor equipment and components that can be used to make equipment without first applying for a license from the Department of Commerce effective immediately. The Department of Commerce’s new rules bans U.S. persons from providing support to the development or production of semiconductors at Chinese semiconductor facilities without a license from the Department of Commerce.  The Department of Commerce also tightened the Foreign Direct Product Rule to restrict China from obtaining advanced microchips that can be used in supercomputers and artificial intelligence applications from American companies as well as foreign companies that rely on American technologies. Tourism data was weak for the National Day Golden Week holiday in China According to data from the Ministry of Culture and Tourism, domestic trips and revenues for the period from Oct 1 to 7 were 18.2% and 26.2% lower than those in the same period last year respectively.  According to estimates from the Ministry of Transport, the aggregate number of passenger trips via roads, railways, waterways and aviation from Oct 1 to 7 was 255.5 million trips or 36.5 million trips per day on average, which was 36.4% lower than that in 2021. Putin is chairing a meeting with his Security Council on Monday Russian President Putin is going to chair a meeting with the permanent members of the Russian Security Council today. It was apparently in response to the explosion two days ago that seriously damaged the Kerch bridge which links Crimea with Russia.   For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-10-oct-10102022
Share of Russian metal grows in LME warehouses

Copper Trade Unchanged But There May Be A Supply Problem| Dozens Of Grain-Hauling Vessels Are Already Backing Up

Saxo Bank Saxo Bank 10.10.2022 09:31
Summary:  Markets remained in a risk-off mood on Friday as US equities sold off steeply in the wake of in-line US employment data for September that discourages the notion that the Fed is set to let up on the tightening pressure any time soon. Sentiment has not picked up to start the week in the Asian session overnight as China is back from a long holiday. The macro calendar highlight of the coming week is Thursday’s US September CPI data, while the large US banks will kick off the Q3 earnings season late this week.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US stocks fell sharply on Friday, closing back toward the cycle lows and wiping out most of the rally from the previous Friday’s cycle-low close. The sell-off Friday was triggered by the stronger than expected US jobs report: payrolls growth was in-line with expectations, but the unemployment rate dropped back to the modern record low of 3.5%, taking US yields higher as the market fears sustained further tightening pressure from the Fed. With the price action now back near the bear market lows, this week could prove pivotal for markets as we await the key US September CPI data on Thursday and as quarterly earnings season is set to kick off late this week with the large US banks reporting Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) China returned from a week-long holiday today and declined moderately with CSI300 off 0.9%.  EV, semiconductor, and tourism names retreated.  Domestic trips and revenues, as well as traffic data for the period from Oct 1 to 7, were substantially below the levels during the same period last year.  Last Friday, the Biden Administration rolled out new rules to restrict China’s access to semiconductor equipment.  Oil and gas, poultry, and pig farming stocks gained in the A-share market. Hong Kong’s Hang Seng Index continued to plunge on Monday, falling by more than 2.5%.  Chip makers, SMIC (00981:xhkg) and Hua Hong Semiconductor (01347:xhkg) plunged 29% and 9.9% respectively.  China internet stocks moved lower, with leading names falling from 3% to 8%. USD and US yields/risk sentiment Cratering risk sentiment on Friday took the US dollar higher as the September US jobs report failed to show any negative surprise that might bring some relief in the Fed’s tightening regime, and as the unemployment rate falling back to the modern record low of 3.5% took US yields back toward cycle highs.  The first USD pairs to push to new cycle extremes include AUDUSD overnight, as the pair tested levels below 0.6350, and USDJPY edged further above the 145.00 area as traders wonder if and when the Bank of Japan/Ministry of Finance will intervene again. EURUSD has more room to run before hitting the cycle lows below 0.9600. The key coincident indicators are likely to remain US treasury yields as the front end of the yield curve is pushing on the cycle highs near 4.35%, and on risk sentiment if US equity indices spill to new lows after nearly hitting the cycle lows overnight. Gold (XAUUSD) Gold trades back below $1700 and back on the defensive after Fridays stronger-than-expected US jobs report added a renewed bid to the dollar and yields on raised concerns the Federal Reserve will continue to hike rates aggressively. The latest COT report covering the week to last Tuesday when gold, supported by a temporary slump in the dollar and yields, jumped by around 6% showed that most of the buying that week was due to short covering.  Overall, the net position jumped 46k lots from the biggest short in almost four years to a small net long. With renewed dollar strength in focus the risk of fresh albeit more muted short selling exists with gold’s renewed upside push unlikely until the market feels convinced that the Fed has reached peak hawkishness. Focus this week on US PPI and CPI prints. Crude oil (CLX2 & LCOX2) pauses after +15% weekly jump Crude oil traded softer in Asia as demand concerns resurfaced in response to worries about a global economic slowdown made worse by central banks continuing to hike rates. Despite worries about supply disruptions the OPEC+ group of producers last week agreed to cut production from November, a move that sent prices sharply higher and will likely prolong central banks battle against inflation and with that the risk of a deeper economic contraction. China meanwhile continues its battle with local virus outbreaks further delaying a pickup in demand from the world's largest importer. Ahead of last week’s OPEC decision hedge funds had increased bullish oil bets to a ten-week high, the bulk of the change being driven by short covering. Focus this week being monthly oil market reports from EIA and OPEC on Wednesday followed by the IEA on Thursday. HG Copper Copper trades flat after a two-day sell off ahead of the weekend eroded earlier strong gains led by dollar weakness and supply worries. However, supply risks are looming with a possible ban of Russian supplies to the London Metal Exchange potentially cutting off some of the world's biggest companies impacting supply of key metals from nickel, aluminum, copper and zinc. In addition, China reopening after a weeklong holiday to report a smaller than expected build in copper stockpiles compared with last year. Speculators cut their net short in HG copper to just 2.5k lots in the week to October 4, the lowest conviction in four months that prices will fall further.  US treasuries (TLT, IEF) US treasury yields lifted all along the curve Friday in the wake of the US September jobs report, which saw the unemployment rate dropping back to the modern record low of 3.5% (in part on a slight drop in the participation rate). The 2-year yield overnight hit the cycle high of 4.34%, while the 10-year yields has yet to break back above the cycle high just north of 4.00% that was posted during the UK gilt wipeout before the BoE brought emergency intervention. Focus this week on FOMC minutes on Wednesday and the US September CPI data point on Thursday. What is going on?   The U.S. tightened restrictions on exporting semiconductor equipment, components, and high-end chips to China. The U.S. Department of Commerce rolled out new regulations last Friday to prohibit American companies from exporting advanced semiconductor equipment and components to Chinese companies that can be used to make equipment without first applying for a license from the Department of Commerce effective immediately. The Department of Commerce’s new rules bans U.S. persons from providing support to the development or production of semiconductors at Chinese semiconductor facilities without a license from the Department of Commerce.  The Department of Commerce also tightened the Foreign Direct Product Rule to restrict China from obtaining advanced microchips that can be used in supercomputers and artificial intelligence applications from American companies as well as foreign companies that rely on American technologies. Germany says severing of cables that disrupted train networks Saturday was highly “professional”, although no suspects were identified and no known person or organization has claimed responsibility for the operation, which shut down much of train travel across northern Germany for several hours. Russian leader Putin calls Security Council for a meeting today after Crimean bridge attack. A truck bomb heavily damaged the only bridge link between Russian territory and Crimea, a move dubbed a terrorist attack by Putin and one that could bring more reprisals on Ukrainian infrastructure, with considerable focus on Europe’s largest nuclear power plant Zaporizhzhia, where intense fighting has at times disrupted power to the plant in recent days. Iron Ore (SCOc1) price hits a three-week high after China returns from week-long holiday. The price of the key streel ingredient, Iron Ore (SOCA,SCOX2) rose 2.4% $96.25 in Asia today after China’s markets reopened after a week long holiday. The 2.4% jump in the iron ore is the biggest one day advance in three weeks. The Iron Ore remains 50% lower than its all-time high of $211 after China curbed imports and lockdowns continue to linger. Iron ore is finding it hard to break out of a bear market, despite, US steel giant, Nucor announced two weeks ago its pushing ahead with plans to expand steel production, with its newest line to open in mid-2025. However, shares in BHP (BHP:xasx) listed in Australia have rallied off their lows and trade 15% away from record high-territory, with the miner benefiting from rising cash flows from its other businesses (coal and oil). Chicago wheat futures jumped nearly 3% in early trading, underpinned by concerns over the Russia-Ukraine war slowing grain shipments from the Black Sea region. This after Putin accused Ukraine of orchestrating the explosion on the bridge over the Kerch Strait, a key prestige project for the Russian President. The developments cast even more uncertainty over shipments to the world market through Ukraine’s export corridor in the Black Sea, which comes up for renewal next month. Dozens of grain-hauling vessels are already backing up while awaiting inspection at Istanbul under the terms of the deal.  What are we watching next? The economic calendar for the week picks up on Wednesday with the latest set of FOMC minutes, but the highlight of the week will be Thursday’s US September CPI report, after the August data surprised with significantly higher than expected inflation. Friday we get a look at US September retail sales after core spending has been on a declining trend for the last several months. Earnings to watch The Q3 earnings season kicks off this week, with the most important day being Friday, as seven large US financial institutions reporting. The key focus points will be to what extent US banks are able to increase their net interest margin and the levels of credit provisions. Wednesday: PepsiCo Thursday: Progressive, Fast Retailing, Tryg, Walgreen Boots Alliance, Fastanal, BlackRock, Delta Air Lines, Domino’s Pizza Friday: Shanghai Putailai New Energy, YTO Express Group, PNC Financial Services, JPMorgan Chase, Morgan Stanley, Citigroup, UnitedHealth Group, Wells Fargo, US Bancorp, First Republic Bank Economic calendar highlights for today (times GMT)US Bank Holiday (treasury market closed, equity market open)0815 – ECB's Centeno to speak1030 – ECB's de Cos to speak1300 – US Fed’s Evans (voter 2023) to speak1300 – ECB Chief Economist Lane to speak1700 – US Fed Vice Chair Brainard to speak2200 – Australia Sep. CBA Household Spending2330 – Australia Oct. Westpac Consumer Confidence Index0030 – Australia Sep. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-10-2022-10102022
Czech National Bank Prepares for Possible Rate Cut in November

After Robust US Jobs Data Focus Shifts To US Inflation Data

Swissquote Bank Swissquote Bank 10.10.2022 11:06
Friday’s US jobs data wasn’t exactly what investors had wished for. The US unemployment rate printed last Friday was the lowest number since 1969 and came as another proof that whatever the Fed does, the US jobs data remains robust. As a result, the Fed hawks came back in force following the US jobs data on Friday. The US yields and the US dollar rose, equities and gold fell. Investors are focused on US inflation data this week. Elsewhere, crude oil continues rising whereas Joe Biden tries everything to reverse the rally, and the US earnings season kicks off with US big bank earnings. TSM will also reveal its Q3 results, but expectations are soft after Samsung announced 32% drop in its operating income and AMD warned they will miss estimates. Watch the full episode to find out more! 0:00 Intro 0:33 US jobs data was too robust… 2:41 Focus shifts to US inflation data 4:48 Swiss franc, gold down 5:40 Crude oil up 7:32 US earnings season kicks off with big bank, TSM earnings Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #jobs #data #NFP #unemployment #wages #Fed #USD #EUR #GBP #Gold #XAU #crude #oil #XOM #Tilray #pot #stocks #Biden #US #bank #earnings #season #AMD #TSM #Nvidia #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Rising Fuel Prices Are Also Bad News For The Fed

Rising Fuel Prices Are Also Bad News For The Fed

InstaForex Analysis InstaForex Analysis 10.10.2022 12:54
The euro-dollar pair is phlegmatically declining, trading within the 97th figure, after a sharp 250-point decline last week. The downward dynamics slowed down ahead of important inflation reports. Note that on Wednesday, the US producer price index will be published, and on Thursday—the consumer price index. Despite the relatively passive position of the bears, buyers are also in no hurry to rush into battle: longs look too risky against the backdrop of fairly strong non-farm payrolls report, published Friday. The ISM Services Index, which came out in the "green zone" last week, also supported the greenback. Therefore, market participants found themselves in a stalemate at the start of the new week: both sellers and buyers of EUR/USD need an additional newsbreak to decide on the vector of further price movement. In my opinion, the situation will develop in favor of the US currency in the near term, as the flywheel of inflation will only spin up. According to some experts, the latest developments in the oil market will hit the pockets of many Americans quite noticeably. Last week, OPEC+ members decided to reduce the production of "black gold" by 2 million barrels per day. The resonant decision was made by the Cartel despite pressure from the United States. After all, the expected consequences of such a step are negative for the United States (and the consequences are not only economic, but also political). First, the decline in oil production will affect the cost of gasoline in the United States. According to preliminary calculations, it will rise in price by 30–50 cents per gallon. Secondly, the OPEC+ decision will hit those US residents who independently heat their homes in winter. Fuel oil, which is used for individual heating in the United States, will rise in price. For US President Joe Biden, and the Democratic Party as a whole, this is bad news, since the Cartel made its odious decision on the eve of the November congressional elections. According to CNN, it will be extremely difficult for Biden to solve this problem, "given the poor relations of the White House with representatives of the American oil industry." In turn, JP Morgan sources report that Washington may take countermeasures by freeing up additional oil reserves. However, how effective these responses will be is an open question. Rising fuel prices are also bad news for the Fed, which is trying in vain to curb inflation. The rise in fuel prices will pull along many other components, which will affect the dynamics of the consumer price index. We will most likely see the echoes of the OPEC+ decision in November–December (if the Biden administration does not stop this problem). But the dollar may receive additional support as early as this Thursday if September inflation exceeds forecast levels. Moreover, experts' forecasts are quite bold: according to most analysts, the general consumer price index will rise to 8.1% in annual terms, and will grow by 0.2% in monthly terms. The core CPI, excluding food and energy prices, could jump to 6.6%. If the core index comes out at least at the predicted level, it will update the 40-year high, thereby strengthening the positions of dollar bulls. But the euro is not able to reverse the situation in its favor. And although inflation in the Eurozone in September once again updated its historical record, reaching the target of 10.0%, this fact turned out to be essentially useless for EUR/USD buyers. The rhetoric of the ECB representatives tightened even before the publication of the latest inflation data. Back in September, many representatives of the European regulator announced that at the October meeting it was necessary to consider the option of a 75-point increase. Therefore, this fundamental factor is already largely taken into account in prices. For example, speeches by ECB representatives—Bundesbank President Joachim Nagel and ECB chief economist Philip Lane—are expected today. In the light of recent releases, they will certainly sound hawkish rhetoric. However, this fundamental factor is unlikely to affect the EUR/USD pair, even in the context of a corrective pullback. But the increase in geopolitical tensions will only increase the demand for a safe greenback. Anti-risk sentiment in the markets is growing again, supporting the dollar bulls. Thus, several fundamental factors play in favor of EUR/USD bears at once. The technical side of the issue also speaks about the priority of short positions: on the daily chart, the price is located between the middle and lower lines of the Bollinger Bands indicator, as well as under all the lines of the Ichimoku indicator, which shows a bearish "parade of line" signal. The first, and so far the main target of the downward movement at the moment is the 0.9570 mark (the lower line of the Bollinger Bands indicator, on the D1 timeframe). If this target is overcome, it will be possible to talk about a decline to the base of the 95th figure.     search   g_translate    
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Crude Oil Amid OPEC+ Decision. Would Supplies From Russia Be Banned On London Metal Exchange?

ING Economics ING Economics 10.10.2022 13:17
Oil had its best week since March following OPEC+ supply cuts, whilst gasoil time spreads have surged due to ongoing strike action at French refineries Energy- middle distillate market surges The oil market finished last week on a strong footing. ICE Brent managed to settle a little more than 11% higher over the course of the week - the biggest weekly increase since late March. And this leaves Brent trading near the US$98/bbl level. The market continues to digest the announced cuts from OPEC+ and what exactly this means for the oil market for the remainder of this year and more crucially for 2023. The cut is clearly bullish. However, there is obviously still plenty of other uncertainty in the market, including how Russian oil supply evolves due to the EU oil ban and G-7 price cap, as well as the demand outlook given the deteriorating macro picture. Read next: Great Britain Expects Positive Results For Its Economy | FXMAG.COM The latest positioning data shows that speculators increased their net long in ICE Brent ahead of last week’s OPEC+ meeting. The managed money net long position increased by 27,459 lots over the last reporting week, leaving speculators with a net long of 185,332 lots as of last Tuesday. This is the largest position held since June and given the move in the market since then, it’s likely that the current position is even larger. The bulk of the increase was driven by fresh longs with the gross long growing by 24,434 lots. The latest data from Baker Hughes shows that the US oil rig count declined by 2 over the last week to 602. The number of active rigs in the US has been largely stable since early July. This is not a great signal for the market in terms of US supply growth, particularly with the tighter supply outlook following OPEC+ supply cuts. The European gasoil market continues to strengthen. The prompt ICE gasoil timespread has surged above US$100/t, up from a little over US$50/t the week before. In addition, the gasoil crack has also seen significant strength. The middle distillates market has been tight for much of the year. However, the latest move in the market is due to ongoing strike action at refineries across France. Strike action along with some other outages means that over 60% of French refining capacity is offline at the moment. Labour negotiations to bring an end to the strike are ongoing, but in the meantime, the government has released fuel from strategic reserves and there is the potential for further releases. Metals- LME launches discussion paper on Russian metal The LME began a formal discussion on a potential ban on supplies from Russia. Any move by the LME will have a significant impact on aluminium, nickel and copper. Russian aluminium has accounted for as much as three-quarters of LME stockpiles over the past decade, while copper from Russia has made up as much as 95%, the exchange said. This year, Russian exports to key markets remained unaffected with most customers likely to have entered into long-term contract agreements – Q4 should give a better sense of the direction of Russian material flows as contracts for next year are negotiated. The launch of the discussion paper comes a day after the LME said it would ban new deliveries of metals from Russia’s Ural Mining & Metallurgical Co. and one of its subsidiaries after the UK placed sanctions on co-founder, Iskandar Makhmudov. The move is the biggest restriction on Russian metal flows by the LME since Russia’s invasion of Ukraine. Agriculture – pessimistic sentiment prevails in soybeans CBOT soybeans continued to witness a liquidation of speculative longs over the last week as better supply prospects from South America and logistical issues in the US weighed on sentiment. CFTC data shows that money managers reduced their net long in CBOT soybeans by another 17,343 lots over the last week, leaving them with a net long of 77,488 lots as of 4 October - the lowest net long position so far this year. The move lower was predominantly driven by longs liquidating with gross longs falling by 15,520 lots to 94,762 lots. The major catalyst for this move remains a buoyant outlook for the soybean crop in South America, where improved weather could help supply prospects significantly in 2022/23. Meanwhile, dry weather in the US Midwest has reduced water levels along the Mississippi river, creating logistical bottlenecks in transporting soybean cargoes to export terminals. The slowdown in exports could increase the availability of soybeans in the US domestic market. Read this article on THINK
Crude decreases amid risk boosting greenback and unclear situation in China

Crude Oil Trades Higher, But OPEC+ May Be The Only One Who Is Happy About It

Ed Moya Ed Moya 10.10.2022 21:06
Oil higher despite weak Chinese PMI Oil prices are continuing to edge higher at the start of the week, albeit at a much slower pace with Brent now not far from $100 a barrel. OPEC+ may be comfortable with that after slashing output targets by two million barrels per day but I’m not sure anyone else will be. The Chinese PMI data overnight highlighted the challenges facing the world’s largest crude importer as it tries to balance its zero-Covid policy with economic growth. That may have helped take some steam out of the rally today but it didn’t last. Gold tumbles below $1,700 Gold prices have slipped by more than 1%, far outweighing the modest rally in the dollar at the start of the week. The yellow metal is on course for the fourth day of losses amid a resurgent greenback and dwindling faith in slower monetary tightening. Yields are up around the world today and that’s going to be further pressuring gold. A move back below $1,700 on Friday is another worrying move which could wipe out any enthusiasm generated during the late-September, early-October rally. Back below $20,000 Bitcoin is also struggling at the start of the week after breaking back below $20,000 on Friday and failing to recapture those losses over the weekend. Ultimately, little has changed though. The cryptocurrency has been fluctuating around $20,000 for months and that remains the case now. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude Oil Upward Trend Remains Limited

A Constantly Falling Number Of Russian Oil Supplies

InstaForex Analysis InstaForex Analysis 11.10.2022 12:34
Oil retreated from 5-week highs as the number of COVID-19 infections in China increased to the highest level since August and the US dollar continued to rally. The US currency is now acting as the horseman of the Apocalypse—its strengthening brings the global economy closer to recession. The USD index is rising due to the Fed's intention to act aggressively, and the Fed's intention to act aggressively brings the decline in US GDP closer. The reduction in global demand is a "bearish" factor for Brent. However, investors have been keen on the offer lately. US Treasury Secretary Janet Yellen called the OPEC+ decision to cut production by 2 million bpd useless and unreasonable. The White House responded by selling 10 million bpd of strategic reserves, but interventions had little effect on oil prices. The very fact that the Alliance decided to go further than the 1 million bpd expected by Bloomberg experts had a positive effect on the oil market. Most of the cuts will come from Saudi Arabia. And even though 526,000 bpd is only a quarter of the allies' set commitments, OPEC+ is already producing less anyway. So, Yellen is partly right—the solution looks useless. Is it unreasonable? I do not think so. Obviously, the fall of Brent did not suit the producing countries. They needed to do something. Riyadh is playing a subtle game. It is well aware that domestic demand against the background of lower temperatures will also decrease. At the same time, Saudi Arabia does not want to lose its market share in Asia. It has kept prices flat for buyers in the region, although a massive cut in production should theoretically increase premiums. In fact, the Saudis are pushing out Russia, which is already having a hard time. Dynamics of offshore flows of Russian oil Before the armed conflict in Ukraine, Moscow supplied 1.62 million bpd to Europe by sea. By October 7, this figure had fallen to 630,000 bpd. Over the next eight weeks, it will completely disappear. At the same time, the transportation of oil to Asia takes 10 times more time, and flows to the three largest buyer countries in the face of India, China and Turkey are constantly declining. Russia's statement that it will not sell oil to those states that will use the price ceiling looks like a farce. Delhi, Beijing, and Ankara have new opportunities to negotiate contract price cuts. Thus, the reduction in supply appeases the "bulls" in the North Sea variety. On the contrary, the worsening of the epidemiological situation in China and the strengthening of the US dollar, indicating the approach of a recession in the global economy, are on the side of the bears. Technically, there was a breakdown of the upper limit of the downward trading channel on the daily chart of Brent, which made it possible to take profits on previously formed longs. A retest in the form of a rebound from the pivot point at $93.5 per barrel is a reason to buy oil.   Relevance up to 09:00 2022-10-16 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/323965
Bank Of France (BoF) Expects Lower GBP For Q3 And The Situation On Phosphate Fertilizer Mining Industry

Bank Of France (BoF) Expects Lower GBP For Q3 And The Situation On Phosphate Fertilizer Mining Industry

Saxo Bank Saxo Bank 11.10.2022 13:05
Summary:  Sentiment remains wobbly as US equity markets edged toward the cycle lows yesterday, with the interest rate sensitive Nasdaq 100 index even posting a new bear market low as US yields lifted higher once again. Fed Vice Chair Brainard voiced the first cautious comments we have seen in a while on the effects of the Fed’s policy tightening even as she argued that tightening will continue. Ahead of the largest US banks kicking off earnings season on Friday, JP Morgan CEO Jamie Dimon says he expects a US recession in six to nine months.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued lower yesterday with S&P 500 futures touching the 3,600 level again before bouncing back a bit into the close. This morning the index futures are trading around the 3,608 level with the 3,593 level being the key level on the downside to watch. With the US 10-year yield back at the 4% level this morning we expect the pressure to continue in US equities and our thesis is also that the upcoming Q3 earnings season starting this week will lead to earnings downgrades and disappointments in the outlook. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Stocks traded in Shanghai and Shenzhen bourses stabilized and traded little changed from yesterday’s closes, with power generation and lithium producers gaining. Guangzhou Tinci Materials (002709:xsec) was 10% limit up and CATL (300750:xsec) rose 5%. CATL preannounced Q3 net income surging 169-200% Y/Y to RMB8.8-9.8 billion. China National Nuclear Power (601985:xssc) surged 7.2% after the company reported a 7.2% Y/Y electricity output growth in the first 9 months of the year. Hong Kong’s Hang Seng Index continued to slide, falling around 2% with China Internet names leading the charge lower. Alibiba(09988:xhkg), Tencent (00700:xhkg), JD.COM (09618:xhkg), Meituan (03690:xhkg), Bilibili (09626:xhkg) declined from 3% to nearly 9%. USD and US yields/risk sentiment USD strength continues as risk sentiment remains wobbly and the entire US treasury yield curve lifted once again, taking the 10-year treasury yield back to the key 4.00% cycle high area. USDJPY continued its tentative move above 145.00, closing in on 146.00 with no official response yet, while AUDUSD posted impressive new lows near 0.6250 overnight and USDCNH is pushing on the 7.20 level once again – the former range top from 2019 and 2020. EURUSD and especially GBPUSD have some more range to work with before posting cycle lows. The next test for the US dollar will be tomorrow’s FOMC minutes, but the event risk of the week will be Thursday’s September US CPI data point and whether traders feel a single month’s data can meaningfully shift the Fed’s stance, given evidence of a still very tight labor market. Gold (XAUUSD) Gold’s short-covering driven rally from last week continues to fade as the dollar regains strength and the US bond yields return to their recent peaks as the prospect for further and aggressive monetary-policy tightening weighs on the market. The latest COT report covering the week to October 4 showed funds changing their net position from the biggest short in almost four years to a small net long. With renewed dollar strength in focus the risk of fresh albeit more muted short selling exists with gold’s renewed upside push unlikely until the market feels convinced that the Fed has reached peak hawkishness. Support at $1658 with a break below signaling the risk of an even deeper retreat. Focus this week on US PPI and CPI prints. Crude oil (CLX2 & LCOZ2) trades lower on renewed demand concerns Last week’s OPEC driven price jump faded further overnight with the risk sentiment once again souring across markets on worries the global economy, including the US, will face a very challenging 2023. In addition, the authorities in China have signaled there will be no letup in their steadfast belief in the nation’s Covid zero policy, thereby potentially prolonging a slump in demand from the world’s biggest importer. For now, the time spreads in Brent continue to signal tightness with the December contract trading 9% above the June 2023 contract. Monthly oil market reports from the EIA and OPEC on Wednesday and the IEA on Thursday will be watched closely for any changes in the supply and demand outlook. Wheat futures (ZWZ2 & WHEATDEC22) jump to a three-month high The December benchmark wheat contract in Chicago surged to near the daily limit on Monday amid worsening Russia/Ukraine tensions and a worsening US crop outlook. Any slowdown in shipments of high protein wheat from the Black Sea may boost prices further and before the latest escalation shipments from Ukraine are already being delayed as the backlog of outbound vessels awaiting inspection in Istanbul has increased. The Ukraine grain export agreement comes up for renewal next month and with Russia losing the war the risk of further desperate measures may put the deal at risk. The rally in December wheat ran out of steam above $9.45 and may now pause ahead of a key crop report from the US Department of Agriculture on Wednesday. US treasuries (TLT, IEF) US treasury yields continued lifting late yesterday and overnight after a the bank holiday in the US yesterday. This has taken the 10-year treasury benchmark yield back close to the round 4.00% level that is a significant psychological milestone and near the 14-year high for the benchmark. Yields rose even as Fed Vice Chair Brainard voiced the first cautious notes we have heard in a while from an important Fed figure (see more below). The next key test for yields as we believe we are nearing “peak hawkishness” from the Fed soon, is more Thursday’s US CPI data point than tomorrow’s FOMC minutes, which may contain few surprises, given nearly all Fed members are on the same page in supporting the current tightening regime. What is going on? The UK government brings forward its budget plans to 31 October The UK government will announce its fiscal plan at the end of this month, more than three weeks earlier than initially scheduled. The plan is built on the ‘mini-budget’ of 45 billion pounds presented in September. It triggered a rout in financial markets which forced the Bank of England to step in the market. The advance release is aimed to appease markets and to provide insights on how the government will pay for tax cuts and what their long-term impact would be. On 31 October, the Office for Budget Responsibility will also publish its latest forecasts, including an impartial assessment of the macroeconomic consequences of the ‘mini-budget’. Fed Vice Chair Brainard signals peak hawkishness approaching, but still higher for longer rates Lael Brainard sounded a small note of caution on Fed’s tightening, saying that it will take time for rate hikes to bring inflation down while also highlighting slowing growth, cooling labor market and financial vulnerabilities. Still, she reaffirmed that monetary policy will be restrictive for some time. Charles Evans remained in favor of front loading, saying that the Fed should quickly reach levels where policymakers feel comfortable pausing to reduce the risk of overshooting. BoE on course to end buyback operations but announced fresh liquidity measures The Bank of England announced it remains on course to end its temporary buy-back auctions at the end of the week and is switching to liquidity support via expanded collateral repos, also for a limited period to help banks with customers that are not entirely hedged against LDI exposure. Gilts plunged as investors remained worried, with 30-year yields rising above 4.7% and 20-year touching a high of 4.9%. Meanwhile, the medium-term fiscal plan is to be published on October 31, just before the next MPC rate meeting, which at the least means a more informed decision may be possible. The Bank of France lowers its Q3 GDP forecast Yesterday, the Bank of France lowered its Q3 GDP forecast to 0.25 % versus prior 0.3% mostly due to poor industrial activity. Without much surprise, industrial companies are in a tough spot because of the energy crisis, supply chain disruptions, and a tight labour market. So far, the recession is not the central bank’s baseline. However, most economists expect France will not avoid a recession next year (with a drop of GDP between -0.2 % and -0.7 % in 2023 depending on the forecasting institutes). Chicago wheat futures jumped nearly 3% in early trading ... underpinned by concerns over the Russia-Ukraine war slowing grain shipments from the Black Sea region. This after Putin accused Ukraine of orchestrating the explosion on the bridge over the Kerch Strait, a key prestige project for the Russian President. The developments cast even more uncertainty over shipments to the world market through Ukraine’s export corridor in the Black Sea, which comes up for renewal next month. Dozens of grain-hauling vessels are already backing up while awaiting inspection at Istanbul under the terms of the deal. TSMC shares down 8% on more US restrictions on semiconductors The US has added new restrictions on exports of semiconductors used in AI and supercomputing, in addition to new restrictions on equipment used in semiconductor manufacturing to any Chinese companies. It is estimated that that the new restrictions will cost the company 5-8% of its revenue. Paul Tudor Jones is getting ready for a recession The famous macro trader said in an interview yesterday that his trading firm is getting ready to deploy its recession playbook. The key dynamics according to Tudor Jones are recessions last 300 days, equities fall 10% on average, short-term bond yields will start to go down before bottom in equities, term premium will increase both in equities and bonds, earnings multiples will compress, and the Fed will either halt or slow rate hikings. JPMorgan Chase CEO Jamie Dimon joins recession crowd In a speech yesterday Jamie Dimon added a negative jolt to the market saying that a global recession was likely in the next 6-9 months due to the rising interest rates and the war in Ukraine. What are we watching next? Fertilizer supply at risk amid fresh Russian tensions and Hurricane Ian aftermath Amid fresh tension from Russian upon Ukraine, fertilizer producers have once again been put in the spotlight on supply concerns. Equities in APAC involved in phosphate/fertilizers rose today as a result; so, it’s worth watching stocks in the sector across Europe and the US. The phosphate fertilizer mining industry’s supply has already been put at risk after Hurricane Ian hit Florida, impacting more than 1 billion ‘stacks’ of supply. Russia is the world’s largest supplier of nitrogen-based fertilizers; however, its supply was slimmed from embargoes after launching attacks against Ukraine. The economic calendar for the week picks up on Wednesday ... with the latest set of FOMC minutes, but the highlight of the week will be Thursday’s US September CPI report, after the August data surprised with significantly higher than expected inflation. Friday we get a look at US September retail sales after core spending has been on a declining trend, measured month-on-month, since early this year. Earnings to watch The Q3 earnings season kicks off this week, with the most important day being Friday, as seven large US financial institutions reporting. The key focus points will be to what extent US banks are able to increase their net interest margin, which they did in Q2, and the levels of credit provisions in Q3. Wednesday: PepsiCo Thursday: Progressive, Fast Retailing, Tryg, Walgreen Boots Alliance, Fastenal, BlackRock, Delta Air Lines, Domino’s Pizza Friday: Shanghai Putailai New Energy, YTO Express Group, PNC Financial Services, JPMorgan Chase, Morgan Stanley, Citigroup, UnitedHealth Group, Wells Fargo, US Bancorp, First Republic Bank Economic calendar highlights for today (times GMT) 0700 – Czechia Sep. CPI 1000 – US Sep. NFIB Small Business Optimism 1245 – ECB Chief Economist Lane to speak 1600 – US Fed’s Mester (Voter 2022) to speak 1645 – Switzerland SNB Chair Jordan to speak 1700 – US 3-year Treasury Auction 1800 – UK Bank of England’s Cunliffe to speak 1835 – UK Bank of England Governor Bailey to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-11-2022-11102022
Gold Has Extreme Bullish Condition

US Inflation Data May Help The Gold, Oil Prices Rose Around 20%

Craig Erlam Craig Erlam 11.10.2022 14:01
Oil eases amid more recession warnings Oil prices are paring recent gains for the second day as the IMF and World Bank warn of an increased risk of a global recession. Those warnings won’t come as an enormous surprise given the immense economic headwinds as a result of the pandemic and Russia’s invasion of Ukraine, not to mention the baffling decision by OPEC+ last week to cut output by two million barrels per day which will only add to them. Oil prices rose around 20% from their September lows as a result of the output decision and may not be done yet. Prices are now back around levels the alliance appears to be targeting, despite forever claiming that balancing the market is what they’re interested in. The level everyone is focused on now is $100 which Brent has struggled to overcome since early July. Perhaps with OPEC+ squeezing supply, it will have more luck this time. Gold crumbles after unsustainable recovery The rally in gold always looked like it was going to be difficult to sustain in an environment of higher government bond yields and a dominant dollar. And it has well and truly wilted over the last week, initially easing off its highs before totally giving up as it collapsed through $1,700 before stabilising a little today around $1,660. ​ A 4% decline in less than a week and it’s hard to see it turning things around without a big helping hand from the US inflation data on Thursday. The Fed minutes will be of interest but to a large extent are outdated at this point. Even the CPI release may come too late as the Fed has made it clear that one good reading won’t be enough to change course. We’ll see whether traders agree over the coming days but early signs aren’t promising. Key levels below include $1,640 and $1,620, with $1,600 then the one to watch. If it does manage a recovery, then $1,685-1,690 looks interesting as it’s a level it has repeatedly rotated around in recent months. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Wheat Prices Driven By Russian Attacks, Crude Oil May Feel Not That Strong As The US Labour Market Data Plays In Favor Of 75bp Hike

ING Economics ING Economics 11.10.2022 17:33
Wheat prices rose yesterday as concern mounted for Ukrainian exports following Russia’s latest attack on a number of Ukrainian cities. The oil market appears to have shrugged off growing tensions and instead seems focused on the weaker macro outlook Energy- oil rally fades Oil prices corrected lower after last week’s significant move higher. The above-consensus US jobs report at the end of last week has reinforced expectations that the Fed will hike by 75bps at its next meeting, and this has put pressure on most risk assets, including oil. ICE Brent settled almost 1.8% lower yesterday. It appears that, after digesting the recent OPEC+ cuts, the market is once again focused on central bank policy and what it means for the demand outlook. The oil market even seemed to shrug off Russia’s latest attacks on a number of Ukrainian cities, including Kyiv. This lack of reaction is likely due to the limited potential actions the West could take to further hit Russian oil exports. Already, a number of countries have sanctioned Russian oil, whilst the EU ban comes into force later this year. While there is always the potential for secondary sanctions on Russian oil, this is something that the US and other countries are unlikely to pursue given the tighter oil outlook (particularly after the recent OPEC+ cuts) as well as the fact that the US has been pushing a price cap on Russian oil to keep Russian oil flowing, whilst simultaneously trying to limit oil revenues for Russia. Metals – copper spreads strengthen Whilst the bulk of the metals complex came under pressure yesterday due to a stronger US dollar, LME copper 3M prices managed to climb for the first time in four sessions and the cash/3M spread also strengthened by US$9/t to a backwardation of US$59.25/t. The flat price and spreads have been boosted by slower China inventory gains, a tightening global supply outlook and risks of a potential ban on Russian supplies by the LME. Last week, the exchange launched a formal three-week discussion process on the possibility of banning Russian metal. Russia accounts for about 4% of global copper production. Inventories of copper in China rose 16,500 tonnes to 82,700 tonnes during the Golden Week holiday ending October 9 from a week earlier, according to Shanghai Metals Market data. The increase was smaller than in the same period last year (20,900 tonnes). Meanwhile, the latest data from the Shanghai Futures Exchange (ShFE) showed copper inventories declined to their lowest level in more than eight months at 30,500 tonnes in the week ending 30 September. Agriculture – wheat jumps on Ukraine grains export risk Wheat prices rallied yesterday following the latest Russian attack on Kyiv and other cities in Ukraine. CBOT wheat settled more than 6.5% higher on the day and traded to an intraday high of almost US$9.50/bu, which is the highest level since June. Russia’s escalation calls into question the future of the Black Sea grain export deal, which is due to expire in the next month. In addition, there is a backlog of vessels awaiting inspection, with UN data showing 99 vessels awaiting clearance. Since the introduction of the Black Sea Grain Initiative in early August, almost 6.9mt of grains and foodstuff have been exported under the deal. Read this article on THINK TagsRussian oil price cap Russia-Ukraine Grains Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis And Trips For Trading The GBP/USD Pair In Short And Long Positions

There Are Hardly Any Positives In The British Assets Market

Saxo Bank Saxo Bank 12.10.2022 08:41
Summary:  Bank of England’s warning to end intervention sent an offered tone to bonds and equities towards the overnight session close, and added to the tightening risks that are being seen globally. Fed’s Mester reiterated hawkish comments as well, sending yields and dollar higher at the Asia open. USDJPY blew past 146, raising intervention threat again although yen crosses remain lower. Crude oil prices also plunged amid dollar strength and China lockdown concerns. Sterling and other UK assets look poised for a tough day ahead, and FOMC minutes are also due, which might mean ripples across global markets. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) indices declined for the 5th day US stocks erased earlier gains as bond yield rose and incoming Q3 earnings and the CPI on Thursday added to the risk-off sentiment. The S&P500 skidded for the 5th day on further tech selling, ending 0.65% down, while the Nasdaq 100 index fell 1.2%. As for the biggest laggards in the S&P 500 sectors, for the second day in row, both the Casino and Gaming and Semiconductor sectors were among the biggest losers down ~4.7% and ~4.3% respectively, gaining downside momentum. Meanwhile, investors continued to top up defensive sectors, buying into the Food Retail and Drugs sectors for the second day in a typical risk-off fashion. Noteworthy US company news and moves General Motors (GM) plans to compete with Tesla’s (TSLA) solar Powerwall business by offering its own sun-generated storage system starting late next year. Tesla shares fell 2.9%, while GM closed almost unchanged. Also making headlines, Uber (UBER) and Lyft (LYFT) plunged 10% and 12% respectively after the US Department of Labor proposed to tweak the way it determines if workers are classified as employees or contractors. Amgen (AMGN:xnas) rose 5.7% after an analyst upgrade citing the potential of its experimental weight-loss drug. Chip maker, KLA (KLAC: xnas) plunged 6.2% after saying the company will stop sales to China-based customers form Wednesday, including South Korea’s SK Hynix’s operations in China. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) finished a choppy session with long-end yields higher After reaching 4% during Asian hours, the 10-year yields retraced to as low as 3.87% at around mid-day New York before bouncing back to finish the day 7bps higher at 3.95%.  The move higher in yields in the afternoon was first triggered by the Bank of England Governor Baily pushing back on calls to extend the emergency bond-buying programme and repeated the BoE’s prior day announcement to stick to the Oct 14 end day of the programme.  He told the audience at the Institute of International Finance annual meeting in Washington that he had warned U.K. pension funds that only three were left to wind up positions. In addition, poor 3-year U.S. treasury note auction results in the afternoon caused some traders to adjust their positions ahead of the 10-year and 30-year auctions on Wednesday and Thursday. 2-year yields finished the day unchanged at 4.31% and the 2-10 year curve bear steepened to -36. Hong Kong’s Hang Seng (HSIU2) retreated as China’s CSI300 (03188:xhkg) stabilized Stocks traded in Shanghai and Shenzhen bourses stabilized and traded little changed from yesterday’s closes, with power generation and lithium producers gaining. CATL rose 6% and led the share prices of the lithium space higher after the company preannounced Q3 net income surging 169-200% Y/Y to RMB8.8-9.8 billion. Eve Energy (300014:xsec) gained 6.2% and Guangzhou Tinci Materials (002709:xsec) soared 10% limit up. China National Nuclear Power (601985:xssc) surged 7.3% after the company reported a 7.2% Y/Y electricity output growth in the first 9 months of the year. On the other hand, Hong Kong’s Hang Seng Index continued to slide, falling 2.2% with financials, China Internet names, EV makers, and China property developers dragging down the benchmark.  The tightening of pandemic control in large cities including Shanghai and the editorials on the mouthpiece People’s Daily reiterating the country’s adherence to the Dynamic-Covid-Zero policy two days in a row dashed the notion of reopening held by some analysts and investors. Airline stocks dropped from 1.4% to 9.1%. Macao casino stocks plunged from 3% to over 5%. Reportedly short selling increased in China Internet names, with Alibaba (09988:xhkg), Tencent (00700:xhkg), JD.COM (09618:xhkg), Meituan (03690:xhkg), Bilibili (09626:xhkg) declining from 3% to more than 9%. Chinese developers, Country Garden (02007:xhkg ) and Longfor (00960:xhkg) were the two largest losers in the Hang Seng Index. Australia’s ASX200 (ASXSP200.1) is tipped to fall 0.3% (futures). Focus on Bank of Queensland results, fertilizer companies and oil So far this week, the ASX200 has fallen 1.7% outperforming global markets, with the most selling in the Tech Sector, while the most gains have been in Consumer Staples, Materials and Industrials, with fertilizer and agricultural stocks rising the most on supply concerns. The Bank of Queensland (BOQ) reported a 5% drop its cash profit for the full year, while the closely watched metric of banking profits, its net interest margin reduced to 1.74% with the bank blaming increased competition on its margin falling. Loan growth in housing rose 7%. The group also declared an impairment of $13 million. That being said, the BOQ and other regional banks are seeing more loan growth when compared to the big four banks year on year. Elsewhere, it’s worth watching oil stocks today after the oil price fell back to $88 after the USD roared up again. Also keep an eye on gold stocks that are likely to come under further selling. While iron ore companies could be worth a look after a strike in Africa hit the countries top iron ore port. Yen past the previous intervention level, GBPUSD dropped below 1.10 USDJPY was seen rising above 146 in early Asian trading hours after the US yields surged higher overnight after BOE’s Governor Bailey warned on end to intervention (read below). The gilt market was closed by the time his comments came, but the US treasuries reacted to it and so the response from the yen could be expected. The Japanese yen has been trapped below this intervention threat level for weeks, but the pressure to the upside will continue to soar amid fresh surge in dollar and yields as dollar’s safe haven bid continues to play. Other yen crosses, however, remain below at sub-142 levels vs. 144 at the time of September intervention and AUDJPY below 92 vs. 97-levels previously. Response on Bailey’s comments was also seen in the sterling which dropped below 1.10 for the first time in October. Crude oil (CLX2 & LCOZ2) down about 3% Oil prices slumped on Tuesday amid further gains in the US dollar towards the NY session close and reports on China’s fresh lockdowns ahead of its key Communist Party meeting that begins later this week. WTI futures slid below $90/barrel, while Brent was below $94 after touching $98+ levels on Monday. Geopolitical tensions however appear to be escalating, with Putin warning further missile attacks on Ukraine. Meanwhile, US-Saudi tensions also remain key to monitor after the OPEC+ production cut announced last week.   What to consider? Bank of England’s Bailey warns intervention to end on Friday Bank of England Governor Bailey gave a “three day” deadline to investors to wind up their positions that they can’t maintain because the central bank will halt its intervention at the end of this week as planned. There had been some expectations that the BoE might extend the purchases to quell financial instability in the UK, but Bailey did not give way on those. This also comes as a hint that QT may begin later this month as planned. There is hardly any silver lining visible for UK assets at this point. Fed’s Mester stays hawkish, FOMC minutes ahead Cleveland President Loretta Mester (2022 voter) reiterated the hawkish rhetoric saying that the Fed has yet to make any progress on lowering inflation and policy needs to be moved to restrictive levels and the biggest policy risk is that the Fed does not hike enough. She does not expect Fed rate cuts in 2023. As we have been saying, she also remarked that “at this point the larger risks come from tightening too little.” FOMC meeting minutes from the September 21 meeting will be released today and will likely continue to send out hawkish signals. China’s outstanding RMB loans grew at 11.2% Y/Y in September, above expectations China released its September credit data last evening. New aggregate financing in September came in at RMB3,530 billion, much stronger than the RMB2,750 billion expected (Bloomberg Survey) and RMB2,430 billion in August as well as the RMB2,903 billion in September 2021. It brought the growth rate of the aggregate financing to 10.6% Y/Y, higher than the 10.5% in August.  New RMB loans rose to RMB2,470 billion, above RMB1,800 billion expected and RMB1,250 billion in August.  An acceleration in loans to the corporate sector, which rose to RMB1,910 billion in September from RMB875 billion, drove the overall loan growth.  Outstanding RMB loans in September grew 11.2% from a year ago. The instructions as well as window guidance from the regulators to urge banks to lend to infrastructure projects, manufacturing industries, and the property sector contributed to the better-than-expected growth in corporate loans. IMF’s warning on global growth After recession threats from Jamie Dimon and Paul Tudor Jones, now the IMF has said there is a growing risk that the global economy will slide into recession next year as households and businesses in most countries face “stormy waters” and the “worst is yet to come”. The institute has said that global growth will slow from 6.0% in 2021 to 2.7% in 2023, being the weakest growth since 2001. The IMF also warned of an increased risk of rapid, disorderly repricing in financial markets, which is exacerbated by existing vulnerabilities and a lack of liquidity. China signaling it will stick with the Dynamic Covid Zero policy after the CCP’s national congress People’s Daily published for the third day in a row this week to reiterate the Chinese authorities’ determination to adhere to the “Dynamic Covid Zero” policy and pledge not to “lie down” passively. It warns that any relaxation of pandemic control would result in a large number of inflection and death and a collapse in the healthcare system so the insistence on Dynamic Covid Zero is the best way to protect people’s lives and health which are of utmost importance. The series of articles is apparently to dash the speculation of relaxation of pandemic control after the Chinese Communist Party’s national congress next week. In the meantime, as Covid cases bounced above 2,000 after the National Day golden week holiday during which many people travelled around the country. Large cities, including Shanghai and Shenzhen tightened pandemic control measures somewhat. Fertilizer supply at risk amid fresh Russian tensions and Hurricane Ian aftermath Amid fresh tension from Russian upon Ukraine, fertilizer producers have once again been put in the spotlight on supply concerns. Equities in APAC involved in phosphate/fertilizers rallied yesterday as a result. So perhaps it’s worth watching stocks in the sector again today, such as Nufarm (NUF), and Orica (ORI) which are this weeks best performers on the ASX. The phosphate fertilizer mining industry’s supply has already been put at risk after Hurricane Ian hit Florida, impacting more than 1 billion ‘stacks’ of supply. And recall that Russia is the world’s largest supplier of nitrogen-based fertilizers, but its supply has slimmed from embargoes after launching attacks against Ukraine. Perhaps the market is thinking more development are to come, so it's worth watching to see how this space develops.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-12-oct-12102022
Easing In Chinese Covid Measures | Crypto Distress Continues | Markets Trade Joyfully

Large Cities In China Tightened Pandemic Control Measures Somewhat | Intel Is Forced To Reduce The Number Of Employees

Saxo Bank Saxo Bank 12.10.2022 09:02
Summary:  A rocky ride for markets yesterday, which were trying to post a rally until a steep sell-off developed late in the session as Bank of England Governor Andrew Bailey warned that UK pensions must get their house in order by Friday, sticking with the end date of the Bank of England’s emergency intervention. Then this morning, the FT reports that the Bank of England may be willing to extend those measures, helping to stabilize sentiment.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities slid again yesterday with S&P 500 futures closing below the 3,600 level for the first time since November 2020, but the index futures are bouncing back a bit this morning trading around the 3,623 level. The fragile situation in the UK Gilt market is a fresh source of negativity with BoE Governor Bailey’s comments yesterday adding to nervousness (see more detailed summary below). Later today the market will get US September PPI figures which are expected to remain at 0.3% m/m excluding energy and food. PepsiCo is the first big US company to report full Q3 earnings with the results expected before the market opens. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) The tightening of pandemic control in large cities including Shanghai and Shenzhen plus and the mouthpiece People’s Daily reiterating the country’s adherence to the Dynamic-Covid-Zero policy for the third day in a row this week to the notion of reopening held by some analysts and investors continued to linger over stocks in the Hong Kong and mainland bourses. The IMF cut China’s growth forecasts to 3.2% in 2022 and 4.4% in 2023.  Hang Seng Index dropped 2% to the level last seen in October 2011. The China Internet, China consumption, China developers, and Macao casino names were among the worst performers. CSI300 fell 1.4% to make a new 2.5-year low. While SMIC (00981:xhkg) fell nearly 4%, other semiconductor stocks managed to bounce off their low, with Hua Hong Semiconductors (01347:xhkg) up 2.7%, SG Micro (300661:xsec) up 3%. China’s September credit data came in better than expected with acceleration in loans to corporate. GBP and USD focus after chaotic Surely Andrew Bailey’s days as Bank of England governor are numbered if BoE does indeed end up extending the QE programme (as the FT reports this morning) that Bailey was out warning yesterday would end on schedule this Friday? GBPUSD has traded all over the map and has correlated with general risk sentiment on the issue, pumping to nearly 1.1200 yesterday before dumping to the low 1.0900’s late yesterday and back to 1.1000 this morning. Any announcement of Bailey’s departure might see short-term upside for sterling. Eventually, the US dollar should steal back the limelight as we get a look at tonight’s FOMC minutes and tomorrow’s US September CPI data: even if the data point is somewhat weaker than expected, will the markets be willing to celebrate a single data point when the US labor market remains so tight and perhaps a large driver of inflation risks at this point in the cycle? Note the upside pressure in USDJPY, which traded to new 24-year highs above 146.00 as traders feel emboldened on the absence of official intervention. Gold (XAUUSD) Gold has settled into a tight but nervous trading range around $1670 and following last week's aggressive short squeeze, potential short sellers have turning more cautious at this stage where the market has been left pondering how close we are to seeing peak hawkishness, a development that may signal a low in gold. The first potential sign came on Monday when Federal Reserve Vice Chair Lael Brainard laid out the case for exercising caution, noting that the previous increases are still working through the economy at a time of high global and financial uncertainty. Key support at $1658, the 61.8% retracement of the recent correction, with the market focusing on Thursday’s US CPI print for direction. Crude oil (CLX2 & LCOZ2) trades lower for a third day as recession concerns once again offsets last week's OPEC production cut, and after China continues to reiterate its firm belief in the nation’s Covid zero policy, thereby potentially prolonging a slump in demand from the world’s biggest importer. Prices have also responded to a growing chorus of analysts predicting a hard landing in the US while the IMF has downgraded global growth for next year saying that policies to tame high inflation may add risks to the global economy. Monthly oil market reports from the EIA and OPEC today and the IEA on Thursday will be watched closely for any changes in the supply and demand outlook. US treasuries (TLT, IEF) US treasury yields trading fairly steadily just below the key cycle high of 4.00% for the 10-year treasury benchmark and ahead of the macro event risk of the week, tomorrow’s US September CPI data. A three-year treasury auction yesterday was seen as somewhat weak on tepid foreign demand. A 10-year treasury auction is up later today and a 30-year T-bond auction tomorrow. What is going on? China signaled it sticks with the Dynamic Covid Zero policy  For a third day this week, the People's Daily published an article reiterating the Chinese authorities’ determination to adhere to the “Dynamic Covid Zero” policy and pledge not to “lie down” passively.  It warns that any relaxation of pandemic control would result in many infections and death and a collapse in the healthcare system so the insistence on Dynamic Covid Zero is the best way to protect people’s lives and health which are of utmost importance. The series of articles is apparently to dash the speculation of relaxation of pandemic control after the Chinese Communist Party’s national congress next week.  In the meantime, Covid cases bounced above 2,000 after the National Day golden week holiday during which many people traveled around the country.  Large cities, including Shanghai and Shenzhen, tightened pandemic control measures somewhat.  Biden warns of ‘consequences’ for Saudi Arabia after OPEC+ cut The US is not pleased with Saudi Arabia’s decision to allow OPEC+ to cut oil production by 2mn barrels per day amid the ongoing energy crisis. Biden said in an interview Tuesday night that there will be consequences and the speculation is that there could be restrictions on defence contracts.  LVMH organic growth in Q3 beats estimates While consumption patterns are weakening in key consumer categories such as consumer electronics and clothing, the high-end luxury market is in decent shape. LVMH reports organic revenue growth of 19% y/y in Q3 vs estimates of 14.4% y/y driven by strong performance in its Fashion & Leather division.  Intel is planning large job cuts The PC market is facing severe headwinds post the pandemic demand boom and the ongoing cost-of-living crisis in the world. This is forcing Intel to significantly cut the number of employees with sales and marketing potentially seeing a 20% cut. What are we watching next?  US grain futures fall ahead of key report Chicago wheat futures dropped on Tuesday after Russia having produced a bumper crop, may abolish its quotas on grain exports. This a day after prices jumped to a three-month high on worries about the viability of the Ukraine grain corridor following Russia’s latest attacks on Ukraine cities. Corn meanwhile trades near a four-month high ahead of today’s important WASDE report from the US Department of Agriculture, which will offer traders insights about the current outlook on world supply and demand for key crops. The report is likely to show lower US corn and wheat stocks while the drop in global stockpiles is expected to be smaller due to a pickup in production elsewhere.  Volatility risks in the FX market through the end of the week As noted above, the Bank of England messaging on its emergency QE programme and the fate of UK pension funds is a proper mess that the already very shaky Truss government can ill afford and could mean changes to the BoE’s leadership (or “should” mean?). Elsewhere, note that USDJPY has slipped to new 24-year highs, with the question of intervention hanging over the market as the price action works higher. The economic calendar for the week picks up today The economic calendar will increase momentum with the latest set of FOMC minutes, but the highlight of the week will be tomorrow's US September CPI report, after the August data surprised with significantly higher than expected inflation. Friday we get a look at US September retail sales after core spending has been on a declining trend, measured month-on-month, since early this year. Earnings to watch Today’s earnings focus is PepsiCo which is scheduled to report Q3 earnings figures before the market opens with analysts expecting 3.1% y/y revenue growth and slightly lower EBITDA margin q/q providing the first signs of whether a margin compression theme is building. PepsiCo has a broad product portfolio, and we expect it to have delivered robust results from the company. Wednesday: PepsiCo Thursday: Progressive, Fast Retailing, Tryg, Walgreen Boots Alliance, Fastenal, BlackRock, Delta Air Lines, Domino’s Pizza Friday: Shanghai Putailai New Energy, YTO Express Group, PNC Financial Services, JPMorgan Chase, Morgan Stanley, Citigroup, UnitedHealth Group, Wells Fargo, US Bancorp, First Republic Bank Economic calendar highlights for today (times GMT) 1135 – UK Bank of England’s Pill to speak 1230 – US Sep. PPI 1330 – ECB President Lagarde to speak 1400 – US Fed’s Kashkari (voter 2023) to speak 1600 – EIA's Short-Term Energy Outlook 1600 -  USDA’s Monthly World Agriculture Supply & Demand Estimates 1700 – UK Bank of England’s Catherine Mann to speak 1700 – US 10-year Treasury Auction 1800 – US Fed’s FOMC Minutes 2030 – API's Weekly US Oil inventory report 2230 – US Fed’s Bowman (voter) to speak on forward guidance as policy tool 2301 – UK Sep. RICS House Price Balance During the day: OPEC’s Monthly Oil Market Report   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-12-2022-12102022
Oil Prices Rise as OPEC Cuts Output and API Reports Significant Inventory Drawdown

Bank Of England (BoE) Interventions Ineffective | The USD/JPY Pair Spiked Above The 146 Level For The First Time In 24 Years

Swissquote Bank Swissquote Bank 12.10.2022 10:37
We are only Wednesday, and the Bank of England (BoE) already intervened twice this week, to cool down the unbearable negative pressure on the British sovereign bonds. But the BoE Governor Bailey’s lack of tact sent all efforts up in smoke. The UK sovereign and sterling remain under a decent selling pressure. All eyes are on FOMC minutes and the US inflation data Beyond Britain, all eyes are on FOMC minutes and the US inflation data. Today, the minutes from the FOMC’s latest meeting will reveal if some Federal Reserve (Fed) members are concerned about going ‘too fast’ in terms of rate hikes. US will also reveal the latest producer price index for the month of September. The US factory-gate prices are expected to have slowed from 8.7% to around 8.4%. Then tomorrow, we will have a better insight about the situation in consumer prices. The headline CPI is expected to have slowed from 8.3% to 8.1%, but core inflation may have spiked higher, which is bad news for those praying for the Fed to slow down the pace of its rate tightening. Elsewhere, the IMF cut its global growth forecast for next year to 2.7%, from 2.9% in July, and from 3.8% in January, and said that there’s 25% probability that growth will slow to less than 2%. In the euro area, the GDP could rise just 0.5% next year. Forex Market The EURUSD remains under a decent pressure of the strong dollar, and only a soft inflation data from the US could help the euro bears take a pause. In Japan, things are not necessarily better. The USDJPY spiked above the 146 level for the first time in 24 years, and investors couldn’t trade the 10-year JGBs for three days, because the BoJ broke the system by buying just too much of the 10-year bonds to conduct a yield curve control strategy. Swap traders are now betting that the BoJ can’t carry on with abnormally low interest rates for so long, and will be forced to hike its rates at some point. Watch the full episode to find out more! 0:00 Intro 0:37 It’s not time for a gaffe, Mr. Bailey! 3:31 Jamie Dimon sees another 20% drop in S&P500 4:23 But it all depends on US inflation and the Fed policy! 6:27 Intel crops jobs 7:32 IMF cuts global growth forecast 8:04 EURUSD under pressure 8:38 US crude slips below $90pb 8:47 BoJ will soon be forced to act on rates to stop yen depreciation Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #UK #GBP #gilt #Bailey #Liz #Truss #sovereign #crisis #FOMC #minutes #USD #inflation #PPI #CPI #crude #oil #Intel #IMF #growth #forecast #JPY #BoJ #FTSE #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

OPEC Corrects Its Forecast And Predict That The Demand For Crude Oil Will Be By Ca. 360Mbbls/d Lower In 2023

ING Economics ING Economics 13.10.2022 11:01
Oil prices came under pressure after OPEC revised down its forecasts for oil demand. Aluminium supply risks are growing after reports that the US is considering imposing a ban on Russian aluminium Energy- OPEC lowers demand forecasts Oil prices traded lower yesterday with ICE Brent settling down 1.95%. The market is now down almost 6% from its recent peak last Friday. The latest monthly report from OPEC did not help sentiment. OPEC have lowered their demand growth forecasts for both 2022 and 2023. For 2022, demand growth forecasts were reduced by around 460Mbbls/d, which would leave demand growing by 2.64MMbbls/d this year. For 2023, growth forecasts were lowered by around 360Mbbls/d to leave demand growth at 2.34MMbbls/d. These downward revisions were driven by a combination of Covid restrictions in China, inflationary pressure and growth concerns, particularly in Europe.  OPEC also sees demand for their crude oil at 29.4MMbbls/d, which is below September production levels of around 29.8MMbbls/d. It is, however, important to remember that if we see effective cuts from OPEC of a little over 1MMbbls/d through 2023, this should mean that global oil inventories continue to decline next year. There are more concerns around European energy infrastructure after an oil leak was detected along part of the Druzhba pipeline in Poland. The section, in which the leak was found, carries Russian oil to Poland and Germany. For now, Poland believes that the leak is due to an accident rather than sabotage. European countries are on high alert when it comes to energy infrastructure following the Nord Stream incident. The latest numbers from the API released overnight show that US crude oil inventories increased by 7.05MMbbls over the last week, whilst gasoline stocks increased by 2.01MMbbls. However, the concern going into winter is still around the middle distillate market. The API reported that distillate fuel oil inventories fell by 4.56MMbbls over the week. Metals – US considers Russian aluminium ban LME aluminium prices rallied yesterday, settling more than 3% up on the day. This came after reports that the US is considering a complete ban on Russian aluminium in response to Russia’s military escalation in Ukraine. According to a Bloomberg report, the Biden administration is considering three options: an outright ban, increasing tariffs to levels which would basically result in an effective ban or sanctioning Rusal. Russia is the world’s second-largest producer of aluminium after China and Russian supplies account for around 10% of total US aluminium imports. The latest data from the International Lead and Zinc Study Group (ILZSG) shows the global zinc market remained almost balanced with a marginal supply deficit of 4kt in the first eight months of 2022, compared to a deficit of 49kt during the same period a year earlier. Total refined production fell 2.6% YoY to 8.97mt, largely due to lower output in Europe, while total consumption declined 3.1% YoY to 8.98mt in Jan-Aug’22. For lead, total production fell 1.9% YoY to 8.1mt, while consumption fell marginally by 0.5% YoY to 8.1mt in the first eight months of the year. The lead market reported a supply deficit of 25kt in Jan-Aug’22, compared to a surplus of 92kt during the same time last year. Significant volumes of unwanted Russian-origin copper have been deposited in London Metal Exchange-approved warehouses in Germany, the Netherlands and Taiwan since the middle of September, according to a report from Reuters. LME data shows that since 15 September, copper stocks in LME warehouses in Rotterdam, Hamburg and Kaohsiung have climbed 225%, 153% and 26% respectively. LME copper stocks are up more than 40% since 15 September at 145,525 tonnes. But while inventories have increased from the lows earlier in the year (below 70kt over February/March), they remain at near historical lows, representing just two days’ worth of global supply. Russia produced 920,000 tonnes of refined copper last year, about 3.5% of the world's total, according to the U.S. Geological Survey, out of which Nornickel produced 406,841 tonnes. Asia and Europe are the main export markets for Russian copper. Although Russian copper is not officially sanctioned, self-sanctioning could already be disrupting trade dynamics in the European market. The LME launched a formal discussion paper on the possibility of banning new supplies of Russian materials, including aluminium, copper, and nickel. The LME also previously announced that it will restrict new deliveries of copper and zinc from Russia’s Ural Mining & Metallurgical Co. and one of its subsidiaries after the UK sanctioned its co-founder Iskandar Makhmudov. Agriculture- US supply cuts The latest WASDE report from the USDA was constructive for soybeans, as US yields and production estimates came in below market expectations. The agency lowered its US soybean production estimate by 69m bushels to 4.3b bushels, while yields were revised down from 50.5 bu/acre to 49.8 bu/acre. The market was expecting a production number of around 4.4b bushels and yields to be around 50.6 bu/acre. While ending stocks were left unchanged at 200m bushels (following demand revisions), the market was expecting an ending stock number of closer to 245m bushels. As for the global soybean balance, ending stocks for 2022/23 were increased from 98.9mt to 100.5mt, largely on account of Brazil. Global soybean production estimates were increased by around 1.2mt to 391mt with the majority of the supply addition coming from Brazil (+3mt). For corn, 2022/23 US ending stocks were lowered from 1.22b bushels to 1.17bn bushels due to lower yields and production. However, the latest numbers still come in above the roughly 1.13b bushels the market was expecting. Meanwhile, global corn production estimates were lowered by 3.8mt to 1,168.7mt due to lower supply from the US (-1.2mt) and the EU (-2.6mt), which saw global ending stocks fall by a little more than 3.3mt to 301.19mt. Finally, the USDA lowered its 2022/23 ending stock estimates for US wheat from 610m bushels to 576m bushels, although this was still above market expectations of 563m bushels. The USDA lowered production estimates from 1.78b bushels to 1.65b bushels due to lower acreage and yields. Read this article on THINK TagsWASDE Russian metals OPEC API Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: China's GDP Disappoints, Adding Pressure to the Complex

Wave Of Demand Coming For Nuclear Power | Expensive American Wheat

Saxo Bank Saxo Bank 13.10.2022 11:35
Summary:  Markets traded sideways yesterday as we await today’s US September CPI data. The FOMC minutes out last night generally failed to move the needle as Fed members generally indicated they feared doing too little to get ahead of inflation more than doing too much. USDJPY traded to new 24-year highs, so far failing to elicit a response or intervention from the Bank of Japan, which intervened previously against JPY weakness at a lower USDJPY level some three weeks ago.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The decline in US equities continued yesterday with S&P 500 futures closing at a new low for this drawdown cycle and this morning the index futures are trading around the 3,590 level. Today’s US September CPI figures are the key event today with a negative surprise (worse than expected inflation) adding to worsening sentiment in US equities as the market in that case would price a higher policy rate. The Q3 earnings season is also ongoing with PepsiCo reporting yesterday (see summary below) and earnings today from Walgreens Boots Alliance and Delta Air Lines. The levels in S&P 500 futures are still standing at the edge of the cliff and under the right circumstances US equities could slide lower in a fast clip. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities retreated, Hang Sent Index down 1% but mid-day and CSI300 lower by 0.3%. HSBC (00005:xhkg) outperformed and gained 0.7%. Worst performers in Hong Kong included China developers, Chinese banks, sportswear, electronic hardware, and China Internet names. In A shares, technology and healthcare stocks outperformed. The Chinese Communist Party (CCP) concluded yesterday a 4-day session in preparation for its 20th national congress, in a communique, the CCP said it had established comrade Xi’s core position on the party and hailed the party’s pandemic control strategy a success. In its first National Security Strategy white paper, the US Biden Administration named China as the only competitor with both the intent and the power to reshape the international order. USD remains near highs as USDJPY punches higher still Traders abandoned their reluctance to take USDJPY higher and risk a fresh blast of intervention from the Bank of Japan/Ministry of Finance yesterday, taking the pair to new 24-year highs just shy of 147.00. The 147.66 level from 1998 is the highest level for the pair since the early 1990’s. The USD action was generally muted elsewhere as EURUSD is finding the 0.9700 area sticky and GBPUSD bobs around near 1.1100, with the market mulling what will happen after the Bank of England halts its emergency QE measures, supposedly on Friday. (more below). The next event risk is the September US CPI release later today and whether it moves the sentiment needle and more importantly, US treasuries, where yields have consolidated below the cycle highs of two weeks ago and near 4.00%. Gold (XAUUSD) Gold remains rangebound around $1670 ahead of today’s important US CPI print, and following last week's aggressive short squeeze, potential sellers have turning more cautious at this stage where the market has been left pondering how close we are to seeing peak hawkishness, a development that may signal a low in gold. In our latest gold update we highlight the reasons behind our medium-term bullish outlook but also why the ducks are not yet lined up properly for the recovery to begin. Support at $1658, the 61.8% retracement of the recent correction, with resistance at $1687 and $1695. Crude oil (CLX2 & LCOZ2) Crude oil traded steady overnight after falling for a third day on Wednesday in response to a report showing a large crude build last week and OPEC and EIA both slashing their demand outlook for 2023. In addition, a hawkish set of minutes from the Federal Reserve also weighed ahead of today’s US CPI print for September. The API reported a 7 million barrel build in crude oil inventories with official data from the EIA following later today. The US led plan to cap prices on Russian oil sales remain a focus with detailed talks about to begin, but the risk it could lead to higher, not lower global prices may still prevent it from being introduced. Following two downbeat oil market updates from OPEC and the EIA, both lowering 2023 demand by around 0.4m b/d, the IEA will publish its report during the European morning. Mixed US crop report with focus on wheat and soybeans Wheat prices in Chicago dropped by 2% on Wednesday after the US Department of Agriculture cut its demand forecast, primarily due to a downgrade in exports to the lowest since 1971. A revision that still left ending stocks at their lowest since 2007 but higher than analyst forecasts. American wheat is too expensive – due to the strong dollar - and sales have been slow, the USDA wrote in its monthly WASDE report. Corn futures (ZCZ2) meanwhile dropped after the report signaled bigger inventories before settling unchanged. Soybeans (ZSX2) jumped sharply before ending up 1.3% with a lowering of US production leading to much lower-than-expected US ending stockpiles. A development being partly offset by increases in Brazil’s soy harvest and export outlook. US treasuries (TLT, IEF) US treasury yields continue to trade not far below the cycle highs near 4.00% in the 10-year treasury benchmark. An auction of 10-year T-notes yesterday saw tepid demand and lower interest from foreign bidders. A 30-year auction is later today, but the important catalyst of the day is the US September CPI release and whether even a soft print can make much of an impression on the bond market, given that the Fed has indicated it will continue to hike even as economic growth weakens, inflation falls and unemployment begins to rise. What is going on? FOMC minutes show Fed more afraid of doing “too little” to stem inflation risks Not a huge surprise to markets to receive this message late yesterday, as Fed rhetoric has consistently pointed in that direction and the market expectations for Fed policy finally now reflect the Fed’s own “dot plot” forecasts of rates continuing to rise a bit more beyond the end of this year. This came after many months of the market expecting that Fed rates would end next year below their level at the end of this year, likely figuring that the economy would weaken significantly from the policy tightening. “Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” Late yesterday, MIchelle Bowman of the Fed’s Board of Governors argued for continued large rate increases and the early November FOMC meeting is nearly fully priced to deliver a 75 basis point hike, with December’s meeting priced at 50-50 odds of 50 vs. 75 basis points. Sweden’s CPI hits new cycle highs in September … showing how the energy crisis in Europe and the weak krona continue to drive higher inflation. The headline CPI released this morning hit 10.8%, above the 10.5% expected and up from 9.8% in August, while the core inflation level rose to 7.4%,  slightly below the 7.5% expected and up from 6.8% in August. PepsiCo surprises on growth and margin If investors were looking for a negative surprise and evidence of margin compression PepsiCo was not the answer. The beverage and snacks business delivered better than expected revenue and earnings in Q3 and lifted fiscal year organic revenue growth to 12% from previously 10%. PepsiCo experienced a bit of margin compression during the quarter but enough to offset the higher revenue growth. It looks like PepsiCo is a very robust business during inflation. Cameco and Brookfield Renewable to buy Westinghouse The uranium miner Cameco and the renewable energy business Brookfield Renewable Partners are teaming up to buy the nuclear services business Westinghouse as the outlook for nuclear power is improving. Cameco’s CEO said yesterday that he sees a ‘wave’ of demand coming for nuclear power and that Russia’s invasion in Ukraine is a game changer for the industry. What are we watching next? The September US CPI data point and Friday’s Retail Sales data are the next two data points of interest for US yields, the US dollar and likely risk sentiment in general ... although earning season is likely to begin generating more headlines and sentiment shifts in coming days. As noted above, it is questionable how much information value the market can extract from any downside surprise in the CPI print today, given Fed forecasts that it will continue its tightening regime even as the inflation and the economy (presumably) decelerate. Therefore, upside surprises may generate more significant market volatility. Elsewhere, core Retail Sales growth has been anaemic in recent months, but the ISM Services has remained strong, suggesting a still strong services sector. Bank of America’s CEO Brian Moynihan was out yesterday claiming that the US consumer is “in good shape” and spending more than a year ago despite the ominous backdrop. “The consumers basically have more money in their accounts by multiples than they did pre-pandemic.” UK Chancellor Kwarteng to skirt blame for any gilt market volatility if BoE winds down emergency QE on Friday as it has claimed it will on Friday Kwarteng commented that any turmoil “is a matter for the governor”. Could Bailey be made a scapegoat and fired over the recent debacle in the gilt market, which was also in part due to the launch of the government’s “mini-budget”, in which abandoning planned tax rises and introducing new cuts suggested the government was set abandoning any sense of caution on the longer term trajectory of fiscal imbalances. The FT cites “people briefed on the discussion” that the BoE may be forced to continue to support the market after tomorrow. The 30-year gilt yield returned above the 5.00% level it touched before the BoE intervened yesterday before dropping toward 4.8% by the close. The BoE is priced to hike more than 100 basis points at its November 3 meeting and another 100 basis points in December. Xi Jinping speech at party congress on Sunday The speech will be closely watched for the Chinese leader’s response to the current global backdrop, including the recent moves by the US to limit Chinese access to semiconductors, as well as for hints on the domestic agenda, especially the future of the Zero Covid policy. Earnings to watch Today’s earnings focus is Walgreens Boots Alliance due to its large footprint with the US consumer selling everything from pharmacy prescription drugs to shampoo and other hygiene products. Given PepsiCo’s stronger than expected result yesterday Walgreens may also surprise in its Q3 results. Delta Air Lines is another important earnings release to watch as travel and leisure are consumer discretionary activities that could see weakness given the cost-of-living crisis. Today: Progressive, Fast Retailing, Tryg, Walgreens Boots Alliance, Fastenal, BlackRock, Delta Air Lines, Domino’s Pizza Friday: Shanghai Putailai New Energy, YTO Express Group, PNC Financial Services, JPMorgan Chase, Morgan Stanley, Citigroup, UnitedHealth Group, Wells Fargo, US Bancorp, First Republic Bank Economic calendar highlights for today (times GMT) 0800 – IEA Monthly Oil Market Report 1230 – US September CPI 1230 – US Weekly Initial Jobless Claims 1430 – EIA's Natural Gas Storage Change 1500 – EIA's Weekly Crude and Fuel Stock Report 0130 – China Sep. PPI/CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-13-2022-13102022
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Podcast: Europe's Real Troubles Discovered As A Result Of The War In Ukraine

Saxo Bank Saxo Bank 13.10.2022 11:42
Summary:  As we await today's US September CPI and wonder whether a soft surprise can really move the needle, we highlight one of the starkest assessments of Europe's current predicament, which has crystallized since Russia invaded Ukraine earlier this year and is not just about stocking up on enough gas to survive the coming winter, but will require decades to address. A look at burgeoning interest in the nuclear energy, stocks to watch and upcoming earnings reports, crude oil, wheat and a 79-year low in the orange crop in the US and more on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-13-2022-13102022
ByBit talks trading bots. What are they? How can they help?

Before The US Inflation Release Bitcoin Price Line Movement Could Be Considered As A Bit... Odd

Craig Erlam Craig Erlam 13.10.2022 20:56
In this article: Oil Gold Bitcoin Oil steadying Oil prices are steadying again after a three-day decline that’s coincided with further concerns around the economic outlook and gloomy forecasts. The output cut from OPEC+ last week triggered a surge in prices but that has partially been offset by the increasingly dire forecasts for the economy which will naturally weigh on demand. The alliance will no doubt be pleased with oil trading back in the $90-100 range, the question is whether the US will. Or if another coordinated SPR release could be on the cards. Gold on the rise Gold is also edging higher and could build strongly on that if we get a weaker inflation reading. The yellow metal is seeing plenty of resistance to recovery rallies in recent days after falling back to earth with a bang last week. One inflation number may not change things as far as the Fed is concerned but for markets, it could be a big start. Especially following the FOMC minutes which contained a sprinkling of dovishness. Bitcoin slipping again Bitcoin is sliding, hitting its lowest level since late September despite other risk assets rallying in the run-up to the inflation data. While there have been occasions when it hasn’t perfectly aligned with other high-risk assets recently, today’s price action is interesting as it’s doing the complete opposite. That may change after the inflation data but going forward, it will be interesting to see whether the relationship between cryptos and risk assets holds or if we enter a new phase where quality traditional risk assets are favoured in an era of recessions and higher interest rates. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil steadies, gold edges higher, bitcoin slides - MarketPulseMarketPulse
The Commodities Feed: Oil maintains positive momentum

Despite The US Inflation Print, Crude Oil Rallied Yesterday. Joe Biden's Administration May Take Action As Situation In Energy Market Arouses Concerns

ING Economics ING Economics 14.10.2022 10:37
A stronger CPI print should have meant that markets came under pressure yesterday. However, oil prices rallied, while supply concerns continue to dominate the aluminium market Source: Shutterstock Energy - oil rallies despite bearish developments ICE Brent managed to settle almost 2.3% higher yesterday even after the higher-than-expected inflation reading from the US. Stickier inflation only reinforces the view of a more aggressive hiking cycle from the US Fed. And this latest data supports a 75bp hike at the Fed’s November meeting. The latest weekly numbers from the EIA were also not very constructive. US commercial crude oil inventories increased by 9.9MMbbls over the last week. Although when taking into consideration SPR releases, total US crude oil inventories increased by just 2.2MMbbls The large commercial build was predominantly driven by a large decline in crude oil exports. These fell by 1.68MMbbls/d WoW. We also saw slightly stronger crude imports and lower refinery activity over the course of the week. For refined products, whilst gasoline saw a build of a little over 2MMbbls, distillate fuel oil stocks declined by 4.85MMbbls. Read next: The Ad-Powered Netflix's Plan | Jim Cramer Comments On The Shares| FXMAG.COM The IEA released its latest monthly market report yesterday in which the agency questioned the recent decision from OPEC+ to cut output. The agency believes the decision will lead to increased volatility and energy security concerns. As a result of a deteriorating economy and higher prices, the IEA revised lower its demand growth forecasts for both 2022 and 2023 by 60Mbbls/d and 470Mbbls/d respectively. This leaves oil demand growth in 2022 and 2023 at 1.9MMbbls/d and 1.7MMbbls/d respectively. As for Russian supply, the IEA reports that exports fell by 230Mbbls/d in September to average 7.5MMbbls/d, which is down around 560Mbbls/d from pre-war levels. Obviously, with the EU ban on Russian oil coming into force in December, these flows are expected to decline further. Looking at broader OPEC+ supply, IEA numbers show that the group produced 3.44MMbbls/d below its target level for September. President Biden has suggested that some action will be taken by his administration next week to address high gasoline prices. The US is clearly not happy with the recent decision of OPEC+ to cut supply and the move has done very little to help the Saudi/US relationship. Potential action could include further releases from the SPR and potentially imposing export limits on fuel. Export limits on fuel would not be very effective, as they would likely push global fuel prices higher, and would then have a positive impact on fuel prices in US regions which import large volumes of refined products from overseas.   Metals – LME aluminium continues to surge on supply woes LME aluminium price continued to surge for a second straight session amid worries over a potential ban on Russian supplies, largely ignoring the jump reported in on-warrant stocks. The latest LME data showed that on-warrant inventories for aluminium rose by 20kt, their seventh consecutive rise, to reach 303.6kt (highest since May 9th) as of yesterday, with the majority of the increase from Malaysia’s Port Klang warehouses. Meanwhile, cancelled warrants also declined for a tenth straight session to 48.3kt as of yesterday, signalling potential further inflows. In China, the latest SMM survey showed China’s copper cathode production rising 13.2% YoY and 6% MoM to 909kt in September, as some smelters resumed normal operations. Meanwhile, a newly expanded smelter in the Zhejiang region reached its full production capacity, while a smelter in the Guangdong region resumed operations in mid-September.  Among other metals, SMM reported that Chinese primary aluminium production rose 7.3% YoY to 3.34mt in September. For the first nine months of the year, output rose 2.8% YoY to 29.9mt. Similarly, refined nickel output rose 7.7% YoY to 15.4kt in September. However, refined zinc output fell 3.1% YoY to 503.9kt last month, while YTD production also declined 3% YoY to 4.4mt. For lead, output rose 12.8% YoY and 10% MoM to 295kt in September. For copper premiums, the latest SMM data shows Yangshan copper premiums in China surged to US$137.5/t (highest since October 2021) due to the lower availability of domestic supplies resulting in higher import demand for the metal. The nearby Shanghai Futures Exchange (ShFE) copper spread moved to a backwardation of over CNY1,600/t as of yesterday, indicating tight domestic supply conditions. Agriculture - Black Sea grain deal uncertainty Wheat prices saw further strength yesterday on concern that the Black Sea grains deal may not be renewed when it expires in mid-November. According to reports, Russia has sent a letter to the United Nations regarding its concerns over the deal and potentially will not renew it if these concerns are not addressed. Read this article on THINK TagsOil IEA Grains EIA Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
EUR: Stagflation Returns Amid Weaker Growth and Sticky Inflation

Japanese Yen (JPY) Suffers The Most, Expectations For The Chinese Economy (CPI, Export)

Saxo Bank Saxo Bank 14.10.2022 10:48
Summary:  A choppy session in equity and bond markets despite a hot US CPI print for September pushing up Fed funds rate expectations by over 25bps on the terminal rate projections which limits the room for Fed officials to out-hawk the markets. Japanese yen suffers the biggest blow as intervention remains weak, while GBP and Gilts generally supported higher with another potential U-turn in UK fiscal plan. Further tightening from Monetary Authority from Singapore boosts the SGD, and China’s CPI will be on watch in the Asian session before Bank earnings take away the limelight later in the day. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) indices plunged after hot CPI data then whipsawed higher, moving in a ~5% range Core inflation (which excludes volatile food and energy items) rose to a 40-year high in September which gives the Federal Reserve reason to continue with its aggressive interest-rate hikes. The Nasdaq 100 fell over 3% and the S&P500 fell 2.35% before both major indices whipsawed higher with the Nasdaq ending up 2.3% and the S&P500 up 2.6%. Short covering and macro trading would have played a huge role in the reason markets whipsawed higher. ETF volume accounted for 39% of the turnover, just a touch lower than the record high of 40%. In terms of sectors, financials and energy led the benchmark index higher. Amid the energy crisis, there are the most rising-free cash flows in energy markets, which offer value. U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) made new highs before waning U.S. treasuries had a volatile after the hot CPI prints. Now the money market fully prices in a 75bps hike in the November FOMC and a terminal rate of 4.9% early next year. The front end of the treasury curve was hit most with 2-year yields rising to as much as 24bps to 4.53% before paring back some of the move to finish the day 17bps higher at 4.65%. 10-year yields made a new high, hitting 4.08% soon after the CPI but spent the rest of the session waning to up only 4bps to close at 3.94%, despite a weak 30-year auction in the afternoon. The sharp rally (yields falling by over 20bps across the curve) in U.K. gilts contributed to stabilising U.S treasuries. The Bank of England bought a record £4.68 billion of gilts in its emergency bond purchase programme which is set to end on Friday. Traders snapped up gilts on speculation that the Truss government will announce the reversal of some of the tax cuts in the mini-budget when the Chancellor of the Exchequer Kwasi Kwarteng returns from the IMF meeting in Washington.  Australia’s ASX200 (ASXSP200.1) may likely meet a similar fate to US equities and have a wild day of trade In Australia a similar situation is playing out with the futures market is now pricing in interest rates will peak at 3.9% next year.  We have seen the RBA express ‘peak hawkishness’, is behind it. But the market is still pricing in rate rises will continue, but at a steady pace. This means growth sectors remain pressured and value strengthens. Consider; amid the energy crisis, there are the most rising-free cash flows in energy markets, which offer value and support share price growth. This is worth perhaps reflecting on, especially given coal prices hit fresh highs and we are not at peak coal demand season (January) yet. As such energy prices seem supported higher. Hong Kong’s Hang Seng (HSIU2) China’s CSI300 (03188:xhkg) Hong Kong and mainland China equities retreated, Hang Seng Index down 1.9% and CSI300 lower by 0.8%. HSBC (00005:xhkg) outperformed and gained 0.7%. Country Garden Services (06098:xhkg), tumbling 14.1%, and Country Garden Holdings (02007:xhkg), falling 9.8% were the worst performers in the Hang Seng Index, as the China property space continued to sell off. Machinery stocks declined on weak excavator sales in China. Weaknesses in China Internet and EV stocks dragged the Hang Seng Tech Index (HSTECH.I) down by 3.4%. On the other hand, local Hong Kong developers, Sun Hung Kai Properties (00016:xhkg), up 2.7%, New World Development (00017:xhkg), up 2.2%, and CK Asset Holdings (01113:xhkg), climbing 1.2% were among the best performers in the benchmark index, following news reports saying the Hong Kong Government is considering to relax the 15% extra stamp duty that non-resident buyers need to pay when buying a property in Hong Kong. In addition, Hong Kong is considering allowing 12 people instead of the currently 4 to gather in public. Macao casino stocks dropped from 1.9% to more than 7% on the dim prospect of relaxation on zero-Covid policy in mainland China. The head of China’s Epidemic Response and Disposal Leading Group, Liang Wannian, said on TV that China had no timeline for an exit from its Covid strategy. Sands China (01928:xhkg) was also troubled by a lawsuit in the U.S. in which the claimant is seeking more than USD7.5 billion in compensation. Healthcare stocks gained at the Hong Kong and mainland bourses. In the A-share market, computing, software, and digital currency concept stocks gained, following China’s central bank’s pledge to promote the development of the digital renminbi. Weak verbal intervention in the Japanese yen USDJPY traded to a fresh record high of 147.67 overnight, and stayed above the 147 handle despite a reversal in US dollar strength later in the session. Only some weak comments were noted from Japanese authorities, with FinMin Suzuki saying that FX volatility was discussed at the G20 meeting. There was also some speculation of more Japanese intervention after some sudden price movements in the Yen yesterday as USDJPY hit a high of 147.47 before knee-jerking lower to 146.52, albeit if it was intervention it wasn't successful with USDJPY back above 147.00. That is perhaps a reason why Japanese MoF official has stayed away from confirming or denying Thursday’s intervention. BOJ Governor Kuroda kept easing bias saying not appropriate to raise rates in Japan now, and with US yields still seeing some more room on the upside, there could be more room for yen weakness. Our technical analyst highlights that if USDJPY breaks 147.65 resistance, 149.34 level is not unlikely. Crude oil (CLX2 & LCOZ2) followed the USD price action While there were enough drivers for the oil prices overnight, price action in crude oil generally followed the USD trend which initially rose after the hot US CPI report cementing expectations for another 75bps rate hike at the November meeting and a small chance of a 100bps rate hike, but it fell later as risk sentiment revived. The IEA's monthly oil market report saw its Q4 demand view lowered by 300k BPD, while its 2023 demand outlook was cut by 470k BPD (both are still expected to show growth). But supply concerns also remained with the weekly US inventory reporting tight market in distillates following a decline of 4.9mln barrels in domestic supply. Crude stocks build was significantly above expectations (9.88mln vs an expected 1.75mln), while stocks at Cushing drew down by 309k; and gasoline posted a surprise build (2.023mln vs an expected -1.825mln). US-Saudi tensions also continue to slide downhill as the White House accused Saudi Arabia of coercing other OPEC+ members into agreeing to a huge output cut, and said it had asked the kingdom for a pause.   What to consider? Hot US CPI pushing Fed tightening expectations higher – can Fed members continue to out-hawk the markets? Core US inflation jumped to a 40-year high of 6.6% y/y in September, making more jumbo Fed rate increases inevitable. Headline CPI also came in higher than expectations, at 8.2% y/y with shelter, food and medical care contributing to the biggest gains. Fed funds rate expectations have pushed higher, with a full 75bps rate hike priced in for November with increasing expectations of a 75bps rate hike in December as well. March 2023 terminal rate expectation pushed higher by about 30bps to 4.94% now. This is above the 4.6% depicted by the Fed’s dot plot, and may leave little room for the Fed members to continue to out-hawk the markets. Fed speakers George, Cook and particularly Waller will be on the wires today. Reports of another potential UK fiscal U-turn There’s no ending the drama in the UK markets, with reports of another potential U-turn in the fiscal plans of Liz Truss government. Now, there are talks that the government is mulling hiking corporation tax despite initial plans to scrap the corporation tax hike and keep it unchanged. Such reports, along with the BOE’s increased bond-buying thus week, could help put a floor on UK assets next week as the central bank halts its bond purchases today. Still, the credibility of UK authorities remains in question, and that would mean it remains hard to include Gilts in asset allocation. Treasury Secretary Yellen warned about the risk of a loss of liquidity in the U.S. treasury market U.S. Treasury Secretary Janet Yellen voiced concerns about a potential breakdown in treasuries trading when answering questions yesterday and said that the Treasury is “worried about a loss of adequate liquidity in the market”. The concern about the potential risk of a sudden loss of liquidity or even a breakdown of trading in the U.S. treasury market has recently risen among some traders as the treasury market loses the largest buyer, the Fed in quantitative tightening. After rounds of QE and large fiscal deficits, the outstanding amount of treasuries has grown to USD23.7 trillion. The daily turnover in treasuries was USD627 billion a day in September.  The turmoil across the pond in the U.K. gilts markets has also added to the worries among traders and probably policy makers in the U.S. U.S. Bank earnings, potential CET1 capital shortfalls to watch Several leading U.S. banks, including JPMorganChase (JPM:xnys), Morgan Stanley (MS:xnys), Citigroup (C:xnys), Wells Fargo (WFC:xnys), US Bancorp (USB:xnys), PNC Financial (PNC:xnys), First Republic Bank (FRC:xnyc) are reporting on Friday. The market focus will be on JPMorganChase, Morgan Stanley, and Citigroup. The key things to watch for are these banks’ net interest margins and their updates on the quality of their loan books, as well as the impact of mark-to-market losses incurred to their available-for-sale investment portfolio, which are largely treasuries and agency mortgage-backed securities, on their common equity tier-1 (CET1).  Some of the banks may be hit by falling bond prices and are facing CET1 capital shortfalls. Taiwan’s TSMC, South Korea’s SK Hynix, and Samsung Electronics secured U.S. approval for getting U.S. equipment for 1 year Taiwan Semiconductor Manufacturing Co said the company had secured a 1-year license from the U.S. government to continue to get U.S. chip-making equipment for its expansion in manufacturing capacity in China for the next 12 months.  Likewise, South Korean chip maker, SK Hynix said it had gotten a 1-year waiver from the U.S. government to import American equipment to its factories in China.  Reportedly, Samsung Electronics got a similar waiver.  On the other hand, China’s top semiconductor equipment maker Naura Technology was said to have told the company’s American engineers to stop working on research and development projects with immediate effect. The Chinese Communist Party convenes its 20th National Congress on Oct 16 General Secretary Xi Jinping will make a speech and presents the Work Report of the 19th Central Committee to the 20th National Congress of the Chinese Communist Party (CCP) on Oct 16. From Oct 16 to 22, around 2,300 delegates from all over the country will elect 205 full members and 171 alternate members of the 20th Central Committee and select the members for the 20th Central Commission for Discipline Inspection. On Oct 22, the 20th National Congress will vote to approve the Work Report of the 19th Central Committee and approve an amendment to the charter of the CCP. The 20th National Congress ends on Oct 22 and the newly elected 20th Central Committee will hold its 1st plenary session on Oct 23 and decide on the most important 25-member Politburo and its 7-member Standing Committee, as well as members of the Central Military Commission and Central Secretariat.  Nomination of Premier and Vice-premiers of the State Council are matters to be decided not this time but later in the 2nd plenary session which may be held in February 2023 and that nomination will need to be approved by the National People’s Congress in March 2023. ECB QT likely to begin in Q2 2023, lower ECB terminal rate ECB discussed possible timeline for balance sheet reduction at Cyprus meeting earlier this month. Consensus appeared to emerge for quantitative tightening to start sometime in Q2 2023. Reports suggested that the ECB could already tweak its language on reinvestments at its October meeting and then could provide a detailed plan possibly in December but more likely in February. Meanwhile, Reuters reported that an ECB staff model puts the terminal rate in Europe at 2.25%, beneath the 3% that markets are currently pricing in; however, the response from ECB policymakers was mixed, with some fearing the model contains errors. China’s CPI is expected to rise to 2.9% in September China is releasing CPI and PPI data on Friday. The median forecast in the Bloomberg survey is expecting the CPI to rise to 2.9% Y/Y in September from 2.5% Y/Y in August.  The rise is likely attributed to higher food prices, including pork prices during the month.  PPI is expected to fall to 1.0% Y/Y in September from 2.3% in August, helped by a high base last year.  China’s export growth is expected to decelerate in September The median forecast in Bloomberg’s survey of economists calls for a sharp deceleration of China’s export growth in USD terms to +4.0% Y/Y in September from +7.1% in August, citing tightened pandemic control measures and a high base of last year. China’s LNG imports are set to decline this winter Bloomberg analysts estimate that China’s LNG import in November and December will be 12.7 million metric tons, a decline of 17% from last year, citing Chinese LNG users canceling LNG import terminal access slots. Singapore avoids a technical recession, MAS re-centres currency band Solid Q3 GDP growth of 4.4% y/y in Singapore according to advance estimates, crushing estimates as construction and services industries outperformed. This reaffirmed that Singapore not only avoided a technical recession, but is on a solid recovery track after the pandemic restrictions were removed. Q/Q growth turned positive to come in strongly at 1.5% from -0.2% previously. This has given further room to the Monetary Authority of Singapore (MAS) to tighten the policy, and it announced re-centring of its currency policy band to the prevailing level. No changes to the width or slope of the band were announced, meaning the boost to the SGD could remain temporary as potentially more USD gains remain likely for now. What is the thinking about what will happen to interest rates in Australia? In Australia the futures market are now pricing in interest rates will peak at 3.9% next year. We have seen the RBA express ‘peak hawkishness’, is behind it. But the market is still pricing in rate rises will continue, but at a steady pace. This means growth sectors remain pressured and value strengthens. Consider; amid the energy crisis, there are the most rising-free cash flows in energy markets, which offer value and support share price growth. This is worth perhaps reflecting on, especially given coal prices hit fresh highs and we are not at peak coal demand season (December-January) yet. Also consider oil prices have moved off their lows. As such energy prices look supported higher for longer despite A. Most traded instruments at Saxo Australia this week The most traded stocks this week at Saxo in Australia are Tesla, Apple, Whitehaven Coal (hit new high), Coles, and Bank of Queensland results. What’s the takeaway here? We need to reflect on the trends. Trends are your friends when it comes to making profits in markets. In the banking sector; we heard from Bank of Queensland who is forecasting house prices to drop and loan growth to slow. Coal prices are moving up and continues to be supported. And in when it comes to the most transacted upon futures, in commodities; we've seen a pick-up in buying of Crude oil Futures; with the OPEC and EIA still predicting demand will outpace supply in 2023, meaning we could expect higher oil prices into next year.   For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-14-oct-v2-14102022
US Nonfarm Payrolls Disappoint: Impact on Dollar and EUR/USD Analysis

Podcast: Moods In The Stock Markets- The Support Levels Of The Nasdaq 100 And S&P 500 And More

Saxo Bank Saxo Bank 14.10.2022 11:26
Summary:  Today we discuss the remarkable turnaround in equities yesterday after a hotter than expected core US CPI print for September pumped Fed rate expectations higher and triggered a sharp new slide in the market. The rally came after both the Nasdaq 100 and S&P 500 tested important support levels. As the headline suggests, we're far from sure that the market comeback offers much information value despite its impressive scale. Elsewhere, we look at the mixed status of USD pairs after yesterday's action, look at natural gas and copper, preview the day and week ahead on the earnings calendar and upcoming macro data points and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast- slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-14-2022-14102022
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Crude Oil Is Doing Fine But The US Inflation Data Was Terrible For The Gold

Craig Erlam Craig Erlam 14.10.2022 14:09
Oil stabilising A strong rebound in oil prices on Thursday coincided with the broader risk reversal in the markets, taking Brent back towards $95 a barrel. This sits right in the middle of the range that Brent may establish itself in now, between $90 and $100. This has been touted as the potential target range for OPEC+ and may prove to be something that consuming countries can just about tolerate. Although with midterms coming up, another SPR release can’t be ruled out in the short term. The global growth outlook remains a major downside risk, also, and with labour markets remaining tight and inflation stubborn, further downgrades could be on the cards. On the decline after whipsaw session Gold prices whipsawed alongside other assets on Thursday but are trading around half a percentage point lower this morning. The inflation data was terrible for the yellow metal as it cemented a 75 basis point hike from the Fed next month. Not just that, with inflation seemingly so stubborn, it may need to go further than markets previously anticipated. That doesn’t bode well for gold in the near term. Yesterday’s lows around $1,640 could soon be tested once more, with the late-September lows the next test after that. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

WTI Crude Oil Prices: Any Subsequent Move Up Is Likely To Confront Some Resistance

TeleTrade Comments TeleTrade Comments 17.10.2022 08:52
WTI crude oil prices attract some buyers near the $84.50-$84.25 confluence on Monday. A convincing break below the said support will pave the way for further near-term losses. Sustained strength beyond the $86.35 region is needed to support prospects for further gains. WTI crude oil prices regain some positive traction on the first day of a new week and hold steady above the $85.00 mark heading into the European session. From a technical perspective, the commodity manages to defend the $84.50-$84.25 confluence comprising the 100-period SMA on the 4-hour chart and the 50% Fibonacci retracement level of the $76.08-$92.63 rally. The said area should now act as a key pivotal point, which if broken decisively will set the stage for an extension of the recent sharp pullback from the highest level since August touched last week. In the meantime, any subsequent move up is likely to confront some resistance near the $85.70-$85.75 region. This is closely followed by the $86.00 mark and the 38.2% Fibo. level, around the $86.30 area, above which spot prices could climb to the $87.00 round figure. The momentum could get extended towards the $87.45 hurdle en route to the $88.00 mark and the 23.6% Fibo. level, around the $88.55-$88.60 supply zone. On the flip side, weakness back below the $85.00 round figure might continue to find decent support near the $84.50-$84.25 confluence. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for additional losses. WTI crude oil prices could then weaken below the $84.00 mark and test the next relevant support near the $83.40-$83.35 region before eventually dropping to the $83.00 level. WTI 4-hour chart
Commodities: Crude oil price could be supported by technicals

OPEC+ Cut The Supply, But It Didn't Hold Back Brent Crude From Declining Over 6% Last Week

ING Economics ING Economics 17.10.2022 09:26
Energy prices traded lower last week with macro pressures proving too much for markets. However, supply concerns remain, not just in the energy complex, but across the broader commodity space Energy: gasoil tightness The oil market is seeing somewhat of a relief rally in early morning trading today. This follows a relatively large sell-off last week. ICE Brent settled more than 6.4% lower over the course of last week. And this is despite the announced OPEC+ cuts from the previous week. Clearly, the market is concerned over the demand outlook given a deteriorating macro outlook. Last week’s higher-than-expected US CPI only clouds the outlook further with expectations that the Federal Reserve will need to be more aggressive when it comes to hiking rates. Also not helping the demand outlook is China’s insistence on following a zero Covid policy. Markets have been keeping an eye on China’s 20th Party Congress to see whether this policy might be eased. However, there appears to be no change, so localised lockdowns could very well be a theme that runs through 2023.   The latest positioning data shows that speculators increased their net long in ICE Brent by 15,831 lots over the last reporting week to leave them with a net long of 201,163 lots as of last Tuesday. This increase was predominantly driven by fresh longs. The move likely reflects the market’s initial reaction to the OPEC+ meeting. However, given the more recent weakness in the market, the current net long is likely somewhat smaller. The latest data from Baker Hughes shows that the US oil rig count increased by eight over the week to 610. This is the highest number of active rigs seen since March 2020. The weakness we have seen in oil prices for much of the summer has meant that the rig count has been largely flat since early July. The EIA will also be releasing its latest drilling productivity report later today. The prompt ICE gasoil spread continues to trade in a deep backwardation of around US$70/t, reflecting the tightness in middle distillate markets as we move closer to winter. Strike action at French refineries has only further tightened the middle distillate market. Exxon Mobil will restart two of its refineries in France after workers came to an agreement with the refiner. However, operations at Total Energies refineries are still affected after the CGT union rejected the company’s latest offer, despite two other unions agreeing on a deal. The tightness in the gasoil market has attracted speculative money with the managed money net long increasing by 10,050 lots over the last week to 62,085 lots as of last Tuesday. Metals: major copper producers increase European copper premiums Two major copper producers, Coldelco and Aurubis, have increased their premiums to supply copper in Europe next year, anticipating tight supplies, stable demand, and lower availability of stocks in exchange warehouses, according to media reports. Coldeldo increased its premium to mid-US$230/t, compared to US$128/t in 2022. Aurubis raised the European copper premium to a record of US$228/t, a rise of almost 85% on an annual basis. Spot copper premiums in Europe, suppressed for years, are now getting a boost from recent supply concerns in Russia and surging freight costs. Spot copper premiums shipped to Rotterdam are now around US$75/t, compared to the levels of US$45/t before Russia’s invasion of Ukraine, according to Fastmarkets. The latest data from the LME showed on-warrant stocks for copper decreased by 11.3kt (the biggest daily decline in almost a year) to 98.9kt (the lowest since 20 September) as of Friday. The majority of the declines came from the US, Taiwan and South Korean warehouses. Agriculture: specs trim soybean position The latest CFTC data shows that money managers continued to reduce net longs in CBOT soybean for a fourth consecutive week by 11,750 lots, leaving them with a net long position of 65,738 lots as of 11 October- the lowest net long held this year. The move lower was predominantly driven by longs liquidating with the gross long falling by 7,963 lots to 86,799 lots. For wheat, speculators increased their net short position in CBOT wheat by 7,283 lots as of last Tuesday to 19,502 lots. Meanwhile, speculative net longs in CBOT corn grew for a second consecutive week by 23,649 lots to a net long of 267,377 lots as of 11 October. Read this article on THINK TagsSpeculators Oil rigs Middle distillates Gasoil Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Hungary's Budget Deficit Grows, Raising Concerns Over Fiscal Targets

Apple Has Completed Deliveries From A Chinese Company YMTC | Flood In Australia And Its Consequences

Saxo Bank Saxo Bank 17.10.2022 12:09
Summary:  Equity markets fell sharply on Friday, erasing the steep rally of the prior session, as US treasury yields rose and the US dollar closed the week on a strong note. After a retreat on Friday, the pound sterling is attempting a comeback on hopes that the new Chancellor will reverse more of the struggling new government’s original tax cut plans. The focus for the week ahead will likely be on corporate earnings, with Tesla, the world’s most heavily traded stock, set to report Wednesday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) A steep drop in equities Friday erased the odd-ball rally of the prior session as the US equity market heads into Q3 earnings season on its back foot, trading heavily near the cycle lows. The next focus lower could be on the major high posted pre-pandemic in the S&P 500 near 3,400. For the Nasdaq 100, the equivalent level would be near 9,750, some 1,000 points lower from the current level. The earnings season kicks into gear this week with especially Wednesday being important for sentiment in equities as Tesla and ASML reports earnings. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Stocks in Hong Kong and mainland China retreated after the selloff in the US markets last Friday.  In addition, General Secretary Xi’s speech yesterday hailed China’s “Dynamic Zero-Covid” strategy and gave no hint of shifting policy priorities toward economic growth as some investors had hoped for. Hang Seng Index lost 1.1% and CSI300 slid 0.4%. China Internet stocks traded in Hong Kong declined from 2% to 8%. CNOOC (00883:xhkg) climbed 0.7% after preannouncing strong net income, benefiting from higher energy prices. USD comes storming back, sterling tries to stabilize... The US dollar quickly recovered lost ground on Friday after the big correction Thursday, in correlation with the return of weak risk sentiment and a fresh rise in US treasury yields back toward the cycle highs. After Chinese leader Xi Jinping's speech at the party congress this weekend, the USDCNH exchange rate remains pinned near the 7.20 area that was the previous high from 2019 and 2020, USDJPY continues to run higher amidst broad JPY weakness (EURJPY is nearing a multi-year high above 145.00). Elsewhere, EURUSD seems reluctant to make a statement with 0.9800 and 0.9536 the two levels of note there, and GBPUSD has pushed higher on hopes that the recent volatility in UK gilts and sterling will see the government retract its budget-busting policy moves, with likely further political turmoil ahead as Prime Minister Truss fights to stay in office. Crude oil (CLX2 & LCOZ2) Crude oil dropped sharply on Friday after a strong comeback for the US dollar and with little to help sentiment as the week gets under way after Chinese leader Xi doubled down once again on his commitment to Zero Covid policy. The bigger focus in energy markets is on the weak supply situation in diesel amidst concerns of shortages in both Europe and the US. In Europe, strikes at French refineries are aggravating the supply situation, while US storage levels are at their lowest for this time of year ever. US treasuries (TLT, IEF) US treasury yields pulled back higher on Friday to close the week near the highs for the cycle, with the 10-year Treasury yield benchmark near 4.00% once again and a very light US data calendar for the week ahead, although important housing data like the October NAHB Survey is up tomorrow and September Housing Starts/Building Permits data follows on Wednesday. The most interesting auctions this week are a 20-year US Treasury auction on Wednesday and a 5 year TIPS auction on Thursday. What is going on? Xi’s speech at the Chinese Communist Party’s 20th National Congress adhered to current policy priorities General Secretary Xi Jinping made a speech to present the Work Report of the 19th Central Committee to the 20th National Congress.  In the speech, he reiterated the current policies of the new development paradigm, common prosperity, dual circulation, and dynamic zero-Covid, as well as strong language on Taiwan. As we remarked in a recent note, General Secretary Xi is set to continue the key policy priorities that he launched over the past 10 years into the five years ahead. Investors hoping for major shifts in economic policies in China or the Chinese authorities ditching the dynamic Covid-zero strategy after the 20th National Congress will most likely be disappointed. Apple to stop using Chinese memory chips Due to US export restrictions Apple has decided to halt the usage of memory chips from the Chinese company YMTC. The chips are cheaper than other manufacturers of memory chips but were only supposed to have been used for the Chinese market, so the immediate impact on iPhone pricing is low. However, it underscores the long-term risks to inflation from the ongoing reshoring of the global supply chain. Mixed US economic data on Friday On a positive note, the US preliminary October University of Michigan sentiment indicator rose slightly, with the headline at 59.8, up from 58.6 in September. This is the highest print since April 2022. This is partially explained by an easing of supply constraints. But concerns over inflation and the ongoing economic slowdown remain. On a negative note, U.S consumer spending was flat last month. Retail and food services sales were little changed after an increase of 0.4 % in August. This is actually much worse than it looks like. Retail sales numbers are not adjusted for inflation which means that real spending actually retreated for the month. However, it is unlikely to prevent the U.S. Federal Reserve from raising the Fed funds rate by at least 75 basis points at the November FOMC meeting (current market pricing is +78 basis points). La Nina is underway in Australia; floods decimate some wheat crops In the Australian state of Victoria at the weekend floods decimated some wheat crops, which has resulted in the price of Wheat futures contracts for March and May 2023 lifting in anticipation that supply issues will worsen. The Australian Federal Emergency Management Minister said parts of Australia face ‘some serious flooding’ with more rain forecast later this week, with 34,000 homes in Victoria potentially expected to be inundated or isolated. The Bureau of Meteorology forecasts the La Lina event to peak in spring that’s underway in the Southern Hemisphere, before turning to neural conditions early next year. What are we watching next? UK Prime Minister Truss in fight for political life this week … as rumors swirl of a rebellion in the Tory ranks. New Chancellor Jeremy Hunt is scheduled to speak today and may announce further reversals of the budget-busting adjustments to tax policy that got the fledgling government into trouble so quickly and helped trigger the recent turmoil in sterling and the UK gilt market. Sterling has started the week on a hopeful note as we also wait and see how well the gilt market functions after the Bank of England wound down its emergency QE programme last week. The UK CPI data on Wednesday is the data highlight of the week for the UK, with headline CPI expected at 10.0% YoY and core at +6.4%. Earnings to watch This is the first full week for the quarterly earnings cycle, with intense focus on Tesla’s earnings report up on Wednesday as the stock closed a new low for the year on Friday as concerns rise of cracks in the company’s growth story. Given the pressure on the semiconductor industry from US export restrictions earnings from ASML and Lam Research are also our focus on Wednesday. Today: Bank of America, Sandvik Tuesday: Charles Schwab, Johnson & Johnson, Goldman Sachs, Intuitive Surgical, Lockheed Martin, Truist Financial Wednesday: ASML, Elevance Health, Tesla, IBM, Lam Research, P&G, Abbott Laboratories, Atlas Copco Thursday: China Mobile, China Telecom, ABB, Danaher, Investor, Philip Morris, Union Pacific, CSX, AT&T, Blackstone, Marsh & McLennan, Yara International, Nordea, Volvo, Ericsson, Freeport-McMoRan, Dow Friday: CATL, American Express, Schlumberger, Verizon Communications, HCA Healthcare, Sika Economic calendar highlights for today (times GMT) 1200 – Poland Sep. Core CPI 1230 – US Oct. Empire Manufacturing 1430 – UK Chancellor Hunt to speak 1500 – ECB’s Lane to speak 2145 – New Zealand Q3 CPI 0030 – Australia RBA Minutes 0200 – China Sep. Industrial Production 0200 – China Sep. Retail Sales 0200 – China Q3 GDP Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-17-2022-17102022
Crude decreases amid risk boosting greenback and unclear situation in China

Drivers May See The Light At The End Of The Tunnel! There's A Chance WTI Crude Oil Will Reach $75

Alex Kuptsikevich Alex Kuptsikevich 17.10.2022 11:01
Read next: The Double-Digit Inflation In The Eurozone Is Here! (European CPI)| FXMAG.COM Three weeks ago, oil started a 22% rally due to OPEC+ production cuts and bounced back after being technically oversold. However, the 8% drop in quotations last week showed that bears still dominate this market, which several technical factors can see. On the weekly charts, the WTI brand turned down neatly from its 50-week moving average, clearly indicating that a medium-term downtrend is prevailing here. On the daily charts, oil's rebound was well within traditional Fibonacci patterns, losing strength near the 61.8% retracement after declining from June through September. At the end of August, oil sold off spectacularly from the 200-day moving average, showing a fundamental breakdown in the market. OPEC+ production cuts and relatively strong U.S. jobs data worked to keep the price dynamic from becoming unidirectional, as it was in 2014-15. However, there is growing evidence that the economic slowdown suppresses energy demand, keeping long-term bearish pressure. Last week, oil sellers were also encouraged by some economic news. According to the latest EIA data, sales of oil from the strategic reserve have accelerated again in the past two weeks, helping to lift commercial inventories by nearly 10 million. According to Baker Hughes data released Friday night, America also increased the number of working oil rigs to 610. This is a new high from March 2020 and an attempt to get back on a rising trend. This could mean that America will again try to take over the initiative and strengthen its lead as the world's largest oil producer, taking advantage of a period of tight OPEC restrictions. The downtrend could intensify if we also see material moves by the U.S. administration to stimulate hydrocarbon production over the coming weeks. Without surprises from a surge in oil demand and new production cuts, WTI may return to the $75 area (September lows) before the end of October. Suppose that support fails, considering the global economic slowdown. In that case, the price could quickly retreat to $65 (the 200-week average) or even $50 (the psychologically important round level and the 161.8% Fibonacci area of the initial momentum from June).
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

US Dollar Is Affecting Crude Oil Price, Which May Be Playing Hide And Seek In The Near Future

Walid Koudmani Walid Koudmani 17.10.2022 21:58
Eyes on the Sterling Pound as new chancellor set to make announcement The pound remains in the spotlight this week as investors await today's speech from the new chancellor Jeremy Hunt where is expected to announce the new budget and tax plans after the recent plans caused a noticeable drop in confidence towards the currency. While there may be a possibility for some surprises in today's statement, expectations remain for a U-turn on several measures previously announced in an attempt to reassure markets about the financial stability of the economy. The pound started the day trading higher reaching 1,125 against the US dollar while the UK FTSE index pulled back slightly after an initial upward move which saw it briefly break above 6900 points and any unpredicted announcement could cause a significant reaction across asset classes. Read next: Netflix Stock Price May Tumble Tomorrow! What Can We Expect From NFLX Earnings? | FXMAG.COM Oil prices attempt to rebound at the start of the week Despite the announcement of a further cut to OPEC+ production in the most recent meeting, oil prices failed to gain momentum and after a brief attempted recovery remained stuck in the previous consolidation area. WTI prices are down around 1,50% after a short upward move this morning which was facilitated by a temporary weakening of the US dollar, which has been putting pressure on commodity prices in recent times. However, the situation appears to be changing as the dollar has once again started to garner some strength and is once again pressuring other currencies as well as commodities like oil. Prices could continue to be volatile in the near future as general economic uncertainty and investor sentiment continue to play a key role in price action while investors await macroeconomic reports and central banker speeches during the week, along with earnings reports from major Wall Street companies. Oil WTI prices are hovering in an interesting technical position as they test a short term support area around $84,50, which managed to limit the most recent downward movement. If this area is broken, it may lead to the start of a bigger move which may result in further speculation regarding the upcoming production targets set by OPEC+.
The Analysis Of Off-Chain Metrics Allows Cryptocurrency Supporters To Count On A Reversal

Craig Erlam Talks Oil Market, Gold And Bitcoin (BTC)

Craig Erlam Craig Erlam 17.10.2022 22:44
Settling down? It’s been another turbulent few weeks in oil markets from global growth concerns to super-sized OPEC+ output cuts and it seems they’re yet to fully settle down. Brent has seen lows of $82 and highs of $98 so perhaps what we’re now seeing is it finding its feet somewhere in the middle. Whether that will satisfy the oil alliance only time will tell but there will be some relief that it’s not back in triple figures already, even if that is a result of the ever-worsening economic outlook. An encouraging rebound Gold is seeing an encouraging rebound after another pretty terrible week. It’s trading more than 1% higher on Monday after slumping more than 3% last week. Lower global yields and a slightly softer dollar are probably behind the move, with traders no doubt hoping that peak inflation and rate pricing are nearly in sight. The recent economic data hasn’t offered cause for much optimism but that could change over the coming months, with central banks now surely not far from their terminal rates. That could favour gold, especially as the economy falters. Resistance ahead could be found around $1,680 and $1,700, although some traders may be encouraged by the failure to breach September’s lows. Read next: Netflix Stock Price May Tumble Tomorrow! What Can We Expect From NFLX Earnings? | FXMAG.COM A positive start to the week Bitcoin’s relationship with risk assets hasn’t been perfect recently but the last week has seen it look far more aligned. The US inflation disappointment almost sent it into a tailspin but then the wild turnaround happened and it quickly bounced back and powerfully. It came within a whisker of $20,000 once more before pulling back and now it’s trading on the front foot again with its sight set on that level. The gains today mirror those in equity markets, with risk assets more broadly getting the week off to a good start. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges lower, gold jumps, bitcoin on the rise - MarketPulseMarketPulse
Russia Look Set To Double Its Exports For The First Half Of 2023

The Agreement Allowing Ukraine To Export Grain May Not Be Renewed

Saxo Bank Saxo Bank 18.10.2022 10:52
Summary:  The Crimea bridge blast last weekend destroyed a key supply route for Moscow’s forces in southern Ukraine. Putin was quick to retaliate by raining missiles over Kyiv and other cities after condemning the act as terrorism done by Ukrainian special services. This places the UN brokered grain deal in jeopardy with negotiations taking place now to extend it by a year. Elsewhere, OPEC+ cut output by 2 million barrels per day despite Western nations protests. The Crimea bridge blast last weekend destroyed a key supply route for Moscow’s forces in southern Ukraine. Putin was quick to retaliate by raining missiles over Kyiv and other cities after condemning the act as terrorism done by Ukrainian special services. He did not spare the port of Odesa, which is considered one of the key grain export ports that Russia has agreed to allow normal export operations to continue via the Black Sea. The bombings has continued for over a week now with central Kyiv being hit by kamikaze drones early yesterday while heavy fighting is still happening at the war front in southeastern Ukraine.Escalating tensions between Russia and Ukraine might see potential risk on grain supply. Prices in wheat (ZWZ2) and corn (ZCZ2) have gained as much as 7.5% and 3.3% respectively after the Kyiv bombings even though these moves look small compared to the ones we saw in the earlier part of this year. To provide some numbers, Ukraine is currently one of the world’s leading exporter of grain. We have the breakdown below:Percentage of global exportsSunflower oil – 46%  Corn – 12%   Wheat – 9% Rapeseed – 20%Barley – 17%UN brokered Grain DealEven though there is an existing UN-brokered deal to allow Ukraine to export grain via the Black Sea, this would expire in November and with tensions escalating between the two nations, there is a risk that this will not be extended a further year. The last time grain exports ceased due to the Russian invasion saw grain prices skyrocket as much as 60%. The market consensus is that it currently expects that the deal would be extended after some changes to the terms – primarily allowing a Russian pipeline to reopen to transport its ammonia fertilizer to Ukraine’s Odessa port for shipment.  However, the move to boost Russia’s export revenues to fund the war indirectly might not sit well with US and Europe which has recently approved a Russian oil price cap to limit export revenue in Russia. U.N. aid chief Martin Griffiths and senior U.N. trade official Rebeca Grynspan has travelled to Moscow last week to discuss this issue.OPEC+ CutJust as we thought supply side constraints were subsiding, we are now facing a possibility that commodity inflation might persist due to political uncertainties. Last week, OPEC+ made a key decision to slash oil output by 2 million barrels per day despite Western nations protesting the move as short sighted, perhaps prioritizing their agenda that maintaining oil revenue is more important than the global inflation problem or crippling Putin’s war now. This sent WTI crude oil rallying as much as 9% with rapid short covering as market was positioned with recessionary risk in mind. Oil has since given back some of those gains. The diverging interest of US and Saudi, both key oil producers globally can create instability in energy supplies.The FedThe US inflation breakdown in the month of September has shown lower inflation from energy while key drivers now are mostly from the demand/services side ( rent, medical, services and food). Because of this, the Fed has been relentless in utilizing every opportunity to reinforce their hawkishness with terminal fed funds rate now at 4.9%. If energy and agriculture prices start rising rapidly once again, this will provide the Fed even more ammunition to stay on the course despite some initial data that shows jobs growth is starting to cool off with vacancies falling 1 million in August. If supply constraints do not resolve, the combination of both demand and supply side factors does not bode well for equities and risk assets.    What trades to consider?Watch for the negotiation outcomes between UN and Russia regarding the grain export agreement set to be out by November. Strained relations between Ukraine and Russia might make negotiations tougher and the terms of the deal less favourable. Grains tradable on Saxo include Wheat futures (ZWZ2) and Corn futures (ZCZ2).The output cut by OPEC+ could trigger the start of a possible supply tightening cycle to support oil prices given weak global demand. The US – Saudi relationship souring could also lead to further price instability with volatility set to rise and possible retaliation from US by increasing their supply. Another bright spark is China reopening even though the recent Chinese Communist Party Congress indicated that China is not doing away with its Covid Zero policy in the near term. To trade, we have both Light Sweet Crude Oil (CLZ2) and Brent Crude (LCOZ2) futures.Lastly, if supply side inflation returns, the Fed might have no choice but to accelerate their rate hike cycle. To express this, USDCNH might be a trade to look at given China’s easing cycle is still ongoing to prop up the property market while the risk reward ratio looks more favourable as compared to USDJPY which has moved substantially and BOJ now jawboning the pair’s appreciation.   Wheat December Futures Corn December Futures Oil December Futures USDCNH Source: https://www.home.saxo/content/articles/commodities/st-note-supply-side-inflation-risks--wheat-corn-oil-and-the-fed-18102022
EUR/USD: Evaluating the Stretch of the Rally

Japan's Total Crude Steel Production Will Decline And India's Sugar Production Will Increase

ING Economics ING Economics 18.10.2022 11:21
LME aluminium inventories continue to grow, raising speculation of inflows of unwanted Russian metal. Meanwhile, the European natural gas market continues to come under pressure with storage still filling up and the European Commission working on a proposal for EU energy markets In this article Energy- European natural gas prices fall further Metals – LME aluminium stockpiles jump most since February Agriculture – rising Indian sugar output Energy- European natural gas prices fall further Although oil prices traded in a fairly large range yesterday, ICE Brent managed to settle little changed from Friday’s close. The strength in equities and the weakness in the dollar failed to push oil prices higher. Instead, the market still seems wary of the demand outlook for the market. President Xi has made it clear that China will continue to follow a zero-Covid policy, which raises uncertainty over Chinese oil demand through 2023. Recession concerns elsewhere only add to the market's uncertainty. The EIA yesterday released its latest drilling productivity report, in which US shale oil production is forecast to average 9.105MMbbls/d in November, up from an estimated 9.001MMbbls/d in October. Unsurprisingly, the Permian region is expected to drive the bulk of this growth with output expected to increase by 50Mbbls/d, whilst Bakken and Eagle Ford are forecast to see output increase by 22Mbbls/d and 18Mbbls/d respectively. The report also showed that drilled but uncompleted wells (DUCs) continue to decline. DUC inventory fell by 10 to total just 4,333 at the end of September. This is the lowest number since at least 2014. US producers have been relying on DUCs to sustain production growth at a time when we are not seeing significant growth in drilling activity. However, as the number of DUCs continues to decline so does the rate at which they decline. In 2021 the average monthly decline in DUCs was 219 vs. 76 so far this year. European natural gas prices came under further pressure yesterday. The Nov-22 TTF contract fell close to 10%, leaving the market at just under EUR128/MWh, which is the lowest level since June.  There is now a fairly strong contango in the front end of the curve, as the market seems less concerned about supply in the near term, but is much more concerned about 2023 supply and the region's ability to build adequate storage ahead of the 2023/24 winter in the absence of Russian supply. For now, though, EU storage continues to increase with the latest numbers from Gas Infrastructure Europe showing storage is more than 92% full. Although, with the 2022/23 heating season still ahead of us, it is important that the market doesn’t get too complacent about the supply/demand picture in the near term. The European Commission also continues to work on proposals for the EU energy markets, which according to reports, could include a proposal for a temporary dynamic price limit on TTF. In addition, there are suggestions that the voluntary gas demand cut of 15% could become a mandatory cut. Proposed measures will be discussed by EU leaders when they meet on 20-21 October. Metals – LME aluminium stockpiles jump most since February LME aluminium prices fell by more than 3% after large inflows into exchange warehouses. The latest LME data showed arrivals of 65.8kt, the biggest daily addition since February, taking total stocks to 433kt, the highest since 8 June. The majority of the inflows were reported in Gwangyang in South Korea and Port Klang in Malaysia, raising speculation that large volumes of unwanted Russian metal could be starting to arrive at the exchange’s warehouses. Union members at Antofagasta’s Los Pelambres copper mine in Chile have reached an agreement with the management, avoiding a strike, according to media reports. The union members failed to reach an agreement during a formal discussion two weeks ago. The mine produced around 336kt of copper last year. According to the latest forecast from the Ministry of Economy, Trade and Industry (METI), crude steel production in Japan is expected to drop by 6.8% YoY (fourth consecutive quarter decline) to 22.5mt in 4Q22. The group expects Japan's total crude steel output to decline by 5.6% YoY to 90.99mt during the 2022 calendar year. Agriculture – rising Indian sugar output The Indian Sugar Mills Association (ISMA) projects that India’s sugar production will increase by 2% YoY to 36.5mt in the 2022/23 marketing year that started this month. Sugar output without the diversion of cane juice and B-heavy molasses is expected to be around 41mt in 2022/23, compared to 39.2mt a year ago. On the consumption side, the group expects Indian sugar demand to total around 27.5mt in 2022/23, while opening stocks were 5.5mt as of 1 October. This leaves a large exportable surplus from India. However, mills are still waiting for an announcement with regard to the export policy for sugar. The Food Secretary in India has said that the government is set to announce the sugar export quota for the season (that began in October) within a week. Data from the National Oilseed Processors Association (NOPA) showed that soybean crushing in the US dropped to the lowest level in a year and also came in below market estimates of 161mn bushels. Soybean crushing fell 4.5% MoM to 158mn bushels in September, as the crushing pace slowed due to seasonal maintenance and repair downtime ahead of the fall harvest. However, it was still up 2.8% YoY. Meanwhile, soy oil supplies among NOPA members dropped to 1.5 billion lbs (lowest since September 2020) as of 30 September, down from 1.6b lbs a month earlier and lower than the 1.7b lbs seen at the same stage last year. TagsTTF Sugar Russian metals European gas Aluminium   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
FXStreet’s Dhwani Mehta Opinion About Gold Movements

The Move Up Gold Has To Work Hard | Oil Prices Are Continuing To Stabilise

Craig Erlam Craig Erlam 18.10.2022 12:53
OPEC+ defends cut as oil steadies around $90 Oil prices are continuing to stabilise around $90 a barrel as OPEC+ steps up its defence of its two million barrel per day cut amid a backlash from the US, in particular. Meanwhile, the world’s largest economy is reportedly considering another release of strategic reserves in order to offset the impact of the cuts and stop fuel prices jumping as midterms near. How effective the SPR release will be may well depend on whether others join as we saw earlier this year. Of course, at the time oil was trading at much higher levels, well above $100 a barrel, and the willingness to engage in joint action may well depend on whether countries perceive there to be a risk of similarly damaging prices when they’re already contending with a weaker economy, even recessions. Gold rebound struggling Gold has benefited from slightly lower yields and a weaker dollar over the last couple of days, both of which could resume their uptrend if rate fears persist. The yellow metal struggled to hold onto gains at the start of the week, perhaps a sign of the headwinds continuing to face it in this environment. Resistance remains above around $1,680 and $1,700, with support now around $1,640 and $1,620. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

The US Dollar To Canadian Dollar (USD/CAD) Pair Will Remain On The Bear's Radar

TeleTrade Comments TeleTrade Comments 19.10.2022 08:51
USD/CAD struggles to extend the recovery from two-week low, grinds near intraday top. US readiness to use SPR to battle OPEC+ supply cuts weighs on oil prices. Sluggish markets restrict immediate moves but firmer yields tease DXY buyers. With the BOC’s likely softer rate hike than the Fed’s the pair buyers remain hopeful. USD/CAD steadies near 1.3750 amid sluggish markets during Wednesday’s European morning. In doing so, the Loonie pair seesaws around intraday high while trying to stretch the previous day’s rebound. The quote’s resistance to decline could be linked to the latest retreat in oil prices, due to Canada’s reliance on WTI crude oil export, as the US eyes releasing more oil from its Strategic Petroleum Reserve (SPR) to battle the OPEC+ supply cut. WTI crude oil remains mildly bid at the fortnight low marked the previous day, retreating to around $83.70 at the latest. On the other hand, the US Dollar Index (DXY) picks up bids while tracking the recently firmer US Treasury yields. That said, the US 10-year Treasury yields added two basis points (bps) near 4.02% mark at the latest. The market’s inaction could be linked to the lack of major data/events, as well as mixed catalysts surrounding China and Russia. That said, the recently mixed covid numbers from China join Russia’s strong fight in Ukraine to challenge the sentiment. However, upbeat earnings and hopes of more stimulus from Beijing, Tokyo and the Eurozone keep the riskier assets firmer. On the same line could be the UK’s optimism due to the recent U-turn from the fiscal policies. Elsewhere, Fed bets and the comments suggesting heavy rate hikes from the US central bankers underpin the US Treasury yields and the DXY of late. Earlier in the day, Minneapolis Federal Reserve Bank President Neel Kashkari said, “Until I see some compelling evidence that core inflation has at least peaked, not ready to declare a pause in rate hikes.” With this, the CME’s FedWatch Tool signals that markets are pricing in a nearly 95% chance of the Fed’s 75 rate hike in November. It’s worth noting that the latest second-tier data from the US and Canada have been mixed but the Bank of Canada (BOC) and the Fed have both shown readiness to battle inflation and increase the benchmark rates. Even so, the hawkish pace at the Fed is much stronger than the BOC and hence the USD/CAD pair is likely to witness further upside if today’s Canadian Consumer Price Index (CPI) eases. Forecasts suggest the CPI ease to 6.8% from 7.0% prior while the closely watched BOC CPI could also decline to 5.8% YoY versus 5.6% previous readings. Technical analysis Given the bearish MACD signals and the confirmation of the five-week-old rising wedge formation on Monday, USD/CAD is likely to remain on the bear’s radar unless it successfully crosses the 1.3850 immediate hurdle comprising the wedge’s lower line.
The Commodities Feed: China's 2023 growth target underwhelms markets

Despite The Strengthening Of The Risk-On Mood The Asian Markets Are Showing Mixed Reactions

TeleTrade Comments TeleTrade Comments 19.10.2022 09:01
Asian equities are displaying a mixed performance due to individual factors. Chinese investors are having anxiety ahead of PBOC’s monetary policy. Oil prices have printed a fresh two-week low amid escalating recession fears. Markets in the Asian domain are displaying a mixed response despite the strengthening of the risk-on mood in global markets. S&P500 futures have raised intermittent highs after two-consecutive bullish trading sessions. Rally in US markets is backed by a bumper start of the quarterly result season despite the headwinds of higher interest rates and soaring price pressures. At the press time, Japan’s Nikkei225 gained 0.63% and Nifty50 added 0.48% while ChinaA50 tumbled more than 1% and Hang Seng dived 1.20%. The US dollar index (DXY) has attempted a rebound move after sensing buying interest around the immediate cushion of 112.00. The rebound move seems less confident amid the absence of a risk-aversion theme. Further, investors are awaiting the release of the US Housing Starts data. The real estate catalyst could get impacted by soaring interest rates by the Federal Reserve (Fed). Meanwhile, Chinese investors have shifted their focus toward the People’s Bank of China (PBOC) monetary policy, which will be announced on Thursday. The central bank could adopt a dovish tone as economic prospects are deteriorating. The continuation of the zero Covid-19 policy by the Chinese administration to contain the epidemic and weak property sector needs monetary easing to get back on the growth track. On the oil front, oil prices have rebounded after printing a fresh two-week low at around $81.20. The rebound move could derail amid headwinds of the central bank's monetary policy tightening and escalating recession fears in the US. Rising US Treasury yields have bolstered the case of a recession situation in the coming months.
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

The USA May Release 15MMbbls Of Crude Oil And Is Expected To Refill The Reserves When The WTI Reaches Ca. $67-72/bbl

ING Economics ING Economics 19.10.2022 10:49
The US administration is set to announce further releases from the Strategic Petroleum Reserve today, although this volume is part of the larger 180MMbbls announced earlier in the year. More interesting are suggestions that the US will look to start refilling the SPR at or below US$67-72/bbl Source: Shutterstock Energy: US SPR release and refill Oil prices came under pressure yesterday after reports that the US would announce a further release from its Strategic Petroleum Reserve. The latest release is expected to be announced today by President Biden and would be for 15MMbbls. However, it is important to point out that this release would be part of the initial 180MMbbls announced earlier this year and would be the final tranche of that volume. Therefore, given that this release is already factored in, the price impact should be minimal. However, there are reports that the US administration is not ruling out further releases through the winter months. The US administration will find it difficult to compensate for the OPEC+ supply cuts with just SPR releases. In the medium- to longer-term, SPR releases are supportive for the market, given the need for the US to refill. Bloomberg is reporting that the US administration is also planning to start refilling the SPR when WTI trades at or below US$67-72/bbl. This should provide another floor to the market, although the key question is whether OPEC+ would allow prices to trade down to these levels or intervene (if needed) to keep prices near current levels. The latest data from the API shows that US crude oil inventories fell by 1.27MMbbls over the last week, while the market was expecting crude stocks to increase by around 2.5MMbbls. In addition to the crude draw, the API also reported that gasoline and distillate inventories decreased by 2.17MMbbls and 1.09MMbbls, respectively. Overall, these numbers were moderately constructive and appear to be offering some support to the market in early morning trading today. The more widely followed EIA numbers will be released later today. European natural gas prices continue to come under pressure. The TTF Nov-22 contract fell by a further 11.5% yesterday, leaving the market to trade at a little over EUR113/MWh. The market has fallen by around 40% now since the start of the month. Warmer than usual weather for this time of year and the fact that EU storage continues to fill up (currently 92% full) is easing concerns over prompt tightness in the market. However, prices from Dec-22 through to Apr-23 are trading in excess of EUR140/MWh. The forward curve continues to reflect concerns over expected tightness through 2023. The European Commission has laid out its latest proposals for the EU energy markets, which for now does not include a gas price cap. Instead, the commission is proposing a dynamic price limit for TTF, which will be temporary and only used as a last resort. In addition, the proposal includes upper and lower daily price limits on energy derivatives to try to address volatility in markets. Furthermore, the commission wants to push the idea of joint gas purchases between member states, in the hope this would give Europe more leverage and prevent EU countries from competing against each other for supply. Finally, given the changing supply dynamics in the European gas market (the EU turning increasingly to LNG), the commission proposes a new LNG benchmark, rather than using TTF which reflects regional infrastructure bottlenecks. These proposals will be discussed by EU leaders who meet later this week. Metals: copper inventories in China surge Copper prices came under pressure yesterday after inventories in Shanghai jumped by a record amount, easing concerns about supply tightness. The Shanghai Futures Exchange’s on-warrant stocks of the red metal ready for delivery climbed by 47,024 tonnes on Monday – the biggest daily change in data going back to 2010. As a result, the prompt SHFE timespread eased from its multi-year highs. Japan’s largest smelter, Sumitomo Metals, estimates the global nickel market to be in a deficit of 108kt in 2022 and forecasts a deficit of 63kt for a third consecutive year in 2023 due to rising demand from the batteries sector. The smelter expects global nickel demand to surge by 7.1% YoY to 3.14mt, while supply is expected to rise by 9% year-on-year to 3.08mt next year. The company forecasts demand for nickel used in batteries to surpass 500kt in 2023, compared with 410kt in 2022 and 320kt in 2021. Agriculture: wheat declines on constructive grain-export deal talks CBOT wheat futures dropped to the lowest level in four weeks on the back of hopes of an extension to the Black Sea grain deal, which is currently set to expire next month. The latest comments from the United Nations suggest that ongoing negotiations to renew the existing grain deal were constructive. However, there still appears to be a rush to export as much as possible through the corridor before the existing deal expires. Meanwhile, a backlog of Ukrainian grain vessels awaiting inspection has eased slightly over the weekend. As per the latest data, the backlog of inbound and outbound vessels awaiting checks stood at 131 as of yesterday, compared to 156 on Friday. The latest data shows that, around 7.7mt of grain and other food products have been exported as of 16 October under the deal. Read this article on THINK TagsUS SPR Grains European natural gas Energy crisis Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Commodities: Crude oil price could be supported by technicals

"Money market spreads are prime candidates for widening when the ECB tightens policy"

ING Economics ING Economics 19.10.2022 11:00
Rates markets have taken reports of an accelerated European Central Bank tightening process in their stride. If such reports are confirmed next week, we expect another leg wider in sovereign spreads, and core rates. The money markets' reaction depends on how the ECB pushes banks to repay TLTRO loans; we may get more information in the coming days ECB sequencing on steroids Francois Villeroy has often been one of the ECB officials laying out his policy expectations most explicitly. Even if he’s only one member of the 25-strong governing council, his opinion can also reflect the tone of policy discussions that are happening behind closed doors. He has also been more often at the slightly more hawkish end of the council, which in the currently hawk-dominated debate makes him a relatively interesting barometer of where the discussion is. This makes his expectation that quantitative tightening could start from the end of this year a particularly notable one. Press reports so far have suggested a start in the course of 2023, most likely in the second quarter. This was to give the ECB time to reach neutral deposit rates (likely around 2%) and to mop up some of the excess liquidity created by targeted longer-term refinancing operation (TLTRO) loans to banks. That suggested timing would not only imply an earlier reduction of the ECB’s bond portfolio, but also a decision as early as next week on how to nudge banks into repaying their TLTRO loans. Money market spreads are prime candidates for widening when the ECB tightens policy Market reaction to QT or TLTRO-related headlines has been very muted. It is difficult to discern euro-specific drivers among the gilt-induced volatility but there has been no appreciable uptrend in sovereign spreads in recent weeks, and the spread of German 10Y yields relative to Treasuries remains well within its recent range. The same goes with money market spreads, which are prime candidates for widening when the ECB tightens policy (see below), and long-dated bases have tightened, if anything. The prospect of ECB QT hasn't pushed euro yields up relative to dollar Source: Refinitiv, ING Liquidity reduction and quantitative tightening around the corner Both are momentous decisions that should be considered carefully by market participants. In the case of pushing banks to repay TLTRO loans, the range of options on the table is so wide that it is difficult to have great certainty about the market impact. Ranging from the most to the least likely, we could see: A reduction of excess liquidity to the tune of €0.5tn in December and €0.5tn in March A greater sensitivity of Euribor fixings to widening in credit and sovereign spreads A rise in Estr fixings relative to the ECB deposit rate A rise in repo rates relative to Estr fixings An easing of collateral scarcity A differentiated tightening of liquidity conditions in various member states Except for the first two, these impacts will depend on the type of mechanism implemented by the ECB. We’ve done our best to keep up with various trial balloons released in the press in dedicated publications on TLTRO repayments, comparison with other central banks' options, and the broader choice of reserve tiering. Quantitative tightening is more straightforward in that there seems to be a broad agreement on the form it will take Quantitative tightening is more straightforward in that there seems to be a broad agreement on the form it will take: a progressive phasing out of reinvestment of its asset purchase programme (APP) portfolio starting sometime in 2023 (or very late in 2022), and then the same for pandemic emergency purchase programme (PEPP) reinvestments in 2025. Here too, we’ve covered the implications in more detail in a dedicated publication but we would expect another leg wider in sovereign spreads, an acceleration of money market spread widening when combined with TLTRO repayments (see above), and eventually higher core rates although we think the effect should be manageable next year. Money markets don't appear concerned about a widening of Euribor fixes Source: Refinitiv, ING Today's events and market view Eurozone inflation and construction output are the main data releases in Europe today. The US will see the release of housing starts and building permits, as well as MBA mortgage applications. There is a decent raft of central bank speakers on the schedule. From the European Central Bank: Fabio Centeno, from the Federal Reserve: Neel Kashkari, Charles Evans, and James Bullard, and from the Bank of England: Jon Cunliffe and Catherine Mann. Read next: The USA May Release 15MMbbls Of Crude Oil And Is Expected To Refill The Reserves When The WTI Reaches Ca. $67-72/bbl| FXMAG.COM Realised volatility has slowed down this week and markets could be left to their own devices on a day which is light on event risk. In that environment, we expect the uptrend in rates to reassert itself. Read this article on THINK TagsRates Daily Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Oil maintains positive momentum

Biden Will Confirm That The Last 15 Million Barrels Will Be Sold By The End Of The Year

Craig Erlam Craig Erlam 19.10.2022 14:29
Oil steadying after falling 10% Oil prices are trading higher on Wednesday after falling once more a day earlier. Brent was down around 10% from just over a week ago at one stage on Tuesday, a sign of how concerned traders are about the economic outlook and how serious the Biden administration is about using the SPR to drive prices lower ahead of the midterms. It’s such a huge political issue in the US and could swing the midterms one way or another with the margins in the House and the Senate so fine. Which explains why the White House has responded so furiously to the OPEC+ output cut. Biden is expected to confirm that the final 15 million barrels, of the 180 million committed to earlier this year, will be sold by the end of the year while leaving the door open to further sales. With Brent stabilising around $90 and WTI between $80 and $85, you have to wonder how OPEC+ countries will feel about how the markets are positioned and whether further cuts could be considered. The bullish case for gold While part of me is questioning just how far gold can realistically fall after a terrible decline from its peak seven months ago, I continue to struggle to come up with a convincing bullish case in the short term. At some point, peak inflation and rate pricing is going to be in sight, at which point the case for the yellow metal could arguably improve. But is anyone confident that we’re there yet? We may not be far away but as you can see with gold, there isn’t much bullish appetite which perhaps suggests traders are still viewing peak rates and inflation with caution. While that remains the case, the yellow metal may come under further pressure with the next test of support – $1,640 has crumbled this morning – coming around $1,620 with $1,600 below that interesting. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Bio
Asia Market: Exports In Indonesia Are Likely To Continue To Grow, Chinese Interest Rate Decision Ahead

Australia Has A Growing Number Of Business Insolvencies | Chinese Concept Of Regulating The Way Wealth Is Accumulated

Saxo Bank Saxo Bank 20.10.2022 10:42
Summary:  The major US indices, the Nasdaq 100 and S&P 500 fell on weaker-than-expected company news, Putin clearing martial law, and more hawkish Fed comments. 10-year US bond yields hit 4.14%, its highest since July 2008 which boosted the US dollar against every G-10 peer. Netflix, the standout performer up 13% following their mostly better-than-expected results. Tesla shares slid after hours on weaker-than-expected 3Q results. AU jobs data disappoints, putting the focus back on the AUD and banking shares. Across the Asia Pacific, all eyes are on energy and oil stocks after the Crude oil price lifted 3% on EIA warnings. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) fall on weaker than expected company news, Putin clearing martial law & hawkish Fed comments US stocks fell on the backfoot after a two-day rally, with the 10-year US bond yield hitting 4.136% in the session, which is its highest level since July 2008, while 2-years rose to the highest since 2007. That in turn boosted the dollar, which rallied against every G-10 peer. Gold dropped. It comes as Fed speakers warned US inflation continues to surprise to the upside, saying there’s no reason to think key price measures have peaked. Over in UK and Canada CPI came in stronger than expected in September, up 10.1% year on year (YOY) and 6.9% YOY respectively, ensuring the Bank of England and Bank of Canada keep on hiking rates.  Earnings enthusiasm faded with backup generator manufacturing Generac (GNR) shares sliding 25% on slashing its full year sales outlook. While community bank M&T (MTB) shares crumbled 14% on the company reporting weaker than expected results. On the upside, oil stocks charged with Baker Hughes (BKR), Valero Energy (VLO) and Halliburton (HAL) up over 5% each. While Netflix (NFLX) was the stand out performer up 13% following their mostly better than expected result released the day prior as we mentioned here.  S&P 500 dropped 0.7% and Nasdaq 100 slid 0.4%. 10 of the 11 sectors of S&P 500 declined with the notable exception of Energy, which rose 2.9%. 10-year U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) jumped to 4.13% Higher-than-expected U.K. inflation prints, hawkish comments from Fed’s Bullard and Kashkari, poor results from the 20-year treasury bond auction, and corporate bond supply contributed to an around 13bp rise in yields across the curve. The 2-year yield rose to 4.56% and the 10-year surged to 4.13%, both reaching new highs. The 20-year auction was awarded at 2.5bps cheaper than the market level at the time of the auction, indicating poor demand. Corporate bond issuance amounted to around USD15 billion and added to the upward pressure on yields. Hong Kong’s Hang Seng (HSIV2) China’s CSI300 (03188:xhkg) Hang Seng Index fell 2.4% by mid-day, as China Internet stocks reversed the bounce in the past two days, falling by 4% to 7%, and local property developer names paring early gains as the relief for extra stamp duties for non-resident home buyers in the maiden Policy Address of the Hong Kong Chief Executive is less extensive than expected. Sun Hung Kai Properties (00016:xhkg) dropped 3.6% and New World Development (00017:xhkg) tumbled 7.8%. Hong Kong Stock Exchange (00388:xhkg), falling 2%, reported a 30% Y/Y decline in EPS in Q3, slightly better-than-feared. EV stocks tumbled, with Xpeng (09868:xhkg) falling 9.5% and other leading names losing by 4% to 7%.  Tanker and dry bulk operator COSCO Shipping Energy Transportation (01138:xhkg) soared more than 10%. In mainland bourses, the CSI300 fell 1.6%, with Consumer Staple and Consumer Discretionary sectors being the worst performers, falling over 3%. While all major sectors in the CSI300 declined, lithium battery makers, shipping, and coal mining companies gained. Australia’s ASX200 (ASXSP200.1), focus is on bank and energy stocks It’s worth keeping an eye on banking stocks particularly regional banks that could see more volatility, like Suncorp (SUN), Bendigo and Adelaide (BEN) and Bank of Queensland (BOQ). Also, today focus will be on oil stocks like Santos (STO), Woodside Energy Group (WDS) and Beach Energy (BPT) after the oil price darted ahead. Japanese yen flirting with 150, GBP facing political hurdles There is a lot of sense of “urgency” in the Japanese officials as USDJPY continues to flirt with the 150 handle. The surge higher in US yields overnight is likely to further pressure the yen, and FinMin Suzuki’s comments this morning on taking appropriate steps to curb speculative moves still suggest they stand ready to intervene if USDJPY rises above 150. Meanwhile, the rebound in the US dollar weighed on G10 currencies, with GBP suffering despite a pick up n BOE rate hike bets after the higher than expected UK CPI print, as political turmoil continued to weigh. Three officials left the office yesterday, including the Home Secretary and Chief Whip, although there were reports later that some of them will remain in post. Meanwhile, the fight for Truss to stay in office continues. GBPUSD testing the downside at 1.1200. USDCNH climbed to as high as 7.2790 The Chinese offshore yuan weakened to as much as 7.2790 this morning and is trading at around 7.2680 as of writing. Higher U.S. bond yields, sell-offs in Chinese stocks, concerns over a harsher line on income redistribution in China, and reports about talks on the joint production of weapons between the U.S. and Taiwan weighed on the yuan.  Gold (XAUUSD) slumps as the dollar momentum returns Gold prices heading lower to test the support at $1620/oz amid risk aversion and higher Fed bets propelling US yields higher and a rebound in the US dollar. Hawkish Fed speak yesterday, together with fresh highs in UK CPI, suggested higher-for-longer inflation and interest rates, while demand for the yellow metal also remains depressed due to ongoing lockdowns in China.  Crude oil (CLX2 & LCOZ2) in focus again following EIA warnings Oil extended gains rising 3.3% to $85.55 after EIA earlier reported US crude stockpiles dropped by 1.73 million barrels last week. Four-week seasonal demand for distillate fuels soared to the highest since 2007 while inventories remained at the lowest point on record for this time of year.  What to consider? Fed speakers further up the hawkish ante James Bullard and Neel Kashkari kept up their hawkish Fed rhetoric, in light of the burgeoning global price pressures. Bullard warned that inflation continues to surprise to the upside and the Fed needs to continue to act, also emphasising higher-for-longer rates even if inflation starts to decline in 2023. Kashkari (2023 voter) added that there is no reason to think that key price measures have peaked, and he sees little evidence of a labor market softening. He also reiterated the Saxo view that “risk of under shooting on rate hikes bigger than overdoing it”. He also said his best guess is the Fed can pause hikes sometime next year but he favours rate hikes until core inflation starts to cool, noting the Fed's rate changes take a year or so to work through the economy. Chicago Fed President Evans was also on the wires this morning, and given that he’s retiring next year, he was accepting of the fact that “beginning rate hikes six months earlier would have made sense.” UK CPI comes out hotter than expected, Euro headline inflation more subtle UK inflation came in at double-digits again, matching the 40-year high in July, at 10.1% y/y. This puts further pressure on the Bank of England to go big with its rate hike at the November meeting. Price pressures were broad-based, but most notable was the increase in food price. Scaling back of aid for electricity and natural gas prices, as suggested by the latest fiscal measures announced by Chancellor Hunt, could fuel further inflationary pressures next year. Eurozone headline inflation, on the other hand, was revised lower to 9.9% for September from flash reading of 10.0% but core measure rose to 5.8% y/y from 5.2% y/y in August, coming in at a record high. The ECB is expected to raise rates by 75bps at the October 27 meeting. Tesla shares slide after hours on reporting weaker-than-expected results Tesla (TSLA) shares fell 2.7% after hours when the EV giant reported third-quarter sales falling short of analyst estimates, noting the US dollar’s growing strength, along with production and delivery bottlenecks impacted results. Tesla’s Revenue rose to $21.5 billion, versus $22.1 billion expected by Wall Street. Profit rose to $1.05 a share, exceeding the $1.01 average Bloomberg estimate. And the closely watched Q3 automotive gross margin, came in at 27.9%, missed the 28.4% expected. Tesla cited higher costs related to a slower-than-expected ramp up in output at new factories, as well as difficulties shipping vehicles. Tesla’s shares are down almost 45% from their high against the backdrop of a slowing economy, higher inflation and rising interest rates, plus Musk’s $44 billion bid to buy Twitter. For more on Tesla click here to read Peter Garnry’s note. Discussion between the U.S. and Taiwan on joint weapon production According to Nikkei Asia, the Biden administration and Taiwan are in talks for American defense companies to provide Taiwan technology to manufacture weapons in Taiwan or to ship Taiwan-made parts to make weapons in the U.S. This, reading together with U.S. Secretary of State Blinken’s warning this Monday that “a fundamental decision that the status quo was no longer acceptable and that Beijing was determined to pursue reunification on a much faster timeline” and President Biden’s remarks of deploying U.S. forces to defend Taiwan in a CBS 60 Minutes interview last month, stirred up some unease among investors. Separately on Wednesday, Taiwan conducted live-fire military drills on Penghu Island, an archipelago in the Taiwan Strait. Investors are feeling unease about the introduction of the concept of regulating the means of accumulated wealth in China in an official document in China Market chatters show some investors are feeling unease about the phrase “we will improve the personal income tax system and keep income distribution and the means of accumulating wealth well-regulated” in the Work Report delivered by General Secretary Xi at the Chinese Communist Party’s National Congress last Sunday. The concept of regulating the means of accumulating wealth (规范财富积累机制) shows up in an official document for the first time. Hong Kong’s Chief Executive John Lee unveils his plans for active industrial policies and integration into national development schemes In his maiden Policy Address, Chief Executive John Lee unveils a Steering Group on Integration into National Development to devise strategic plans to integrate Hong Kong’s economy into the mainland’s Greater Bay Area development scheme and the Belt and Road Initiative. Li also rolls out investment-led measures aiming to boost the Hong Kong economy, including setting up a Hong Kong Investment Corporation which will establish and fund an HKD30 billion public-private co-investment fund to invest in projects that potentially drive industry development in Hong Kong. Hong Kong will also establish the Office for Attracting Strategic Enterprises whose mandate is to attract business enterprises from the mainland and overseas through favorable tax, financing, land provision, and other incentives. Weaker yen to prop up Japan inflation further Japan’s inflation data for September is due for release on Friday, and as signalled by the Tokyo CPI released earlier this month, price pressures are likely to pick up further. Bloomberg consensus expects the core measure (ex-fresh food) to come in at 3.0% y/y from August’s 2.8% y/y while the core-core measure (ex-fresh food and energy) is expected at 1.8% y/y in September from 1.6% y/y previously. The headline is expected to be a notch softer at 2.9% y/y from 3.0% y/y, but still remain way above the 2% target level. Weakness in the yen prompted an intervention from the Bank of Japan in September but the effect faded fast and the currency was significantly weaker in the month, which possible led to import price pressures. Still, the central bank is unlikely to shift its easing stance and will likely continue to wait for the global pressures to ease and USD to top out.       Aussie unemployment rises. Employment falls Traders digested much weaker than expected jobs data for September. Data released today showed just 923 jobs were added to the economy, much weaker than the 25,000 jobs Bloomberg estimated to be added. It also shows employment is falling ahead of RBA’s expectations, with less jobs added to the Australian economy, following last month’s 33,500 jobs being added. Also in important news; the unemployment rate rose by less than 0.1 percentage points, but remained at 3.5% in rounded terms. The reason for this is because rate rises and rising inflation is having a greater impact on the corporate world with the RBA also noting business insolvencies are rising in Australia.   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-20-oct-20102022
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

Liz Truss (UK Prime Minister) In Deep Trouble | Procter & Gamble And Tesla Did Better Than Expected | Nestle Reported Its Strongest Sales Growth

Swissquote Bank Swissquote Bank 20.10.2022 10:53
The market mood was rather bearish yesterday, as the major US indices gave back a part of the early week gains. The S&P500 slid 0.67%, Nasdaq gave back 0.85%, and the Dow Jones eased 0.33%. Mixed earnings didn’t really help improve sentiment. One of the biggest gainers was Netflix which jumped 13%, but other FANG stocks, or MAMAA stocks did poorly on hawkish Federal Reserve (Fed) expectations. Better than expected Procter & Gamble did better than the earnings and revenue expectations, Nestle reported its strongest 9-month sales growth in 14 years, IBM beat analyst expectations, and boosted its full year profit forecast, and Tesla announced a better-than-expected earnings per share, but slightly missed on revenue expectations. Tesla shares slipped more than 6% in the afterhours trading. Philip Morris and Dow are due to announce earnings today, American Express and Barclay on Friday. Crude Oil In energy, the barrel of American crude rebounded yesterday, after falling toward $82 earlier this week. Politics In politics, Liz Truss is really in a hot seat, as the chaos among the Tories got worse yesterday, after Home Secretary Braverman got fired for sharing confidential information. Forex Market In the FX, Cable continued falling, the EURUSD remains sold below the 50-DMA and the Japanese yen continues diving against the US dollar. The situation of turkey In central banks, Turkey is expected to cut its policy rate by another 100bp to 11%, which would push the Turkish inflation-adjusted rate down to -71.5%. But tell that to Mr. Erdogan! Watch the full episode to find out more! 0:00 Intro 0:33 Market update 2:08 Mixed earnings: Tesla, Nestle, P&G, IBM 3:48 Growing EV competition 5:05 US crude rebounds, Exxon revised to Buy at Jefferies 5:52 ASML reports strong results, jumps 6% 7:06 Liz Truss in deep trouble 8:59 FX update: USDJPY tests 150 resistance, Turkey to cut Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Netflix #Tesla #Nestle #P&G #IBM #ASLM #earnings #hawkish #Fed #expectations #USD #EUR #JPY #GBP #TRY #gilt #sovereign #crisis #Bailey #BoE #Liz #Truss #Jeremy #crude #oil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH      
Conflict Over Taiwan Would Trigger A Huge Global economic Shock

Deployment Of US Forces To Defend Taiwan |Because Of Global Price Pressure, The Fed Strategy Will Remain Unchanged And More

Saxo Bank Saxo Bank 20.10.2022 12:43
Summary:  Equity markets rolled over yesterday suffering in the headwinds of a fresh strong rise in US treasury yields, as the entire US yield curve lifted to new highs for the cycle. After the close, the heavily traded Tesla reported disappointing revenue and margins and traded some 6% lower in late trading. Elsewhere, the rise in yields is pushing hard on the JPY to weaken further, but the USDJPY rate of 150.00 it’s clearly a psychological barrier for official intervention-wary traders.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The S&P 500 index closed the day –0.7% lower and the Nasdaq 100 index was down –0.4% (although far lower from the overnight highs posted after the Netflix earnings late Tuesday) Still, this was not that weak a performance, given the fresh strong lift in treasury yields, with the price action holding up relatively well after the close of trading yesterday despite the disappointing Tesla results that took that heavily traded stock down sharply after the close. The further outlook for treasury yields on incoming data, as well as the heavy earnings calendar of next week, are likely to set the tone for equity markets from here. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Hong Kong stocks tumbled with Hang Seng Index down 2.4% hitting 13-year lows. Higher U.S. bond yields and the Chinese Yuan weakening to new lows weighed on the markets. To add to the woes, investors have become increasingly concerned about the potential policy implications of the concept of “regulating the means of accumulating wealth” and US-Taiwan discussions on joint manufacturing of defensive capabilities (more below) China Internet names sold off 5% to 9%. CSI 300 declined 0.7%. Semiconductor stocks are the notable outperformers in both the Hong Kong and mainland bourses.  SMIC (00981:xhkg) gained 0.9% and Hua Hong Semiconductor (01347:xhkg) climbed 3.2%. Maximum support for the US dollar from rising treasury yields, but price action uninspiring The US dollar is getting about as much support as it conceivably can from a fresh rise in US treasury yields, but the impact on the currency has been minimal, as it feels as if a large finger has pressed the paus button – could this be a widespread nervousness as traders look at the USDJPY level perched near 150.00, with pressure from rising global yields for the JPY to weaken further, but with market participants knowing that a large bout of official Japanese intervention will be forthcoming at some point above that level? Relatively stable sentiment despite the fresh surge in treasury yields may also be behind the lackluster price action in USD pairs here, with USDCNH correcting back lower after its burst higher yesterday on a strong CNY fixing overnight another source of resistance for the greenback. Crude oil (CLX2 & LCOZ2) in focus again following EIA warnings November WTI extended gains rising above $86/barrel overnight after the EIA yesterday reported US crude stockpiles dropped by 1.73 million barrels last week. Four-week seasonal demand for distillate fuels soared to the highest since 2007 while inventories remained at the lowest point on record for this time of year. Oil stocks charged higher with Baker Hughes, Valero Energy and Halliburton up over 5% each. Gold (XAUUSD) slumps as the dollar momentum returns Gold prices heading lower to test the support at $1620/oz amid risk aversion and higher Fed bets propelling US yields higher and a rebound in the US dollar. Hawkish Fed speak yesterday, together with fresh highs in UK CPI, suggested higher-for-longer inflation and interest rates, while demand for the yellow metal also remains depressed due to ongoing lockdowns in China. US treasuries (TLT, IEF)   US treasury yields lifted all along the curve, with the 2-year rising above 4.55% for the first time and the 10-year yield lifting aggressively to almost 4.15%, well clear of the 4.00% level that seemed to be providing bond market support in recent weeks. What is going on? Fed speakers further up the hawkish ante James Bullard and Neel Kashkari kept up their hawkish Fed rhetoric, in light of the burgeoning global price pressures. Bullard warned that inflation continues to surprise to the upside and the Fed needs to continue to act, also emphasising higher-for-longer rates even if inflation starts to decline in 2023, though he also suggested that “front-loading” of hikes is likely to end early next year (market pricing this anyway). Kashkari (2023 voter) added that there is no reason to think that key price measures have peaked, and he sees little evidence of a labor market softening. He also reiterated the Saxo view that “risk of under shooting on rate hikes bigger than overdoing it”. He also said his best guess is the Fed can pause hikes sometime next year but he favours rate hikes until core inflation starts to cool, noting the Fed's rate changes take a year or so to work through the economy. Chicago Fed President Evans was also on the wires this morning, and given that he’s retiring next year, he was accepting of the fact that “beginning rate hikes six months earlier would have made sense.” Tesla misses on revenue growth and margins, reaffirms longer term growth guidance Investors are used to Tesla beating estimates but last night the EV-maker surprised investors missing revenue and automotive gross margin estimates as the EV-maker faced battery constraints during the quarter and delivery transportation capacity during peak deliveries at the end of the quarter. While the company disappointed against estimates revenue growth was still impressive 56% y/y and the company is reiterating its 50% average growth target over the coming years, something analysts are not agreeing with seeing revenue growth declining to 14% in 2025. Shares were down 6% in late trading after the report. Discussion between the U.S. and Taiwan on joint weapon production According to Nikkei Asia, the Biden administration and Taiwan are in talks for American defense companies to provide Taiwan technology to manufacture weapons in Taiwan or to ship Taiwan-made parts to make weapons in the U.S. This, reading together with U.S. Secretary of State Blinken’s warning this Monday that “a fundamental decision that the status quo was no longer acceptable and that Beijing was determined to pursue reunification on a much faster timeline” and President Biden’s remarks of deploying U.S. forces to defend Taiwan in a CBS 60 Minutes interview last month, stirred up some unease among investors. Separately on Wednesday, Taiwan conducted live-fire military drills on Penghu Island, an archipelago in the Taiwan Strait. Chinese Investors uneasy about the introduction of policy language on wealth regulation Market chatters indicate that some investors are feeling unease about the potential policy implications of the phrase “we will improve the personal income tax system and keep income distribution and the means of accumulating wealth well-regulated” in the Work Report delivered by General Secretary Xi at the Chinese Communist Party’s National Congress last Sunday. The concept of regulating the means of accumulating wealth shows up in an official document for the first time. Weak Aussie September jobs report for September, supporting less hawkish RBA The data showed just 923 jobs were added to the economy, vs the +25k consensus from Bloomberg. It also shows employment is falling far ahead of RBA’s expectations, following last month’s 33,500 jobs being added. The unemployment rate also rose, by less than 0.1 percentage points but remained at 3.5% in rounded terms. It comes as part-time employment fell by 12,400. Recently the RBA noted business insolvencies were rising, and today’s data shows that the official stats are reflecting this too. That said, of the Australian mining companies reporting quarterly result this week, most reported labour shortages are continuing, which is affecting production. What are we watching next? Weaker yen to prop up Japan inflation further   Japan’s inflation data for September is due for release on Friday (tonight), and as signalled by the Tokyo CPI released earlier this month, price pressures are likely to pick up further. Bloomberg consensus expects the core measure (ex-fresh food) to come in at 3.0% y/y from August’s 2.8% y/y while the core-core measure (ex-fresh food and energy) is expected at 1.8% y/y in September from 1.6% y/y previously. The headline is expected to be a notch softer at 2.9% y/y from 3.0% y/y, but still remain way above the 2% target level. Weakness in the yen prompted an intervention from the Bank of Japan in September but the effect faded fast and the currency was significantly weaker in the month, which possible led to import price pressures. Still, the central bank is unlikely to shift its easing stance and will likely continue to wait for the global pressures to ease and USD to top out.         Earnings to watch Today’s earnings focus is on Swedish power and automation equipment maker ABB, diversified and medical equipment maker Danaher, miner Freeport McMoRan and mobile network equipment maker Ericsson. Today: China Mobile, China Telecom, ABB, Danaher, Investor, Philip Morris, Union Pacific, CSX, AT&T, Blackstone, Marsh & McLennan, Yara International, Nordea, Volvo, Ericsson, Freeport-McMoRan, Dow, Snap Friday: CATL, American Express, Schlumberger, Verizon Communications, HCA Healthcare, Sika Economic calendar highlights for today (times GMT) 1100 – Turkey Rate Announcement 1230 – Canada Sep. Teranet/National Bank Home Price Index 1230 – US Oct. Philadelphia Fed Business Survey 1230 – US Weekly Initial Jobless Claims 1400 – US Sep. Existing Home Sales 1400 – US Sep. Leading Index 1430 – US Weekly Natural Gas Storage Change 2145 – New Zealand Sep. Trade Balance 2301 – UK Oct. GfK Consumer Confidence 2330 – Japan Sep. National CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-20-2022-20102022
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Yesterday, Joe Biden officially announced, that 15MMbbls of crude oil will be released from SPR

ING Economics ING Economics 20.10.2022 14:13
As widely expected, the US administration yesterday announced a further release from the Strategic Petroleum Reserve (SPR). This will be the final tranche from the 180MMbbls announced earlier this year. Meanwhile, LME aluminium inventories continue to grow amid speculation is that it is Russian aluminium flowing into LME warehouses Energy- US SPR release confirmed President Biden confirmed that the US will release 15MMbbls of crude oil from its SPR, which would be the final tranche from the 180MMbbls announced earlier this year. The crude will be for delivery through December with bids due by 25 October and results by 1 November. 3MMbbls will be sour crude, while the remaining volume will be sweet crude. Given that this volume is part of the previously announced larger release, the impact on the market is minimal. This is reflected in price action with WTI settling 3.3% higher yesterday. This latest release will do little to offset the impact of OPEC+ supply cuts - the release is equivalent to less than 14 days of OPEC+ supply cuts, whilst the OPEC+ deal is set to run through until the end of 2023. However, as widely reported before Biden’s announcement, the US will make further releases over the coming months if necessary. Yesterday’s EIA report was constructive. US commercial crude oil inventories fell by 1.73MMbbls over the week, which was unexpected - the market was anticipating a build in the region of 2.5MMbbls. The drawdown in crude stocks was even larger when taking into consideration SPR releases. Total US crude oil inventories declined by 5.29MMbbls. The fall in crude stocks was largely driven by a recovery in exports which grew by 1.27MMbbls/d over the period. As for refined products, gasoline stocks fell by 114Mbbls, while distillate stocks increased by 124Mbbls. Despite this increase, there are still concerns going into winter over distillate inventories as they are at their lowest levels in at least 25 years for this time of year. Metals - LME aluminium inflows fuel concerns of Russian glut Readily available aluminium inventories in LME warehouses rose for an eleventh day, driven by deliveries into Malaysia’s Port Klang. They now stand at 527,675 tonnes, according to data from the bourse. On-warrant stockpiles have doubled since the start of October, fuelling speculation about Russian material inflows. Meanwhile, Reuters reported on Wednesday that trader, Glencore had delivered “significant” amounts of Russian-origin aluminium to LME-registered warehouses in Gwangyang, South Korea.           The International Copper Study Group (ICSG) forecasts the global copper market to be in a supply deficit of around 325kt in 2022, compared to a previous estimate of a supply surplus of 140kt in 2022 and a supply deficit of 458kt reported last year. For 2023, the group forecasts the copper market balance to switch to a supply surplus of 150kt; however, the group had previously forecast a surplus of 350kt back in May. Global mine supply is forecast to rise by 3.9% YoY this year and 5.3% YoY in 2023. Meanwhile, refined copper supply growth was revised down from 4.3% YoY to 2.8% YoY for the current year, mainly due to lower output from smelters and longer-than-expected smelter maintenance/shutdowns. For 2023, refined output is expected to increase by 3.3% YoY following the expansion of Chinese capacity and newly added smelting capacity elsewhere. On the consumption side, global refined copper usage is expected to rise by 2.2% YoY this year and 1.4% YoY in 2023. The International Nickel Study Group (INSG) forecasts the global nickel market to shift to a supply surplus this year and to continue to remain in surplus next year due to negative growth expectations in the stainless-steel sector. The global nickel market is expected to be in a supply surplus of 144kt in 2022 and a surplus of 171kt in 2023, compared to a supply deficit of 163kt in 2021. Global primary nickel production is forecast to rise by 424kt to 3.04mt this year and then expected to rise to 3.39mt in 2023. Global demand is estimated to rise by 117kt to 2.89mt this year and to 3.22mt in 2023. Read this article on THINK TagsUS SPR Nickel EIA Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Crude Oil Prices Up, China May Change Its COVID Rules

Ed Moya Ed Moya 20.10.2022 23:33
Energy US natural gas declined to the lowest levels since March as supply concerns have slightly improved. ​ Over the past week, energy traders have digested a few winter weather forecasts and it seems many are thinking the south will be drier and warmer than usual, while the northern tier, Midwest and Ohio valley could have a colder winter. Oil prices rallied on hopes that China is starting to pivot with their COVID quarantine guidelines and as energy traders start to price in a hard floor for WTI crude after yesterday’s White House announcement on how they will restock the SPR. ​ The Biden administration intends to buy WTI crude ahead of the $67-72 a barrel range, which means oil should remain supported if China doesn’t suffer a major COVID setback. ​ The latest round of US economic data suggests the economy is still in good shape and any immediate hits to the short-term crude demand outlook are premature. ​ WTI crude should start to form a range slightly above the $90 level, with the upside tentatively capped at the $100 level. ​ Gold bounces back Gold prices are rebounding as the dollar softens slightly after political turmoil in the UK drove the British pound higher and as BOJ was forced into action. ​ The BOJ had no other option but to do an additional unscheduled purchasing of JGBs. The dollar-yen testing the 150 level in New York is putting more pressure on Japan to intervene. ​ Gold is still battling steady outflows from gold-backed ETFs and that trend should limit any rebounds we see over the short term. ​ Another round of US economic data and earnings still supports the argument that the labor market is strong and that the economy is slowly weakening. ​ It looks like the Fed might be in a position to tighten aggressively beyond the winter and that could drive further weakness for gold. ​ It looks like a matter of when will gold break the September lows but for now it is stabilizing as it seems it will need a fresh catalyst to send prices below the psychological $1600 level. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil higher on possible Chinese COVID pivot, gold rebounds - MarketPulseMarketPulse
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

WTI Crude Oil Prices Could Retest The Weekly Low

TeleTrade Comments TeleTrade Comments 21.10.2022 09:03
WTI crude oil prices continue to find support ahead of the $84.00 mark, or the 23.6% Fibo. level. The lack of follow-through buying warrants some caution before positioning for meaningful gains. A sustained move beyond the $86.00 round figure is needed to negate any near-term bearish bias. WTI crude oil prices reverse an Asian session dip to the $84.15 area, though the intraday uptick lacks bullish conviction. The black liquid is currently trading around the $84.74-$84.80 region, nearly unchanged for the day. From a technical perspective, the overnight pullback from the weekly high showed some resilience below the 100-hour SMA and found some support near the $84.00 mark. The said handle coincides with the 50% Fibonacci retracement level of the recent fall from the monthly peak and should now act as a pivotal point. A convincing break below will suggest that the corrective bounce witnessed over the past two trading sessions has run out of steam and will shift the bias back in favour of bearish traders. WTI crude oil prices might then accelerate the fall towards the $83.00 round figure en route to the $82.75-$82.70 support. The next relevant support is pegged near the $82.00 mark, below which WTI crude oil prices could retest the weekly low, around the $81.25 region. Some follow-through selling would make the commodity vulnerable to extending its recent sharp downfall from the monthly peak touched at the beginning of the previous week. On the flip side, any subsequent strength beyond the $85.00 mark is likely to confront resistance near the 38.2% Fibo. level, around the $85.55-$85.60 region. This is followed by the $86.00 mark, or the 200-hour SMA, which if cleared should lift WTI crude oil prices towards the overnight swing high, near the $86.90 area. WTI 1-hour chart  
CNY Can Appreciate Mildly Through This Year According To Economists At Commerzbank

The USD/CNH Pair Is Looking Forward To Reaching The Weekly High

TeleTrade Comments TeleTrade Comments 21.10.2022 09:08
USD/CNH is eyeing a test of a weekly high at 7.2790 amid a vulnerable market mood. The DXY has refreshed the day’s high at 113.12 amid an improvement in safe-haven appeal. An unchanged PBOC’s monetary policy has kept yuan bulls on the tenterhooks. The USD/CNH pair has shifted its business above the crucial hurdle of 7.2600 after a perpendicular rally from Thursday’s low of 7.2209. The asset is marching vigorously towards the weekly high of 7.2790 as the risk-off impulse has rebounded firmly after a minor optimism. A pullback move in S&P500 futures has terminated and the index futures have started their downside journey. The US dollar index (DXY) has refreshed its day’s high at 113.12 as negative market sentiment has resulted in a flight of safety at the safe-haven counter for the market participants. Now, the DXY is aiming to test the weekly high at 113.21. Returns on US government bonds are buzzing in the global markets after overstepping figures recorded at the time of the sub-prime crisis.  The 10-year US Treasury yields have printed a fresh 14-year high at 4.26%. Meanwhile, investors are shifting their focus toward the S&P PMI data, which will release on Monday. Earlier, the Manufacturing PMI landed at 52.0 while the Services PMI was recorded at 49.3. On the China front, an unchanged monetary policy by the People’s Bank of China (PBOC) has kept the Chinese yuan on the tenterhooks. The central bank maintained the status quo despite the headwinds of weaker economic prospects and sluggish price pressures. Also, the real estate demand is extremely vulnerable, which needed a booster dose. Meanwhile, oil prices have turned sideways after a correction below $85.00 as soaring yields have bolstered signs of recession ahead. It is worth noting that China is a leading import of oil and subdued oil prices could retreat the major.
UK PMIs Signal Economic Deceleration, Pound Edges Lower

Restricting China's Access To Advanced Technologies | Advertising Partners From Many Industries Are Reducing Their Marketing Budgets

Saxo Bank Saxo Bank 21.10.2022 09:35
Summary:  With Fed officials keeping up their rate hike rhetoric, swaps are now pricing in a 5% peak rate in the first half of next year. The benchmark 10-year Treasury yield rose 9 basis points to 4.23%, which weighed on equity valuation multiples. Snap earnings also send a warning on tech earnings ahead. UK PM Truss’ resignation would do little to help with the chaos in UK economy and politics. The dollar was mixed, oil was steady, gold retreated as bond-yields rose. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) retreat as bond yields climb US stocks fell for the second day, after Treasury yields rose again, continuing to climb into territory not seen in more than a decade, with Fed officials keeping up their rate hike rhetoric. Swaps are now pricing in a 5% peak rate in the first half of next year. The benchmark 10-year Treasury yield rose 9 basis points to 4.23%, at one point hitting 4.239%, its highest level since 2008. The policy-sensitive yield, the 2-year Treasury traded up five basis points to 4.608%. As such this makes high PE tech stocks look expensive, particularly as the Nasdaq only offers a yield of 0.97%, and the S&P500 has an average yield of 1.8%, and the Dow Jones with a yield of 2.2%, all at a time when US corporate earnings are falling for the first time this year. The Nasdaq 100 fell 0.5% and the S&P 500 erased an earlier gain of more than 1%, before it ended 0.8% lower. Utilities down 2.5%, were the worst performing sector in the S&P 500. Communication Services outperformed, led by AT&T (T:xnys) which jumped 7.8% after the telecommunications giant reported earnings beating estimates and raising profit outlooks. 10-year U.S. treasury yields made a new 14-year high at 4.23% (TLT:xnas, IEF:xnas, SHY:xnas) U.S. treasuries sold off for a second day in a row, with the 2-year yield climbing 5bps to 4.615 and the 10-year yield 9bps higher at 4.23%, the highest levels in 14 years. Yields surged after the Philadelphia Fed President Harker said he was expecting the Fed Fund rate to be “well above 4% by the end of the year” and Fed Governor Cook said fighting inflation “will require ongoing rate hikes and then keeping policy restrictive for some time.” Hedging for new issues in the corporate space also contributed to the rise in yields. Hong Kong’s Hang Seng (HSIV2) China’s CSI300 (03188:xhkg) Hong Kong stocks tumbled with Hang Seng Index down 1.4% hitting 13-year lows. The bounce on the news of China shorting quarantine requirement for inbound travellers failed to hold. Higher U.S. bond yields and the Chinese Yuan weakening to new lows weighed on the markets. To add to the woes, investors have become increasingly concerned about the potential policy implications of the concept of “regulating the means of accumulating wealth” introduced in the Work Report delivered at the Chinese Communist Party’s National Congress last Sunday and the newswire report that the U.S. and Taiwan are in discussion of jointly manufacturing weapons. Chinese leading banks kept the 1-year and 5-year Loan Prime Rates unchanged. China Internet names sold off 3% to 8%. The EV space remained weak, with leading names falling by 2% to 6%. JD Health (06618:xhkg) rose 7.1% on share buyback news. Semiconductor stocks surged in Hong Kong and mainland bourses. Reportedly, the Ministry of Industry and Information Technology summoned executives of microchip manufacturers to discuss the latest moves from the U.S. to contain China’s access to U.S. semiconductor technology and pledged support to the domestic semiconductor industry. In addition, mainland securities firms published reports saying that China’s domestic chip-making industry will benefit from the whole-nation systemic initiatives to develop strategic technologies proposed at the CCP’s National Congress. Semiconductor names surged both in Hong Kong and mainland bourses, with Hua Hong Semiconductor (01347:xhkg) rising 5.6%, SMIC (00981:xhkg) climbing 1.6%, and Naura Technology (002371:xsec) limit up 10%. CSI 300 gained 0.6%. Australia’s ASX200 (ASXSP200.1) falls 0.8% on Friday, losing 1.2% on the week. Focus is on Lithium and Coal company earnings, from Allkem to Whitehaven   The following companies reporting quarterly and revenue numbers are a focus today; with Australia’s second biggest lithium company, Allkem reporting (AKE) quarterly production that missed expectations, seeing its shares decline almost 4%. Investors focused on the mining giants guidance for the year ahead with Allkem noting it expects lithium carbonate prices to be higher by 15% this quarter, than the last. Meanwhile, it reported lower grades, flagged issues including logistics delays in South America and on-going labour and equipment shortages in Western Australia. As a result, production at its South American Olaroz Stage 2 project is now delayed and planned for Q2 CY23. In good news though for Australia’s second biggest lithium company, Allkem, its net cash rose to $447 million (as at Sept. 30, up from $28.9 million from June 30). In Coal news Whitehaven Coal (WHC) shares rocked 3.2% higher after 16.6 million in block trades pushed its shares up, with the block of trades equating to 2.1% of its float. Also in Coal news, Coronado Global (CRN) results are set to be released and pulled apart, with the coal price in record high neighborhood, despite falling 13% from its high. It will be interesting to glean into their outlook for the year, particularly as coal demand usually peaks in January. For Coronado, focus will also be on the potential merger with Peabody. Other companies to watch include, wealth and financial planning business, AMP (AMP) with focus to be on how they can return $1.1b capital to investors in FY23. And in industrials, eyes will be on rubbish business, Cleanaway (CWY), who is holding its Annual Meeting. Traders will be looking to see if Cleanaway changes its earnings (Underlying Ebitda) forecast that’s pegged to be between A$630m to A$670m. USDJPY breaks 150, next to watch is 153 USDJPY finally broke above the key 150 level yesterday, the level above which many expected intervention. Officials have been jawboning the pair, including FinMin Suzuki this morning saying that they continue to watch the markets with a sense of urgency. He also seemed cautioned by the rattle in the UK markets, as suggested by his comments that they will pursue fiscal health so that market trust isn’t lost. BOJ meeting next week is key, although a change in policy stance cannot be expected. The break of 150 now exposes 153 levels in USDJPY. Crude oil (CLX2 & LCOZ2) Gains in crude oil on the back of expectations of China easing inbound tourism policy restrictions, but gains were later reversed with focus still on US efforts to curb price increase in energy. While the 15mbbl of release announced by President Biden is a part of the larger 180mbbl release that commenced earlier this year, focus is also on how the US strategic reserves will be refilled. WTI futures were seen back below $85/barrel while Brent was close to $92.   What to consider? What could the new UK PM bring in terms of policy change? After significant economic and political turmoil, Liz Truss resigned as Britain’s prime minister after just 44 days in office. The easy choice remains Rishi Sunak, former chancellor, who stood against Truss for the Tory leadership in the summer and predicted correctly that his rival would set off panic in the markets if she pressed ahead with a massive package of debt-funded tax cuts. The other alternative being ex-PM Boris Johnson or Penny Mordaunt, who also stood for the Tory leadership in the summer. Fiscal policy is unlikely top see a major shift with the new PM, as UK administration now remains extremely sensitive to market events. There is little they can do to prevent the upcoming recession or bring back asset allocation to UK assets. Market Fed rate expectations reach 5% Early 2023 Fed rate expectations have now reached over 5%, with the Fed funds rate now fully pricing in a 75bps rate hike for the November meeting and a strong probability of another 75bps rate hike at the December meeting. While the Fed has reiterated it will continue to hike more next year before it pauses, but the market pricing is now running higher than what the dot plot has hinted earlier. So the room for the Fed to surprise on the hawkish side in diminishing, especially if core inflation continues to surprise on the upside. Fed speakers are starting to turn slightly cautious looking at the market pricing, with Charles Evans last night saying that if the Fed pushes its policy rate much further than planned it could start to weigh on the economy and says he is worried that at some point rate increases could have a non-linear impact with businesses becoming more pessimistic. Harker (2023 voter) and Cook reasserted that the Fed needs to continue to hike but will noted that the Fed can pause sometime next year to assess the impact of its tightening on the economy. Another fall in weekly jobless claims for the Oct 15 week continued to suggest labor market strength despite the disruptions from recent hurricanes. China is considering reducing inbound quarantine Reportedly, the Chinese authorities are considering to reduce the current 7 days in hotel plus 3 days at home quarantine requirement for people travelling into China to 2 days in hotel plus 5 days at home. While the move may be small in magnitude, and still not confirmed by the authorities, it may have signaling power in terms of more flexbility in the day-to-day implementation of the zero Covid policy which is constraining consumption, investment and tourism. . US to expand China tech ban Bloomberg reports, citing “people familiar with the situation”, that the Biden administration is considering, at an early stage, new export bans limiting China’s access to advanced computing technologies that can be used in quantum computing and artificial intelligent software. Cyber security attacks on the rise globally, US Home Secretary warns to expect more in Asia A US official has warned that aggressive cyberattacks will rise from Russia, China, North Korea, Iran, particularly against Asian countries. It comes after a very strong spate of cyberattacks occurred globally this month, from Microsoft’s data being breached, along with the Japanese Securities Dealer Association, Australia’s Taxation Office batting three attempts per month, to the Indianapolis Housing Agency’s systems being breached as well, as well as one of Australasia’s telcos, and an ASX listed insurance group, Medibank. This reflects the need for companies and organizations to ramp up cybersecurity spending now and on an ongoing basis. This brings to mind perhaps the importance of remembering the need for diversification and possibly considering exposure to Cybersecurity stocks and ETFs. For more information, refer to our cybersecurity basket. Japan inflation hits 3%, update to CPI forecasts expected next week Japan’s core inflation touched 3% levels for the first time in over 30 years, matching expectations. Headline inflation came in higher-than-expected at 3.0% y/y while core-core ex fresh food and energy) measure was up at 1.8% y/y from 1.6% y/y previously. The stark yen weakness can prompt further import price pressures in Q4 as well, and demand is likely to push higher as well with Japan reopening its borders from the pandemic restrictions. Bank of Japan meets next week, and while policy change is hard to expect, it is expected that the central bank will raise the CPI forecast for fiscal 2022 (year ending March) from 2.3% to high-2% range. Snap earnings send tech earnings fear soaring Snap (SNAP:xnys) plunged 26.5% in the after-hour trading, following the company reported Q3 revenues growth at 6% Y/Y, largely in line with street estimates, but said its internal forecast for the Q4 revenues growth is decelerating to about flat year on year (vs market expectations of +6% Y/Y). The social media company said that they are finding “advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven pressures, and rising costs of capital.”   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-21-oct-21102022
Liz Truss The Shortest Prime Minister In The History Of The Great Britain | Crude Oil Is Growing

Liz Truss The Shortest Prime Minister In The History Of The Great Britain | Crude Oil Is Growing

Saxo Bank Saxo Bank 21.10.2022 09:46
Summary:  Equity markets feebly attempted another rally yesterday, but the headwinds of seemingly ever-rising yields proved too strong, sending the indices sharply back lower to the lowest close in three days. This is still a relatively firm performance, given the scale of the rise in yields. Elsewhere, the USDJPY 150.00 level only proved a barrier for about a day, as the weight of rising yields saw the price action spilling higher above this level, with no signs yet of fresh official intervention against JPY weakness.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Yesterday saw a session relatively like the prior one, as an early rally simply failed to find sustenance in the face of the ongoing grind higher in US treasury yields. Still, market sentiment seems remarkably quiet despite the strong headwinds of the 25-basis point jump in longer Treasury yields this week. Next week is an important one for equities as the earnings season hits its peak with most of the megacap companies in the US reporting earnings, with the price action currently buried in the middle of the two-week range ahead of today’s session. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Hang Seng Index and CSI300 fluctuated in a narrow range and were down modestly. In Hong Kong, Chinese developers and China Internet stocks bounced. In mainland bourses, solar, wind power, education, nuclear power, and properties outperformed. General market sentiment is weak as U.S. bond yield risen to new highs and investors pondering the policy implications from the Chinese Communist Party’s National Congress. USD finds stride again on higher Treasury yields, USDJPY spilling above 150.00 The US dollar behaved rather oddly in recent sessions in trading sideways even as US treasuries continue to provide strong support for the currency. Hesitation yesterday from USD bulls may have been on concern that official intervention and choppy price action across USD pairs might await if USDJPY attempted to trade above the psychological 150.00 level. But that level fell late yesterday without any real fuss, trading nearly to 150.50. Still, while USDJPY moves are heavily correlated with the fresh rise in US Treasury yields, it’s interesting that another 50 basis point jump in long US treasury yields to new 14-year highs has not seen new cycle lows in EURUSD and many other USD pairs. Crude oil (CLZ2 & LCOZ2) Crude oil is among just a handful of commodities trading higher in a week that has seen another sharp jump in US bond yields drive down growth expectations. Crude and its related fuel products however continue to be supported by the risk of tightness driven by a period of supply uncertainty in the coming months as OPEC+ cuts supply, and the EU implements sanctions on Russian oil. In addition, uncertainty over Chinese demand as the zero Covid tolerance is being maintained and further incremental SPR sales of 15 million barrels will continue to weigh on prices in the short term. All developments, however, that are likely to keep crude oil rangebound for now, with Brent finding support below $90. Focus next week being earnings from six Big Oil companies, led by Exxon, Chevron and Shell. Gold (XAUUSD) Gold trades down 1.5% on the week close to key support at $1617, the September low and 50% retracement of the 2018 to 2022 rally. A second week of weakness being driven by an across the curve surge in US treasury yields with the ten-year yield rising 23 basis points on the week to 4.25%. Hawkish Fed comments and no signs of economic data showing the much-needed slowdown, has seen the market price in a Fed funds rate above 5% by early next year. The exodus from bullion backed ETFs has gathered pace this week as investors instead focus on increasingly attractive bond market yields, not least the two-year yield at 4.6% yield. Gold will likely continue to struggle until we reach peak hawkishness and/or the dollar starts to weaken. US treasuries (TLT, IEF) US treasury yields lifted all along the curve again yesterday, posting new highs for the cycle, with rises at the long end outpacing those at the short end, with the 2-10 inversion up to –37 basis points versus the cycle low below –50 bps in Sep and earlier this month. Traders are perhaps awaiting incoming data before trading shorter yields, now that the market has priced the Fed funds rate to reach above 5.00% by early next year (priced to do so at the March 2023 FOMC meeting). What is going on? UK Prime Minister Liz Truss resigned in a short statement yesterday … becoming the shortest serving Prime Minister in Britain’s history. She will stay in power until a new leader of the Conservative party can be chosen. The leading candidate is former Chancellor Rishi Sunak and other top contenders include Boris Johnson as the Conservative party has fallen to a record low in the polls against Labour. Japan inflation hits 3%, update to CPI forecasts expected next week Japan’s core inflation touched 3% levels for the first time in over 30 years, matching expectations. Headline inflation came in higher-than-expected at 3.0% y/y while core-core ex fresh food and energy) measure was up at 1.8% y/y from 1.6% y/y previously. The stark yen weakness can prompt further import price pressures in Q4 as well, and demand is likely to push higher as well with Japan reopening its borders from the pandemic restrictions. Bank of Japan meets next week, and while policy change is hard to expect, it is expected that the central bank will raise the CPI forecast for fiscal 2022 (year ending March) from 2.3% to high-2% range. UK Retail Sales volumes slide badly again in September Real (volume-based) sales were down for a second consecutive month at –1.4% MoM and –6.9% YoY, with the ex Petrol sales at –1.5% MoM and –6.2% YoY. China is considering reducing inbound quarantine The Chinese authorities are considering reducing the current 7 days in hotel plus 3 days at home quarantine requirement for people travelling into China to 2 days in hotel plus 5 days at home. While the move may be small in magnitude, and still not confirmed by the authorities, it may have signaling power in terms of more flexibility in the day-to-day implementation of the zero Covid policy which is constraining consumption, investment and tourism.Snap earnings send tech earnings fear soaringSnap (SNAP:xnys) plunged 26.5% in the after-hour trading, following the company reported Q3 revenues growth at 6% Y/Y, largely in line with street estimates, but said its internal forecast for the Q4 revenues growth is decelerating to about flat year on year (vs market expectations of +6% Y/Y). The social media company said that they are finding “advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven pressures, and rising costs of capital.” Gas prices in Europe and US see steep weekly declines US natural gas futures are heading for their longest stretch of weekly declines since 1991 as stockpiles continue to build at a faster than expected pace ahead of winter. The November (NGX2) front month contract trades down by 18% on the week and down 44% since the August peak, driven by mild autumn weather and rising production. In addition, the Freeport LNG export terminal explosion on June 8 has reduced exports, and the terminal will open in November at 85% capacity. In Europe, the TTF price trades down 10% has bounced strongly after almost reaching €100/MWh earlier in the week, a level we do not expect to be challenged until later in the winter when demand becomes more visible. With prices falling and almost full inventories, the political resolve to introduce a price cap has faded, hence the bounce. What are we watching next? US is considering national security reviews of Elon Musk business activities ... according to unnamed sources in a Bloomberg story. These would include the acquisition of Twitter and SpaceX’s Starlink satellite network. Musk has expressed his view on the war in Ukraine and investors in his Twitter takeover include Saudi and Chinese individuals. Tesla also has a strong presence in China, an awkward situation as the US has moved recently to cut off China’s access to advanced semiconductor tech. Market Fed rate expectations reach 5%, can they continue to rise? Early 2023 Fed rate expectations have now reached over 5%, with the Fed funds rate now fully pricing in a 75bps rate hike for the November meeting and a strong probability of another 75bps rate hike at the December meeting. While the Fed has reiterated it will continue to hike more next year before it pauses, market pricing is now running higher than the September FOMC dot plot forecasts. Some Fed speakers are starting to turn slightly cautious looking at the market pricing, with Charles Evans last night saying that if the Fed pushes its policy rate much further than planned it could start to weigh on the economy and says he is worried that at some point rate increases could have a non-linear impact with businesses becoming more pessimistic. Harker (2023 voter) and Cook reasserted that the Fed needs to continue to hike but will noted that the Fed can pause sometime next year to assess the impact of its tightening on the economy. Another fall in weekly jobless claims for the Oct 15 week continued to suggest labor market strength despite the disruptions from recent hurricanes. Earnings to watch Today’s earnings included the report from the world’s largest battery market CATL overnight, with a focus in the US session on consumer demand and consumption patterns in today’s American Express earnings report as well as the largest US oilfield services company Schlumberger. Today: CATL, American Express, Schlumberger, Verizon Communications, HCA Healthcare, Sika Economic calendar highlights for today (times GMT) 1230 – Canada Aug. Retail Sales 1340 – US Fed’s Evans to speak 1400 – Euro Zone Oct. Consumer Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-21-2022-21102022
West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

Crude oil price have been affected by i.a. OPEC+. Craig Erlam (Oanda) sees Brent trading between $90 and $100, unless...

Craig Erlam Craig Erlam 21.10.2022 23:29
Oil choppy as it establishes a new range Another choppy session in oil markets but one in which the price is once again broadly unchanged on the day. Yesterday we saw a decent rally before gains were erased and today we’ve seen the opposite. It continues to look like oil is establishing a new range after a host of factors caused massive swings in the price including the increasingly pessimistic global economic outlook and the huge two million cut to output from OPEC+. We could see Brent stabilise between $90 and $100 now barring another coordinated SPR release. Recovery rally short-lived Gold prices are slipping a little again after a recovery rally on Thursday was cut short. The bullish case for the yellow metal remains weak considering the uncertain outlook for inflation and interest rates. It’s testing support around $1,620 this morning with further support potentially coming around $1,600. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil choppy, gold rally fizzles - MarketPulseMarketPulse
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

A Volatile Environment For Most Commodities Ahead Of The Year End

Saxo Bank Saxo Bank 22.10.2022 08:04
Supply worries offsetting growth concerns   Multiple uncertainties will continue to create a volatile environment for most commodities ahead of the year end. While the recession drums will continue to bang ever louder the sector is unlikely to suffer a major setback before picking up speed again during 2023. This forecast for stable to potentially even higher prices will be driven by pockets of strength in key commodities across all three sectors of energy, metals and agriculture. With that in mind we see the Bloomberg Commodity Index, which tracks a basket of 24 major commodities, hold onto its +10 percent year-to-date gain for the remainder of the year.   It highlights the behaviour of commodities where supply and demand ultimately set the price. While we are seeing concerns about growth and demand, the supply of several major commodities remain equally challenged. An explosive rally during the first quarter was led by war, sanctions and the backend of a post-pandemic surge in demand for consumer goods and energy to produce them. The market then retraced sharply lower during June when the US Federal Reserve turbocharged its rate hikes to combat runaway inflation, while China’s zero-Covid policy and property sector woes drove a sharp correction. During the third quarter however, the sector has reasserted itself and while pockets of demand weakness will be seen, we see the supply side equally challenged—developments that we see support the long-lasting cycle of rising commodity prices that we first wrote about at the start of 2021.   The multiple uncertainties mentioned will first of all mean a focus on the demand side. There’s no doubt that increased efforts from central banks around the world, led by the US Federal Reserve, to combat runaway inflation by aggressively hiking rates to lower the economic temperature, will lead to some weakness in demand. In addition, China’s month-long and so far unsuccessful battle with Covid and harsh anti-virus restrictions has, together with its property sector crisis, driven a slowdown from the world’s biggest consumer of raw materials. However, we view the current weakness in China as temporary and with domestic inflationary pressures easing, we expect the government and the People’s Bank of China to step up their efforts to support an economic turnaround.  Agriculture: With global demand for food being relatively constant, the supply side will continue to dictate the overall direction of prices. We see multiple challenges that could see those move higher into the winter and next spring. The main culprits are the cost of fertiliser due to high gas prices, climate change and a “triple-dip” La Ninã during the 2022/23 northern hemisphere winter, a weather phenomenon that has driven a change in temperatures around the world and led to several climate emergencies during the past couple of years. Adding to this is Putin’s war in Ukraine which has led to a sharp drop in exports from a major supplier of grains and edible oils to the global market. With global stocks of key food items from wheat and rice to soybeans and corn already under pressure from weather and export restrictions, the risk of further spikes remains a clear and critical danger.   Precious metal traders and investors will continue to focus on the direction of the dollar and US bond yields, with strength in both being the main reason why gold trades down on the year and at the lower end of a current 300-dollar wide range. However, given the fact we have witnessed the strongest dollar rally and fastest pace of rising real yields in decades, this weakness has generally only been seen against the dollar. With that in mind we view gold’s performance so far in 2022 as acceptable and it points to some underlying strength that is likely to reassert itself once the dollar stops rising.   Gold is currently stuck in a wide $1600 to $2000 range and the direction towards year end is likely to be determined by the dollar and whether the US Federal Reserve is successful in bringing inflation under control without driving the US economy into a recession. We believe the latter will be a major challenge, and the market could be forced to reprice future inflation expectations, currently priced below 3% in a year from now. With the risk of a US recession in 2023 and inflation staying higher for longer, we see gold perform well in such a scenario, especially if the dollar, as mentioned, begins to peak out. Following a period of sideways action ahead of the year end, these developments will start to add tailwind to precious metal investments in 2023, and with that the prospect of moving back towards the top of the mentioned range.   We favour silver given the current weak investor participation and the additional support from a recovering industrial metal sector where supply, especially for aluminium and zinc, remains challenged by punitively high gas and power prices. This has forced a reduction in production around the world, most notably in Europe but also in China, where a long period of drought has seen smelters suffer from electricity shortages.   Industrial metals: We maintain a long-term positive outlook on the industrial metal sector given the expected ramp up in demand towards the electrification of the world. With regards to copper, the so-called king of green metals, we expect that the prospect for a temporary increase in production capacity next year by miners around the world, most notably from Central and South America as well as Africa, will likely dampen the short-term prospect for a renewed surge to a fresh record high.   The copper-intensive electrification of the world will continue to gather momentum following a year of intense weather stress around the world and the need to reduce dependency on Russian-produced energy, from gas to oil and coal. But for power grids to be able to cope with the extra baseload, a massive amount of new copper-intensive investments will be required over the coming years. In addition, we are already seeing producers like Chile, the world’s biggest supplier of copper, struggling to meet production targets amid declining ore-grade quality and water shortages. China’s slowdown is viewed as temporary and the economic boost through stimulus measures is likely to focus on infrastructure and electrification—both areas that will require industrial metals.   Crude oil has returned to pre-Russian invasion levels as the market continues to price in the prospect for an economic slowdown hurting demand. The result is lower spot prices and a flattening forward curve to an extent that is not yet backed up by a corresponding rise in inventories. It raises the question whether the macro-economic outlook has driven prices down to levels that are not yet justified by current supply and demand developments.  There is no doubt demand has softened in recent months, especially following the end of summer driving season, and continued but temporary lockdowns in China that are hurting mobility and growth. In Europe, punitively high prices for gas and power have also helped drive a slowdown in fuel demand but the region is still importing around 3 million barrels per day from Russia. The introduction of an import embargo on December 5th will likely tighten the overall market with Russia struggling to find other buyers.   We view the current weakness in oil fundamentals as temporary and side with the major oil forecasters of EIA, OPEC and the IEA who, despite current growth concerns, have all maintained their demand growth forecasts for 2023. During the final quarter prices are likely to remain challenged at times resulting in a potential lower range in Brent crude between $80 and $100 dollar-per-barrel. The main developments that could impact prices include:  China’s continued battle with Covid versus additional stimulus to offset growth risks  Gas-to-fuel switching supporting demand for distillate products  EU embargo on Russian oil potentially forcing a reduction in Russian production  The US plans to begin refilling its strategic reserves  OPEC threat to lower production should prices drop further  The direction of US inflation and the dollar—both key drivers of the general level of risk appetite  US production growth, which is showing signs of stalling, thereby supporting prices  Oil majors swamped with cash, and investors in general, showing little appetite for investing in new discoveries suggest that the cost of energy is likely to remain elevated for years to come. This is driven by the green transformation which is receiving increased and urgent attention, and which will eventually begin to lower global demand for fossil fuels. It’s the timing of this transition that keeps the investment appetite low. Unlike new drilling methods such as fracking where a well can be productive within months, traditional oil production projects often take years and billion-dollar investments before production can begin. With that in mind, oil companies looking to invest in new production will not be focused on spot prices around $90 in Brent and lower in WTI, but instead at +30-dollar lower prices currently traded in the futures market for delivery in five years' time.       Source: https://www.home.saxo/content/articles/quarterly-outlook/a-difficult-and-volatile-quarter-awaits-04102022
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

The Future Lies In A More Sustainable Distribution Of Energy Sources

Saxo Bank Saxo Bank 22.10.2022 08:10
Summary:  Could the focus on energy and renewable adoption change the entire investment sentiment in Asia? Asia’s energy crisis will have many faces Asia, including emerging Asia, is at the forefront of the energy crisis. The most compelling case of investment in emerging markets historically has come from the demographic trends and increasing aggregate demand amid rapid urbanisation and a growing middle class. However, energy supplies are likely to remain short for the foreseeable future due to decades of underinvestment, Russia’s war tactics, and increasing energy security issues in Europe and elsewhere.  This means the future will bring a wave of investment in securing energy supplies, deploying energy infrastructure, adopting new energy sources to meet power demand, and ensuring energy security and a broad-based fuel reliance. This won’t come without some short-term pain, including blackouts, caps on industrial use and rising subsidy bills, as well as a possibility of social and political unrest in some of the weaker Asian markets. We got a flavour of the crisis in Sri Lanka earlier this year, and Pakistan and Bangladesh also remain exposed to such risks.  LNG’s “bridge fuel” status adds to the crisis Liquified Natural Gas (LNG) has been popular in Asia as a bridging solution between the jump from coal and other fossil fuels to renewable sources of energy. LNG has also been one of the most convenient replacements for domestic gas, supplies of which are fast declining in countries like the Philippines, Bangladesh and Thailand. However, Europe is now competing directly with Asia to secure LNG supplies as its gas supply from Russia dries up. It is expected that Europe’s LNG demand could increase by 25 million tonnes (Mt) this year. As such, LNG cargoes have started to be diverted away from Japan and Asia in general in a hunt for better price points in Europe. This means that parts of Asia will lose their LNG supplies not just for this year, but for years to come as Europe builds its other sources of energy. Those that can afford it will have to pay a much larger fee to maintain a steady supply of LNG. apan’s winter shock to ease barriers on nuclear adoption Japan is in no way a stranger to energy crises. A catastrophic earthquake and tsunami triggered a meltdown of the Fukushima Daiichi nuclear plant in 2011, followed by a suspension of nuclear power over the last decade. Since then, Japan has focused on energy saving at the business and household level, without the need for substantial government interventions.  In recent months, a scorching heatwave and surging oil and gas prices have again brought Japan’s energy security under the scanner as electricity prices rose to a record high. Japan, being the fifth-largest oil consumer and the sixth-largest gas consumer globally, is heavily dependent on energy imports. Almost 90 percent of Japan’s domestic energy consumption comes from imported oil and gas.  Russia’s shock nationalisation of the Sakhalin 2 LNG and oil project, coupled with the Japanese yen at its lowest level for over two decades, have added to Japan’s energy pains. Japan’s excessive reliance on LNG has also come back to haunt it with supplies getting diverted to Europe. The only viable solution for Japan in the near term will be further demand destruction at the individual and business level. The government may need to step in to institute consumption limits for the bigger energy users, and it remains certain that consumers are about to feel the pinch. This could, however, mean that some tough decisions, such as those on nuclear adoption, could become relatively easy. Japan’s Prime Minister Kishida has pushed forward with the adoption of nuclear technology to address the demand-supply gap in the power market. His government has taken charge to ensure the continued operation of 10 nuclear plants that have been restarted, and is further pushing to restart another 7 reactors. This is a huge signal to other Asian countries and the world that nuclear energy can not only help to reduce reliance on fossil fuels, but it achieves this in the most green way possible by reducing carbon emissions and increasing energy security. This provides a compelling investment opportunity in power companies with an increasing share of output coming from nuclear, such as Kansai Electric Power (9503). There will potentially be some hurdles in the way for Japan to pursue the nuclear path, and some reliance on coal will likely be explored as well. Japan has a clear focus on the “net” in the net-zero agenda, and is pushing the carbon capture, usage and storage (CCUS) technologies that can enable it to keep burning some fossil fuels in hard-to-decarbonise sectors by offsetting or capturing/utilising emissions from power plants and industrial processes, and even extracting CO2 directly from the atmosphere. This brings potential opportunities in CCUS technologies, but also suggests that Japan will continue to use fossil fuels despite its net-zero push.  A return to fossils, and broadening energy supplies Coal-fired plants have been one of the easiest fall-back options for many emerging Asian countries, due to the scale of demand as well as the ease of availability of the fossil fuel and its related infrastructure in the region. For countries with low-cost domestic coal supplies, the case has been even more compelling, and coal-fired output has ramped up recently in China, India, Indonesia and Vietnam. More alternate energy sources are also being explored. Singapore, for instance, has exerted efforts to unearth its geothermal potential to diversify its energy sources. Indonesia, the Philippines and New Zealand also have significant untapped geothermal potential which could be explored further as the energy crisis reigns. Hydrogen and hydropower also remain a key focus in the region, with South Korea being the world leader in the hydrogen economy and others like China, Japan and Malaysia also adopting hydrogen push policies. Global demand for hydrogen based on existing government pledges is expected to reach around 250 Mt per annum by 2050. Some of the ETFs that provide exposure to the hydrogen push include VanEck Hydrogen Economy UCITS (HDR0:xetr), Global X Hydrogen (HYDR:xnas) and Direxion Hydrogen (HJEN:arcx).  Asia’s nuclear adoption is also expected to take a step up in the current crisis. In addition to Japan, countries like India and China have also shown increasing acceptance of nuclear technology to meet the growing energy demand. India plans to triple its number of nuclear power plants to 72 in total, while China has proposed the construction of 168 new reactors in addition to 18 being built and 37 being planned, which would amount to an increase of 337 percent. Overall, 35 reactors around Asia are already in construction, with Europe coming in second with 15 plants, according to data from World Nuclear Association.  In summary, the future lies in a more balanced distribution of energy sources. For Asian economies with a lack of domestic fuel supplies, energy self-sufficiency can only come from a bigger and faster shift to renewables in the medium term. Those that have domestic supplies may however find it harder to trust the volatile renewable sources and a more pragmatic approach may be warranted.   Shift away from dollar-based trade arrangements? India’s heavy reliance on oil, with about 80 percent of its demand being met by imports, made it vulnerable to the energy crisis early on. What saved India from a balance of payments crisis was its continued oil imports from Russia, at an undisclosed discounted price paid in Russian roubles. This is just a reflection of the course that other emerging markets could take as well, as they get immersed knee-deep in energy scarcity issues and are unable to find any reliable short-term solutions to sustain their economies. The Sri Lanka crisis has already raised alarm bells for many frontier economies. There have been reports recently that Myanmar has also started buying Russian oil products and is ready to pay for deliveries in roubles. Similarly, Moscow may continue to find buyers in smaller nations that have been hard hit by inflation and are running out of fuel supplies.  If more and more countries shift to similar trade arrangements with Russia for their energy and/or food/fertiliser imports, that could mean a significant shift away from dollar-based trade finance in the region. This will have consequences beyond the global energy markets, with some countries potentially faced with the tough choice of taking sides as deglobalisation forces become stronger.     Source: https://www.home.saxo/content/articles/quarterly-outlook/asia-intermittent-solutions-but-a-faster-renewable-adoption-curve-04102022
The Loonie Pair (USD/CAD) Bounces Off An Upward-Sloping Support Line

The Future Of The USD/CAD Exchange Rate Will Depend On The Decision Of Bank Of Canada (BOC)

TeleTrade Comments TeleTrade Comments 24.10.2022 08:40
USD/CAD has accelerated to near 1.3680 amid a stellar recovery in the DXY. The 10-year US Treasury yields have extended their losses to near 4.17% amid soaring market mood. The BOC may trim the extent of the rate hike to 50 bps this week. The USD/CAD pair sensed buying interest after dropping to near the round-level support of 1.3600 in early Tokyo. The loonie bulls have retreated after the US dollar index (DXY) defended the intervention rumors of the Bank of Japan (BOJ) recovered its entire intraday losses. The asset has extended its gains to near 1.3680. The DXY has recaptured its intraday high at 112.26 and is expected to behave critically ahead as the returns on US government bonds have dropped sharply. The 10-year US Treasury yields have extended their losses by 4.17% after displaying jaw-dropping gains to near 4.34% on Friday. Market sentiment is extremely cheerful and S&P500 futures are holding their gains. On Monday, the US S&P PMI data will be keenly watched. The Manufacturing PMI is expected to decline to 51.2 vs. the prior release of 52.0 while the Services PMI may drop to 49.2 from 49.3 reported earlier. This week, the interest rate decision from the Bank of Canada (BOC) will determine the further direction of the asset. A Reuters poll on projections for BOC’s interest rate claims that BOC Governor Tiff Macklem will announce a rate hike of 50 basis points (bps). The extent of the rate hike seems lower than their current pace of hiking interest rates. It is worth noting that the headline inflation rate in Canada was recorded at 6.9% for September. On the oil front, oil prices have dropped below the crucial support of $85.00 amid mounting global recession fears. In addition to the BOC, the BOJ and the European Central Bank (ECB) will announce their monetary policies. The BOJ may continue its ultra-loose stance while the ECB could tighten its monetary policy. An expectation of a fresh rate hike spell is weighing pressure on oil prices.
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Bank Of Canada (BoC) And ECB Interest Rate Expectations | Redundancies Of 4,000 Employees At Philips

Saxo Bank Saxo Bank 24.10.2022 12:51
Summary:  Equities snapped back higher Friday to close the week on a positive note and near the highs for the week, perhaps as the persistent rise in US treasury yields finally reversed sharply intraday on Friday after posting new cycle highs. The positive mood carried over into the early Asian session overnight as yields fell further, but sentiment has soured again slightly ahead of the open of the European session today. The Japanese yen weakened after Friday’s wild rally from new multi-decade lows, a move that was likely intervention-driven. The week ahead will feature earnings reports from the largest US megacaps.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Strong equity session on Friday with S&P 500 futures closing at a weekly high and this morning the index futures briefly pushed above the 3,800 level which is quite startling given the price action out of China. Many of the large US companies have considerable revenue exposure to China, so there is a downside risk here to US companies as the increasing political risk premium on Chinese equities could impact valuation on US companies with large Chinse exposure. The falling US 10-year yield likely driven by safe-haven seeking flows is offsetting at the margin some of the headwinds for US equities, but the medium-term outlook remains negative. It is also a massive earnings season week in the US with most of the mega caps reporting earnings, so volatility could easily pick up during the week in the event that these earnings surprise to the downside. Hang Seng (HK50.I) In light of the events over the weekend in China with Xi Jinping drawing up a new leadership in China (see more in-depth analysis below), the Hang Seng Index is selling off 6.4% to price levels seen as far back as 2005; in the total return basis is not quite as bad. The equity valuation on Hang Seng Index has fallen to less than 8 on 12-month forward P/E ratio suggesting that a steep political risk premium is being built into Chinese equities. Chinese mainland shares are down 3.2% during the session likely reflecting the divergence in foreign ownership. Wild ride for JPY traders Friday, likely on intervention The yen spiked further to the downside as global bond yields continued to rise Friday, with USDJPY nearly reaching 152.00 before what may have been a powerful intervention from official Japanese sources took USDJPY as far south as sub-146.50 levels on Friday as bonds also found support. Japan’s finance minister Shunichi Suzuki said that the country is in a showdown speculators and can’t tolerate “excessive” moves in the JPY. The action has sprung back overnight, taking USDJPY back to the 149.00 area in early European trading today. Other USD pairs have moved in sympathy with the wild volatility in JPY, with sudden USD weakness late Friday following through in places overnight but reversing later in the session. Elsewhere in FX, sterling is bid on hopes of an orderly transition to a new prime minister, most likely Rishi Sunak. Crude oil (CLZ2 & LCOZ2) Crude oil has given back some of Friday’s weaker-dollar-driven gains as fears over the global economic outlook continues to offset OPEC+ production cuts and EU sanctions on Russian oil flows from early December. A batch of delayed economic data out of China and President Xi tightening his grip on the country also helped sour sentiment at the start of a new week. Overall, however, the oil market judging from the bullish curve structure remains tight signalling no easy path for those looking for lower prices. Focus this week on earnings from Exxon, Shell and their Big Oil peers. HG Copper trades near resistance in the $3.5lb area ... following an end of week rally that was triggered by a weaker dollar and softer yields (see below). A batch of data released by China overnight saw copper imports reach their second highest level this year and despite the current property market crisis, the metal is seeing rising demand in order to replenish low stock levels and from clean energy production which is taking hold even as China’s broader demand for commodities have seen a slowdown due to lower economic activity. Speculators have traded copper from the short side since April, and a break above $3.70 is likely to be the minimum requirement for that to change. Gold (XAUUSD) Gold reached $1670 overnight as Friday's rally extended into the Monday session, and apart from speculation about the timing of a peak-and-reversal in US treasury yields, it is the current wild ride in USDJPY that has got the algo’s going wild in both directions. While we maintain our long-term bullish view on gold and silver, the price action has yet to confirm a reversal. This despite the second failed attempt last week to break lower through key support at $1617. The exodus from bullion backed ETFs has gathered pace recently as investors instead focus on increasingly attractive bond market yields. Gold will likely continue to trade in a choppy fashion until we reach peak hawkishness and/or the dollar starts to weaken. US treasuries (TLT, IEF) US treasury yields spiked further on Friday, with the 10-year treasury yield benchmark posting a remarkable 4.33% before treasuries finally found strong support, closing the day slightly below the prior day’s close of 4.22% and following through to 4.16% in early European trading today. Could this prove a climax peak-and-reversal in yields? We would need to see the yield work back down below 4.00% for a stronger indication. Noted “Fed whisperer” Nick Timiraos of the Wall Street Journal penned an article at the weekend suggesting that the Fed is preparing for a downshift in the pace of rate hikes by early next year (more below). US 2-year yields are also sharply lower from the Friday highs, having fallen some 20 basis points and trading near 4.43% this morning. What is going on? China’s Communist Party’s new leadership China’s General Secretary Xi lined up a team who deeply share his vision of the future of China and the blueprint of the governance model and development strategies that he had established to replace four of the seven members of the Chinese Communist Party’s Politburo Standing Committee, including Li Keqiang, Premier. The strategies of common prosperity, high-quality development, dual circulation, technology self-reliance, strengthening governance within the CCP, and deepening CCP’s leadership over all aspects of the country will continue. WSJ’s Nick Timiraos suggests the Fed is eyeing a slowdown in its pace of tightening Timiraos is widely considered to have solid access to Fed sources and in a piece released this Saturday, affirms the market view that the Fed may begin to downshift from the 75-basis point hike pace, perhaps already after the November meeting and eventually pause the tightening regime at some point early next year to offer time to assess the impact of the rapid pace of rate hikes, which took the Fed Funds rate from 0-0.25% as late as March of this year to a projected 4.25-4.50% after the December meeting. But he also notes the variety of opinions among Fed officials, some of whom are in favour of carrying on with the current pace of tightening and not wanting to signal any change in resolve as long as inflation persists anywhere near current levels. Philips in urgent restructuring laying off 4,000 employees The Dutch industrial conglomerate has been a mess for years and this morning the company is reporting revenue and EBITDA in line with estimates, but announcing a big restructuring of the company laying off 4,000 employees to improve profitability ahead of what the company expects to be more challenging times. What are we watching next? Former UK Chancellor Rishi Sunak may become next UK Prime Minister today Former PM Boris Johnson announced at the weekend that he will not run for leadership of the conservative party. The deadline to announce support from at least 100 Tory lawmakers is today at 14:00 UK time, with the only challenger to Sunak’s bid Penny Mordaunt, who may not have sufficient votes. Sunak has over 100 backers and will automatically become the next Prime Minister if Mordaunt can’t muster sufficient support for a run-off. Bank of Canada and ECB set to hike by 75 basis points this week On Wednesday, the Bank of Canada (BoC) is expected to hike interest rates by as much as 75 basis points, taking the policy rate to 4.00% if they do so, after a hotter than expected CPI print in September for Canada. On Thursday, the European Central Bank (ECB) will also further tighten its monetary policy to fight against widespread and persistent inflation. We think that the ECB will have no other choice but to send a hawkish message to the markets (meaning a 75-basis point interest rate hike) and signal further hikes to come, at least until February 2023. It is likely that the central bank will downshift interest rate hikes in December 2022 and in February 2023 to take into consideration the ongoing economic slowdown (which may end up in a recession). At this week’s meeting, the ECB governing council will also discuss two other matters: 1) Quantitative tightening and when/how it should start. But a final decision is not expected until December; 2) commercial banks’ early repayment of TLTRO (for Targeted Longer-term Refinancing Operations to provide financing at very low rates to credit institutions). Those two points are unlikely to be major market movers. Further pressure on Japan’s yield curve control? Last week, the Bank of Japan (BoJ) was forced to start emergency bond buying operations to maintain its yield curve control (YCC) policy. Pressure could remain high this week again. Several factors are pushing yields higher in Japan: highest inflation print since 1991, calls for very large wage increases and the continued upward migration in global yields, of course. Earnings to watch Around 430 earnings releases expected this week in the earnings universe that we cover during earnings seasons. Out of those more than 400 earnings releases, the most important ones are highlighted below. By the end of this week, we will have an adequate view into revenue growth, operating margin, and earnings growth on a both q/q and y/y basis. Today: Nidec, Philips, Cadence Design Systems Tuesday: First Quantum Minerals, Canadian National Railway, DSV, UPM-Kymmene, SAP, HSBC, ASM International, Norsk Hydro, Novartis, UBS, Kuhne + Nagel, Microsoft, Alphabet, Visa, Coca-Cola, Texas Instruments, UPS, Raytheon Technologies, General Electric, 3M, General Motors, Valero Energy, Biogen, Enphase Energy, Halliburton, Spotify Technology Wednesday: Dassault Systemes, Mercedes-Benz, BASF, Deutsche Bank, PingAn Insurance, CGN Power, UniCredit, Canon, Barclays, Standard Chartered, Heineken, Aker BP, Iberdrola, Banco Santander, SEB, Meta Platforms, Thermo Fisher Scientific, Bristol-Myers Squibb, ADP, Boeing, ServiceNow, Ford Motor, Twitter Thursday: ANZ, Anheuser-Busch InBev, Argenx, Shopify, Teck Resources, Neste, Kone, TotalEnergies, EDF, STMicroelectronics, PetroChina, China Life Insurance, CNOOC, Oriental Land, Shin-Etsu Chemical, Takeda Pharmaceuticals, Hoya, FANUC, Shell, Lloyds Banking Group, Universal Music Group, Repsol, Ferrovial, Hexagon, Evolution, Credit Suisse, Apple, Amazon, Mastercard, Merck & Co, McDonald’s, Linde, Intel, Honeywell, Caterpillar, Gilead Sciences, Pioneer Natural Resources Friday: Macquarie Group, OMV, ICBC, China Merchants Bank, LONGi Green Energy Technology, Midea Group, Imperial Oil, Danske Bank, Sanofi, Airbus, Volkswagen, China Construction Bank, Agricultural Bank of China, Bank of China, BYD, China Shenhua Energy, Eni, Keyence, Hitachi, Denso, Equinor, CaixaBank, Wilmar International, Swiss Re, Exxon Mobil, Chevron, AbbVie, NextEra Energy, Colgate-Palmolive, Royal Caribbean Cruises Economic calendar highlights for today (times GMT) 0715-0800 – Eurozone Oct. Flash Manufacturing and Services PMI 0830 – UK Oct. Flash Manufacturing and Services PMI 1230 – US Sep. Chicago Fed National Activity Index 1345 – US Oct. Flash Manufacturing and Services PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-24-2022-24102022
Saxo Bank Members Talks About Commodities, Intervention From Japan And More

Saxo Bank Members Talks About Commodities, Intervention From Japan And More

Saxo Bank Saxo Bank 24.10.2022 12:57
Summary:  Today we look at the zany session that developed on Friday across not just USDJPY but all markets in the wake of apparent heavy official intervention from Japan, although sources there are playing coy with their communication on the issue. We also discuss a vicious further slide in the Hang Seng index as investors vote no confidence in the signals emanating from the CCP party congress ahead of Xi's third term. A look at natural gas, copper, earnings season hitting fever pitch this week, the macro calendar for the week ahead and more in today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are found via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-24-2022-24102022
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

A Summary Of Futures Contracts, The Funds Increased Their Natural Gas Shortages

Saxo Bank Saxo Bank 24.10.2022 13:08
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, October 18. A week that saw stocks rebound after a solid start to the corporate-earnings season helped offset continued growth worries. The dollar traded softer and bond yields higher while commodities adopted a defensive stance with the biggest amount of net selling hitting crude oil, gold, corn and coffee. Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report Financial Markets Quick Take - October 24, 2022Saxo Market Call Podcast: HangSeng delivers a vote of no confidence in Xi's 3rd term This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, October 18. A week that saw stocks rebound from oversold levels after a solid start to the corporate-earnings season helped offset continued worries about how far central banks are prepared to hike rates in order to combat inflation through forcing a reduction in economic activity.    With exception of the JPY, the dollar traded softer against most major currencies while bond yields rose ahead of a mid-week spike that saw 2-year yield jump to the highest since 2007 as traders pushed expectations for the peak policy rate closer to 5% by early 2023. Commodities traded defensively throughout the week with losses seen across most sectors led by energy, especially natural gas which slumped by close to 13%.  Commodities The Bloomberg Commodity index lost 3.2% during the reporting week with losses being led by the energy sector where the market reversed some of the gains seen in the previous week when OPEC and Russia announced their surprise production cut. Natural gas slumped 13% on the week while renewed yield strength and economic worries sent most metals sharply lower with funds reversing back to net short position in gold, silver and copper.    Responding to these developments, speculators cut their total exposure across 23 major commodity futures by 7% to 1.037,869 contracts with the biggest amount of net selling hitting crude oil, gold, corn and coffee with buying concentrated in soybean oil, sugar and hogs.  Energy Responding to renewed weakness, speculators cut bullish WTI and Brent crude oil bets by a combined 57k lots to 353k lots, thereby reversing the bulk of the buying seen in the aftermath of OPEC+ decision to cut production. The change was led by a combination of longs (-42k lots) bailing out of recently established positions and fresh shorts (+15k) being added. The product market was mixed with buying of the two distillate contracts while gasoline length was reduced. Funds increased their natural gas short by 6% to 82.5k lots in response to a near 13% drop on continued mild weather and rising production.  Metals Sellers returned to the metal sector with the recently established small longs in gold, silver and copper being flipped to decent size short positions while platinum’s small gain on the week managed to attract additional fresh longs. Agriculture  The combined long in across the six major grain and oilseed contracts held steady around 471k lots with buyin of soybean oil being offset by selling of corn and wheat. In softs the main action was seen in coffee where months of relative robust price action supported by tight market conditions gave way to a 10% slump driving a 64% reduction in the net long to just 12k lots, an 18 month low. Sugar meanwhile saw net buying with the net long jumping 36% to 107k while recession worries reduced the cotton long to 22k lots and lowest since July 2020.     Forex In forex, flows remained mixed during a week that saw the dollar index trade softer by 1% after recently hitting a 20-year high. Overall the gross dollar long against nine IMM currency futures and the Dollar index rose by 5% to $15 billion, primarily driven by heavy JPY selling as the under siege currency dropped 2.3% towards the important 150 level. Elsewhere, a recovering Sterling saw net selling with speculators reducing the gross long more than offsetting fresh short selling.Speculators continued to buy euros and since August 30 when EURUSD traded around €1 they have bought €12 billion, driving their net futures exposure from a 48k lots short to a 48k lots long, a four-month high.   What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Source: https://www.home.saxo/content/articles/commodities/cot-crude-oil-sold-on-fading-opec-impact-metal-positions-flip-back-to-net-short-24102022
Long-Term Yields Soar Amidst Hawkish Fed: Will They Reach 5%?

It Will Be Busy Week, Central Bank's Decisions Ahead (BoC, ECB, BoJ), Softer US yields Could Play In Favour Of Gold And More

Swissquote Bank Swissquote Bank 24.10.2022 14:13
Last week ended on a strong positive footage, on hints that some Federal Reserve (Fed) officials have started talking about pausing the interest rate rises to avoid going too far. BoC, ECB & BoJ to decide Softer Fed expectations pulled US yields lower and sent equities higher.On the earnings front, 70% of the S&P500 companies that reported earnings so far did better than earnings expectations, and big US tech companies and oil giants will be reporting earnings this week. In politics, Boris Johnson announced yesterday evening that he will not be running for the PM role this week. That makes the British ex-Chancellor of Exchequer Rishi Sunak the front runner in the contest. Sterling kicked off the week on a positive note, but bumped into 50-DMA resistance. In central banks, the Bank of Canada (BoC) is expected to raise interest rates by another 50bp when it meets this week, the European Central Bank (ECB) will certainly raise its rates by 75bp, while the Bank of Japan (BoJ) is expected to stay pat. The BoJ intervened again in the currency markets on Friday to pull the USDJPY lower, after the pair flirted with the 152 level last week. The pair eased to 145.50 following the intervention and is back to almost 149 at the time of video. Commodities In commodities, US crude trades around $85per barrel level, and gold is better bid. Softer US yields could play in favour of gold if we really start seeing material easing in Fed expectations. But the latter is data dependent. Due this week, investors will closely watch the US latest GDP update, and the PCE index. Watch the full episode to find out more! 0:00 Intro 1:02 Are Fed officials softening tone? 3:23 China GDP better-than-expected, but well below target 4:44 US Big Tech & Oil Giants due to announce earnings 7:54 UK to choose its new PM 8:57 BoC, ECB & BoJ to decide 11:05 Update on crude oil & gold Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Apple #Amazon #Microsoft #Meta #ExxonMobil #Chevron #earnings #UK #PM #Rishi #Sunak #GBP #USD #JPY #BoJ #ECB #BoC #China #US #GDP #XiJinPing #crudeoil #XAU #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___  Let's stay connected: LinkedIn: https://swq.ch/cH
"Gold had a series of large bodied red candles throughout October with any recoveries quickly reversed by the end of the day in a clear bear trend."

"Gold had a series of large bodied red candles throughout October with any recoveries quickly reversed by the end of the day in a clear bear trend."

Jason Sen Jason Sen 24.10.2022 15:09
Gold Spot has been confusing for over a week. During this period Gold has been in daily ranges of 25 to 40 points, but mostly up one day down the next day in very volatile conditions. Having trended lower for 3 weeks in October we came close to retesting the September low at 1614/13 before a huge bounce to strong resistance at 1647/52. Finally we have a tradeable pattern. Silver beat first resistance at 1880/90 this time targeting 1925/35, perhaps as far as 1970/80 on Monday. WTI Crude December establishes a sideways trend after reversing from below the late August high earlier this month - it is likely that the weekly ranges will decrease now & we will see lower volatility as we head towards the apex of the triangle. Last week we held a range of 8130 - 8714 & closed the week up only 40 ticks. Remember when support is broken it usually acts as resistance & vice-versa. Update daily by 05:00 GMT Today's Analysis. Gold had a series of large bodied red candles throughout October with any recoveries quickly reversed by the end of the day in a clear bear trend. However Friday's enormous bullish engulfing candle from just above the September low signals a potential double bottom buy signal. First resistance at 1656/60. A break above 1664 is a buy signal targeting 1670/72 & second resistance at 1684/87. A high for the day likely, but shorts may be more risky now. Holding 1656/60 can target 1650 & possibly support at 1645/42. Watch for a low for the day after the bullish engulfing candle - could be worth trying a long with stop below 1637. Silver beat first resistance at 1880/90 this time targeting 1925/35, perhaps as far as first resistance at 1970/80 on Monday. Shorts could be risky, but if you try, stop above 1995 & then use 1980/70 as support to try to enter a long targeting 2030/35 & 2080/90. We should have support at 1885/75. WTI Crude December strong resistance at 8600/50 again today. Shorts need stops above 8700. A break higher this week targets 8800 & perhaps 8900/8920. We broke first support at 8530/8480 to make a low for the day at the next target of 8340/20. A break below 8300 risks 8230/10, perhaps as far as last week's low at 8150/30.
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

The Upward Movement Of US Treasuries Was Halted | Allegations Of Systematic Maltreatment Of Patients Against Orpea

Saxo Bank Saxo Bank 25.10.2022 08:46
Summary:  Equity markets managed a comeback from an intraday sell-off yesterday as treasury yields eased back lower after briefly threatening to challenge the cycle highs. Today is the first day of the blitz of earnings releases this week and will include Microsoft and Google-parent Alphabet reporting after the close of trading today. In Asia, even while the US dollar treads water, the Chinese yuan slipped to a new cycle low versus the greenback after a weak official fixing.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are continuing to climb ahead of key earnings tonight with S&P 500 futures trading around the 3,811 level this morning and potentially could reach for the 50-day moving average around the 3,876 level if we get better than expected Q3 earnings over the coming days. Euro STOXX 50 (EU50.I) Momentum is extending this morning with STOXX 50 futures trading around the 3,542 level with yesterday’s high at the 3,551 level being the key resistance level on the upside. The key drivers are lower energy prices caused by recently very mild weather in Europe. If flows into EUR continues, European Q3 earnings surprises, and energy prices remain in easing stance then the 3,600 level could be the next big level to be tested. FX: USD treads water, CNH continues broad plunge The continued local softness in US yields and resilient risk sentiment here have kept the US dollar trading sideways and kept USDJPY out of the headlines. But USDCNH extended sharply higher after a surprising weak fix for the onshore CNY last night, and USDCNH spiked all the way to 7.368 before the move was cut about in half by later in the session. China is clearly happy to allow the CNH to weaken broadly, with EURCNH, for example, rallying hard since earlier this month and trading near the range high of the last year close to 7.30. Crude oil (CLZ2 & LCOZ2) Crude oil has settled into a relatively tight range, in Brent between $90 and $95 per barrel, while the market assesses the overall impact on demand from the global economic slowdown against a tight supply situation, especially in the distillate market, which is likely to worsen once OPEC producers in the Middle East reduce production of high yielding middle distillate crude oil from next month. In addition, EU sanctions against Russia starting in December is already having an impact on supplies reaching the region. Overall, the oil market judging from the bullish curve structure remains tight and may tighten even further during the coming months. Focus this week on earnings from Exxon, Shell and their Big Oil peers. US treasuries (TLT, IEF) US treasury yields threatened back higher toward the cycle highs yesterday, but the move was tamed as treasuries found support. The 10-year yield has been almost unchanged on a daily close basis for the last three days running (near 4.22%). The circulation of an article from “Fed whisperer” Nick Timiraos suggesting that the Fed will consider slowing the pace of hikes after the November 2 FOMC meeting saw no follow-on drop in short yields. The treasury will auction 2-year t-notes today, 5-year notes tomorrow and 7-year notes on Thursday. What is going on? EU gas (TTFMX2) traded below €100/MWh on Monday for the first time since June with the “Next hour” contract briefly trading negative following a warm start to the heating season, a development that looks set to continue in the next couple of weeks, thereby leaving storage sites near full. While a great deal of weather-related volatility, and potentially even lower prices, can be expected at the front of the curve, it is important to watch TTFMG3, the peak winter demand contract for February, which remains anchored above €140/MWh. However, the longer the warm spell continues, and LNG arrivals remain strong the worry about next winter will fade, thereby providing a much-needed boost to industries trying to navigate through the current crisis. EU energy ministers meet today to discuss the emergency actions proposed by the Commision last week. Ugly flash Eurozone PMI for October There is nothing new here. As expected, activity weakened more quickly in October. The eurozone October business activity is down at 47.1 versus prior 48.1 and expected at 47.6. It looks increasingly clear that the Eurozone economy is set to contract in the fourth quarter. The factors driving the contraction in activity are well-known: fears of a recession, widespread and higher inflation (especially in the services sector), worries about high inventories, weaker than expected sales etc. We all know the next step: companies will start to cut costs, reduce their employment expectations for 2023 and ultimately cut their labor force. All of this even before we enter winter. This is a high-risk period for the Eurozone due to the energy crisis and potential energy disruptions in some countries. DSV lifts outlook Europe’s largest logistics company is raising its EBIT outlook this morning as Q3 results are better than estimated with revenue at DKK 60.6bn vs est. DKK 56.3bn and adjusted net income of DKK 4.8bn vs est. DKK 4.7bn. The company also says that it expects a gradual decline in profitability as logistics prices are coming down from their high prices reached during pandemic bottlenecks in the global supply chain. SAP beats on revenue in Q3 Europe’s largest software company reports Q3 revenue of €7.8bn vs €7.6bn driven by strong performance in its cloud business. HSBC Q3 results beat estimates The bank reports this morning Q3 adjusted revenue of $14.3bn vs est. $13.5bn and adjusted pre-tax profits of $6.5bn vs est. $6.1bn. The bank is also lifting its outlook and announcing the replacement of its CFO. What are we watching next? Orpea could get a bailout by the French government The French retirement home group Orpea is facing a rough time since allegations of systematic mistreatment and patient abuse were discovered earlier this year. Yesterday, the stock was suspended by the French regulator AMF on rumors that the French government could step in to save the company. The stock is down 80 % year-to-date. Orpea is facing a mountain of debt (around €9.5bn). The group operates nearly 1,200 homes worldwide, with around 350 of them in France. It used to be one of the best performing stocks in the French stock market. Rishi Sunak set to become next UK Prime Minister, October 31 budget statement on tap Sunak is said to be keeping Jeremy Hunt on as Chancellor and is expected to proceed with prudence in keeping the UK’s fiscal deficits on a more sustainable path, with the austerity likely to mean a harder landing for the UK economy and the Bank of England possibly unwilling to hike interest rates as much as the market expects (or forced to do so because inflation remains stubborn and the currency weak). EURGBP jumped back higher toward 0.8750 yesterday after selling off on the news that Boris Johnson would not run for the leadership. Earnings to watch Today’s US earnings focus is on Microsoft, Alphabet, Visa, UPS, General Electric, Halliburton, and Enphase Energy. Microsoft’s business model is robust due to its large market share and dependency for its software, but the company is facing rising input costs on wages and energy cost for running its datacenters. Alphabet could post Q3 weakness as Snap’s Q3 results last week showed advertising weakness. UPS earnings are important for insights into the global economic slowdown. Today: First Quantum Minerals, Canadian National Railway, DSV, UPM-Kymmene, SAP, HSBC, ASM International, Norsk Hydro, Novartis, UBS, Kuhne + Nagel, Microsoft, Alphabet, Visa, Coca-Cola, Texas Instruments, UPS, Raytheon Technologies, General Electric, 3M, General Motors, Valero Energy, Biogen, Enphase Energy, Halliburton, Spotify Technology Wednesday: Dassault Systemes, Mercedes-Benz, BASF, Deutsche Bank, PingAn Insurance, CGN Power, UniCredit, Canon, Barclays, Standard Chartered, Heineken, Aker BP, Iberdrola, Banco Santander, SEB, Meta Platforms, Thermo Fisher Scientific, Bristol-Myers Squibb, ADP, Boeing, ServiceNow, Ford Motor, Twitter Thursday: ANZ, Anheuser-Busch InBev, Argenx, Shopify, Teck Resources, Neste, Kone, TotalEnergies, EDF, STMicroelectronics, PetroChina, China Life Insurance, CNOOC, Oriental Land, Shin-Etsu Chemical, Takeda Pharmaceuticals, Hoya, FANUC, Shell, Lloyds Banking Group, Universal Music Group, Repsol, Ferrovial, Hexagon, Evolution, Credit Suisse, Apple, Amazon, Mastercard, Merck & Co, McDonald’s, Linde, Intel, Honeywell, Caterpillar, Gilead Sciences, Pioneer Natural Resources Friday: Macquarie Group, OMV, ICBC, China Merchants Bank, LONGi Green Energy Technology, Midea Group, Imperial Oil, Danske Bank, Sanofi, Airbus, Volkswagen, China Construction Bank, Agricultural Bank of China, Bank of China, BYD, China Shenhua Energy, Eni, Keyence, Hitachi, Denso, Equinor, CaixaBank, Wilmar International, Swiss Re, Exxon Mobil, Chevron, AbbVie, NextEra Energy, Colgate-Palmolive, Royal Caribbean Cruises Economic calendar highlights for today (times GMT) 0800 – Germany Oct. IFO Business Climate survey 0855 – UK Bank of England Chief Economist Huw Pill to speak 1200 – Hungary Central Bank Decision 1300 – US Aug. S&P CoreLogic Home Price Index 1400 – US Oct. Consumer Confidence 1400 – US Oct. Richmond Fed Manufacturing Index 1700 – US Treasury to auction 2-year notes 1755 – US Fed’s Waller (Voter) to speak 2030 – API Weekly Oil and Fuel Stocks Report 0000 – New Zealand Oct. ANZ Business Confidence 0030 – Australia Q3 and Sep. CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher     Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-25-2022-25102022
The Commodities Feed: Oil maintains positive momentum

European Sanctions Against Russia Will Enter Into Force Earlier

InstaForex Analysis InstaForex Analysis 25.10.2022 12:15
Oil is starting to consolidate. At first glance, due to the retreat of the US dollar, on the one hand, and the slowdown in economic activity, on the other. But this is not just the case. Due to constant turmoil, investors' attention is constantly shifting from the problem of limited supply to the risks of a global recession, which does not allow Brent to spread its wings. At the same time, many negative factors associated with demand have already been taken into account in the quotes of the North Sea variety. This circumstance makes the potential of its peak limited. Oil is quoted in US currency, so the USD index that took a step back is good news for Brent. The market is actively discussing the topic of slowing down the speed of the Fed's monetary restriction, in particular, raising the federal funds rate not by 75, but by 50 bps in December, as well as the arguments of FOMC officials on this topic in November. Coupled with positive corporate reporting and the appointment of Rishi Sunak as Prime Minister of Britain, this contributes to the S&P 500 rally, improves global risk appetite, and puts pressure on the US dollar. Dynamics of oil and US dollar In addition, the stock market now operates in the "bad news from the economy is good for us" mode. In this regard, a further slowdown in business activity, including the fastest pace of PMI reduction in the US manufacturing sector, became a good reason to buy equity securities and sell the dollar. For oil, this has become a double-edged sword. Purchasing managers' indices are falling not only in the United States, but also in Europe and other regions, which adds negativity to the piggy bank of declining global demand for black gold. At the same time, according to SPI Asset Management, the risks of a recession in the global economy and a collapse in demand are overstated and are certainly taken into account in the price. On the contrary, the OPEC+ production cut by 2 million bpd, which is ready to begin in November, and the start of the EU embargo on Russian oil from December will allow Brent to return to $100 per barrel. Dynamics of sea transportation of Russian oil The IEA believes that about 80–90% of oil from the Russian Federation will not fall under the price ceiling set by the G7, which is good news for the global economy. It still needs Russian black gold. At the same time, according to Bloomberg, European sanctions will not come into effect from the beginning of December, but earlier. The volume of sea supplies in the week by October 21 fell to the lowest level since mid-September. In my opinion, the risks of a global recession have not yet been fully factored into the price of oil. The US economy remains resilient despite the Fed's most aggressive monetary tightening cycle in decades. GDP in the third quarter is ready to grow by 2.3%. Yes, the probability of consolidation of the North Sea variety is high, but it can still continue to dive. Technically, on the Brent daily chart, there is a Splash and shelf pattern on a 1-2-3 base. I recommend setting pending orders to buy at $94.8 and sell from $88.8 per barrel.   Relevance up to 09:00 2022-10-30 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325227
The Commodities Feed: First US crude draw this year

Oil and gold in the eyes of Ed Moya (Oanda) - 25/10/22

Ed Moya Ed Moya 25.10.2022 23:19
Oil ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Crude prices rose after constant reminders that the oil market is still tight. ​ Saudi energy minister Abdulaziz noted that they need to retain spare oil capacity. On Halliburton’s earnings conference call they stated that oil and gas supply is tight for the foreseeable future. ​ Earlier Valero said that US fuel demand has surpassed 2019 levels. Risk appetite was somewhat healthy and that helped keep oil prices positive this morning. ​ The dollar rally hit a wall and that should provide a boost for all commodities. Gold higher as Treasury yields fall Gold prices got a boost as Treasuries kept the rally going on strong. US economic data is deteriorating and that is helping push down Treasury yields. ​ If the data keeps on getting uglier, the December FOMC meeting debate might not be between a half-point increase and 75 basis-point hike, but with a quarter-point rise and 50 basis-point boost. Gold’s rebound is gaining momentum as the 10-year Treasury yield continues to drop further away from last Friday’s high. ​ Gold’s bearish trend has firmly been in place after prices could not hold the $2000 level in the spring. ​ We’ve seen some bullion rallies stall around the 50-day SMA, which means this current rebound could target the $1700 level. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil and gold rise - MarketPulseMarketPulse
The RBA Will Continue At A 25bp Pace At Coming Meetings

The Australian Government Will Not Be Able To Deliver On Its Election Promise

Saxo Bank Saxo Bank 26.10.2022 08:34
Summary:  The US major indices, the Nasdaq 100 & S&P 500 lift for the 3rd day supported by bonds yields falling, with traders digesting weaker US economic news which could persuade the Fed to slow its pace of hikes, all while parsing through stronger than expected earnings. WTI and gold both gained, while Bitcoin broke above $20,000 for the first time in nearly three weeks. Asian equity futures are in the green. Downunder investors parse through the Australian Federal budget winners; green energy, infrastructure, healthcare and parents. While mulling over Government warnings that power bills will rise 50%. What’s happening in markets?   The US major indices, the Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) lift for the 3rd day The major indices rallied 2.3% and 1.6% respectively, supported by bonds yields falling, with traders digesting weaker US economic news which could persuade the Fed to slow its pace of hikes, all while parsing through stronger than expected earnings. The 10-year Treasury yield plunged 15 bps to 4.10%, which helped the dollar fall against every G-10 peer, while the pound added 1.7%. It's worth noting so far this US earning seasons 146/S&P500 companies reported results, and 3% delivered earnings surprises to the upside, which has supported equites, with energy earnings growth up the most, averaging 164%.  While total aggregate earnings have declined. Crude oil (CLX2 & LCOZ2) rises over $85 on near supply tightness and some thinking the Fed will slow its pace of hikes  Three US economic data sets released over the last two days are pointing to the US economy souring, which could indicate the US Federal Reserve’s rate rises have been working and may perhaps persuade the Fed to slow its pace of hikes. This could be seen as a positive signal for fuel demand. Consumer Confidence fell, while the S&P Core Logic Case-Shiller 20-City House Price Index also released Tuesday showed home prices fell 1.3% in the 20 core cities studied month-on-month, but were still 13.1% higher than a year ago. The day prior we had S&P Global’s flash US Composite PMI Output Index, that tracks the manufacturing and services sectors, falling to 47.3 this month from a final reading of 49.5 in September  Australia’s ASX200 (ASXSP200.1) rises 0.3%, erasing earlier gains on hotter than expected CPI Australian CPI rose more than expected to a 32 year high, with CPI up 7.3%, hotter than the consensus expectation that consumer prices would rise 7.1% YoY. The biggest moves were in Housing prices, up 10.5% YoY, followed by Transport costs up 9.2% (fueled by fuel prices ripping up), while Food price growth remained strong, up 9% YoY. Core inflation (or trimmed mean inflation) which the RBA looks at, which excludes large rises and falls rose to 6.1% YoY, which is the highest reading since the data was first published. Today's proof shows the RBA’s pace of hikes has done very little to slow price growth and serves as a wakeup call that perhaps the RBA will continue to hike rates to slow inflation, despite employment falling and some businesses being in financial hardship. Coincidently, the last time CPI was this high, was in 1990, when the RBA hiked so aggressively it tipped the economy into recession, so that’s something to consider. It's also worth looking at asset classes that typically do well in recessionary cycles (such as bonds, and in equities healthcare, utilities and consumer staples). The Australian share market is up 0.3% on Wednesday, up for the third day. The real estate sector is leading today, up 2.3% after the sector won in the Australian Federal budget handed down last night. As for stocks, Costa Group (CGC) is up the most, 11% with investors speculating the business might be taken over.   What to consider? Australian Govt budget winners are green energy, infrastructure, healthcare and parents  The Australian Federal Budget handed down last night forecasts slower GPD growth, higher energy bills, as well as higher spending. See below for more.  A sector to watch is green transformation. With the AUD$20b to be put toward Australia’s transformation to net zero. The government outlined a large fund to mitigate climate change risk and support the transformation to net zero, with the funding going toward recently commenced projects on windfarms in VIC and the TAS Marinus Link project, while also delivering cheaper infrastructure loans for investment into renewable energy, in order to lower energy costs and achieve net zero over the coming years. Focus will be on lithium, rare earths, hydrogen, with companies like Pilbara Minerals, Allkem, Lynas and Iluka on watch.      Another sector to watch is building, construction, infrastructure and mining. With the introduction of the national Housing Accord between government and other industry bodies, there is a target of building one million new homes over 5yrs, starting mid-2024. The government will establish a AU$10bn housing Australia future fund, with an aim of providing 20k new social housing dwellings. AU$350m will be spent over 5yrs in delivering 10k affordable dwellings, with state governments to provide another 10k homes. The government also committed to its pre-election promise of a shared equity scheme, allowing eligible people to buy a house with a smaller deposit. Focus will be on stocks like Transurban, Abbri and eyes will also be on banks that could benefit from housing polices, so CBA, ANZ Bank, NAB, as well as Westpac as well as Suncorp and Bank of Queensland   Another sector to watch is health and aged care. The Government will spend AU$787.1m over four years on making a greater co-payment for prescription drugs, starting next year. Moreover, the government pledged to open 50 Medicare urgent care clinics, expand access in suburbs and regions. Overall, along with a rise in spending on hospitals, and extending various COVID-19 support measures, the government has pledged AU$6.1b. Elsewhere, the government is committing AU$2.5b to improving aged care to improving aged care facilities and staffing issues. Focus will be on health care businesses like Ramsay Health, Sonic Health Care, ResMed as well as Healius and Australian Clinical Labs.   And another big highlight was increasing child care subsidies and paid parental leave to drive female labour force participation. From July 2023, childcare subsidy rates will increase for all eligible families with annual incomes less than AU$530k, which would cover around 96% of families. The increase in paid-parental leave will cost AU$531.6mn over four years, starting in FY23. Each year from July 2024 to July 2026, the paid parental leave will increase by 2 weeks, with a total increase of 6 weeks to 26 weeks by FY27. Australian Federal Budget 2022 warns power bills will rise 50%  The Australian Federal Budget handed down last night, estimated power prices will rise 50% over the next two years. It follows on from the Australian Energy Regulator warning electricity prices will rise by up to 50% just in 2023. Either way, it seems the Australian Government won’t be able to fulfill its election promise to cut power bills. Several bodies warned Australia will run out of energy next year including the Australian Consumer and Competition Commission, who says there is a significant risk the nation will be short supply in 2023 by 56PJ, which could further cause prices to rise, and result in some manufacturers closing their businesses, with market exists already occurring.  This might be a catalyst for some to perhaps consider looking at large cap oil companies, and ETFs.       For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-26-oct-26102022
Australia Is Expected To Produce A Bumper Year Of Crops

Ukrainian Exports Of Agricultural Products May Increase In October | Rising Energy Costs Will Hurt Microsoft's Operating Margin

Saxo Bank Saxo Bank 26.10.2022 08:45
Summary:  A whiplash-inducing session for equity traders yesterday as the strong market session was spoiled after hours yesterday by weak results from Microsoft and Google-parent Alphabet. A drop in US treasury yields, meanwhile, has driven a sharp correction lower in the US dollar, with EURUSD eyeing parity suddenly ahead of next week’s FOMC meeting and AUDUSD trying to break higher after a hot core Q3 CPI reading overnight.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Strong rally in US equities yesterday touching the 50-day moving average before settling a bit lower on the close. Price action has subsequently turned negative overnight after the cash session as disappointing earnings from Alphabet and worsening outlook from Microsoft are weighing on the indices. On the positive side, the US 10-year yield is coming down from its recent peak and the Chicago Fed National Activity Index showed yesterday that the US economy operated meaningfully above trend growth in both September and August suggesting inflationary forces are still intact despite tighter financial conditions. Euro STOXX 50 (EU50.I) Touched almost the 3,600 level as we indicated yesterday was the upside level the market was looking for, but the weaker US earnings overnight might impact equity sentiment today, but on the other hand European earnings releases this morning have broadly beaten estimates. FX: USD punched lower as yields drop Yesterday saw the potent, USD-negative combination of treasury yields pushing sharply lower and strong risk sentiment, but interesting to note that the USD weakness continued in late trading yesterday, even after important megacap companies in the US reported weak earnings and risk sentiment reversed sharply, suggesting that treasury yields are the primary driver of the moment. EURUSD came within spitting distance of parity again, and could head to 1.0200 on a break above if the US 10-year yield breaks below 4.00%, although traders may rein in their market exposure ahead of next Wednesday’s FOMC meeting. USDJPY is also under pressure, trading near 148.00, and may have a path to 145.00 or lower if yields continue to ease. Elsewhere, a hot CPI print from Australia overnight (more below) has AUDUSD making a bid above the important 0.6400 area. Gold (XAUUSD) and silver (XAGUSD) Gold and silver trade higher after receiving a boost from a weaker dollar and continued decline in US bond yields amid signs the US economy is showing signs of rolling over, just days before the next FOMC interest rate decision on November 2. US yields slumped across the curve after data showed home prices tumbling the most since 2009 and US consumer confidence was down by more than expected. While another bumper 75 basis points hike is expected next week, the FOMC may decide to ease the foot of the brakes in coming meetings while assessing the impact of their rate and quantitative tightening actions. As a minimum gold needs to break above $1730 before an end to the month-long downtrend can be called. Until then watch the dollar and yields for inspiration, while silver, in order to avoid creating a potential bearish head-and-shoulder formation, needs a break above $20. Crude oil (CLZ2 & LCOZ2) Crude oil remains rangebound, with Brent currently stuck in a $90 to $95 range, after a weaker dollar led pop on Tuesday was reversed after the American Petroleum Institute reported a 4.5-million-barrel expansion in US crude stocks. In today’s weekly update from the EIA, the market will be watching distillate stocks as concerns about tight supplies continue to grow ahead of the EU embargo on Russian fuel starting next February. Diesel inventories in the US are at lowest seasonal level ever heading into winter while the situation in Europe looks similar. Developments that have driven distillate crack spreads and diesel prices at the pumps higher in recent weeks relative to gasoline. Also focus this week on earnings from Big Oil. US treasuries (TLT, IEF) US treasury yields dropped further yesterday, with the 2-year benchmark yield easing below 4.50%, and the 10-year yield pushing all the way down below 4.10% and therefore nearing the important 4.00% area. A drop in the latest Consumer Confidence survey (more below) offered a tailwind, as have talks since Monday of a possible treasury “buyback” from US Treasury Secretary Yellen, said to be prompted by the need to improve liquidity in the treasury market and attractive from the Treasury’s point of view as lower yielding long treasuries issued at far lower yields can be bought back at significant discounts. What is going on? Australia September and Q3 CPI comes in hot Yet another hot inflation report out overnight, particularly in the core inflation data, this time from Down Under, as Australia’s September CPI came in at +7.3% YoY vs. +7.1% expected, and the Q3 CPI was also higher than expected at +1.8% QoQ and +7.3% YoY vs. +1.6%/7.0% expected, with the “trimmed mean” core CPI out at +1.8%/6.1%, far above the 1.5%/5.0% expected, and 4.5% YoY in Q2. Housing prices were the biggest contributors up 10.5%, followed by Transport costs up 9.2% and Food price growth up 9%. US October Consumer Confidence weaker than expected The survey was out at 102.5 versus 105.9 expected and 107.8 in September, with a bad miss in the Present Situation component, which fell to 138.9 from 150.2 in September, a large drop and the lowest reading since early 2021. Wheat futures (ZWZ2) slipped to a five-week low on Tuesday ... with Black Sea grain exports pressuring prices while rain in recently dry growing areas in the US and Argentine adding further downward pressure to prices, especially in the US where recently planted winter wheat fields in the US Midwest look set to receive a decent dose of moisture and potentially further speed of the planting currently 79% completed. Ukraine’s export of agricultural products could rise by more than 8% in October from last month, the Ukrainian Agrarian Council said on Tuesday while ADM’s chief grain trader on an earnings call said that he sees “nothing significant that could derail” an extension of the Black Sea grain export corridor next month. Google shares down 7% on big Q3 miss It turned out that Snap’s worse than expected results last week were a good leading indicator on Google’s performance in Q3. Revenue came in at $69.1bn vs $70.8bn and operating income was $17.1bn vs est. $19.7bn as the operating margin is coming under significant pressure q/q and y/y. Revenue growth in Q3 at 6% y/y is the slowest pace since Q2 2020. Microsoft shares down 7% on worsening outlook FY23 Q1 (ending 30 September) revenue was $↨50.1bn vs est. $49.6bn and EPS of $2.35 vs est. $2.29, but it was the forecast for the current quarter that negatively surprised the market. Microsoft expects the slowdown in PC sales and rising energy costs to hurt operating margin, and the company has more or less introduced a hiring freeze to keep costs under control. What are we watching next? Bank of Canada set to hike 75 basis points We have an interesting combination of hot CPI readings in a number of places, including Canada and Australia, seeing the market adjusting expectations higher for the Bank of Canada and Reserve Bank of Australia, all while US yields have eased off on the anticipation that the FOMC will deliver a message. After the recent hot September Canada CPI reading, the market boosted expectations for today’s Bank of Canada hike to 75 basis points for today's, which will take the policy rate to 4.00% UK PM Sunak may delay budget statement scheduled for early next week Prime Minister Rishi Sunak may delay the report to give the new government a chance to find its feet first, with less urgency as sterling has not only stabilized, but rallied and UK Gilt yields have plunged, with the 10-year yield some 100 basis points lower, closing at 3.64% yesterday. Sunak reappointed Jeremy Hunt as Chancellor and announced a number of other appointments. Earnings to watch Today’s US earnings focus is Meta and given the weak results from both Snap and Alphabet due to worsening pricing on online ads we expect downward pressure on Meta’s business. Key for investors will be Meta admitting that its Metaverse bet is too expensive and will be reined in in the short-term as the company is facing tough headwinds on cash flow generation. Today: Dassault Systemes, Mercedes-Benz, BASF, Deutsche Bank, PingAn Insurance, CGN Power, UniCredit, Canon, Barclays, Standard Chartered, Heineken, Aker BP, Iberdrola, Banco Santander, SEB, Meta Platforms, Thermo Fisher Scientific, Bristol-Myers Squibb, ADP, Boeing, ServiceNow, Ford Motor, Twitter Thursday: ANZ, Anheuser-Busch InBev, Argenx, Shopify, Teck Resources, Neste, Kone, TotalEnergies, EDF, STMicroelectronics, PetroChina, China Life Insurance, CNOOC, Oriental Land, Shin-Etsu Chemical, Takeda Pharmaceuticals, Hoya, FANUC, Shell, Lloyds Banking Group, Universal Music Group, Repsol, Ferrovial, Hexagon, Evolution, Credit Suisse, Apple, Amazon, Mastercard, Merck & Co, McDonald’s, Linde, Intel, Honeywell, Caterpillar, Gilead Sciences, Pioneer Natural Resources Friday: Macquarie Group, OMV, ICBC, China Merchants Bank, LONGi Green Energy Technology, Midea Group, Imperial Oil, Danske Bank, Sanofi, Airbus, Volkswagen, China Construction Bank, Agricultural Bank of China, Bank of China, BYD, China Shenhua Energy, Eni, Keyence, Hitachi, Denso, Equinor, CaixaBank, Wilmar International, Swiss Re, Exxon Mobil, Chevron, AbbVie, NextEra Energy, Colgate-Palmolive, Royal Caribbean Cruises Economic calendar highlights for today (times GMT) 1230 – US Sep. Advance Goods Trade Balance 1400 – Bank of Canada Rate Decision 1400 – US Sep. New Home Sales 1430 – US DoE Weekly Crude Oil and Product Inventories 1500 – Canada Bank of Canada Governor Macklem to speak 1700 – US Treasury auctions 5-year T-notes 2045 – New Zealand RBNZ Governor Orr to speak 2130 – Brazil Selic Rate Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-26-2022-26102022
Key Economic Events and Earnings Reports to Watch in US, Eurozone, and UK Next Week

Saxo Bank Members Talks In Podcast About Reports Of The Next Key Companies, The Biden Administration And More

Saxo Bank Saxo Bank 26.10.2022 10:54
Summary:  Today we look at a whiplash-inducing session for equities traders as a strong session yesterday on falling treasury yields and a weaker US dollar was marred in the aftermarket session by very weak earnings from Microsoft and Google-parent Alphabet. We break down those earnings reports, the next key companies to report, the status of the US dollar, crude oil and gold, and importantly: the narrative around the Biden administration, with a cooperative Fed, trying to engineer strong support for the equity market into the mid-term elections the week after next. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-26-2022-26102022
RBA Governor Announces Major Changes at RBA Board as US Inflation Expected to Decline

Finalizing Twitter Purchases By Elon Musk | The US Stock Market Scores Gains

InstaForex Analysis InstaForex Analysis 26.10.2022 11:49
S&P 500 Outlook for October 26th The US stock market scores gains The main US stock indices have been bullish for the third straight day: the Dow added 1.1% and the S&P500 grew by 1.6%. The S&P 500 index is seen trading at 3,859 in the range between 3,800 and 3,900. S&P 500 futures showed a fall of up to 1% at the morning open. The US stock market The US stock market has been bullish for three straight days. It also formed a deep bottom. As the chart shows, the index has encountered strong resistance in the 3,860-3,930 range with the 50-day and 100-day moving averages. In order to extend growth, the index should leave the range and close above it. On Tuesday, the market grew, following the release of disappointing consumer sentiment data, which fell to 102. It fuelled speculation that the US Federal Reserve might reduce the pace of rate hikes after raising the rate by 0.75% in November. The US Q3 GDP report is due on Thursday (forecast: +2.1%). The ECB is expected to lift interest rates by 0.75% at a meeting on Thursday. Yesterday, the yield on 10-year Treasury bonds fell to 4.11%. Reports Strong reports came: Coca-Cola (KO 58.95, +1.38, +2.4%), General Motors (GM 37.01, +1.29, +3.6%), and Sherwin-Williams (SHW 220.20, +7.67, +3.6%). Ten of the 11 S&P 500 sectors rose. Real estate led the way with a 3.9% gain. Automatic Data (ADP), Boeing (BA), Bristol-Myers (BMY), General Dynamics (GD), Harley-Davidson (HOG), Hilton (HLT), Kraft Heinz (KHC), Norfolk Southern ( NSC), Roper (ROP), Seagate Tech (STX), and Waste Mgmt (WM) will deliver earnings report on Wednesday. VISA's profit surged by 21% to $15 billion. Microsoft's shares were down by 7%. The firm's profit dropped by 14%. Alphabet's shares lost 6%, following the earnings report that logged a 26% decline in profit. Elon Musk is planning to close the Twitter acquisition deal on Friday. The deal is now at the stage of signing documents. New home sales are due today in the United States. The reading is estimated to plunge to 575,000 from 685,000 year-over-year. Energy: Crude is firm at previous levels. Brent is trading at $92.7 per barrel. Macro data The United States is to sell another 15 million barrels of oil from its strategic reserves in an attempt to prevent a rise in prices. Biden says the US is ready to sell even more. Saudi Arabia slammed the US for using its strategic reserves to manipulate crude prices. However, OPEC's decision to artificially limit supply in the oil market can also hardly be called a market action. The US House of Representatives election will be held in early November. Recent polls show that both Democrats and Republicans have a 50% chance of a House majority. Inflation in Australia accelerated to a record 7.3%. The Bank of Canada will announce its interest rate decision today. The US dollar index dropped to 110.70. Final thoughts: the US stock market needs to pull back deeper. Buy trades could be considered after a pullback.     Relevance up to 08:00 2022-10-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/325341
It's not clear we find out the results of mid-term elections immediately. Binance to buy FTX

US crude oil exports up, New Zealand dollar supported by risk appetite, Canadian dollar "softened"

Jing Ren Jing Ren 27.10.2022 08:41
USDCAD tests key support The Canadian dollar softened after the BoC surprised the market with a smaller-than-expected rate hike. On the daily chart, the rally came to a halt in the supply zone from May 2020 under 1.4000. The greenback is testing the recent low at 1.3500, a key level to keep short-term buyers interested. A lack of bids suggests that traders could be wary of chasing after an already high exchange rate. A breakout would force the bulls to bail out and trigger a deeper correction with 1.3360 as the next target. 1.3640 is the closest resistance. NZDUSD bounces higher The New Zealand dollar climbs as soft US data raises risk appetite. The daily resistance at 0.5810 has been capping the recent price action. But a ‘buy-the-dips’ behaviour off March 2020’s low (0.5500) has offered the kiwi effective support. A series of higher lows indicates growing buying pressure. A bullish breakout would prompt sellers to cover their bets, paving the way for an extended rally should momentum pick up. 0.5880 would be the next stop and 0.5730 at the base of the breakout the first support in case of a pullback. USOIL finds support WTI crude rallied after data showed a rise in US crude exports. The price has stabilised near a 3-week low (82.00). A bullish MA cross on the daily chart suggests a potential acceleration to the upside. Cautious traders may wait for a bullish breakout as a form of confirmation. After a break above 87.00, sentiment would only start to shift in the bulls’ favour if they succeed in pushing past the support-turned-resistance at 89.80. 85.00 is a fresh support and 82.00 an important floor to keep the current bounce valid.
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Weaker US dollar helped commodities. Crude oil exports data may have supported price of black gold

ING Economics ING Economics 27.10.2022 11:03
USD weakness provided a boost to the commodities complex yesterday, with both energy and metals pushing higher. Record US crude oil exports over the last week appear to have provided further support to oil prices Energy- record US crude oil exports The latest data from the EIA shows that US commercial crude oil inventories increased by 2.59MMbbls over the last week, though when factoring in SPR releases, total US crude oil inventories declined by 829Mbbls. The build in commercial inventories comes despite the US exporting a record 5.13MMbbls/d of crude oil over the last week, an increase of 991Mbbls/d WoW. Refined product exports also grew, helping total petroleum exports (crude and refined products) to grow by 1.96MMbbls/d WoW to a record 11.43MMbbls/d. As for refined product inventories, gasoline stocks fell by 1.48MMbbls, while distillate stocks increased by a marginal 170Mbbls. However, the US distillate market is still in a tight situation as we head into winter, particularly on the US East Coast. According to a Bloomberg report, the US is rethinking the severity of the proposed G-7 price cap on Russian oil. Instead of a strict price cap, the cap may be more loosely imposed and also at higher levels than originally pushed for. In addition, the cap will likely be followed only by G-7 members, Australia and possibly South Korea. The effectiveness of a potential price cap has been called into question since it was first proposed. Firstly, it will be difficult to get key buyers, China and India to follow the cap. And there is always a risk that Russia reduces supply as a result. Obviously, that would have the opposite effect of what the US is trying to achieve. Metals – more calls for sanctions on Russian metal Norsk Hydro, the largest aluminium smelter in Europe, is calling for sanctions to be imposed on Russian metals. Russian aluminium is currently not sanctioned in the US or Europe, although some European buyers are shunning Russian material in next year’s contracts.  Norsk Hydro won’t agree to any new Russian metal, while Novelis Inc. has excluded Russian supply from a key tender for new contracts to supply its European factories next year. Last month, Alcoa Corp., the largest US aluminium producer, wrote in a letter to the London Metal Exchange, that Russian metal shouldn’t be traded on the bourse. European aluminium smelters continue to operate at lower rates or remain idle amid surging energy costs. It is estimated that over 1mt of aluminium capacity has been impacted due to surging energy costs in Europe. Refined copper output in China rose 5.8% YoY to 946kt in September, according to the latest data from the National Bureau of Statistics (NBS). Zinc output rose 3.7% YoY to 583kt while lead production increased 10.9% YoY to 672kt last month. Peru’s Espinar community will start protests against Glencore’s Antapaccay copper mine on 7 November, as the mine is not fulfilling its commitments to the community, according to media reports. The community leaders warned that they would block the southern mining corridor affecting Antapaccay, Hudbay and MMG’s Las Bambas copper mine. Agriculture- temporary halt to Black Sea corridor exports CBOT wheat futures edged higher yesterday, receiving a boost from the recent halt in exports from Ukraine’s Black Sea corridor along with concerns over the US winter wheat crop. According to reports, ship traffic was temporarily halted in the Ukraine corridor as a suspicious object had been identified. This has once again raised concerns over the growing backlog of vessels which were scheduled to export grains through the corridor before the deal expires on 19 November- although obviously, the idea is to extend the export deal. The International Sugar Organization (ISO) expects the global sugar market balance to remain in a supply surplus of 5.6mt in 2022/23. Total sugar output is expected to grow by 7.8mt (highest in five years) to reach 181.9mt in 2022/23, while consumption is forecast to remain almost flat at 176.3mt. The group expects sugar production in India, Thailand and Central America to remain healthy in 2022/23. However, sugar exports from Brazil could be affected by rains that have already delayed the harvesting process in Center-South. Read this article on THINK TagsSanctions Russian oil price cap Oil EIA Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

ECB to hike by 75bp | Softer US Dollar (USD) Helps Gold And Crude Oil

Swissquote Bank Swissquote Bank 27.10.2022 13:51
Yesterday wasn’t not a good day for the US Big Tech. Google dived almost 10% after reporting disappointing results, while Microsoft sank almost 8%. Nasdaq bounced 2% lower after having tested the major 38.2% Fibonacci retracement, a touch below the 11700. Meta And don’t expect the things to look better today. Meta dived another 20% in the afterhours trading, after announcing disappointed results. Softer-than-expected  On the macro front, however, the Bank of Canada (BoC) surprised with a softer-than-expected rate hike, and US home sales fell almost 11% in September.   EUR/USD The US dollar index dived below its 50-DMA yesterday. The EURUSD rallied above parity, as Cable advanced past 1.16. Focun On Focus shifts to US GDP dat, the European Central Bank (ECB) decision, Apple & Amazon earnings today. Watch the full episode to find out more! 0:00 Intro 0:33 US Big Tech selloff intensifies. Meta down 20% post-market 1:55 What to expect from Apple & Amazon?7 4:05 Policy pivot? 5:20 US GDP to rebound despite sluggish economy 6:52 US dollar softer, EURUSD rallies above parity, Cable past 1.16 7:52 ECB to hike by 75bp, discuss QT 9:19 Gold, oil up on soft dollar Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Apple #Amazon #Meta #Google #Microsoft #earnings #USD #GDP #ECB #rate #decision #EUR #XAU #crudeoil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH      
ECB's Hawkish Hike: Boosting EUR/USD and Shaping Global Monetary Policy

The Main US Indices Fell | Asia-Pacific Stocks Are Mostly In The Red | Fortescue (FMG) Plans To Increase Iron Ore Production

Saxo Bank Saxo Bank 28.10.2022 08:38
Summary:  The ECB rose its key rate to 1.5% from 0.75% and signaled it is making progress in the fight against inflation. The US economy grew 2.6% on an annualized basis last quarter after two declines in a row, beating consensus as personal consumption rose more than forecast. The Nasdaq 100 & S&P 500 ended 1.6% and 0.6% lower, with Amazon falling 13% after hours, while the Dow Jones lifts, boosted by McDonald’s and Boeing. Crude oil climbs above $89, while iron ore falls to its lowest level since 2020. Asian equity futures mostly trade lower. Australia’s ASX200 opens 0.6% lower today, but tracks 2% higher this week, supported by commodity stocks and Macquarie beating forecasts. What’s happening in markets?     Need to know  The ECB rose its key rate to 1.5% from 0.75% and signaled it is making progress in the fight against inflation. Officials dropped a reference to hikes continuing for "several meetings," while saying they expect further action. Christine Lagarde emphasized that more increases were on the way: "We still have ground to cover." Money markets pared tightening wagers by as much as 20 bps, and European stocks erased losses. The US economy grew 2.6% on an annualized basis last quarter after two declines in a row, beating consensus as personal consumption rose more than forecast. The GDP report showed foreboding signs, as growth was almost entirely driven by trade, and residential housing investment plunged. As such, treasuries yields extended their fall, with 10-year yield pushing below 4%. The dollar was mostly higher, though the yen was barely up ahead of the BOJ meeting. Oil advanced and gold retreated. Asia-Pacific's equity futures are mostly in the red. The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) ended 1.6% and 0.6% lower, while the Dow Jones lifts, boosted by McDonald’s The US major indices fell on Thursday from continued weaker than expected earnings carnage with Facebook (META) falling 25%. In mega caps, Amazon (AMZN) was leading the losses, falling 4.1% on projecting slower growth and cutting its spending in the face of economic uncertainty, falling 13% after hours. Apple (AAPL) shares fell 3% on reporting weaker than expected iPhone and services sales in its latest quarter, however it gave an otherwise somewhat upbeat report, noting record sales spurred its active base of devices to hit an all-time high. Post market, Apple shares trade 0.4% higher. Meanwhile, the Dow Jones 30 blue-chip index ended 0.6% up on Thursday, supported by recession-stalwart McDonald’s (MCD) shares rising 3.3% on reporting sales that well surpassed analysts’ estimates, despite inflationary pressures. McDonald’s results were boosted by McRib sales, with the CEO saying they are “the GOAT of sandwiches on our menu,” using the acronym for greatest of all time. The fast-food chain will offer McRib nationwide in the US from the end of this month. Oct. 31. Boeing (BA) shares moved up 4.5% with the company releasing a bullish 20-year forecast for China’s commercial jet market, saying China will need to double its fleet in two decades and that China will be a major driver of Boeing sales. Boeing expects China to need 8,485 new passenger and freighter planes valued at $1.5 trillion through 2041.   Crude oil (CLX2 & LCOZ2) climbs above $89, while iron ore (SOCA) falls to its lowest level since 2020 Oil is trading higher for the third day, on tightness and heavy worry about the price of fuel products over the coming months as the northern hemisphere heads to winter. WTI climbed above $89 with US data showing an economic rebound last quarter. US natural gas futures steadied after the EIA reported stockpiles rose last week. European gas prices advanced. It’s also really important to note, tight diesel markets are taking the main stage at the moment, which you can read more on from our head of commodity strategy, just click here. As for other commodities, copper fell 0.7%, while iron ore (SCOA, SCOX2) fell 0.2% to $81.55, which is its lowest level since May 2020 on concerns that the iron ore market could be oversupplied. Yesterday Fortescue Metals (FMG) affirmed extra production will come to the market before March, (instead of June), with investors worried there is not enough demand from China. Most other commodities were lower, including Wheat and Corn while Cocoa rose 1.6%  Australia’s ASX200 (ASXSP200.1) falls 0.6% on Friday, but tracks 2% higher this week, supported by commodity stocks. Macquarie beats forecasts  After the Aussie share market rose for four straight sessions putting on 2.5% Monday to Thursday supported by commodity stocks, including lithium, gold stocks and agricultural stocks, today’s focus is on tech stock carnage, following the Wall Street sell off. Brainchip (BRN) is down 15%. While iron ore shares are lower, with Fortescue (FMG) trading 7% lower after noting that its increasing its spending, while its margins are tightening. Plus Fortescue is ramping up production, at a time when iron ore demand is limited. On the upside, Macquarie Group (MGQ) shares trade up 3.5% after reporting profit that beat forecasts with market volatility buoying its commodities and global markets business. Macquarie’s net income for the six months to Sept. 30 rose to A$2.31 billion ($1.49 billion), up from A$2.04 billion in the prior year. That exceeded the A$2.15 billion average estimate of four analysts surveyed by Bloomberg. Elsewhere, oil stocks are higher with the WTI price cleared $89, with Viva Energy (VEA) up the most in energy, up 1.6%. What to consider Markets, businesses, commodities with high exposure to China see heavy selling this week. Will it continue?   Assets with exposure to China are being heavily penalized as it seems investors are realigning their portfolios somewhat with the priorities of President Xi his policy on stronger state control over the economy and markets, which look set to continue unchallenged for years. The confirmation was made on Sunday and across the week, Hong Kong’s Heng Seng fell 7.5%, and the iron ore (SCOA, SCOX2) price fell to 15% $79.60 its lowest level since 2020 on concerns that the biggest iron ore consumer, China will further slow demand, all while iron ore seems oversupplied. The biggest pure play iron ore company in the southern hemisphere, Fortescue (FMG) shares fell almost 12% this week, as a result. Plus Fortescue company affirmed it is increasing its spending, while its margins are tightening. Fortescue plans to ramp up iron ore production at its expanded facility in March, instead of June, which will likely further push the iron ore market into greater oversupply. Australian exports trade prices stumble, imports prices rise   Australian exports prices fell last quarter, but less than expected, falling 3.6% vs the 7% fall consensus forecast. That said, export prices are still up 25.9% YoY. The quarterly drop in prices was driven by the fall in iron ore demand from China, and the drop in coal prices, as global steel demand weakens. That said, Australian gas and crude export prices rose amid surging global demand particularly from Europe. And lithium prices rose markedly, boosted by global electric vehicle sales. Inversely, Australian import prices rose more than expected, up 3%, vs the 0.9% consensus forecast. What contributed to this was price of imports of sodium hydroxide (used in bauxite refining) rose, while the price of importing plastics rose, coinciding with higher energy prices. All in all, import prices to Australia are up 19.3% YoY.    For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-28-oct-28102022
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

The Risk Is Aggravated By The Weakness Of The Japanese Yen (JPY) |Gold And Oil Are Doing Well

Saxo Bank Saxo Bank 28.10.2022 10:02
Summary:  A rocky session for equity markets once again yesterday, which tried to find cheer on falling bond yields, only for a thorough thrashing after the close yesterday on Amazon issuing its weakest ever holiday sales outlook, which saw its shares knocked some 13% in the aftermarket. Elsewhere, Apple shares managed to stabilize after its earnings report in, as revenue and earnings topped estimates. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The recent string of US earnings have not done much to keep the recent momentum in US equities alive. Neutral earnings from Apple last night was topped with awful outlook from Amazon, the second largest stock in the US equity market, that saw its shares decline 13% in extended trading. S&P 500 futures are retreating this morning trading around the 3,790 level despite a sizeable readjustment lower in the US 10-year yield to 3.93%. Euro STOXX 50 (EU50.I) European equities saw more diverging price action yesterday but closed above the 3,600 level again, but this morning STOXX 50 futures are coming down 1% trading around the 3,570 level with 100-day moving average at 3,528 being the next support level to watch. There are no economic releases in Europe of importance today so it will be interest rate direction and sentiment on earnings that will drive price action into the weekend. FX: USD pulled in two different directions as falling yields negative, weak sentiment positive The further drop in US treasury yields fail to extend the US dollar sell-off yesterday, as a far less hawkish than expected ECB took EURUSD back below parity and the Bank of Japan sent no new signals on its terminally stuck policy mix of ongoing QE and yield-curve-control.  Weak risk sentiment seems to provide offsetting support from the greenback, but the dollar will find stronger support if US data remains resilient and the Fed is faced to stay on message with further tightening, especially now that the market has significantly downshifted expectations for peak Fed Funds rate beyond the 75 basis point move expected at next Wednesday’s FOMC meeting, with less than 100 basis points of further tightening now priced and a peak rate near 4.78% by next March. Gold (XAUUSD) Gold remains on track for a second week of gains although some caution has emerged ahead of next week's FOMC meeting. Yesterday, the positive sentiment received a knock as the dollar regained some ground, especially against the euro after the ECB stayed far less hawkish than expected. Countering this potential gold negative development, US bond yields continued lower with the US 10-year treasury yield benchmark falling below the important 4% level to record a +25-basis point drop on the week. While the FOMC is expected to deliver another bumper 75 basis points hike they may tilt towards slowing the pace at future meetings while assessing the impact of their rate and quantitative tightening actions. As a minimum gold needs to break above $1730 before an end to the month-long downtrend can be called. Crude oil (CLZ2 & LCOZ2) Crude oil remains on track for a second week of gains but for now without challenging resistance indicating a market still struggling for direction with no overriding theme being strong enough to set the agenda. Strength this week has been driven by a developing tightness in the fuel product market, US exports of crude and fuels setting a weekly record and the weaker dollar, as well as strong buying from China as refineries there plan to boost fuel exports through the end of the year. Diesel markets in Europe and the US continues to signal tightness ahead of winter with elevated refinery margins and prompt spreads signalling tight market conditions. Focus next week on the Nov 2 FOMC meeting and major OPEC producers beginning to cut their production. Additional technical upside in WTI above $89.25 while Brent’s next level of resistance is the October high at $98.75. US treasuries (TLT, IEF) The US 10-year treasury yield benchmark fell through the important 4.00% level yesterday, with the yield trading as low as 3.90% before treasuries found resistance. The 3.85% area is arguably a pivotal level if treasuries continue to rally. The entire yield curve dropped yesterday, in part on a less hawkish ECB continuing the trend recently of central banks delivering less than expected on guidance, as German 10-year Bunds dropped below 2.00% for the first time in weeks on the ECB meeting yesterday (more below). It looks like we’ll be heading into next week’s FOMC meeting with a fairly hard market lean for a significant downshift in the Fed’s hawkish message. What is going on? ECB the latest central bank to surprise dovish The ECB hiked its key rate 75 basis points to 1.5% from 0.75%. Officials dropped a reference to hikes continuing for "several meetings," in the statement, while saying they expect further action. Christine Lagarde said in the press conference that more rate hikes were on the way: "We still have ground to cover." The bank will continue to reinvest all maturing assets in its asset purchase program (QE) and QT won’t be discussed until the December meeting. The market read the meeting as a strong dovish surprise, as another 20 basis points of tightening were removed from forward expectations for 2023 (down some 50 basis points now from peak expectations just over a week ago.) Apple is a fortress FY22 Q4 revenue came out at $90.2bn vs est. 88.6bn up 8% y/y keeping up with inflation and EPS at $1.29 vs est. $1.26 driven by a new all-time high of active devices. The number of paid subscriptions, which Apple has recently announced will see price hikes, have doubled in three years to 900mn. Shares were unchanged in extended trading. Amazon shares plunged 13% on Q3 results Revenue in Q3 hit $127.1bn vs est. $127.6bn up 15% y/y but operating income hit $2.5bn vs est. $3.1bn. The weaker than estimated operating income was driven by a negative revenue surprise in their cloud business AWS with revenue of $20.5bn vs est. $21bn. The free cash flow in Q3 was still negative at $5bn with the combined negative free cash flow over the past year at $26bn. The change in cash generation for Amazon indicates that the pandemic turned out to be bad for the business as it spent too much on expanding capacity that could not be maintained. The outlook for Q4 was what terrified investors with the retailer guidance operating income in the range $0-4bn vs est. $4.7bn and revenue of $140-148bn vs est. $155.5bn. Japan announces massive fiscal stimulus Japan’s Prime Minister Fumio Kushida announced a ¥71.6 trillion (nearly $500 billion) stimulus package overnight, in a purported bid to “ease inflation” and shore up his government’s popularity. The new spending in the package is set at ¥39 trillion and will focus on incentivizing companies to raise wages, national security/defense and subsidies to reduce the impact of energy costs, especially electricity bills. With the Bank of Japan not allowing government bond yields to adjust, this risks adding to the yen’s weakness as long as other major central banks are not in easing mode. Caterpillar, McDonalds, and Boeing positive stories in the negative backdrop A few positive stories to highlight amidst the massive drop in marquee megacap names include Caterpillar, which soared a massive 7.7% on impressive results. Elsewhere McDonald’s (MCD) shares rose 3.3% on reporting sales that handily beat analysts’ estimates, despite inflationary pressures. McDonald’s results were boosted by McRib sales, and the fast-food chain will offer McRib nationwide in the US from the end of this month. Meanwhile, Boeing (BA) shares jumped a day after an ugly drop on its earnings report. Yesterday, shares rose 4.5% with the company releasing a bullish 20-year forecast for China’s commercial jet market, saying China will need to double its fleet in two decades and that China will be a major driver of Boeing sales. Boeing expects China to need 8,485 new passenger and freighter planes valued at $1.5 trillion through 2041. A tough week for coffee, cotton and sugar The Bloomberg Commodity Softs index trades down 5% on the week led by a 6% drop in Arabica coffee (KCH3) $1.79/lb, a 14-month low as money managers continue to exit long-held bullish bets, now turning increasingly sour amid concerns a global recession will hurt demand at a time where the outlook for the 2023/24 crop in Brazil is showing signs of improving. However, a combination of exchange monitored stocks lingering at a 23-year low and oversold condition may soon drive a technical bounce ahead of support at $1.73/lb. Sugar (SBH3) meanwhile has been hurt by a weaker Brazilian Real boosting incentives to export. Cotton (CTZ2), down 52% from its May peak has plunged to near a two-year low on weak demand for supplies as consumers around the world cut back on spending. Weekly export sales from top shipper, the US, plunged from a year earlier with overall sales for the current season being well behind last year and the long-term average. What are we watching next? Market leaning very hard now for a dovish downshift at next Wednesday’s FOMC After the Bank of Canada surprised with a smaller than expected hike this week and the ECB surprised with more dovish forward guidance, the market is now. But will the US data cooperate and is the maximum conceivable downshift from the Fed next week already in the price – given that the Fed itself has said that it will continue to hike even as the economy – including the labor market - weakens? After all, the market has removed nearly 25 basis points of tightening through the March FOMC of next year from the peak of just above 5.0% a bit more than a week ago to just under 4.8% now, and is more aggressively pricing the Fed to begin cutting rates by late next year (December ‘23 FOMC yield down almost 50 bps from peak).  Earnings to watch Today’s US earnings focus is on the two oil and gas majors Exxon Mobil and Chevron expected to report strong earnings in Q3. Exxon Mobil is expected to grow revenue 44% y/y with the operating margin expanding further. NextEra Energy is also worth watching given the recently passed US bill on renewable energy because it may lift the outlook for the industry. Today: Macquarie Group, OMV, ICBC, China Merchants Bank, LONGi Green Energy Technology, Midea Group, Imperial Oil, Danske Bank, Sanofi, Airbus, Volkswagen, China Construction Bank, Agricultural Bank of China, Bank of China, BYD, China Shenhua Energy, Eni, Keyence, Hitachi, Denso, Equinor, CaixaBank, Wilmar International, Swiss Re, Exxon Mobil, Chevron, AbbVie, NextEra Energy, Colgate-Palmolive, Royal Caribbean Cruises Earnings releases next week: Monday: Daiichi Sankyo, Stryker Tuesday: Toyota Motor, Sony Group, Mondelez, AMD, Airbnb, Eli Lilly, Pfizer, BP Wednesday: KDDI, Novo Nordisk, GSK, Booking, Qualcomm, CVS Health, Estee Lauder, Humana Thursday: Cigna, Amgen, PayPal, Starbucks, EOG Resources, ConocoPhillips, Regeneron Pharmaceuticals, Zoetis, Canadian Natural Resources, DBS Group Friday: Duke Energy, Enbridge Economic calendar highlights for today (times GMT) 0800 – Germany Q3 GDP0900 – Eurozone Oct. Confidence Surveys1200 – Germany Oct. Flash CPI1230 – Canada Aug. GDP1230 – US Sep. Personal Income/Spending1230 – US Sep. PCE Inflation1400 – US Oct. Final University of Michigan Sentiment   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-28-2022-28102022
Italian headline inflation decelerates in January, courtesy of energy

Energy Prices Fueled The Rise In Inflation In Italy

ING Economics ING Economics 28.10.2022 14:49
The energy component was the driver of the surprisingly strong leap in headline inflation. Possible government interventions could increase volatility in inflation numbers over the rest of the year In this article Highest inflation reading since June 1983 An energy driven inflation acceleration More inflationary volatility ahead and the government may intervene Highest inflation reading since June 1983 According to preliminary Istat data, Italy's headline inflation figure shot up to 11.9% (from 8.9% in September), widely beating expectations, and marking the highest level since June 1983. The harmonised measure reached 12.8% (from 9.4% in September). An energy driven inflation acceleration The upwards surprise was mainly due to the energy component (+73% in October from +44% in September), with both the regulated and non-regulated components shooting up. The transmission to electricity bills of past gas increases went well beyond expectations. Beyond energy, the other inflation driver was food (+13.1% from 11.4% in September), which confirmed its recent trend. Interestingly, we note a widening gap between goods inflation (+17.2% from 12.5% in September) and services inflation (+3.7% from 3.9% in September), and that looks to be some evidence of the re-opening/tourism effect finally ending. The energy bias is confirmed by the contained increase in core inflation to 5.3% (from 5% in September). Core inflation remains a reason for concern, but its deceleration is tentatively encouraging and will have to be assessed over the coming months. On the one hand, it is possible that demand concerns will limit the scope for future accelerations; on the other, there remains ample scope for pass-through in the pipeline. This is confirmed by September producer price data, also released earlier today, which also points to inflation increases in the non-energy component.   In the October business confidence survey, businesses (with the exception of manufacturers) revealed non-declining expectations of future prices, again suggesting that the pass-through might not be over. All this will very much determine the degree of stickiness of inflation as the energy peak is passed. More inflationary volatility ahead and the government may intervene Looking ahead, conditions don't seem to be there yet to call the inflation peak. What we will likely see is more volatility in headline numbers over the next few months. Recent declines in gas prices might already be partially reflected in the November inflation release, possibly bringing about a softer inflation print. Furthermore, after such a shocking inflation release, the Italian government will likely feel compelled to speed up the launch of a new package of dedicated compensating measures. We tentatively expect inflation to average 8.1% in 2022, and upgrade our forecast for 2023 to 6.3% on the back of a higher statistical carryover.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

The Low Risk Of Seeing Lower Crude Oil Prices | The Commodity Market Remains Tight

Saxo Bank Saxo Bank 30.10.2022 11:59
Summary:  Commodities trading was mixed during this past week, with strength across the energy sector led by fuels being offset by weakness in agriculture - especially the soft sector which dropped to a one-year low led by continued weakness in coffee and cotton. Overall the dollar maintains a strong across market influence on the direction of several key commodities, not least gold which received support from increased speculation that the FOMC may pause soon to assess the economic impact of the current rate hike cycle. Commodities trading was mixed during this past week, with strength across the energy sector being offset by weakness in agriculture – especially the soft sector which dropped to a one-year low led by continued weakness in coffee and cotton. The industrial metal index showed a small gain, with focus on developments in China following the end of the 20th National Congress of the Chinese Communist Party, and the dollar – which traded softer on the week. Meanwhile, precious metals found some support following a change in sentiment across bonds and the dollar on speculation that we may approach peak hawkishness from the US Federal Reserve. The latest recovery in gold followed increased speculation that the Fed is preparing to downshift in pace of rate hikes by early next year. The idea being that the FOMC’s willingness to offer time to assess the economic impact of the rapid pace of rate hikes and quantitative tightening already seen. However, some of the initial gains faded towards the end of the week after the dollar showed renewed strength especially against the euro after the ECB surprised to the dovish side, as well as the Japanese yen after the Bank of Japan maintained its yield cap and the government announced massive fiscal stimulus. With the Bank of Japan not allowing government bond yields to adjust, this risks adding to the yen’s weakness as long as other major central banks are not in easing mode. Crude oil supported by tight fuel supply outlook Crude oil remains on track for a second week of gains but for now without challenging resistance indicating a market still struggling for direction with no overriding theme being strong enough to set the agenda. Strength this week has been driven by a continued developing tightness in the fuel product market, US exports of crude and fuels setting a weekly record, the weaker dollar as well as strong buying from China as refineries there plan to boost fuel exports through the end of the year While crude oil has been mostly rangebound since July, the fuel product market has continued to tighten as supplies in Europe and the US have become increasingly scarce, thereby driving up refinery margins for gasoline and distillate products such as diesel, heating oil and jet fuel. The focus in terms of tightness remains the northern hemisphere product market where low stocks of diesel and heating oil continues to raise concerns. The market has been uprooted by the war in Ukraine and sanctions against Russia, a major supplier of refined products to Europe. In addition, the high cost for gas has supported increased switching activity from gas to other fuels, especially diesel and heating oil.This tight market situation was recently made worse by the OPEC+ decision to cut production from next month. While the continued release of US (light sweet) crude from its strategic reserves will support production of gasoline, the OPEC+ production cuts will primarily be provided by Saudi Arabia, Kuwait and the UAE – all producers of the medium/heavy crude which yields the highest amount of distillate. As long as the product market remains this tight, the risk of seeing lower crude oil prices -despite the current worry about recession - seems to be low so we maintain our forecast for a price range in Brent for this quarter between $85 and $100, with the tightening product market increasingly skewing the risk to the upside.   A tough period for coffee, cotton and sugar. The Bloomberg Commodity Softs index traded down 5% on the week, led by a 6% drop in Arabica coffee to 175 cents per pound. This is a 14-month low for the commodity as money managers continue to exit long-held bullish bets, which are now turning increasingly sour amid concerns that a global economic slowdown will hurt demand at a time where the outlook for the 2023/24 crop in Brazil is showing signs of improving. However, the combination of exchange monitored stocks still lingering near a 23-year low and the technical picture showing a very oversold market, could mean the market establishes some support soon – potentially around 173 cents per pound. This level would represent a 50% correction of the 2019 to 2022 rally from 86 to 260 cents. Sugar has been hurt by a weaker Brazilian Real, which boosted incentives to export and thereby increasing supply while forcing recent established speculative longs to exit. Cotton, down 53% from its May peak has plunged to near a two-year low on weak demand for supplies as consumers around the world cut back on spending. Weekly export sales from top shipper, the US, plunged from a year earlier with overall sales for the current season being well behind last year and the long-term average. The main culprit for the slowing sales is cancellations of orders from key buyer China, as demand for textiles suffer amid the current economic slowdown. A development that is being reflected in the weakness in the MSCI World Textiles Apparel & Luxury goods index, down 35% year-to-date compared with a 22% drop in the broad MSCI World index. Gold nervously awaits the November 2 FOMC meeting. At Saxo, we maintain our bullish medium but cautious short-term outlook for gold. In our latest update, we highlighted how the latest bounce has been supported by speculation that the FOMC may pause soon to assess the economic impact of the current rate hike cycle, which is currently pricing in a peak Fed funds rate just below 5% from the current 3.25%. In addition, we maintain the view that long term inflation will end up somewhere in the 4 to 5% area, well above the current market expectations for a sub 3% rate. If proven correct, it would trigger a major adjustment in breakeven and inflation swap prices – developments that may support gold through lower real yields. Speculators and investors are likely to remain mostly side-lined until we get a clearer view on the thinking within the Federal Reserve, hence the importance of next week's FOMC meeting. According to the weekly Commitment of Traders reports, speculators in the futures market have been whipped around for the past few weeks, thereby reducing the willingness to aggressively enter the market until a clearer picture appears. The same goes for investors in bullion-backed ETFs, who have been net sellers on an almost continued basis since June. Overall total holdings have slumped to 2965 tons to a 30-month low, down 11% from the April peak.After once again being rejected at the key $1615 support area, gold has a minimum need to break above $1735, thereby reversing a succession of lower highs, before an end to the month-long downtrend can be called. However, the path to that level remains littered with several smaller resistance levels, especially $1687 and $1700. For now and until such time momentum can be reestablished, watch yields, geopolitical developments and the dollar for directional inspiration. The latter traded higher following the ECB and BOJ meetings, thereby reducing support for commodities – especially gold where a high negative correlation has been established in recent weeks. Source: https://www.home.saxo/content/articles/commodities/softs-limping-diesel-boosts-crude-oil-28102022
Australia Is Expected To Produce A Bumper Year Of Crops

Grain Prices May Rise As A Result Of Russia's Actions | Stock Markets Increased Profit

Saxo Bank Saxo Bank 31.10.2022 08:58
Summary:  Equities closed higher on Friday on the Wall Street, sending a bid tone to Asian stocks to start the new week. However a host of risks ahead including the Fed meeting which will see another jumbo rate hike but focus is also whether the members send out signals of a downshift in rate hike path. WSJ Timiraos has now hinted at higher for longer interest rates in his latest article, and this has helped a bid tone in US dollar to return in early Asian trading hours. Geopolitics also took an ugly turn with Russia backing off from grain export deal, threatening food crisis again. What is happening in markets? Need to know Asian stocks look to build on last week's US gains, though investors may be cautious ahead of the FOMC meeting. The S&P 500 jumped 2.5% on Friday in another turbulent session, buoyed by tech shares and some modestly positive economic data. Treasuries snapped a three-day rally, with 10-year yields rising back to around 4%, while the dollar inched up. Russia pulls out of the agreement to allow Ukrainian crop shipments, meaning its ready to halt Ukraine Wheat exports. Chinese President Xi Jinping will host a flurry of foreign leaders this week, making a return to the world stage after China's Covid Zero restrictions. On Thursday some Chinese cities ramped up COVID-19 restrictions and the IMF downgraded China’s growth expectations to 3.2%, after a 8.1% rise in 2021. Oil and gold both retreated. The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) trade near 6-week highs Apple (AAPL) shares rocked up 7.6% after it reported mostly better than expected results last week, and the sentiment buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. Plus, economic data showed small signs of improvement in the battle against inflation. This week, the most prominent companies to report quarterly results include; Exxon Mobil, Berkshire Hathaway, Advanced Micro Devices, Qualcomm, UBER, PayPal, and Starbucks. If you are looking for inspiration this week, here is the Five Stocks To Watch video. Australia’s ASX200 (ASXSP200.1) futures suggest a bullish 1.3% rise on Monday AM The Reserve Bank of Australia on Tuesday is expected to deliver a 2nd straight quarter of 0.25% hikes on Tuesday’s meeting, according to Bloomberg. Australia’s corporate bond market is showing signs of succumbing to the global volatility in fixed income, unleashed by central bank tightening. And this is causing Australian tech stocks to remain pressured. Focus today is on earnings from Nickel Mines (NIC), Origin Energy(ORG), and coal company Corando Global (CRN). Elsewhere, pressure will likely be on iron ore giants, which might expect their selling rout after China increased covid-19 restrictions. Focus will be on Fortescue Metal, BHP and Rio Tinto which are all trading under their 200-day moving average. Crude oil (CLX2 & LCOZ2) trades at $88. Iron ore (SOCA) erases 3-years of gains Oil fell on Friday with WTI (CLX2 & LCOZ2) settling near $88 but posting a 3.4% weekly gain, despite the biggest crude importer, China, widening its COVID-19 curbs. This week; OPEC unveils its 2022 World Oil Outlook at the ADIPEC conference Monday. Plus, there is a swathe of energy ministers from Saudi Arabia, Kuwait, Iraq and Nigeria will also weigh in, as well as CEOs from BP and Occidental. Meanwhile, Iron ore (SCOA) now trades at its lowest level since 2019, US$78.40 after China confirmed it will maintain its covid-19 policies. Markets, businesses, commodities with high exposure to China see heavy selling this week. Will it continue?  Assets with exposure to China are being heavily penalized as it seems investors are realigning their portfolios somewhat with the priorities of President Xi and his policy on stronger state control over the economy, which means markets could be challenged for years. Xi confirmed this stance on Sunday 24 October, and on top of that China increased covid-19 curbs, which is why Hong Kong’s Heng Seng suffered at 8.3%, drop last week, while the iron ore (SCOA, SCOX2) price fell ~15% last week, and now traded at $78.40 its lowest level since Feb 2019, on concerns that the biggest iron ore consumer will further slow demand, all while iron ore seems oversupplied. The biggest pure play iron ore company in the southern hemisphere, Fortescue (FMG) shares fell 10% last week, plus what added to the selling was that Fortescue affirmed it is increasing its spending, while its margins are tightening. Fortescue says it will ramp up iron ore production at its expanded facility in March, instead of June. Meaning, this could likely further push the iron ore market into greater oversupply. Some investors are concerned Fortescue Metals technical indicators show that perhaps more selling could be ahead, despite the stock trading somewhat in oversold territory. US dollar back on the front foot in Fed week The US dollar was seen returning to mild gains against most major currencies after Fed-pivot bets picked up last week. A turnaround in comments from Fed whisperer Nick Timiraos who is now suggesting higher-for-longer rates (read below) may be one of the reasons. The uptick in geopolitical worries with Russia pulling out of the grain deal may however also play a part in bidding safe haven flows to the dollar. Fed is expected to hike rates by another 75bps this week, and pricing for December is also close to 75bps still. This will likely revive pressure on the JPY this week, while GBP seems to have priced in all the good news for now. USDJPY heading to 148 in early Asian hours while GBPUSD testing 1.1600. Wheat futures (ZWZ2) gap higher Wheat futures (ZWZ2) gapped up 7% to open at $8.88/bushel after Russia pulled out of the UN brokered black sea grain deal over the weekend after Ukraine carried out an attack on Russia’s Black Sea fleet off Sevastopol. Corn has also gained 2.5% to open at $6.96/bushel. What to consider? US core PCE sends no clear signal to the Fed The US core PCE, Fed’s preferred inflation gauge, remained elevated for September as expected. The core measure came in at 5.1% YoY from 4.9% previously, but remained a notch softer than expected at 5.2% YoY. On a m/m basis, gains were flat at 0.5% as expected. While the case for November’s 75bps rate hike from the Fed is still intact, it still remains hard to argue a downshift with the kind of strength we are seeing in the US economy. WSJ Fed whisperer now signalling higher-for-longer rates Nick Timiraos, who is seen as the Fed’s messenger, had sent shivers across markets last week with a report suggesting that the November FOMC meeting may be used to signal a downshift to smaller rate hikes. This saw equity markets extending gains while the USD was on the backfoot last week, but now he has come out with another article saying that higher savings buffers and lower interest expenses could make the Federal Reserve raise rates higher and keep them there for longer. Russia exits Ukraine grain deal Russia suspended its participation in the Ukraine grain export deal after a swarm of drones targeted at least one Russian warship from the Black Sea navy. This will block the passage of millions of tonnes of grain via southern Ukraine and may lead to a fresh jump in prices. The report is especially catastrophic as it comes together with massive wheat crop damage with the US crop belt seeing La Nina for its third consecutive year. Putin is getting desperate after losing ground militarily and in terms of Europe’s winter gas requirement, so he has likely gone back to using the food crisis as another tool. Fed, BOE, RBA meet – what can you expect The Fed and BOE and RBA are expected to hike this week, with robust labour markets defying efforts to tamp down inflation, despite predictions of a imminent recession. Companies are complaining of chronic worker shortages, and a persistent mismatch between hiring demand and supply is supporting wages and shielding consumers from slowdowns. Consensus expects the RBA to take the cash rate from 2.6% to 2.85% on Tuesday. On Wednesday the Fed meets and consensus expects to take rates up by 0.75% to 4%. All in all, Goldman Sachs raised its peak Fed rate prediction to 5% from 4.75%, citing "uncomfortably high" prices will keep rates higher for long. On Thursday the Bank of England meets, and consensus expects to take the rate from 2.25% to 3%. This means FX markets are expected to be quite volatile along with equity market, especially interest rate sensitive parts of the market, tech, consumer spending and real estate stocks. Lula’s comeback in Brazilian presidential elections Luiz Inácio Lula da Silva claimed a victory in Brazil’s presidential election on Sunday, defeating incumbent rightwing leader Jair Bolsonaro by less than two percentage points and setting the stage for a return to leftwing governance in Latin America’s largest nation. Brazilian ETFs including such as EWZ:arcx, IBZL:xams, RIO:xpar, BRZU:arcx, or BRQ:arcx may be the ones to watch, as will be the BRL later in the day. BRL has been the best performer in the EM basket (excluding Russian rouble) against the USD so far this year. Lack of economic plans from Lula may make a case for market outperformance somewhat weaker, however. China PMIs out today at 9:30am SGT/HKT China’s October PMIs are due for a release today and expectations are for the manufacturing number to dip into the contractionary territory with Bloomberg consensus expecting a 49.8 print from 50.1 in September. A slowdown is also expected in the non-manufacturing print, but it still may remain in expansion.   For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-31-oct-31102022
Preparation Of A Common Currency For South America, Gold Trades Softer

Victory In The Elections Of Luiz Inácio Lula Da Silva | Smoother Crude Oil Trade

Saxo Bank Saxo Bank 31.10.2022 09:13
Summary:  Equity markets closed strongly on Friday, even as the narrative that has purportedly driven strength at times in the equity market of late, the hope that central banks and especially the Fed are set for a dovish shift, failed to offer any fresh support on Friday. After a fresh article from “Fed whisperer” Nick Timiraos from the Wall Street Journal suggested that the Fed fears that it may have to keep the policy rate higher for longer, the event risk of the week will be the FOMC meeting this Wednesday, though other important central bank meetings are in the mix, including a Bank of England meeting on Thursday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Strong Friday close in the S&P 500 futures reaching the highest closing price for the up cycle that began earlier this month. S&P 500 futures are now up 8.7% from their lowest close on 12 October. This morning the index futures are trading lower hovering around the 3,898 level which is just below the 100-day moving average. This week is all about the FOMC decision and the ongoing US earnings. Euro STOXX 50 (EU50.I) European equities had a less spectacular performance on Friday and the impressive performance in US equities has not positively impacted STOXX 50 futures this morning trading lower around the 3,620 level. European equities have done better than US equities over the past month as the US technology sector has had weak Q3 earnings. FX: USD mixed as Wednesday’s FOMC meeting eyed Mixed developments for the US dollar on Friday, with the wild rally in equity markets a headwind, while the sharp, partial unwind of the anticipated dovish shift from the Fed at this Wednesday’s FOMC meeting offered some offsetting support as yields perked up slightly after testing key levels last week (see more below in What are we watching next?). After the brief foray above parity and nearly to 1.0100, EURUSD has been tamed back well below that level, while GBPUSD remains relatively bid and well clear of the pivotal level of 1.1500 ahead of the key event risk of the week for sterling, the BoE meeting Thursday (preview below). Elsewhere, USDJPY is coiling within the 145.00-150.00 range, while USDCNH has rebounded sharply and nearly back to the cycle highs. Broad CNH volatility is worth watching for contagion across asset markets. Wheat futures gap higher on Ukraine supply worries Wheat futures (ZWZ2) in Chicago surged as much as 7.7% to $8.93 on the opening after Russia over the weekend pulled out of the UN brokered black sea grain deal (see below). Since the UN and Turkey supported grain corridor opened three months ago Ukraine has shipped more than 9 million tons of foodstuff and it has helped ease tight world supplies and control global food costs. Money managers have been wrongfooted by the latest developments after raising bearish bets on Chicago wheat futures by 63% to a 28-month high in the week to October 25. Food exports from Ukraine also includes corn and sunflower oil and reduced supply of those has lifted corn futures (ZCZ2) in Chicago by 2.3% to trade near resistance at $7/bu and soybean oil futures by 2%. Gold (XAUUSD) Gold trades nervously within a narrowing range ahead of Wednesday’s FOMC meeting where another bumper rate hike is expected. What may follow, however, has caused a great deal of volatility across markets with traders looking for guidance regarding the pace and strength of future rate hikes. Gold is heading for its seventh straight month of declines, the longest losing streak since at least the late 1960’s (Bloomberg) while bullion-backed ETF holdings have dropped to a 30-month low and money managers hold a net short near the highest in four years. All developments supporting an eventual recovery, but not until we reach peak hawkishness from where we could see yields and the dollar soften. As a minimum gold needs to break above $1730 before an end to the month-long downtrend can be called. Crude oil (CLZ2 & LCOZ2) Crude oil trades softer therefore trimming a monthly gain driven by already tight markets and OPEC+’s planned supply cuts from next month. The latest weakness once again being driven by weak economic data from China and a stronger dollar ahead of Wednesday’s FOMC meeting after the famous FOMC whisperer at WSJ in an article speculated the Fed will need to keep rates higher for longer (see below). In addition to OPEC+ production cuts, the market will also have to gauge the impact of EU planned sanctions on Russian oil flows in December, a development that could be a “big hit” to already tight fuel supply, especially in Europe according to Eni’s CEO. US treasuries (TLT, IEF) The low water mark for the US 10-year treasury yield benchmark was near 3.90%, a key pivot level this week as we await the FOMC meeting and how the Fed’s guides for its future policy moves now that it is reaching an important inflection point in which the market expects it is likely the Fed will begin to hike in smaller increments as soon as December. It’s a delicate communication task to guide for a downshift without appearing too dovish. The important US economic data this week includes Thursday’s October ISM Services and especially the Friday October payrolls and earnings data for October. The October CPI is up next week. What is going on? Russia exits Ukraine grain deal Russia suspended its participation in the Ukraine grain export deal after a swarm of drones targeted at least one Russian warship from the Black Sea navy. This will block the passage of millions of tonnes of grain via southern Ukraine and may lead to a fresh jump in prices. The report is especially catastrophic as it comes together with massive wheat crop damage with the US crop belt seeing La Nina for its third consecutive year. Ukraine’s infrastructure ministry said 218 ships had been immediately affected. This included 95 that had already left its ports and were waiting at the inspection site before unloading, 101 waiting for inspection before collecting Ukrainian grain, and a further 22 that were loaded up and ready to set sail. “Putin needs leverage as things go south for him on the battlefields in Ukraine, so the threat of global food crisis needs to be put back in the Russian toolbox of coercion and blackmail,” wrote Alexander Gabuev, senior fellow at the Carnegie Endowment for International Peace via the FT. Lula’s comeback in Brazilian presidential elections Luiz Inácio Lula da Silva claimed a victory in Brazil’s presidential election on Sunday, defeating incumbent rightwing leader Jair Bolsonaro by less than two percentage points and setting the stage for a return to leftwing governance in Latin America’s largest nation. Brazilian ETFs including such as EWZ:arcx, IBZL:xams, RIO:xpar, BRZU:arcx, or BRQ:arcx may be the ones to watch, as will be the BRL later in the day. BRL has been the best performer in the EM basket (excluding Russian rouble) against the USD so far this year. Lack of economic plans from Lula may make a case for market outperformance somewhat weaker, however. What are we watching next? Is Fed concerned that market is expecting too much of a dovish shift at FOMC meeting this Wednesday? Nick Timiraos, who is seen as a kind of “Fed whisperer” and possible conduit of Fed communication with the market, had sent shivers across markets last week with a report suggesting that the November FOMC meeting may be used to signal a downshift to smaller rate hikes. This saw equity markets extending gains while the USD was on the backfoot last week, but now he has come out with another article: Cash-rich Consumers Could Mean Higher Interest Rates for Longer, saying that higher consumers savings buffers and a low level of interest expenses could require that the Federal Reserve raise rates higher and keep them there for longer due to less sensitivity to interest rates than was seen likely previously. The December 2023 EuroDollar contract had rallied as much as 50 basis points off the lows recently, correcting some 15 basis points Friday and slipping a bit lower to start this week as the market is unsure of how aggressively it should lean for dovish guidance. Big week ahead for central bank meetings The general theme is “downshifting” of guidance (As noted in the FOMC comments above). The FOMC meets Wednesday and is expected to hike 75 basis points with guidance indicating that the pace of hikes may start to slow as soon as at the December meeting (if likely with no commitment in either direction). First up, however, is tonight’s RBA meeting, where Governor Philip Lowe and company are expected to only hike 25 basis points tonight after a string of 50 basis point moves as the RBS is concerned about the impact of further tightening on consumption and mortgage payments, though a small minority still expect another 50 basis points moves. On Thursday, we have a pivotal Bank of England meeting, the first after the violent market swings during the uproar over former PM Truss’ fiscally risky policy moves. With calming markets and the new Sunak government rolling out far tighter budget plans, BoE expectations have fallen like a stone, but with the market still expecting the first ever 75 basis point move for this cycle. The BoE has s history of bad communication with the market – and an austere budget brings forward and increases the severity of the coming recession. Finally, Norges Bank also meets Thursday and is expected to hike 25 basis points, seemingly in no hurry despite a very weak currency and high inflation readings, and even having guided that it soon sees an end to the tightening cycle. Earnings to watch Today’s US earnings focus is Stryker which is expected to see its earnings growth increase to 7% y/y with operating margin still under pressure. Otherwise, as we look ahead, earnings tomorrow from Toyota, Sony, BP, AMD, and Airbnb will have the market’s focus. Monday: Daiichi Sankyo, Stryker Tuesday: Toyota Motor, Sony Group, Mondelez, AMD, Airbnb, Eli Lilly, Pfizer, BP Wednesday: KDDI, Novo Nordisk, GSK, Booking, Qualcomm, CVS Health, Estee Lauder, Humana Thursday: Cigna, Amgen, PayPal, Starbucks, EOG Resources, ConocoPhillips, Regeneron Pharmaceuticals, Zoetis, Canadian Natural Resources, DBS Group Friday: Duke Energy, Enbridge Economic calendar highlights for today (times GMT) 0900 – Switzerland SNB Weekly Sight Deposits 0930 – UK Se. Mortgage Approvals 1000 – Eurozone Oct. Flash CPI estimate 1000 – Eurozone Q3 GDP estimate 1345 – US Oct. Chicago PMI 1430 – US Oct. Dallas Fed Manufacturing Activity 1500 – ECB Chief Economist Lane to speak 0145 – China Oct. Caixin Manufacturing PMI 0330 – Australia RBA Cash Target Announcement Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-31-2022-31102022
Australia Is Expected To Produce A Bumper Year Of Crops

Soft commodities - corn and wheat up. Crude oil prices may end October above-the-line after very long time

ING Economics ING Economics 31.10.2022 09:59
It’s not surprising that wheat and corn opened higher this morning after Russia suspended the Black Sea grain deal over the weekend. Meanwhile, markets will be focused on the outcome of the FOMC meeting later this week and looking for any hints or signals that the Fed may slow the pace of rate hikes in upcoming meetings Energy - oil set to end the month higher The oil market has seen quite a bit of strength over October and is set to finish the month higher, after four consecutive months of declines. Announced OPEC+ supply cuts have provided support to the market at a time when there is plenty of demand uncertainty. OPEC+ supply cuts are set to start tomorrow which should see 1.1MMbbls/d of supply taken off the market. In addition to this, there is still plenty of uncertainty over the full impact of the EU ban on Russian seaborne crude oil, which comes into force on 5 December. Clearly, it is constructive for the market, but how constructive will depend on how much more Russian oil the likes of China and India can absorb. Speculators have been more positive on the market over the last month. The latest positioning data shows that speculators increased their net long in ICE Brent by 28,574 lots over the last reporting week - to leave them with a net long of 205,451 lots as of last Tuesday, which is the largest position speculators have held since June. Looking further at ICE Brent positioning data and focusing on commercial positioning shows that producers have been fairly active in hedging over the last couple of months. The gross producer short in ICE Brent stood at 1.21m lots as of last Tuesday, up from 978k lots in early September. This increased producer hedging could be driven by growing uncertainty over the demand outlook. Although, it is worth pointing out that the gross producer short is still well below levels seen pre-2022. Read next: Elon Musk Closes Twitter Deal, Apple Reported Record Revenue, ECB May Turn Dovish| FXMAG.COM As for the calendar this week, ADIPEC kicks off in Abu Dhabi today, which will continue through until Thursday. Speakers at the event will include a number of OPEC oil ministers and so expect plenty of noise around the market outlook and also more comments and views on the recent OPEC+ supply cuts. However, the event this week which could have the biggest impact on the oil market is the FOMC meeting. Expectations are that the Fed will hike interest rates by 75bps. However, the market will also be eager for any signals on what the Fed could do at its December meeting. There is a growing expectation that the Fed could slow the pace of hikes In December. Any hints from the Fed of a slowing in the pace of hikes would likely provide some support to risk assets, including oil. Metals – Glencore's production falls, cuts guidance Glencore reported lower production in Q3 for half the commodities it mines and lowered full-year guidance on zinc, nickel and coal. The company cited extreme weather in Australia, industrial action at nickel assets in Canada and Norway, and supply chain issues in Kazakhstan caused by Russia’s war in Ukraine. Glencore’s copper production fell 14% YoY to 770.5kt, while zinc output fell 18% YoY to 699.6kt in the first nine months of the year. The company reduced zinc production guidance to 945kt for the year, compared to its previous guidance of 1.01mt due to the emerging supply-chain issues due to Russia-Ukraine war. In ferrous metals, the most active contract for iron ore trading on SGX is on course for five consecutive sessions of declines with prices trading down to an  intra-day low of US$75/t this morning- the lowest levels since September 2020. The raw material prices are already down more than 50% from the recent highs of US$171/t seen in March this year. The extended weakness in China’s property sector along with the nation’s Covid restrictions is weighing on steel consumption at a time when ex-Chinese demand is also bleak due to tighter monetary policy and a worsening energy crisis in Europe. Over the coming weeks, potential winter output curbs in China would result in rising stockpiles of iron ore, further weighing on the prices. Meanwhile, Baoshan Iron & Steel Co., the world’s largest steelmaker, highlighted a weak outlook for the steel industry in China last week and forecasts that steel demand in the country could fall 5% this year. Chinese manufacturing PMI data for October, which was released this morning will certainty not help with the PMI falling from 50.1 to 49.2 - leaving it in contraction territory. Agriculture - Russia suspends Black Sea grains export deal It’s no surprise that CBOT wheat and corn opened significantly higher this morning after Russia suspended the Black Sea grains export deal, following attacks on Russian navy vessels in the Black Sea. The latest data from the UN shows that a little over 9.3mt of grains and foodstuff have been exported from Ukraine under the deal since August. However, around 2.65mt of this is still awaiting inspection and its unclear what will happen to these cargoes now. The deal was originally set to expire on 19 November, but there was hope that it would be extended. We will need to see if involved parties can  somehow put the deal back on track, but clearly there is the very real risk that Ukrainian grain exports see a significant slowdown due to these latest developments. Previously, Ukraine’s Grain Association had said that Ukraine could export 50mt of grains if the deal was prolonged, without it the maximum volume would likely be around 35mt. Read this article on THINK TagsRussia-Ukraine Oil Metals Grains China PMI Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Stronger Oil Prices Boost US Oil Production and Supply

Escalating Tensions With Russia | This Week Focus On The Fed, RBA And The Bank Of England Decisions

Swissquote Bank Swissquote Bank 31.10.2022 10:09
Despite the broadly disappointing Big Tech earnings, and the heavy selloff we saw in most Big Tech stocks, US equities ended last week on a positive note, thanks to record profits from US Big Oil companies, and a much better than expected reaction to Apple results. American crude consolidates above the 50-DMA, but failed to clear the $90 offers last week, as recession fears prevent a further rally from developing. Fed, RBA & Bank of England This week, attention shifts to Federal Reserve (Fed), expected to raise rates by another 75bp. The Reserve Bank of Australia (RBA) and the Bank of England (BoE) are also expected to hike by 25bp, and 75bp respectively.Elsewhere, news is not great. Russia decided to pull out of a deal to allow Ukrainian crop shipments; wheat futures jumped more than 5% this morning. China China’s manufacturing and services PMI slipped below 50, to the contraction zone in October due to Covid restrictions in major cities, and many cities are still dealing with lockdown measures, and Xi Jinping made sure to emphasize that he will continue to fight… the virus. Brazil In Brazil, Lula won the election bearing Bolsonaro by less than 2 percentage points. The latter said he refuses the defeat, which means that we will see some more political uncertainty in Brazil in the coming weeks. Watch the full episode to find out more! 0:00 Intro 0:24 Big Oil earns Big 4:07 Big Tech disappoints 5:41 Don’t look at Powell to make you feel better 7:19 Russia scraps wheat deal, China slows, Brazil elections 8:32 Watch Fed, BoE, RBA decisions, US jobs & EZ inflation 9:30 …and some more earnings… Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #ExxonMobil #Chevron #Shell #BP #earnings #crudeoil #natural #gas #Fed #RBA #BoE #monetary #policy #decision #USD #GBP #AUD #EUR #ECB #inflation #wheat #futures #Ukraine #Russia #war #Brazil #elections #Lula #Bolsonaro #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Ed Moya (Oanda) talks crude oil and hold - 31/10/22

Ed Moya Ed Moya 31.10.2022 20:59
Oil eases Oil prices are a little lower today although nothing has dramatically changed in recent weeks as far as the outlook is concerned. The global economy is facing major challenges, even recession, OPEC+ is prepared to make unpopular cuts alongside member Russia, whose war in Ukraine has been a dominant driver of market volatility. China’s economic stumble driven partly by its commitment to zero-Covid also continues to dampen the outlook for demand. Brent continues to settle in the $90-100 range which all parties may just about accept for now. Well, after the midterms for a little while perhaps. Make or break week for gold? Gold continues to be choppy but its outlook hasn’t improved at all, with rallies continuing to face significant resistance and $1,600-1,620 looking very vulnerable. Its resilience will certainly be put to the test this week though, given the Fed meeting on Wednesday and US jobs report on Friday. Not to mention the scattering of data around those events. Time will tell whether it proves to be the week that starts the resurgence or the straw that breaks the camel’s back. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil eases, gold choppy - MarketPulseMarketPulse
The US Dollar Index Is Expected A Pullback Rally At Least In The Near Term

The US Dollar Started The Week Stronger | Expectations For The RBA's Decisions

Saxo Bank Saxo Bank 01.11.2022 08:44
Summary:  A return to hawkish expectations for the FOMC and risk-off from weak China data as well as possible issues in Russia-Ukraine grain deal saw markets tumble on Monday and US 10-year yields reversed back to 4.10%. Dollar strength returned as well, with gains most pronounced against the sterling and yuan. However, demand concerns returned, while oil also retreated with President Biden’s hopes of a windfall tax on profits of US energy companies weighing as well. Gold extended its downtrend with the surge in yields. Reserve Bank of Australia on watch in the day ahead, with some key Japanese names like Toyota and Sony also reporting earnings. What is happening in markets? The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) fall on Monday ahead of Fed, but hold onto monthly gains US stocks fell into the red on their last trading day of the month with end of month rebalancing coming into play, while stocks were also on the back foot as bond yield climbed ahead of Wednesday's Fed decision. Still the S&P500 held onto a monthly gain of 8%, but on Monday the index dropped 0.75%. The Nasdaq fell 1%, but held a 4% October gain. Most Treasury yields rose, with 10-year notes up to around 4.05%, while the dollar climbed against every G-10 partner, save the kiwi. Oil and gold both retreated. Energy shares whipsawed on news that President Joe Biden will call on Congress to consider tax penalties for oil producers accruing record profits. JPMorgan Chase Marko Kolanovic is joining strategists who believe the aggressive Fed hiking is nearing an end. He thinks the Fed will raise rates by 50 basis points in December and pause after one more 25-basis-point hike in the first quarter. Apple (AAPL) shares fell 1.5% with iPhone’s Foxconn plant in central China grappling with virus outbreak.  Fertilizer giant, Archer Daniels (ADM) rose 2.2% with traders expecting higher agricultural prices amid supply concerns from added geopolitical tension. Australia’s ASX200 (ASXSP200.1) futures suggest a 0.15% rise on Tuesday, ahead of the RBA rising rates today The Reserve Bank of Australia is expected to deliver its 2nd straight month of 0.25% hikes at today’s meeting, according to Bloomberg consensus, which will take the cash rate from 2.6% to 2.85%. However it will be a tough decision, with stronger-than-expected third-quarter inflation data from last week, and hot retail and credit data yesterday giving room for a potential 50-bp (0.5%) hike. This could trigger a knee jerk jump in the Aussie dollar vs the US (AUDUSD), however we maintain our bearish view of the AUDUSD given the Fed has more ammo to aggressively rise. Also note, Governor Philip Lowe has regularly wrong-footed forecasts. Still, swaps imply only a 20% chance of an outsized move, and Australian 10-year yields are a full 25 bps below similar-dated Treasuries, meaning there are expectations that RBA will take a softer line than the Fed. The RBA will last month previously noting loan arrears and insolvencies have picked up in Australia, while housing loan commitments declined -  ‘demonstrating the effect of high interest rates on housing’. This demonstrates, the RBA has a tough task of rising rates to slow inflation, without compromising the health of the economy. FX: Dollar returns to gains ahead of FOMC Dollar started the week on a firmer note as WSJ Timiraos comments turned more hawkish over the weekend after dovish Fed expectations possibly went a bit far. The worst performer was GBP, and we had raised concerns yesterday that it was pricing in all the good news so there was scope for disappointment. GBPUSD broke below 1.1500 with EURGBP also reversing back higher to 0.8620 despite EURUSD weakness to sub-0.99. USDJPY rose back above 148.50, with US 10-year Treasury yields touching 4.1% at one point. Japan’s Finance Ministry data showed a record USD 42.8bln was spent on multiple interventions in the FX market last month to attempt to cushion the Yen’s fall. The Chinese yuan continued to slide, USDCNH rose to 7.34 and the onshore spot USDCNY seen close to 15-year highs of 7.30+ at Monday’s close. Crude oil (CLX2 & LCOZ2) worried about oil demand Crude oil prices were lower on Monday as concerns of weaker demand weighed on sentiment with the Fed commentary from whisperer Nick Timiraos shifting towards a hawkish stance again. Meanwhile, China’s PMIs fell below the 50 mark which separates expansion and contraction. On the other hand, OPEC’s World Oil Outlook estimates demand will climb 13% to reach 109.5mb/d in 2035, then hold around that level for another decade and secretary-general Haitham al Ghais said that the oil supply surplus was the main reason for the decision to cut output. There were also some reports suggesting that President Biden is considering a potential windfall tax on US energy companies. WTI futures slid towards $86/barrel. Gold (XAUUSD) in a downtrend Gold (XAUUSD) fell for a third consecutive day approaching the recent support area $1,625 as US dollar broadly strengthened with 10 year treasury yield touching 4.10% at one point on Monday. With the Fed poised for another 75bps rate hike this week, pressure on gold could increase, but we continue to see fundamental strength in gold especially given the higher-for-longer inflation expectation. But as a minimum gold needs to break above $1730 before an end to the month-long downtrend can be called.   What to consider? What next for the RBA after peak hawkishness? The Reserve Bank of Australia meets today and is expected to continue with a smaller pace of rate hikes with 25bps priced in despite a hotter than expected Q3 CPI. Q3 CPI rose by 7.3% YoY from previous print of 6.1%, coming in higher than expectations. RBA’s preferred Trimmed Mean CPI was seen at 6.1% vs. expected 5.6% (prev. 4.9%), while PPI also accelerated in Q3 to 6.4% from 5.6% previously. There are, therefore, some calls for an outsized 50bps rate hike as well as inflation continues to inch above the central bank’s 2-3% target range. An update on the latest growth and inflation projections will also be seen along with today’s rate decision. AUDUSD will need a clearly larger than expected rate hike of 50bps, or a very hawkish commentary with a 25bps rate hike to make any substantial gains. If RBA tows the line, focus shifts to USD and the Fed meeting on Wednesday. AUDNZD is also key to watch, with the 1.1000 handle on test. Eurozone GDP and inflation prints continue to make the ECB’s job tougher Eurozone inflation data for October YoY printed another record as it soared to 10.7% (prev. 9.9%), and well above the median Bloomberg expectation of 10.3%. Meanwhile, Q3 GDP growth slowed to 0.2% QoQ or 2.1% YoY (prev. 0.8% QoQ, 4.1% YoY). While mild whether and full storage hasn’t unleashed the full effects of energy shortages this year, the threat continues to loom and this could mean the macro story could deteriorate further. China PMIs and Hong Kong GDP growth send red flags China’s manufacturing and non-manufacturing PMI both plunged into contractionary territory in October with Covid curbs likely continuing to weigh on demand and manufacturing ahead of the CCP meeting. China's official manufacturing PMI declined to 49.2 in October after a brief rebound to 50.1 in September following a two-month decline. Meanwhile, services activity fell to 48.7 in October from 50.6 last month. Also, Hong Kong recorded its worst quarter in over two years, with Q3 GDP growth coming in at -4.5% YoY vs. expectations of -0.8%. The QoQ growth was also in negative territory at -2.6%, signalling recession concerns if such a performance continues despite the economy’s reopening. Key Japanese earnings on watch Big Japanese names Toyota (7203) and Sony (6758) report earnings today. While high inflation and interest rates remain a key consideration to watch for consumer spending trends, the effect of a weak yen will also be key to consider. Sony will be key to watch after the US tech tumble last week, and consensus is looking for a 10% drop in its operating profit from a year ago. Toyoto will likely continue to highlight the supply chain pressures, but possible buyback announcements could support.   For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-1-nov-01112022
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

US 10-Y Treasury Yields Have Eased Back | Airbnb Expects Revenues To Increase

Saxo Bank Saxo Bank 01.11.2022 09:42
Summary:  Risk sentiment remains near the local highs heading into tomorrow’s FOMC meeting, where the market is hoping for guidance that suggests a downshift in the pace of tightening. Another micro-hike of 25 basis points from the RBA increases the sense that more central banks are set to slow their fight on inflation via rate hikes. Elsewhere, unconfirmed stories swirling overnight in China that that Covid restrictions are set to be lifted saw a potent rally in Chinese equities.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Momentum is trying to come back into US equities after yesterday’s retreat with S&P 500 futures trading around the 3,902 level. A higher close today could set in motion an extended rally into tomorrow’s FOMC rate decision lifting expectations for the Fed to signal a slowdown in rate increases. Given the latest macro figures we have gotten this might still be too early for the market to expect this, but if the Fed confirms the ‘peak hawkishness’ narrative then the 4,000 level in the S&P 500 futures is not outrageous. Euro STOXX 50 (EU50.I) Strong earnings from BP lifting sentiment in early trading in addition to positive spillover effects from the Chinese equity session seeing Hang Seng futures 6.1% higher on unconfirmed news that Chinese policymakers are considering phasing out its strict Covid policy. STOXX 50 futures are pushing higher this morning trading around the 3,649 level, which is the highest level since 13 September. The market is increasingly adjusting to the ‘peak hawkishness’ theme and if momentum extends here the 200-day moving average at the 3,675 level is the big area to watch out for. FX: USD on its back foot as market hopes for dovish downshift at FOMC meeting The market’s hope for a dovish downshift in the Fed’s guidance is a bit nuanced, as the expectations for the coming handful of meetings are back near the cycle highs, with the Fed funds priced to reach nearly 5.00% at the March or May FOMC meeting next year, while expectations farther out into next year and in 2024 are 25 or more basis points from the cycle highs. But with the USD on its back-foot and risk sentiment clearly unafraid of the Fed at the moment, the surprise side this Wednesday would be a stern message from the Fed that checks sentiment. Watching parity in EURUSD as an important psychological barometer, 1.1500 in GBPUSD, which was briefly broken yesterday, and eventually 145.00 in USDJPY and 7.25 area in USDCNH if the sudden USD drop overnight on hopes that China Covid policy is set for relaxation sticks and follows through. HG Copper (HGZ2) recovered all of Monday’s losses during Asian trading ...partly driven by a report that a “Reopening Committee” has been formed led by a Politburo Standing Member. The committee is reviewing data to assess various opening scenarios, targeting a March 2023 reopening. In addition to a weakening dollar and demand towards renewable energy, the copper market is being supported by persistent supply challenges highlighted by top supplier Codelco lowering its annual guidance for the second time in three months. The futures price remains stuck within a narrowing trading around $3.45 and looks poised for a breakout soon. Given the latest developments the risk of an upside break has risen. Gold (XAUUSD) trades higher … after falling for a third consecutive day on Monday, thereby extending its monthly losing streak to seven, the longest since the late 1960’s. The market bounced with support from lower bond yields and a softer dollar but as a minimum the yellow metal needs to break above $1730 before an end to the month-long downtrend can be called. The WGC reported that central banks bought a record 400 tons during the third quarter, more than quadruple the amount of a year earlier, thereby more than offsetting the 227 tons reduction in holdings across bullion-backed ETFs Crude oil (CLZ2 & LCOZ2) Crude oil trades higher within the established range after advancing with the broader market overnight as OPEC+ begins to cut production by around 1.2 million barrels per day, a decision that has been driven by excess supply according to its secretary-general. OPEC also released its World Oil Outlook in which they estimate demand will climb 13% to reach 109.5mb/d in 2035, then hold around that level for another decade. A weaker global economic growth hurting demand, OPEC+ production cuts and EU sanctions on Russian crude from December have all clouded the outlook, thereby supporting the current rangebound price action. Focus on Wednesday’s FOMC meeting and its potential impact on the dollar. Brent has since the September low several times been bouncing off trendline support, currently at $92 with resistance at $97.25 and $98.75. US treasuries (TLT, IEF) US 10-year treasury yields have eased back toward 4.00% after briefly touching above 4.1% yesterday. The focus on continued strength in bond markets will be the 3.90% pivot low yield posted last week, which could open up for a run to the 3.50% area, but would such a move represent a flight to safety (weak risk sentiment) or be celebrated as a sign of easing pressure on asset valuations. The key two event risks are the FOMC meeting Wednesday and how the yield curve reacts as well as the US jobs report on Friday, with the ISM Services Thursday also an interesting data point. What is going on? RBA hikes 25 bps, ups inflation forecasts, downgrades GDP and remains dovish Will the RBA stop hikes early? The RBA hiked the cash rate by 25bps (0.25%) as most expected to 2.85%, maintaining its dovish stance and bordering on restrictive, as it again acknowledged tighter financial conditions are yet to be felt in mortgage payments, but higher rates and inflation have put pressure on household budgets, causing a small amount of loan arrears and insolvencies. This rate hike cycle since May, has been the second fastest in history. We note the RBA was the first major central bank to under-deliver on rate hike expectations last month. The RBA raised its year-end 2022 CPI forecast from 7.8% to around 8%. The RBA revised its GDP forecast down, with growth of around 3% expected this year and 1.5% in 2023 and 2024. AUD knee-jerked lower on the decision, but recovered most of the lost ground against a stumbling US dollar in Asia, while sticking near local lows against the NZD. BP had exceptional Q3 in gas marketing and trading The European oil and gas major is lifting sentiment in Europe with strong net income beating expectations while cash flow generation is coming in below estimates. The energy company is increasing its buyback programme further by $2.5bn. Toyota down 2% on big operating income miss Japan’s largest carmaker is lowering its fiscal year production target as Volkswagen also recently did while posting a Q2 operating income of JPY 563bn vs JPY 765bn due to soaring materials costs and one-off items. The lower production target comes as the industry is still facing a chips shortage. UK Treasury says all Britons will have to pay more tax Chancellor Hunt said that “those with the broadest shoulders should be asked to bear the greatest burden” as the clear message from the new Sunak government, after the previous Truss-Kwarteng team triggered chaos in UK Gilts and sterling, is that financial stability is priority number one. The particulars of the new budget and policy will be laid out in a statement on November 17. US President Biden rails against oil companies not reinvesting profits, promising to raise taxes on profits that are “windfall of war”... ... saying that “The oil industry has not met its commitment to invest in America.” Such a move would require a bill to pass through Congress, however, which would likely prove difficult after the mid-term elections next week, if projections of a strong GOP showing flip the House and possibly the Senate into their hands, making for a largely lame-duck presidency for the next two years. Eurozone GDP and inflation prints continue to make the ECB’s job tougher Eurozone inflation data for October YoY printed another record as it soared to 10.7% (prev. 9.9%), and well above the median Bloomberg expectation of 10.3%. Meanwhile, Q3 GDP growth slowed to 0.2% QoQ or 2.1% YoY (prev. 0.8% QoQ, 4.1% YoY). While mild weather and full storage has not unleashed the full effects of energy shortages this year, the threat continues to loom, and this could mean the macro story could deteriorate further. Japan spent a record $42 billion to defend JPY in October The Finance Ministry is said to have another 10 trillion yen, or about $68 billion in ready cash left to throw after defending the JPY if pressure mounts again, although Japan’s central bank reserves are many, many multiples of these amounts, currently at $1.24 trillion. What are we watching next? Another small hike from a central bank (the RBA) encourages speculation of dovish shift at the FOMC meeting on Wednesday A number of recent central bank meetings of late, including the latest RBA meeting overnight, which saw Australia’s central bank only hiking rates 25 basis points for the second consecutive time, encourage the notion that the Fed is set for a dovish shift at this Wednesday’s FOMC meeting. Working against that narrative have been a number of possible “leaks” by journalists at key publications thought to have strong Fed sources, including the WSJ’s Nick Timiraos and a NY Times reporter, whose latest musings suggest that the Fed is not set to indicate any backing down from its hawkish message. An overtly defensive and hawkish FOMC meeting tomorrow could badly shock the market, which coming into this morning, at least, seems hopeful that the Fed is set to downshift its tightening guidance this week. Or at least, given that Fed expectations for the next six months or so are within a few basis points of the cycle highs, isn’t obviously afraid of the message the Fed is set to deliver: equities are up near the local highs after a ripping rally off October lows. Earnings to watch Today’s US earnings focus is AMD, Airbnb, and Uber with analysts expecting revenue growth of 31% y/y for AMD but EPS down 5% y/y as input pressures are eating up growth coming from strong product introductions. Airbnb is still riding the reopening tailwind with revenue expected to increase 26% y/y in Q3 and EBITDA expanding significantly to $1.39bn up from $888mn a year ago. Uber has a goal of becoming self-funded by 2024 and could achieve this based on the current trajectory. The company is expected to deliver revenue growth of 67% y/y and EPS of $-0.06 up from $-0.42 a year ago. Today: Toyota Motor, Sony, BP, Eli Lilly, Pfizer, AMD, Mondelez, Airbnb, Uber Wednesday: Suncor Energy, Nutrien, Novo Nordisk, Maersk, Vestas Wind Systems, GSK, Electronic Arts, Qualcomm, CVS Health, Estee Lauder, Booking, Fortinet, Ferrari, Albemarle Thursday: Verbund, Barrick Gold, Orsted, Novozymes, BNP Paribas, BMW, Enel, ING Groep, DBS Group, ConocoPhillips, Amgen, PayPal, Starbucks, Regeneron Pharmaceuticals, EOG Resources, Moderna, MercadoLibre, Block, Cloudflare, Coinbase Friday: Enbridge, Societe Generale, Intesa Sanpaolo, SoftBank, Amadeus IT Group, Duke Energy, Economic calendar highlights for today (times GMT) 0820 – Australia RBA Governor Lowe to speak 1400 – US Sep. JOLTS Job Openings 1400 – US Oct. ISM Manufacturing 2000 – New Zealand RBNZ publishes Financial Stability Report 2030 – API Weekly Report on US Oil Inventories 2145 – New Zealand Q3 Average Hourly Earnings 2145 – New Zealand Q3 Employment Change/Unemployment Rate 2230 – Canada Bank of Canada Governor Macklem to speak 0030 – Australia Sep. Building Approvals Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-1-2022-01112022
Hungary's Budget Deficit Grows, Raising Concerns Over Fiscal Targets

Operating Profit Beat Of Sony Was Broad-Based | A Sharp Increase In Base Metals

Saxo Bank Saxo Bank 02.11.2022 09:01
Summary:  Higher-than-expected US job openings data and a still-strong ISM manufacturing print pushed the US yields higher as terminal Fed pricing topped 5% again. This saw equity markets on the backfoot ahead of the Fed meeting scheduled for later today, and mixed earnings results from AMD and Airbnb also underpinned, while Sony jumped higher as FX effects supported better than expected results and improved guidance. Shares of Asian mining companies tied to nickel and copper may move after the metals rallied on speculation Beijing will make preparations to ease China’s stringent Covid rules. NZ jobs gains may support more RBNZ rate hikes but NZD remained cautious. What is happening in markets? The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) fall on solid labor market data, which supports an aggressive Fed hike path The US major indices fell on Tuesday, with the S&P500 ending 0.4% lower, after erasing the 1% earlier gain, while the Nasdaq 100 met a similar fate before ending 0.9% lower. Two-year Treasury US yields , which are most sensitive to imminent Fed moves, topped 4.5% after sliding as much as eight basis points earlier in the day. The added volatility and risk-off mode came after US job openings unexpectedly rebounded in September amid low unemployment. This will likely fuel further wage gains (inflation), and it means the Fed will likely hike by 75-bp (0.75%). But keep in mind, any hint of a dovish pivot on Wednesday could perhaps prompt an outsized market reaction and risk on rally. Big tech weighed on equities, with Apple (AAPL) down almost 2%, and Amazon (AMZN) falling 5.5%, taking its value below $1 trillion for the first time since 2020. On the upside, investment banks did well include JP Morgan (JPM) up 1.8% and Goldman (GS) up 1.2%. While in the S&P500 Abiomed (ABMD) shares rose 50% with Johnson & Johnson, announcing it will takeover the firm for $17.3 billion, building on its portfolio of technology assisting heart function. After market, Advanced Micro Devices (AMD) shares rose almost 5% after its profits beat expectations and it signaled that inroads in the server chip market will continue to bolster its finances. The Dow Jones traded near a resistance level, that saw the index halt a few rally attempts, in the past few months.  China/HK stocks surge on unofficial reports that China may be looking to exit Zero Covid The CSI300 surged over 3.5% on Tuesday and the HSI rose by over 5% on speculation that Beijing is preparing to phase out Covid Zero policies, even as the country’s Foreign Ministry said it was unaware of such a plan. Unverified social media posts circulated online on Tuesday showed a committee was being formed to assess scenarios on how to exit Covid Zero. Internet giants Meituan and Tencent were some of the biggest gainers. While the reports may be unconfirmed for now, it gives a signal on how strong a recovery can come through if China alters its Zero Covid policy stance at some point. Australia’s ASX200 (ASXSP200.1) futures suggest a flat start, but focus will be on copper and nickel giants, and companies with USD exposure Focus will be on nickel and copper companies including Nickel Mines (NIC), Oz Minerals (OZL), and BHP (BHP), which are expected to gain attention and possibly move higher after the commodities prices rallied on speculation Beijing could make preparations to ease China’s stringent Covid rules, which have kept commodities prices underwater. BHP shares rose 3.7% in New York, and the listed entity in Australia is expected to likely follow. Focus will also be in Amcor (AMC) which has just reported financial results, declaring a stronger dividend that expected, stronger EPS than expected, but weaker than expected income, weighed down by the strength of the US dollar. The global packaging giant sees its full year financial results being negatively impacted by the US dollar by 5%, up from its prior 2% estimate. NZDUSD brushes off a broadly positive employment report NZ jobs data for Q2 was rather mixed with unemployment rate still near record lows, while rising slightly to 3.3% and wage growth of 2.6% YoY much higher than last month’s 2.3%. Employment change slowed slightly to 1.2% YoY but was far better than expectations of 0.3%, and also up 1.3% QoQ. While these numbers underscore a case for still-higher inflation and the need for further rate hikes from the RBNZ, NZD remained largely unchanged in early Asian trading hours after the release. NZDUSD eased from overnight highs of 0.5900 to trade around 0.584, while AUDNZD is testing the downside at 1.094 after breaking below 1.10 yesterday following a dovish RBA. While NZDUSD will continue to focus on what the Fed path brings, there may be more downside in store for AUDNZD amid the policy divergence of the RBA and RBNZ, unless one of the two things change: 1. RBNZ pivots to a pace of smaller rate hikes, or 2. China sends signals of opening up. This will bring the focus back on current account differentials which favour the AUD over the NZD. RBNZ’s financial stability report also highlighted some concerns from higher interest rates on consumption and new residential construction. Metals run higher on China speculation Copper and nickel led a surge in base metals on unconfirmed speculation Beijing is preparing to ease Covid rules, even as these reports were later denied by Chinese Foreign Ministry official. This also brought the focus back on supply issues in Copper, with inventories running low on exchanges. LME Nickel was over 8% higher as well, along with Zinc and Aluminium as well. Iron ore (SCOA) moved up slightly as a result, adding 0.3% to $78.35. Gold (XAUUSD) rose back towards $1650 but higher bond yields continue to haunt especially ahead of the critical Fed meeting. Silver, enjoying a trifecta of support from rising gold and copper as well as the weaker dollar, traded up to once again challenging resistance at $20/oz. A break may bring the key $21.14 back into focus. Crude oil (CLX2 & LCOZ2) Oil prices also gained on the China news, while a weaker USD up until the release of the US job openings or the ISM data also supported gains in oil. OPEC+ production cuts continue to keep the supply outlook tight for the oil market, but the overall sentiment is muddled by weakening global demand concerns and also the EU sanctions on Russian crude that are set to begin in December. WTI futures were seen rising towards $89/barrel while Brent futures were close to $95.   What to consider? US job openings and ISM manufacturing complicate Fed’s message US job openings saw an unexpected rebound in September amid low unemployment, suggesting more wage gains could be in store. JOLTS job openings came in higher at 10.7 million in September from a revised 10.3 million in August. This likely thrashes expectations of any material downshift from the Fed after today’s widely expected 75bps increase. Meanwhile, October's ISM manufacturing index also remained in expansion at 50.2, albeit falling from last month’s 50.9. However, disinflationary trends were emphasised as the index of prices paid fell to an over 2-year low. Still, sticky shelter and services inflation remains materially high suggest still-higher interest rates remain on the horizon. Terminal rate pricing for Fed funds futures has picked up again to 5% levels, and it would be hard for the Fed to push it any higher at this point, but what it can clearly hint at today is pushing out of the rate cut expectations for next year. Read our full FOMC preview here for further insights. Lack of insurance halted UN Black Sea shipments, but progress being made The UN halted grain shipments from Ukraine's Black Sea ports on Wednesday, after Russia warned ships weren't safe using the route and demanded guarantees from Ukraine. However, reports suggested early on Wednesday that an agreement had been reached and ships will start to sail again from Thursday, as pressure on Russia continues to build. We continue to watch crop and fertilizer prices, as a meaningful reversal could come through if we see improving shipments across the Black Sea region. RBA ups inflation forecasts, downgrades GPD, remains dovish. Possibly market implications if rate hikes stop early, as they have historical The RBA hiked the cash rate by 25bps (0.25%) as expected to 2.85%, maintaining its dovish stance and bordering on restrictive, as it again acknowledged tighter financial conditions are yet to be felt in mortgage payments, but higher rates and inflation has put pressure on household budgets and caused a small amount of loan arrears and insolvencies. The RBA’s rate hike cycle since May, has been the second fastest in history and we also note the RBA was the first major central bank to under-deliver on rate hike expectations (last month). Also consider, what’s ahead. The RBA has a history of stopping rate hikes early, before CPI peaked in YoY terms. Over the last 30 years the RBA started easing ‘early’ and cut rates despite headline CPI staying above its 2-3% target. So, could the RBA replay this trend? We think so. The RBA rose its 2022 CPI forecast to around 8%, up from 7.8%. Meaning, the Q4 CPI read could print between 7.75% and 8.25%. The RBA downgraded its GDP forecasts, only expecting 3% this year and 1½ per cent in 2023 and 2024. If the RBA makes any hint of a becoming even more dovish at their next meeting, it could perhaps prompt an outsized market reaction in the ASX200 and fuel a risk on rally. Imminently, in FX, the AUDUSD is on watch ahead of the Fed’s hike on Wednesday, and could succumb to further selling if the Fed hikes by 0.75%. Another pair under pressure is the AUDNZD.  AMD earnings supported by servers despite weak PC sales Advanced Micro Devices rose in the after-hour trading as it reported better than estimated Q3 earnings, although issuing guidance that missed analysts’ expectations. EPS came in $0.67 vs estimated $0.65, revenue $5.57B vs estimated $5.62B. Guidance suggested AMD is expecting strong growth in its server chip business in the coming quarters. Q3 results were in-line with a warning issued by AMD on October 6 which helped to reset expectations, as weak PC sales continued to underpin. Airbnb drops on disappointing guidance Airbnb reported its highest revenue and most profitable quarter but a muted Q4 outlook as consumer preferences are shifting back to cities which tend to have lower rates based on smaller sized spaces. Q3 revenue rose 29% to $2.88B, estimated $2.84B. Net profit rose 45.6% to $1.21B. But the company said it expected bookings to moderate after a bumper third quarter. Sony surges on profit beat Weak yen propped up revenues for Sony and also nudged up the fiscal year profit outlook, pushing shares higher in early trading. Q2 sales came in at 2.75tr yen, est. 2.67 tr yen while operating income was 344bn yen vs. 280.66bn yen expected. Operating profit beat was broad-based, except in games.   For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-2-nov-02112022
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Increase In German Trade Balance | Waiting For Fed’s Decision

Kamila Szypuła Kamila Szypuła 02.11.2022 10:51
Today, the most important reports for the markets will be from Germany and the USA. In the first half of the day, attention is focused on reports from Germany, but the markets are still awaiting the most important decision of the day - the Fed's decision. German Trade Balance (Sep) The trade result report for the biggest waterfall in the euro zone is positive. The current reading shows an increase from 1.2B to 3.7B. This is quite an optimistic result and could be the start of a trend reversal. Moreover, a trade surplus can create employment and economic growth, but may also lead to higher prices and interest rates within an economy. The reading was very high in April and then dropped drastically. The very low level was maintained for the next two months. After the increase in August, there was another downward trend. This trend was expected to continue this time, the expected level was 0.2B. Source: investing.com German Manufacturing PMI Expectations for Germany Manufacturing were lower than the previous reading, ie the expected level was at 45.7 against the latest reading of 47.8. The current reading of the gauge is 45.5. Another decline was clearly expected, but was 0.2% lower than the forecast level. As you can see, the approaches to this indicator and this sector are projected on a downward trend. German Unemployment Change The change in the number of unemployed fell in Germany from 15K to 8K. This is a positive reading in view of the sustained unemployment rate of 5.5%. As we can read from the data, this number has been decreasing month by month since the sudden increase in the unemployed in June. This is a positive signal for the labor market. Source: investing.com ADP Nonfarm Employment Change The first report that will be published in America will concern the labor market, namely the monthly change in non-farm, private employment. This number is expected to drop from 208K to 195K. These forecasts suggest that the recent rise was just a step back from the prevailing downtrend. Source: investing.com Crude Oil Inventories The next report will be the weekly report on the U.S. Crude Oil Inventories. The last reading was at 2.588M and this was a sharp increase. It is currently predicted to reach the level of 0.367M. What if? If the decline in crude is less than expected, it implies greater demand and is bullish for crude prices. The same can be said if a increase in inventories is more than expected. Fed Interest Rate Decision The most important event of the day, or even of the week, is the Fed's decision on interest rates. The Fed is not expected to follow other central bank decisions and will not soften its decisions. The Fed rarely deviates from expectations in its decisions, therefore the market is ready for another interest rate hike by 75bp. We have to wait for this decision until 19:00 CET Read more: What Can Bring The Fed's Next Decision And What It Means For Economy?| FXMAG.COM FOMC Press Conference U.S. Federal Open Market Committee (FOMC) Press Conference will take place a half an hour after decision. Valuable comments may appear at the press conference regarding the current decision, the situation of the farm and future activities. Summary 8:00 CET German Trade Balance (Sep) 9:55 CET German Manufacturing PMI (Oct) 9:55 CET German Unemployment Change (Oct) 13:15 CET ADP Nonfarm Employment Change (Oct) 15:30 CET Crude Oil Inventories 19:00 CET Fed Interest Rate Decision 19:30 CET FOMC Press Conference Source: Economic Calendar - Investing.com
FXStreet’s Dhwani Mehta Opinion About Gold Movements

Central Banks Increased Their Buying Of Gold Significantly

ING Economics ING Economics 02.11.2022 11:32
The commodities complex was provided with a boost following unverified reports that China could look to ease its zero-Covid policy. Meanwhile, markets today will be fully focused on the outcome of the FOMC meeting In this article Energy- OPEC output edges higher Metals – Aluminium smelters in Henan to reduce capacity on losses Energy- OPEC output edges higher The oil market had a strong day yesterday with ICE Brent settling almost 2% higher after unverified reports that China could look to ease its zero-Covid policy. However, for now, this is nothing more than a rumour. China’s covid policy has weighed heavily on oil demand this year with crude oil imports over the first nine months of 2022 averaging 9.95MMbbls/d, down 4.4% YoY. Numbers from the API overnight have provided some further support to the market in early morning trading in Asia. US crude oil inventories are reported to have fallen by 6.53MMbbls over the last week. This is significantly more than the roughly 200Mbbls draw the market was expecting. For refined products, distillate fuel oil stocks increased by 865Mbbls, while gasoline stocks fell by 2.64MMbbls, which would have boosted sentiment further. Overall, it was a bullish set of numbers. However, we will need to see what the more widely followed EIA numbers show later today. Preliminary numbers from Bloomberg show that OPEC oil production in October increased by 30Mbbls/d to average 29.98MMbbls/d. The largest increases came from the UAE, Nigeria and Iraq, whose output increased 70Mbbls/d, 50Mbbls/d and 50Mbbls/d respectively. While Angola, Congo and Libya saw the largest declines with output falling by 60Mbbls/d, 40Mbbls/d and 30Mbbls/d respectively. Production target levels for the broader OPEC+ group were lowered by 100Mbbls/d for October. However, given that most producers are still producing well below their target production levels, the group is still well ahead in terms of compliance levels. Metals – Aluminium smelters in Henan to reduce capacity on losses Base metals rallied yesterday on speculation that Beijing will prepare to wind down China’s Covid-19 rules. Chinese stocks and the yuan also rallied. An unverified social media post circulating online suggested that a committee is being formed to assess scenarios on how to exit its current Covid zero policy. Three aluminium smelters in China’s Henan province plan to halt 110kt of combined annual capacity on losses and to curb pollution during the winter heating season, according to a report from the Shanghai Metals Market. The plants plan to halt 10-15% of their total capacity by the middle of this month with the restart time unknown for now. In precious metals, gold prices rose as the dollar fell ahead of a Federal Reserve meeting. Gold has been struggling to find direction in recent weeks, trading around $1,650/oz, as investors wait for the Fed’s decision, with market expectations firmly behind a fourth consecutive 75bp interest rate hike. The latest data from the World Gold Council shows that central banks increased their buying of gold significantly over the third quarter. Central banks bought 399 tonnes in 3Q22, which is up 341% YoY and also a record quarterly amount. The data shows that Turkey, Uzbekistan, India and Qatar were the largest buyers of gold over the quarter. Those who report their numbers were net buyers of almost 90 tonnes, which leaves a significant amount of purchases from unknown buyers. TagsOPEC Oil Gold Covid-19 China Aluminium   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read morein
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Can We See An Improvement In Supplies In The Black Sea Region? | Crude Oil Is Growing

Saxo Bank Saxo Bank 02.11.2022 11:57
Summary:  A surprisingly strong survey of US job openings yesterday suggests that the US labor market remains extremely tight, potentially continuing to feed inflationary pressures. Today sees the latest FOMC meeting, at which the Fed will have to grapple with guidance and whether to flag the much-anticipated possible downshift from 75 basis point hikes at the December meeting. Given the recent easing of financial conditions and strong risk sentiment, the Fed may try to lean against the market and hawkishly keep all options on the table. Industrial metals run higher on speculation China is preparing to ease Covid rules.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The fear of recession has eased quite a bit in October and as a result equities have rallied from their lows in October. S&P 500 futures are trading around the 3,868 level this morning as the US 10-year yield has moved higher above 4% again. The big event is tonight’s FOMC rate decision which will prove to be a delicate balancing act for the Fed keeping financial conditions tight enough but smooth the transition to this higher level of interest rates without breaking the market. If the market interprets a dovish tilt tonight the 4,000 level is quickly the main focus point in the S&P 500 futures. Euro STOXX 50 (EU50.I) STOXX 50 futures touched the 200-day moving average yesterday before retreating, but this morning the index futures are continuing higher trading around the 3,661 level, which is just below the 200-day moving average. The 3,800 level in STOXX 50 futures could be the next big level to watch if momentum continues. European equities are enjoying tailwinds from easing energy and electricity markets and better than expected GDP reports in Q3 showing that the European economy can absorb the input cost shocks for now. FX: USD rallies on very strong JOLTS survey, eyes FOMC The greenback rebounded yesterday on the very strong September JOLTS jobs openings survey, which jumped sharply from the large August dip (see more below), helping US treasury yields back higher. See the FOMC meeting preview under What are we watching next? below. Today and in the wake of the important US jobs data tomorrow, the pivotal areas for EURUSD are perhaps 0.9850 and parity on the daily/weekly close, for GBPUSD, the 1.1400-1.1500 area is the zone of contention, and in AUDUSD, 0.6350-0.6530. USDJPY will be sensitive to any sharp move in US treasury yields, leaning toward 150.00 if yields jump in the wake of tomorrow’s US jobs report or challenging 145.00 if the Fed fails to surprise hawkish today and the jobs data is weak. Gold (XAUUSD) Gold reached $1657 before running into sellers as bond yields rose following stronger US economic data. The dollar and yields developments continue to haunt the metal, especially ahead of today’s critical Fed meeting. Silver, initially enjoying a trifecta of support from rising gold and copper as well as the weaker dollar, traded up to once again challenge resistance at $20/oz before running out of steam. Crude oil (CLZ2 & LCOZ2) Crude oil trades higher for a second day with WTI challenging a recent high at $90 and Brent moving closer to $97.25 resistance. Oil prices initially received a boost from China reopening speculation, the weaker dollar and OPEC+ production cuts before extending gains after the API reported a bumper 6.5-million-barrel drop in crude inventories. Apart from today’s official inventory report from the EIA, crude oil traders will turn their attention to today’s FOMC meeting given the potential impact the rate decision and comments may have on the dollar and the general level of risk sentiment. US treasuries (TLT, IEF) The key US 10-year treasury yields pulled back above the important 4.00% level after the strong September jobs openings survey out of the US yesterday, but far more important are today’s FOMC meeting and further incoming data, discussed below. The recent price action makes it clear that the 3.90% area is important resistance for bond yields and at the shorter end of the curve, the 5.00% level will be an important focus, given that the market has been unwilling to take Fed expectations more than a couple of basis points beyond that level as it continues to see the Fed cutting rates by the end of next year. What is going on? Metals run higher on China speculation Copper and nickel led a surge in base metals on speculation - which was later denied - that Beijing is preparing to ease Covid rules. However, metals held gains after China’s outgoing premier Li Keqiang said China will strive for a "better" economic outcome and promote stable, healthy and sustainable development, saying China’s economy is showing signs of stabilizing, as well as “rebounding momentum" thanks to stimulus. Developments showing the potential support for industrial metals when restrictions are being lifted, and it brought the focus back on supply issues in Copper, with inventories running low on exchanges and major producers struggling to meet their production targets. The BCOM Metal index jumped 3.4% with steel and iron ore prices also receiving a bid. HG copper’s further advance will be challenged by multiple resistance levels between $3.55 and $3.78. European earnings This morning we have got strong results from Novo Nordisk, Maersk, and GSK, while the wind turbine maker Vestas misses big on revenue and EBIT. Vestas is also adjusting its FY EBIT to –5% from previously –5% to 0%. Novo Nordisk reports Q3 revenue of DKK 45.6bn vs est. DKK 44.4bn and EBIT of DKK 20.2bn vs est. DKK 19.2bn in addition to increase its sales forecast due to strong demand for its obesity drug Wegony. Maersk is still enjoying strong earnings beating estimates on EBIT in Q3, but the container shipping company is lowering its forecast for container volume and in general the market is expecting a slowdown in 2023. US job openings and ISM manufacturing complicate Fed’s message US job openings saw an unexpected rebound in September amid low unemployment, suggesting more wage gains could be in store. JOLTS job openings came in higher at 10.7 million in September from a revised 10.3 million in August. This likely thrashes expectations of any material downshift from the Fed after today’s widely expected 75bps increase. Meanwhile, October's ISM manufacturing index also remained in expansion at 50.2, albeit falling from last month’s 50.9. However, disinflationary trends were emphasised as the index of prices paid fell to an over 2-year low. Still, sticky shelter and services inflation remains materially high suggest still-higher interest rates remain on the horizon. Terminal rate pricing for Fed funds futures has picked up again to 5% levels, and it would be hard for the Fed to push it any higher at this point, but what it can clearly hint at today is pushing out of the rate cut expectations for next year. Read our full FOMC preview here for further insights. Lack of insurance halted UN Black Sea shipments, but progress being made The UN halted grain shipments from Ukraine's Black Sea ports on Wednesday, after Russia warned ships weren't safe using the route and demanded guarantees from Ukraine. However, reports suggested early on Wednesday that an agreement had been reached and ships will start to sail again from Thursday, as pressure on Russia continues to build. We continue to watch crop and fertilizer prices, as a meaningful reversal could come through if we see improving shipments across the Black Sea region. AMD earnings supported by servers despite weak PC sales Advanced Micro Devices rose in the after-hour trading as it reported better than estimated Q3 earnings, although issuing guidance that missed analysts’ expectations. EPS came in $0.67 vs estimated $0.65, revenue $5.57B vs estimated $5.62B. Guidance suggested AMD is expecting strong growth in its server chip business in the coming quarters. Q3 results were in-line with a warning issued by AMD on October 6 which helped to reset expectations, as weak PC sales continued to underpin. Airbnb drops on disappointing guidance Airbnb reported its highest revenue and most profitable quarter but a muted Q4 outlook as consumer preferences are shifting back to cities which tend to have lower rates based on smaller sized spaces. Q3 revenue rose 29% to $2.88B, estimated $2.84B. Net profit rose 45.6% to $1.21B. But the company said it expected bookings to moderate after a bumper third quarter. Sony surges on profit beat Weak yen propped up revenues for Sony and also nudged up the fiscal year profit outlook, pushing shares higher in early trading. Q2 sales came in at 2.75tr yen, est. 2.67 tr yen while operating income was 344bn yen vs. 280.66bn yen expected. Operating profit beat was broad-based, except in games. Australian home-lending falls more than expected in September House lending in Australia fell 8.2% YoY in September (far more than the market expected) while building construction lending fell 36.6% YoY, with the weaker data sets coming out just a day after the RBA remained dovish - raising Australia’s official cash rate by 25bps (0.25%) to 2.85%. Yesterday the RBA acknowledged tighter financial conditions and the ‘full effect’ of increased interest rates are yet to be felt in ‘mortgage payments’, but the rate hikes since May, combined with higher inflation have already put pressure on household budgets. What are we watching next? FOMC meeting – Fed may want to keep a low profile, but can’t afford to be seen dovish The September JOLTS jobs openings data point yesterday was the latest to suggest that the Fed will have a hard time pre-committing to any slowdown in the pace of its policy tightening after the 75-basis-point hike that is priced in for today’s meeting. The December 14 FOMC meeting odds have not shifted much over the last couple of weeks, as investors still favour a downshift to a 50-basis-point move then and another 50 basis points of tightening early next year over the space of a couple of meetings. To surprise hawkish today, the Fed may have to make it very clear that it is willing to continue tightening beyond current expectations and beyond its September forecasts to boost the greenback via rate guidance, but is probably also reluctant to pre-commit to anything. Pointing to high reactivity to further incoming data may be one way to achieve this. That will then mean extreme volatility on the next bits of Incoming data ahead of the December meeting, starting with the ISM Services tomorrow and then the October jobs report this Friday and two more CPI releases before December 14. Earnings to watch Today’s US earnings focus is Estee Lauder, Booking, Fortinet, and Albemarle. Analysts expect revenue to decline by 11% y/y at Estee Lauder but improving operating margin. The cosmetic business is facing headwinds from labour costs and transportation. Booking is expected to deliver strong earnings growth given the better-than-expected result from Airbnb yesterday. Analysts expect 26% y/y revenue growth and EPS growth of 35% y/y. Fortinet is one of the market leaders in the fast-growing cyber security industry and with the ongoing war in Ukraine we expect demand for cyber security solutions to be high; analysts expect Fortinet to grow revenue by 30% y/y in Q3. Albemarle is riding the demand for lithium as electric vehicle sales is seeing explosive growth. Albemarle is expected to deliver 168% y/y growth in revenue and EPS growth of 545% y/y. Today: Suncor Energy, Nutrien, Novo Nordisk, Maersk, Vestas Wind Systems, GSK, Qualcomm, CVS Health, Estee Lauder, Booking, Fortinet, Ferrari, Albemarle Thursday: Verbund, Barrick Gold, Orsted, Novozymes, BNP Paribas, BMW, Enel, ING Groep, DBS Group, ConocoPhillips, Amgen, PayPal, Starbucks, Regeneron Pharmaceuticals, EOG Resources, Moderna, MercadoLibre, Block, Cloudflare, Coinbase Friday: Enbridge, Societe Generale, Intesa Sanpaolo, SoftBank, Amadeus IT Group, Duke Energy, Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final Oct. Manufacturing PMI 0855 – Germany Oct. Unemployment Change/Rate 1215 – US Oct. ADP Employment Change 1430 – EIA's Weekly Crude and Fuel Stock Report 1800 – US FOMC Meeting 1830 – US Fed Chair Powell Press Conference 2000 – New Zealand RBNZ Governor Orr before Parliamentary Committee 0145 – China Oct. Caixin Services PMI  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-2-2022-02112022
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Yesterday Brent crude oil seemed to be supported by news about Chinese Covid policy

ING Economics ING Economics 02.11.2022 12:19
The commodities complex was provided with a boost following unverified reports that China could look to ease its zero-Covid policy. Meanwhile, markets today will be fully focused on the outcome of the FOMC meeting Energy- OPEC output edges higher The oil market had a strong day yesterday with ICE Brent settling almost 2% higher after unverified reports that China could look to ease its zero-Covid policy. However, for now, this is nothing more than a rumour. China’s covid policy has weighed heavily on oil demand this year with crude oil imports over the first nine months of 2022 averaging 9.95MMbbls/d, down 4.4% YoY. Numbers from the API overnight have provided some further support to the market in early morning trading in Asia. US crude oil inventories are reported to have fallen by 6.53MMbbls over the last week. This is significantly more than the roughly 200Mbbls draw the market was expecting. For refined products, distillate fuel oil stocks increased by 865Mbbls, while gasoline stocks fell by 2.64MMbbls, which would have boosted sentiment further. Overall, it was a bullish set of numbers. However, we will need to see what the more widely followed EIA numbers show later today. Preliminary numbers from Bloomberg show that OPEC oil production in October increased by 30Mbbls/d to average 29.98MMbbls/d. The largest increases came from the UAE, Nigeria and Iraq, whose output increased 70Mbbls/d, 50Mbbls/d and 50Mbbls/d respectively. While Angola, Congo and Libya saw the largest declines with output falling by 60Mbbls/d, 40Mbbls/d and 30Mbbls/d respectively. Production target levels for the broader OPEC+ group were lowered by 100Mbbls/d for October. However, given that most producers are still producing well below their target production levels, the group is still well ahead in terms of compliance levels. Metals – Aluminium smelters in Henan to reduce capacity on losses Base metals rallied yesterday on speculation that Beijing will prepare to wind down China’s Covid-19 rules. Chinese stocks and the yuan also rallied. An unverified social media post circulating online suggested that a committee is being formed to assess scenarios on how to exit its current Covid zero policy. Three aluminium smelters in China’s Henan province plan to halt 110kt of combined annual capacity on losses and to curb pollution during the winter heating season, according to a report from the Shanghai Metals Market. The plants plan to halt 10-15% of their total capacity by the middle of this month with the restart time unknown for now. In precious metals, gold prices rose as the dollar fell ahead of a Federal Reserve meeting. Gold has been struggling to find direction in recent weeks, trading around $1,650/oz, as investors wait for the Fed’s decision, with market expectations firmly behind a fourth consecutive 75bp interest rate hike. The latest data from the World Gold Council shows that central banks increased their buying of gold significantly over the third quarter. Central banks bought 399 tonnes in 3Q22, which is up 341% YoY and also a record quarterly amount. The data shows that Turkey, Uzbekistan, India and Qatar were the largest buyers of gold over the quarter. Those who report their numbers were net buyers of almost 90 tonnes, which leaves a significant amount of purchases from unknown buyers. Read this article on THINK TagsOPEC Oil Gold Covid-19 China Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Oil maintains positive momentum

The Risk Of Seeing Lower Crude Oil Prices Seems To Be Low

Saxo Bank Saxo Bank 02.11.2022 14:36
Summary:  Crude oil trades near the top of its current range with the lack of visibility regarding the short-term direction likely to keep the market mostly rangebound with Brent having settled into the 90’s while WTI is struggling to break above $90 per barrel. Key drivers remain the supply impact of OPEC+ production cuts and upcoming EU sanctions against Russian oil while the demand side is focusing on the timing of Covid restrictions being lifted in China and a general worry about the global economic outlook Crude oil trades near the top of its current range with the lack of visibility regarding the short-term direction likely to keep the marketmostly rangeboundwith Brent having settled into the 90’s while WTI is struggling to break above $90 per barrel. Key market focus remains the supply impact of OPEC+ production cuts and upcoming EU sanctions against Russian oil as well as a tight product market while the demand side is torn between the prospect of a pickup in Chinese demand once Covid restrictions are lifted and worries that global economic activity will continue to weaken in the coming months.  Adding to these specific oil market developments, traders are also watching the current ebb and flow in the general level of risk appetite currently being orchestrated by movements in the dollar and US Treasury yields. With that in mind the market awaits news and guidance from today’s FOMC meeting.  The attempted bounce seen this week has been led by speculation - which was later denied - that Beijing is preparing to ease Covid rules. However, most of the gains which also benefitted industrial metals held after China’s outgoing premier Li Keqiang said China will strive for a "better" economic outcome and promote stable, healthy and sustainable development, saying China’s economy is showing signs of stabilizing, as well as “rebounding momentum" thanks to stimulus. Ahead of the agreed OPEC+ production cuts this month OPEC itself, according to a Bloomberg survey, raised its output by 30,000 barrels per day in October, almost hitting 30 million barrels per day for the first time since April 2020 when Saudi Arabia temporarily hiked production just before demand collapsed as the pandemic shut down the world. While the table below only shows part of the equation the announced 2 million production cut this month will be less as several OPEC and non-OPEC+ members are struggling to reach their baseline production target. Overall, the cut is likely to be around 1.2 million barrels per day with just a handful of producers cutting, four of them shown below. Apart from today’s FOMC announcement, the market will also be watching EIA’s weekly storage report, not least after the American Petroleum Institute last night released their report showing a counter seasonal6.5 million barrel drop in US crude stocks. In addition, the market will also be watching changes in gasoline and distillate stocks, both currently at precariously low levels and for signs of a pickup in refinery demand as seasonal maintenance ends. The level of crude and product exports will also be watched after record crude exports in the previous week helped drive total exports of crude and fuel to a record 11.4 million barrels per day. As long as the product market remains this tight, the risk of seeing lower crude oil prices -despite the current worry about recession - seems to be low so we maintain our forecast for a price range in Brent for this quarter between $85 and $100, with the tightening product market increasingly skewing the risk to the upside. With that in mind, a close above $98.75 will confirm a short term technical uptrend. WTI meanwhile trades within a narrowing range with some local resistance at $98.75. Above that level, and in order to attract fresh momentum, the price would likely need to close above $93.65 for that to change. Source: https://www.home.saxo/content/articles/commodities/opec-production-cuts-support-crude-oil-prices-02112022
FX Daily: Upbeat China PMIs lift the mood

In The US, Stocks May Remain Risk-Free | According To Chinese Prime Minister Li Keqiang, The Chinese Economy Is Showing Signs Of Stabilization

Saxo Bank Saxo Bank 03.11.2022 08:25
Summary:  The Nasdaq 100 & S&P 500 drop after the Fed made hawkish remarks post lifting rates 0.75%. Fed says ‘we still have some ways to go’. It will make ‘ongoing increases’ until rates are ‘sufficiently restrictive’. Provided the upcoming economic data is strong, and shows the US economy is, the Fed can keep hiking. However, it could pivot as early as December. Until the next major US eco data release it seems equites could remain in risk-off mode, especially with high PE stocks, like tech, while defensive and commodity plays with rising cash flows could continue to garner interest. China’s Li signals a potential economic recovery, fuelling commodities and China’s markets. Crude oil rocks up after OPEC raised its forecast for oil demand. a2 Milk gets FDA green light. What is happening in markets? The Nasdaq 100 (USNAS100.I) & S&P 500 (US500.I) drop after Fed made hawkish remarks post lifting rates 0.75% US major indices dropped on Powell's hawkish comments. The S&P 500 shed 2.5% and the Nasdaq plunged 3.4% with megacap tech stock copping the brunt of the selloff with Apple (AAPL) down 3.73% and Tesla (TSLA) down 5.6% with the EV giant reportedly shutting its flagship showroom in China, in Beijing as it shift strategy. What prompted high PE stocks being sold off was that Treasuries yields rose across the curve, with the 10-years up 4 bps to 4.08%. The dollar reversed course and rose against every G-10 peer save the yen. So, the bottom line is, the market will now be contending with a risk-off tone, until the next US economic data sets prove the Fed can pivot. Oil moved higher, while corn and wheat dropped on grain-corridor developments. Elsewhere, Boeing (BA) shares rose 2.8% with the plane maker saying it could generate $10 billion in cash annually by mid-decade, once it turns around its operations after years of setbacks. Australia’s ASX200 (ASXSP200.1) futures suggest risk-off mode will be enacted with tech stocks on notice. Focus will be on milk Aussie tech stocks are likely to come under pressure with US bond yields rising again. However, there may be bright sparks today. Iron ore (SCOA) rose 0.4% sitting back above $80.85, which might support iron ore companies shares. That said, BHP closed 3.1% lower in NY. A2Milk (A2M) may garner attention after the US FDA gave approval for a2 Milk to be sold in the US. Bubs Australia (BUB) may likely 'piggyback' on any gains. That said, you could expect infant formula stocks to gain interest, particularly as China’s outgoing premier signal China is striving to build sustainable development. In other news; Rio (RIO) moved in on taking over a Canadian copper-gold company, Turquoise Hill Resources (TRQ). On Wednesday in Australia, Rio offered C$43 per share for the Canadian miner, saying that is its best and final offer. Rio is seeking to buy 49% of the Canadian miner, that it doesn’t already own, in a deal valued at around C$4.24 billion. Turquoise Hill Resources shares surged The Investor meeting to consider the takeover is set for November 8. Rio is also bidding to gain control of Mongolia’s Oyu Tolgoi, one of the world’s biggest copper mines. Crude oil (CLX2 & LCOZ2) rocks up after OPEC raised its forecast for oil demand   Oil rallied for several reason; firstly OPEC rose its forecasts for world oil demand in the medium to longer term, saying that $12.1 trillion of investment is needed to meet this demand. Second, an EIA report showed US gasoline inventories fell to the lowest since 2014 and East Coast distillate stocks slide to a record low seasonally, which intensifies supply concerns. Crude supplies also fell. Natural gas rose in the US and in Europe. Fed says ‘we still have some ways to go’; and it will make ‘ongoing increases’ until rates are ‘sufficiently restrictive’. What to watch next, what it means for equities Federal Reserve Chair Jerome Powell stuck to his campaign to bring inflation under control, saying “we still have some ways to go”, before rates were ‘sufficiently restrictive’ but the path may soon involve smaller hikes. Still, Powell sees it may be appropriate to make smaller hikes, as soon as December, or at the meeting after. But, he also said it was very premature to be thinking about pausing. After the Fed raised rates by 75 basis points on Wednesday, Powell said “incoming data since our last meeting suggests that ultimate level of interest rates will be higher than previously expected.” He also mentioned rate hikes have a lag effect on the economy, and the Fed needs to take this into account. This means, the devil will be in the detail ahead, as in the upcoming economic data which the Fed will respond to. Provided the upcoming economic data is strong, shows the US economy is, then the Fed can essentially keep hiking. For equites this means the risk-off mode in high PE stocks, like tech can possibly continue, inversely, defensive and commodity plays with rising cash flows might continue to garner interest. Saxo’s Head of FX Strategy says, so cue tomorrow’s ISM Services, Friday’s US jobs report, the October CPI due out next week, November 11 next week, and the November CPI report due December 12. China’s Li Keqiang signals a potential economic recovery, fueling commodities and China’s markets China’s outgoing premier Li Keqiang said China will strive for a "better" economic outcome and promote stable, healthy and sustainable development, saying China’s economy is showing signs of stabilizing, as well as “rebounding momentum" thanks to stimulus. This has supported gains in iron ore (SCOA) and also supported optimism in Asian equites. Australian lending and building approvals fall more than expected, giving the RBA greater cause to remain dovish. Keeping AUDUSD on notice House lending in Australia fell 8.2% in September (far more than the market expected) while building construction lending fell 36.6%, with the weaker data sets coming out just a day after the RBA remained dovish - rising Australia’s official cash rate by 25bps (0.25%) to 2.85%. On Tuesday the RBA acknowledged tighter financial conditions and the ‘full effect’ of increased interest rates are yet to be felt in ‘mortgage payments’, but the rate hikes since May, combined with higher inflation have already put pressure on household budgets. We believe the RBA could increasingly become dovish despite inflation running away to the upside. We think the RBA may be forced to potentially pause on rate hikes sooner, as they have done in history, despite peak inflation continuing to rise YoY. The AUDUSD remains under pressure for this reason. Plus until the Fed has reason to pivot the US dollar remains supported. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-3-nov-03112022
Russia Look Set To Double Its Exports For The First Half Of 2023

Volatility In The Grain Market May Continue | Global Demand For Containers Will Fall This Year

Saxo Bank Saxo Bank 03.11.2022 10:45
Summary:  Traders were given a case of whiplash yesterday over the FOMC meeting after the new monetary policy statement confirmed the impression that the Fed will soon downshift the size of rate hikes after another 75 basis points hike at this meeting. But then a very hawkish press conference from Fed Chair Powell took Fed terminal rate expectations next year to new highs for the cycle, pummeling risk sentiment and lighting a fire under the greenback. The next key focus will be tomorrow’s US October jobs report.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Powell delivered a jolt to equities communicating on the FOMC press conference that the terminal rate could be higher than what the market expects and that rates will stay higher for longer. S&P 500 futures could out many support levels on the downside in the last night session and are continuing lower this morning trading around the 3,765 level with the 3,700 level being the next level to watch on the downside. Powell’s remarks confirm our view that inflation and interest rates will remain higher for longer and that equities will be under pressure in the medium term, being negatively impacted by higher interest rates and more margin compression. Euro STOXX 50 (EU50.I) STOXX 50 futures are naturally responding to Powell’s statements yesterday trading lower this morning around the 3,575 level with the 100-day moving average around the 3,528 level being the gravitational point on the downside to watch. FX: USD bull market is back in business after hawkish Fed Chair Powell presser The dollar was first weak yesterday on the new monetary policy statement before the hawkish Powell presser lit a fire under the greenback as he made it clear that the ceiling could be raised next year for the “ultimate level” of Fed funds rate, de-emphasizing the size of rates from here after several 75-basis point moves. The US dollar ripped back to the strong side, generating compelling reversal patterns for USD bulls almost across the board, with the important 0.9876-0.9850 area falling in EURUSD, GBPUSD slipping below the bottom of the 1.1400-1.1500 zone, AUDUSD crushed back below 0.6400, USDJPY support at 145.00 surviving yesterday with the pair lifting back well north of 147.00, etc. Of course, the USD will be sensitive to incoming data, but yesterday established a clear line in the sand that USD bulls will now use for longs, eyeing the cycle highs for the greenback against most other G10 currencies. Gold (XAUUSD) Gold trades lower following a volatile session where Fed Chair Powell managed to wrongfoot most markets. Following the expected 75 bp rate hike the written statement raised the prospect of the FOMC pausing to assess the “cumulative tightening” impact before saying at the press conference “We still have some ways to go. And incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected”. Most markets, including gold, responded by turning sharply lower with the yellow metal slumping 2% from the high. These comments send a signal that we have not yet reached peak hawkishness and with that the risk of a prolonged period of dollar and yield strength slowing gold’s recovery. It’s the incoming data that everyone will have to watch, starting with US payrolls this Friday. Crude oil (CLZ2 & LCOF3) Crude oil traded lower after the FOMC meeting raised expectations for a higher peak in US rates and together with continued uncertainty over China demand they helped offset support from a tightening fuel market. Earlier in the day the market jumped after the EIA reported US gasoline supplies had fallen to a 2014 low while distillate supplies on the East Coast had reached a near record seasonal low. China’s zero-Covid tolerance remains the overall strategy according to the government, thereby removing some earlier optimism about a change. However, OPEC+ cuts from this month and upcoming EU sanctions is likely to keep the market rangebound with resistance in Brent at $97.25. US treasuries (TLT, IEF) The hawkish Powell press conference yesterday (more below) took Fed rate expectations to new highs for the cycle and the 2-year rate is pushing on cycle highs near 4.62%, while the 10-year merely rebounded above 4.00% as the yield curve is close to its most inverted for the cycle at below –50 bps for the 2-10 spread. Incoming US data will be the focus next for the longer end of the yield curve and whether 10-year yields can threaten the cycle highs well north of 4.25%. What is going on? FOMC one-two as dovish interpretation of new policy statement reversed by hawkish Powell presser The initial read of the FOMC statement was dovish, as the new statement inserted the phrase: “The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” This read a bit dovish as the market assumed that this means the anticipated downshift in Fed rate hikes is coming and US yields dropped, risk up, USD down, etc. In the press conference, however, Fed Chair Powell was far more hawkish, saying there is a “ways to go”, and spelling out that the incoming data means that the “ultimate level” that the Fed funds reaches is likely to move to higher levels than was though at the September meeting. This had Fed expectations for the spring of next year edging back toward the cycle highs of 5.00% and then closing the day a full 10 basis points higher near 5.10%. While Powell did say it may be possible that the Fed steps down to smaller hikes as soon as the December meeting, the FOMC felt that the speed of hikes Is becoming “less important” (leaving market to infer that the Fed just keeps hiking at more meetings if incoming data supports doing so. As well, we must remember that the Fed has cranked up the pace of quantitative tightening in the background, which provides its own tightening pressure on markets and arguably equates with several hundred basis points of rate tightening over the course of a year. European earnings this morning Orsted is raising its full-year guidance on EBITDA excluding new partnerships to DKK 21-23bn and Q3 revenue was DKK 36.5bn vs est. DKK 26.7bn highlighting the increased profitability in power generation using renewable energy. BNP Paribas beats on both revenue and net income driven by strong results in its fixed-income, commodities, and currencies trading. BMW is also beating on both Q3 revenue and EBIT and maintaining its EBIT margin fo 7-9%. US earnings recap Fortinet, the industry leader in cyber security, delivered Q3 revenue of $1.15bn vs est. $1.12bn and adj. EPS $0.33 vs est. $0.27 and Q4 outlook on revenue of $1.28-1.32bn vs est. $1.27bn and Q4 EPS outlook of $0.38-0.40 vs est. $0.35, but despite strong figures shares were lower in extended trading. Albemarle delivered high growth in Q3 on revenue and earnings, but lowered its fiscal year revenue and EPS a bit against their previous guidance. Wheat (ZWZ2) prices slump as Russia to resume grain deal participation Amid mounting pressure on Russia to avoid a galloping food crisis, Russia finally agreed to resume its participation in the Ukraine grain deal, allowing safe passage of Ukraine’s crop exports. Wheat prices dropped over 6% on the news and corn was lower as well, with vessels likely to resume normal operations today. Russia however threatens to pull out of the agreement at any time, which suggests volatilities can continue till the war goes on. Better-than-expected US ADP turns attention on NFP US ADP national employment reported a 239k increase in October, above the expected 193k and the prior, revised lower, 192k, ahead of the key NFP on Friday. While there is little confidence in this data set as the methodology has been recently revised and there is limited backward data, a tight labor market is still the clear read. Focus now turns to NFP due on Friday, with unemployment rate and wage growth remaining as the key metrics to track. Bloomberg consensus expectations are still set for a headline gain of 200k for October, with unemployment rate inching a notch higher to 3.6% from 3.5% previously and wage growth slightly weaker at 4.7% YoY from 5.0% YoY previously. Maersk warns about rapid economic deterioration Maersk, the world’s largest owner of container ships, said it expects global container demand to decline by up to 4% this year, as against its previous estimate of +/- 1%. It also warned that next year could be worse, signalling further downturn in global trade may be on the cards. Still, Q3 earnings before interest and tax rose to $9.48bn vs. $8.63bn expected. What are we watching next? Next US data points and impact on US yields Fed Chair Powell made it clear yesterday that he didn’t feel the size of Fed rate hikes are very important after yesterday’s 75 basis point move, but that the Fed could continue to tighten beyond what the Fed itself was forecasting less than two months ago, suggesting a higher peak rate. Currently, peak Fed rates for next year are projected at 5.10% by next spring, a new cycle high and well above the prior highs just above 5.0% after Powell made a hawkish impression at yesterday’s press conference. That leaves the market still very sensitive to incoming data for gauging how high the Fed might take rates next year, with the next data points of note the October US ISM Services survey up today and the October jobs data up tomorrow. Earnings to watch Today’s US earnings focus is ConocoPhillips, PayPal, Starbucks, MercadoLibre, and Cloudflare. Based on previous results in the energy sector we expect ConocoPhillips to deliver good results. PayPal has had headwinds for some time and could disappoint. One of our worst performing theme baskets has been e-commerce which has been hit by difficulties in advertising targeting due to Apple’s data privacy decision, supply chain bottlenecks, and explosive prices on logistics. MercadoLibre is the South American version of Amazon and analysts expect revenue growth of 45% y/y and EPS growth of 24% y/y. Cloudflare will be in focus and given the negative sentiment over Fortinet’s earnings release last night expectations might be too high for any cyber security company to deliver on. Today: Verbund, Barrick Gold, Orsted, Novozymes, BNP Paribas, BMW, Enel, ING Groep, DBS Group, ConocoPhillips, Amgen, PayPal, Starbucks, Regeneron Pharmaceuticals, EOG Resources, Moderna, MercadoLibre, Block, Cloudflare, Coinbase Friday: Enbridge, Societe Generale, Intesa Sanpaolo, SoftBank, Amadeus IT Group, Duke Energy, Economic calendar highlights for today (times GMT) 0730 – Switzerland Oct. CPI 0805 – ECB President Lagarde to speak 0900 – Norway Norges Bank Deposit Rate announcement 1130 – US Oct. Challenger Job Cuts 1200 – UK Bank of England Rate Announcement 1230 – UK Bank of England Governor Bailey press conference 1230 – US Sep. Trade Balance 1230 – Canada Sep. Building Permits 1230 – Canada Sep. International Merchandise Trade 1230 – US Q3 Nonfarm Productivity/Unit Labor Coasts 1230 – US Weekly Initial Jobless Claims 1330 – Czech Central Bank Rate Announcement 1400 – US Sep. Factory Orders 1400 – US Oct. ISM Services 1430 – EIA's Weekly Natural Gas Strorage Change 0030 – Australia RBA Monetary Policy Statement 0030 – Australia Q3 Retail Sales Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-3-2022-03112022
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Yesterday's Fed decision didn't prevent crude oil from ending the day in the black

ING Economics ING Economics 03.11.2022 11:07
The US Fed hiked rates by 75bp as expected, but the press conference suggested that rates will go higher than previously expected. This is likely to provide headwinds to commodity markets in the near term despite constructive fundamentals Jerome Powell, chair of the Federal Reserve Energy - Bullish US inventory report The oil market managed to settle higher yesterday despite a 75bp hike from the US Fed and comments suggesting that rates will peak at a higher level than previously expected. That said, they also indicated that the pace of hiking could slow as soon as the next meeting in December. Weaker price action in early morning trading in Asia looks as if the market could be digesting the outcome of the FOMC meeting, with WTI down more than 1% at the time of writing. The EIA’s weekly report was fairly bullish and showed that US commercial crude oil inventories declined by 3.12MMbbls over the last week. Although if we look at total US crude oil inventories, which take into account stocks from the SPR, inventories fell by 5.04MMbbls. The drawdown in the SPR last week was the smallest since February. It would appear that we are starting to see larger draws in commercial crude oil inventories as the amount of crude released from the SPR is reduced. The refined product numbers were also bullish. US gasoline inventories declined by 1.26MMbbls, leaving total US gasoline inventories at 206.63MMbbls - the lowest level seen since 2014. Meanwhile, distillate fuel oil stocks grew by just 427Mbbls, and while we saw a more meaningful build on the US East Coast, inventories in the region are still at their lowest levels on record for this time of year. European day-ahead gas prices continue to trade in a volatile manner. TTF day ahead rallied more than 96% yesterday to EUR45/MWh. Although current prices are still well below the more than EUR200/MWh seen at the end of September. There have been few fresh fundamental developments in the European market. Storage continues to fill up given the milder weather. The latest data from Gas Infrastructure Europe shows that storage is 95% full now, compared to a 5-year average of 89%. Meanwhile, German storage is more than 99% full. The rally in prices yesterday could have been driven by the fact that it is looking increasingly likely that the Freeport LNG export facility in the US will see a further delay in its restart after a fire earlier in the summer. The plant was set to partially restart this month but is yet to submit its restart plan to regulators. Further delays in the restart mean a tighter-than-expected global LNG market through the northern hemisphere winter. Metals – China steel demand to remain suppressed The China Iron Ore and Steel Association (CISA) expects steel demand in China to remain suppressed due to extended stringent Covid-19 control measures and worries over a global economic slowdown. China’s steel consumption fell 4.2% YoY to 741mt in the first nine months of the year as overall downstream demand remained weak. The recent data from Mysteel shows that roughly 150kt of daily production capacity was impacted in October as 44 blast furnaces were shut down at mills in China's north and north-west. At the end of the month, 28 of those had not resumed production affecting 100kt of production capacity. Agriculture – Russia resumes Ukraine grain export deal CBOT wheat futures fell more than 6% yesterday after Russia agreed to resume the Black Sea grain export deal. This is after Russia said it had received “written guarantees” from Ukraine that the safe-passage corridor wouldn’t be used for military purposes. Ukraine is optimistic that the deal will be extended beyond its mid-November deadline due to strong global demand. The deal will automatically be extended for 120 days if the involved parties have no objections. Read this article on THINK TagsTTF Russia-Ukraine Oil LNG EIA Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Oil maintains positive momentum

Brent Crude Oil Has Stabilized And Gold Is Close To The Low

Craig Erlam Craig Erlam 03.11.2022 11:53
Settling in a range Oil prices are softening a little on Thursday after nudging higher again a day earlier. Brent appears to be settling around the mid-point of the $90-$100 range as traders weigh up the impact of the OPEC+ cut against a bleak global economic outlook. The zero-Covid rumours in recent days may have given oil another bump higher, as will the crude inventory data that showed a large drawdown. But with those rumours not confirmed and recession talk growing louder, it may be a little premature to be suddenly optimistic. Not as bad as it seems Gold bulls thought Christmas had come early on Wednesday when the Fed indicated a slower pace of tightening will be considered next month. But just as quickly as the good news was delivered, the caveat was yet another crushing blow. The prospect of further tightening overall was enough to wipe out the benefits of lower hikes and gold now finds itself trading around the week’s lows. The question is, once the dust settles, will traders continue to view this so negatively? Slower tightening now buys time for the data to improve in a manner that could negate the need for more later, something 75 or 100bps hikes do not. This may not be such bad news after all for gold. But traders may wait for some encouragement from the data before getting too excited again. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
ECB's Tenth Consecutive Rate Hike: The Final Move in the Current Cycle

Saxo Bank's Podcast: The Reaction Of The Markets To The Fed's Decision

Saxo Bank Saxo Bank 03.11.2022 11:58
Summary:  Today we look at the hawkish Fed Chair Powell press conference delivering a hammer-blow to sentiment as he managed to both pull off the idea that the Fed may indeed soon pivot to a slower pace of rate hikes as soon as December, but that any talk of a pause is "very premature". The result? Sentiment thrashed and the USD going vertical as the market takes Fed rate expectations and the terminal rate next year higher still. Incoming US data could further aggravate this move if the data remains even resilient, much less hotter than expected. We also talk through the reaction to the FOMC in gold, risks to sterling today if BoE fails to take the hawkish hint from Powell, stocks to watch, perspective on where we are with equity valuations and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app:           If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.
Canada's Inflation Expected to Ease in May, Impacting BoC's Rate Decision

Crude oil amid Fed's actions and stocks in premarket commented by InstaForex

InstaForex Analysis InstaForex Analysis 03.11.2022 15:44
Oil prices have declined only slightly, and it's all the fault of Federal Reserve Chairman Jerome Powell's statement that interest rates will rise higher than previously forecast. West Texas Intermediate futures fell below $89 per barrel after rising 4% compared to the previous two sessions. Powell said it was "premature to think about suspending the rate hike cycle" after the Fed raised rates again by 75 basis points.     All major central banks are currently trying to curb rampant inflation, which puts pressure on demand and energy. The bearish sentiment caused by the increase in rates offset the rise in gasoline prices in the United States, but this was not enough to seriously affect the situation. Growing concerns about the slowdown in the global economy will inevitably affect the oil demand, which will limit the upward potential of the trading instrument. However, the battle between the bearish demand forecast and the bullish supply forecast continues to be waged in full. It is difficult to say how energy carriers will behave in winter since they are largely tied to geopolitical risks and factors.     Premarket: Qualcomm shares lost 6% after the company reported weak earnings. Forecasts and targets also fell short of analysts' expectations, as demand was lower than expected due to China. According to Refinitiv, the technology company reported adjusted earnings per share of $3.13. Revenue for the quarter was $11.39 billion, compared with an estimated $11.37 billion. Shares of the Roku streaming TV platform fell nearly 20% after the company said fourth-quarter revenue would be lower than Wall Street expects. The company reported third-quarter results that beat analysts' forecasts: a loss per share of 88 cents compared with a loss of $1.28. Revenue was $761 million, more than the estimated $694 million. However, forecasts for the future have ruined everything. Etsy securities jumped more than 10% after the company reported quarterly profit that exceeded expectations. The online store reported revenue of $594.47 million against the expected $564.48 million. The company also expects continued sales growth in the fourth quarter, leading to a share increase. Zillow shares rose 2.7% after reporting earnings that beat analysts' expectations. The company reported adjusted earnings per share of 38 cents, above the forecast of 11 cents. Revenue was $483 million, while Wall Street expected $456 million. As for the technical picture of the S&P500, after yesterday's decline, demand for the index remains rather sluggish. The main task for buyers now is to protect the support of $3,735. As long as trading is conducted above this level, we can expect a return in demand for risky assets - especially if the US data disappoints. This will create good prerequisites for strengthening the trading instrument and returning $3,773 under control, just above which the level of $3,808 is located. A breakthrough in this area will strengthen the hope for an upward correction with an exit to the resistance of $3,835. The farthest target will be the $3,861 area. In a downward movement, buyers must declare themselves in the $3,735. A breakdown of this range will quickly push the trading instrument to $3,699 and open up the possibility of updating the support of $3,661. Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/326182
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Supply Outlook Of Crude Oil Remains Challenged | The Norges Bank (NB) Took The Dovish Path

Saxo Bank Saxo Bank 04.11.2022 08:44
Summary:  While the Fed surprised hawkish this week, most other central banks have been surprising dovish, with the latest being Bank of England which tried to cool down the aggressive market pricing for their terminal rate. Meanwhile, Norges Bank also took the less hawkish path, and this has made USD the king again with sterling suffering the heaviest blow. US stocks and bonds were lower, and oil prices, as well as precious metals, also suffered in the aftermath of Fed’s hawkish tilt. Focus turns to NFP today which should continue to suggest a tight labor market. What is happening in markets?   The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) continued to slide on hawkish Fed and weaker outlook U.S. stocks continued to adjust for the second day to the increased prospect of interest rates being higher for longer following Powell’s pushback to the market’s speculation for Fed pivot on Wednesday, with S&P falling 1.06% and Nasdaq 100 down 2%. For a discussion on the implication of Powell’s hawkish comments on equities, please refer to Peter Garnry’s article here. Information technology, falling 3%, was the worst-performing sector in the S&P 500 while energy, up 2%, and industrials, up 1% were the outperformers. Announcements of hiring or headcount freezes from Amazon (AMZN:xnas), Apple (AAPL:xnas), Lyft (LYFT:xnas), and Morgan Stanley stirred concerns among investors about the outlook of the economy and corporate earnings. After closing, Starbucks (SBUX:xnas) reported above expectations revenues and earnings while a number of software companies, including Atlassian (TEAM:xnas), Twilio (TWLO:xnys), Appian (APPN:xnas), missed revenues guidance. 10-year U.S. treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) The U.S. yield curve bear flattened as the 2-year yield jumped to as high as 4.74%, before finishing the session at 4.71%, the highest level since 2007. It brought the 2-10 year spread to was wide as -58 and close at -56, the most inverted level in 40 years. The market has brought another 75bp hike in December back to the table, pricing in a slightly more than 50-50 chance. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) Being hit by the double whammy of the reiteration from China’s National Health Commission that dynamic zero-Covid is the primary pandemic control strategy and a hawkish Fed Chair Powell hinting at higher terminal rates, Hang Seng Index tumbled 3.06% and the Hang Seng Tech Index (HSTECH.I) dropped 3.8% on Thursday. China Internet, EV, healthcare and property stocks dragged the benchmark indices lower. Following the hike by the U.S. Fed overnight, five leading commercial banks in Hong Kong raised their prime rates by 25bps. On the data front, Caixin China PMI Services came in at 48.4 in October (consensus: 49.0; Sep: 49.3), falling further into contractionary territory. CSI300 performed relatively more resilient and pared some losses in the afternoon to finish the day losing only 0.8%. Semiconductors, defence and basic chemicals gained. Buying emerged overnight in the U.S. hours, Nasdaq China Golden Dragon Index jumped more than 3% and Hang Seng futures were nearly 1.5% higher from Hong Kong closing. FX: GBPUSD suffered on BOE-Fed differential The USD is seeing another leg higher not just on the back of Powell’s hawkishness this week, but also with the other central banks taking the less hawkish path. Both Norges Bank and BOE surprised dovish yesterday, in continuation of the trend that we have seen from Reserve Bank of Australia, Bank of Canada and the ECB earlier. GBPUSD fell over 2% to sub-1.12 on the announcement that BOE thinks market’s current pricing is too aggressive. December pricing is still at another 50bps rate hike but it won’t be a surprise if it is pulled lower after we had two dovish dissenters on Thursday. NOK saw a selloff as well, while USDJPY continues to find trouble to overcome 148.50 despite the fresh surge in US yields. Crude oil (CLX2 & LCOZ2) worried about demand After a hawkish FOMC, commodity markets have once again started to focus on demand weakness that could come as a result of Fed’s rapid tightening pace. Meanwhile, any hopes of a recovery in Chinese demand have also been crushed for now with authorities still standing by their zero Covid strategy. WTI futures traded close to $88/barrel while Brent futures were below $95. Supply outlook remains challenged however going into the winter, with OPEC+ having announced production cuts followed by EU sanctions on Russian crude flows from December. Gold (XAUUSD) and Silver (XAGUSD) to face short-term pressures Our Head of Commodity Strategy Ole Hansen wrote yesterday on how gold and silver turned sharply lower yesterday after Fed Chair Powell delivered a hammer-blow to sentiment across markets as he managed to both pull off the idea of the Fed may indeed soon pivot to a slower pace of rate hikes, but that any talk of a pause is “very premature”. Gold touched sub-1620 levels yesterday before a slight recovery later in the session while Silver took a look below $19. There is likely to be more pressure in the short term, but as yields get closer to a peak or as the possibility of central bank policy mistake increases, while inflation continues to run higher, the outlook for the precious metals could revert to being positive.   What to consider? Bank of England’s dovish hike The BOE hiked by 75bps to 3%, as expected by the consensus, but strongly pushed back against expectations for the scale of future moves, saying that the terminal rate priced in currently by the markets would induce a two-year recession. There were also two dovish dissenters at the meeting, one calling for 50bps rate hike and another for a mere 25bps. New forecasts were also released, which gave a particularly grim outlook for the economy, looking for a GDP print of -0.5% QoQ in Q3 2022 vs -0.1% expected in September. The inflation forecast now shows a peak around 11% in Q4, which is marginally hotter than the prior meeting’s projection. US weekly jobless claims tick lower, ISM services softened There was a slight decline in initial jobless claims to 217k from previous 218k, coming in marginally below the expected at 220k. Still, labor market remains tight despite some signs of cooling and continues to provide room to the Fed to continue its tightening cycle. Meanwhile, the ISM services index fell more than expected to 54.4 in October from 56.7 previously, however the prices paid gauge increased by 2% pts to 70.7 and remains elevated. Norges Bank hiked by 25bps With expectations split between a 25 or 50bps rate hike, Norges Bank took the dovish path as well despite a deteriorating inflation outlook. However, the Committee continues to place emphasis on the growth situation writing "there are signs that some areas of the economy are cooling down" and acknowledging the tightening effect that the higher policy rate is beginning to have. For the December gathering, the Committee points to a further hike being likely. Australia to double its Royal Australian Airforce cargo fleet in a $10 billion US military deal US officials are looking to approve the sale of $10 billion of iconic cargo aircraft, including 24 Hercules planes, to Australia. The US Defence Security Co-operation Agency says Australia is one of its most important allies in the western Pacific and its location and economic power ‘contributes significantly to ensuring peace and economic stability in the region’. Australia has operated the Hercules aircraft for decades, with the aircraft playing a major role in moving troops and equipment in and out of war zones and evacuating civilians after the fall of Kabul last year. It has also performed countless missions flying humanitarian supplies to countries hit by natural disasters. Australia trade surplus swells on surging energy exports Australia’s trade surplus swelled to $12.4 billion in September, smashing expectation of a $8.75 billion surplus. It comes as exports rose far than expected, up 7% vs the 1% consensus expected thanks to greater demand for mineral fuels for energy, while iron ore exports also rose. Imports remained unchanged month on month. Multiple reports of hiring freezes emphasizing margin pressures Apple paused all hiring for roles outside research and development. Amazon will pause new incremental hires in its corporate workforce, citing an "uncertain" economy and its recent hiring boom. Lyft will eliminate 13% of staff, or around 683 people.   For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-4-nov-04112022
Commodities: Crude oil price could be supported by technicals

Brent crude oil lost 1.5% yesterday. According to ING prices could go down further, if OPEC+ hadn't intervened

ING Economics ING Economics 04.11.2022 10:43
A rallying USD following this week’s hawkish FOMC meeting has kept the pressure on the commodities complex. In the short term, sentiment is likely to remain negative. However, in the medium to longer term, there are clear supply risks for a number of commodities which should prove constructive Energy- USD weighs on oil USD strength and a more hawkish FOMC meeting this week have proved too much for the oil market (and broader risk assets) with ICE Brent settling more than 1.5% lower on the day. The increasingly gloomy macro outlook is providing some strong headwinds to the oil market and without the supply cuts announced by OPEC+ back in October, we would likely have been trading at much lower levels. In fact, OPEC+ cuts have provided some stability to the market in the short term. However, this is likely to change once the EU ban on Russian oil comes into force next month for crude and in February for refined products. The UK government yesterday announced that it would impose a ban on the use of UK insurance, brokerage and shipping services for the purchase of Russian oil from 5 December. This aligns the UK with similar action taken by the EU. However, under the G-7 price cap, the ban will not be applied to Russian oil bought at or below the price cap. Although, for now, it is still not clear at what level the G-7 will set the price cap. The US natural gas market came under pressure yesterday. Henry Hub settled almost 4.7% lower over the day. The weakness in the market was driven by US inventory data which showed that US gas storage increased by 107bcf, which was above market expectations of closer to 100bcf and also well above a 5-year average build of 45bcf for this time of year. The increase means that total US natural gas storage is 3.5tcf, which leaves inventories 3.7% below the 5-year average. Metals – Las Bambas copper mine to progressively halt production MMG’s Las Bambas copper mine in Peru will be forced to progressively halt its production due to road blockades. Since 28 October, communities have blocked the roads used by Las Bambas in Chumbivilcas and an alternate road in Paruro. Protests against the mining sector have spread to Glencore’s Antapaccay, where civil organizations demand alleged unfulfilled commitments. Readily available zinc inventories in LME warehouses jumped by 13,600 tonnes to 36,625 tonnes yesterday – the biggest tonnage increase since 14 December. The increase was driven by a drop in orders to withdraw metal from Taiwan. The cash/3m spread for zinc eased to a backwardation of US$17.25/t yesterday compared to a backwardation of US$38.50/t  at the beginning of the week and year-to-date highs of US$218/t on 23 June. Ghana’s only aluminium smelter temporarily shut down after pay protests threatened the safety of its operations. Volta Aluminium halted production after cutting power to its smelter because of an invasion by protesting workers. Unions representing workers are asking for a 55% pay increase and for their pay to be linked to the US dollar. The company is producing 50kt currently, below its installed capacity of 200kt, as only two out of its five pot lines are running due to a lack of maintenance and repairs. Read this article on THINK TagsUSD strength Oil Natural gas FOMC Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

The Economic Outlook And OPEC+ Dominate The Crude Oil Market

Craig Erlam Craig Erlam 04.11.2022 11:36
China rumours boost oil prices Oil prices are rallying once more at the end of the week as rumours continue to circulate around China’s plans to relax certain Covid restrictions in the first major move away from its zero-Covid policy. Of course, this is pure speculation at the moment and yesterday’s denial from the National Health Commission appears to have fallen on deaf ears but that doesn’t appear to have stopped oil rallying. Stocks in China and Hong Kong aren’t doing too badly either. Of course, there remain two dominant forces in the oil market right now, the economic outlook and OPEC+. We’ve seen more gloomy forecasts this week, with the BoE suggesting the UK could face a two-year recession. While others may not be as bad, global growth prospects remain weak. Oil has been climbing over the last few weeks but ultimately remains roughly in the middle of the $90-$100 range. Tentatively higher Gold is trading tentatively higher on the final day of the week after testing the September and October lows on Thursday. The yellow metal was dealt another blow by the Fed’s admission on the terminal rate but appears to be clinging on for now. A hot jobs report today could be the final nail in the coffin, with support around $1,620 coming under serious pressure. Below there, $1,600 could be key. But the gains we’re seeing so far today are impressive, if not a little surprising. Following Wednesday’s setback, a rally of more than 1% in the run-up to what could be another red-hot jobs report is certainly bold. Should it break $1,680 in the aftermath, it could signal that a relief rally is underway. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The South America Are Looking For Alternatives To The US Currency

Ed Moya (Oanda) talks NFP, oil, crypto and more - 4/11/22

Ed Moya Ed Moya 04.11.2022 22:12
US stocks went on a rollercoaster ride after another strong labor report. Stocks are rallying as Wall Street believes the Fed is on the right to bring inflation down. This nonfarm payrolls report was mostly hot; a strong headline number, upward revisions, and further wage growth. ​ What was surprising was the jump higher with the unemployment rate, but when you factor in we had a surprise drop in September, it doesn’t look so significant. There are a lot of signs that support the labor market will continue to soften here. ​ Service sector hiring has some cracks and that should weaken going forward. This labor report allows Fed Chair Powell to stick to the hawkish script for a while and still support the idea of a downshift in tightening for the next policy meeting. Unless next week’s inflation report is a scorcher, the Fed will opt for a slower rate pace of rate increases. ​ ​ ​ ​ NFP The labor market is slowly weakening here. ​ An impressive NFP headline of 261,000 jobs created in October was also accompanied by an increase in the unemployment rate from 3.5% to 3.7%. ​ Wage growth did not ease up at all and that should keep the Fed rhetoric remaining hawkish. The economy is just starting to feel the Fed’s first round of rate hikes which means they might have to remain hawkish going into the spring. Fed swaps are expecting the policy rate to rise to 5.25% in June and that is the line in the sand for risk appetite. ​ If the next couple of inflation reports are surprisingly hot, risk appetite could see a violent selloff. FX The dollar is getting crushed here as Wall Street is growing confident they finally identified the peak in the terminal rate. ​ It seems markets are pricing in a Fed that will slowly take rates to 5.25% and that has put a key top in the dollar. ​ The dollar is having its worst day since March 2020 and that could continue if next week’s inflation report does not come in scorching hot. ​ Oil The oil market shouldn’t expect a lot of new wells as oil and gas extraction jobs only rose by 400 in October. ​ $100 oil is coming as the US service sector labor market remains robust and on expectations supplies will remain tight. Oil rallied earlier on further speculation that China is about to tweak their pandemic rules. Chinese crude demand has been capped and if that roars back, that alone could send oil prices 5% regardless of global economic slowdown fears. ​ There are too many geopolitical risks on the table that should keep oil’s trajectory higher. ​ If the dollar continues to slide here, oil’s strength could be relentless. Gold Gold prices are pushing higher despite a strong labor market report. Gold’s initial NFP reaction was a spike lower as the two-year Treasury surged to a multi-year high. ​ The initial glance of the NFP report was that both hiring and wages remain hot and that could have the Fed take rates to 5.25%. ​ After Wall Street digested the NFP report, yields and the dollar reversed. ​ The Fed appears to be on the right path for fighting inflation and that will lead to a weaker economy early next year. The long variable lags of Fed tightening has traders convinced they opt for a slower pace of hikes and decide later on when to stop. If next week’s inflation report contains a downward surprise, gold might be able to make a run towards the $1700 level. Crypto Range traders must love crypto. ​ Bitcoin remains anchored above the $20,000 level. ​ Today’s employment report triggered a wave of volatility that ended up being positive for risky assets, which has helped Bitcoin rally above the $21,000 level. ​ A downshift to a slower pace of tightening still seems in the cards for the Fed and that should provide some short-term support for cryptos. ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. NFP React: Stocks higher, Dollar crushed, Oil eyes $100, Gold surges, Bitcoin above $21k - MarketPulseMarketPulse
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

A Third Week Of Gains With Brent And WTI Crude Oil

Saxo Bank Saxo Bank 06.11.2022 09:39
Summary:  Commodities traded higher during a week where the focus altered between optimism over China reopening and an extended rate hike cycle in the US having a negative impact on global growth and demand. Overall China optimism won the day with strong gains being led by industrial metals, energy and cotton. Commodities traded mostly higher during a week where the focus altered between optimism over China reopening and an extended rate hike cycle in the US having a negative impact on global growth and demand. In addition, the energy market continues to focus on the price-supportive impact of OPEC+ production cuts and upcoming EU sanctions against Russian crude sales. Overall, the Bloomberg Commodity Index which tracks a basket of major commodity futures spread evenly between energy, metals and agriculture, traded higher by more than 4% near a three-week high. Following Wednesday’s expected 75 basis point rate hike, the fourth in this cycle, Fed Chair Powell went on to deliver what turned out to be a temporary hammer-blow to sentiment across markets after saying that any talk of a pause is “very premature”. However, it is also clear that the FOMC will be economic data driven, and any signs of weakness could alter this view after the Fed in its statement raised the prospect of pausing to assess the” cumulative tightening” impact. The time lag between rate hikes and the economic impact remains a worry that the bond market is trying to price through an increasingly inverted US yield curve. This week, the 2–10-year spread jumped to -61 basis points, the most inverted we have seen it since the 1980’s and it highlights the risk of a central bank policy mistake leading to weaker growth without successfully managing to get inflation under control. These developments helped support gold and silver, both bouncing strongly on short covering following an initial and failed attempt to drive them lower through key support. Gold recovering from another FOMC dump Gold traded higher on the week after managing to recover from the stronger dollar and rising yields driven sell-off that followed Fed Chair Powell’s press conference. The initial weakness saw gold challenge key support in the $1615 area for a third time with the subsequent bounce being supported by short covering and a softer dollar. Also supporting the price was the mentioned further inversion of the US yield curve signalling increased risks of an economic slowdown. Having returned to safer ground the market will be watching the incoming economic data, starting with US payrolls on Friday which despite being on the strong side did not arrest gold’s end of week rally. At Saxo, we maintain a long-held view that the medium term inflation outlook will likely surprise to the upside with a 4% to 5% range over the next decade not being that outrageous. Driven by a new geopolitical situation where the world is splitting into two parts with everything evolving around deglobalization driven by the need for self-reliance. Together with the energy transition, we are facing a decade that will be commodity and capital intensive and where scarcity of raw materials and labor will keep inflation elevated for longer, and higher than the 3% level currently being priced in through the swaps market.Such a scenario combined with the risk of an economic slowdown forcing a roll over in central bank rate hike expectations, sending yields and the dollar lower, may in our opinion create powerful tailwinds for gold and silver during 2023. Underlying support is already being provided by central banks who bought a record 400 tons in Q3, thereby more than offsetting a 227 tons reduction in total holdings across bullion-backed ETFs. With support firmly established at $1615, the first key upside challenge awaits in the $1675-80 area where we find a recent high, the 50-day moving and trendline from the March high. Crude oil bulls getting the upper hand Crude oil remains on track for a third week of gains with Brent and WTI crude oil both approaching the top of their established ranges with the focus on the supply impact of OPEC+ production cuts and upcoming EU sanctions against Russian oil as well as a tight product market while the demand side is torn between the prospect of a pickup in Chinese demand once Covid restrictions are lifted and worries that global economic activity will continue to weaken in the coming months. While crude oil has been mostly rangebound since July, the fuel product market has continued to tighten as supplies in Europe and the US have become increasingly scarce, thereby driving up refinery margins for gasoline and distillate products such as diesel, heating oil and jet fuel. The focus in terms of tightness remains the northern hemisphere product market where low stocks of diesel and heating oil continues to raise concerns. The market has been uprooted by the war in Ukraine and sanctions against Russia, a major supplier of refined products to Europe. In addition, the high cost for gas has supported increased switching activity from gas to other fuels, especially diesel and heating oil.This tight market situation is now being made worse by the OPEC+ ill-timed decision to cut production from this month. While the continued release of US (light sweet) crude from its strategic reserves will support the production of gasoline, the OPEC+ production cuts will primarily be provided by Saudi Arabia, Kuwait and the UAE – all producers of the medium/heavy crude which yields the highest amount of distillate.As long as the product market remains this tight, the risk of seeing lower crude oil prices -despite the current worry about recession - seems to be low so we maintain our forecast for a price range in Brent for this quarter between $85 and $100, with the tightening product market increasingly skewing the risk to the upside.   Strong week for industrial metals on reopening hopes The Bloomberg Industrial Metals Index was heading for its best week since July with gains being led by the three major metals of nickel, aluminum and copper on unverified talk that China could be moving closer to exit its strict Covid-zero policies as well as raised worries about tightening supply driven by increased activity from Chinese buyers. Copper in addition received a boost from a halt to operations at MMG’s giant Las Bambas mine in Peru, one of the world’s largest. Since October 31, operations have been challenged by blockades from locals. As per the chart below, HG copper, rangebound since July, traded sharply higher through a couple of resistance levels but in order to confirm a proper recovery it would need to break above the August high at $3.78 per pound. Only then can we potential see fresh momentum buying from speculators who for months have preferred to trade the metal with a short bias. Cotton jumps on short covering and signs of a demand rebound. Cotton, down by more than 50% since May on worries about the health of the global economy and with that demand for garments from consumers, has bounced 20% since last Friday. Despite renewed dollar strength weighing on other agriculture commodities, cotton has bounced on signs China’s yarn production seems to be picking up. A story supported by weekly US export sales to China showing a 98% jump from a year ago. Rollercoaster week for wheat Wheat traded in Chicago and Paris surged higher at the start of the week after Russia announced a suspension of the Ukraine grain-export deal, only to slump after an about-face from Russia allowed shipments to continue. Prices nevertheless maintained a bid on growing drought concerns in Argentina and the US Plains. Source: https://www.home.saxo/content/articles/commodities/metals-surge-on-china-covid-easing-speculation-04112022
Crude decreases amid risk boosting greenback and unclear situation in China

On Friday Brent crude oil ended the day very close to $100

ING Economics ING Economics 07.11.2022 08:14
Commodity markets received a boost on Friday after unverified rumours that China could ease its zero-Covid policy, whilst a weaker USD would have only provided further support. However, China made it clear over the weekend that its zero-Covid policy will continue to be followed, setting the scene for weaker markets this morning   Energy - China crude oil imports increase ICE Brent rallied to its highest levels since late August on Friday, leaving the market in striking distance of US$100/bbl. A weaker USD also provided a boost to oil and the broader commodities complex. It was further unverified reports of China looking to ease its zero-Covid policy which really provided the boost to markets.It appears these reports were nothing more than a rumour, after the National Health Commission said that China will stick to its zero-Covid policy. Unsurprisingly, oil markets opened lower this morning, following these comments. The latest trade data from China shows that crude oil imports in October averaged 10.2MMbbls/d, up from 9.83MMbbls/d in September and 8.9MMbbls/d in October last year.  It is the strongest monthly imports since May, when 10.83MMbbls/d of inflows were seen. Crude oil imports over the first ten months of the year are still down 2.7% YoY to average 9.97MMbbls/d. Demand this year has been largely under pressure due to China’s zero-Covid policy. The Saudis released their latest official selling prices (OSPs) for December loadings at the end of last week, which saw reductions for almost all grades into Asia. This includes cutting Arab Light into Asia by US$0.40/bbl to US$5.45/bbl over the benchmark. Meanwhile, all grades to the US were left unchanged for the month, whilst all grades into Europe were increased with the exception of Arab Medium which was unchanged. Speculators appear to have a growing appetite for the oil market. The managed money net long in ICE Brent increased by 22,214 lots over the last reporting week to leave them with a net long of 227,665 lots as of last Tuesday- the largest net long since June. Speculators appear to be getting increasingly constructive on the oil market likely due to the expectation that the market will tighten due to a combination of the EU ban on Russian oil soon coming into effect as well as OPEC+ supply cuts.   Commercial operations have begun at the first stage of the 615Mbbls/d Al-Zour refinery in Kuwait and the refinery could reach full capacity in early 2023. This would leave total Kuwaiti refining capacity at a little over 1.4MMbbls/d. Additional refining capacity would come as a relief to product markets, particularly middle distillates, which have been extremely tight this year. Metals – USD weakness & Covid speculation boost metals Industrial metals rallied amid China reopening speculation, whilst USD weakness would have provided further upside. LME copper managed to settle more than 7% higher on Friday as a result. However, clarification from China’s National Health Commission that the zero-covid policy will remain in place has unsurprisingly seen base metals trade lower this morning. Zinc prices rose more than 5.6% on Friday- its largest gain since August. The latest data from the Shanghai Futures Exchange (SHFE) showed that exchange inventories declined 44% WoW (the biggest weekly drop since 2007) to 24.9kt (lowest since December 2018) as of Friday. SHFE contracts for nearby delivery traded at huge premiums to later-dated futures, resulting in a widening backwardation. Agriculture – India announces sugar export quota The Indian government finally announced sugar export quotas for the current 2022/23 marketing year. Domestic mills can export up to 6m tonnes of sugar through until the 31 May 2023. Given that this only covers a portion of the season, we could very well see the government issue further export quotas for the remainder of the season (June-September) at a later stage. There have been reports that a second tranche could be in the region of 3m tonnes, depending on how the current crop evolves. In the 2021/22 season, the sugar export quota totaled 11.2m tonnes.          CBOT wheat remained volatile with mounting production concerns in Australia and Argentina. There are suggestions that excessive rains and flooding in the major wheat-growing areas in Australia have lowered expectations of a record high-quality crop. Meanwhile, the Buenos Aires grains exchange revised its forecasts for Argentina’s 2022/23 wheat harvest further to 14mt last week, down from a previous forecast of 15.2mt and initial expectations of 20.5mt. The downward revision was primarily due to a prolonged drought, worsened by extended frosts over the main wheat-producing region. The latest CFTC data shows that money managers continued to build net longs in CBOT soybean for a third consecutive week, adding 25,918 lots and leaving them with a net long position of 101,329 lots as of 1 November. Meanwhile, speculative net longs in CBOT corn increased for a second consecutive week by 7,586 lots, taking the net long to 271,960 lots. Read this article on THINK TagsSugar Oil Metals Covid-19 China China trade Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
China's Position On The Russo-Ukrainian War Confirmed At The G20 Meeting

China Will Maintain Its Zero-Covid Policy | US Dollar (USD) Back Into Gains

Saxo Bank Saxo Bank 07.11.2022 08:58
Summary:  Speculation about China relaxing its stringent dynamic zero-Covid policy stirred up risk-on trades on global equities and commodities on Friday. Hong Kong’s Hang Seng Index surged 5.4% and China’s CSI 300 rose 3.3%. A mixed job report brought about a choppy session in the U.S. and stocks managed to finish the day higher as materials and industrials rallied in the afternoon when Investors turned their focus to the China reopening notion and strength in commodities. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rebounded on Friday but were still down for the week Following a mixed job report, the U.S. equity markets had a choppy session on Friday, fluctuating between gains and losses, and finished the day higher. S&P500 gained 1.4% and Nasdaq 100 climbed 1.6%. For the week, however, S&P 500 was down 3.4% and Nasdaq 100 was 5.7% lower. All 11 sectors of the S&P 500 gained on Friday, with materials having done the best and up 3.4%. Software names underperformed on earnings and revenue misses. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) yields were largely steady after the job report U.S. treasury yields surged initially on the stronger-than-expected non-farm payroll gain of 261K jobs in the establishment survey but pared the rise after the market focus shifted to the higher unemployment rate of 3.7% and a decline of 328K in employment in the household survey. The yield curve turned steeper notably, with the 2-year yield down 6bps to 4.66%, the 10-year yield up 1bp to 4.16%, and the 30-year yield jumping 7bps to 4.25%. The market is pricing in a 65% chance of a 50bp hike at the December FOMC and a terminal Fed Fund rate at around 5.1% next year. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) rallied dramatically on reopening hope Stocks in Hong Kong and the mainland surged on intensification of speculation on relaxation (not abandoning but relaxing) of the dynamic zero-Covid policy, newswire stories reporting that the U.S. Public Company Accounting Oversight Board (PCAOB) has completed the first round of inspection on Chinese ADR ahead of schedule, and an article from Vice-Premier Liu He on the People’s Daily pledging to boost domestic aggregate demand.  Hang Seng Index jumped 5.4% and CSI300 surged 3.3%. Hang Seng China Enterprise Index surged 6% and China Internet stocks climbed 10% to 17%, with Alibaba (09988:xhkg) up 11%, and Tencent (00700:hkxg) up 7.8%. FX: USD gains return as China asserts commitment to Zero Covid FX: USD gains return as China asserts commitment to Zero Covid With plenty of chatter last week about China’s reopening, commodity currencies had been supported with NZD leading the gains against the USD and being up over 2%. AUDUSD also surged above 0.6450 into the end of the week on hopes of a recovery in commodities demand. However, weekend reports from China’s Health Ministry confirmed that China will maintain its present zero-Covid regulations but improve the pandemic control measures, hinting that protracted lockdowns will be avoided. This has sent dollar back into gains this morning, with AUD and NZD leading the declines. GBPUSD also slid back to 1.1300 and EURUSD back at the 0.99 handle. Commodities rally Commodity screens all in the green on the back China reopening hopes. The Crude Oil (CLX2 & LCOZ2) price rose 5% to $92.61, its highest level since August after rising 5.4% last week. Iron Ore (SCOA, SCOZ2) is up 1.6% today $87.30 after gaining 8.3% last week. The Copper price (HGA, HGZ2) rose 7.8% today, after rising 7.5% last week.   What to consider Mixed US jobs report to keep the Fed on a tightening path US NFP headline gains of 261k were above expectations of 200k but slowed from last month’s 315k which was revised higher from 263k. Job gains were broad-based with strong gains in healthcare, professional and business services and manufacturing. Wage growth also held up strongly, coming in at 0.4% MoM in October from 0.3% MoM previously although a tad softer on a YoY basis at 4.7% from 5.0% YoY previously. However, the unemployment rate ticked up to 3.7% from 3.5% (exp. 3.6%), although it was met with a 0.1% decline in the participation rate to 62.2%. However, with layoffs rising recently, especially in tech, it will be interesting to see how that impacts the headline NFP and the Fed tightening path in the months to come. Heightened anticipation of relaxation of the implementation of pandemic control in China Speaking at a meeting hosted by a U.S. investment bank last Friday, the former Chief Expert of Epidemiology of the Chinese Centre for Disease Control and Prevention said the relaxation of pandemic control had already started and more would come, citing the resumption of state visits, sports events (e.g. the Beijing Marathon this Sunday), and relaxing PCR test requirements and starting to charge for the tests. At a press conference last Saturday, China’s National Administration of Disease Control and Prevention reiterated adherence to the dynamic zero-Covid policy. This may dampen somewhat investors’ optimism about reopening. Nonetheless, the Chinese health officials pledged at the same press conference to improve the implementation of the pandemic control measures so as to avoid massive and protracted lockdowns. China’s approval of BioNTech vaccine for foreigners living in mainland China also stirred up some anticipation of the possibility of allowing the more effective BioNTech vaccine to be available eventually beyond foreign residents. Stocks of interest to watch First up this week, Champion Iron (CIA) goes ex-dividend today, along with Macquarie (MGQ). National Australia Bank (NAB) is due to report results on Wednesday 9th. Mosaic (MOS) a fertilizer giant reports on Monday in the US. Walt Disney (DIS) reports 9th November. On with Occidental Petroleum (OXY) and Constellation Energy (CEG) report as well. Note Oxy and CEG are some of the US' best performers this year). Ralph Lauren (RL) reports on Thursday.    For a global look at markets – tune into our Podcast.     Source: https://www.home.saxo/content/articles/equities/market-insights-today-7-nov-07112022
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

China Is The Biggest Consumer Of Such Commodities

Saxo Bank Saxo Bank 07.11.2022 09:04
Summary:  The October US CPI release this week will be key to watch after Fed’s hawkish shift last week. Market pricing for December’s Fed rate hike is closer to 50bps for now, but a stronger than expected core print could move that towards another 75bps expectation. Midterm elections could also cause some volatility given the risk of policy paralysis if Democrats lose control of the Congress. More economic data is due, from UK’s Q3 GDP to China’s credit update and inflation, but a key driver of volatility will likely be further developments on China’s reopening story. In the commodities space, this means industrial metals, iron ore, copper, gold, energy and cotton are key to watch. The earnings calendar cools down, but keep Walt Disney and Adidas on your radar. components Bloomberg consensus expects US October CPI to drop below the 8% mark and come in at 7.9% YoY from 8.2% previously, but still higher at 0.6% MoM from 0.4% in September. The core measure is also expected to ease slightly to 6.5% YoY, 0.5% MoM (prev. 6.6% YoY, 0.6% MoM) but still remain elevated compared to historical levels. Key to watch also will be the drivers of inflation, particularly the stickier shelter and services costs, which if stuck higher could move the December Fed funds future pricing more towards another 75bps rate hike, resulting in another round of selloff in equities and dollar gains. However, with another CPI report due before the next Fed meeting in December, market impact of this week’s report will likely remain restrained unless a major deviation from expectations is seen. For this week’s CPI data, we will be watching the USD, and bond yields, which may be expected to rally up if the data is hotter than expected. What next for the China reopening chatter, and what does that mean for commodity markets? Last Saturday, China’s National Administration of Disease Control and Prevention reiterated China’s adherence to the dynamic zero-Covid policy but at the same time pledged to improve the implementation of the policy so as to avoid massive and protracted lockdowns. Investors will focus on if subtle relaxation of implementation will gather momentum in the coming weeks. This will be key not just for mainland/HK markets, but also for commodity markets. The biggest impact will be seen on industrial metals (watch Copper, Iron ore) and energy prices, as China is the biggest consumer of such commodities. HG Copper broke through several resistances last week, but is seen lower back at $3.60 on Monday morning after Chinese officials hinted at adherence to the zero covid policy. Crude oil prices also remain on watch especially with OPEC+ production cuts set to take effect this month and upcoming EU sanctions against Russian oil, all leading to a tight market. Gold (XAUUSD) reversed its post-FOMC slump on China reopening optimism at the end of last week, and remains supported above $1670 for now. Will it break the short-term downtrend? Also worth watching Cotton, which bounced more than 20% from their low on signs of China’s improving yarn production, but still remains down on a YTD basis. US mid-term elections this Tuesday Pundits suggest that the Republicans have very strong odds of flipping the House of Representatives in their favour, while the odds look finely balanced for whether the Senate ends retaining the slimmest of Democratic majorities. Republicans taking both houses has few immediate ramifications, as US President Biden has the presidential veto, but a stronger than expected Democratic showing that somehow sees them retaining the House and strengthening their Senate majority would be a game changer – opening for more policy dynamism from the US over the next two years rather than the expected lame-duck presidency. Uncertainty is high as pollsters have had a hard time gathering accurate indications for the election results since Trump’s victory in 2016. China is scheduled to release credit data, CPI, PPI, and trade data Among the data scheduled to release this week, investors are likely to focus on the new RMB loans and aggregate financing numbers. After a very strong September in which banks were urged to lend, new RMB loans were expected to decelerate to RMB800 billion in October from RMB2,470 billion in September. New Aggregate Financing was forecasted to fall to RMB 1,600 billion in October from RMB 3,530 billion in September. On the inflation front, China’s PPI is expected to fall 1.6% Y/Y in October, due to the high base last year resulting from increases in material and energy prices. Unlike other major economies, CPI in China is expected to slow to 2.4% in October. On trade, while export growth in RMB terms is forecasted to rise to +12.7% YoY in October from +10.7% in September, exports in US dollar terms are expected to decelerate. China’s Singles’ Day this Friday, Nov 11 Investors will watch closely Alibaba, JD.com, and other online retailers’ sales on Singles’ Day this Friday to gauge the strength of China’s private consumption. Analysts are expecting slower sales growth as recent data indicated slower user growth across online shopping platforms. UK GDP to confirm the onset of a recession On Friday, UK’s Q3 GDP is released and the first negative print of the current cycle is expected to be seen. Consensus forecast is seen at 2.1% YoY, -0.5% QoQ, significantly lower than the second quarter print of 4.4% YoY, 0.2% QoQ. August GDP data had already begun to show a negative print with -0.3% MoM and the trend will only likely get worse in September, exacerbated by a one-off factor relating to Queen Elizabeth II’s funeral in the month, which was a national holiday. The economy is already facing a cost of living crisis, and both fiscal and monetary policy have to remain tight in this very tough operating environment. Technically, a recession may still be avoided as activity levels picked up in October, but still it will remain hard for the UK to dodge a recession going into 2023. This suggests more downside for the sterling may be in store, especially as the market refuses to cater to the Bank of England’s warning that the current expectations of terminal rate may be too steep. Key Earnings to watch Saxo’s Head of Equity Strategy, Peter Garnry, wrote the following, for key focus areas for corporate earnings this week. On Monday our focus is Activision Blizzard which is struggling with negative top-line growth like the rest of the gaming industry as the pandemic boom is over. Analysts are expecting revenue growth of -17% y/y and EPS of $0.50 down 39% y/y. Walt Disney is next week’s biggest earnings release scheduled on Tuesday with analysts expecting Q4 (ending 30 September) revenue growth of 15% y/y but EBITDA at $3bn down from $3.86bn in Q3 highlighting the ongoing margin pressure. Adidas, reporting on Wednesday, is also key due to its size in consumer goods but also because of its costly partnership breakup with Ye; analysts estimate revenue growth up 13% y/y but EPS at €1.24 down 47% y/y due to one-off items. On Thursday, we will focus on ArcelorMittal, because Europe’s largest steelmaker is an important macro driver, and analysts are getting increasingly negative on the steel industry expecting ArcelorMittal to announce a 14% drop in Q3 revenue and a 66% drop in EPS. The week ends with Richemont expected to see revenue growth coming down fast to just 7% y/y in Q3.   Key company earnings releases Monday: Westpac Banking, Coloplast, Ryanair, Activision Blizzard, BioNTech, Palantir Technologies, SolarEdge Technologies Tuesday: Bayer, Deutsche Post, KE Holdings, Nintendo, Walt Disney, Occidental Petroleum, Lucid Group, DuPont Wednesday: National Australia Bank, KBC Group, Genmab, Siemens Healthineers, E.ON, Adidas, Honda Motor, Coupang, Rivian Automotive, Roblox, DR Horton, Trade Desk Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Key economic releases & central bank meetings Monday 7 NovemberChina (Mainland) Trade (Oct)Germany Industrial Production and Output (Sep)Eurozone S&P Global Construction PMI (Oct)Indonesia GDP (Q3) Tuesday 8 NovemberJapan BOJ Summary of Opinions (Oct)Japan All Household Spending (Sep)Eurozone Retail Sales (Sep) Wednesday 9 NovemberJapan Current Account (Sep)China (Mainland) CPI and PPI (Oct)United States Wholesale Inventories (Sep) Thursday 10 NovemberUnited States CPI (Oct)United States Initial Jobless ClaimsChina (Mainland) M2, New Yuan Loans, Loan Growth (Oct) Friday 11 NovemberNew Zealand Manufacturing PMI (Oct)Germany CPI (Oct, final)United Kingdom monthly GDP, incl. Manufacturing, Services and Construction Output (Sep)United Kingdom Goods Trade Balance (Sep)United Kingdom GDP (Q3, prelim)United Kingdom Business Investments (Q3)United States UoM Sentiment (Nov, prelim)     Source: https://www.home.saxo/content/articles/macro/saxo-spotlight-7-nov-2022-07112022
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Maersk Expects The Eurozone Enter Into A Recession | iPhone's Demand Is Coming Down

Saxo Bank Saxo Bank 07.11.2022 09:12
Summary:  Traders witnessed a wild session on Friday as the market decided that the US data would not add any further risk of a hawkish Fed for now, helping risk sentiment to rebound sharply as US treasury yields eased a bit lower. The US dollar was pummeled for sharp losses, particularly against commodity currencies that rebounded on chatter of China moving to ease Covid restrictions, only to see those hopes dashed over the weekend. Focus this week on US October CPI release this Thursday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are holding up pretty well given the remarks on Wednesday from Fed Chair Powell and assessment by Larry Summers that the terminal rates probably should be closer to 6% than 5%. S&P 500 futures are trading around the 3,767 level with the index futures likely trying to attempt again to move to the 3,800 level, but our view is that tighter central bank policy will begin to impact US equities negatively again and the 3,600 level is our shorter-term target for S&P 500 futures. Euro STOXX 50 (EU50.I) European equities are up 13% from late September as European earnings have been better than expected and the energy situation has eased. But this optimistic view might be premature as the economic activity in the euro area is slowing down fast and the winter has not even started, so we do not know the true strength of the European energy market. Also, the idea that ECB will begin pausing is not credible as the inflationary pressures are very high and will force ECB to continue being more aggressive on policy rates. STOXX 50 futures are trading just above the 200-day moving average this morning at the 3,680 level, with some potential to move higher if the index futures can close above Friday’s close. But overall, we maintain that it is more likely that equities will begin to roll over here as central bank hawkishness on terminal rates will sink in. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) While China’s National Administration of Disease Control and Prevention reiterated its adherence to the dynamic zero-Covid policy at a press conference last Saturday, the health officials added that local governments should not unreasonably double down on the implementation and must ensure people’s livelihood and economic activities remain normal.  Investors took note of the above and recent signs of incremental flexibility in the implementation of pandemic control measures in China and saw the Hang Seng Index more than 3% higher as of writing. The resumption of large-scale sports events including the Beijing Marathon last Sunday, multinational sports events scheduled for 2023 such as Shanghai F1 and Hangzhou Asian Games, relaxation of PCR test requirements, increases in international flights, cancellation of circuit breaker for international flights, and approval of BioNTech vaccine for foreigners living in mainland China are among the factors cited by investors who anticipate gradual reopening in the coming months. Mainland A-shares’ reactions were more modest, with CSI300 climbing only 0.2%. FX: USD bounces back as China reasserts Zero Covid commitment after Friday’s huge sell-off The market absorbed Friday’s US data without further punishing US treasuries, as yields were capped and eased back. This saw the former USD strength reversing sharply to pronounced weakness Friday as risk sentiment also rebounded. Chatter late last week about China’s reopening added to brightening of sentiment. Commodity currencies had been supported with NZD leading the gains against the USD and being up over 2%. AUDUSD also surged above 0.6450 into the end of the week on hopes of a recovery in commodities demand. However, weekend reports from China’s Health Ministry confirmed that China will maintain its present zero-Covid regulations but improve the pandemic control measures, hinting that protracted lockdowns will be avoided. This has sent dollar back higher overnight, with AUD and NZD leading the declines, but this still appears merely a small consolidation of Friday’s weakening move. Focus this week on US CPI release on Thursday (more below). Gold (XAUUSD), silver (XAGUSD) and copper (HGZ2) … all raced higher on Friday, before giving back some of those gains overnight. The China reopening story gained its own momentum last week and while the official line has not changed, the tone has softened (see HK and China update above).  The extended rally despite a stronger-than-expected US report was driven by copper which recorded its best day since 2009, rallying close to 8% and in the process breaking through several key levels of resistance, thereby triggering some extra buying momentum from traders, not positioned for a bounce. The strong surge fed through to silver, up 7% on day, which found its own momentum above $20 and finally also Gold which had its biggest jump since March 2020. It may still be too early to call for a reversal given continued worries about the global economic outlook and Fed action, but Friday’s action will force a rethink of whether the sell-into-strength strategy is still valid. China developments, the dollar and incoming US data will provide most of the answers to this question.  Crude oil (CLZ2 & LCOF3) Crude oil trade lower following Friday’s strong gains with the market responding negatively to weekend headlines about zero-Covid policies being maintained in China. However, looking a bit deeper there is no doubt a softening approach is happening. The People’s Daily in an article on November 3 told people not to worry too much about “long Covid” ie the aftermath health problems from Covid while the health officials told local government not to make measures over stringent. With demand in China potentially starting to recover, the ill-timed OPEC+ production cut and EU sanctions against Russian crude is likely to keep the price risk focused to the upside, but with Brent failing to break above $98.75, and WTI above $93.65, the October highs, the market may spend the start of the week consolidating last week’s strong gains. US treasuries (TLT, IEF) US Treasury yields dropped back slightly on Friday as the US data was not seen stoking additional fears of the Fed intensifying its hawkish stance further for now, with this Thursday’s CPI weighing more in the balance than the mixed jobs report Friday. Focus is on the 4.32% top in the US 10-year treasury benchmark yield and the 3.90% low-water mark of the recent consolidation lower. What is going on? Mixed US jobs report US NFP headline gains of 261k were above expectations of 200k but slowed from last month’s 315k which was revised higher from 263k. Job gains were broad-based with strong gains in healthcare, professional and business services and manufacturing. Wage growth also held up strongly, coming in at 0.4% MoM in October from 0.3% MoM previously although a tad softer on a YoY basis at 4.7% from 5.0% YoY previously. However, the unemployment rate ticked up to 3.7% from 3.5% (exp. 3.6%) on a rather weak Household Survey although it was met with a 0.1% decline in the participation rate to 62.2%. However, with layoffs rising recently, especially in tech, it will be interesting to see how that impacts the headline NFP and the Fed tightening path in the months to come. Apple lowers iPhone output by 3mn units The demand for iPhones is coming down and Apple is now announcing a cut of 3mn units as consumers are under pressure from inflation and might be extending the life of their old phones. Apple has recently hiked prices on some of its services aiming to offset the weakness in its hardware business. Meta to start layoffs according to WSJ Investors have been frustrated with Meta following the Q3 earnings release as Mark Zuckerberg has reinforced the image that he does not listen to the concerns of investors that Meta is spending too much capital on its metaverse bets. According to Wall Street Journal, Meta might have listened after all as the technology company is expected to begin laying off thousands of employees. Ryanair lifts passenger target If there is an airliner that can do well during a recession in Europe it is Ryanair and the first half result this morning is a bit better than expected and the airliner expects net income of €1-1.2bn in the FY23 (ending 31 March). The Danish shipping giant Maersk sees the world entering a recession Maersk cut its forecasts for container demand this year. The drop is expected to reach minus 2 to 4 %. This matters because the company is often seen as a barometer for global trade. This is explained by well-known factors we have mentioned several times here: high inflation across the board, structural energy crisis in Europe, the geopolitical tensions and higher cost of capital. All of this weighs on consumer purchasing power and can potentially cause a global recession. Maersk expects the eurozone to be already or to enter into a recession, and potentially the United States as well. At Saxo Bank, we share this view, especially regarding the recession risk in the eurozone. Last week, ECB governor Martins Kazaks (which is seen as a hawk) acknowledged that the eurozone recession is now the baseline. This was the first time that an ECB governing council member said that officially.  The number of penny stocks is increasing on Euronext Paris With the significant equity drop that started earlier this year, many stocks are now close to zero. In Euronext Paris, the number of listed companies with stock value below 0.01 euro has jumped in recent months. For instance: Pharnext (biopharmaceutical company), NFTY (NFT and blockchain marketing services), Safe (specialized in the design and manufacture of medical devices) etc. Retail investors need to be very careful regarding small caps investment (especially when the valuation of the company is below 100 million euros). There are a lot of stocks that are not liquid enough and can represent a high risk of losses. What are we watching next? US inflation to test the 8% level, watch core and stickier components Bloomberg consensus expects US October CPI to drop below the 8% mark and come in at 7.9% YoY from 8.2% previously, but still higher at 0.6% MoM from 0.4% in September. The core measure is also expected to ease slightly to 6.5% YoY, 0.5% MoM (prev. 6.6% YoY, 0.6% MoM) but still remain elevated compared to historical levels. Key to watch also will be the drivers of inflation, particularly the stickier shelter and services costs, which if stuck higher could move the December Fed funds future pricing more towards another 75bps rate hike, resulting in another round of selloff in equities and dollar gains. However, with another CPI report due before the next Fed meeting in December, market impact of this week’s report will likely remain restrained unless a major deviation from expectations is seen. For this week’s CPI data, we will be watching the USD, and bond yields, which may be expected to rally up if the data is hotter than expected. US mid-term elections tomorrow Pundits suggest that the Republicans have very strong odds of flipping the House of Representatives in their favour, while the odds look finely balanced for whether the Senate ends retaining the slim Democratic majorities. Republicans taking both houses has few immediate ramifications, as US President Biden has the presidential veto, but a stronger than expected Democratic showing that somehow sees them retaining the House and strengthening their Senate majority would be a game changer – opening for more policy dynamism (and inflation from fiscal stimulus) from the US over the next two years rather than the expected lame-duck presidency. Uncertainty is high as pollsters have had a hard time gathering accurate indications for the election results since Trump’s victory in 2016. Earnings to watch The Q3 earnings season is slowing down this week but there are still important earnings releases to watch in certain industries or equity themes. Today our earnings focus is Ryanair, Palantir, and SolarEdge. Palantir is part of the technology segment that has been hit hard on valuations and with revenue growth slowing down and a negative EBITDA in Q2 the pressure is on Palantir to deliver a credible path to profitability; analysts expect 21% y/y revenue growth. Solar panel growth is still high and SolarEdge is enjoying this tailwind with revenue expected to grow 57% y/y and EPS up 57% y/y to $1.46. Monday: Westpac Banking, Coloplast, Ryanair (see earnings review above), Activision Blizzard, BioNTech, Palantir Technologies, SolarEdge Technologies Tuesday: Bayer, Deutsche Post, KE Holdings, Nintendo, Walt Disney, Occidental Petroleum, Lucid Group, DuPont Wednesday: National Australia Bank, KBC Group, Genmab, Siemens Healthineers, E.ON, Adidas, Honda Motor, Coupang, Rivian Automotive, Roblox, DR Horton, Trade Desk Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Economic calendar highlights for today (times GMT) 0700 – Germany September Industrial Production Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-7-2022-07112022
US Inflation Rises but Core Inflation Falls to Two-Year Low, All Eyes on ECB Rate Decision on Thursday

Saxo Bank's Podcast: Discussion On US Consumer Credit Growth, China Is In Focus Over Its Covid Situation

Saxo Bank Saxo Bank 07.11.2022 11:54
Summary:  Today we step back and look at last week's price action and especially after the FOMC rate decision. China is in focus over supposedly easing its Covid restrictions lifting copper and other industrial metals including emerging market equities. The USD also seems to be rolling over in the short-term easing financial conditions a bit and lifting risk sentiment. On the macro side, we discuss US consumer credit growth and what it means for the cycle and we highlighting the plunge in European economic activity over the past three months. On equities, we discuss rumoured Meta layoffs and Apple cutting its iPhone production target. Today's podcast features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-7-2022-07112022
Share of Russian metal grows in LME warehouses

Copper Buyers Sensing Support From Developments In China

Saxo Bank Saxo Bank 07.11.2022 13:15
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, November 1, the day before Fed Chair Powell sent shivers across markets. Ahead of the meeting speculators cut bullish dollar bets to a 15-month low, in commodities buying was concentrated in crude oil, natural gas, copper and soybeans with gold, sugar and coffee seeing continued selling Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, November 1. The day before the FOMC delivered its fourth consecutive 75 basis rate hike in this cycle while pouring cold water on the markets hope for a slowdown after Fed Chair Powell said there is still some way to go and that incoming data means will help determine the “ultimate level” that the Fed funds reaches. In the reporting week prior to the meeting technology stocks had sold of on disappointing earnings while the dollar and US Treasury yields traded softer. The commodity sector was mixed with gains in industrial metals and grains being partly offset by softness elsewhere.  Commodities The Bloomberg Commodity traded higher on the week with a small 0.6% gain reflecting a mixed market where gains in industrial metals and especially the grains sector was being offset by losses in softs and livestock. The energy sector traded lower with losses in natural gas and gas oil disguising an otherwise strong week for crude oil.Speculators where net buyers of commodities with length being added to 13 out of the 24 commodity futures tracked in this, led by and concentrated in crude oil, natural gas , copper and soybeans. Selling was concentrated across the softs sector where all four contracts continued to be sold. Energy Speculators raised bullish crude oil bets by a combined 38k lots to 426k lots, an 18 week high. In the week both WTI and Brent rallied by more than 3% in response to OPEC+ production cuts and renewed optimism about demand in China, developments that helped attract fresh longs, primarily into Brent. Small profit taking reduced the net length in gas oil and gasoline. In natural gas a 7% price drop triggered profit taking among short sellers resulting in the net short falling by 21% to -68k lots.    Metals Money managers were net sellers of gold for a third week ahead of last week's FOMC meeting. The 17% increase to -39k lots took the net short back to near a four-year high, just ahead of a volatile few trading days where anotherr downside rejection at $1615 support helped trigger a strong short covering rally ahead of the weekend. Short covering reduced the silver net short by 43% to 3.4k lots, platinum length was added for a fifth week taking the net long to 13.3k lots and highest since March. Copper buyers sensing support from developments in China helped flip the net back to a long position of 5.3k lots and highest since June.  Agriculture  The grains sector saw net buying for a second week lifting the combined long across six grains and soy contracts to a 19-week high at 553k lots. The bulk of the buying was led by the soybeans, soy meal and oil contracts with corn seeing a small increase in the net long. The 8% jump in wheat on Ukraine export worries did not alter the overall bearish view held by funds. Selling into strength they lifted the net short in Chicago wheat to -37k lots, the biggest short bet since the depth of the pandemic panic in June 2020. The four major softs commodities continued to see heavy net selling, this week being led by 48% reduction in the sugar long to 44k lots. The cocoa net short extended to -43.7k lots and not far from a five-year high, a development that increasingly could trigger a sharp rebound should the technical and/or fundamental outlook turn more friendly. Weeks of coffee selling continued resulting in the net flipping back to a net short of -10.4k lots for the first time in 25 months. A similar situation in cotton where nine weeks of continued selling has taken the net close to neutral at just 5.4k lots.    Forex In forex, flows turned decisively against the dollar, a day before Fed Chair Powell delivered his hawkish comments which only managed to trigger some temporary dollar strength. Before this reporting week, the Greenback had increasingly been losing steam against several of the nine IMM forex futures tracked in this report. The bulk of the net dollar selling had up until recently been mostly against the euro which since late August has seen €19 billion of net buying, reversing the net position from a 48k lots short to a 106k long. This past week buying accelerated with the net long jumping 41% to a 17 month high. Combined with an aggressive 24% reduction in the JPY net short and a 250% jump in the MXN net long, the combined dollar long ended up being reduced by 59% to just $5 billion, the weakest belief in a stronger dollar since August last year.     Source: https://www.home.saxo/content/articles/commodities/cot-crude-oil-and-copper-bought-gold-sold-ahead-of-fomc-07112022
A Significant Change In The Prospects For The Crude Oil Market

A Significant Change In The Prospects For The Crude Oil Market

ING Economics ING Economics 05.11.2022 08:41
Natural gas prices came under significant pressure in October due to milder weather and growing European storage. Oil prices have been relatively stable following the recently announced OPEC+ supply cuts. Despite the recent weakness, the 2023 outlook remains bullish In this article European natural gas prices collapse 2023 will be tight for European gas OPEC+ cuts change 2023 oil outlook European natural gas prices collapse The scale and pace of the collapse in European natural gas prices have been extraordinary; day-ahead TTF prices fell by 79% over October, trading to their lowest levels since June 2021. Meanwhile, TTF next-hour prices briefly traded in negative territory towards the end of the month. This may be an odd move during an ongoing energy crisis, which is being felt most acutely in Europe. However, milder-than-usual weather across large parts of Europe has meant that heating demand has been lower than usual while EU gas storage continues to grow. The latest numbers from Gas Infrastructure Europe show that European inventories are almost 95% full right now, well above the European Commission’s initial target of having storage 80% full by 1 November. It's also above the 5-year average of around 89%.  Essentially, EU storage is full Clearly, through much of 2022 strong LNG shipments and demand destruction helped the European Union build inventories at a good pace despite the significant fall in Russian pipeline gas flows - YTD Russian flows to the EU have fallen by around 50% Year-on-Year. While weakness in prices provides some relief to consumers, the concern is whether those lower prices will stimulate demand once again. European fertiliser producers have already started to bring back curtailed capacity following the recent weakness in prices. If we see this happening on a larger scale, Europe’s efforts to refill storage next year will be more difficult. There are still concerns for Europe over the longer term, particularly through 2023 and into 2024. The front end of the TTF forward curve is in significant contango with Feb-23 TTF futures trading in excess of EUR130/MWh (vs. day-ahead at around EUR34/MWh). The forward curve through 2023 until early 2024 remains fairly flat at these elevated levels. EU gas storage Chart shows total capacity as a percentage    Source: GIE, ING Research Europe's temperature anomaly The darker red colours show the higher-than-normal temperatures in the week beginning 23 October Source: NOAA 2023 will be tight for European gas The pace of inventory builds during the 2023 injection season will be much more modest compared to what we have seen this year, given the reductions in Russian supply. If Russian gas flows remain as they are currently, annual flows next year will still be down 60% YoY. And clearly, there is the risk that these remaining flows still come to a complete stop. The ability of the EU to completely turn to other sources is just not possible. There are constraints to how much more LNG Europe can import. There are reports that LNG carriers are queuing for spots at regasification units. This highlights the lack of regas capacity in Europe at the moment. It could also be partly due to market players wanting to take advantage of the significant contango in the front end of the TTF curve. The EU is seeing the start of a fair amount of regasification capacity in the form of Floating Storage Regasification Units (FSRUs) over the second half of this year and into early 2023. This will help with some of the infrastructure constraints Europe is facing, but the issue is also around global LNG supply and the limited capacity which is expected to start next year. Also, a key upside risk for Europe is if we see a recovery in Chinese LNG imports next year. The world’s largest importer has seen weaker demand so far this year due to the impact of Covid-related lockdowns and higher prices. Chinese LNG imports over the first nine months of 2022 were down 21% YoY. Tight storage capacity will leave Europe vulnerable this time next year  As a result, Europe is likely to go into the winter with tight storage which will leave the region vulnerable this time next year.  In order to get through this winter comfortably, we will have to see continued demand destruction. This will have to be either a result of market forces (prices needing to trade higher to reduce demand) or EU-mandated demand cuts. While Europe should be able to scrape through this winter if current Russian gas flows continue, it is much more challenging if the remaining Russian gas flows come to a full stop. Therefore, we believe there to be upside to current 2023 forward values, particularly those towards the end of the year. Although much will depend on how much storage the EU drawdowns this winter, which obviously will depend on heating demand through the peak of winter. OPEC+ cuts change 2023 oil outlook The outlook for the oil market has changed significantly since last month and this is a result of the OPEC+ supply cuts announced in early October. OPEC+ agreed to reduce their output targets by 2MMbbls/d from August production levels. These cuts will start in November and run through until the end of 2023. However, given that the bulk of OPEC+ members are producing well below their target levels, the actual cuts we see from the group will be much smaller. We estimate that output will fall by around 1.1MMbbls/d. These OPEC+ cuts come at a time of plenty of uncertainty around Russian supply. The EU ban on Russian seaborne crude oil comes into effect on 5 December, followed by the ban on Russian refined products on 5 February. Up to now, Russian supply has held up well thanks largely to India, China and a handful of small buyers increasing their share of Russian oil purchases, but it is difficult to see them having room to increase these purchases significantly. Therefore, when these bans come into force, we would expect to see more significant declines in Russian supply. For now, we are assuming Russian supply to fall by a little more than 2MMbbls/d in the first quarter of next year.  Prior to the latest OPEC+ supply cut announcement; we were forecasting that the oil market would be in surplus through to mid-2023. However, with the market set to lose in the region of 1.1MMbbls/d of supply, it's now expected to be in deficit throughout the whole year. This is even after considering slower demand growth next year, given the macro headwinds (the IEA estimates demand growth of 1.7MMbbls/d for 2023 vs. a previous forecast of 2.1MMbbls/d). As a result, we see oil prices trading higher over 2023. We currently forecast ICE Brent to average US$104/bbl next year. There are several risks to this view. These include a worse-than-expected macro environment, OPEC+ ending supply cuts early or members not adhering to their cuts, and obviously a de-escalation in the Russia-Ukraine war. For now, we believe it is unlikely that US sanctions against Iran will be lifted, so we see no change in Iranian supply through 2023. Global quarterly oil balance (MMbbls/d)   Source: IEA, EIA, OPEC, ING Research TagsRussia-Ukraine OPEC+ Oil Natural gas Energy crisis   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Crude decreases amid risk boosting greenback and unclear situation in China

Situation in China acts on crude oil prices. Brent price doesn't seem to play in favour of Democrats

Craig Erlam Craig Erlam 07.11.2022 22:39
Continuing to creep higher Oil prices are continuing to creep closer to $100 amid ongoing speculation over China’s Covid-zero commitment and a little more positive sentiment in broader markets. Brent and WTI are treading water but it’s been choppy at times, with the former coming within a dollar of triple figures. That won’t make good headlines at a time when the Democrats in the US need all the good headlines they can get as people head to the polls. But with OPEC+ cutting output aggressively in anticipation of a demand shock, there’s little they can do. As we’ve seen following President Biden’s wasted trip to Saudi Arabia months ago. Gold choppy after jobs report Gold is choppy at the start of the week but largely holding onto Friday’s gains. I struggle to see how the jobs report was good for gold – especially to the tune of 3% – but that is the markets right now and perhaps there was some delay from what was an overreaction to the Fed a couple of days earlier. Still, the yellow metal is trading around $1,680 where it has now stalled. This has been a notable area of support and resistance in recent months and so it is proving again. If it can overcome this, $1,700 will be the next test, followed by $1,720 above that. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil ticks higher, gold choppy - MarketPulseMarketPulse
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

Australia’s Consumer Sentiment Dropped | USA: A Stronger Than Expected Democratic Showing

Saxo Bank Saxo Bank 08.11.2022 08:39
Summary:  Equities extended their rebound from post-Powell lows on Monday with China reopening reports not taking any clear direction. US treasury yields jumped higher, but more so on a heavy corporate calendar rather than macro-driven, and dollar continued to slip for a second consecutive day. Asian economic data sending some warnings signs with China export/import growth turning red and Australian confidence dropping to fresh lows. US midterms ahead, and a clean Republican sweep can be further dollar negative. Earnings focus on Walt Disney in the day ahead. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) rose with tech and energy leading gains Ahead of the U.S. midterm election, equity market sentiments maintained a risk-on tone. Both S&P 500 and NASDAQ rose about 1%.  Community services, energy, and information technology led gains while utilities were the largest loser in S&P 500. On corporate news, Meta (META:xnas) gained 6.5% after the company announced plans to cut staff. Viatris (VTRS:xnas) surged 13% after the pharma company agreed to acquire Oyster Point (OYST:xnas). Lyft (LYFT:xnas) plunged 15% in extended-hour trading after reporting weaker-than expected ridership growth. Tesla (TSLA:xnas), losing 5%, dragged the benchmarks indices most. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) edged higher on incoming supply Yields across the treasury curve rose around 6bps ahead of refunding auctions of the 3-year notes, 10-year notes, and 30-year bonds for a total of USD96 billion from Tuesday to Thursday. A rise of 16bps across the pond in the 2-year UK Gilt yield also added to the pressure on treasuries. Investors will be watching closely the U.S. mid-term election on Tuesday and CPI on Wednesday. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) continued to rally on China reopening hopes Stocks in Hong Kong shrugged off the headlines about China’s National Administration of Disease Control and Prevention reiterating adherence to the dynamic zero-Covid policy over the weekend. Investors took note that the health officials added that local governments should not unreasonably double down on the implementation and must ensure people’s livelihood and economic activities remain normal.  In addition, the resumption of large-scale sports events, relaxation of PCR test requirements, increases in international flights, cancellation of circuit breaker for international flights, and approval of BioNTech vaccine for foreigners living in mainland China were among the factors cited by street analysts in their reports anticipating gradual reopening in the coming months. The Hang Seng Index rose for the second day in a row, finishing 2.7% higher. Financials outperformed, with HKEX (00388:xhkg) up 5.4%, HSBC (00005:xhkg) up 3.7%, and AIA (01299:xhkg) up 3.3%,  China property names surged on better-than-expected home sales data from some tier-1 cities. Country Garden (02007:xhkg), up 11%, was the top gainer in the Hang Seng Index. Despite Apple (AAPL:xnas) cutting iPhone production, Sunny Optical (02382:xhkg) jumped 11%. MMG (01208:xhkg) surged 16%, following the removal of blockage by locals to the company’s copper mine in Peru. Zinjin Mining (02899:xhkg), up 10.3%, announced to buy a 20% stake in Zhaojin Mining (01818:xhkg), up 9.7%.  China’s October trade data came in weaker than expected but it did not have much impact on the market on Monday. FX: Dollar’s decline extends despite rise in 10-year yields The US 10-year yields rose to last week’s post-Powell highs at 4.20%+, but the dollar tumbled for a second day in a row to drop to over one-week lows. Dollar decline was broad-based, against all G10 currencies barring the loonie. Gains were led by sterling, with GBPUSD above 1.1500 and EURGBP also sliding lower to 0.8700. EUR benefitted from the weaker dollar which helped EURUSD rise above parity from lows of 0.9900 even as President Lagarde reiterated her usual tone noting inflation must be brought back down to 2%. Midterms bring further volatility risks to FX, with a clean Republican sweep likely being dollar negative as yields will likely plunge amid speculation of a hamstrung administration limiting scope for fiscal support.    Crude oil (CLX2 & LCOZ2) lower despite dollar weakness Oil prices ended lower as hopes of China easing its zero covid policy faded, even as near-term supply constraints continued to limit the slide. OPEC has begun reducing output in line with the agreement to reduce quotas by 2mb/d at its last meeting. The market is also facing the deadline for European imports of Russian oil before sanctions kick in on 5 December. This has left fuel inventories tight, with Brent crude oil futures still below $100 per barrel and WTI futures staying above $91. Meanwhile, US natural gas futures soared on cold weather fears in the West and the Northeast. December natural gas futures contracts climbed as much as 12.8% to $7.22 per MMBtu before trimming the advance later. Copper (HGZ2) trimmed last week’s gains Copper reversed back to $3.60 after racing to $3.70+ levels on Friday on China reopening optimism. However, reports that China would stick with its adherence to strict virus controls, made the metal reverse some gains. Weak economic data also weighed on sentiment with China’s imports of Copper ore down and overall imports also unexpectedly falling for the first time in more than two years. Gold (XAUUSD) held steady despite the lower USD, and it may still be quite early to call a reversal in the short-term downtrend.   What to consider US mid-term elections to spook market volatility Pundits suggest that the Republicans have very strong odds of flipping the House of Representatives in their favour, while the odds look finely balanced for whether the Senate ends retaining the slimmest of Democratic majorities. Republicans taking both houses has few immediate ramifications, as US President Biden has the presidential veto, but a stronger than expected Democratic showing that somehow sees them retaining the House and strengthening their Senate majority would be a game changer – opening for more policy dynamism from the US over the next two years rather than the expected lame-duck presidency. Uncertainty is high as pollsters have had a hard time gathering accurate indications for the election results since Trump’s victory in 2016. China’s October trade data disappointed China’s exports in USD terms declined 0.3% Y/Y in October, much worse than the growth of 4.5% expected in the Bloomberg survey and the 5.7% in September. It was the first decline in export growth since May 2020 and might point to a turning point of deceleration in exports as the global economy slowed. If adjusting for inflation in export prices, the decline of China’s exports would be even larger in the real term. Imports in USD terms declined 0.7% Y/Y (vs consensus 0.0%, Sept: +0.3%). Bank of Japan affirms easy policy, but not without some mention of a future exit The Bank of Japan released summary of opinions of the October policy meeting today, broadly reaffirming the easy monetary policy stance. Still some members stuck a slightly different tone, noting that Japan's inflation likely to remain fairly high as there are signs service prices starting to rise, and “cannot rule out chance prices will sharply overshoot forecasts.” Still, sustained wage gains remained the base case for Japan to achieve its price target and members agreed that there was no immediate need to tweak monetary policy. Importantly, one member noted that the Bank of Japan must continue examining how a future exit from ultra-low interest rates could affect financial markets, in a rare mention of an exit. Big slump in Australian business and consumer confidence Australia’s consumer sentiment tumbled to its lowest level in 2.5 years and business confidence also weakened as higher interest rates and surging inflation stoke caution over the economic outlook. NAB business confidence plunged to 0 from 5 in September, while the Westpac consumer confidence index was down to 78 for November from 83.7 previously. This bodes ill for spending ahead, suggesting RBA’s caution on rate hikes may continue to prevail despite the continued hot CPI reports. Walt Disney earnings ahead Walt Disney is scheduled to report on Tuesday with analysts expecting Q4 (ending 30 September) revenue growth of 15% y/y but EBITDA at $3bn down from $3.86bn in Q3 highlighting the ongoing margin pressure. Layoffs are coming to Meta and Apple cuts iPhone production The demand for iPhones is coming down and Apple is now announcing a cut of 3mn units as consumers are under pressure from inflation and might be extending the life of their old phones. Apple has recently hiked prices on some of its services aiming to offset the weakness in its hardware business. Meanwhile, investors have been frustrated with Meta following the Q3 earnings release as Mark Zuckerberg has reinforced the image that he does not listen to the concerns of investors that Meta is spending too much capital on its metaverse bets. According to Wall Street Journal, Meta might have listened after all as the technology company is expected to begin laying off thousands of employees. Read our equity strategist Peter Garnry’s note here.   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-8-nov-08112022
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

The Biden Government Would Have To Increase Production Of Crude Oil Barrels

Conotoxia Comments Conotoxia Comments 08.11.2022 10:00
The OPEC cartel's recent decision to cut oil production was met with a response from U.S. President Joe Biden, who called an emergency conference call on October 31 following the cartel's decision. To this, he announced significant steps to beat the price, describing the oil companies with the following words: "Their profits are a windfall of war – the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe" Situation in the US oil market Since President Biden's statement, the price of WTI crude oil (XTIUSD) on the markets has risen more than 16% to $92 per barrel. Recall, however, that the United States is currently the number one producer in the oil market. According to the latest data from the EIA (Energy Information Administration), production stands at 11.975 million barrels per day (11.9% of global output). These are levels from November 2019, when the price per barrel was in the neighbourhood of $55. Will Biden succeed in forcing companies to increase production? On Wednesday, we will learn the results of the change in oil inventories in the United States. Last week, they decreased by 3.115 million barrels (0.45 million barrels per day). If this trend continues, it  could  be assumed that the US government's actions have yielded the first results. However, the amount of inventories seems to be presented negatively. According to the EIA's data, they currently stand at 836.62 million barrels, down 29% from their July 2020 peak. If the current trend of inventory consumption continues, the stockpile would run out in 5 years; if it doubles, we could see shortages after just 2.5 years. Will OPEC lead to a global recession? According to data provided by OPEC, in Q3 2022 global supply was 100.63 million barrels per day, and the cartel itself, which consists of 13 countries mainly in the Middle East, amounted to 29.45 million barrels per day (28% of global output). Demand at the time was 99.33 million barrels per day. It is expected that demand may remain at a similar level. The cartel's announcement may indicate a desire to reduce production by more than 2 million barrels per day. This could create a shortage in the world market of about 2%, in which case it seems that we could expect price increases in this market. To cover the described shortfall, the Biden government would have to increase production by 16%, or increase supply to levels of about 14 million barrels per week. Both scenarios and their mixes may prove unlikely. Oil prices, and fuel prices at that, appear to have a significant impact on inflation. As a result, the U.S. presidential government may do all it can to limit the risk of further price increases. Information that could lead to a reduction in demand in the global market in recent days is a declaration by the Chinese government, which has reaffirmed its commitment to pursuing a zero-Covid policy. This could lead to a reduction in demand from one of the world's largest importers of the commodity. What does Wall Street think about the oil market? The EIA Institute gives a target price for 2023 in the vicinity of $95/bbl. However, a consensus of analysts reported by Trading Economics indicates a price of $108.71/bbl in 12 months. An additional perspective was indicated by UBS bank analyst Giovanni Staunovo on OPEC's production cuts: "The cut suggests that there is a desire to defend oil prices to stay above the level of $90 per barrel". Source: MT5, XTIUSD, Daily How to find CFDs on oil? At Conotoxia, you can choose from CFDs for commodities and precious metals. Wanting to find an XTIUSD CFD, for example, you just need to follow 4 simple steps: To access Trading Universe - a state-of-the-art center of financial, information, investment and social products and services with a single Smart account, register here. Click "Platforms" in the "Invest&Forex" section. Choose one of the accounts: demo or real. On the MT5 platform, search for the CFD of your choice and drag it to the chart window. Use the one-click trading option or open a new order with the right mouse button. Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Read more reviews and open a demo account at invest.conotoxia.com Materials, analysis and opinions contained, referenced, or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
China: PMI positively surprises the market

Podcast: China Is Set To Ease Up On Its Covid Restrictions, Eyes On The USA

Saxo Bank Saxo Bank 08.11.2022 11:53
Summary:  Today we look at markets as we await US elections today and the US CPI data print on Thursday, all while everyone has very twitchy trading fingers on hopes that China is set to ease up on its Covid restrictions. We also discuss the simultaneous decline in bond market and equity market volatility and ask which asset class might be more attractive. Equity sentiment has improved sharply and is near six-month highs. In commodities, we zero in on nat-gas, gold, cocoa and coffee. Stocks to watch, including Tesla, upcoming earnings from Disney and more also on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.     Source: https://www.home.saxo/content/articles/podcast/podcast-nov-8-2022-08112022
Crude decreases amid risk boosting greenback and unclear situation in China

Brent crude weakens amid COVID outlook in China. Among others, in Guangzhou number of cases went up

Ed Moya Ed Moya 08.11.2022 23:28
Oil edges lower  Crude prices edged lower after as China continues to struggle with COVID. Bets that China will reopen soon are losing momentum as cases jumped in Guangzhou and other key Chinese cities. ​ Brent crude is still close to the $100 a barrel level for now and it seems short-term risks to supplies have traders looking for a bullish move higher. ​ Gold powers higher Gold had a great day as the dollar tumbled ahead of the midterm elections and a pivotal inflation report. ​ The weakness in the dollar was more of a short-covering move and potentially on hopes that later this week we will have confirmation that inflation is headed lower. ​ Gold looks like it could be breaking out now and it will just need the macro backdrop to support the move higher. ​ Gold’s rally above the $1700 was impressive as it comes before any exit polling data and well ahead of Thursday’s inflation report. ​ Gold should find major resistance ahead of the $1750 level and that might prove to be difficult to reach before this week’s CPI data. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil lower on China concerns, gold pops - MarketPulseMarketPulse
The French Housing Market Is More Resilient | The Chance Of Republicans Winning The Senate Is Up

The French Housing Market Is More Resilient | The Chance Of Republicans Winning The Senate Is Up

Saxo Bank Saxo Bank 09.11.2022 08:31
Summary:  Risk sentiment remained upbeat despite the fallout in the crypto world as equities focused on the results of the midterm elections. Bitcoin made fresh YTD lows in the wake of Binance's acquisition of FTX. But US yields and the dollar tumbled, helping Gold and Silver to run higher breaking some key resistances. Another surge in China’s Covid cases still kept a check on gains in oil prices, and focus today will be on inflation data from China. Disney’s disappointing results further add to this quarter’s earnings misery, and Rivian and Roblox report today. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) closed higher in a choppy session A political gridlock with a divided Congress after mid-term elections was historically positive for the equity market. S&P 500 gained nearly 1.4% and Nasdaq 100 rose as much as 2% at one point before paring all the gains and more in the early afternoon, dragged by a selloff in the crypto space. Stocks managed to bounce in the late afternoon and recover some of the early gains, with S&P 500 and Nasdaq 100 finishing a volatile session 0.6% and 0.8% higher respectively. Lyft (LYFT:xnas) tumbled 23% after weak rider growth was reported the day before. Walt Disney (DIS:xnys) plunged 6.4% in extended-hours trading on earnings miss which was dragged by weak streaming results. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) yields fell on hopes for political gridlock and strong demand in the 3-year auction US treasury yields fell 4bps to 9bps across the curve with the best performance in the 5-year to 10-year segment, with the 10-year yield down 9bps to to 4.12%. Anticipations of political gridlock in Washington that historically restrained fiscal policies saw buying in treasuries. Demand in the 3-year auction was solid with awarded yields stopped at more than 1bp richer from the time right before the auction. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) took a pause as Covid cases surged The China reopening trade took a pause in Hong Kong and the mainland bourses as domestically transmitted new cases in the mainland doubled to 7,455. Guangzhou, the capital city of the Southern Guangdong province reported 2,377 new cases and launched mandatory testing in 9 of the 11 districts of the city, and extended the lockdown of Haizhu district to Friday. Hang Sang Index fell 0.2% and CSI300 lost 0.7%. China’s passenger vehicle sales growth slowed in October to +7.3% Y/Y but new energy vehicles sales, rising 75% Y/Y, remained solid. However, EV stocks declined, with NIO (09866:xhkg) falling the most, down 9% following analysts cutting price targets on the stock. Among China internet names, Alibaba (09988:xhkg) underperformed, losing 3.7%. Macau casino stocks were the top performers, rising 2% to 4%, following Macau’s decision to relax entrance rules for some visa holders starting Sunday. FX: Weaker dollar and lower yields amid an expected Republican sweep Expectations of a split Congress saw lower US yields and further USD selling on Tuesday, and eyes are now on US CPI due later this week. Meanwhile, the crypto fallout in the wake of FTX being acquired by Binance sparked a wave of volatility. Yen gained with USDJPY falling below 146. EUR gained a firmer footing above parity amid the latest ECB rhetoric including from de Guindos who noted they will continue raising rates to levels that ensure price stability, while ECB's Nagel said he will do his utmost to make sure the ECB does not let up in the inflation fight and said that large rate hikes are necessary. GBPUSD also reclaimed 1.15 handle. Crude oil (CLZ2 & LCOF3) slid with API inventory build WTI futures slid below the key $90 mark on Tuesday and Brent slid to $95 despite a weaker dollar as a fresh surge in China’s Covid cases further sparked concerns on whether China will part ways with its Zero Covid policy. Xinjian reported its fourth highest number of new cases nationally on Monday. Inner Mongolia, which was sealed off in early October, saw cases jump to almost 1800. New infections in the province of Henan almost doubled. Meanwhile, supply concerns eased with API inventory build coming in larger than expected with crude oil inventory up 5.6mm barrels last week and gasoline inventory also coming in higher. Still, US EIA also cut its 2023 oil production estimate to 12.31mm barrels/day, suggesting structural supply concerns are here to stay. Copper (HGZ2), Gold (XAUUSD) and Silver (XAGUSD) The weakness in the dollar drove metals higher. Copper led the base metals sector higher on dwindling inventories amid positive signs for demand, challenging the September high of $3.6925 once again, ahead of $3.78. Bold move higher in gold and silver as well last night with renewed USD weakness, with the most notable being gold up at one-month highs breaking through $1680/85. A break above $1735 would likely confirm a low in the market. Silver finding some technical resistance here at $21.50 but the break above $21.15 has opened up for a move to $22.25.   What to consider Republicans likely in a strong position in the US mid-term elections Looking at the latest odds on Predictit, the chance of Republicans taking the House is up to 95% from 90% earlier. The chance of them winning the Senate is up to 83% from 74% earlier. All the closest races have tilted towards the Republicans as well. It can take several days to confirm which party will prevail, especially in the Senate. More so if we go to recounts, where the votes cast in a close race are retabulated to verify the initial results. A split Congress, as we wrote yesterday, lowers the expectation of fiscal support measures thereby leading to investors expecting a sooner Fed pivot again. This can spark a further tactically rally in equities and will likely be USD negative. Risk of a contagion in the crypto market After a weeklong dispute between crypto exchanges Binance and FTX, the former is set to acquire FTX, stating a significant liquidity crunch for FTX. This may fuel further contagion throughout the crypto market, as not only FTX but also Alameda Research - the highly linked trading firm to FTX - may be insolvent. Our crypto analyst expects increased volatility in the next couple of days and weeks. Further, this may lead to contagion across the crypto market as experienced in May and June this year, so in our view, traders and investors in the crypto market should act cautiously in the foreseeable future. Likewise, Bitcoin's correlation with NASDAQ has been record-high throughout this year - and relatively high today. Please be aware that the development of crypto may impact particularly NASDAQ. Read more here. China’s PPI and CPI are expected to slow in October China’s PPI is expected to fall -1.5% Y/Y in October vs +0.9% Y/Y in September, due to the high base last year resulting from increases in material and energy prices. Unlike other major economies, CPI in China is expected to slow to +2.4% Y/Y in October from +2.8% in September. Walt Disney reported disappointing FYQ4 results Walt Disney reported FYQ4 revenue at USD20.2 billion, about USD1 billion below street consensus estimates. Adjusted EPS declined to 30 cents, missing substantially the Bloomberg consensus of 51 cents. Subscriptions rose to 164.2 million in FYQ4, up 12 million from 152 million in FYQ3, beating expectations. The operating loss in the direct-to-consumer segment, driven by the Disney+ streaming service, however, jumped to USD1.47 billion in FYQ4 from USD1.05 billion in FYQ3. The management told analysts that they expect the direct-to-consumer segment losses “to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming [they] do not see a meaningful shift in the economic climate.” France’s housing market is cooling down The combination between high inflation across the board (CPI hovering close to 6% on a year-on-year basis), lower purchasing power and higher interest rates is pushing housing prices down in France. According to the real estate promoter Century21 (one of the leading player in this market), real estate prices went down under the threshold of 10.000 Є per square meter in Paris. The deceleration in prices is however limited so far. Contrary to Tel Aviv, Amsterdam and Hong Kong, the parisian housing market is not in a situation of a speculative bubble. Prices are overvalued however. Expect prices to go down a bit more due to a drop in solvent demand. But we won't see a large decrease in prices as it is currently happening in several major cities in the United States, for instance. The French housing market is more resilient for mostly two main reasons: fixed interest rates and a comparatively low household debt (it represents about 124% of net disposable household income versus a peak at 249% in Denmark). For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-9-nov-09112022
Technical Analysis: Gold/Silver Ratio Still On The Rise

Gold, Silver And Copper All Resumed Their Upside Push | The US Dollar (USD) Fell Sharply

Saxo Bank Saxo Bank 09.11.2022 09:51
Summary:  Market sentiment improved further yesterday before dipping slightly overnight, as China Covid cases are on the rise, pushing back against hopes for a lifting of Covid restrictions. In the US mid-term elections, Democrats are slightly outperforming expectations, possibly set to retain control of the Senate even if Republicans look likely set to take narrow control of the House of Representatives.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities exhausted themselves yesterday pulling back from intraday highs to close around the 3,835 level. Sentiment has weakened overnight amid the ongoing impact from the US midterm elections, bad Disney and the fallout from the implosion of FTX in the crypto industry with S&P 500 futures trading down to the 3,829 level. Tesla shares continued lower yesterday, and Elon Musk announced overnight in a filing that he had sold 19.5mn shares in Tesla, and the negative momentum could broaden as many retail investors have sizeable exposure to the stock. The next big event for the US equity market is tomorrow’s October inflation figures which are expected to show core inflation is easing a bit. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) The China reopening continued to fade as new Covid cases surged further to 8,176 yesterday. Hang Seng Index retreated 1.6% and CSI 300 slid 0.8%. China’s PPI declined 1.3% Y/Y in October due to falls in energy and materials prices and weaknesses in metal processing. CPI inflation was also weaker than expected and fell to +2.1% in October from 2.8% in September on weak consumer demand and property prices. Share prices of Chinese developers however surged, following the Chinese authorities pledged to provide credit support, including credit insurance and bond buying, to private enterprise developers. FX: USD remains on back foot after testing important support. Thursday CPI key focus The US dollar fell sharply yesterday, with EURUSD testing the pivot high of 1.0094 before pulling back slightly into this morning and USDJPY had a look toward the pivotal 145.00 level without breaking through. Elsewhere, AUDUSD tested above the 0.6522 pivot late yesterday before pulling back again, likely on concerns that rising China Covid cases are frustrating hopes that a shift away from lockdowns will provide a further boost to the commodity market. Lower US treasury yields yesterday helped drive the US dollar lower and are a key focus over the Thursday October US CPI release, as CPI releases have sparked considerable volatility in recent months. Crude oil (CLZ2 & LCOF3) slid on API inventory build and China’s Covid Challenges WTI futures trade back below $90 and Brent near $95 after a fresh surge in China’s Covid cases sparked concerns over whether China will part ways with its Zero Covid policy. Also weighing on prices was the API reporting a 5.6m build in crude and 2.6m build in gasoline stocks. On the supply the EIA made another downgrade to its forecast for US 2023 production, down 0.7m b/d since March to 12.3m b/d driven by labor shortages, high equipment costs, supply-chain constraints and not least commitment to profits over production. Precious and industrial metals pause following another upside push After pausing on Monday, gold, silver and copper all resumed their upside push yesterday with the moves being triggered by renewed dollar weakness and softer bond yields ahead of tomorrow’s US October CPI release. A selloff in cryptocurrencies potentially helped get the ball rolling, especially gold which found fresh momentum buying on the break above $1680/85 area. Technical resistance levels in silver at $21.50 and copper at $3.69 together with the EURUSD hitting resistance at the pivot high of 1.0094 paused the rally. Gold, up 83 dollars in three sessions, will be watching $1735 closely as a break above could be signalling an end to the month-long correction. Crypto market getting nervous After a weeklong dispute between crypto exchanges Binance and FTX, a letter of intent was signed yesterday for Binance to acquire FTX, stating a significant liquidity crunch for FTX. The announcement was initially a brief relief for the crypto market, but it was followed by a steep crypto sell-off, likely dragging major equity indices such as S&P 500 down as well. Nervousness is spreading throughout the crypto markets in fear of further contagion as we saw earlier this year, and a higher degree of volatility should be expected in the crypto markets. Read more here. US treasuries (TLT, IEF) US Treasury yields fell yesterday all along the curve ahead of the macro data point of the week – tomorrow's US October CPI release. Focus on the 3.90% yield on the 10-year treasury yield to the downside and 4.3% area cycle high to the upside in the wake of that release. What is going on? Disney sees margin compression in Q4 Disney+ delivered Q4 subscribers of 164.2mn vs est. 162.5mn but EPS came in at $0.30 vs est. $0.51 as energy costs and wage pressures are pressuring the operating margin. Disney+ is still on track to be profitable in the FY24 (two years from now). Disney’s Q4 revenue was $20.2bn vs est. $21.3bn. Shares were 7% lower in extended trading. Tesla shares fall another 5% and Elon Musk sells $4bn of shares The rumours about the big losses at Twitter and that Elon Musk would be forced to fund its operations were true as he filed overnight that he had sold $4bn of Tesla shares pushing the price down by another 2% in extended trading. Negative momentum could easily extend here with Tesla shares sitting a crucial support area back from March and June 2021. US Mid-term elections avoid the “red wave” of Republican gains, although Dems likely to lose House The final results are too early to call, but the Democrats may possibly retain control of the US Senate, with one race in Georgia possibly requiring a run-off as was the case in the 2020 election before any final outcome is known. Final tallies are not available for the House of Representative results, but the lean in the results makes it likely that the Republicans will take control of the House by a fairly comfortable margin (NYT estimates 225-210 this morning). Democrats losing the House means that the last two years of the Biden presidency will be “lame-duck”, with no real ability to shape new policy. At the same time, given the situation coming into this election, with soaring inflation and poor popularity for the sitting president, the Republican performance looks quite weak. As well, if the Democrats do retain control of the Senate, Republican-driven legislation will be unlikely to reach Biden’s desk, meaning he won’t have to formally veto their bills. France’s housing market is cooling down The combination between high inflation across the board (CPI hovering close to 6 % on a year-on-year basis), lower purchasing power and higher interest rates is pushing housing prices down in France. According to the real estate promoter Century21 (one of the leading players in this market), real estate prices went down under the threshold of 10.000 Є per square meter in Paris. The deceleration in prices is, however, limited so far. Contrary to Tel Aviv, Amsterdam and Hong Kong, the Parisian housing market is not in a situation of a speculative bubble. Prices are overvalued, however. Expect prices to go down a bit more due to a drop in solvent demand. But we won't see a large decrease in prices as it is currently happening in several major cities in the United States, for instance. The French housing market is more resilient for mostly two main reasons: fixed interest rates and a comparatively low household debt (it represents about 124 % of net disposable household income versus a peak at 249 % in Denmark). What are we watching next? US October CPI release tomorrow is macro event of the week Many recent US CPI releases have sparked considerable market volatility, not least the September release last month which strongly surprised by showing core inflation reaching a new cycle high of 6.6% year-on-year. Tomorrow’s October CPI release, ex Fresh Food and Energy is expected to come in at +0.5% month-on-month and +6.5% year-on-year, with the headline expected at +0.6%/7.9%, which would be the first sub-8.0% year-on-year print since February. Earnings to watch Today’s US earnings focus Rivian Automotive and DR Horton. The electric vehicle industry is in high growth phase and Rivian is also expected to report revenue of $561mn up from $1mn a year ago as the company ramps up production of its delivery vans. DR Horton is expected to deliver FY22 Q4 (ending 30 September) revenue growth up 25% as the tailwind from the backlog is still feeding through, but revenue growth y/y is expected to collapse to –6% y/y in the current quarter so the outlook is the key watch in this earnings release. Wednesday: National Australia Bank, KBC Group, Genmab, Siemens Healthineers, E.ON, Adidas, Honda Motor, Coupang, Rivian Automotive, Roblox, DR Horton, Trade Desk Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Economic calendar highlights for today (times GMT) 0800 – Hungary October CPI 0800 – US Fed’s Williams (Voter) to speak 0905 – Australia RBA’s Bullock to speak Poland Announces Interest Rate 1200 – Mexico Oct. CPI 1300 – UK Bank of England’s Haskel to speak 1530 – EIA's Weekly Crude and Fuel Stock Report 1630 – UK Bank of England’s Cunliffe to speak 1700 – World Agriculture Supply and Demand Estimates (WASDE) 0001 – UK Oct. RICS House Price Balance 0100 – US Fed’s Kashkari (Voter 2023) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-9-2022-09112022
FXStreet’s Dhwani Mehta Opinion About Gold Movements

The Next Test To The Upside For Gold Falls |Oil Prices Are A Little Lower Again

Craig Erlam Craig Erlam 09.11.2022 12:14
Oil eases amid a surge in inventories Oil prices are a little lower again on Wednesday after falling around 3% a day earlier. This came following a strong move in recent weeks in which crude prices rallied around 20% on the back of the OPEC+ output cut and the prospect of less restrictive Covid measures in China, which have not been confirmed. The API inventory data came late in the day on Tuesday after the bulk of the losses had already occurred. If the large inventory build is confirmed by EIA today, it will be interesting to see if it generates a bigger reaction in the markets, with Brent now trading back in the middle of the $90-100 range. Gold surges ahead of CPI A surge in gold on Tuesday saw the yellow metal smash through $1,680 and then $1,700 resistance and settle above here, as risk appetite improved and the dollar retreated. While it’s hard to attribute the rally to any particular event, the technical loss of both of those resistance levels won’t have done it any harm. The question now is whether it can hold onto those gains once the latest inflation report drops. It may well be that gold’s revival, and the dollar’s retreat, are driven by an expectation that the CPI data will be favourable but we’ve seen what the dangers of that are before. Especially when it comes to inflation data. The next test to the upside for gold falls around $1,730, while prior resistance of $1,700 and $1,680 could now become support. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
In Crypto, You Could Prove You Own A Private Key Without Revealing It

Saxo Bank's Podcast: Huge Liquidity Pressures In The Crypto Space

Saxo Bank Saxo Bank 09.11.2022 12:41
Summary:  Today we look at the US mid-term election results, where the House looks set to flip Republican and the Senate may go down to a December 6th run-off in Georgia (as in 2020 and providing fodder for election denier conspiracy theories, etc...) but either way cementing the lame duck second half of Biden's presidency. Elsewhere, we look at the massive gold rally yesterday, in part on huge liquidity pressures in the crypto space that have prices tumbling there. Also, Tesla, Disney, stocks to watch, the USD on edge ahead of critical CPI release tomorrow and more on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app:           If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.     Source: https://www.home.saxo/content/articles/podcast/podcast-nov-9-2022-09112022
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Yesterday Brent crude oil lost almost 3%. According to ING, taking the OPEC+ supply cuts, lower supply from the USA and ban on Russian oil into consideration, it may trade near $110 in the end of year 2023

ING Economics ING Economics 09.11.2022 14:05
Demand concerns have weighed on oil prices so far this week. The medium to long term outlook for the market is still constructive, with expectations of a tighter balance. Latest US oil supply estimates for next year only reinforce the view of a tighter oil market in 2023 Source: Shutterstock Energy - lower US oil supply growth Oil prices came under further pressure yesterday, with ICE Brent settling  more than 2.6% lower as Covid cases in China rise, while the government recently made it clear that it will stick to its zero-Covid policy. Meanwhile, API numbers released overnight show that US crude oil inventories increased by 5.61MMbbls over the last week, whilst gasoline stocks grew by 2.55MMbbls. Distillate inventories fell by 1.77MMbbls, which will do little to help ease concerns over supply tightness in middle distillates as we head into the heating season. In the short term, sentiment remains negative as a result of the demand outlook. However, the supply picture for 2023 is looking increasingly tighter. The EIA yesterday released its latest Short Term Energy Outlook, in which further cuts were made to US supply growth expectations for next year. The EIA now forecasts that US crude oil output will grow by 490Mbbls/d YoY to 12.31MMbbls/d in 2023. While this is slightly lower than last month’s numbers, output forecasts have been consistently lowered through the year. If we go back to March, the EIA was expecting that 2023 output would grow by close to 1MMbbls/d to around 13MMbbls/d. The US industry appears focused on capital discipline rather than pumping as much as they can. Not helping matters is that oil producers have reported labour and equipment shortages, along with rising costs. Lower than expected supply growth from the US leaves the market more vulnerable over 2023. In addition to ongoing OPEC+ supply cuts, Russian oil supply should fall as the EU ban on Russian crude and refined products comes into effect. Lower US supply growth gives us even more confidence in our view that Brent will average US$110/bbl in 4Q23.   Metals – Codelco proposes price hike for Chinese copper buyers for 2023 Codelco, the world’s biggest copper miner, has proposed a premium of $140/t for 2023 supplies to at least two Chinese customers, a 33.3% increase from this year, and its highest since 2008, according to a report from Reuters. The premium, paid on top of LME copper prices for physical delivery of copper cathodes into China is a widely watched industry benchmark. The move continues a trend of higher premiums - last month Codelco and Aurubis increased 2023 refined copper premiums for European buyers on the back of expectations of firm copper demand and low inventories. Meanwhile, China’s copper cathode production rose 14.2% YoY, according to data from SMM, although fell 0.9% MoM to 901kt in October amid power cuts, Covid-related restrictions and tight supply for blister copper and copper scrap. Cumulative copper output increased 2.8% YoY to 8.51mt over the first ten months of the year. Chinese refined zinc production rose 3% YoY and 2% MoM to 514mt in October. Cumulative output still fell 2.5% YoY to 4.93mt in the first ten months of the year. Agriculture – France revises corn output lower The Agriculture Ministry of France revised lower its estimate for domestic corn output from a previous forecast of 11.4mt  to 11mt following drought conditions. French corn output is now expected to come in 29% lower than last year and 21% below the 5-year average. The latest data from Ukraine’s Agriculture Ministry shows that winter grain plantings are now 90% complete with 4.3m hectares planted. The bulk of this is winter wheat- 3.6m hectares, whilst 568k hectares and 79k hectares of barley and rye have been planted respectively. Weekly data from the European Commission shows that soft wheat shipments from the EU reached 12.5mt as of 6 November, up from 11.9mt for the same period last year. Meanwhile, given lower domestic output, EU corn imports stand at 10.2mt, compared to 4.64mt last year. Read this article on THINK TagsUS oil production Corn Copper China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Factors Which Play Against The Active Rise In Crude Oil Prices

InstaForex Analysis InstaForex Analysis 10.11.2022 08:16
Oil is getting cheaper for the third consecutive session. The trigger is unexpected reports that the Chinese authorities have finally begun to discuss the issue of the country's exit from severe restrictions. This is big news, as the world's largest oil importer and consumer has signaled that restrictions on its territory will be eased and public life is likely to resume: people will start traveling and spending oil savings inside their country. The Cost Of Brent The cost of January futures for Brent on the London ICE Futures exchange by 12:49 London time fell in price by 1.54% and amounted to $93.86 per barrel. By 6:39 p.m. Brent had dropped to $92.95. The Price Of WTI The price of futures for WTI oil for December in electronic trading on the New York Mercantile Exchange was $87.52 per barrel during the daytime, falling by 1.53%. At 21:40, quotes fell to $86.17. China Situation All this time, China has been desperately fighting the constantly emerging new outbreaks of coronavirus, imposing too strict restrictions on its population, reducing both public and business activity. All this led to the fact that the flourishing and actively developing economy of the country suddenly began to slow down, and the population's need for petroleum products significantly decreased. And although recently the news background has been filled with hints about the lifting of restrictions in China, there have still been no concrete facts and actions on the part of the authorities on this matter. It is clear that softening the "zero tolerance for coronavirus" approach can accelerate economic growth in China and, accordingly, increase global demand for fuel, but the Beijing authorities are clearly in no hurry to make loud statements and change something drastically. In contrast, Chinese health officials said over the weekend that they would remain committed to strict restrictions for the time being. Crude Oil Market Situation All of this uncertainty has left oil markets on edge, especially as the number of new coronavirus infections has skyrocketed in Guangzhou and other Chinese cities, according to official figures. It is noted that the global manufacturing center is struggling with the worst outbreak in history. Another factor weighing on quotes is the data from the American Petroleum Institute (API), which on Wednesday night told the world that the growth of US commercial stocks over the past week amounted to 5.6 million barrels. Official data showed that US commercial oil inventories rose by 3,925,000 barrels last week to 440.755 million barrels. Commodity stocks of gasoline decreased by 900,000 barrels (up to 205.733 million), stocks of distillates - by 521,000 barrels (up to 106.263 million). In the context of a surplus in oil supply on the market, despite all the efforts of OPEC +, all these factors play against the active growth in oil prices.   Relevance up to 19:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/326697
Meta Is Cutting Discretionary Spendings And Extending Its Freeze On Hiring

Meta Is Cutting Discretionary Spendings And Extending Its Freeze On Hiring

Saxo Bank Saxo Bank 10.11.2022 09:12
Summary:  Risk sentiment took a beating again as the midterms fever faded with a lack of a Republican wave, and focus shifted back to the crypto turmoil and continued surge in Covid cases in China. Tech layoffs also took another step up with Meta slashing 13% of its workforce. USD gained despite lower US yields as it is likely turning more risk-sensitive than yield-sensitive, but focus on US CPI will add to some caution ahead of the release. A hotter-than-expected core print will likely bring the focus back on Fed’s hawkishness. What’s happening in markets? The Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) dropped on crypto selloff, earnings disappointment, lower oil prices, and midterm elections S&P 500 plunged 2.1% and Nasdaq fell 2.4%. The sell0ff was board based with all 11 sectors of the S&P 500 in the red. The energy sector was the worst performer, falling 4.9% as crude oil prices down nearly 4% on rising US inventory levels. The collapse in crypto prices deepened, following Binance’s decision to walk away from its short-lived takeover bid for the ailing FTX. Robinhood Markets (HOOD:xnas) fell 13.8% as investors were concerned if FTX’s Sam Bankman-Fried might liquidate his 7.5% stake in Robinhood. Disney (DIS:xnys) plunged 13.2% on disappointing earnings. Meta Platforms (META:xnas) gained 5.2% after the company announced to layoff 13% of its employees to cut costs. US treasury (TLT:xnas, IEF:xnas, SHY:xnas) yields fell in a mixed session U.S. treasuries, in particular, the frontend of the curve were supported by selloff in equities and crypto, dovish comments from Fed Evans, and strong rallies in the European bond markets, seeing 2-year yields down 7bps to 4.58%, and 10-year yields falling 3bps to 4.09%. European bond yields dropped on the news that Russia was withdrawing its troops from Kherson, a Ukrainian regional capital city annexed by Russia less than two months ago. Chicago Fed president Charles Evans, who is retiring, said in an interview that there are “benefits to adjusting the pace as soon as” the Fed can and the Fed should not keep raising rates by a large amount every time on disappointing economic data. The 10-year auction did poorly with weak demand from investors but the market managed to shrug it off and had a strong close. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) The China reopening trade continued to fade on Wednesday as new domestically transmitted cases surged further to 8,176 the day before. Hang Seng Index retreated 1.2% and CSI 300 slid 0.9%. China’s CPI fell to 2.1% Y/Y and PPI declined 1.3% Y/Y in October, signaling weak domestic demand. Share prices of Chinese developers however surged, following Chinese authorities saying that they were expanding an existing credit support programme by RMB250 billion to help private enterprises, including developers, in raising debts, by providing debt insurance or bond buying. Country Garden (02007:xhkg), up 13.9%, Longfor (00960:xhkg), up 4%, were top performers in the Hang Seng Index. After trading 1% to 4% lower during the Hong Kong session, China Internet names continued to face selling pressure overnight in New York, with ADRs of Alibaba (09988), Tencent  (00700:xhkg) ,and Meituan (03690:xhkug)  each falling around 3% from their Hong Kong closing levels. FX: USD gains return as risk sentiment deteriorates The USD was back on the front foot on Wednesday ahead of the critical US CPI data due today. US midterms still ended in a political gridlock, even though a Republican wave was avoided. However, limited implication on policy means market focus can return to other key events, such as the crypto turmoil and further rise in China’s Covid cases. US 10-year yields dropped below 4.1% but it appears that the USD is not more risk-sensitive rather than being yield-sensitive. Geopolitics turned calmer with Russia retreating from the only Ukrainian regional capital captured, Kherson, but that brings some risk of new escalations as Putin gets desperate. Focus on US CPI however brought some weakness back in the DXY in early Asian hours with USDJPY back below 146.20. GBPUSD bounced back after a brief slide below 1.1350 and the EUR bounced back higher from parity. Crude oil (CLZ2 & LCOF3) WTI futures dipped further below $90/barrel mark, now touching the $85 handle, while Brent moved lower to sub-$93. Oil prices declined as the EIA reported US crude stocks rose by 3.9 million barrels to the highest since July 2021. This was offset by tightness in the fuel product markets. Gasoline inventories fell by 900kbbl, and distillate fuel stockpiles fell by 521kbbl. Meanwhile, sustained rise in Covid cases in China continued to take a hit on the demand outlook. New cases in Beijing jumped to the highest level in more than five months. Of particular concern was the number of infections found outside quarantine, suggesting the virus is still circulating through the community and would likely delay the easing of Zero Covid policies. Wheat (ZWZ2) prices lower, along with Corn, after USDA report The USDA released it’s November World Agricultural Supply and Demand Estimates report, which led to mixed but mostly lower grain prices. While the overall wheat consumption outlook was raised, USDA said demand may drop in some places, including Indonesia and Sri Lanka, due to high prices. Wheat prices plunged 2.5%. The agency also lifted its soybean output and stockpiles outlook, but robust export demand lifted prices. Meanwhile, USDA expects to see the seventh-largest corn crop on record this year, with a new estimate of 13.93 billion bushels.   What to consider? US midterms avoided a Republican wave Even with votes still being counted and runoffs yet to come to determine the US Senate majority, the midterm election didn't bring the red wave that was expected. Republicans are inching towards control of the House, but with a far narrower margin than what was predicted. Meanwhile, Democrats are likely to keep their majority in the Senate but the outcome won’t likely be confirmed for a while as Georgia heads to a runoff on December 6. The end result is still a political gridlock, much as expected, but with far smaller market implications given lack of a firm policy direction. US inflation to test the 8% level, watch core and stickier components Bloomberg consensus expects US October CPI to drop below the 8% mark and come in at 7.9% YoY from 8.2% previously, but still higher at 0.6% MoM from 0.4% in September. The core measure is also expected to ease slightly to 6.5% YoY, 0.5% MoM (prev. 6.6% YoY, 0.6% MoM) but still remain elevated compared to historical levels. Key to watch also will be the drivers of inflation, particularly the stickier shelter and services costs, which if stuck higher could move the December Fed funds future pricing more towards another 75bps rate hike, resulting in another round of selloff in equities and dollar gains. However, there is another CPI report due before the next Fed meeting in December, and we are going into today’s release with a weak risk sentiment following the crypto meltdown seen this week. This suggests that even a print that matches expectations, or is above it, will likely bring another selloff in equities and further support for the dollar. Binance walked away from FTX acquisition, another plunge in Bitcoin The contagion in the crypto and equities we mentioned yesterday is already here, and getting worse as latest developments suggest that Binance backed away from its earlier pledge, tweeting Wednesday afternoon that it would not pursue the acquisition of FTX. It cited due diligence and a reported US investigation into the exchange. Bitcoin plunged below $16,000, , while Ether followed and dipped to its lowest price since July, barely hanging on to the $1,100 level. China is in disinflation China’s PPI declined 1.3% Y/Y in October due to falls in energy and materials prices and weaknesses in metal processing. CPI inflation was also weaker than expected and fell to +2.1% in October from 2.8% in September on weak consumer demand, falling residential costs, and declines in vegetable prices. Meta to layoff 13% of its workforce Meta’s Mark Zuckerberg announced the social platform’s plan to layoff over 11,000 employees, about 13% of its workforce. Zuckerberg also said Meta is cutting discretionary spendings and extending its freeze on hiring through Q1 2023. The company reaffirmed its Q4 revenue guidance of USD30-32.5 billion, in line with expectations. Capex for 2023, according to the Company, will be in the range of USD34-37 billion, at the low end of prior guidance of USD34-39 billion.   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-10-nov-2022-10112022
ADP Non-farm payrolls jobs market data show a growth of 127K, much less than the previous print

Brent crude plunged almost 3% yesterday. S&P 500 lost over 2% - ING point to kind of a risk aversion

ING Economics ING Economics 10.11.2022 09:19
Energy markets came under further pressure yesterday as part of a broader risk-off move across markets. Meanwhile, the price action in a number of commodity markets could also be a reaction to Russian orders for a withdrawal of its troops from Kherson in Ukraine Source: Flickr Energy - US East Coast product inventories fall Sentiment in the oil market remains negative, with ICE Brent settling more than 2.8% lower yesterday which saw the market trading down to levels last seen at the start of the month. Demand remains a key concern, particularly related to China’s zero-Covid policy. Although a large part of yesterday’s price action appears to be part of a broader risk-off move across markets with the S&P 500 down a little more than 2%. The EIA released weekly US inventory numbers yesterday which showed that US commercial crude oil inventories increased by 3.93MMbbls over the last week. Although, when factoring in the drawdown of the SPR, total US crude oil inventories increased by just 352Mbbls. As SPR releases near an end, we are likely to see more meaningful draws in commercial crude oil inventories in the coming months.  On the refined products side, gasoline and distillate fuel oil saw inventory draws of 900Mbbls and 521Mbbls respectively. These draws come despite refiners increasing run rates by 1.5pp over the week to 92.1% as they return from seasonal maintenance. Product inventories on the US East Coast remain extremely tight with gasoline inventories standing at 49.14MMbbls- the lowest levels since 2012, while distillate stocks remain at their lowest levels on record for this stage of the year. The IEA has criticised the decision OPEC+ made in early October to reduce production targets by 2MMbbls/d from November through until the end of 2023. The IEA has said that the move will hurt importers in Asia and Africa the most and also suggested that the group may have to rethink these cuts. In the short term it is clear that the OPEC+ decision has provided some stability to the market. However, in the medium to longer term we are of the view it will push the market into deficit through 2023, which suggests higher oil prices over the course of next year. Metals – Chinese copper smelters call for capacity controls China’s major copper smelters, including Jiangxi Copper Corp., China Copper, Tongling Nonferrous Metals Group Holdings Co., and Zijin Mining Group Co., have called on Beijing to issue policies to “reasonably control” domestic smelting capacity in order to ensure supply-chain security and improve quality. The request comes after a surge in smelter construction in recent years has led to a fight for market share and raw material supplies. The smelters also pledged to boost the proportion of copper scrap used to make refined output to about 25% of total production by 2025. Daye Nonferrous Metals Group and Holdings Co. is expected to start its new copper smelter in China this month, with 400kt/year operating capacity. Zijin Mining Group in China is planning to build a 500kt/year copper smelter in Sichuan province in the southwest region. It is expected that Julong copper mine in Tibet would produce 160kt of copper annually once the first phase reaches full capacity. The mine has a long-term production target of 600kt. Zijin is aiming to boost the smelter capacity to 1.8mt by 2027-28 due to rising production in the Julong mine. LME on-warrant copper stocks fell by 6.4kt, taking the total to 39.13kt (lowest since November 2021) as of yesterday. Cancelled warrants for copper rose by 4.3kt (after declining for eight consecutive sessions) to 41.9kt as of yesterday, signaling potential further outflows. Meanwhile, exchange inventories declined for the thirteenth straight session, by 2.1kt to 81kt. Agriculture – USDA raises domestic supply estimates for corn and soybeans The latest WASDE report from the USDA was really a non-event, with small changes made in Domestic US and global balances for wheat, corn and soybeans. For corn, the USDA increased its 2022/23 ending stocks estimates for the US from 1.17b bushels to 1.18b bushels. This was largely due to a revision higher in domestic production on the back of expectations for better yields. As for the global corn balance, 2022/23 ending stock estimates were revised down from 301.2mt to 300.8mt- broadly in line with market expectations for a number of around 300.7mt. For soybeans, the USDA increased its yield estimate for 2022/23 from 49.8bu/acre to 50.2bu/acre, leading to expectations of higher output. As a result ending stocks for the current marketing year were increased by 20m bushels to 220 bushels. The global soybean balance saw 2022/23 ending stocks increased from 100.5mt to 102.2mt, largely on account of revisions higher to beginning stocks. for wheat, US ending stocks for 2022/23 were lowered from 576m bushels to 571m bushels- the lowest since 2007/08. This decrease was driven by expectations of marginally higher domestic demand. As for the global balance, the USDA increased production estimates for 2022/23 from 781.7mt to 782.7mt, whilst global demand estimates were also revised higher. As a result, 2022/23 ending stock estimates were increased marginally from 267.5mt to 267.8mt. Read this article on THINK TagsWASDE USDA Oil EIA Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

The Russia Has Announced The Intention To Withdraw Its Troops | Hopes For A Covid Zero Exit In China Fades

Saxo Bank Saxo Bank 10.11.2022 09:22
Summary:  Markets are increasingly spooked by the liquidity pressure in the crypto space, as the major crypto exchange FTX.com and its associated trading house Alameda Research may be set to go bust without a multi-billion dollar rescue, and as total market cap in crypto currencies has plunged over $100 billion over the last month. Elsewhere, the focus was meant to be on today’s US October CPI release. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities saw a hit to sentiment yesterday as Binance walked away from the deal to save the crypto exchange FTX setting in motion a plunge in cryptocurrencies. One of the largest shareholders in FTX, Sequoai Capital, is marking down its investment to zero suggesting little faith in the company and its ability to function. The risk-off moves spilled over into equity market with Tesla leading the declines among the mega caps down 7% with US President saying that Elon Musk relationships with foreign powers could be a national security issue. S&P 500 futures took out gains over the previous two sessions closing at 3,755 but the index futures are attempting to rebound this morning. Note the critical support level at 3,727 which could come into play later today if we get a negative surprise on the US inflation figures suggesting more sticky inflation. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Following the risk-off sentiments spilling over from the crypto space and then global equities, Hong Kong and mainland China stocks declined, with Hang Seng down 2% and CSI 300 0.6% lower. China EV and Internet stocks are the top losers.  Among Hang Seng Index constituents, LINK REIT (00823:xhkg) was the performer, gaining more than 2%. AAC (02018), Apple’s acoustic product supplier, surged 5.7% on earnings beat and analysts expecting the company gaining market shares from its arch-rival after the latter losing orders from a key foreign client (most likely Apple).  FX: USD finds bids on weak risk sentiment. US October CPI release key focus later today The US dollar clawed back some of its losses as cratering crypto prices are seeing widening contagion, and rising Covid cases in China continue to drive concerns that further lockdowns are on the way. The weakest currencies were those normally associated with risk sentiment, like the smaller G10 currencies, as AUDUSD trades this morning not far above 0.6400 after a spike to 0.6550 at the beginning of the week. Overall USD direction remains in play as the USD is somewhat down, but by no means out and today’s US October CPI to theoretically set the tone, although a liquidity crisis in crypto that continues to drive contagion elsewhere could yet steal the spotlight in the near term, with poor liquidity generally associated with USD strength. A weak US treasury auction yesterday is also a concern on that front (more below). Crude oil (CLZ2 & LCOF3) Trades lower for a third day as hopes for a Covid zero exit in China fades after the country increased restrictions in a key manufacturing hub and new cases in Beijing jumped to the highest level in more than five months. WTI has returned to the $85 handle, down 9% from Monday’s peak, while Brent trades sub-$93. In addition, the market has also been hurt by the loss of risk appetite filtering through from the carnage in cryptos and after the EIA reported US crude stocks rose by 3.9 million barrels to the highest since July 2021. This was somewhat offset by tightness in the fuel product markets with gasoline inventories dropped to an eight-year low. Focus on China, the general level of risk appetite signaled through the dollar and today’s US CPI print for October.  Precious metals hold gains ahead of today’s US CPI print Gold trades above $1700 for a second day with shallow correction attempts since Tuesday's surge so far pointing to underlying support. However, with most of that currently being provided by a drop in Treasury yields and a softer dollar, today’s US CPI print for October will be watched closely. Another upside surprise may cause a temporary drop before potentially supporting prices as the market will start wondering whether the FOMC will be successful in getting inflation control. Some support also emerging from the chaos across the crypto market where the risk of contagion to other coins from the FTX fallout remains elevated. Gold support at $1682 and silver at $21 followed by $20.27. Crypto market: another plunge in crypto as Binance walks away from FTX acquisition  The contagion in the crypto and equities we mentioned yesterday is already here, and getting worse as latest developments suggest that Binance backed away from its earlier pledge, tweeting Wednesday afternoon that it would not pursue the acquisition of FTX. It cited due diligence and a reported US investigation into the exchange. Bitcoin plunged below $16,000, while Ether followed and dipped to its lowest price since July, barely hanging on to the $1,100 level. According to a research note from JPMorgan the crypto market is right now facing a cascade of margin calls and liquidity disappearing in the system. US treasuries (TLT, IEF) US Treasury yields are sharply lower this morning, with the 2-year treasury yield closing below 4.60% yesterday, the lowest since the hawkish Fed Chair Powell press conference last Wednesday. Weak risk sentiment and contagion from the melt-down in crypto markets may finally be driving safe haven flows into what is traditionally the world’s most liquid asset: UYS treasuries. The 10-year treasury benchmark yield edged below 4.10% after a very weak 10-year auction, with bidding metrics the worst in years. The US Treasury is set to auction 30-year T-bonds today. What is going on? Wheat (ZWZ2) prices lower, along with Corn (ZCZ2), after USDA report The USDA released its November World Agricultural Supply and Demand Estimates report, which led to mixed but mostly lower grain prices. While the overall wheat consumption outlook was raised, USDA said demand may drop in some EM countries due to high prices. Wheat prices plunged 2.5% with additional selling from the announcement Russia is moving its troops out of Kherson, a development that may clear the way for more crop shipiments out of Ukraine. The agency also lifted its soybean output and stockpiles outlook, but robust export demand lifted prices. Meanwhile, USDA expects to see the seventh-largest corn crop on record this year, with a new estimate of 13.93 billion bushels. Foxconn still sees high demand for high-end electronics  The electronics maker, and the biggest supplier to Apple, reported Q3 results today with operating profits and revenue beating estimates. The company still sees strong demand for consumer electronics at the high-end of the market, but sees overall consumer electronics falling in Q4 y/y. US earnings recap: Beyond Meat and Rivian The EV delivery van maker Rivian missed estimates on Q3 revenue yesterday due to supply constraints, but the EPS loss of $1.57 was less than estimated at $1.86. The EV maker still sees 2022 production target at 25,000 vs est. 26,166. Rivian shares gained 8% in extended trading hours. Beyond Meat missed big on both revenue and EBITDA, but tries to calm investors by putting out a positive cash flow level around the second half of 2023. Russia said to be set to pull troops from embattled Kherson  In the hardest fought area of the war after the Russian invasion of Ukraine, the Russian side has announced the intention to withdraw its troops to the Eastern side of the river after an intense battle to maintain control of the strategic city, which is the closest major city to the Crimean Peninsula and would bring many Russian targets, including key supply routes from Crimea, within range of Ukrainian artillery if Ukraine takes control of Kherson. UK October Home Price Survey shows massive deceleration in UK housing  The RICS House Price Balance has been tumbling in recent months as mortgage rates have spiked on the overall rate rise, but also as spreads have widened due to by poor liquidity in the market. The positive 30% reading in September was already a sharp drop from the very strong levels above 50% just two months prior, and the October survey was expected to show +19% (still shownig prices generally rising). Instead, it plunged all the way to –2%, suggesting that UK housing market pricing is decelerating at a record clip, with deeper negative readings ahead that will impact overall UK confidence. What are we watching next? US October CPI release today suddenly looking less pivotal? The crypto panic has quickly stolen focus from the US CPI data release here, possibly to a sufficient degree that even an inflation print that is solidly below the expectations could fail to spark notable relief across markets, as weak liquidity concerns possibly keep the US dollar firm and equity markets weak even if yields ease lower. The ex-Fresh Food and Energy number is expected to come in at +0.5% month-on-month and +6.5% year-on-year, after the multi-decade high of 6.6% YoY in September, with the headline expected at +0.6%/7.9%, which would be the first sub-8.0% year-on-year print since February.) Earnings to watch Today’s US earnings focus is NIO which will be latest test for the EV market as maybe providing information on the factory situation in China amid rising Covid cases. The Chinese market is the most important market for Tesla so a dire outlook from NIO could translate into negative sentiment on Tesla shares. Thursday: Brookfield Asset Management, Fortum, Engie, Credit Agricole, Allianz, Merck, Hapag-Lloyd, RWE, SMIC, Nexi, AstraZeneca, ArcelorMittal, Siemens Gamesa Renewable Energy, Becton Dickinson, NIO Friday: Richemont Economic calendar highlights for today (times GMT) 1330 – US Oct. CPI 1330 – US Weekly Initial Jobless Claims 1400 – US Fed’s Harker (voter 2023) 1400 – Poland Central Bank Governor Glapinski news conference 1530 – EIA’s Weekly Natural Gas Storage Change 1730 – US Fed’s Mester (Voter 2022) to speak 1800 – US Treasury auctions 30-year T-bonds 1830 – US Fed’s George (voter 2022) to speak 1900 – Mexico Central Bank Rate Announcement     Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-10-2022-10112022
China's Position On The Russo-Ukrainian War Confirmed At The G20 Meeting

Sales On Asian Stock Markets | Investors Stay Away From Equities

TeleTrade Comments TeleTrade Comments 10.11.2022 09:30
Asian stocks have been prey to sheer volatility ahead of the US inflation data. Massive sell-off at Facebook's helm brought a sell-off in S&P500. Long-term US yields have tumbled in anticipation of a 50 bps rate hike in the December policy meeting. Markets in the Asian domain have witnessed an intense sell-off after fetching negative cues from S&P500. A significant recovery in the risk-off market mood has forced investors to stay away from equities till the release of the US Consumer Price Index (CPI) and the outcome of mid-elections outcome. At the press time, Japan’s Nikkei225 tumbled 1.05%, ChinaA50 dropped 0.43%, Hang Seng plummeted 1.87%, and Nifty50 surrendered 0.70%. Massive lay-off announced at Facebook dented sentiment of market participants. This has triggered the risk of a slowdown in overall demand. Well, US equities are facing the consequences of accelerating interest rates by the Federal Reserve (Fed). Also, a majority win of Republicans would snap some command from Democratic in passing bills and laws. The US dollar index (DXY) is hovering around the day’s low at 110.20 as investors are restricting themselves ahead of the US CPI for making informed decisions. The 10-year US Treasury yields have tumbled to 4.07% as odds are not favoring a rate hike of 50 basis points (bps) in December monetary policy by the Federal Reserve (Fed). Going forward, the extent of deviation in inflationary pressure will provide meaningful cues about the likely monetary policy action by the Fed. Meanwhile, Nikkei225 has witnessed selling pressure despite the announcement of economic stimulus packages this week. To spurt the aggregate demand, the Japanese administration has decided to provide stimulus budgets and hike taxes for big pockets. On the oil front, oil prices have nosedived by more than 3% after the head of the International Energy Agency (IEA) Fatih Birol slammed OPEC+’s decision to cut oil production as it might worsen the outlook for developing countries that are sliding towards recession, reported Bloomberg. He further added that the move is fueling inflation, especially in developing countries, and may require a “rethink,”
Crude Oil Sees Its Biggest Weekly Pull Back Since April

Stabilized Gold | Brent And WTI Crude Oil Are Settling Towards The Lower End

Craig Erlam Craig Erlam 10.11.2022 11:41
Oil slides amid Chinese Covid restrictions Oil prices fell again on Wednesday, taking losses over the last couple of days to more than 5%. Brent and WTI are basically flat on the day at the time of writing, settling towards the lower end of their recent trading ranges. While the narrative in recent weeks has focused on the potential for Chinese Covid restrictions to be relaxed, which has driven Chinese equities higher and lifted oil prices, the reality has seen case numbers soaring, restrictions reimposed and mass testing undertaken. This doesn’t exactly add substance to the rumours and we may be seeing some unwinding of those positions. Gold steadies ahead of CPI data Gold has steadied over the last 24 hours or so after surging late last week and early this in the hope that inflation data delivers what the Fed, and investors, crave so much. It’s a very hopeful-looking move and one that could end badly if the CPI data continues this year’s trend of disappointing to the upside. I just wonder at this point what investors need to see because the recovery of the last week has been strong – more than 5% – which suggests expectations are quite high. Time will tell if hopeful traders will be burned once more. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Ed Moya and Jonny Hart talk the US Q3 GDP, crude oil and crypto

Crude oil price has significantly decreased. Oman's oil minister talks a slide to $70

Alex Kuptsikevich Alex Kuptsikevich 10.11.2022 14:56
Oil has lost 7.5% since Tuesday, bouncing back to $84 for WTI. Pressure intensified on Wednesday after the weekly inventory report. Having failed to break above $93 for the second time in just over a month, oil appears to have completed its correction from its June-September decline, heading towards $75. Weekly data showed a 3.9M barrel increase in commercial inventories, reversing the decline a week earlier. At the start of November, inventories were 2.5% below the five-year average for the same week. From this point of view, the situation is quite normal-ish. The strategic reserve continues to melt away, masking the lag between production levels and demand. Notably, weekly production levels remain close to 12M BPD, at 12.1M last week versus 11.9M the week before. However, these numbers may well be considered sufficient given the slowdown in China, which is increasingly evident from the data released this week. Also on the side of the market bears was Oman, whose oil minister warned of a possible drop in the price to "$70 after this winter". Adjusting to the shift of the OPEC cartel member, market participants began to consider an even deeper decline. On the chart, oil has formed a ‘double top’, failing to raise above $93 at the start of the week. And now, the $83 level, where the previous support area is located, is worth paying more attention to. A fall below that would confirm the pattern, suggesting a possible target in the $73 area. A resistance area in oil has formed in the last month at 61.8% of the decline, a classic Fibonacci retracement. This pattern will finally get confirmation if the price falls under $75. It is considered that in this case, the bears' target will be the area of 161.8% of the initial movement, i.e., the mark near $50. A drop here looks excessively pessimistic now, but volatile oil has repeatedly lost more than 70% of its peak value during economic downturns. And given the increasing risks of a recession early next year in the USA, the Eurozone, and the UK, plus a sharp slowdown in China at the same time, a fall to $50 looks like a pessimistic working scenario.  
Crude Oil Ended Higher | Initial Jobless Claims Rose Marginally

Crude Oil Ended Higher | Initial Jobless Claims Rose Marginally

Saxo Bank Saxo Bank 11.11.2022 08:26
Summary:  A softer US CPI print sent the equity markets skyrocketing in an extreme reaction, but there was some pushback against dovish expectations from Fed speakers and WSJ’s Timiraos, highlighting that a 50bps rate hike at the December Fed meeting is still in play. Dollar weakness fueled gains across the metals space, but oil market remained volatile on concerns around China’s covid cases even as the authorities urged targeted measures will remain in place. UK GDP due in the day ahead before focus turns to G20 meetings next week. What’s happening in markets? The S&P 500 (ESZ2) jumped 5.5% and Nasdaq 100 (NQZ2) soared 7.5%, staging the biggest rally in two years US equities surged the most since 2020 on a softer-than-expected CPI report. S&P 500 gained 5.5% and Nasdaq 100 soared 7.5%. The gains were board-based. All 11 sectors of the S&P 500 rose, with the information technology, real estate, and consumer discretionary sectors leading the charge higher. Semiconductor names surge, Marvel Technology (MRVL) up 16.1%, Nvidia (NVDA:xnas) up 14.3%, and Advanced Micro Devices (AMD:xnas) up 14.3%.  Amazon (AMZN:xnas) surged 12%, Meta (META:xnas) gained 10.3% and Apple (AAPL:xnas) climbed 8.9%. The shift of sentiment from risk-off to risk-on saw the crypto stabilize and Bitcoin rally 13%. US treasury (TLT:xnas, IEF:xnas, SHY:xnas) soared, yields tumbling 22 to 30bps across the curve Treasuries jumped in price and yields plunged on slower-than-expected CPI data. Large buying first concentrated on the 2-year and the 5-year notes. The yield curve bull-steepening in initially, with the 2-10 spread narrowed 8bps to minus-41bps at one point. However, the long ends rallied strongly in the afternoon following a strong 30-year bond auction. The curve reversed and became more inverted with 2-10-year finishing the session at minus-52 bps. At the close, 2-year yields fell 25bps to 4.33% and 10-year yields tumbled 28bps to 3.81%. On Fedspeak, Cleveland Fed President Mester said “services inflation, which tends to be sticky, has not yet shown signs of slowing” and she views “the larger risks as coming from tightening too little”. San Francisco Fed President Mary Daly remarked “it was indeed good news that inflation moderated its grip a bit” but “one month of data does not a victory make”. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) retreated on Covid outbreaks Hong Kong and China stocks retreated on Thursday as China’s daily new domestic Covid cases came in above 8,000 second day in a row and Guangzhou extended lockdown in one of its districts. Hang Seng Index dropped 1.7% and CSI 300 lost 0.8%. China Internet and EV stocks underperformed. NIO (0988:xhkg) fell 13.2% on a bigger-than-expected loss in Q3 and a Q4 guidance below analysts’ expectations. Overnight in U.S. hours, Hang Seng Index futures jumped 4.6% after U.S. stocks soared on softer CPI data. ADRs of Alibaba (09988:xhkg), Meituan (03690:xhkg), and Tencent (00700) surged around 7% to 9% in New York hours. FX: Massive dollar selloff in the aftermath of the US CPI release The Dollar Index saw its greatest losses in a single day since 2009, falling to lows of 107.7 after the release of that softer-than-expected US CPI. The biggest gainer on the G10 board was JPY, no surprises there, given its yield-sensitive nature and the plunge in US yields. USDJPY broke below 141 although it has rebounded to 141.68 in the Asian morning. If we do see hawkish Fed comments in the coming days/weeks, some of this rally in the JPY is likely to be unwound but overall the trend in USDJPY remains biased to the downside now with most of the interest rate expectations already in the market. GBPUSD was also a big gainer as it surged to the 1.17 handle, but a test lies ahead with UK GDP release today likely to confirm the onset of a recession (read preview below). Crude oil (CLZ2 & LCOF3) volatile amid dollar weakness and China's Covid concerns Crude oil ended higher in a volatile session as earlier concerns of weak demand were overtaken by the broader market rally in response to lower inflation and the weakness in the US dollar. Concerns however remain on China’s Covid cases with Beijing reporting its highest number of cases in a year, which kept the gains restrained. WTI futures rose above $86/barrel while Brent went above $94 before retreating later. Cooler US inflation prompts gains across metals The weaker USD eased pressure on the base metals complex, with copper rising more than 2%. This was boosted by reports coming out of a Politburo Standing Committee meeting that suggest Beijing would take more targeted measures to avoid damage to the economy. If China’s Zero covid measures remain targeted, this could shift focus back to supply issues and dollar weakness. Copper (HGZ2) broke the September high of $3.6925, and is now testing resistance at $3.78. Gold (XAUUSD) also broke above the double top at 1730, likely suggesting that the bottom is in place. Silver (XAGUSD) rose to $21.83 but has since returned to the resistance turned support at $21.50.   What to consider? Softer US inflation, but what does it mean for the Fed? US CPI was softer than expected across the board, as headline M/M and Y/Y printed 0.4% (exp. 0.6%, unchanged) and 7.7% (exp. 8.0%, prev. 8.2%), respectively, while the core metrics came in at 0.3% M/M (exp. 0.5%, prev. 0.6%) and 6.3% Y/Y (exp. 6.5%, prev. 6.6%) on a Y/Y basis. Shelter prices still remained hot while the used vehicle prices declined by 2.4% M/M. While the inflation still remains high and far from Fed’s 2% target, it can be expected that the trend is lower. Markets cheered the release, expecting a downshift in Fed’s rate hike trajectory which has already been communicated at the last FOMC meeting. December Fed rate hike pricing is still close to 50bps, while the terminal rate projections have slid lower to 4.9% for May 2023. However, it is worth noting that there is one more labor market report and another CPI report due before the FOMC’s Dec 13-14 meeting. Fed speakers pushed back on the market rally The kind of market reaction we have seen to the soft CPI print in the US yesterday confirms that investors still remain on edge expecting a Fed pivot. This can prove to be counterproductive, as easing of financial conditions can derail this downtrend in inflation and reverse the less hawkish path that Fed is expected to take in the coming months. The Cleveland Fed’s Loretta Mester said that, while she was encouraged by October’s data, she sees bigger risks from tightening too little than too much. Kansas City Fed President Esther George said monetary policy “clearly has more work to do”, while the Dallas Fed’s Lorie Logan said earlier that inflation has a long way to go before it reaches the central bank’s target. They also noted it may be time to slow down the pace of hikes, however, but that it shouldn’t be interpreted as easing policy. Equally importantly, WSJ's Timiraos tweeted, "The October inflation report is likely to keep the Fed on track to approve a [50bps rate hike] next month. Officials had already signaled they wanted to slow the pace of rises and were somewhat insensitive to near-term inflation data". Easing financial conditions will likely drive the Fed speakers to a further hawkish tilt in the coming days. US jobless claims still underscore a tight labor market Initial jobless claims rose marginally to 225k from 218k, and above the expected 220k. Meanwhile, continued claims also exceeded consensus to print 1.493mln (exp. 1.475mln) from, the revised higher, 1.487mln. While this still continues to show a tight labor market in the US, it may be worth watching how it moves in the coming months especially after the wave of tech sector layoffs that we have seen in the past few weeks. The latest in the Crypto space Bloomberg reports a balance sheet hole of $8bn for FTX. Likewise, the Wall Street Journal reports that Alameda Research owes FTX about $10bn. Reuters says that the loan to Alameda Research was equal to at least $4bn. Sam Bankman-Fried (SBF), however, went to Twitter to give an explanation. He goes on to talk about two major mistakes that he has made, one being that he underestimated the demand for sudden liquidity by clients withdrawing funds. In terms of liquidity, SBF further says that: “FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!). But that's different from liquidity for delivery--as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.” Remember, that this is contrary to the story by Bloomberg and likely the Wall Street Journal and Reuters story. It now seems plausible that FTX has a serious hole in its balance sheet”, though, hard to judge anything at this stage given the amount of rumors and unconfirmed information floating around. What remains clear is that any liquidity event will unlikely remain isolated as cascading margin calls and contagion effects are likely to be felt beyond the crypto space. UK GDP to confirm the onset of a recession UK’s Q3 GDP is scheduled for release today and the first quarterly negative print of the current cycle is expected to be seen. Consensus forecast is seen at 2.1% YoY, -0.5% QoQ, significantly lower than the second quarter print of 4.4% YoY, 0.2% QoQ. August GDP data had already begun to show a negative print with -0.3% MoM and the trend will only likely get worse in September, exacerbated by a one-off factor relating to Queen Elizabeth II’s funeral in the month, which was a national holiday. The economy is already facing a cost of living crisis, and both fiscal and monetary policy have to remain tight in this very tough operating environment. Technically, a recession may still be avoided as activity levels picked up in October, but still it will remain hard for the UK to dodge a recession going into 2023. This suggests there maybe some downside for the sterling, especially as the market refuses to cater to the Bank of England’s warning that the current expectations of terminal rate may be too steep. Credit growth in China slowed in October China’s new aggregate financing fell to RMB908 billion in October, much lower that the RMB1,600 billion expected in the Bloomberg survey and the RMG3,527 billion in September. The growth of outstanding aggregate financing slowed to 10.3% in October from 10.6% in September. New RMB loans declined to RMB615 billion in October, below the 800 billion consensus estimate and much smaller than the RMB2,470 billion in September. New RMB Medium to long-term loans to corporate fell to RMB462 billion as loan demand was weak. China’s Politburo Standing Committee met to discuss pandemic control policies  On Thursday, President Xi and the rest of the Politburo Standing Committee had a meeting to discuss its policies on pandemic control. While the statement from the meeting reiterated adherence to the dynamic zero-Covid policy, it also highlighted the push for vaccination and treatments and called on government officials to implementation of control measures more scientifically targeted and precise and to avoid doubling down on each layer of execution.   China’s Singles’ Day this Friday, Nov 11 Investors will watch closely Alibaba, JD.com, and other online retailers’ sales on Singles’ Day this Friday to gauge the strength of China’s private consumption. Analysts are expecting slower sales growth as recent data indicated slower user growth across online shopping platforms.   For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-11-nov-2022-11112022
FX Daily: Upbeat China PMIs lift the mood

Meeting Of U.S. President Biden And China’s President Xi | Chinese Methods To Contain The Pandemic

Saxo Bank Saxo Bank 14.11.2022 08:38
Summary:  China released a set of 20-item guidelines on Friday to fine-tune the country’s pandemic control measures aiming at minimizing disruption to people’s livelihood and the economy. The move added fuel to the post-US CPI risk-on sentiments and saw Hong Kong and China stock soaring with Hang Seng Index up 7.7% and commodities prices higher. S&P 500 rallied another 0.9% on Friday and finished the week nearly 6% higher. Over the weekend, China’s financial regulators rolled out a 16-point plan to boost the property sector. What’s happening in markets? The S&P 500 (ESZ2) and Nasdaq 100 (NQZ2) extended post-CPI gains US stocks rallied for the second day, adding to the dramatic surge after the softer CPI prints on Thursday. S&P 500 gained 0.9% and Nasdaq 100 climbed 1.9%. The energy sector, up 3.1%, was the top performer in the S&P 500 as WTI crude oil price bounced 2.8% on China’s easing of pandemic control measures despite a rise in the number of new Covid cases. Gaming and casino stocks and consumer discretionary names also gained from optimism about China’s fine-tuning of Covid policies. FTX filed for Chapter 11 bankruptcy protection on Friday and its CEO and founder resigned. Coinbase (COIN:xnas), the largest US crypto exchange, bounced 12.8% on Friday after being dragged down by the FTX fiasco earlier in the week. Robinhood (HOOD:xnas), in which FTX’s Sam Bankman-Fried has a 7.5% stake, surged 12.9% after steep declines on Tuesday and Wednesday. Over the week, S&P 500 gained 5.9% higher and NASDAQ 100 surged 8.8%. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) markets were closed for holiday The US treasury cash markets, after the massive 25bp-30bp  post-CPI drops in yields on Thursday, took a break to observe the Veterans’ Day holiday on Friday. Treasury note and bond futures were little-changed. Hong Kong’s Hang Seng (HSIX2) China’s CSI300 (03188:xhkg) soared on China’s fine-tuning of pandemic control measures Hang Seng Index soared 7.7% on the post-CPI rally in the U.S. stock market and the easing of pandemic control measures in China. Following a meeting of the Chinese Communist Party’s new Politburo Standing Committee on Thursday, China’s health authorities issued 20 new measures on Friday to fine-tune pandemic control policies including relaxing quarantine and PCR testing requirements and prohibiting excessive lockdowns. China Internet stocks soared, with Alibaba (09988:xhkg) up 12.4%, Tencent (00700:xhkg) up 11.7%, Meituan (03690:xhkg) up 12.5%, JD.Com (09618:xhkg) up 16.1%, and Kuaishou (01024:xhkg) up 17.5%. EV maker NIO (09866:xhkg) jumped 20.4% despite missing Q3 earnings. XPeng (09868:xhkg) surged 16%. Macao casino stocks gained 8% to 9%. China consumption names also climbed on China’s easing of pandemic control. Share prices of China property developers were squeezed massively higher, with Country Garden (02007) soaring 35% and Longfor (00960 ) jumping 29%. The debt-laden CIFI (00884:xhkg) soared 72.2%. Subsequently, Bloomberg ran a couple of news reports saying China is rolling out a 16-point rescue plan to boost the ailing property markets and struggling developers. CSI300 gained 2.8%/ Australia’s ASX200 (ASXSP200.1) rises ~4% last week. Stock poised to extend rally on China’s property measures All eyes will be on Australia tech stocks following the stellar run in the US, however Aussie tech stock gains may not shoot the lights be muted today after Australia’s 10-year bond yield rose seven basis points to 3.72%.  However, Commodity stocks will be a focus; on Covid hopes, with the Copper price up 4.1%, while precious metals are higher and aluminum had its best day since 2009. In New York BHP rose 3.6%, gapping up and rising above its 200-day moving average which could be seen as bullish sign, and also means local listed counterpart will likely follow. Lithium stocks will also be in the spotlight, with Australia’s biggest Allkem (AKE) and Pilbara (PLS) a focus with sentiment picking up and the stocks already trading in record-high territory ahead of China reopening. FX: the US Dollar continued to plunge in the aftermath of a softer CPI The US dollar index plunged 1.7% on Friday, bringing the weekly loss to 4%. After falling the post-CPI decline of 3.8% on Thursday, USDJPY fell another 1.5% to 138.81 on Friday. Over the week, USDJPY fell from 1.4662 to 138.81, a 5.3% decline. EURUSD surged 1.4% on Friday, bringing its weekly gain to nearly 4%. The Chinese renminbi strengthened further against the US dollar, benefiting from China’s easing of pandemic control in addition to the impact in the aftermath of the US CPI. USDCNH declined from 7.15 to 7.09 on Friday.The Aussie dollar is gaining on the back of China's property sector rescue package. China introduced 16 property measures to address the developer liquidity crisis; from blanket debt extensions, to loosening down-payment requirements for homebuyers. On top of that that, China’s eased covid restrictions; shortening to five-day quarantines, which is aimed at reducing the economic impact of Covid Zero, rather than relaxing restrictionsThe Australian dollar jumped 1.4% on Friday and 3.7% over the week. While the market still awaits further easing developments, the market is buoyed on forward looking hopes that the AUD will continue to be bid on commodity demand picking up. The iron ore (SCOA) price is back above US$90 after rising 6% last week, the copper price lifted about 5% last week, and the lithium price is also higher, with carbonate prices up 118% year to date.  Crude oil (CLZ2 & LCOF3) WTI crude oil gained 2.8% to finish the week at USD88.96 on China’s easing of pandemic control and a sharply lower dollar but it remained stuck inside its established trading range. In addition, as the fuel product market has been tightening in Europe and the US due to low inventories of diesel and heating oil, the crude oil price is likely to find support here and the tendency is more to the upside. OPEC issues its monthly market report on Monday so all eyes will be on that. Copper (HGZ2) rose nearly 5% on Friday on China easing Covid policies Benefiting from China fine-tuning Covid policies and a sharply lower US dollar, copper rose 4.7% on Friday and nearly 7% for the week to USD3.91. It is poised to challenge a key resistance zone near $4 in the near term. As noted by Ole Hansen, Saxo’s Head of Commodity Strategy, while the prospect of copper mines in Central America, South America, and Africa temporarily increasing production is significant, the outlook for copper prices remains positive since global electrification will continue to drive the demand for copper higher. Globally, especially in Europe, the need to reduce reliance on Russian-produced natural gas, oil, and the use of coal as energy sources will continue to build momentum for accelerated electrification. But enabling the grid to handle the additional baseload will require significant new copper-intensive investment in the coming years. In addition, producers such as Chile, the world's largest copper supplier, are not optimistic about their ability to increase production of copper mines in the medium and long term amid declining ore grades and water shortages. The slowdown of the Chinese economy is temporary, and the Chinese government's economic stimulus measures are focused on infrastructure and electrification, which require a lot of industrial metals, especially copper. Gold (XAUUSD) Gold climbed 0.9% to USD1771 on Friday, with the biggest weekly gain since March. In addition to a softer US CPI on Thursday, according to Ole Hansen, supporting the underlying improvement in sentiment was the recently published Gold Demand Trends Q3 2022 update from the World Gold Council. The update outlines how central bank demand reached a quarterly record of nearly 400 tons, thereby offsetting a 227 tons outflow from bullion-backed ETFs. What to consider? China issued 20 guidelines to fine-tune its dynamic zero-Covid policy measures China’s health authorities released 20 guidelines on Friday to fine-tune the country’s pandemic control measures, a day after the Politburo Standing Committee, led by President Xi, held a meeting to discuss how to best contain the pandemic. The key measures in the guidelines include reducing the number of quarantine days for close contacts from 10 days to 8 days, relaxing some centralized quarantine to home quarantine, limiting PCR testing, prohibiting excessively extending lockdowns, promoting vaccination and treatments, and prohibiting local authorities from shutting down production, schools, and transportation without proper approval. At a press conference on Saturday, the National Health Commission emphasized the fine-tuning was optimization measures based on scientific findings but not representing a shift in the principles of dynamic zero-Covid policy. China’s financial regulators rolled out a 16-point plan to boost the property sector The People’s Bank of China and the Banking and Insurance Regulatory Commission jointly issued a notice to financial institutions with 16 measures to address the liquidity squeeze faced by property developers through measures including the relaxation of previously imposed redlines restricting banks from lending over certain ceilings and calling for financial institutions to treat private enterprise developers equally with state-owned enterprises. A busy week of Fedspeak kicked off by Fed Governor Waller After the sharp easing of financial conditions after the massive asset price movements after the release of the CPI, helped by lower bond yields, higher stock prices, and lower US dollar, the market is eagerly monitoring if Fed officials will push back on pivot speculations in order to bring financial conditions back to tighter levels. Governor Waller previously proposed that the Fed should not pause until the monthly core PCE substantially falls below 3% on an annualized basis. Biden and Xi are set to meet on the sidelines of the G20 summit U.S. President Biden and China’s President Xi will hold a bilateral meeting on the sidelines of the G20 summit in Indonesia on Monday. It will be the first time they meet in person since Biden took the presidential office in January 2021. The White House said the meeting could last a couple of hours. For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-14-nov-2022-14112022
Crude decreases amid risk boosting greenback and unclear situation in China

After some of covid restrictions were loosened, Brent crude oil soared almost 3%. OPEC publishes report today

ING Economics ING Economics 14.11.2022 09:33
The commodities complex pushed higher on Friday after China eased some of its quarantine restrictions related to Covid. This more positive sentiment should continue today with reports that the Chinese government is also rolling out a number of measures to help out the weak property sector Source: Shutterstock Energy - oil rallies on China Covid policy change The oil market continued its move higher on Friday. ICE Brent settled almost 2.5% higher on the day. This followed China's relaxation of its covid-related quarantine measures. These measures reduce the quarantine period for inbound travellers and close contacts of those who have tested positive. In addition, secondary contacts will no longer need to be traced. However, while we are seeing these changes in policy, China is also experiencing its highest numbers of daily Covid cases since April and Guangzhou has tightened restrictions. The latest easing in quarantine requirements is certainly a step in the right direction, but the market will likely need to see further easing if this recent enthusiasm is to be sustained. European natural gas prices continued to come under pressure on Friday. TTF December futures fell by almost 14%, leaving the market below EUR100/MWh. EU storage is now close to being 96% full compared to a 5-year average of 89%. Mild weather means that storage is still filling up at a time when we usually see drawdowns. Forecasts show that temperatures in Western Europe are likely to be warmer than usual over the next week. Meanwhile, the European Union’s Copernicus Institute, said that Europe could see a milder than usual winter, which if the case, will continue to provide some relief to the market. As for the calendar this week. OPEC will release its latest monthly market report later today, which will include the group’s latest views on the market outlook for the remainder of this year and 2023. This will be followed by the IEA monthly oil market report on Tuesday.   Metals – LME decides against Russian metals ban Metals prices surged on Friday after China eased some Covid restrictions, fuelling speculation of a broader relaxation in measures. The easing, including a shortening of the quarantine period, comes at a time when Covid cases nationwide have surged, with outbreaks in Guangzhou and Beijing. A weakening US dollar, following a lower-than-expected US CPI reading for October, has also been supportive. This optimism is likely to continue this morning after reports that China will implement 16 property measures to help out the weak property sector. Some of these measures include debt extensions to the industry and relaxing deposit requirements for homebuyers. The metal markets also have a bit more clarity now, following the LME’s decision to take no action on the delivery of Russian metals into LME warehouses, after receiving a number of responses to its discussion paper. The LME was looking at potentially banning the delivery of Russian metal into its warehouses, limiting Russian flows or taking no action. In the lead-up to the decision, there were a number of producers who were quite vocal in calling for Russian metal to be banned, whilst consumers were keener for there to be no changes. If we continue to see an increasing amount of self-sanctioning of Russian metals, the risk is that we see more Russian metal being delivered into LME warehouses, which could potentially mean that LME prices trade at discounted levels to actual traded prices.   Nyrstar’s Budel plant in the Netherlands will partially restart production in November. The operations at the plant will depend on market conditions, the company said, which remain extremely challenging. The Budel smelter was shut on 1 September, however, the plant had been operating at lower capacity since 4Q21 due to high energy prices. Budel is one of Europe’s largest zinc smelters, with a nameplate capacity of 315ktpa. Agriculture – Indian wheat area increase The latest data from the Indian Ministry of Agriculture & Farmers Welfare shows that farmers have planted wheat on 4.5m hectares during the current sowing season that began on 1st October, up 9.7% when compared to last year. Meanwhile, there is speculation that the Indian government might take price-cooling measures to try to rein in soaring domestic prices, which could include the release of state reserves in the open market and possibly reducing the 40% import duty. Wheat stocks in state warehouses totalled 22.7mt at the start of October, quite a bit lower than the 46.9mt from a year earlier. The market is expecting wheat production to total around 95mt this year, much lower than the government forecast of 106.8mt. Read this article on THINK TagsRussian metals Property Oil LME China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
In Crypto, You Could Prove You Own A Private Key Without Revealing It

FTX And More Than 100 Affiliates Filed For Bankruptcy | The Aussie Dollar (AUD) Has Gained Ground

Saxo Bank Saxo Bank 14.11.2022 10:03
Summary:  Market sentiment closed last week on a strong note after the wild rally on Thursday in the wake of the softer-than-expected October US CPI data. Sentiment was checked in the Asian session today by rising Covid cases in China, although the Zero Covid policy approach there may be softening. US yields jumped a bit to start this week after a bank holiday on Friday and after Fed Governor Waller was the first significant Fed profile to push back against the market’s lower of forward Fed tightening expectations in the wake of a single data release.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Last was a spectacular week for equities with the MSCI World Index up 6.7% with our theme baskets e-commerce, cyber security, and semiconductors rallying 19.4%, 13.6%, and 12.8% respectively. High duration equity themes responded the most to broad-based easing of financial conditions last week and the key question is now if the market will extend its momentum. S&P 500 futures closed on Friday at the 4,000 level and have opened a bit lower this morning but are already attempting to climb back to the 4,000 level. If we look at financial conditions and where they mostly went last week there are theoretically room for a rally up 4,100 and even beyond that to the 4,200 level. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hang Seng Index climbed 2.7% and CSI 300 edged up 0.9% on the news that the People’s Bank of China and the Banking and Insurance Regulatory Commission jointly issued a notice to financial institutions with 16 measures to address the liquidity squeeze faced by property developers through measures including the temporary relaxation of previously imposed redlines restricting banks from lending over certain ceilings to developers and calling for financial institutions to treat private enterprise developers equally with state-owned enterprises. Leading China private enterprise property developers listed in Hong Kong soared by 20% to 40% at one point. FX: USD picking up the pieces after massive downdraft on lower October CPI The US dollar lurched into an historic two-day plunge late last week after the release of the softer than expected US October CPI data on Thursday ahead of a three-day weekend for US rates (on Friday’s bank holiday). The move was so sharp that it can’t hope to maintain course, so for the nearest term, the market will try to feel out consolidation levels. EURUSD, for example, finally found resistance just above the key 1.0350 area, which was the major low back in May and June and prior to that, back in early 2017. The first support is the 1.0200 area, the 38.2% retracement of the rally sprint, with the reversal level at 1.0100, the 61.8% retracement and near the prior important resistance. For USDJPY, the market managed to take out the 139.40, the prior major high in July, around where it trades this morning. Amazingly, having fallen from 151.95 to the local low of 138.46, the 200-day moving average is still quite far away, near 133.00. Crude oil (CLZ2 & LCOF3) remains rangebound ... trading softer into the European session in response to a recovering dollar after Fed’s Waller said the FOMC has some way to go before it stops raising interest rates. Earlier in the session commodity prices in general, including oil, were supported by demand optimism after China on top easing Covid restrictions issued a rescue package for its struggling property market. A pickup in Chinese demand, despite the current headwinds from rising virus cases, when EU is preparing sanctions against Russian oil and OPEC+ is cutting production, will likely lead to further tightening of the market. Focus on US economic data given its impact on risk appetite as well as Monthly Oil Market Reports from OPEC today and the IEA tomorrow. Gold trades softer following a two-week jump of almost 8% … after Fed’s Waller cautioned that the FOMC isn’t close to pausing interest rate hikes. The dollar strengthened while Treasury yields moved higher after having been closed on Friday for Veterans Day. Overall, however, the sentiment in the market seems to be changing with a period of consolidation, potentially the next phase. Focus on resistance-turned-support at $1735 and whether we have seen a shift in the trading behaviour among speculators from a sell-into-strength to a buy-on-weakness. ETF investors – net sellers for months - and speculators in the futures market now hold the key that could unlock further gains. Expect some consolidation and potentially a recheck of support at $1735 with resistance at $1789 and $1804. Industrial metals remain focussed on China … and overnight iron ore, the key feedstock for steel production, jumped +3% after the Chinese government released a package of policies to rescue its property sector. The news came on top of last week's easing of some virus restrictions which drove a near 14% rally in the Bloomberg Industrial metals index to a five-month high. Copper, now up 25% from the July low was one of the main beneficiaries of the news, coming at a time when supplies are already showing signs of tightening. Overnight, the property news drove HG copper to a fresh five-month high at $3.96 per pound before some profit taking emerged just ahead of critical and potential sentiment as well as momentum changing resistance in the $4 to $4.05 area.  US treasuries (TLT, IEF) US Treasury yields (10Y) closed Thursday on a weak note after the plunge on the October CPI data ahead of a three day weekend for banks (treasuries not trading, even as equity markets were open). Yields have jumped a bit here at the start of this week after Fed Board of Governors member Waller pushed back against the market’s repricing of Fed tightening intentions since that CPI release (more below) in comments overnight. The low water mark for the 10-year treasury benchmark was just above 3.80%, with a jump back above 4.00% needed to suggest that this drop in yields is temporary. The next level of note to the downside is the 3.50% area, which was the high-water mark back in June that held for about three months before new highs were posted in September. What is going on? AUDUSD is up 9% from its low, gaining some extra ground on China’ property rescue package The Aussie dollar has gained ground on the back of China's introduction of a property sector rescue package. AUDUSD now trades at a two-month high, hitting 0.666 in anticipation that Australia’s trade surplus will be further supported by exports into resurgent Chinese demand after China introduced 16 property measures to address its developer liquidity crisis. On top of that that, China’s eased some covid restrictions; shortening to five-day quarantines, which is aimed at reducing the economic impact of Covid Zero. US Fed’s Waller pushes back against market’s lowering of Fed expectations Federal Reserve Governor (and therefore voter) Christopher Waller has been the first high profile Fed official to emerge and push back against the market’s repricing lower of the Fed’s rate tightening trajectory in comments overnight. Speaking at a Sydney, Australia conference, Waller said that “These rates are going to...stay high for a while until we see this inflation get down closer to our target”. “We’ve still got a ways to go. This isn’t ending in the next meeting or two.” The market is now pricing the Fed to reach a peak policy rate below 5.00%, either at the March or May FOMC meeting next year, with a 50-basis point hike priced for December to take the Fed Funds rate to 4.25-4.50% and slightly more than 50 basis points of further tightening priced beyond that. This is some 25 basis points below the prior peak in expectations. Crypto market fear is spreading On Friday, the CEO of the cryptocurrency exchange FTX stepped down, and FTX and more than 100 affiliates filed for bankruptcy, with the filing revealing that FTX and Alameda Research (related trading firm) have liabilities in the range $10-$50 bn. Contagious effects have already appeared with examples of as Genesis has $175 mn stuck in FTX and the crypto lender BlockFi stating that they would be limiting activities in wake of the FTX collapse. As the confidence in centralized exchanges is shrinking, a record-high amount of Bitcoin was moved out of exchanges and into self-custody wallets due to increased fears of exploitation and mismanaging of user funds. What are we watching next? Fed Vice Chair Lael Brainard to speak today Brainard is thought to be one of the most dovish of prominent Fed figures and possibly behind what was seen as slightly dovish insertion in the November FOMC monetary policy statement before Fed Chair Powell’s press conference. What will Brainard say now that the market seems ready to pounce on a single month’s data to significantly alter its projections of Fed policy? NY Fed President and voter Williams will also speak today, with a rather busy schedule of Fed speakers in the week ahead. Incoming US data Traders will remain nervous around incoming US data after the wild reaction to last week’s Thursday October US CPI release. The US macro calendar highlights this week include Tuesday’s October PPI releases, the Oct. Retail Sales data on Wednesday and November NAHB Housing Market Index release the same day. Finally, the US reports October Housing Starts/Building Permits data on Thursday. Major China Internet companies are scheduled to report this week Meituan (03690:xhkg) kicks off the busy earnings calendar of  China Internet companies on Monday, followed by Tencent (00700:xhkg) on Wednesday, Alibaba (09988:xhkg) on Thursday, and JD.COM (09618:xhkg) on Friday. Analysts’ estimates for top-line growth in Q3 are subdued due to weak consumption recovery and the macro environment. Slow merchandise value (GMV) growth during the Singles’ Day festival may point to a sluggish Q4 outlook. Alibaba's GMV growth during the Singles' Day festival was flat. JD.COM has not yet announced its numbers except saying GMV had positive growth Y/Y during the period (from Oct 31 evening to Nov 11 end of the day). According to estimates, eCommerce platform GMV grew about 14% Y/Y but the large traditional eCommerce platforms were estimated to see GMV growth at just around 3% Y/Y. UK Autumn Statement on 17 November Expect a contractionary 2023 UK Budget. The new Prime minister Rishi Sunak needs to find savings worth about £30-40bn/year to convince the independent Office for Budget Responsibility that debt won’t rise across the medium-term as a percentage of GDP. This is not an easy task. But this is certainly the only way for the United Kingdom to win back investor confidence after the disastrous mini-budget presented in September. All of this will likely increase the depth of the UK recession and poverty across the country. The outlook is really grim. The Bank of England expects the UK to be in recession from mid this year all the way through to mid 20024. Then growth will pick up only very modestly (annualized rate of 0.75 %). Poverty is also increasing. The country’s largest foodbank charity says 11.5 million meals were handed out over six months – more than 63.000 a day on average. This is a record. The 2023 budget will likely make things worse. The UK is facing an emerging market economy dynamic. Earnings to watch The Q3 earnings season is still slowing down but with important earnings releases still coming out this week. Today’s focus is Chinese e-commerce giant Meituan, Brazil-based fintech bank Nu Holdings, and finally DiDi Global which is the Uber equivalent in China. For foreign investors the earnings from Nu Holdings will get the most attention as the bank is purely technology-driven, fast growing (expected to grow net revenue 188% y/y in Q3 to $1.09bn), and has Berkshire Hathaway as one of its biggest shareholders. Monday: Meituan, Sonova, Tyson Foods, Nu Holdings, Trip.com, DiDi Global Tuesday: Infineon Technologies, Vodafone, Alcon, Walmart, Home Depot, Sea Ltd Wednesday: Siemens Energy, Tencent, Experian, SSE, Nibe Industrier, Nvidia, Cisco, Lowe’s, TJX, Target Thursday: Siemens, Alibaba, Applied Materials, Palo Alto Networks, NetEase Friday: JD.com Economic calendar highlights for today (times GMT) 1000 – Eurozone Sep. Industrial Production 1630 – Switzerland SNB President Jordan to speak 1630 – US Fed Vice Chair Brainard to Speak 2030 – Weekly Commitment of Traders Report (delayed from Friday) During the day: OPEC’s Monthly Oil Market Report 0030 – Australia RBA Minutes 0120 – China Rate Decision 0200 – China Oct. Industrial Production / Retail Sales  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-14-2022-14112022
The Commodities: The EU Is Looking At A Price Cap Level Of Around US$60/bbl

The US Inflation Data Last Week Gave Crude Oil Another Boost

Craig Erlam Craig Erlam 14.11.2022 10:37
Oil is steady but upside risks remain The prospect of looser restrictions has boosted the price of oil recently and yet Brent still finds itself trading around the middle of its $90-$100 range. The US inflation data last week gave crude another boost as traders were left to dream again about a possible soft landing if the data continues that way and the Fed raises rates less. There’s still a long way to go though and much of the world won’t be so lucky, assuming it isn’t already too late for the US. But further signs of inflation peaking will no doubt be welcome; you just wonder whether it will also be the catalyst for oil to break $100 again, further complicating the growth outlook once more. Gold’s spectacular rebound It’s been a fantastic 10 days for gold, with the yellow metal going from at risk of breaking below $1,620 support to rallying almost 10% to its highest level in almost three months. It’s been quite the ride, fueled by signals from the central bank that the next hike could be less aggressive and then that inflation report. Can gold hold onto this momentum and break $1,800, taking it into territory that it hasn’t traded within since late-Spring, early-summer? It’s a big ask but if the data is generous and the dollar continues to give back some of its enormous gains from the past year, there’s every chance gold could build momentum from here. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Economic Data From China Positively Affected Copper, Aluminum, Zinc And Iron Ore

The LME Prices Reflecting The Price Of Russian Metal More

ING Economics ING Economics 14.11.2022 14:41
The LME's decision to continue to allow Russian metal to be delivered into its warehouses put some downward pressure on metals on Monday morning, easing fears of supply shortages In this article LME aluminium prices retreat LME says many consumers still accept Russian supplies LME aluminium prices retreat The LME aluminium price fell from a two-month high to as low as $2,416/t on Monday morning following the decision. How much further pressure we will see on metals prices going forward will depend on whether we see a significant inflow of Russian metals into LME warehouses in the weeks and months ahead. LME says many consumers still accept Russian supplies After the LME launched a discussion paper on 6 October related to the delivery of Russian metal into LME warehouses, the exchange has been receiving feedback from market players on the potential action, if any, that should be taken. The period for feedback closed on 28 October. The LME set out three options; to take no action on Russian metal, to ban the delivery of Russian metal into LME warehouses, or to introduce thresholds which would restrict the amount of Russian metal that could be delivered into LME warehouses. In the lead-up to the decision, there were a number of producers, who were quite vocal in calling for Russian metal to be banned, whilst consumers were keener for there to be no changes. After going through all the feedback and carrying out its own analysis, the LME has decided to take no action on Russian metal, allowing it to continue to be delivered into LME warehouses. The LME said it believes, after receiving feedback, that a material amount of the market is still accepting and will continue to rely on Russian metals. This was evident in the response from consumers during the discussion period. The LME received 42 written responses - 22 of the responses favoured taking no action, 17 supported a ban on Russian metal and just two supported limiting Russian metal stocks. While a number of respondents said that allowing the delivery of Russian metal into LME warehouses, at a time when we are seeing an increasing amount of self-sanctioning, would see LME prices reflecting the price of Russian metal more than actual traded prices, others said excluding Russian metal would mean that LME prices are not truly reflecting the supply and demand picture. There were also suggestions that the LME's action needs to reflect the global picture, where there are still a number of markets accepting/buying Russian material, rather than just taking a purely Western view, which is where we are seeing most of the self-sanctioning. While there were opposing views on what impact banning or not banning Russian metal would have on liquidity, there was a strong view that nickel should be excluded from any ban, given that it would face the largest liquidity disruption in such an event. The LME acknowledged that its decision to take no action would mean that we likely see increased volumes of Russian metal into LME warehouses. However, the LME believes we would have seen higher inflows of metals into warehouses regardless, given the depressed global outlook. Having said that, the LME has reported that the proportion of Russian metal in LME warehouses has not changed significantly over the discussion paper period. While the LME accepts that LME prices may start to increasingly reflect the price of Russian metal if we see large inflows into LME warehouses, they believe that premia will play an important role, with this likely reflecting a large proportion of the all-in cost, so that non-Russian metal producers continue to receive fair value for their metal. According to feedback, market players do want more transparency on the origin of metal stocks in LME warehouses. Starting in January 2023, the LME will publish a monthly report which will provide the percentage of live tonnage of Russian metal on warrant. If we continue to see an increasing amount of self-sanctioning of Russian metals, the risk is that we see more Russian metal being delivered into LME warehouses, which could potentially mean that LME prices trade at discounted levels to actual traded prices.   Percentage of live tonnage of Russian brands Source: LME Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Commodities Update: Strong Russian Oil Flows to China and Volatility in European Gas Market

Commodities: Favorable weather conditions may be gone some time soon, so energy prices may go further up

Ed Moya Ed Moya 14.11.2022 22:20
Oil Crude prices softened but didn’t break as energy traders await how supplies will be disrupted when the Russian crude price cap begins early next month. ​ Today’s oil price weakness was mainly attributed to a weakening short-term demand outlook by OPEC and nervousness that the Fed could still remain aggressive with raising rates. Warmer weather across Europe has been good news for natural gas prices and that has removed some of the extra demand that was expected to come crude oil’s way. ​ The warm weather however is about to go away and that could keep energy prices rising going forward. ​ ​ ​ Gold Gold’s rally appears to be running out of steam. ​ The Fed remains the key driver for gold prices and this week could see a strong round of hawkish pushback from the policymakers. The Fed’s Waller kicked off the week with some hawkish talk that reminded traders we need to see a couple of more strong drops with inflation to say policymakers can pause. ​ Gold appears to have strong resistance at the $1800 level, with decent support at the $1750 region. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil weakens, gold rally losing steam - MarketPulseMarketPulse
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Marc Chandler talks global markets covering EuroStoxx 600, CSI 300, macroeconomics and much more

Marc Chandler Marc Chandler 14.11.2022 23:03
November 14, 2022  $USD, Brazil, China, Currency Movement, Federal Reserve, France, inflation expectations, Japan, UK Overview: China’s new initiatives to support the property sector helped lift the Hang Seng. And while the China’s CSI 300 edged higher both the Shanghai and Shenzhen composites fell. Most Asia Pacific markets fell, while Europe’s Stoxx 600 is posting a small gain. US futures are sporting modest losses. European benchmark 10-year yields are 3-5 bp lower, including UK Gilts ahead of Thursday’s budget that is expected to confirm new borrowing (Office for Budget Responsibility projects to be GBP70 bln more than previously anticipated). The 10-year US Treasury yield is about seven basis points higher near 3.88%. The dollar is mostly firmer after last week’s sharp losses. The yen is leading to the downside with about a 1.3% loss, while the Canadian dollar is holding up the best, off around 0.2%. A small handful of Asian currencies, including the Chinese yuan, are posting small gains against the greenback. Higher yields and a stronger dollar are paring last week’s sharp gold gains. It is off a little less than 1%. December WTI rallied nearly 2.9% before the weekend and is also off nearly 1% today. The cold spell in the US is helping natgas recoup its pre-weekend loss of more than 5%. Similarly, though more volatile, Europe’s natgas benchmark is recovering fully the 10.5% drop seen at the end of last week. Iron ore continues to rebound. Today’s 3.1% advance comes on top of the more than 14% rally over the past two weeks. December copper’s four-day rally is stalling, and it is off 2.3%. It rallied about 13.5% over the past two weeks. December wheat snapped a four-day before the weekend with a nearly 1.3% bounce. It is come back offered and is trading about 1% lower.    Asia Pacific China has launched two multi-point programs to revive the property market and allow a more focused implementation of its zero-Covid policy. So much depends on the implementation that it is hard to discern the real impact. Moreover, given the excess capacity in the housing market, even with the 16-points to be implemented and lending renewed, many Western observers are skeptical that the underlying challenges will be addressed. Reducing mass testing, resisting overzealous lockdowns, reducing the number of days in quarantine for inbound travelers, dropping the punishments against airlines for bringing into too many sick passengers sound well and good, but they may not herald the kind of pivot some in the financial press are claiming. Chinese officials themselves claim that policy is not being relaxed, and the number of cases is surging to 7–8-month highs. Japan reports its first estimate of Q3 GDP first thing tomorrow. It is expected to slow from 0.6% quarter-over-quarter to 0.2% largely on the back of slower consumption. Consumption rose 1.2% in Q2 and is seen having grown about a quarter as much. Business spending may have increased a little and inventories may not have been a drag (-0.3% in Q2). Despite the yen's weakness, net exports were likely a drag after contributing slightly in Q2. The GDP deflator, which is often seen as among the best metrics of overall price pressures, may show the most deflationary pressure this year. After falling 0.3% in Q1 and 0.5% in Q2, the median forecast in Bloomberg's survey projects a -0.6% reading.  The dollar slid to its lowest level against the yen since late August ahead of the weekend, slightly below JPY138.50, but has rebounded back above JPY140 in the European morning. It had stalled in front of there in Asia, but stops, perhaps related to the roughly $510 mln option (at JPY140) that expires today, saw it quickly trade up to JPY140.40. The rebound in US yields was also supportive. Nearby resistance is around JPY141.00. The Australian dollar initially rose through the pre-weekend high marginally on some optimism arising from China's measures but has succumbed to mild profit-taking pressures. It was knocked back from nearly $0.6725 to slightly below $0.6665. A break of $0.6650 could spur a retreat toward $0.6600. The greenback may have completed a three-day 3.4% decline against the Chinese yuan that took it to its lowest level since September 20 (~CNY7.0255). Optimism about the Covid and property measures helped the yuan recover. China may boost the lending at the one-year Medium-Term lending facility tomorrow and it reports October economic activity. The PBOC set the dollar's reference rate at CNY7.0899, nearly matching the median projection in Bloomberg's survey for CNY7.0903. Europe While tighter US monetary policy, via rate and the balance sheets, are well known, we have argued that many observers do not seem to be aware of the magnitude of the fiscal tightening that is taking place. The budget deficit is set to be more than halved from last year. After the Great Financial Crisis, it took several years to deliver the magnitude that is being experienced this year. The UK is engaging in its own double-barrel effort. The Bank of England is one of the few central banks that have begun to actively sell bonds it bought during QE rather than the more passive approach of limiting the re-investment of maturing proceeds. The BOE also signaled that it will begin selling the GBP19 bln (~$22 bln) Gilts purchased to help stabilize the markets (Sept 28-Oct 14). These sales of long-term bonds and inflation-linked instruments will begin at the end of the month. The operations will be demand-led, in a reverse enquire window, rather than at a preannounced pace so as to be responsive to market conditions and interest. It will publish additional operational details next month. Meanwhile, the highlight this week is Chancellor Hunt's budget statement on Thursday. Spending will be cut, and taxes will rise, even if the precise details are not fully known. The windfall tax on oil and gas firms appears earmarked to increase. Also, more revenue is to be had on bracket-creep, while lowering the threshold for paying the top rate. Still, the Office for Budget Responsibility warns borrowing will be around GBP70 bln more than previously anticipated. The UK's Telegraph reported over the weekend that the US has given the UK and EU until April to reach an agreement on the Northern Ireland Protocol. It is when President Biden is expected to visit Northern Ireland and commemorate the 1998 Good Friday Agreement, for which the US is a guarantor. However, the article's only detail was a far cry from the US setting the deadline as the headline claimed: "...and White House officials have privately indicated that he [Biden] would be happier if the situation was resolved before then." The Democratic Unionist Party has boycotted the Northern Ireland Assembly since the May election over the Protocol. New elections were delayed last week potentially until April 13, three days after the anniversary in hope of the deal by then. The UK is demanding that the role for the European Court of Justice in adjudicating disputes over the Protocol is eliminated. This has become the latest sticking point. More promising was the Telegraph's story that UK and France have reached an agreement to limit migration. The UK apparently has agreed to pay GBP60 mln to France to share intelligence on the people being smuggling through the English Channel and boost the number of officers on the beaches to limit the proportion of migrants leaving France for the UK. The UK had demanded that British "officials" would be allowed to join the patrol of the French beaches, but Paris could not abide. Instead, some British immigration officials would be part of a joint control center. The stronger than expected eurozone September industrial output figures (0.9% vs. 0.5% median forecast and August revised to 2.0% from 1.5%) failed to deter the market from paring the euro's advance. It did rise a few hundredths of a cent above the pre-weekend high but continued to work its way lower through the European morning and slipped below $1.03. The low in the North American session before the weekend was near $1.0265 and that may offer the nearby target. Sterling's pre-weekend high was near $1.1855, and initially it was bid slightly through $1.1870 in early Asia Pacific trading, but when it stalled, momentum traders appear to take profits. Sterling fell to about $1.1745 and another attempt on the upside stalled near $1.1830. It came under new selling pressure in the European morning and the market may have its sights set on the roughly GBP560 mln options that expire at $1.1715 today. America The busy week of US economic reports begins slowly. Many economic calendars do not include it, but the results of the Federal Reserve's October survey of consumer inflation expectations will be reported today. In September, the one-year expectation had fallen to 5.4% from 5.7%, the lowest since September 2021. By comparison, the University of Michigan's survey found expectation in September slipped from 4.8% to 4.7%, and then rose to 5.0% in October. Last week's preliminary results showed a tick up to 5.1%. The Fed's survey saw three-year expectations edge up to 2.9% from 2.8% and the five-year outlook rise to 2.2% from 2.0%. The University of Michigan's survey showed the 5–10-year inflation forecast outlook rose to 2.9% in October from 2.7% in September, and then, the preliminary estimate for October rose to 3.0%. It has been between 2.7%-3.1% since the start of last year. The Fed's Waller pushed hard against the market exuberant response to the softer than expected inflation print. He argued that it was only one print, and that the Fed has more work to do. But he was preaching to the converted. The market is well aware of those facts and continues to price in not only a 50 bp hike next month but more hikes next year. Governor Cook also reiterated what is widely recognized the more and longer the Fed hikes the more it risks overdoing it. Governor Brainard and NY Fed President Williams speak today, and they too are unlikely to break fresh ground. No official that has spoken before or after the CPI report to give any reason to expect a dissent at the December meeting, which slows the pace of tightening from 75 bp to 50 bp, which had been tipped in the September dot plot. Brazil has been a market darling this year, but concerns about the new government's fiscal plans has pushed it from second place behind the Russian rouble to third place, below the Mexican's peso as well. With a new team in place, including naming a finance minister, Lula appears to be pushing for a constitutional amendment that would allow welfare expenditures to be permanently outside of the budget cap. The cap limits spending increases to inflation. Constitutional amendments require 3/5 of both houses to support it in two votes. The Brazilian real was the weakest currency in the world last week, falling 3% against the weakening greenback. The Bovespa fell 5%, bucking the global equity rally.    The US dollar fell to almost CAD1.3235 ahead of the weekend, culminating a 1.5% weekly drop. It was the fourth consecutive weekly decline for the greenback, the longest losing streak since October 2021. The modest unwinding of risk-sentiment and the firmer tone for the US dollar, has seen the greenback recover to CAD1.33. The next upside target may be near CAD1.3350. Many find the Mexican peso's weakness ahead of the weekend difficult to comprehend, but we suspect it was the result of unwinding short yen carry trades that were used to finance long peso positions. As the yen strengthened dramatically, positions were unwound. The dollar shot up from new two-and-a-half year lows (~MXN19.2655) to a little above MXN19.59. A move now through MXN19.63 may signal a move toward MXN19.70-75.      Disclaimer
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

Fresh China Stimulus Has Added To The AUD/USD Pair Rally | Meeting Of President Biden And President Xi Showed Some Goodwill Gestures f

Saxo Bank Saxo Bank 15.11.2022 08:39
Summary:  Perhaps reality set in that markets could perhaps have been a bit too euphoric after just one inflation print showed CPI had dropped. Investors took profits from the Nasdaq 100 and S&P 500 seeing the indices fall 1% & 0.9% ahead of US PPI and following Fed officials’ remarks about ‘additional work to do’ and “a ways to go” to bring down inflation. Inflation expectations in a New York Fed consumer survey increased. Crude oil took a haircut, falling 4.2% after OPEC cut its oil demand outlook. Despite the US dollar rising against almost all major G-10 peers, The Aussie dollar nudged up to 0.67 ahead of the RBA meeting minutes. What’s happening in markets? Investors took profits from the Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) seeing the indices fall 1% and 0.9% as there’s ‘additional work to do’ to bring down inflation  Perhaps reality set in, that markets could perhaps have been a bit too euphoric after just one inflation print showed CPI had dropped. The major US indices snapped their two-day rally because US Federal Reserve speakers raised the alarm that the Fed had extra work to do to bring down inflation. Fed Governor Christopher Waller warned that “the market seems to have gotten way out in front over this one CPI report” and the Fed has “got a ways to go”.  Adding to that, Fed’s Vice Chair Lael Brainard said there is “additional work to do”. Putting it into perspective, the S&P500 has still managed to hold onto a gain of 10% from October 10. Given the rhetoric of ‘more work to do’ has been reinforced, it’s important to remember bear markets produce wild swings in markets, and volatility might be expected to pick up given the uncertainty. Ten of the 11 sectors of the S&P 500 declined with Real Estate, Consumer Discretionary, and Financials falling the most and Health Care being flat. Amazon (AMXN:xnas) dropped 2.3% as the company announced plans to layoff about 10,000 employees. Tesla (TSLA:xnas) declined 2.6% as Elon Musk said he had too much work to juggle and was running Tesla “with great difficulty”. Toll and board games maker, Hasbro (HAS:xnas) tumbled nearly 10% on analyst downgrades. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) as China rolling out financial support to the property sector Hang Seng Index climbed 1.7% and CSI 300 edged up 0.1% on the news that the People’s Bank of China and the Banking and Insurance Regulatory Commission jointly issued a notice to financial institutions with 16 measures to address the liquidity squeeze faced by property developers through measures including the temporary relaxation of previously imposed redlines restricting banks from lending over certain ceilings to developers and calling for financial institutions to treat private enterprise developers equally with state-owned enterprises. Leading China private enterprise property developers listed in Hong Kong soared, with Country Garden (02007:xhkg) jumping 45.5% and Longfor (00960) surging 16.5%. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) pared some post-CPI gains on hawkish Fedspeak and higher surveyed inflation expectations. US treasury yields rose about 6bps across the curve, paring some of the post-CPI gains, after returning from a long weekend, with the 10-year yield rising to 3.86% and the 2-year yield back to 4.39%. Hawkish comments from Fed Governor Waller that the market has gotten too much ahead of itself on one CPI report and there is still a long way to go triggered selling in treasuries during Asian hours. To add to that, the usually dovish Fed Vice Chair Lael Brainard said there is additional work to do in fighting inflation. Higher inflation expectations from the New York Fed’s Survey of Consumer Expectations weighed on the bond markets. Median one- and three-year-ahead inflation expectations increased to 5.9% and 3.1% from 5.4% and 2.9%, respectively. The median five-year-ahead inflation expectations rose to 2.4% from 2.2%. Also weighing on the markets during the session as about 12 billion corporate bond issuance. Australia’s ASX200 (ASXSP200.1) trades at its highest level since June; focus on CBA today   The biggest bank in Australia and the second biggest company on the ASX, Commonwealth Bank (CBA) reported its financial results today, with the bank reporting its net profit after tax (NPAT) from continuing operations grew just 2% compared to the prior quarter to A$2.5 billion. Its common equity Tier 1 ratio fell slightly to 11.1% vs. 11.5% q/q (showing its holding slightly less cash), and it also declared a loan impairment expense of A$222 million from bad debts, (showing Australians are feeling the pinch of the rate hikes). All in all, CBA’s income rose 9%, driven by higher margins and volume growth, which partly offset the reduced non-interest income. Meanwhile, CBA’s expenses rose, 4.5% (excluding remediation) with higher staff costs adding to the bill. CBA’s shares have risen 21% from their June low. And the technical indicators on the monthly chart suggest its slow grind up could perhaps continue, but the monthly and daily charts look somewhat mixed/choppy- it guess you could say, showing volatility may pick up. A lot can be taken by the RBA’s commentary, which has alluded to insolvencies rising up. Which we can see has been reflected in CBA’s results. Also remember the RBA said that the rate hikes from May have not fully been felt by Australians yet. That means, CBA’s margins could remain thin given inflationary pressures and rising rates. If you are looking for alpha, we still believe commodities offer the most potential over banks. Crude oil (CLZ2 & LCOF3) took a haircut, falling 4.2% after OPEC cut its oil demand outlook WTI crude price fell 4.2% as OPEC cut its global oil demand outlook down 0.1million bpd to 99.6 million bdp for 2022 and down 0.1 million bdp to 101.8 million bdp for 2023.  In the natural gas market, Freeport LNG will likely extend an outage that began in June, curbing the much-needed supply to customers in Europe and Asia. AUDUSD holds steady at around 0.67 after balanced RBA meeting minutes Despite the US dollar rising against almost all major G-10 peers, the Aussie dollar has held its ground, thanks to fresh China stimulus (with China announcing a property sector rescue package, as well as relaxing some Covid restrictions). This has added to the AUDUSD rally, with the pair now gaining 6.2% this month, in anticipation that Australia’s trade surplus will bolster, with hopes that commodity demand will improve. In its minutes released this morning, it shows that the RBA considered the case for a 50bp rate hike but settled at raising 25bps as the RBA was mindful of the full impacts of prior hikes were yet to be fully felt.  What to consider? US PPI today to watch In the October CPI released last week, a decline in health insurance costs due to technical factors contributed to the deceleration in the service component of the core CPI. In the calculation of core PCE, which the Fed watches most closely, the healthcare services prices are estimated from the PPI dataset than the CPI database. As a result, investors are likely to pay more attention to the October PPI numbers scheduled to release on Tuesday than usual as they are trying to gauge the trend of the service component of the core CPI. Bloomberg consensus estimates for headline PPI are +04% M/M and +8.4% Y/Y and for core PPI are +0.3% M/M and +7.2% Y/Y. Biden and Xi stroke a conciliatory tone but key issues unresolved  The 3-hour long meeting between President Biden and President Xi on the sidelines of the G20 Summit in Bali showed some goodwill gestures from both sides. Nonetheless, key issues remain unresolved.  In a relatively conciliatory tone, the two leaders agreed to resume talks on climate change and economic issues between officials of the two countries. U.S. Secretary of State Blinken plans to visit China early next year. Japan’s Q3 GDP unexpectedly declined Japan reported Q3 GDP that unexpectedly declined by 1.2% on a seasonally adjusted annualized basis, contrary to the consensus expecting a 1.2% growth. Falling net exports and a decline in housing investment drove the weakness. China’s October activity data are expected to be weak October retail sales in China are expected to decelerate to +0.7% Y/Y according to the Bloomberg survey from +2.5% Y/Y in September as the surge in COVID cases and pandemic control restrictions took their toll on consumption. Industrial production is estimated to slow to +5.3% Y/Y in October from +6.3% Y/Y in September, amid Covid-related restrictions, slower auto production, and weak exports. Retail bellwether companies report Q3 results today Home Depot (HD:xnys) and Walmart (WMT) are scheduled to report Q3 results today. Investors will be monitoring the top-line growth figures and assessment of business outlooks to gauge the state of US consumers. For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-15-nov-2022-15112022
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

Crude Oil Price Dynamics Can Affect The UDS/CAD Pair

TeleTrade Comments TeleTrade Comments 15.11.2022 09:09
USDCAD comes under some renewed selling pressure on Tuesday amid modest USD weakness. Bearish crude oil prices might undermine the Loonie and help limit the downside for the major. Investors now look to the US macro data and speeches by FOMC members for a fresh impetus. The USDCAD pair struggles to capitalize on the previous day's bounce from the 100-day SMA support and meets with a fresh supply near the 1.3325 area on Tuesday. The pair maintains its offered tone through the early European session and is currently placed near the daily low, around the 1.3285-1.3280 region. The US Dollar comes under some renewed selling pressure amid rising bets for a less aggressive policy tightening by the Fed. In fact, Fed fund futures are now pricing in a 91% chance of a 50 bps rate hike at the next FOMC meeting in December. This, along with a generally positive tone around the equity markets, is seen as another factor weighing on the safe-haven buck and exerting some downward pressure on the USDCAD pair. The downside, however, seems cushioned in the wake of a mildly negative sentiment surrounding crude oil prices. Rising COVID-19 cases in China raise concerns about lower fuel consumption in the world's top crude oil importer. This comes after OPEC lowered its 2022 global demand forecast and continues to act as a headwind for the black liquid, which might undermine the commodity-linked Loonie and lend support to the USDCAD pair. The mixed fundamental backdrop warrants some caution for aggressive traders and positioning for a firm near-term direction. Traders now look to the US macro data - the Empire State Manufacturing Index and Producer Price Index (PPI). This, along with speeches by influential FOMC members and the US bond yields, will drive the USD demand. Apart from this, oil price dynamics should provide a fresh impetus to the USDCAD pair.  
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

Chinese Covid Situation And Economic Activity Are Dragging Brent Down

InstaForex Analysis InstaForex Analysis 15.11.2022 09:26
Expect the best, but prepare for the worst. As much as investors would like the glass to be half full, the pessimistic forecasts of authoritative organizations are forcing oil markets to ignore supply concerns and focus on slowing global demand. How else, if OPEC cut the estimate of the increase in the indicator by 100,000 b/d to +2.5 million b/d in 2022 and to +2.2 million b/d in 2023, coupled with weak statistics from China, this forced Brent collapse to $92.5 per barrel. The whole world knows firsthand how COVID-19 affects the economy. What the global recession 2020 is worth. Now China is following this thorny road, the deterioration of the situation, which is pushing global GDP to a new recession. In October, retail sales in China decreased by 0.5%, industrial production growth slowed, and real estate investment continued to fall. Dynamics of Chinese indicators China is the largest consumer of oil, so it is not surprising that the outbreak of COVID-19, an increase in the number of infections, lockdowns and a reduction in economic activity are dragging Brent down. China is far from the only dark spot on the map of the global economy. According to Bloomberg forecasts, the eurozone's GDP will shrink by 0.1% in 2023. And that is subject to a mild winter and large-scale fiscal incentives to combat the energy crisis. If the governments of the countries of the currency bloc fail and frosts come to the eurozone, the economy may sink by 3.3%. As for the US, the basic scenario here is a 0.7% GDP growth with a recession in the second half of 2023. The housing market crisis and the Fed's overly aggressive monetary restrictions will lead to a deeper and longer recession. Thus, the situation in the key economies of the world leaves much to be desired, while the IMF warns that it may worsen due to inflation and the armed conflict in Ukraine. As a result, global oil demand will suffer, expectations of which rightly lead to a peak in Brent. As for supply issues, investors are ignoring them due to the increase in maritime transport of oil from Russia to the highest levels since 2017. Buyers seek to increase imports ahead of the EU embargo. Dynamics of sea transportation of oil from Russia In my opinion, a significant part of the negative is already embedded in Brent quotes. For a long time, investors have been talking about a recession, the most aggressive federal funds rate hike in decades. If the Fed succeeds in giving the US economy a soft landing, warm weather in Europe keeps the recession short and shallow, and China can weather the COVID-19 pressure as other countries have, demand for oil will be higher than expected. And with it the prices. Technically, on the daily chart, Brent falling below $92.5 per barrel will activate the 1-2-3 pattern and become the basis for short-term sales. Subsequently, we use the rebound from $91 and $89.2 to fix profits and medium-term purchases.       Relevance up to 08:00 2022-11-20 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327134
US-China Tensions Continue To Ramp Up, Dollar Off Its Highs

The US And Chinese Leaders Criticized Russia For Its Threatening The Use Of Nuclear Weapons

Saxo Bank Saxo Bank 15.11.2022 09:47
Summary:  Equity markets traded largely sideways, as did the US dollar after the wild sell-off late last week in the wake of the soft US CPI data. Markets in Asia traded on a strong note overnight after friendly headlines from the long Biden-Xi talk yesterday. The focus on incoming data in the days ahead will be on US PPI today and Retail Sales tomorrow, with the UK set to announce a much anticipated autumn budget statement on Thursday, likely to include new windfall taxes on power and fossil fuel companies.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Despite a strong session in China there is little spillover effect into developed market equities with S&P 500 futures still hovering just below the 4,000 level. Today’s key events are earnings from Walmart and Home Depot, or news coming out of the G20 meeting. US equities are tilted short-term in favour of an upside move with the 200-day moving average in the S&P 500 futures at 4,080 being the natural gravitational point for the market. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hong Kong and China’s equity markets surged for the third day in a row, with Hang Seng Index soaring 3.4% and CSI 300 climbing 1.7%, as optimism returned to the markets due to favourable policy shifts in China regarding pandemic control and property developers’ access to funding and goodwill gestures shown by China’s President Xi and the US’ President Biden at their first face-to-face meeting after President Biden took office. China Internet companies were among the top gainers, with Alibaba (09988:xhkg) up 11%, Tencent (00700:xhkg) up 10%, and Meituan (03690:xhkg) up 6%. Investors brushed off the rise of new Covid cases to 17,772 in mainland China as well as weaker-than-expected retail sales (shrinking 0.5%) and industrial production (+5%) in October. FX: USD still on the mat after massive downdraft on lower October CPI After the massive two-day plunge last week on the release of the softer than expected US October CPI data on Thursday, the US dollar largely tread water in yesterday’s session, with traders unwilling to take it lower still after a huge, one-off adjustment to Fed expectations that will require more weak incoming data from the US if investors want to solidy their case for a coming Fed pivot. EURUSD continues to trade near the key 1.0350 area, which was the major low back in May and June and prior to that, back in early 2017. The first support is the 1.0200 area, the 38.2% retracement of the rally sprint, with the reversal level at 1.0100, the 61.8% retracement and near the prior important resistance. For USDJPY, while the market managed to briefly take out the 139.40, the prior major high in July, it has bounced back above 140.00 at times since yesterday. Crude oil (CLZ2 & LCOF3) returned to the lower end of their current ranges ... after OPEC cut its forecasts for global oil demand in the fourth quarter, virus infections continue to climb in China. In addition, a monthly Drilling Productivity Report from the EIA cast doubt on US shale growth and as oil production per drilled well has fallen to the lowest since July 2020. Weaker than expected China data also highlighted the risk to oil demand during the final quarter before an expected tightening driven by OPEC+ production cuts and EU sanctions against Russian oil. Focus on US economic data given its impact on risk appetite as well as IEA’s Oil Market Report for November due later today. Gold (XAUUSD) Gold has so far seen three shallow corrections during the run up from the post-FOMC low at $1620 on November 3, highlighting an emerging “buy-the-dip" mentality as short positions are being reduced while others trade the current positive momentum. An attempt to reverse some of last week's drop in the dollar and yields initially supported a correction but gold did not get close to test key support at $1735 before receiving a bid after Fed Vice Chair Lael Brainard said it would be appropriate for the Fed to slow its monetary-tightening pace soon. Demand from ETF investors – net sellers for months – have yet to show any appetite while speculators cut their net short by 80% to –8k lots in the week to November 8.  Expect some consolidation and potentially a recheck of support at $1735 with resistance at $1789 and $1804. US treasuries (TLT, IEF) US treasuries failed to consolidate much of last Thursday’s enormous slide in yields, with the 4.00-4.10% area the somewhat far away upside swing zone, while the next major focus lower will be on the major pivot high near 3.50% from June. What is going on? Xi-Biden summit sees positive headlines After a three-hour talk between the US and Chinese heads of state, both sides issued statement suggesting a friendly reset of the tone between the two countries. The two sides are set to resume cooperation on climate change and food security and both leaders criticized Russia for its threatening the use of nuclear weapons. The Chinese Foreign Minister Wang Yi said the talks represent a “new starting point” with both sides hoping “to stop the tumbling of bilateral ties and to stabilize the relationship.” Weak incoming data from China overnight Industrial Production rose 5% YoY in October, a slowing of the pace from the month before and below estimates of 5.3%. Retail Sales for the month were down –0.5%, far below expectations of a rise of +0.7%. Infineon Technologies blasts earnings estimates The German semiconductor manufacturer reports strong Q4 results (ending 30 September) with revenue at €4.14bn vs est. €3.93bn and segment profit of €1.06bn vs est. €970mn. For the current fiscal year, the company guides segment profit margin of 24% vs est. 22.2% and revenue of €15.5bn vs est. €15bn. Fed Vice Chair Brainard mentions slowing the pace of Fed rate hikes In an interview yesterday, Lael Brainard, widely considered the chief dove on this FOMC, confirmed forward market expectations for lowering the size of future rate hikes. After last Thursday’s softer US October CPI print, the market had already lowered expectations to a 50-bp move, so there was little market impact despite a flurry of headlines. Brainard said “It will probably be appropriate soon to move to a slower pace of increases...but I think what’s really important to emphasize, we’ve done a lot, but we have additional work to do.” Higher US inflation expectations ... from the New York Fed’s Survey of Consumer Expectations weighed slightly on bond markets. Median one- and three-year-ahead inflation expectations increased to 5.9% and 3.1% from 5.4% and 2.9%, respectively. The median five-year-ahead inflation expectations rose to 2.4% from 2.2%. Also weighing on the markets during the session was about $12 billion corporate bond issuance. What are we watching next? ECB’s TLTRO repayments on Friday This is usually a non-event for traders, only ECB watchers care about that. But this is before the European Central Bank (ECB) decided on 27 October to change the rules retroactively and increase the targeted longer-term refinancing operation (TLTRO) rates from 23 November onwards. The interest rate will be directly indexed on the ECB’s deposit rate (which could peak at 2.50 % next year) instead of being calculated over the entire life of the operation. This creates strong incentives for commercial banks to repay in advance (the bulk of the TLTRO was going to be repaid in June 2023). This is aimed to reduce the eurozone balance sheet and with that to contribute to the overall monetary policy normalisation. At this stage, it is still unclear what will be the exact consequences on the flow of credit in the eurozone. This is something to monitor, however. Incoming US data Traders will remain nervous around incoming US data after the wild reaction to last week’s Thursday October US CPI release. The US macro calendar highlights this week include today’s October PPI releases, the Oct. Retail Sales data on Wednesday and November NAHB Housing Market Index release the same day. Finally, the US reports October Housing Starts/Building Permits data on Thursday. Hints of new taxes for the coming UK Autumn Budget Statement on 17 November The new Prime minister Rishi Sunak needs to find savings worth about £30-40bn/year to convince the independent Office for Budget Responsibility that debt won’t rise across the medium-term as a percentage of GDP.  At the same time, Sunak was out yesterday promising the return of the “triple lock” he suspended for 2022-23 as Chancellor, under which pensions are adjusted higher by the highest of inflation, average earnings, or 2.5%. Current Chancellor Jeremy Hunt is considering a new 40% windfall tax on electricity producers. He may also extend the current windfall tax on oil and gas producers to 2028 and raise it to 35% from 25% in Thursday’s budget statement. Earnings to watch Today’s US earnings focus is Walmart and Home Depot which are both giants in the US consumer sector. Walmart is expected to deliver 5.2% y/y revenue growth and lower EBITDA margin at 5.5% down from 6.3% a year ago. Home Depot is expected to deliver revenue growth of 3% y/y and unchanged EBITDA margin at 17.5% compared to a year ago. Sea Ltd is also reporting today and was at one point the darling of the market delivering high growth rates and strong returns but the last year has been brutal. Analysts expect revenue growth of 12% y/y down from a revenue growth rate of 122% y/y a year ago as e-commerce, gaming and financial services have slowed down in Southeast Asia. Today: Infineon Technologies, Vodafone, Alcon, Walmart, Home Depot, Sea Ltd Wednesday: Siemens Energy, Tencent, Experian, SSE, Nibe Industrier, Nvidia, Cisco, Lowe’s, TJX, Target Thursday: Siemens, Alibaba, Applied Materials, Palo Alto Networks, NetEase Friday: JD.com Economic calendar highlights for today (times GMT) 0900 – IEA’s Oil Market Report for November 1000 – Germany Nov. ZEW Survey 1000 – Eurozone Sep. Trade BAlance 1000 – Eurozone Q3 GDP estimate 1330 – US Oct. PPI 1330 – Canada Sep. Manufacturing Sales 1400 – US Fed’s Harker (voter 2023) to speak 1500 – US Fed’s Barr (Voter) to speak before Senate panel 2130 – API's Weekly Crude and Fuel Stock report 0030 – Australia Q3 Wage Price Index  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-15-2022-15112022
Rates Spark: Discussing the Potential of 4.5% and its Impact on Markets

China Could Be The Next Hit To Global Inflation | Donald Trump's Announcement

Swissquote Bank Swissquote Bank 15.11.2022 09:52
Equities saw some profit taking in last week’s post-US inflation rally, as some Federal Reserve (Fed) officials reminded investors that the 7.7% inflation is still high and that the Fed would continue fighting to bring it lower. G20 In geopolitics, yesterday’s meeting between Jow Biden and Xi Jinping went well. US-listed Chinese stocks extended gains. Crude Oil In energy, American crude dived on the news that OPEC cut its oil demand outlook and warned of uncertainties around global growth. Earnings In earnings, big US retailers Walmart and Home Depot are due to release earnings today Donald Trump And in fun news, Donald Trump will make an important announcement! Whoo! Watch the full episode to find out more! 0:00 Intro 0:41 Fed members warn of premature optimism 2:54 US inflation expectations go up 4:31 China could be the next hit to global inflation 5:05 Crude oil down on OPEC demand outlook cut 6:20 Biden, Xi meeting went well! 7.49 Crypto selloff cools 8:53 What to watch today? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #US #inflation #expectations #G20 #Biden #Xi #meeting #US #China #crude #oil #FTX #bankruptcy #Bitcoin #Ethereum #selloff #Binance #recovery #funds #Walmart #HomeDepot #earnings #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
The White Metal (Silver) Is Manifesting A Lackluster Performance

Volatility In The Nickel Market Has Become More Common

ING Economics ING Economics 15.11.2022 11:19
Most of the commodities complex came under pressure yesterday. Although nickel was one of the exceptions, hitting its daily limit of 15% after reports of a blast at a nickel pig iron plant in Indonesia In this article Energy- OPEC cuts demand outlook Metals – LME nickel briefly hits limit amid reports of blast in Indonesia Agriculture – slight improvement in US winter wheat condition Energy- OPEC cuts demand outlook The oil market came under pressure yesterday. ICE Brent settled almost 3% lower on the day. A partial recovery in the USD put pressure on oil and the broader commodities complex, but a poorer demand outlook appears to have been the key catalyst for the move. OPEC released its latest monthly market report yesterday, in which they revised their demand growth forecasts for both 2022 and 2023 down by 100Mbbls/d. This means that the group now expects 2023 demand to be 200Mbbls/d below their previous forecast. OPEC forecasts demand for their crude oil to be 29.3MMbbls/d in 2023, compared to output in October of 29.49MMbbls/d. Given the sizeable supply cuts from November through until the end of next year, OPEC supply will still be lower than demand for OPEC oil over 2023. The IEA’s monthly market report will be released later today. The latest drilling productivity report from the EIA shows that the number of drilled but uncompleted wells (DUCs) increased by eight in October, which is the first monthly increase in DUCs since June 2020. The US industry since Covid has relied heavily on DUCs to help drive a recovery in production, which has left the amount of DUCs at their lowest levels since at least 2014. Meanwhile, in the same report, the EIA estimates that US shale production will grow by 91Mbbls/d to 9.191MMbbls/d in December. Metals – LME nickel briefly hits limit amid reports of blast in Indonesia Nickel briefly jumped by its 15% daily limit after unconfirmed reports about a blast at a small nickel pig iron plant in Indonesia. The operator of the plant has, however, said that the reports are false. The LME price surged by more than $4,000/t before paring gains. Volatility in the nickel market has become more common in recent months with reduced liquidity ever since the short squeeze seen back in March. Copper inventories immediately available to withdraw from LME warehouses climbed by 23,175 tonnes, the highest daily inflow since June 2021, according to the latest data from the exchange. The increase was driven by gains from warehouses in Germany and the Netherlands. Meanwhile, LME exchange inventories rose by 8.9kt after declining for fifteen consecutive sessions. Agriculture – slight improvement in US winter wheat condition The latest data from Ukraine’s Agriculture Ministry shows that Ukraine exported around 15.1mt of grains so far in the 2022/23 season, a decline of almost 31% YoY. Total corn shipments stood at 8.1mt (+124% YoY), while wheat exports fell 56.5% YoY to 5.7mt as of 14 November. The latest crop progress report from the USDA shows that the condition of the US winter wheat crop has improved over the week. 32% of the winter wheat crop is rated good to excellent. This compares to 30% last week and 46% at the same stage last year. The poor condition of US winter wheat will raise concerns for US 2023/24 wheat supply. TagsWheat OPEC Oil Nickel IEA   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Crude Oil Prices Remain Uncertain | The Gold Only Slightly Higher

Craig Erlam Craig Erlam 15.11.2022 11:34
Oil treading water Oil prices are basically flat on Tuesday, sitting a little below the middle of their recent trading ranges as traders continue to weigh up the global economic outlook, OPEC+ production risks, and China’s Covid approach. Prices remain choppy and that’s likely to remain the case given the ongoing uncertainty around these key areas. Everyone became much more optimistic around the US after last week’s inflation report but that appears to have quickly faded. Enormous downside risks remain around the global economy next year even if the Fed does pause its tightening a little sooner and perhaps that reality is kicking in again. Gold rally stalls at key resistance level The great gold recovery has stalled, with the yellow metal only slightly higher on the day after dipping a little earlier in the session. That follows a similar pattern to Monday and could be viewed as a positive sign given the reluctance to allow the recent rally to retrace in any considerable way. It has been a very impressive recovery though, up around 10% from the lows earlier this month, so a corrective move wouldn’t come as a surprise. It’s seeing resistance around $1,780 at the moment, a level that was a major area of support earlier in the year and again in May before finally crumbling in early July. A move above here would be a significant technical breakout. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

The RBA Downgraded Its Outlook For The Property Market | Walmart Is Increasing Its FY Outlook

Saxo Bank Saxo Bank 16.11.2022 08:53
Summary:  Nasdaq 100 and S&P 500 ended higher, being lifted by softer-than-expected producer inflation. Walmart and Home Depot beat in earnings and topline. Chinese stocks surged on additional financial support to the property sector and a conciliatory tone from the Biden-Xi meeting. Hang Seng Index rose 4% to 18,343, more than 25% higher from its October low. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) gained on softer-than-expected US PPI Investors got a lift from the softer-than-expected PPI data which added to the post-CPI optimism that the US inflation may have peaked. S&P 500 gained 0.9% and NASDAQ 100 rose 1.5%. Stocks pared gains in the afternoon when the news of Russian missiles landing in Poland, a NATO member, hit the wires. Stocks nonetheless managed to recover from the missile news and finished the session higher.  Nine out of 11 S&P 500 sectors gained, with communication services, consumer discretionary, information technology and real estate led. On earnings, retail bellwether Walmart (WMT:xnys) surged 6.7% after reporting earnings and revenue beats and raising full-year outlook guidance. Home Depot (HD:xnys) gained 1.7% on earnings beating estimates and reaffirming full-year guidance. US  treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied on PPI prints, with the 10-year yield falling 8bps to 3.77% US treasuries rallied, with yields falling 5-9 basis points across the curve. The 10-year yield fell 8bps to 3.77%. The market surged in price after the growth in PPI, both in headlines and core measures, slowed more than expected. A stronger Empire State manufacturing index, returning to the expansionary territory and Fedspeak from Bostic, Barr, and Harker reiterating the slower pace but still additional work to do message, did not tame market sentiment. Adding to the fuel was some safe-haven buying of treasuries after Russian missiles hit Poland and killed two people. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) on fire as risk-on sentiment returned Hong Kong and China’s equity markets surged for the third day in a row, with Hang Seng Index soaring 4.1 % and CSI 300 climbing 1.9%, as optimism returned to the markets due to favourable policy shifts in China regarding pandemic control and property developers’ access to funding and goodwill gestures shown by China’s President Xi and the US’ President Biden at their first face-to-face meeting after President Biden took office. In addition, the Chinese authorities announced that they will allow developers, after meeting some requirements in their financials and supports from their banks, to tap into some of the presale deposits now placed in escrow accounts. China Internet stocks and semi-conductor names were among the top gainers. Commodities lift; Crude oil (CLZ2 & LCOF3) rose more than 1% after Russian rockets hit, iron ore (SCOA,SCOZ2) extended its gain and wheat whipped up 1% Crude oil (CLZ2 & LCOF3) rose more than 1% after the EIA published a report saying inventories in developed nations sunk to an 18-year low of less than 4 billion barrels. The EIA says a potential EU ban on Russian supply will add further pressure, and its output may drop below 10 million b/d next year, from about 10.7 million so far this year. For the next technical indicators and levels to watch in oil, click here. Moving to metals, the Iron ore (SCOA) price rose 1.7%, continuing its rebound and has now risen 25% this month on the back of fresh China stimulus, however the iron ore price is still down 13% from its high. The question is, if China continues to ease restrictions, will the iron ore price continue its rebound, and support affiliated iron ore equities. Meanwhile in crop markets, wheat trades higher on concerns there could be a potential escalation of the war. What to consider Fed collects more evidence inflation is easing; US producer prices cool more than expected, clocking smallest gain in a year Investors got another piece of evidence the inflationary pressures are easing, with US producer price growth rising 8% Y/Y in October (below the 8.3% Bloomberg consensus expected and down from the 8.5% Y/Y in September), with prices rising 0.2% M/M (which was less than the 0.4% expected). Excluding volatile food, energy, and trade services, the core PPI grew 6.7% Y/Y in October- while the market expected the growth remains unchanged from the September level of 7.2%. After peaking in March at 11.7%, producer price growth has moderated from improving supply chains, softer demand, and weakening commodities prices. This means, following the softer-than-expected CPI print last week, the Fed has garnered more catalysts to slow its pace of hikes, which also provides further support to the equity market and bond market rallies. However, the next important data sets the Fed will be watching are due early next month; US jobs, and November CPI, which are ahead of the Fed’s next meeting (in the third week of December). RBA meeting minutes signal food and energy prices to rise, and property prices to fall Australia’s central bank sees food price inflation rising, along with energy prices, while the Unemployment rate is expected to rise as well off its lows. The RBA downgraded its outlook for the property market, expecting property prices to continue to fall, as they have in history when the RBA is in a rising cycle. It also sees housing loan commitments further falling. Yet the RBA affirmed it will keep rising rates till inflation is within its targets as the central bank wants underlying inflation to be within 2-3%. The RBA also hinted it may be close to its target, "in underlying terms, inflation was a little over 6% with most components of the CPI rising at annualized rates of more than 3%”. What are the investor takeaways from the RBA minutes? It could be worth looking for potential opportunities in investing in Food stocks, food ETFs, and the as well as wheat and corn. Secondly, it could be worth looking for potential opportunities in energy, like crude oil, or oil stocks such as Woodside Energy and Occidental Petroleum to name a few. And with property prices falling, along with lending, keep an eye on bank shares. Consider looking at CommBank (CBA) as a proxy. Will CBA continue to rally off its low on the back of the RBA's dovish stance, or will CBA and big banks take a haircut as banks’ profits are shrinking? Walmart and Home Depot earnings beat estimates Peter Garnry, Head of Equity Strategy wrote in his notes that Walmart showed a positive surprise on its operating margin and an upward revision to the FY results and Home Depot is delivering a decent Q3 result,= as well.  Walmart, the largest US retailer reported FY23 Q3 (ending 31 October) revenue of $152.8bn up 9% y/y beating estimates and adj. EPS of $1.50 vs est. $1.32 while announcing a $20bn buyback programme. The third quarter result is so strong that Walmart is increasing its FY outlook on adj. EPS to -6% to -7% y/y from previously -9% to -11%. The 12-month trailing revenue figure eclipsed $600bn for the first time in its history. As we have seen throughout this Q3 earnings season, retailers and consumer industries have been able to either preserve or expand operating margins. Walmart is valued at a 12-month forward EV/EBITDA of 11.6x compared to 12x for the S&P 500 Index.  The largest US home improvement retailer Home Depot reports FY23 Q3 (ending 31 October) revenue of $38.9bn vs est. $37.9bn up 6% y/y and EPS of $4.24 vs est. $4.13 as the US consumer remains in good shape despite inflation and higher cost of living. Home Depot is confirming its fiscal year guidance. Tencent (00700) is scheduled to report earnings on Wednesday Tencent is scheduled to report Q3 results today. Bloomberg survey shows the street is expecting revenues to edge down around 1% Y/Y with both advertisements and gaming down Y/Y. On adjusted EPS, the consensus is calling for an 8% year-on-year decline. For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-16-nov-2022-16112022
Hungary's Budget Deficit Grows, Raising Concerns Over Fiscal Targets

Apple Shares Rose | As Trump Still Enjoys Personal Popularity

Saxo Bank Saxo Bank 16.11.2022 09:08
Summary:  Equity markets were in for a wild ride yesterday as the melt-up continued in early trading, only to violently reverse on an apparently errant missile killing two in a Polish town bordering Ukraine. The price action has since stabilized, with risk sentiment still strong in Asia on hopes for incoming stimulus from China. Important incoming US data up today includes the October Retail Sales data.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Big rejection in S&P 500 futures yesterday with the index futures coming off 1.3% from the intraday highs to close below the 4,000 level. Yesterday’s upside driver was a lower than estimated US PPI print and then later the downside move was triggered by news that a rumoured Russian missile had hit Polish territory killing two persons. This morning S&P 500 futures are attempting to push above the 4,000 level again, but we want to emphasize cautiousness here as geopolitical risks remain high and markets that seem fragile and trading on thin liquidity across many markets. Today’s key earnings event in the US is Nvidia reporting after the market close. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hong Kong and China stocks consolidated and took a pause on the strong rally since last Friday, with Hang Seng Index losing 1% and CSI 300 Index sliding 0.7%. Chinese property names retraced. Leading private enterprise developer Country Garden (02007:xhkg) plunged 14% following the placement of new shares. Chinese EV makers underperformed, with leading names dropping by 2% to 6%. New Covid cases in mainland China went above 20,000 for the first time since April. FX: USD volatile on risk sentiment swings yesterday The US dollar was pummelled yesterday as the risk sentiment melt-up initially continued yesterday in early trading in the US before a missile hitting a Polish town (more below) sharply reversed sentiment. The situation has since stabilized, but the reversal of the spike put a considerable dent in tactical USD downside momentum. GBPUSD traded the most wildly ahead of today’s CPI and tomorrow’s Autumn Budget Statement, squeezing from 1.1750 early yesterday to all the way north of 1.2000 briefly before trading back to 1.1800 and closing the day south of 1.1900. The USD volatility was less pronounced elsewhere, particularly against Asian currencies. The incoming US data and risk sentiment swings around that data (or as we saw yesterday from other sources) will likely drive the next USD move. Crude oil (CLZ2 & LCOF3) Crude oil ended lower on Tuesday following a volatile trading session that briefly saw prices spike on news a Polish border town had been hit by a Russian-made but probably Ukrainian fired missile (see below). Overall, the crude oil market remains rangebound with demand worries currently weighing a touch harder than supply concerns driven by OPEC+ production cuts and from next month, EU sanctions against Russian oil, a development that according to the IEA may drive a 15% reduction in Russian output early next year. In China the number of virus cases have surged to near 20,000 thereby testing local authorities' appetite for maintaining the covid-zero restrictions. Focus on EIA’s weekly stock report after the API reported a 5.8m barrel drop in crude and smaller increases in fuel stocks. Gold (XAUUSD) Gold touched resistance at $1788 on Tuesday as the dollar hit a fresh cycle low after US PPI showed the smallest increase since mid-2021. Later in the day, a brief safe haven bid quickly fizzled out after Biden said the rocket that hit Poland was unlikely to have been fired from Russia. Demand from ETF investors – net sellers for months – remain elusive with total holdings falling to a fresh 31-month low and with that in mind expect continued consolidation and potentially a recheck of support at $1735. Resistance at $1788, the 38.2% retracement of the 2022 correction and $1804, the 200-day moving average. US treasuries (TLT, IEF) US treasuries punched to new local lows yesterday, with the 10-year treasury benchmark dipping below 3.80% after a likely errant missile hit a Polish town bordering Ukraine and on slightly softer than expected PPI data. But yields have rebounded today and are back to slightly below the close from last Thursday after that day’s surprisingly soft October US CPI release. Key levels are 3.50% to the downside, the pivot high around the June FOMC meeting when the Fed hiked 75 basis points for the first time for this cycle, while 4.00-4.10% is perhaps the upside swing area. What is going on? UK October CPI was out at 11.1% YoY, a new cycle high This was vs. 10.7% expected and 10.1% in September. Core CPI matched the cycle high from September at 6.5% YoY, versus 6.4% expected. Sterling trades a bit weaker after the initial reaction to the data point, as higher inflation will likely require more fiscal and monetary tightening that will make the coming UK recession deeper, a sterling negative. Missile comes down in Poland town bordering Ukraine, killing two The source of the missiles is a mystery, with US President Biden saying after an emergency meeting with other leaders that the missile was “unlikely” to have been launched in Russia, while Poland claimed that the missile was “Russian made” and convened an emergency security meeting yesterday afternoon. Markets reacted strongly to the development initially, as Poland is a member of NATO. Russian officials said that claims of an intentional missile firing are a “deliberate provocation with the goal of escalating the situation.” Donald Trump declares third bid for the White House in 2024 Trump was widely seen as the chief liability in a very poor Republican showing in the mid-term elections last week, with candidates strongly denying the results of the 2020 election losing badly in almost every case. The Democrats are set to gain a slightly larger majority in the Senate and the Republicans will only eke out the narrowest of majorities in the House of Representatives. As Trump still enjoys an unmatched “base” of personal popularity, it will be difficult for any Republican profile to rise up to challenge Trump, just as it is likely impossible that Trump can win independent voters and those that are not his base. It’s ideal ground for the formation of a new party. Apple set to shift to US-based chip production Apple shares rose over 2.1%, moving to their highest level since early November after the Apple CEO unveiled the company will be using US-made Chips from Arizona in 2024, as part of reducing its reliance on Asian chip manufacturers and shifting to producing its own. CEO Tim Cook also told staff Apple plans to expand its chip supply into European markets. The moves underscore the necessity for technology companies to reshoring semiconductors from Asia to reduce supply chain risks. These types of moves will add to inflationary pressures in the future. US earnings recap: Walmart, Home Depot, and Sea Ltd Yesterday’s earnings releases from these three consumer retailing companies were all better than expected with Walmart lifting guidance and beating on revenue growth. Home Depot had the most downbeat reaction from investors as the home improvement retailer’s revenue growth beat was only due to inflation and not higher volume. The biggest positive reaction was in Sea Ltd shares as the Southeast Asia gaming and e-commerce company posted a narrower operating loss and beat on revenue growth; however, the company took down guidance in its gaming division. Read more details in our earnings review note from yesterday. US producer prices cool more than expected, clocking smallest gain in a year Investors got another piece of evidence inflationary pressures are easing, with US producer price growth rising 8% Y/Y in October (below the 8.3% Bloomberg consensus expected and down from the 8.5% Y/Y in September). Excluding volatile food, energy, core PPI rose 6.7% Y/Y in October- when the market prices to rise 7.2%. After peaking in March at 11.7%, producer price growth has moderated from improving supply chains, softer demand, and weakening commodities prices. The Fed has therefore garnered more catalysts to slow its pace of hikes, which also provides further support to the equity market and bond markets. However, the next important data sets the Fed will be watching are due early next month; US jobs, and November CPI, which are ahead of the Fed’s next meeting (in the third week of December). Arabica coffee (KCc1) dropped 4.4% on Tuesday … thereby extending a rout that has seen the price retrace almost 61.8% of the 2019 to 2022 surge to a multi-year high above $2.50 per pound. Fast forward nine months and the global economic slowdown has led to a reduction in away-from-home consumption at a time where the production outlook from South America has improved. Stocks at ICE monitored warehouses have risen for the past seven days from a 20-year low and could more than double soon with more than half a million bags awaiting assessment. A new LNG exporter is born Mozambique is now officially a new LNG exporter after the first shipment on Monday left the Coral South floating liquefaction unit, which has a 4.4 bcm annual export capacity. This is positive news for Europe who is desperately looking for new energy suppliers since the Ukraine war has started. It was a long-decade process for Mozambique to get its first LNG supply out of the country. Based on official estimates, this is one of the largest LNG offshore fields in Africa. What are we watching next? Fed hawk Christopher Waller to speak on Economic Outlook tonight Waller is an FOMC voter as he sits on the Board of Governors and is widely considered one of the most hawkish Fed members and may unleash a blast of hawkish rhetoric, although it seems the market is more likely to listen only to Fed Chair Powell himself and more importantly, at incoming data. US October Retail Sales data today An interesting data release is up today, the US Retail Sales for October. This data series suggests rather sluggish US growth and is reported in nominal month-on-month terms, not real- or inflation-adjusted terms. The last three months of the headline data have averaged almost exactly 0.0%, while the “ex Food and Energy” series has averaged +0.36%. Today’s headline number is expected at +1.0% MoM and +0.2% for core sales. Earnings to watch Today’s US earnings focus is Nvidia which is expected to deliver a 18% decline in revenue y/y to $5.8bn and EPS of $0.70 down 31% y/y as the market for GPUs is cooling down as crypto mining is becoming less profitable from lower prices on cryptocurrencies. Tencent is expected to report earnings today following a new round of layoffs announced yesterday as revenue growth is expected to be down 1% y/y in Q3. Today: Siemens Energy, Tencent, Experian, SSE, Nibe Industrier, Nvidia, Cisco, Lowe’s, TJX, Target Thursday: Siemens, Alibaba, Applied Materials, Palo Alto Networks, NetEase Friday: JD.com Economic calendar highlights for today (times GMT) 0900 – ECB Financial Stability Review 1300 – Poland Oct. CPI 1315 – Canada Oct. Housing Starts 1330 – US Oct. Retail Sales 1330 – Canada Oct. CPI 1330 – US Oct. Import & Export Prices 1415 – US Oct. Industrial Production 1450 – US Fed’s Williams (Voter) to speak 1500 – US Nov. NAHB Housing Market Index 1500 – US Fed’s Barr (Voter) to testify before House Panel 1530 – EIA's Weekly Crude and Fuel Stock Report 1935 – US Fed’s Waller (Voter) to speak 0030 – Australia Oct. Employment Change / Unemployment Rate Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source:https://www.home.saxo/content/articles/macro/market-quick-take-nov-16-2022-16112022
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

Australian Employment Rose | Microsoft Will Use Nvidia's Graphics Chips

Saxo Bank Saxo Bank 17.11.2022 08:47
Summary:  The hotter-than-expected US retail sales data and hawkish-leaning comments from Fed officials weighed on equities but boosted buying of long-dated bonds as investors focused on the likelihood of Fed overdoing in monetary tightening and triggering a recession. Target disappointed with Q3 miss and weak Q4 sales guidance, highlighting the pain of the US retailers and consumers. Nvidia's results beat expectations, moving its shares up after hours. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated on strong retail sales and hawkish Fedspeak The Good news is bad news phenomenon persists. The hotter-than-expected 1.3% rise in October retail sales, followed by several hawkish-leaning comments from Fed officials triggered concerns that the Fed would overdo monetary tightening and bring about a recession. The fall in yields at the long end of the US treasury curve did not lend support to the equity market as in recent months as stock investors took it as a sign of bond market pricing in a higher recession risk. Nasdaq 100 fell 1.5% and S&P500 declined 0.8%, with 68% of S&P 500 companies and 9 out of 11 sectors closing lower. Energy, consumer discretionary, and information technology led the benchmark index lower while the defensive utilities sector and consumer staples sector managed to finish the session with modest gains. Target (TGT:xnys) fell 13% following the retailer reported a large miss on earnings and cut its outlook for the current quarter far below analyst estimates. Lowe’s (LOW:xnys) gained 3% after reporting better-than-expected comparable sales and raising full-year earnings guidance. Micron (MU:xnas) dropped 6.7% as the chipmaker said it was cutting DRAM and NAND wafer production. After the market closed, Nvdia (NVDA:xnas) and Cisco (CSCO:xnas) reported earnings beating analyst estimates. Nvida rose 1.3% and Cisco gained 3.9% in the extended hours trading. US  treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied with yields in the long end of the curve falling most on recession concerns The US treasury yield curve bull flattened, with the 2-year yield edging up 2bps to 4.35% while the 10-year yield fell 8bps to 3.69%. The much-watched yield curve inversion between the 2-year and the 10-year widened to 67bps, the most invested since February 1982, and heightened the growth scare among investors. The market has largely priced in a 50bps hike in December but is unwinding some of the post-CPI optimism that the Fed may do less next year, after Fed’s George, Daly, Waller, and Williams pushed back on the notion of pausing. The strong results from the 20-year bond auction on Wednesday helped supported the outperformance of the long ends.  Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) on fire as risk-on sentiment returned Hong Kong and China stocks consolidated and took a pause on the strong rally since last Friday, with Hang Seng Index losing 0.5% and CSI 300 Index sliding 0.8%. Chinese property names retreated, following new home prices in the 70 major cities of China falling 1.6% Y/Y in October, the largest decline in seven years, and Agile (03383) announced that the developer will sell new shares at an 18% discount. Agile tumbled 23%. Country Garden (02007:xhkg), which also announced share placement earlier, plunged 15%. Investors also became increasing concerned about the rising trend in new Covid cases in mainland China, which having gone above 20,000 for the first time since April. In New York hours, the ADRs of Tencent (00700:xhks) rose 3.4% versus their Hong Kong closing level after reporting earnings beating estimates while Meituan (03690:xhkg) dropped 6.7% from Hong Kong closing as Tencent said it would disburse its stake on Meituan to shareholders. What to consider U.S. Retails hotter-than expected U.S. headline retail sales grew by 1.3% M/M in October (consensus:  +1%, Sep: 0%). The control-group retail sales increased by 0.7% M/M (consensus: +0.3%, Sep: +0.4%). U.K. headline CPI jumped to 11.1% in October, the highest in 41 years U.K’s October headline CPI came in at 11.1% Y/Y (vs consensus 10.7%), the highest in 41 years. Core CPI remained at 6.5%. Australia’s unemployment falls, employment rises more than expected in October, following Australian wage growth growing more than expected; AUDUSD trades flat Australia’s jobless rate fell to 3.4%, from 3.5% last month, which supports the RBA continuing to rise rates, and not pause on rate hikes at their next meeting in December. Australian employment rose by 32,200 month-on-month in October, almost double the 15,000 jobs expected to be added to the economy. Job growth is also up markedly from the tiny 900 jobs that were added the month prior. The AUDUSD is staying range bound for now. Target reported Q3 earnings miss and full-year guidance reduction Target’s Q3 adjusted EPS fell to USD1.54, nearly 30% below the median of analyst estimates. The retailer is predicting a drop in comparable sales for the first time in five years and estimating operating margins will shrink to about 3%, which is half of its previous forecast. Target is looking to axe $3 billion in costs, but says there will be no mass layoffs. This highlights the pain of the US retailers and also the consumer – who is reluctant to spend on non-essential items in the face of rising interest rates and inflation. Nvidia earnings beat Software graphics giant Nvidia (NVDA) reported revenue for the third quarter that beat analyst estimates. Revenue fell 17% y/y to $5.93 billion, beating the expected drop of 18% y/y to $5.84 billion. NVIDIA’s outlook for the fourth quarter was a bit vague though, but more or less points to improvements in revenue, citing revenue is expected to hit $6.00 billion, plus or minus 2%. Nvidia said Microsoft will use its graphics chips, networking products, and software in Microsoft’s new AI products. Nickel Miners could be under fire Profit taking in oil equites is likely with the after the oil price fell on reports the Druzhba pipeline carrying Russian oil to Europe had restarted, WTI Crude Oil fell 1.9%. Elsewhere, Nickel miners shares could be under fire today move after Nickel futures fell 9% on Wednesday. LME is said to be stepping up surveillance of sharp swings earlier in the week on supply fears. Keep an eye on Australia’s Nickel Mines (NIC) and IGO, Japan’s Pacific Metals, Sumitomo Metal Mining, and Indonesia’s Vale Indonesia, Aneka Tambang. For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-17-nov-2022-17112022
Share of Russian metal grows in LME warehouses

Copper And Silver Both Extended Their Declines | The USD Edged Higher

Saxo Bank Saxo Bank 17.11.2022 10:17
Summary:  The strong equity market rally eased yesterday as a very strong US Retail Sales report for October pushes back against the notion that the US economy is rapidly weakening. Today features a pivotal Autumn Budget Statement that will allow the market to make a vote of confidence on sterling on whether the new spending cuts and tax rises will inspire further confidence in sterling after its recent comeback.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures fell yesterday to close at 3,968 as investors are not following through on the momentum around the ‘peak rates’ narrative. This morning the index futures are trading higher with the 3,964 level being the key level to watch on the downside and 4,000 on the upside. Today’s macro events that can impact the equity market are US housing starts and permits, Philly Fed Business Outlook and initial jobless claims with the latter in focus given the latest mass layoffs in the technology sector. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hong Kong and China stocks retreated for the second day in a row, with Hang Seng Index falling around 2% and CSI 300 declining 1%. Tencent (00700:xhkg) fluctuated between small gains and losses after reporting Q3 EPS beating analyst estimates but a 2% Y/Y decline in revenues, being dragged down by online gaming and advertisement. Meituan (03690:xhkg) however fell nearly 8%, following Tencent’s announcement to disburse its 17% stake in Meituan to shareholders. NetEase (0999:xhkg) tumbled 12% after US gaming company Blizzard Entertainment (ATVI:xnas) would not renew its expiring licensing agreement with NetEase. Also weighing on sentiment was the People’s Bank of China’s emphasizes on financial stability and warns against potential inflation risks in the central bank’s Q3 monetary report, as well as news reports about the temporary suspension of redemption in some investment products suffering losses from the recent rise in Chinese bond yields. In addition, new Covid cases surged to 23,132, a new high since April. FX: GBP focus today as USD stabilizes on very strong October US Retail Sales report Strong US data is at odds with the recent drumbeat of softer inflation numbers that have helped inspired the recent steep sell-off in the US dollar, and kept the 2-year yields and Fed rate expectations from falling any further yesterday, even if longer US yields dipped to new local lows yesterday. The USD edged higher, with the recent lows the key support for the greenback and with the currency trading more in line with risk sentiment now. The top-tier incoming data won’t arrive until the early-mid December time frame, save perhaps for the PCE data on November 30. The bigger focus today is on GBP as Chancellor Jeremy Hunt is set to deliver the Autumn Budget Statement and a chance for thje market to judge whether the UK is an attractive place to invest in addition to whether the moves ill stabilize the country’s finances as it also risks worsening the depth of the coming recession. 1.2000 appears a key in GBPUSD, while EURGBP is choppy in the 0.8700-0.8800+ range. Crude oil (CLZ2 & LCOF3) Crude oil remains on the defensive trading near the lowest levels this month on continued concerns about the demand outlook in the world’s two largest consumers. The US yield curve has inverted the most since the early 1980’s underscoring concerns about the risk of recession next year while China continues to battle with rising covid cases, now nearing the all-time high seen earlier this year. Both developments leading to demand growth for next year being downgraded, thereby offsetting some of the tightness the EU embargo on Russian oil will help create into early 2023. WTI will be looking for support ahead of the recent low at $82 with Brent focusing on the $90-area. Gold (XAUUSD) Gold trades lower as the market pauses for breath following a 170-dollar run up in prices from the November 3 low. The metal is currently dealing with mixed signals as elevated recession worries, highlighted by the most inverted yield curve in almost four decades, are being offset by the biggest increase in US retail sales in eight months, indicating Fed tightening has further to run to bring inflation under control. Demand from ETF investors – net sellers for months – picked up a bit on Wednesday, but not enough to signal a change in their behaviour, and with that in mind expect continued consolidation and potentially a recheck of support at $1735. Resistance at $1788, the 38.2% retracement of the 2022 correction and $1804, the 200-day moving average. Copper (HGH3) and silver (XAGUSD) Copper and silver both extended their declines following a recent strong run up in prices. Copper ran out of steam ahead of major resistance in the $4/lb area and after breaking back below $3.78 the next line of support now comes in at $3.68. Industrial metal traders are keeping a watchful eye on covid developments in China, the US yield curve signalling an increased risk of a recession next year, extreme volatility in nickel market and in copper specifically, an emerging contango indicating a market with ample supply.  currently. Silver meanwhile trades back below its 200-day moving average with the first level of support in the $20.95 area. US treasuries (TLT, IEF) US treasuries punched to new local lows again yesterday, supported by a strong 20-year auction result, and despite the strong US Retail Sales news, with the 10-year treasury benchmark dipping below 3.70% and within 20 basis points of the next psychologically important level and pivot high from mid-June near 3.50%, a level that was quickly reached in the context of the market realizing that the FOMC was set for its first 75 basis point rate hike since 1994. The much-watched yield curve inversion between the 2-year and the 10-year widened to 67bps, the most invested since February 1982, and heightened the growth scare among investors. The market has largely priced in a 50bps hike in December and is unwinding some of the post-CPI optimism that the Fed might do less next year, after Fed’s George, Daly, Waller, and Williams pushed back on the notion of pausing. What is going on? Strong October US Retail Sales, weak November housing Market survey After a string of weak reports, the US October Retail Sales report came in far stronger than expected, with a strong +1.3 % MoM rise (vs. +1.0% expected) for the headline and an even more impressive +0.9% MoM rise in the “ex Food and Energy” print, on top of a +0.3% revision to the September data point. Elsewhere, we can see the massive shift higher in US mortgage rates continue to weigh on housing activity, as the November US NAHB Housing Market Index plunged 5 more points to 33, the lowest reading since the very worst month of the pandemic outbreak shock in 2020 and before that since 2012. Siemens Q4 results beat estimates The German industrial giant reports FY22 Q4 (ending 30 September) revenue of €20.6bn vs est. €19.3bn and orders of €21.8bn vs est. €20.4bn. In addition, the company says that it sees higher operating margins in three divisions and that downside risks from Russia are minimal now. Target reports earnings miss and downgrades sales guidance Target’s Q3 adjusted EPS fell to $1.54, nearly 30% below the median of analyst estimates. The retailer is predicting a drop in comparable sales for the first time in five years and estimating operating margins will shrink to about 3%, which is half of its previous forecast. This indicates that the substitution effect is increasing as the consumer is increasingly under more pressure. Target is looking to reduce $3bn in costs but says there will be no mass layoffs. Nvidia earnings beat Software graphics giant Nvidia (NVDA) reported revenue for the third quarter that beat analyst estimates. Revenue fell 17% y/y to $5.9bn, beating the expected drop of 18% y/y to $5.8bn. NVIDIA’s outlook for the fourth quarter was vague citing revenue is expected to hit $6.0bn, plus or minus 2%, which will translate into a 20% drop in revenue in the important holiday quarter. Nvidia also said Microsoft will use its graphics chips, networking products, and software in Microsoft’s new AI products. The slowdown in demand for GPUs is driven by less profitable crypto mining and as a result GPU pricing is plummeting and inventories on the balance sheet rising to $4.45bn up from $2.23bn a year ago. EPS was $0.28 down 73% y/y. Australia’s unemployment falls, employment rises more than expected in October Australia’s jobless rate unexpectedly fell to 3.4%, from 3.5% last month, which now supports the RBA continuing to raise rates, and not pause on hikes at their next meeting in December (market priced at 50-50 odds of a 25-bp hike). Australian employment rose by 32,200 month-on-month in October, almost double the 15,000 jobs expected to be added to the economy. The AUDUSD is staying range bound for now after its recent sharp rally, consolidating a bit on weak risk sentiment in Asia overnight. The RBA has said it expects the jobless rate to rise. US Fed’s Waller, noted Fed hawk, says he is “more comfortable” with smaller hike It appears that Fed consensus is settling on lowering the pace of rate increases at the December FOMC meeting after one of the more hawkish FOMC voters, Governor Christopher Waller said he is “more comfortable” with a smaller hike in December after the Fed’s four 75-basis points moves since the June FOMC meeting, although he still declared the move is data-dependent. What are we watching next? UK Autumn Budget Statement to be announced today Ahead of the speech, the UK’s Office for Budget Responsibility told the treasury that by 2026-27, the budget deficit could grow to £100 billion from earlier projections of £32 billion. Several moves by Chancellor Jeremy Hunt have already been made to reverse the original budget laid out by former Chancellor Kwarteng under PM Truss’ leadership, including a shortening of the energy bill cap scheme to just six months. Corporate taxes are also set to be raised to 25 percent from 19 percent, and windfall taxes on electricity and oil and gas firms, together with more income earners set to pay tax at the top 45% rate and taxes on capitali gains and dividends set to rise. Still, the pension benefit will be set to rise at September’s 10.1% CPI rate in April of next year. Critics might suggest that much of the tax implementation will be “back-loaded” to beyond the 2024 election to avoid a further hit to Tory popularity. This statement will be critical for the direction of sterling from here. Earnings to watch In today’s US earnings focus we expect Applied Materials to report revenue growth of 4% y/y and lower operating margin from a year ago following the signs we observe in the semiconductors industry. In the cyber security industry, Palo Alto Networks is also reporting today with revenue growth expected to 24% y/y and EBITDA of $349mn up from $-8.8mn a year ago. The Chinese technology and consumer sectors have faced a lot of headwinds over the past year and Tencent’s result yesterday was not rosy either, so there might be a downside risk to Alibaba’s result today. Analysts expect Alibaba to report revenue growth of 4% y/y and EPS of CNY 11.21 up 65% y/y. Today: Siemens, Alibaba, Applied Materials, Palo Alto Networks, NetEase Friday: JD.com Economic calendar highlights for today (times GMT) 0955 – UK Chancellor Jeremy Hunt presents Autumn Budget Statement 1000 – Eurozone Oct. Final CPI 1230 – UK Bank of England Chief Economist Pill to speak 1300 – US Fed’s Bullard (voter 2022) to speak 1330 – US Oct. Housing Starts and Building Permits 1330 – US Oct. Philadelphia Fed 1330 – US Weekly Initial Jobless Claims 1440 – US Fed’s Mester (Voter 2022) to speak 1530 – EIA's Weekly Natural Gas Storage Change  1540 – US Fed’s Jefferson and Kashkari (voter 2023) to speak 1600 – US Nov. Kansas City Fed Manufacturing Activity 1845 – US Fed’s Kashkari (voter 2023) to speak 2330 – Japan Oct. National CPI 0001 – UK Nov. GfK Consumer Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-17-2022-17112022
Saxo Bank Podcast: Nvidia And Siemens Earnings, The Budget Statement From UK And More

Saxo Bank Podcast: Nvidia And Siemens Earnings, The Budget Statement From UK And More

Saxo Bank Saxo Bank 17.11.2022 11:01
Summary:  Today we look at risk sentiment taking a breather after a particularly strong US October US Retail Sales report, although long US treasury yields fell on the day and took the yield curve inversion to its most negative in over forty years as markets continue to price a recession ahead. The key incoming data doesn't start rolling in for another couple of weeks, so we wonder if a possible shift in weather into proper winter mode could change the complacent stance in energy markets. Elsewhere, we wonder if the Budget Statement from UK Chancellor Hunt can continue to support sterling, look at the plunge in coffee prices, Nvidia and Siemens earnings, and more. Today's pod features Peter Garnry on equities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-17-2022-17112022
The USD/CAD Pair Has The Strong Downside Momentum

Pound sterling gains on the back of soaring UK inflation rate which teases next BoE rate hikes

Jing Ren Jing Ren 17.11.2022 08:26
GBPUSD keeps high ground Sterling rallies as red hot inflation in the UK calls for more interest rate hikes by the BoE. A break above September’s high of 1.1740 has prompted some bears to cover their positions, easing the downward pressure from the daily chart’s perspective. A brief pause above this resistance-turned-support suggests that there is still juice in the recovery. August’s double top at 1.2250 would be next should the rebound pick up speed past 1.2000. 1.1500 near the origin of a bullish breakout is a key demand zone. USDCAD attempts to rebound The Canadian dollar slid as October’s inflation fell short of expectations. A dip below 1.3240 indicates a lack of demand for the US counterpart. The greenback may continue to lose ground as traders stay on the sidelines for fear of catching a falling knife. 1.3150 is the immediate level to see whether it could trigger a buy-the-dips behaviour. Failing that, the psychological level of 1.3000 would be on the line. For those looking to buy, 1.3440 is the first hurdle to clear and the pair may only regain a foothold once above 1.3640. USOIL falls lower WTI crude remains feeble amid rising COVID-19 cases in China. The price is in a horizontal consolidation between 82.00 and 93.50, but the downward pressure is still omnipresent following a double top at the upper band. Two consecutive falls below 88.00 and 85.00 have put the bulls on the defensive. As the latest rebound stalled at the psychological level of 90.00, the commodity could be vulnerable to a new round of sell-off. A drop below 82.00 might attract momentum sellers and push the price towards 77.00.
WTI and Brent Crude Oil Corrections Show Signs of Reversal, Potential Path to $100/brl

Jason Sen (DayTradeIdeas) talks crude oil, silver and gold - November 17th

Jason Sen Jason Sen 17.11.2022 09:00
Silver we do have a sell signal after a new high & significantly lower close yesterday. I am watching for a small head & shoulders pattern to form on the short term charts for confirmation. WTI Crude December remains in a volatile sideways trend. Impossible to read day to day as we are up one day, down the next day. Update daily by 05:00 GMT. Today's Analysis. Gold could be on the turn after a very fast $170 rally in just 2 weeks as we test important Fibonacci & 2 year trend line resistance at 1785/90. No sell signal yet but I feel we are due for a correction to the downside. A break below 1768 today should be confirmation of a move towards 1755 & support at 1750/45 for profit taking on shorts. Strong Fibonacci resistance at 1785/90 then further important 500 & 200 day moving average resistance at 1800/05. I think Gold will reverse from one of these 2 areas. A sustained break above 1810 is a buy signal. Silver holding above the 200 day moving average at 2155/35 was a buy signal targeting 2220/30 which was hit yesterday with a high for the day exactly here. However prices collapsed back to the 200 day moving average at 2150/40. We can trade this 80 tick range while we wait for the next signal. Yesterday I warned that a bounce today which holds 2200/2210 (a high for the day exactly here yesterday) & then breaks below the neck line at 2140/30 is a sell signal. So sell a break below 2130 today targeting 2115/10 & 2085/80, perhaps as far as strong support at 2050/40.
US and European Equity Futures Mixed Amid Economic Concerns and Yield Surge

COP27: Russia’s Invasion Of Ukraine Has Led Countries To Ensure Short-Term Energy Security

ING Economics ING Economics 17.11.2022 14:32
The key theme for COP27 has been to follow through on commitments made at COP26. The climate conference so far has shown some but not enough progress in implementation. While talks are slowly advancing on loss and damage funding and carbon offset markets, we expect more to be done in the remaining days of COP27 In this article Slow progress in addressing loss and damage Complications of developing a more mature carbon market Few new targets and climate plans revealed Will there be an agreement to phase down all fossil fuels? Corporate sustainability commitments grabbing more attention Conclusion and what to expect from the final days of COP27 Climate change forecasts have been more alarming than ever. Just days before COP27, the United Nations annual climate conference, a report released by the UN Environmental Programme projected that current nationally determined contributions (NDCs, or country pledges that cover agreed policies) will likely result in a 2.4 to 2.6-degree Celsius increase in global temperature by 2100, well above the Paris Agreement’s 1.5-degree Celsius goal. This gloomy outlook emphasises the urgency for governments to act and collaborate. Deemed an 'implementation COP', COP27 has largely been focusing on how governments are going to honour their commitments, and how they can work together to address climate challenges at the global level. While COP27 is still a few days away from its conclusion, here’s what the conference has achieved so far. Four key things to watch out for at COP27 Good COP, Bad COP: Separating heat from light at the climate summit Slow progress in addressing loss and damage The issue of loss and damage – which refers to how developing countries are suffering disproportionally from climate change while having contributed little to it – has been taking centre stage at COP27 as it appears officially for the first time on the agenda. Developed countries previously agreed to provide $100bn per year by 2020 to help developing countries mitigate climate change but have been falling short of that target (developed countries collectively only financed $83.3bn in 2020). Climate finance provided and mobilised by developed countries OECD   This year at COP27, developed countries such as the US and the UK have announced plans to increase their climate funding to developing countries, but these announcements are likely not going to be enough to reach the $100bn per year target. Moreover, while the UK, for example, pledged to triple climate funding, the money is expected to come from the $13.65mn that the country had already committed to paying, with no extra funding planned. So far, negotiations on the topic have been hindered by disagreements between developing and developed countries. On Monday, the UN published a draft proposing to either launch a two-year process to establish a funding mechanism to compensate for loss and damage or to delay the decision on what the UN’s role would be until 2023. Developing countries including China, however, have requested a loss and damage fund be established at COP27. The geopolitical situation is not helpful either. Although the US and China have resumed bilateral climate talks, which is expected to boost COP27 negotiations in general, the two countries are divided on climate financing. While China is among the group of developing countries requesting funding, the US has expressed concern about putting money in a fund as this could pose a liability to donors in the event that funds turn out to be insufficient. And there are reasons to believe it will, as experts claim that $100bn per year is far from sufficient in the long-term to help developing countries mitigate climate change consequences. A recent UN-backed report shows that roughly $2tn per year of investment will be needed by developing countries by 2030 to fight climate change, and half of it will have to come from external financing. The $100bn per year of funding target from developed countries is therefore only a start; a coordinated mechanism will need to be in place for global climate financing to work. In addition to direct climate aid, the UN’s proposed draft notes that arrangements for funding for loss and damage can also include debt relief, reform of international financial institutions, and humanitarian assistance, among others. These measures can effectively improve the climate financing system and are relatively easier for developed countries to get on board with. Indeed, the IMF and the World Bank have announced at COP27 that countries affected by extreme weather disasters will be able to defer their debt repayments for a maximum of two years. Complications of developing a more mature carbon market Although not as popular as loss and damage, Article 6 is an important discussion point at COP27. Article 6, which was finally agreed upon at the COP26 Glasgow summit, addresses the functioning of international carbon markets and carbon trading and discusses how countries can collaborate across borders to meet their climate goals. Yet several issues remain outstanding for COP27. First, despite the agreed-upon principles regarding additionality and performance to enhance the credibility of carbon credits, detailed rules are needed for the carbon market to function. Second, countries still need to decide whether they can modify their authorisations for carbon credits and how to deal with unauthorised credits. Third, while avoided emissions currently do not qualify under Article 6, it will be up to negotiators to decide whether they will qualify in the future. Discussions on Article 6 have been advancing slowly at COP27, partly because the loss and damage topic is dominating delegates’ attention, and partly because of the complexity of designing an effective global carbon market. Yet we could still expect final decisions to be made on the matter, as Article 6 is not as controversial as some of the other issues at COP27.   We could still expect final decisions to be made on Article 6. Separately, the US has proposed setting up a carbon offset programme – called the Energy Transition Accelerator (ETA) – which would allow private companies to buy a newly created class of carbon credits from projects in developing countries to help cut emissions and accelerate the transition from fossil fuels to renewable energy. Such a programme could transfer large amounts of money from the private sector to developing countries and help with climate financing, but the proposal has encountered resistance. First, without careful design and successful implementation, the programme is not guaranteed to lead to substantial cuts in emissions. For instance, if a renewable project is planned to be built in a developing country anyway, without replacing fossil fuels, the project would not replace emissions but would nevertheless allow credit purchasers to emit more. Additionally, with the current $2bn carbon offset market remaining unregulated, the ETA would likely face challenges on the regulation front as well. The ETA will likely not be included in COP27’s final text, but will likely start to be implemented anyway, led by the US. From a global perspective, there are good reasons to go for one carbon offsetting market, rather than different systems. So it will be curious to see how this plays out. Few new targets and climate plans revealed Another topic being watched at COP27 is whether and how countries will revisit and strengthen their 2030 climate targets to be aligned with the 1.5-degree Celsius Paris Agreement goal. We were not expecting an overflow of government announcements at COP27 amid the global energy crisis and fears of economic recessions. Indeed, only 28 countries have submitted an updated NDC so far. Further efforts are needed to push countries to roll out concrete plans to back their climate targets. Of these countries, India stands out. The world’s third largest emitter is now committed to reducing carbon intensity by 45% below 2005 levels by 2030, up from 33%-35% before. India has also submitted during COP27 its Long-Term Low-Carbon Development Strategy (LTS), which includes plans that range from increasing renewable deployment to electrifying the transport sector to enhancing climate resiliency. However, the submitted LTS appears to be insufficient without specific pathways to achieving its 2030 and 2070 targets. Notably, the document states that India will need coal in the long run. India is proposing to rationalise the use of fossil fuels and close inefficient thermal power. Yet it suggests that although the share of coal-fired power generation will decrease, it will be a gradual process (also discussed later). This is evidence that further efforts are needed to push countries to roll out concrete plans to back their climate targets. Will there be an agreement to phase down all fossil fuels? While Russia’s invasion of Ukraine has led countries to ensure short-term energy security by switching to more coal consumption, it has also prompted them to make more efforts to switch to renewable energy. As such, the International Energy Agency’s (IEA’s) most recent World Energy Outlook suggests for the first time under its Stated Energy Policy Scenario that demand for fossil fuels will see a definitive plateau this decade. Global fossil fuel demand under different scenarios International Energy Agency, ING Research   However, the plateau of fossil fuel demand is not enough. The IEA’s Net Zero Scenario requires a deep decline in fossil fuel consumption, with the demand for coal needing to fall by 90% (unabated coal demand to fall by 98%), oil by 75%, and gas by 55% by 2050. At COP26, almost 200 countries pledged for the first time to phase down the use of unabated coal and end inefficient subsidies on fossil fuels, although these 200 countries notably did not include China and India. At COP27, China expressed that it would need to continue relying on coal production to ensure grid stability; India also stated in its LTS that it needs coal to “guard against a lack of adequate and reliable energy.” Since it remains uncertain how much of the coal production in China and India will be abated, the continuing reluctance of the world’s two largest coal consumers to substantially phase down coal means limited effects of the global coal pledge reached at COP26. India, on the other hand, is pushing to include in the final text of COP27 a phase-down of all kinds of fossil fuels. The EU has stated its support for India’s proposal, but only if this does not weaken any of the commitments already made on coal. But we would expect oil-producing countries – and poor countries in regions such as Africa – to oppose this proposal, which makes the chances of it being included in the final decision uncertain. While it is still subject to change, a first draft of the overarching COP27 decision reportedly did not include phasing down fossil fuels. Corporate sustainability commitments grabbing more attention With a flurry of announcements from corporates to reach net-zero emissions, there is a growing concern about companies making pledges without releasing concrete action plans. During COP27, an UN-backed organisation published a report recommending how corporates can avoid greenwashing based on inaction and inaccurate claims. These recommendations include coupling long-term pledges with short-term science-based targets, addressing Scope 3 emissions, prioritising deep emissions reduction over purchasing carbon credits, increasing climate action transparency and accountability, as well as transitioning from fossil fuels to renewables. The report affirms the mounting trend that companies will increasingly be held accountable – by investors, regulators, and now international organisations – for not only their pledges but also their strategies and actions. Conclusion and what to expect from the final days of COP27 Although discussions have been advancing slowly, which is not completely abnormal at COP conferences, we could still see important agreements made by parties this Friday toward the very end of COP27. On financing for loss and damage, we would expect some final decision to be made, as this is the single most important topic of COP27. The optimistic case is that countries agree to establish a fund and an official entity to manage and oversee funding flows; the less optimistic case is that countries leave the decision to COP28. The longer countries delay climate action, the deeper and faster we will need to cut emissions to reach net-zero emissions by 2050. And while we think that agreements on the details of Article 6 could be reached, we are less confident that countries will, on a large scale, agree to phase down all kinds of fossil fuels, given the global energy crisis. Understandably, most of the above-mentioned issues are complex in nature, and it is hard to get every country on board. But we must keep in mind that the longer countries delay climate action, the deeper and faster we will need to cut emissions to reach net-zero emissions by 2050. Compromises and timely collaboration have become critical to keeping global warming under control.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Craig Erlam Craig Erlam 17.11.2022 18:19
Oil slips amid easing geopolitical risk and China woes Oil prices are slipping as we move through the week, with easing geopolitical risk and Chinese demand weighing. Prices spiked earlier in the week after missiles landed in Poland, risking a dramatic escalation in the war in Ukraine. Thankfully, those fears have abated and the situation de-escalated, which has seen oil gains unwound. Read next: Many sued in FTX scandal, Elon Musk to reduce his time at Twitter, EU stocks edged higher on Thursday| FXMAG.COM China remains a downside risk for oil in the near term, despite its recent relaxation of certain Covid curbs. A surge in cases in major cities, mass testing, and restrictions will hit economic activity despite recent measures which will weigh on demand in the world’s second-largest economy. Still, Brent remains within its $90-$100 range for now and OPEC+ may continue to ensure that largely remains the case. Gold stalls but the future may be looking bright We’re seeing more risk aversion in the markets today after a strong rebound in recent weeks. Gold has performed well in this period, particularly in the aftermath of the Fed decision and jobs report and then after the inflation data. The PPI numbers further supported the view that inflation is easing and could be sustained which saw gold rally towards $1,780 where it stalled. It is now paring gains for a second day, off around 1%, but still holding onto the bulk of the gains of recent weeks. If the data continues to improve on the inflation side, we could see gold build on recent gains as the dollar eases and yields are pared back. That’s a big “if” after what we’ve seen this year but the data we’ve seen in recent weeks has been very promising. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices fall, gold stalls - MarketPulseMarketPulse
Gold Stocks Have Performed Very Well Under Pressure

Gold prices supported by Fed commentaries which remind markets of rate going above 5%

Ed Moya Ed Moya 17.11.2022 19:41
Oil Oil prices are getting punished as crude demand concerns show no signs of easing. ​ The world’s two largest economies are struggling here as China battles COVID and the US is seeing a significant drop in manufacturing activity.  China’s new case total rose above 23,000, which is the highest level since April and is approaching its record high. ​ Fears are growing that the spread won’t ease soon as cases have spread across populous regions of Guangzhou and Chongqing. ​ Some of the geopolitical risk that sent oil higher earlier this week is coming off the table. With no immediate escalation in the war in Ukraine, we could see energy traders fixate on the Russian crude price cap that takes hold early next month. Read next: NVIDIA (NVDA) Q3 earnings results outperformed part of the markets forecasts| FXMAG.COM ​ ​ ​ Inventory levels remain a key concern for the oil market so we might see limited downside from here. Gold Gold prices got beat up after a round of hawkish Fed speak reminded investors that the risks of the Fed taking rates above 5% are clearly there. ​ Fed’s Bullard’s comment that the policy rate is not yet ‘sufficiently restrictive’ is a big reminder that we need to see the labor market weaken significantly before we can price in the end of its tightening cycle. ​ A top has been put in place with gold and prices could soften towards the $1750 level. ​ ​ ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil lower on demand woes, gold slumps - MarketPulseMarketPulse
Bestway Might Have Larger Designs On The UK's Second Biggest Supermarket

UK Yields Rose Yesterday | The Chinese Electric Vehicle Market Showing Strong Growth

Saxo Bank Saxo Bank 18.11.2022 09:01
Summary:  Market sentiment managed to bounce mid-session yesterday in the US and was steady overnight, with the USD back lower but still very range bound and US treasury yields rising off their lows, with a new extreme for the cycle in the yield-curve inversion, suggesting the market remains worried that the Fed’s tightening will lead to recession. The market shrugged off yesterday’s budget statement from UK Chancellor Jeremy Hunt as most of the measures were flagged ahead of his speech.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended their declines yesterday to the 100-day moving average at around the 3,916 level driven by comments from Fed’s Bullard saying the sufficiently restrictive zone on policy rate was in the range 5-7% spooking markets. It is obvious, that the Fed is out trying to dampen expectations following the rally on the lower than estimated US October inflation print. S&P 500 futures are bounced back after the initial shock but closing lower for the session and this morning they are trading around the 3,950 level. Hong Kong’s Hang Seng (HSIX2) and China’s CSI300 (03188:xhkg) Hang Seng Index snapped a two-day decline and bounced about 0.3% as of writing. China interest stocks led the charge higher following Alibaba reporting earnings beating expectations and adding to its share repurchase programme. The Chinese authorities’ grant of a new round of 70 online game licences to firms including Tencent and NetEase also help the market sentiment. Hang Sent Tech Index climbed 2%. In mainland bourses, healthcare shares gained as new Covid cases surged to above 25,000, a new high since April. Online gaming stocks rose on the new game license approval. Financials however continued to trade weak as investors are troubled by recent incidents of retail investment products losing heavily as bond yields rising in China. CSI 300 gained 0.2%. FX: USD rally eases on risk sentiment bounce of the lows yesterday The US dollar eased lower after a bout of weak risk sentiment was turned mid-session yesterday in New York and despite US treasury yields lifting all along the curve (with a new multi-decade low in the yield curve inversion suggesting the market remains concerned that the Fed’s tightening regime will lead to a recession. After the very sharp move lower off the back of the October CPI data, the USD has traded in a rather tight range in most places, with EURUSD bottled up near the 200-day moving average (currently 1.0414) and GBPUSD still hugging the 1.1900 area after the market shrugged off the autumn budget statement yesterday. Next week has the Thanksgiving holiday in the US, which usually sees light trading from Wednesday through Friday and the first key data is not up until the week after, so upcoming catalysts are not readily evident. Crude oil (CLZ2 & LCOF3) Crude dropped sharply yesterday to multi-week lows, trading as low as 89.53 in January Brent and 81.40 in December WTI. Concerns of weakening demand in China are purportedly behind some of the weakness yesterday, but with a new extreme in the yield curve inversion yesterday, rising market anticipation of an incoming recession is likely weighing on sentiment in oil. For the December WTI contract, the 81.30 level is the last significant pivot low ahead of the 75.70 September low for that contract. For January Brent, the  87.52 level is the last pivot low ahead of the 80.94 September low for that contract. Gold (XAUUSD) Pushed a bit lower yesterday on the rise in US treasury yields, trading above 1,760 this morning after the 1,786 high earlier this week. The 200-day moving average is near the important 1,800+ area. An extension of the recent rally likely requires further declines in yields and the US dollar or some other catalyst that sees a run to safety. US treasuries (TLT, IEF) US yields surged across the entire yield curve with yields rising the most in the front end. The 2-year yield jumped 10bps to 4.45% and the 10-year climbed 8bps to 4.77%. The 2-10 year spread inverted further hitting a new low of minus 71bps. Selling concentrated on the front end as St. Louis Fed President James Bullard referred to the “sufficiently restrictive level” being “5% to 5.25%” and “that’s a minimum”. In addition, Bullard showed a chart that suggested a range of terminal rates from 5% to 7%. Meanwhile, Minneapolis Fed President Kashkari said the Fed is “not there yet” to pause and it is an open question of how far the Fed needs to go. What is going on? Japan’s CPI increased more than expected in October Japan released its national CPI data which came in hotter than expected. Headline CPI grew 3.7% Y/Y (consensus: 3.6%, Sep: 3.0%). CPI excluding Fresh Food was 3.6% higher than last year (consensus: 3.5%, Sep: 3.0%) and CPI excluding Fresh Food and Energy increased 2.5% Y/Y in October (consensus: 2.4%, Sep: 1.8%). UK budget statement sees little market reaction, but huge Gilt issuance set for next year The mix of measures was more or less as anticipated, with many of the specific larger moves well flagged ahead of yesterday’s speech on the budget from UK Chancellor Jeremy Hunt. After a strong surge in UK gilts (sovereign bonds), UK yields rose yesterday, as the Debt Management Office in the UK project that issuance of gilts in the 2023-24 financial year will rise almost 50% to £305 billion, with net issuance at £255 billion, almost double the previous high from 2011. Near term issuance to the end of the current fiscal year to April is expected somewhat lower than prior estimates. China urges local authorities to strike a better balance in pandemic control measures China’s National Health Commission urged local authorities to avoid “irresponsible loosening” of pandemic control measures. In a press briefing, health officials said local authorities “must continue to rectify the practice of excessive measures such as lockdowns and oppose the irresponsibility of evading a solution by loosening up”.The world’s second biggest lithium producer, SQM, sees lithium prices staying higher in 2023.SQM sees the Chinese electric vehicle market showing strong growth, buttressing solid demand for lithium. In its third quarter result, SQM’s income beat analyst estimates, rising by more than 10 times to $1.1 billion. The surge was fueled by the lithium price more than tripling over the past year, and rallying over 1,200% since 2020, amid tight supply and rising demand from EV makers. SQM sees the lithium market staying tight and higher prices for the rest of 2022 and into 2023. BHP (BHP) raised its takeover offer for copper giant, Oz Minerals (OZL) The offer was raised to $6.4 billion as global miners are hungry to boost copper production. Copper is a vital metal in electricity networks, electric vehicles, housing and renewable energy. BHP currently makes about 48.7% of its revenue from iron ore, 26.7% from copper, and 24.6% from thermal coal.What are we watching next? Earnings to watch today: JD.com Today’s earnings calendar is light with only the Chinese e-commerce giant JD.com reporting results. Analysts expect revenue growth of 11% y/y and EPS of $4.46 up 194% y/y on expanding EBITDA margin, but given the results from other Chinese companies we find it a bit unlikely that JD.com can deliver those types of results. Options expiry today in US to hit new record Options expire today on a notional $2.1 trillion in underlying instruments today as this month looks likely to set the record for options volume, with 46 million contracts in daily trading on average, up 12% from last month. Increasingly popular are contracts that expire within 24 hours, a phenomenon that may have driven the extreme volatility around the Thursday October CPI release last week. Economic calendar highlights for today (times GMT) 0830 – ECB President Lagarde to speak 1315 – UK Bank of England’s Catherine Mann to speak 1330 – Canada Oct. Home Price Index 1340 – US Fed’s Collins (non-voter) to speak 1500 – US Oct. Existing Home Sales 1500 – US Oct. Leading Index Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-18-2022-18112022
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Brent crude finished below $90. According to ING oil price is influenced by firmer greenback and hawkish Fed rhetoric

ING Economics ING Economics 18.11.2022 09:35
The commodities complex came under further pressure yesterday from a stronger USD and hawkish comments from Fed officials Energy - weakness persists The oil market sold off aggressively yesterday with ICE Brent falling by more than 3.3% to settle below US$90/bbl - its lowest close since early October. Macro developments continue to weigh on oil with a stronger USD and comments from some US Fed officials pointing towards hawkish policy. However, the sell-off in the oil market is not all macro-driven. There are signs of weakness in the physical oil market despite the looming EU ban on Russian crude oil. Prompt time spreads have also weakened significantly, suggesting that the spot physical market is loosening. The prompt WTI spread is trading at a backwardation of less than US$0.30/bbl, compared to  US$1.18/bbl at the start of the month. Similarly, for Brent, the prompt spread has fallen from US$1.86/bbl at the start of November to just below US$1/bbl currently. The loosening in the market is a surprise, particularly given that we are seeing OPEC+ reducing supply at the moment. However, we still hold a constructive outlook for the market through 2023 on the back of falling Russian supply and OPEC+ cuts. In the US, Henry Hub natural gas settled more than 2.7% higher on the day with colder-than-usual weather expected across large parts of the US in the coming days. In addition, US natural gas inventories increased by 64bcf over the week, which was below market expectations for an increase of around 66bcf. Despite coming in below expectations, this was still a record build for this time of year and compares to a 5-year average draw of 5bcf. Metals – China's alumina market to move to a surplus next year China’s alumina market is expected to move to a surplus of 520kt in 2023 following capacity expansions, compared to a deficit of 490kt this year, according to Antaike. Total alumina capacity is already around 98mt, and China needs only about 100mt over the long term to feed aluminium capacity. Strong Chinese alumina exports (mainly to Russia) are expected to ease as other nations such as India and Indonesia increase shipments. Meanwhile, around 70% of Chinese alumina producers are currently making losses due to surging raw materials costs (primarily coal). Refined copper output in China rose 11% YoY to 953kt in October, according to the latest data from the National Bureau of Statistics (NBS). Zinc output rose 9.4% YoY to 595kt while lead production increased 7.2% YoY to 687kt last month. The global zinc market remained in a deficit of 43kt in the first nine months of 2022, compared to a deficit of 101kt during the same period a year earlier, according to data from the International Lead and Zinc Study Group (ILZSG). Total refined production fell 2.4% YoY to 10.1mt, due to lower output in Europe, while total consumption declined 3% YoY to 10.2mt in Jan’22-Sep’22. As for lead, total production fell 1.6% YoY to 9.1mt, while consumption remained almost flat at 9.2mt in the first nine months of the year. The lead market reported a deficit of 52kt in Jan’22-Sep’22, compared to a surplus of 75kt during the same time last year. Sinter plants in the Tangshan region in China (a major steel-making hub) are cutting production by 30% for 10 days starting from 15th November, according to reports from Mysteel, as low profits continue to discourage domestic steel mills from resuming their full capacity. The group’s latest survey showed that Jiangsu province-based steel plants are also expected to curb crude steel output over the coming days. Meanwhile, the latest data from China Iron & Steel Association (CISA) showed that steel inventories at major Chinese steel mills were up 1.5% in early November from late October. Agriculture – Black Sea Grain deal renewed Grains came under pressure yesterday after Russia agreed to renew the Black Sea grain deal, which will allow the export of Ukrainian agricultural products through Black Sea ports for another 120 days. There were no major changes made to the terms and conditions of the previous deal. While this will come as a relief, it probably is still worth pricing in some form of supply risk when it comes to Black Sea grains, given the risk that Russia could still pull out of the deal. The latest data from the UN shows that Ukraine has shipped over 11mt of wheat, corn, sunflower oil and other goods from three ports located in the Odesa region since exports resumed in August. According to the International Sugar Mills Association (ISMA), India has entered contracts for the export of around 3.5mt of sugar so far for the 2022-23 season. Exports in October totalled around 0.2mt, below the 0.4mt shipped over the same period last year. ISMA also reported that mills have produced 2mt of sugar through until 15 November for the season that started 1 October, slightly lower than the 2.1mt produced over the same period last year. Lower production appears to be due to a number of mills in the West starting operations later this season. Read this article on THINK TagsUSD strength Oil Natural gas Federal Reseve Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: OPEC+ meeting ahead

Oanda's Craig Erlam wonders whether OPEC+ could go for a bigger output cut

Craig Erlam Craig Erlam 18.11.2022 14:48
Brent below $90 ahead of December OPEC+ gathering Oil prices are continuing to retreat against the backdrop of increasingly gloomy economic prospects and surging Covid cases in China which risk further restrictions and lockdowns, threatening demand in the world’s second-largest economy. Brent crude has broken back below $90, testing the mid-October lows and, if sustained, the patience of OPEC+. Read next: Canda's CPI inflation prints didn't surprise, consensus points to a 25bp rate hike, but chances of a greater variant are still there| FXMAG.COM The group was heavily criticized for its two million barrel per day output cut and yet oil prices are now not far from the September lows that preceded the decision. Could OPEC+ go even further if the outlook continues to deteriorate when it meets again in a couple of weeks? Gold holding onto gains Gold is flat on Friday after paring gains over the last couple of days. The yellow metal has recovered strongly over the last month, around 10% from its lows, as risk appetite has improved and interest rate fears abated. It’s not out of the woods yet but its resilience after hitting resistance at $1,780 is encouraging. This is a major obstacle, having been such a substantial level of support from January to July. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil extends decline, gold steady - MarketPulseMarketPulse
Monica Kingsley talks S&P 500, crude oil and more - November 18th

Monica Kingsley talks S&P 500, crude oil and more - November 18th

Monica Kingsley Monica Kingsley 18.11.2022 15:58
S&P 500 bulls came back, 3,910 support held, and the dollar was unable to hold on to intraday gains really. In the European morning, I doubted the bearish shift materializing later today as the Fed speakers‘ risk-off momentum did wear off already yesterday. Precious metals are indeed leading the charge among real assets, and I‘m still not writing off crude oil. S&P 500 looks likely to conquer the low 4,010s today, which would flip the daily chart distinctly bullish again. Paying off not to panic – the Fed‘s ability to tighten in the face of slowing economy, is correctly being doubted – 4.50% Fed funds rate year end is still a great tightening achievement but stocks are willing to run higher in its face. Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there, but the analyses (whether short or long format, depending on market action) over email are the bedrock, so make sure you‘re signed up for the free newsletter and that you have Twitter notifications turned on so as not to miss any tweets or replies intraday. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Fake breakdown on low volume attracting no sellers – that would be the most likely conclusion after today‘s closing bell. Credit Markets HYG posture is bound to improve further today – the downswing was bought, and white body candle awaits today while TLT more or less erases yesterday‘s decline. Gold, Silver and Miners We haven‘t seen an important precious metals top – the sector will likely hold on to and extend today‘s premarket gains. Silver is still recharging batteries, but will recapture $22 with ease. Crude Oil Oil downswing appears overdone, but unless $82.50 is recaptured and WTIC starts outperforming especially base metals, the short-term outlook is tricky. Oil stocks not joining in the slide, is though positive – so, I‘m not turning bearish.
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Recession Fears In The Global Economy

ING Economics ING Economics 19.11.2022 10:27
Executive summary 1)Following the Russian invasion of Ukraine in 2022, European and Polish economies are experiencing a huge energy shock due to record-high prices and the risk of energy supply disruptions. 2)Due to the dependence on energy from Russia and the structure of energy balances, it is mainly a gas problem for the EU and a coal problem for Poland. This applies less to power plants as it does to households and district heating units which rely heavily on imported coal from Russia. The source is not only high prices, but also the risk of natural gas and coal shortages over the coming winter. 3)Higher energy prices on wholesale markets have contributed to a significant increase in producer and consumer prices, but this is not an automatic pass-through. It is stretched over time. Producer prices depend on previous contracts, competitive conditions and the substitutability of energy carriers. 4)The pass-through of higher costs to the end user depends on both demand and fiscal policy. Energy prices for households are largely influenced by the decisions of the government (e.g., the anti-inflation shield) and the regulator (Energy Regulatory Office tariffs). On average, consumer electricity prices increased by about 5% in 2022, following increases of 12% in 2020 and 10% in 2021. 5)Our survey of 300 small and medium-sized companies shows that: •70% of companies are concerned about access to energy in the upcoming heating season. •Companies have generally only partially passed on higher energy costs to buyers and are actively reducing other expenses. •High energy prices are increasing SMEs' interest in investing in energy efficiency and renewable energy sources (RES), especially in industrial companies. •The anti-inflation shield alone is not enough support but should be maintained at least until the end of 2023. •Companies are rather sceptical about the effectiveness of EU policy support. Energy Shock 2022: On the back of an economic rebound following the pandemic in 2021 and thereafter due to Russia's invasion of Ukraine in 2022, the prices of energy carriers in Europe have remained in a clear upward trend and fluctuated strongly. They shot up in the summer of 2022 following the initial threat and again after Nord Stream 1 completely halted gas supplies to Europe. By the end imports to Europe were about threeof September, daily Russian gas quarters lower year Gazprom manipulation from mid2021:onyear. Prices of energy carriers have been on an upward trend since mid2021. Russia's gas manipulations led to a jump in prices later that year, with energy prices rising further after the outbreak of war in Ukraine. Local maximum in midAugust: In midAugust 2 022, energy prices were many times higher than the average in January 2021. Prices for natural gas rose more than 15 times, electricity (wholesale market) by 7 times, coal by almost 5 times, and oil almost twice. The explosion in gas prices was due to volu me restrictions imposed by Gazprom. Shipments through Nord Stream 1 fell to 40% in June 2022, then to 20% in July August preceding the complete suspension of supplies through this pipeline in early September. September correction: When the European Commission and EU member states responded to Russia's gas manipulation, prices fell sharply. The correction in oil prices was largely due to recession fears in the global economy and also driven partly by monetary tightening. In early October, following fluctuati ons due to the Nord Stream leaks and the EU Council's decision to control rising energy costs, price increases were eight times higher for natural gas, almost three times for electrici and 1.5 times for oil. Prices of energy carriers: January 2021 =100 Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Rates Spark: Discussing the Potential of 4.5% and its Impact on Markets

Energy Prices And Their Impact On Marekts And Consumer Price

ING Economics ING Economics 19.11.2022 10:28
Energy price shock for producers in 2022 Translation of wholesale market prices into Producer Price Index (PPI) and Consumer Price Index (CPI) prices: Producer prices typically respond quickly to changes in wholesale energy market prices, which are driven by global developments. In Europe, they are largely impacted by the EU’s energy and climate policy and the EU’s energy market design. However, for individual companies, price changes are often indexed to market prices and occur with some delay. While stock market transactions are transparent, we have limited insights into bilateral contracts between energy utilities and individual manufacturers. Finally , the transmission of shifts in wholesale and 4 producer prices on consumer prices in Poland is constrained by the Energy Regulatory Office, which is responsible for electricity and gas tariffs to households, as well as government decisions on taxes and bene fits. Energy prices what and what does it depend on? Postrecession rebound 2021 and rising oil prices: The upward pressure on industrial output in 2021 was a rebound from the 2020 pandemic recession steadily. In January 2021, PPI growth was 1% built up quickly and YoY, and by December was already at 14.4%, largely driven by price increases in the coke a nd refined petroleum products While January 2021 saw a 6.9% . YoY decline in this category, while December 2021 price growth was 64.3% YoY. This category accounts for 5.2% of the PPI index basket in 2022. Producer price index (PPI) and its energy categories (%ch YoY) A rapid buildup of cost pressures in 2022 and increases in gas and electricity prices: Throughout 2022, water incre prices in the generation and supply of electricity, gas, steam, and hot ased systematically . Price increases in this category reached 30% January 2022 and accelerated to nearly 80% YoY in YoY in August. This category accounts for .8% 7.5% of the PPI basket in 2022. Increases in energy and other categories moved the PPI index from 14 YoY in January to 25.5% in August At the starting point ( before the energy shock ) , 2022 . energy prices for companies in Poland were generally close to the EU average: for companies (including taxes) average in Poland in the second half of 2021. They the past According to Eurostat data, electricity prices were about a quarter lower than the EU27 have increased by a total of about 25% over four years (between the second half of 2021 and of 2018). The price of natural gas for companies saw a total increase of 30% in four years, close to the EU average . Electricity prices for companies in the EU in second half of 2021 Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Eurozone PMI Shows Limited Improvement Amid Lingering Contraction Concerns in September

Most Companies Interested In Green Investments

ING Economics ING Economics 19.11.2022 10:29
Offsetting higher energy costs Given that around 95% of companies decided to increase the prices of their products or services, we asked a follow-up question on the extent to which they compensated for higher energy prices. Compensating for the increase in costs by passing them on to consumers appears to be an easier option than the search for cheaper production substitutes. When raising prices of own products or services, most companies tried to compensate themselves for at least half of the higher energy costs (as noted by 60% of companies that have raised prices). On the other hand, this means that still there is a large room for price adjustments in the future. To what extent did the companies compensate for higher energy prices by price hikes of own products or services? We also asked a similar question about offsetting higher energy costs to 77% of entrepreneurs looking for cheaper materials and services. Around 60% of companies that take such steps could only compensate themselves for energy price increases "to a very small extent," and 34% of companies for less than half. Limited substitution possibilities could result from supply constraints due to disruptions in global value chains amid the pandemic. To what extent did the compensate for higher energy prices by looking for cheaper materials and services Green investments For most companies interested in green investments, solutions aimed at saving energy or building their own RES installations are only in the planning stages. A relatively large number of companies are also in the process of modernising production lines or thermal modernisation of buildings. While investment in renewable energy sources has slowed down (with few currently in the pipeline), one in three companies interested in such investments have found a solution, appreciated its advantages and plans to expand investments in their own RES. Reasons for lack of green investments More than half of the companies that do not plan to invest in thermal modernisation have taken care of this beforehand. One in three companies that are not in the process of investing in their own energy sources are waiting for the availability of funds for this purpose. They also expect better solutions at the state level (e.g., the possibility of building windmills, increasing the profitability of setting up PV panels). However, more than 40% of companies currently not investing in renewable energy sources say they may consider doing so in the future. More than half of all industrial companies would be ready to modernise production lines if there were funds to do so, with 30% currently waiting for funding from EU sources (e.g., from the National Recovery Fund). Pressure to use energy-efficient and low-carbon solutions In the context of the climate crisis, we also asked companies about external pressure to go green. Generally, the pressure felt by companies to use energy-saving and low- carbon solutions is low, with just one in five companies noting its effect. Greater pressure is felt by larger companies and industrial firms. This stems mainly from national and EU regulations and policies, and secondarily from local governments and residents in the vicinity of the company's headquarters. Only one in four of those perceiving pressure see it from contractors; one in four from consumers; and one in ten from banks. Pressure to act in response to the climate crisis appears to be lower in the SME sector than in large companies. This conclusion is supported by our other research at both global and national levels. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Companies Are Looking For Cheaper Materials And Suppliers

ING Economics ING Economics 19.11.2022 10:29
The quantitative survey was conducted by GFK Polonia on behalf of ING Bank Slaski in August 2022, using the Computer Assisted Telephone Interviewing (CATI) method. The sample consisted of 300 small and medium enterprises (SME). Research questions In the survey, we searched for responses to the following questions: 1) How are companies coping in times of an energy shock, mainly for natural gas? How does expensive energy affect their business? Do companies have problems with access to energy? Are they worried about energy access problems in the coming year? 2) How have they responded so far? What are their plans for investing in energy- efficient technologies or perhaps their own sources like photovoltaics, windmill, heat pump, and energy storage? 3) Does the anti-inflation shield (including the reduction of VAT and excise taxes on energy) help them? 4) Given the context of the current climate crisis, do they feel pressure/identify a need to switch to clean energy in the near future? 5) Are they aware of EU climate policy and opportunities to support clean energy and energy efficiency? Types of energy used One in five companies has its own power generator, and 17% of companies say they have their own sources of electricity. Own boilers/furnaces as heat sources are used by almost half of the companies - that's as often as heat from the grid. 10% of companies declare using electric-powered vehicles, although this result is likely inflated. According to local automotive associations PZPM and PSPA there are only about 50,000 pure electric and plug-in hybrid cars in Poland. Natural gas is twice as popular as electricity in company vehicles. Share of energy in total costs About two-thirds of all companies indicate a share of energy (all carriers, including transport fuels) making up more than 10% in company costs. Larger companies declare a larger share of energy in their costs, most often between 10% and 30% (for more than half of the companies over PLN 10 million in turnover last year). About half of the companies with higher turnover are industrial companies, which are generally more energy-intensive than the service or construction industries. Average share of energy costs in the company's costs Perception of the energy situation Companies perceive energy and fuel price increases differently. Most (26%) believe that prices have already risen between 50% and 80%. Perception of past increases in fuel and energy costs - by how much? (%) Expectations for future increases are slightly more consistent, with 32% of companies predicting that prices will still rise between 30% and 50% further. Predicting further increases in fuel and energy costs - by how much? (%) The vast majority of companies (nearly 70%) are concerned about problems with access to energy and fuels. Concerns about access to fuel and Energy Responses to increased energy and fuel costs Almost all companies have reacted to rising energy and fuel costs by increasing the price of products or services. Only 5% have avoided this so far. The second most common way to cope with the situation is looking for cheaper materials and suppliers (recorded by 77% of companies), followed by cutting other costs (60%) and halting R&D investments (41%). More than one in three companies intend to invest in solutions that will help save energy in the future. Responses to increased energy and fuel costs Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
EUR: Stagflation Returns Amid Weaker Growth and Sticky Inflation

The Summarises Of The Key Research Questions Of ING Survey

ING Economics ING Economics 19.11.2022 10:30
This section summarises the responses to the key research questions of our survey. How are companies coping in times of an energy shock, mainly gas? How does expensive energy affect their business? Do companies have problems with access to energy? Are they worried about energy access problems in the coming year? • SMEs have been hit hard by the war in Ukraine due to higher energy prices, which account for a more significant share of total costs. • 70% of companies are concerned about access to energy in the upcoming heating season. • Companies have generally only partially passed on higher energy costs to buyers and are actively reducing other expenses, including development. How have they responded so far, and what are their plans regarding energy-saving technologies or perhaps their own sources like photovoltaics, windmill, heat pump, and energy storage? • Companies expect further increases in energy prices for the coming year, although slightly lower than in the past 12 months. • High energy prices are increasing interest from SMEs in investments in energy efficiency and RES, especially in industrial companies in towns with less than 100,000 residents. • Companies are mainly focused on ad hoc measures with quick effects - increasing prices, looking for substitutes and cutting costs, including developmental ones. Does the anti-inflation shield (including reductions in VAT and excise taxes on energy) help them? • Most companies see the positive effects of the energy tax cuts. • For two-thirds of all companies, the anti-inflation shield is not enough support. For 15%, the shield does not help at all. • Nevertheless, the majority (60%) of companies believe it should be maintained at least until the end of 2023.Do companies feel pressure/identify a need to switch to clean energy in the near future? • Just 1 in 5 companies feel pressure to do so industrial companies.this tends to apply to larger • For the companies perceiving said pressure, the source is generally national and EU regulations, and secondarily from local governments or residents in the vicinity of the company's headquarters. Are they aware of EU climate policy and opportunities to support clean energy and energy efficiency? • Companies are r ather sceptical about the effectiveness of support from EU policy. A bird’s eye view takeaway: the large energy shock will make inflation more persistent The massive increases and fluctuations in the prices of energy carriers in 2022 (for natural gas in particular) have caused an unprecedented shock for Polish companies. In times of crisis, we appreciate how important energy is for production – in all companies, not just energy-intensive ones. Attempting to pass on high energy costs to buyers was the initial reaction for most companies, but they did so only partially. Having observed the behaviour of demand, it is possible that they have since decided to stagger price increases for their products or services. As a result, upward price adjustments will still take place in the form of second-round effects. The government's anti-inflation shield (currently under re-consideration) and various other solutions for 2023 should help to smooth out energy price increases, buying more time for action and investment in energy-saving technologies and our own RES. However, the persistency of inflation throughout 2023 is to come from non-energy items, such as food. This is visible in the rising trend of core inflation, which reached double-digit levels in the recent months (11% YoY in October). Prioritising the potential for green investment is no doubt the right way to go as a sustainable option for improving energy security in such turbulent times. Amid negative external circumstances, the emphasis on going green at the enterprise level is a reassuring message. Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

In China The Outbreak Continues To Get Worse | The ECB Has Given Banks An Incentive To Get Rid Of Those Loans

Saxo Bank Saxo Bank 21.11.2022 09:30
Summary:  Markets remain on edge amid lack of economic data but heavy focus on Fed commentaries which were mixed at best with Collins remaining hawkish but Bostic again signaling a slowdown in the pace of rate hikes. Meanwhile, covid outbreaks in China continue to get worse, keeping expectations of a Xi pivot also restrained. Commodities including oil and gold gave up recent gains on higher USD and China concerns. Weekend elections in Malaysia saw its first ever hung parliament, although not a complete surprise. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) traded sideways US equity markets had a lackluster session with modest gains on Friday. Nasdaq 100 was unchanged and the S&P 500 edged up 0.5%. Nine out of the 11 sectors within the S&P 500 gained, with utilities, up 2% being the top performer. Energy was the largest laggard, down 0.9% as WTI crude oil fell to as low as USD77.24 at one point before settling at USD80.08, down 1.9% on Friday and 10% for the week on the concerns of weakening demand. Retailers Foot Locker (FL:xnys), Rose Stores (ROST:xnas), and Gap (GPS:xnys) surged by 7% to 10% on earnings and guidance beating street estimates. US  treasury (TLT:xnas, IEF:xnas, SHY:xnas) yield rose as Fed member Collins keeping 75bps on the table Investors sold the front end of the treasury curve, seeing 2-year yield up 8bps to finish at 4.53% on Friday, following Boston Fed President Susan Collins kept the option of a 75bps hike in December open. Nonetheless, the money market curve continue to assign a higher than 80% chance of a 50bp hike in the next FOMC meeting. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) consolidated on Friday but ended the week higher The risk-on sentiment in Hong Kong and mainland China faded towards the end of last week as investors became cautious about the surge of Covid cases in mainland China that might be testing the resolve of the Chinese authorities, in particular, that of the local governments to implement the 20-item guidelines of relaxing pandemic control measure. Hong Kong stock markets traded higher initially in the morning, led by China Internet stocks, following Alibaba (09988:xhkg) reporting earnings beating expectations and adding to its share repurchase programme and The Chinese authorities’ grant of a new round of 70 online game licences to firms including Tencent (00700:xhkg) and NetEase (0999:xhkg). China property developers declined and dragged the benchmark indices lower, after Moody’s warned that the recent government policy support to the mainland real estate sector was no game changer. Hang Seng Index dropped by 0.3% on Friday and gained 3.9% for the week. In mainland bourses, healthcare shares gained as new Covid cases surged to above 25,000, a new high since April. CSI 300 declined 0.5% on Friday and edged up by 0.3% for the week. Crude oil (CLZ2 & LCOF3) suffering from worsening Covid outbreak in China WTI futures took a look below the key $80/barrel mark on Friday amid the return of demand concerns as the Covid outbreak in China continued to get worse. Further developments over the weekend (read below) suggest further caution on Xi pivot expectations will likely remain. Meanwhile, the winter demand has so far remained restrained but the week ahead may bring further volatility as the deadline for European sanctions on Russia crude looms. NatGas prices were also lower after Freeport LNG announced initial operations are set to resume from their export facility in mid-December, one month later than prior guidance. Gold (XAUUSD) still eying the hawkish Fed Gold stayed short of making an attempt at the key $1800 level last week and was down over 1% as the USD gains returned amid the generally hawkish rhetoric from Fed speakers confirming more rate hikes remain in the pipeline. It is now testing the resistance-turned-support at 1750, and a move higher needs support from further declines in yields and the US dollar or some other catalyst that sees a run to safety. FX: NZD in gains ahead of RBNZ rate decision this week The Reserve Bank of New Zeeland is likely to deliver its sixth consecutive 50bps rate hike this week, or more with consensus tilting towards a larger 75bps move. The calls for a hike come amid hot inflation at 7.2% YoY in Q3 – well above the RBNZ’s 1-3% target – which comes in conjunction with a tight labour market. Most members of the RBNZ shadow board also supported a 75bps rate hike. NZDUSD started the week on a stronger footing, after having touched 0.62 on Friday. AUDNZD remains in a downtrend with China’s Covid outbreak as well as a relatively dovish RBA limiting the prospects for AUD.   What to consider? Fed’s Collins says 75bps still on the table for December, Bostic dovish Fed’s Boston Governor Collins appeared on a CNBC interview on Friday, and said she hasn’t decided on the magnitude of next month’s interest rate hike, but that a 75bps rate hike still remains on the table. She also emphasised that there is no clear and significant evidence that the overall inflation is coming down at this point, and there is also no clear consistent evidence of softening in labor markets. In fact, her comments raised terminal rate expectations as she said that data since September have kind of increased the top of where the Fed may need to go with interest rates. On the economy, she is concerned there could be a self-fulfilling dynamic that could make a more severe downturn more likely. However, Collins is reasonably optimistic a recession can be avoided. On the other hand, we also heard from Atlanta Fed Governor Raphael Bostic who said he favours slowing down the pace of rate hikes and also hinted that terminal rates will be about 1% pt higher from here. Worth noting however that Collins is only a voter this year (and not in 2023) while Bostic is not a voter this year or next. China’s Covid outbreak is getting worse China reported its first Covid-related death in nearly 6 months in Beijing as the outbreak continues to get worse and cast doubts on a Xi pivot. The capital added 516 cases on Sunday, and called the situation "grim." There are some retail and school closures, and the request to stay home was made over the weekend and has been extended. Meanwhile, a district in Guangzhou has imposed a 5-day lockdown to conduct mass coronavirus testing in some areas. ECB balance sheet reduction kicks off Euro zone banks are set to repay 296 billion euros in multi-year loans from the European Central Bank next week, less than the roughly 500 billion euros expected, in its latest step to fight runaway inflation in the Eurozone. The ECB has given banks an incentive to get rid of those loans by taking away a rate subsidy last month. It was its first move to mop up cash from the banking system and the first step towards unwinding its massive bond purchases. While the odds of a 50bos are still in favor for the December 15 meeting, key focus will also be on how fast this move can reverse the ECB's 3.3-trillion-euro Asset Purchase Programme. Christine Lagarde continued to sound the alarm on inflation, saying that even an economic downturn wont be enough to tame soaring prices. However, Knot hinted at slower pace of rate hikes, expecting rates to reach neutral next month. He still reaffirmed that policy needs to be restrictive and QT should be used alongside. UK retail sales signals a temporary recovery in consumer spending A rebound in UK’s retail sales for October signalled that Q4 may see concerns on consumer spending ease slightly. Retail sales grew 0.6% MoM in October after a decline of 1.5% in September. However the outlook remains bleak given the squeeze on incomes amid high inflation and the rise in interest rates. Political gridlock in Malaysia After Saturday’s election, Malaysia saw its first ever hung parliament as none of the three major coalitions won enough seats to form a majority, extending the political crisis in an economy on a fragile rebound. It is unlikely to be a big shock to the markets, as the results were generally as expected. The king has asked the parties to name their PM candidates by Monday afternoon, and while a coalition will likely be formed it is hardly enough to ensure a smooth functioning government. Ex-PM Mahathir lost the election while the ruling coalition was reduced to 30 seats, signalling a complete lack of trust in the political framework.   For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-21-nov-2022-21112022
The Reserve Bank Of New Zeeland Is Likely To Deliver 50bps Rate Hike

The Reserve Bank Of New Zeeland Is Likely To Deliver 50bps Rate Hike

Saxo Bank Saxo Bank 21.11.2022 10:06
Summary:  Markets are off to a sluggish start this week after a choppy session on Friday, with China reporting its first official Covid deaths in months, one in Beijing, and driving new headwinds for reopening hopes. The Hang Seng Index was down over 5% at one point overnight. The week ahead is a short one in the US, with markets closed there on Thursday for the Thanksgiving holiday. Wednesday sees the release of many preliminary manufacturing and services PMI.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are trading slightly lower in early European trading hours driven by lower sentiment as China’s zero Covid policy is already under pressure with rising case numbers and the central bank, PBoC, urging stabilisation of financing to the real estate sector indicating how fragile this part of the economy is. The key level on the downside to watch in the S&P 500 futures is the 3,955 level and after that the 100-day moving average at around the 3,919 level. Euro STOXX 50 (EU50.I) European stocks are still up more than 20% from the lows in early October following better than expected macro news and mild weather on the continent. But it seems the good fortune might change now with the weather turning much colder in Northern Europe and if China is not opening up as fast and wide as expected that is a negative for European companies as China is the largest trading partner to Europe. STOXX 50 futures are trading around the 3,910 level with the 3,892 level being the first support level to watch on the downside and then the 3,873 level. FX: USD grinds higher on wobbly risk sentiment The US dollar traded firmer in the Asian session overnight after choppy action late last week as there has been no major follow up move in US yields after the huge reaction to the October CPI data release the week before. Risk sentiment seems to be the local driver here and major reversal levels for USD pairs are still quite distant, meaning the USD can continue to consolidate without major technical implications just yet. Examples of levels are the 1.0100 area in EURUSD, the 1.1600-50 area in GBPUSD and 0.6500-25 in AUDUSD. Little in the way of US macro data this week, although on Wednesday we do get the FOMC minutes, together with a dump of data points including Oct. Durable Goods Orders, weekly jobless claims, preliminary Nov. Manufacturing and Services PMI, and Oct. New Home Sales ahead of the Thanksgiving holiday, with markets close in the US on Thursday and only partially open on Friday. Crude oil (CLZ2 & LCOF3) Crude oil dropped further to fresh multi-week lows in early Monday trading with January Brent touching 86.40 and December WTI below 80. The short-term outlook has been hurt by renewed dollar strength, the most inverted US yield curve in four decades signaling high risk of an economic recession, and not least China’s continued struggle with Covid (see below). Ahead of EU sanctions on Russian oil, which will reduce supply from early next year, the seasonal softness in demand has been exaggerated by the above-mentioned developments. Crude oil trades within a wide range, and it will take a break below the September low at $83.65 in Brent and $76.25 in WTI for that to change. Gold (XAUUSD) Gold trades lower for a fourth day with the market potentially targeting $1735 support. While a stronger dollar driven by FOMC hawks (see below) is weighing on prices, gold’s biggest short-term threat remains long liquidation from funds who in the runup to last week’s failed attempt to break resistance around $1800 had bought gold futures at the fastest pace since June 2019. During a two-week period to November 15 money managers bought 80k lots thereby flipping a short position to a 49k lots net long. During the same period holdings in bullion-backed ETFs continued to drop, signaling no appetite from longer-term focused investors to get involved. An extension of the recent rally likely requires further declines in yields and the US dollar driving fresh demand for ETFs or some other catalyst that sees a run to safety. US treasuries (TLT, IEF) US treasury yields rose slightly on Friday, but have fallen back to start the weak amidst soft risk sentiment in Asia. Friday saw the yield curve inversion reaching a new extreme for the cycle at –72 bps for the 2-10 slope. For the 10-year yield, the cycle low is 3.67%, with considerable focus on the 3.50% level (the major high from June just after the FOMC meeting), while an upside reversal would require a jump well through 4.00%. What is going on? China’s Covid outbreak is getting worse China reported its first official Covid-related death in nearly 6 months in Beijing as the outbreak continues to get worse and cast doubts on a Xi pivot. The capital added 516 cases on Sunday and called the situation "grim." There are some retail and school closures, and the request to stay home was made over the weekend and has been extended. Meanwhile, a district in Guangzhou has imposed a 5-day lockdown to conduct mass coronavirus testing in some areas. China focused commodities have taken a haircut on the recent deterioration on concerns tighter restrictions could be enforced, while China implements its new 20-point tweaking covid restriction plan, aimed at minimising disruptions to people’s daily lives and the economy. The iron ore (SCOc1) price fell almost 4% on Monday in Asia while copper has lost 8% during the last week. Hopes regarding China’s property sector remain after the nation introduced a property rescue package last week. Netherlands trade minister says US cannot impose trade restrictions on Netherlands Referencing the US’ ban against exports of key advanced semiconductor production technology, the Netherland’s trade minister said Friday. This was among signs that Europe is seeking a “middle path” on its policy toward China after US President Biden’s administration asked key allies to comply with its ban as well. French President Macron Friday also pushed back against the idea of dividing the world into rival blocs, while German Chancellor Scholz visited China two weeks ago looking for economic reconciliation between the two countries. Sweden house prices down 3% m/m in October This takes the decline in house prices down 14% from the peak sounding off the alarms at the Riksbank and commercial banks as the house price declines will drive impairments on loans related to the sector. This could in turn lead to lower credit extension from banks into the private sector and thus slow down the economy further. ECB Christine Lagarde reaffirms high inflation remains the number one issue In a speech on Friday, ECB president Christine Lagarde confirmed once again that the central bank will mostly focus on fighting inflation in the short- and medium-term. According to her, the risk of a recession in the eurozone has significantly increased but even if this happens, it is unlikely to quell inflation significantly. This means that hiking interest rates is still on the cards. She also advises the eurozone government to embrace targeted and temporary fiscal stimulus. Too much fiscal stimulus is likely to stimulate demand, thus increasing inflationary pressures. Based on the detailed eurozone HIPC report for October which was released a few days ago, there is so far no sign whatsoever of a peak in underlying inflation pressure. In our view, we should not take for granted that the ECB will slow the pace of hikes to 50 basis points in December. COT report shows major rotation between commodity sectors The weekly Commitment of Traders report covering the week to November 15 saw speculators make some major position adjustments as the dollar and yields dropped, a further inversion of the US yield curve raising the risk of an incoming recession as well as temporary hopes China would ease its Covid restrictions. Developments that saw funds reduce exposure in energy and grains while adding length to metals and softs. The biggest changes being a sharp reduction in speculative bets in crude oil, soybeans, corn and cattle while buying was concentrated in gold, copper, sugar and cocoa. What are we watching next? NZD gains ahead of RBNZ rate decision this week The Reserve Bank of New Zeeland is likely to deliver its sixth consecutive 50bps rate hike this week, or more with consensus tilting towards a larger 75bps move. The calls for a hike come amid hot inflation at 7.2% YoY in Q3 – well above the RBNZ’s 1-3% target – which comes in conjunction with a tight labour market. Most members of the RBNZ shadow board also supported a 75bps rate hike. NZDUSD started the week on a stronger footing, after having touched 0.62 on Friday. AUDNZD remains in a downtrend with China’s Covid outbreak as well as a relatively dovish RBA limiting the prospects for AUD. Fed’s Collins says 75bps still on the table for December, Bostic dovish Fed’s Boston Governor Collins appeared on a CNBC interview on Friday and said she hasn’t decided on the magnitude of next month’s interest rate hike, but that a 75bps rate hike remains on the table. She also emphasised that there is no clear and significant evidence that the overall inflation is coming down at this point, and there is also no clear consistent evidence of softening in labor markets. In fact, her comments raised terminal rate expectations as she said that data since September have kind of increased the top of where the Fed may need to go with interest rates. On the economy, she is concerned there could be a self-fulfilling dynamic that could make a more severe downturn more likely. However, Collins is reasonably optimistic a recession can be avoided. On the other hand, we also heard from Atlanta Fed Governor Raphael Bostic who said he favours slowing down the pace of rate hikes and hinted that terminal rates will be about 1% pt higher from here. Worth noting however that Collins is only a voter this year (and not in 2023) while Bostic is not a voter this year or next. Earnings to watch Today’s US earnings focus is Zoom Video and Dell Technologies. After being a darling through the pandemic Zoom Video has experienced revenue growth coming down to 4.4% y/y expected in the FY23 Q3 (ending 31 October) release down from 35% y/y a year ago. The company is well run but is facing intense competition in the video conferencing business. Dell Technologies will likely highlight the trends we already know of slowing PC sales and lower spending on enterprise technology driven by a slowing economy and falling share price in the technology sector. Today: Compass, Agilent Technologies, Zoom Video, Dell Technologies Tuesday: Kuaishou Technology, Medtronic, Analog Devices, VMware, Autodesk, Dollar Tree, Baidu, HP, Best Buy Wednesday: Xioami, Prosus, Deere Friday: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) 1330 – US Oct. Chicago Fed National Activity Index 1800 – US Fed’s Daly (Voter 2024) to speak 2145 – New Zealand Oct. Trade Balance  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-21-2022-21112022
Crude Oil Sees Its Biggest Weekly Pull Back Since April

The Gloomy Economic Outlook Is Weighing On Crude Oil Prices

Craig Erlam Craig Erlam 21.11.2022 11:37
Oil slips further amid China woes The prospect of more restrictions and therefore lower demand in China has weighed on crude prices recently. Brent slipped back below $90 last week and could register the fourth day of declines if it remains in the red. We’re seeing bleak economic prospects all around the globe which continues to weigh on oil prices and if interest rates keep rising as they are, expectations will likely deteriorate further. That will make the next OPEC+ meeting in a couple of weeks all the more interesting. The group came under fire early last month for its decision to cut output targets by two million barrels per day, even as many countries fight inflation and recession in part as a result of higher oil prices. The question now is whether the group be so bold as to cut output again in light of recent price moves and economic developments. Paring gains but still encouraging Gold prices are slipping at the start of the week in risk-averse trade that is supporting the US dollar. The yellow metal has performed extremely well in recent weeks as investors have been buoyed by slightly less hawkish rhetoric from the Fed and some much more positive inflation prints. It’s stalled around $1,780 which was previously a very significant area of support and given some back in recent days but it continues to trade well off the lows which is encouraging. The next test of support could be $1,730 where it met strong resistance on the way down in September and October. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The US PCE Data Is Expected To Confirm Another Modest Slowdown

Saxo Bank Podcast: Correlation Between Risk Sentiment And The US Dollar (USD), The Outlook Of Gold, Copper And Crude Oil

Saxo Bank Saxo Bank 21.11.2022 11:54
Summary:  Today we look at downbeat sentiment on the latest concern that the reopening trade in China isn't going to happen any time soon with the first official deaths from Covid there in months reported. Elsewhere, we look at tight inverse correlation between risk sentiment and the US dollar and positioning in the US FX futures market, the holiday-shortened week in the US, gold, copper & crude oil, incoming earnings including Dell and Zoom Video, the macro calendar for this week (including the US Thanksgiving holiday) and much more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-21-2022-21112022
Investments In Specific Football Clubs Do Not Appear To Be Profitable

World Cup Begins! |The Euro (EUR) Decline | Equity Rally Wanes

Swissquote Bank Swissquote Bank 21.11.2022 10:54
Stocks in Asia fell this Monday on news that China reported its first death in six months from Covid on Sunday, and two other deaths followed. The news spurred fear that the government could make a U-turn on its decision of easing the strict Covid zero rules, and wreak havoc in Chinese markets, yet again. US Elsewhere, the US-inflation-data boosted rally faded last week, on the back of a too-strong-to-be-happy retail sales print, and a couple of hawkish comments from Federal Reserve (Fed) Presidents, including a chart from Mr. Bullard where the Fed’s terminal rate stretched up to 7%!This week, investors will focus on interest rate hikes and the US Black Friday sales. Commodities In commodities, the barrel of US crude slipped below the $80 psychological level last week, below the post-pandemic ascending trend base. Forex In the FX, the US dollar kicks off the week on a positive footage, on the back of a retreat in dovish Fed expectations. Crypto In cryptocurrencies, contagion news from the FTX collapse continues making the headlines in cryptocurrencies. According to the latest news, FTX owes more than $3 billion to its unsecured creditors, and crypto.com, Binance and OKX suspended deposits of dollar-backed stablecoins, USDC and Tether before last weekend. World Cup In sports, the world’s most expensive World Cup kicked off this weekend in the middle of the Qatari desert, with a lot of unusual news, speculation and backlash about the CO2 emissions and limited sales of alcohol, among other criticism. Investors hope sports betting and beverage companies would see a boost from the event… Watch the full episode to find out more! 0:00 Intro 0:40 China Covid worries resurface 1:57 Equity rally wanes, as attention shifts to rate talks & Black Friday 4:19 Oil dips below $80pb 5:27 USD gains, as XAU, EUR decline 6:52 FTX contagion continues, Solana further pressured 8:20 World Cup begins! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #China #Covid #World #Cup #hawkish #Fed #USD #EUR #XAU #crude #oil #US #retail #sales #Thanksgiving #BlackFriday #FTX #contagion #Bitcoin #Solana #Tether #USDC #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Commodities: Signals from China influence crude oil prices

Ed Moya Ed Moya 21.11.2022 22:52
Oil Crude prices remain heavy as China continues to have setbacks with its COVID fight. The warnings from key Chinese officials are the primary driver behind oil’s current slump. ​ As we near the European Russian crude ban, it seems the physical markets are already showing most of the effects of those sanctions. ​ Europe has been quickly erasing its dependence on Russian crude and that will continue as we approach the oil price cap deadline. A potential rail strike could end up being very troubling for the weakening US economy. ​ Rail workers have till early December to reach a new contract agreement (or extend it again as they did for the midterm elections), but until they do this could weigh on the crude demand outlook as supply chain problems will lead to many delays. Oil is going to have trouble finding a floor with a deteriorating crude demand outlook for both world’s largest economies. ​ Until we get some positive news from either China or the US, the dollar will continue to rebound and crude’s path appears to be headed lower. Brent crude fell below the $85 level after reports that the Saudis were debating an OPEC+ increase in production as the Russian oil price cap nears. ​ Oil didn’t stand a chance today as both the supply and demand side headlines turned bearish. Gold Gold is heading lower this short Thanksgiving week as the king dollar trade makes a comeback. ​ Gold will only be a safe-haven trade if the dollar is in a defensive mode and that is not happening here. ​ Gold needs China’s Covid situation to improve before it can start to look attractive again for investors. ​ If the dollar rally turns excessive, gold could be vulnerable to a plunge towards the $1700 level. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Crude crushed, gold stumbles - MarketPulseMarketPulse
Crude oil market affected by news that OPEC+ will enlarge output

Crude oil market affected by news that OPEC+ will enlarge output

ING Economics ING Economics 22.11.2022 07:21
A stronger USD weighed on most of the commodities complex yesterday. The oil market also saw significant volatility after reports that OPEC+ is looking to increase supply at its next meeting. These reports were later denied by Saudi Arabia Source: Shutterstock Energy - OPEC+ noise starts already Oil prices were whipsawed yesterday with ICE Brent trading in almost a US$6/bbl range. The catalyst for the increased volatility was a report from the WSJ suggesting that OPEC+ is looking to possibly increase output by as much as 500Mbbls/d when the group next meets on 4 December. However, this report was quickly denied by the Saudis, and this led the market to recoup most of its losses. It would be an odd move from OPEC+ to increase supply when there is still so much demand uncertainty, and while there is still so little clarity on what the full impact of the EU ban on Russian oil will be. We believe it is unlikely that the group makes any further changes to its deal after reducing production targets by 2MMbbls/d at their meeting in October. If we are to see changes, this would likely only be next year when there is more clarity on Russian supply. Russia’s Deputy Prime Minister, Alexander Novak, has once again made it clear that Russia will not supply crude oil or refined products to countries which follow the G-7 price cap. Instead, oil will either be redirected to those nations who choose to ignore the price cap or Russian output will be reduced. It is expected that the market will receive more clarity on the G-7 price cap this week, including the level at which the group plans to set the cap.   Metals – China Covid concerns push metals lower LME metal prices fell on Monday as concern over China’s potential reopening amid a rise in Covid-19 cases weighed on sentiment. Beijing reported three Covid deaths over the weekend as cases rose, fuelling concerns that tougher restrictions in the capital might return once again. A stronger dollar added to the downbeat mood. LME copper prices dropped by around 2.4%, while LME aluminium prices were also down by around 2.1%. A monthly survey from Mysteel showed that Chinese stainless steel production could drop by around 5% MoM in November as higher nickel prices weigh on the profitability of mills. While LME nickel prices have increased by around 15% in the current month, China’s stainless steel prices have been largely flat due to soft demand for end-products. Rising Covid-19 cases and threats of lockdowns are likely to further weigh on operating rates over the coming weeks and keep nickel demand under pressure.      Read this article on THINK TagsSaudi Arabia Russian oil price cap Russian oil ban OPEC+ Covid-19 China Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Swiss Inflation Falls Below Expectations; US Markets Closed, Fed Minutes Awaited

RBNZ Could Deliver A 75bps Rate Hike This Week | A Big Beat For Dell

Saxo Bank Saxo Bank 22.11.2022 08:40
Summary:  Risk off tone in the markets spilled over to the US session on Monday after a fresh surge in Covid cases in China. Fed speakers tilted neutral-to-dovish, but the USD has turned more risk-sensitive rather than being yield-sensitive and ended the day stronger, especially against the Japanese yen. Oil prices whipsawed, falling 6% on OPEC output boost speculation which was later denied by Saudi Arabia, and Gold tested key support as well. Earnings from Zoom and Dell beat consensus, but a consistent message on a tough Q4 continued to dampen sentiment. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) closed in the red Nasdaq 100 dropped by 1.1% and S&P500 slid 0.4% in a relatively quiet session. The sentiment was dampened slightly by concerns of potential China backtracking in easing Covid control measures as new cases surged. On the other hand, dovish-leaning comments from the Fed’s Bostic and Daly boosted the sentiment somewhat. Among the sectors of the S&P 500, consumer discretionary, energy, and communication services declined the most. Tesla (TSLA:xnas) plunged 6.8% on a recall of over 300,000 cares for tail-lamp issues and the Covid outbreak in China. Walt Disney (DIS:xnys) surged 6.3% after Robert Iger, the entertainment giant’s former chairman and CEO to return as CEO, replacing Bob Chapek. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) finished a choppy session little changed The dovish comments from Atlanta President Bostic and San Francisco Fed President about the slowing the pace in December and a terminal rate potentially of around 5% did not have much market impact. The 2-year yield edged up 2bps to 4.55%. The long end however caught a bid in early New York trading, with the 10-year yield falling as much as 7bps to 3.76% at one point when the crude oil price fell over 6% to as low as USD75.08 intraday. The 10-year pared gains and finished the day unchanged at 3.83%.  The Australian share market opens 0.6% higher on Tuesday Bright sparks are in lithium, fertilizers, coal and banking. Lithium company Pilbara Minerals trades 4% higher and Allkem (AKE) ais also up about 3% with sentiment in the lithium sector buoyed after lithium giant SQM shares rose almost 10% in NY on announcing a US$3.08 dividend per share following their optimistic update last week. SQM also operates in fertizliers as well, so ASX fertilizers companies are seeing a sentiment uptick with Incitec Pivot (IPL) are trading higher. Coal companies such as Whitehaven (WHC) and New Hope (NHC) also are trading sharply higher with large block trades coming through with traders expecting higher prices for coal in January. Also in commodities, it’s worth watching copper company Oz Minerals (OZL) as options trading volume increased dramatically after BHP increased their takeover offer for company. Yesterday OZL options volume was almost 7 times the 20-day average, with 5,000 calls and zero puts, meaning the market expects a higher price for OZL. In banking Virgin Money (VUK), trades up 13% today after the London listed stock rose 15%. Virgin reported stronger than expected profits for the year to Sept. 30 and upgraded its outlook on Monday, saying it expects its net interest margin to expand in the medium term. Virgin Money’s Slyce, a buy-now-pay-later product that launched earlier this year, had a waitlist of about 40,000. So many are thinking the business could be potentially turning around.  Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) declined as Covid cases surged Investors turned their focus on how the Chinese authorities would be handling the surge in Covid cases towards the April high and whether China would backtrack the 20 fine-tuning pandemic control measures. Hang Seng Index fell by 1.9% and Hang Seng TECH Index plunged by 3%, with China Internet, consumer, Macau gaming, and EV stocks leading the decline. JD.com (09618:xhkg), Alibaba (09988:xhkg), and Meituan (03690:xhkg) dropped by around 5% each. In mainland bourses, CSI 300 slid 0.9%. Food and beverage, beauty care, services, and media stocks were the major laggards. Kweichow Moutai (600519:xssc), and Wuliangye Yibin (000858:xsec) fell by around 3% each.  FX: Dollar strength returns, mainly on the back of Japanese yen Risk off tone from the fresh surge in cases in China prompted a bid tone in the US dollar on Monday. Fed speakers were neutral-to-dovish, lacking the hawkish push seen from Collins and Bullard last week, but as we have written before, dollar is turning to be less yield-sensitive now, but more risk-sensitive as it draws safe haven flows. USDJPY rose above 142 with US 2-year yields inching above 4.55% and 10-year also somewhat higher. Even as the pace of Fed rate hikes slows down, most members have called for over 5% terminal rate, suggesting downside for the Japanese yen may be close but pressure isn’t completely off yet. Disappointing German PPI and dollar strength pushed EURUSD lower to 1.0222 lows.  Crude oil (CLZ2 & LCOF3) whipsaws on OPEC+ reports A volatile day for crude oil amid reports that OPEC was planning to lift production. Oil prices fell sharply with WTI touching $75/barrel and Brent below $84after the Wall Street Journal reported that OPEC+ alliance was considering an output increase of 500kb/d in light of the looming EU ban on Russian oil imports. Oil pared these losses after Saudi Arabia denied the report; instead insisting that the current cut of 2mb/d was in place until the end of 2023. Demand concerns broadly remained with rising virus cases in China and slowing global consumption as central banks around the world continue to tighten policy. A stronger dollar also weighed on oil prices.  Gold (XAUUSD) tested the key 1735 support A stronger dollar continued to push Gold lower on Monday, and it tested the key support at $1735. With FOMC minutes due this week, and more Fed speakers on the horizon, there may be more talk about a higher terminal rate pricing even as the pace of rate hike slows from December. This, together with the risk of repeat lockdowns in China, could continue to weigh on the precious metal. An extension of the recent rally likely requires further declines in yields and the US dollar driving fresh demand for ETFs or some other catalyst that sees a run to safety. What to consider Development in China’s handling of the Covid outbreak across large cities to watch Daily new cases in mainland China surged to 26,824, a new high since April. Beijing reported three Covid deaths, the first time in more than half a year. Part of the population in Guangzhou, Beijing, Chengdu, Zhengzhou, and Shizjiazhung are urged to stay home or under some sort of movement restrictions. It is a testing time for the local authorities of how to control the outbreak and implement the recently released fine-tuning measures to minimize disruption to daily lives and economic activities. The People’s Daily published an article to call for handling pandemic control scientifically and with precision in the spirit of the 20 fine-turning measures. The National Health Commission released four documents to provide further guidelines on how to do PCR testing, management of high-risk districts, quarantine at home, and health surveillance. As Hong Kong’s Chief Executive John Lee was tested positive and he sat near President Xi in some meetings during the APEC Summit last week, investors are also closing watch if President will meet Cuban President Miguel Diaz-Canel when the latter visit China on Nov 24.  Fed’s Daly tilted dovish, while Mester was more neutral Mary Daly (2024 voter) called on the Fed to be mindful of the lagging impact hikes have on the economy.She suggested financial conditions are tighter than what is suggested by Fed rates, saying financial markets are priced like the FFR is at 6%, not 3.75-4.00%.She also said the Fed must be mindful of overdoing rate hikes but there is still more work to be done but inflation is moving in the right direction. She noted policy is in modestly restrictive territory but she sees it peaking at around 5%, saying 4.725-5.25% is reasonable. Meanwhile, 2022 voter Mester said it makes sense to slow down the pace of rate hikes and believes they can slow down from 75bps in December.Mester is beginning to see the Fed's actions work but they need more, sustained good news. She thinks the Fed is just barely there in regards to restrictive territory, adding they need to get there. Disappointing guidance from Zoom (ZM) Zoom reported Q3 EPS of $1.07, $0.24 better than the analyst estimate of $0.83. Revenue for the quarter came in at $1.1 billion versus the consensus estimate of $1.09B. But guidance disappointed as with expectations penned lower than consensus as Q4 2023 EPS of $0.75-$0.78 was seen, vs. the consensus of $0.80. Zoom sees Q4 2023 revenue of $1.095-1.105B, versus the consensus of $1.12B.  Dell Technologies (DELL) beats consensus A big beat for Dell as it reported third-quarter adjusted EPS of $2.30 on revenue of $24.7 billion, compared with estimates for $1.61 per share and $24.4B, respectively. However, PC demand remained weak and weighed on demand outlook, while Q3 were boosted by favorable corporate-PC positioning and robust operational execution to drive the margin and EPS beat.  RBNZ’s hawkishness to continue to outperform while Riksbank to play catchup The monetary policy decision from the Reserve Bank of New Zealand (RBNZ) will be key on Wednesday to determine the direction of NZD, which has seen strong gains over the past month from higher hawkishness. After a series of 50bps rate hikes, there are some expectations that RBNZ could deliver a 75bps rate hike this week, as inflation and labour market conditions support the case for further front-loading. Inflation has reached 7.2% YoY in Q3 – well above the RBNZ’s 1-3% target. Most members of the RBNZ shadow board also supported a 75bps rate hike. Meanwhile, the Riksbank has been lagging other G10 central banks in tightening policy and is now playing catch up after delivering a 100bp hike in September. The Riksbank is expected to deliver a 75bps hike on Thursday while another 100bps hike can’t be ruled out.     For our look ahead at markets this week - Listen/watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/market-insights-today-22-nov-2022-22112022
Analysis Of Tesla: A Temporary Corrective Rally Should Not Come As A Surprise

Negative Sentiment Over Massive Recalls Of Tesla Cars In The US

Saxo Bank Saxo Bank 22.11.2022 10:23
Summary:  Markets started the week in a downbeat mood with a weak session in the US yesterday. China posted another weak session as the rise in China Covid cases there has dogged sentiment since the weekend. Crude oil was slammed with a huge sell-off on a report from WSJ that key swing producer Saudi is considering a production boost, but the sell-off was entirely erased yesterday by the end of the day on official Saudi sources denying the story.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are in a slow grinding downward trend from the recent peak over a week ago trading around the 3,955 level this morning with the 3,920 level being the first support level to watch and then the big 3,900 level. Key risk sources to monitor are the USD, falling Tesla share price which could spill over into other pockets of the market, and the potential bankruptcy of the crypto company Genesis. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Daily new cases in mainland China continued to surge. Hang Seng Index fell 0.8% while CSI 300 managed to edge up 0.5%. China internet shares slid. On the other hand, SOE telecommunication and infrastructure stocks surged as the Chairman of China Securities Regulatory Commission said listed state-owned enterprises are undervalued by stock investors. China Unicom (00762:xhkg) jumped nearly 10% and China Communications Construction (01800:xhkg) surged 9%. FX: Dollar strength returns, mainly against the Japanese yen Risk off tone from the fresh surge in Covid cases in China prompted a bid tone in the US dollar yesterday. Fed speakers were neutral-to-dovish, lacking the hawkish push seen from Collins and Bullard last week, but as we have written before, the dollar seems to be less yield-sensitive now, but more risk-sensitive as it draws safe haven flows. USDJPY rose above 142 with US 2-year yields inching above 4.55% and 10-year also somewhat higher near 3.80%. USDJPY is unlikely to mount a full bullish reversal above the key 145.000 area unless US 10-year yields threaten back above 4.00% (and hit sentiment once again). Elsewhere, EURUSD bottomed out at 1.0222 yesterday, still well above meaningful downside pivot levels, the first being the 1.0100 area. Crude oil (CLZ2 & LCOF3) Crude oil prices whipsawed on Monday in response to a later denied report from the Wall Street Journal that the Saudis together with OPEC+ was considering hiking production by 500,000 barrels a day ahead of the EU embargo on Russian oil. The price quickly dropped $5 to a ten-month low before rallying to end the day close to unchanged. A move that left both buyers and sellers hurting, potentially worsening an already troubled market that is suffering from falling volumes and lower open interest given the current lack of clarity regarding demand and supply, and the potential impact of a G7-planned price-cap-plan on Russian seaborne flows. Russia may retaliate against the plan by refusing to supply crude oil to those involved. Demand concerns, however, broadly remain with rising virus cases in China (see below), slowing global consumption as central banks around the world continue to tighten policy and the stronger dollar weigh on prices Gold (XAUUSD) testing support at $1735 A stronger dollar continued to push Gold lower on Monday, and it tested the key support at $1735. In the short-term the direction will be determined by fund activity and whether they need to make further reductions in recently established, and now under water, long positions. With FOMC minutes due this week, and more Fed speakers on the horizon, there may be more talk about a higher terminal rate pricing even as the pace of rate hike slows from December. This, together with the risk of repeat lockdowns in China, could continue to weigh on the precious metal. An extension of the recent rally likely requires further declines in yields and the US dollar driving fresh demand for ETFs or some other catalyst that sees a run to safety. Silver (XAGUSD) meanwhile trades higher for the first time in six days after retracing 50% of the recent rally. US treasuries (TLT, IEF) US treasury yields are a bit adrift here, awaiting the next incoming data for next steps, with tomorrow’s batch of US data unlikely to move the needle as we await next Wednesday’s PCE inflation data and next Friday’s November US jobs report. The key upside swing area for the 10-year yields is near 4.00%, while the major downside focus beyond the 3.67% pivot low is the 3.50% cycle high from June. The 2-10 yield curve inversion remains near its lows for the cycle, at –70 basis points this morning. What is going on? Development in China’s handling of the Covid outbreak across large cities to watch The number of new Covid-19 cases hit 27,307 and reportedly more than 40 cities across the country are under some sort of lockdown or movement. Guangzhou, the provincial capital of Guangdong reported over 8,000 new cases and Chongqing seconded with over 6,000 new cases. So far, the municipal government of Guangzhou avoids adopting stringent lockdowns. However, Chongqing the manufacturing hub of Western China has rolled out more stringent lockdown. Chinese local governments are struggling to strike the right balance between adhering to zero-Covid policy and minimising disruption to daily lives and economic activities. The swing from abandoning PCR testing a week ago but only to reinstate mandatory testing days later in the city of Shijiazhuang was an example of such dilemma. On a positive note, the People's Daily published an article to call for handling pandemic control scientifically and with precision in the spirit of the 20 fine-tuning measures. The National Health Commission released four documents to provide further guidelines on how to do PCR testing, management of high-risk districts, quarantine at home, and health surveillance. Tesla decline could ignite risk-off Shares were down 7% yesterday following negative sentiment over massive recalls of Tesla cars in the US and renewed uncertainty as China is battling with reopening its society. Investors are also increasingly worried that CEO Elon Musk is spending too much time on his Twitter acquisition and that his recent behaviour around Twitter is damaging his brand and ultimately Tesla’s brand. We know from surveys that there is a large overlap in investors owning cryptocurrencies, Tesla, and Ark Innovation ETF. UK retail sales signals a temporary recovery in consumer spending A rebound in UK’s retail sales (the release is a volume-based measure) for October signalled that Q4 may see concerns on consumer spending ease slightly. Retail sales grew 0.6% MoM in October after a decline of 1.5% in September. The outlook, however, remains bleak given the squeeze on incomes amid high inflation and the rise in interest rates. Disappointing guidance from Zoom (ZM) Zoom reported Q3 EPS of $1.07, $0.24 better than the analyst estimates of $0.83. Revenue for the quarter came in at $1.1 billion versus the consensus estimate of $1.09B. But guidance disappointed as with expectations penned lower than consensus as Q4 2023 EPS of $0.75-$0.78 was seen, vs. the consensus of $0.80. Zoom sees Q4 2023 revenue of $1.095-1.105B, versus the consensus of $1.12B. Dell Technologies (DELL) beats consensus A big beat for Dell as it reported third quarter adjusted EPS of $2.30 on revenue of $24.7 billion, compared with estimates for $1.61 per share and $24.4B, respectively. However, PC demand remained weak and weighed on demand outlook, while Q3 were boosted by favourable corporate-PC positioning and robust operational execution to drive the margin and EPS beat. What are we watching next? RBNZ up tonight with market uncertain of size of hike. Sweden’s Riksbank up tomorrow The monetary policy decision from the Reserve Bank of New Zealand (RBNZ) will be key on Wednesday to drive the direction of NZD, which has seen strong gains over the past month from anticipation that the RBNZ may stay on a determined tightening path. After a series of 50bps rate hikes, there are some expectations that RBNZ could deliver a 75-bp rate hike tonight to take the rate to 4.25%, as inflation and labour market conditions support the case for further front-loading. Inflation reached 7.2% YoY in Q3 – well above the RBNZ’s 1-3% target. Most members of the RBNZ shadow board also supported a 75-bp rate hike. Meanwhile, the Riksbank has been lagging other G10 central banks in tightening policy and is now playing catch up after delivering a 100-bp hike in September. The Riksbank is expected to deliver a 75-bp hike on Thursday, with some looking for another 100-bp move. Crypto lender Genesis in the spotlight on bankruptcy risk Genesis, a large crypto lender and creditor to the FTX fraud operation that recently blew up, is looking for up to $1 billion in funding and has warned that it may have to file for bankruptcy if it is unable to find funding, also claiming that the risk of bankruptcy is not imminent. Bitcoin trades today near the cycle lows below 16,000 as the market cap of the entire crypto space has dipped below $800 billion. Earnings to watch Today’s US earnings focus is technology earnings from VMware, Autodesk, and HP. On the consumer sector, investors will be watching earnings from Dollar Tree and Best Buy. Analysts expect HP revenue growth to be down 12% y/y in FY22 Q4 (ending 31 October) as PC sales and enterprise technology spending are down from the high levels during the pandemic. Today: Kuaishou Technology, Medtronic, Analog Devices, VMware, Autodesk, Dollar Tree, Baidu, HP, Best Buy Wednesday: Xiaomi, Prosus, Deere Friday: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) 0830 – Australia RBA’s Lowe to speak 1300 – Hungary Central Bank Rate Decision 1330 – Canada Sep. Retail Sales 1415 – UK Office for Budget Responsibility testifies to Parliament 1500 – Eurozone Nov. Preliminary Consumer Confidence 1500 – US Nov. Richmond Fed Manufacturing Index 1600 – US Fed’s Mester (Voter 2022) to speak 1645 – Canada Bank of Canada’s Rogers to speak 1915 – US Fed’s George (Voter 2022) to speak 1945 – US Fed’s Bullard (Voter 2022) to speak 2130 – API's Weekly Report on US Oil Inventories 0100 – New Zealand RBNA Official Cash Rate  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-22-2022-22112022
In Crypto, You Could Prove You Own A Private Key Without Revealing It

Stress In Crypto Market Continue | Global Recession Fears

Swissquote Bank Swissquote Bank 22.11.2022 10:30
Market sentiment is fragile on uncertainty regarding whether China would make a U-turn on its Covid reopening plans. Oil Recession fears were already weighing on fragilized oil on Monday morning, when news that OPEC+ would increase oil production by half a million barrels per day on the upcoming December 4th meeting wreaked havoc yesterday. The barrel of US crude tanked to $75 per barrel, below the September dip. Later, Saudi denied the report and we are back to $80 this morning. Forex In the FX, the US dollar index bounced higher after getting very close to the 38.2% retracement level on 2021-2022 rally, and mixed Fed comments tilt the balance to the upside for the greenback. Cryto In cryptocurrencies, news that Genesis warned investors that it could file for bankruptcy further weighed on sector sentiment. Watch the full episode to find out more! 0:00 Intro 0:22 China Covid worries fuel global recession fears 1:53 Oil dips on China worries, OPEC rumour 3:57 US dollar gains, equities fall 5:14 Should you sell Tesla because you don’t like Elon Musk? 7:39 Disney up as ex-CEO returns 8:30 Bitcoin slips below $16K on FTX contagion, Genesis warning Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Twitter #Tesla #Elon #Musk #China #Covid #selloff #crude #oil #EUR #USD #hawkish #Fed #FTX #contagion #Genesis #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

Russia's Active Production Cuts Could Be Grounds For A Bullish Shock

InstaForex Analysis InstaForex Analysis 22.11.2022 10:40
Against the backdrop of a tense market situation, any unexpected news may lead to sharp price movements. The Wall Street Journal insider said that OPEC+ would be discussing a 500,000 bpd increase in oil production at a meeting in early December, pushing futures on the North Sea crude to a 10-month low. Only a rebuttal from Saudi Arabia allowed Brent to recover. Was that a fake? The decision to cut production would mean reversing the previous OPEC+ decree to increase it by 2 mln bpd. However, insiders cited four reasons why such a reverse could take place. Firstly, a day after the meeting, the EU embargo on Russian oil and the G7 price cap on it will come into effect. According to the IEA, these restrictions will lead to a reduction in Russian oil production by 2 mln bpd, to 9.6 mln bpd by the end of March 2023, as Moscow will find it difficult to find new markets. Changes in oil production in Russia Second, Saudi Arabia may have made compromises to the US that called for lower oil production after the White House told a federal court that Crown Prince and Prime Minister of Saudi Arabia Mohammed bin Salman should have sovereign immunity from a lawsuit in the United States over the murder of a Saudi journalist. Third, OPEC forecasts that oil demand will increase by 1.69 million bpd in the first quarter, to 101.3 million, and a production ramp-up is needed to balance the market. Finally, the UAE and Iraq have a huge desire to increase production. The former has a quota of just over 3 million bpd, while its production capacity is estimated at 4.45 million bpd, and the country intends to increase it to 5 million bpd by 2025. The reasons are certainly weighty but in the current conditions, the increase in supply will drag the Brent quotations to the bottom, which is not beneficial both for OPEC+ and Saudi Arabia. Its statement that the Alliance's production cuts of 2 million bpd will be valid until the end of 2023 and no one is going to cancel it, has calmed the oil market. It returned to its usual drivers: the COVID-19 outbreak in China and the assessment of risks associated with squeezing Russia out of the market. The number of coronavirus cases in China rose to 27,307 per day, which is close to the April peak. The fatalities increase the risks of the economic shutdown, which has a negative impact on demand and prices. On the other hand, Russia's active production cuts could be grounds for a bullish shock. From the technical point of view, a pin bar with a long lower shadow was formed on Brent's daily chart. If the price manages to reach above the high near $88 per barrel, it may create an opportunity to open short-term longs with the target at the pivot level of $89.4 and the resistance level in the form of the MA at $91. If the price rebounds from these levels, bears may return to the market and drag the price to the downside.     search   g_translate     Relevance up to 08:00 2022-11-27 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327778
The Commodities Feed: OPEC+ meeting ahead

Saudi Arabia Has Already Cut Crude Oil Exports Sharply

InstaForex Analysis InstaForex Analysis 22.11.2022 11:10
Saudi Arabia denied reports that it was discussing an increase in oil production in time for next month's OPEC meeting. Energy Minister Prince Abdulaziz bin Salman said the current cut of 2 million barrels a day will continue through the end of 2023, and if there is a need to take additional cuts to balance supply and demand, they are always ready to step in. This news led to crude oil futures bouncing back from earlier losses, trading 1.8% lower at $87.13 a barrel. After the Wall Street Journal reported that OPEC members were considering a 500,000 bpd increase in output, oil futures fell 6.1%, dipping below $85 a barrel. That would be a major turnaround after the organization decided to cut production by 2 million barrels a day in October. Back then, US President Joe Biden criticized the move, saying it threatened the world economy. OPEC has twice lowered its global oil demand forecasts, with Prince Abdulaziz saying the group would remain cautious because of uncertainty about the state of the global economy. Saudi Arabia has already cut oil exports sharply this month to comply with the OPEC agreement. The group's next meeting is scheduled for December 4.   Relevance up to 09:00 2022-11-24 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/327784
Commodities: Crude oil price could be supported by technicals

OPEC+ reject reports of increased output. Crude oil up

Craig Erlam Craig Erlam 22.11.2022 23:11
OPEC+ speculation drives oil market volatility Oil prices are bouncing back as OPEC+ members continue to reject reports of an output hike at the next meeting. An announcement from the G7 around the Russian oil price cap is due any day now and could complicate the group’s mission to balance supply and demand in the market, especially if the Kremlin responds by slashing exports to participating countries, as they’ve threatened. Read next: Canada: Retail sales declined, what can make a 50bp rate hike a less probable variant| FXMAG.COM That Russia is a key member of the alliance seriously complicates matters. I do wonder whether members could consider reconfiguring output targets, rather than boosting them, in order to account for lost Russian crude. Of course, that would likely require the backing of Russia which may not be forthcoming. Oil prices will likely remain highly volatile over the next couple of weeks against this backdrop, with the EU embargo and potential price cap scheduled to start the day after the OPEC+ meeting on 4 December. If the cap agreement goes to the wire, OPEC+ may opt to delay the meeting given the uncertainty it would generate. Gold rebounds off the prior resistance level The slight recovery in risk appetite today is coinciding with a pullback in the US dollar and a rebound in gold. The yellow metal has held onto the bulk of November’s gains over the last week, seeing support around $1,730 on Monday where it met firm resistance on multiple occasions in September and October. The key level to the upside remains $1,780 where it peaked around last week and saw substantial support around in the first half of the year. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rebounds, gold gains ground - MarketPulseMarketPulse
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Craig Erlam calls effects of the FTX crash "uncovered". Saudi Arabia confirms OPEC+ won't increase output in December

Craig Erlam Craig Erlam 22.11.2022 23:16
As was to be expected, it’s been a choppy week so far in financial markets with Europe a very mixed bag on Tuesday while US futures are marginally higher after making marginal losses on Monday. On the one hand, we could be seeing investors warily waiting for the FOMC minutes and taking in all of the speeches from various Fed officials in the meantime. On the other, this week may just be a void in an otherwise turbulent year thanks to a lack of major catalysts and the US Thanksgiving bank holiday at the end of the week. Read next: OPEC+ reject reports of increased output. Crude oil up| FXMAG.COM Saudi Arabia has gone some way to filling that void, with so much attention now likely to be on the Gulf over the coming weeks. It goes without saying that it came as quite a shock as everything unfolded as it wasn’t what anyone was expecting, quite the opposite in fact. And it could have a major impact on the outcome next month. But the 2-1 win over one of the tournament favourites, Argentina, was a monumental victory and undoubtedly one of the biggest shocks in World Cup history. It’s blown Group C wide open and cast serious doubt over whether Lionel Messi will ever get his hands on the trophy. In other news, Saudi Arabia also rejected reports that OPEC+ is considering increasing output on 4 December. Another dead cat bounce? Bitcoin is trading higher on Tuesday, but for how long? The knock-on effects of the FTX collapse are still being uncovered, with more names being added to the exposure list every day. Confidence in the markets has been shattered and it may take time to rebuild. There remains considerable uncertainty around the full consequences of the FTX collapse and as long as that remains the case, any rallies we see in cryptos may simply become dead cat bounces, as opposed to market bottoms. The latest occurred around $15,500, where it rebounded off a couple of weeks ago, and a break of this could trigger another sharp decline. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Filling the void - MarketPulseMarketPulse
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

The Commodities: The European Gas Market Strengthened

ING Economics ING Economics 23.11.2022 08:49
The European gas market strengthened yesterday after growing supply risks with Russian flows via Ukraine. Meanwhile, the European Commission has finally proposed the level at which they want to set the price cap for TTF futures In this article Energy - European Commission proposes TTF cap level Metals – Platinum to shift to deficit for the first time since 2020 Source: Shutterstock Energy - European Commission proposes TTF cap level The oil market benefited from a broader rally of risk assets yesterday with ICE Brent settling more than 1% higher. The market would also have taken comfort from other OPEC+ members also denying reports that the group was looking to increase supply at its next meeting on 4 December. The market is trading firmer in early morning trading in Asia after API data released overnight showed that US crude oil inventories fell by 4.8MMbbls, which was more than the roughly 2.6MMbbls draw the market was expecting. In addition, gasoline inventories are reported to have declined by 400Mbbls, whilst distillate stocks increased by 1.1MMbbls over the week. Expectations are that the G-7 will soon announce the level at which they intend to set the price cap on Russian oil. There are reports suggesting that the cap could be set at around US$60/bbl. This would not be too far away from the current price that Russia is receiving when taking into consideration the discount that Urals currently trades to Brent. The European gas market strengthened yesterday with TTF settling a little more than 3% higher on the day. This strength is due to growing supply risks, since Gazprom has threatened to reduce gas flows via Ukraine. However, for now, this is an issue between Russia, Ukraine and Moldova. Gazprom is claiming that Ukraine is keeping gas which is meant to go to Moldova and so is threatening to reduce flows by an amount that corresponds to the volume they believe Ukraine is keeping. Therefore, this shouldn’t have an impact on flows via Ukraine to the EU. However, there is always the risk that the situation escalates, which could have an impact on a larger share of gas flows that go through Ukraine. The European Commission yesterday proposed the levels at which they want to cap TTF gas futures and the conditions which would need to be met in order to do so. The Commission has proposed setting the cap for TTF at EUR275/MWh, which is above the current price of EUR120/MWh, but still below the highs seen back in August. In order for the cap to be triggered, front-month TTF futures need to trade above EUR275/MWh for two weeks and TTF prices need to be more than EUR58/MWh above the LNG market for 10 consecutive days in this 2-week period. Obviously, the higher the cap the smaller the impact this intervention will have on the European gas market. The risk has been that the price cap could see the trade moving from the exchange to the over-the-counter market, given that the latter would be excluded from the cap. This would not only mean lower liquidity in the market but also less transparency. Metals – Platinum to shift to deficit for the first time since 2020 The latest data from World Steel Association shows that global steel output remained unchanged YoY at 147.3mt in October, as production gains from Asia and the Middle East were offset by output losses from Europe, Russia and Ukraine. Cumulatively, total output fell 4% YoY to 1,553mt in the first ten months of the year. Meanwhile, Chinese steel production gained 11% YoY to 79.8mt in October, despite efforts by local authorities to curb output. However, from Jan’22-Oct’22, steel output in China declined 2.2% YoY to 861mt. Among other Asian nations, India’s steel output rose 2.7% YoY to 10.5mt last month, while YTD production also increased 6.1% YoY to 103.8mt in the first ten months of the year. The World Platinum Investment Council forecasts the global platinum market to shift to a deficit of 303koz (for the first time since 2020) in 2023 following higher demand from the automotive industry. This compares to an estimated supply surplus of 804koz for the current year. Total consumption is expected to rise by 19% YoY to 7.8moz, whilst global supply is forecast to increase only by 2% YoY to 7.5moz in 2023. The group forecasts automotive demand for platinum to rise by 3.3% YoY to 3.3mt, whilst jewellery demand should remain flat at 2mt next year. Industrial demand is expected to rise by 10% YoY to 2.3mt while ETF demand will continue to remain weak next year. TagsTTF Steel Russian oil price cap Russia-Ukraine European natural gas Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: OPEC+ meeting ahead

Western Countries Are Set To Agree On Russian Oil Price Cap

Saxo Bank Saxo Bank 23.11.2022 09:06
Summary:  U.S. equity benchmark indices gained over 1%, with energy being the best-performing sector as WTI crude bounced 1.5% on a larger-than-expected draw in private US crude inventory data and continued denials from OPEC+ about any production increases. Deliberations on caps on Russian energy remain on watch. Fed speakers continued to steadily pushback against pivot expectations, and FOMC minutes will be key today. Lower yields and a weaker dollar saw gold steady ahead of key support. Investors are also watching closely the development of the Covid-19 outbreak in China. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) Nasdaq 100 gained 1.5% and S&P 500 rose by 1.4%. All 11 sectors within the S&P 500 gained, led by energy, materials, and information technology. Trading was thin ahead of Thanksgiving. Investors were not overly troubled by yet another round of hawkish-leaning remarks from Fed officials on Tuesday. Best Buy (BBY:xnys), surging 12.7%, was the best performer in the S&P 500. The consumer electronic retailer reported better-than-expected earnings driven by smaller-than-feared declines in revenues and margins. On the other hand, Dollar Tree Store (DLTR:xnas), a discount store chain, tumbled 7.8%, after reporting earnings beat but downbeat Q4 guidance on margin pressure. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) In spite of a weak 7-year auction, treasuries were well bid over the day on Tuesday, in particular for the long end. The 2-year yield fell 4bps to 4.51% and the 10-year yield closed 7bps richer at 3.76%. Following a series of remarks from Fed officials since last week to push back to the market speculation of an early pause at a lower terminal rate next year, investors are adding onto their bets for a recession in the U.S. in 2023. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Daily new cases in mainland China continued to surge and approach the April high. Hang Seng Index fell 1.3% while CSI 300 managed to finish the session flat. Southbound investments registered an HKD5.8 billion net outflow, the largest outflow since August 2021. Southbound investors sold a net HKD3.5 billion of Tracker Fund (02800;xhkg) and HKD1.7 billion of Meituan (03690:xhkg). Meituan tumbled 8.3% and was the worst performer among stocks in the Hang Seng Index on Tuesday. On the other hand, SOE telecommunication and infrastructure stocks surged as the Chairman of the China Securities Regulatory Commission said listed state-owned enterprises were undervalued by stock investors. China Unicom (00762:xhkg) gained 6.8% and China Communications Construction (01800:xhkg) rose by 8.4%. China Aluminum (02068) surged 25.5% after jumping as much as 42.8% at one point. FX: Dollar weakens as risk sentiment stabilizes Data and news flow was thin on Tuesday before it picks up today with FOMC minutes and PMIs due ahead of the US Thanksgiving holiday. Fed speakers Mester and George added little new information, continuing to reaffirm that the fight against inflation had further room to run. US Richmond Fed marginally improved, albeit still negative with mixed details. Philly Fed non-manufacturing survey improved slightly, but firm-level business activity dropped into negative territory alongside full-time employment falling. Dollar slid to lows of 107.11, with gains led by NOK and NZD (ahead of RBNZ meeting where expectations are for a 75bps rate hike). EURUSD is poking at 1.032 while USDJPY is attempting a move below 141. Crude oil (CLZ2 & LCOF3) Crude oil prices were bid on broader risk appetite and continued OPEC+ denials of any production increases. Meanwhile, there was also a larger-than-expected draw of crude inventories while deliberations around Russian energy price caps were held ahead of the planned December 5th implementation. However, there were also reports that China has paused some purchases of Russian oil ahead of the price cap implementation. Supply worries however remained with API reporting that US crude inventories fell by 4.8 million barrels for the week ended November 18, higher than the expected draw of 2.2 million barrels. API data also showed that gasoline inventories declined by about 400,000 barrels last week, and distillate stocks increased by 1.1M barrels. The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies fell by about 1.1M barrels last week. WTI futures traded firm above the $80 mark while Brent futures were near the $88 mark. Natural gas prices also rose as much as 5.2% after Gazprom threatened to cut its gas flows sent via Ukraine — the last remaining route to western Europe — next week.   What to consider The increase in the ECB’s TLTRO funding costs for European banks came into effect Until today, European banks’ outstanding borrowings from the ECB’s Targeted Long-term Refinancing Operations III (TLTRO III). LTRO III has been funded at as low as 50bps below the average of the ECB’s Depository Facility Rate (DFR) over the entire life of those borrowings. The DFR, which is currently 1.5%, has been kept at minus 50bps from Sept 2019 to July 2022. It has been a large subsidy from the ECB in the form of below-market funding costs to European banks. Some banks are depositing these monies back into the ECB and arbitraging the interest rate differential. Last month, the ECB announced to change the calculation of the applicable DFR index with effect from Nov 23 to over the current period as opposed to the whole life of the borrowings.  The move will reduce European banks’ net interest income and withdraw liquidity from the banking system. Currently, the TLTRO III balance is EUR 2.1 trillion.     A testing time for the implementation of the fine-tuning measures for controlling Covid-19 outbreak in China The number of new Covid-19 cases hit 27,307 and reportedly as many as 48 cities across the countries are under some sort of lockdown or movement. Guangzhou, the provincial capital of Guangdong reported over 8,000 new cases and Chongqing seconded with over 6,000 new cases. So far the municipal government of Guangzhou avoids adopting stringent. However, Chongqing the manufacturing hub of Western China has rolled out more stringent lockdown. Chinese local governments are struggling to strike a right balance about adhering to zero-Covid policy and minimising disruption to daily lives and economic activities. The swing from abandoning PCR testing a week ago but only to reinstate mandatory testing days later was an example of such dilemma. In a press conference on Tuesday, health officials from the State Council reiterated the importance of implementing the 20 recently released fine-turning measures. Fed’s Mester and George keep the focus on inflation As investors continue to try and gauge the path of Federal Reserve rate hikes, Cleveland Fed President Loretta Mester reiterated on Tuesday that lowering inflation remains critical for the central bank, a day after supporting a smaller rate hike in December. Kansas City President Esther George said the central bank may need to boost interest rates to a higher level and hold them there for longer in order to temper consumer demand and cool inflation. Russian oil price cap in the works The Wall Street Journal is reporting that Western countries are set to agree on Russian oil price cap around $60 per barrel. However, it could be as high as $7 per barrel ahead of the December 5 start date. The sanctions that the G7, EU and Australia will set, will ban the provisions of maritime services for shipments of Russian oil unless the oil sells below the cap price. The aim is to reduce petroleum revenues for Russia's war machine while maintaining flows of its oil to global markets and preventing price spikes. EU’s new proposed cap on gas prices The EU proposed a cap of €275 per megawatt-hour on natural gas prices to defend consumers against a steep rise in energy costs. The level is well above the current price of about €120, but below last summer's highs when Dutch TTF gas prices went as high as €300+. The tool will only be used if futures on the Dutch Title Transfer facility exceed €275 for two weeks and the gap between TTF and liquefied natural gas prices is greater than €58 for 10 trading days. Even at the height of the crisis in the summer, the price didn’t stay above that level for two weeks, suggesting the tool would not have been activated had it been in place then. That led several market watchers to question how powerful can will actually be. If approved by EU countries, the cap would be available for one year from January 1. Ant Group could be fined more than USD1 billion, setting the stage for concluding regulatory overhaul over the company According to Reuters, the Chinese regulators may be close to a decision to impose a fine of over USD1 billion on the Ant Group. Since being called to stop its IPO in 2020, the group has been under regulatory overhaul. While the amount of the fine is substantial, initial reactions from the investment community to the news are positive as the fine could set the stage for the conclusion of the regulatory overhaul. JD.COM (09618:xhkg) cut senior management pays while increasing benefits for all employees JD.Com announced that the company is slashing the pay for about 2,000 managers by 10-20% and using some of the savings from the move to fund planned increases in staff benefits, including health and housing benefits, for all employees including hundreds of thousands of delivery staff. Founder Richard Liu will also donate 100 million yuan towards staff benefits. The OECD revised downward its 2023 growth forecasts Yesterday, the OECD published its latest Economic Outlook. There is not much surprise. Global growth is expected to slow down significantly in 2023 to 2.2% and to rebound modestly in 2024 at 2.7%. This will be a long and painful economic crisis. Asia will remain the main engine of growth in the short-term. But the zero Covid policy in China will likely limit the country’s contribution to global GDP growth. Before Covid, China represented about 30% of global growth impulse. It is now down to roughly 10%. The OECD warns that the fight against inflation will take time. But several countries are successful. For example, in Brazil, the central bank moved swiftly, and inflation has started to come down in recent months. In the United States, the latest data also seem to suggest some progress in the fight against inflation. Nevertheless, a pause in monetary policy is unlikely in most countries in the short-term. Get access to the full report here. FOMC minutes to be key for terminal rate pricing The FOMC minutes from the November 2 meeting are scheduled to be released on Wednesday, just ahead of the Thanksgiving holiday. The key message delivered by Powell at this meeting was that the pace of rate hikes will slow down as needed, and that will likely remain the highlight of the minutes as well. However, Powell managed to deliver this message hawkishly at the press conference, but the risk from the minutes remains tilted to the dovish side. There is likely to be little consensus about whether the rates are in restrictive territory or there’s still room for that, and the divide within the committee remains key to watch as investors remain on the edge to expect a Fed pivot sometime in 2023. Flash PMIs on the radar for US, UK and EU The S&P flash PMIs for the US, EU and UK will be released in the week, and will likely test the soft-landing rhetoric that has been gaining traction. We will likely see further broad-based easing in the metrics from the October prints, as consumer spending remains constrained amid high inflation and a rise in interest rates. While expectations for December remain tilted towards a downshift in rate hikes for the Fed, ECB and the BOE, the upcoming data point will be more key in determining the terminal rate pricing. Markets are now back at pricing 5% levels for the Fed, but the ECB’s pricing for the terminal rate is still sub-3% while UK’s is 4.7% with fiscal austerity being delayed. Singapore’s Q3 GDP revised lower The final print of Singapore’s Q3 GDP was revised lower to 4.1% YoY, 1.1% QoQ from 4.4% YoY, 1.5% QoQ in the preliminary estimate. This came primarily on the back of weaker-than-expected manufacturing sector growth amid global demand weakness, which resulted in the first decline in non-oil exports for October. Meanwhile, covid curbs in China also continue to weigh on Singapore’s growth trajectory. The 2022 growth forecast was also trimmed to around 3.5% from a range of 3%-4% seen previously, a reflection of an increasingly challenging global macro environment, while 2023 growth forecast was set at 0.5-2.5%.   For our look ahead at markets this week - Read our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-23-nov-2022-23112022
EUR/USD Faces Pressure Amid PMI Releases: Is More Downside Ahead?

The OECD Warns That The Fight Against Inflation Will Take Time | Credit Suisse May Lose $1.6bn In Q4

Saxo Bank Saxo Bank 23.11.2022 09:12
Summary:  Market sentiment bounced yesterday on little news, with sentiment steady in Asia overnight. Long US treasury yields dipped, and short yields were steady ahead of today's FOMC minutes release from the November 2 meeting, taking the US yield curve inversion to a multi-decade low of -75 basis points. The focus in Europe today will be on preliminary November PMI for a sense of how badly the EU is tilting into recession.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rallied 1.3% yesterday closing at the 4,010 level, the highest close since 9 September, suggesting bulls are in control as bears are already sitting on strong profits for the year and therefore has little incentive to take bigger positions before yearend. The next big level on the upside is the 200-day moving average at around the 4,060 level. Today’s key events are preliminary US PMI figures for November and later this evening the FOMC Minutes which could provide more clues into the thinking of policymakers. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) According to Reuters, the Chinese regulators may be close to a decision to impose a fine of over $1 billion on Jack Ma’s Ant Group. Since its IPO was halted by the Chinese authorities in 2020, the group has been under regulatory overhaul. While the amount of the fine is substantial, initial reactions from the investment community to the news were positive as the fine could set the stage for the conclusion of the regulatory overhaul. Alibaba (09988:xhkg) jumped more than 4% on the news. China internet stocks gained, led by Kuaishou Technology (01024:xhkg) as the social media platform company surged 6.2% on better-than-expected Q3 results. After rising 25.5% yesterday, China Aluminum (02068:xhkg) continued its advance, rising 18% on Wednesday. Overall market sentiment remains cautious as the number of new cases reached 28,883 on Tuesday, just a touch below the April high of 29,317 cases. Hang Seng Index gained 1.2% and CSI 300 climbed 0.5%. In mainland A shares, infrastructure names surged while pharmaceutical and biotech stocks retreated. FX: Dollar drops as risk sentiment rebounds Softer long US treasury yields also pushed the US dollar lower as the US yield curve inverted to a new cycle low. Still, the big dollar has done very little after the huge, but brief sell-off move on the October CPI release nearly two full weeks ago, with today’s large data dump and FOMC minutes the last hope this week for providing a spark of volatility in either direction ahead of the long holiday weekend (tomorrow, US markets are closed, with most workers also out Friday). The FOMC minutes late today are not highly anticipated, but could surprise if there is more consensus on a hawkish stance than anticipated. EURUSD has carved out a 1.0222-1.0479 range now. Crude oil (CLF3 & LCOF3) Crude oil closed higher on Tuesday supported by a general recovery in risk appetite as the dollar softened and recent short sales in response to false production hike rumor were paired back. Crude oil prices have traded lower this month in response to a drop in demand from China as Covid cases surge to near a record with restrictions of movements currently impacting 48 cities. Ahead of today’s weekly EIA report, the API reported a 4.8 million barrel drop in US crude stocks. The data also showed that gasoline inventories declined by about 0.4m barrels last week, and distillate stocks increased by 1.1M barrels. EU diplomats will discuss and potentially approve a price cap on Russian seaborne oil sales today (see below), and if implemented Russia may retaliate by refusing to sell its crude to nations that adopt the cap. WTI resistance at $82.25 followed by $84.50 Gold (XAUUSD) Gold trades nervously around the $1735 support level for a second day as the market awaits the release of FOMC minutes. The yellow metal managed a small bounce on Tuesday as the dollar softened after Fed officials indicated they were open to implementing less aggressive hikes going forward. In the short-term the direction will be determined by fund activity and whether they need to make further reductions in recently established, and now under water, long positions. An extension of the recent rally likely requires further declines in yields and the US dollar driving fresh demand for ETFs or some other catalyst that sees a run to safety. US treasuries (TLT, IEF) US treasury yields were steady at the short end and dipped at the long end yesterday, driving a new extreme in the 2-10 yield curve inversion of –75 basis points. Traders are awaiting incoming US data today and the FOMC minutes for next steps, although more heavy hitting data awaits next week with Wednesday’s November PCE inflation data and next Friday’s November US jobs report. The key upside swing area for the 10-year treasury yield is near 4.00%, while the major downside focus beyond the 3.67% pivot low is the 3.50% cycle high from June. What is going on? New Zealand’s RBNZ hikes 75 basis points to 4.25% The market was divided on whether the bank would go with the larger rate hike after a string of 50 basis points moves prior to the meeting overnight. NZ two-year yields jumped back toward the cycle highs overnight as the market participants raised the anticipated peak in the policy rate by mid-year next year to almost 5.50%, up about 30 basis points after the decision. Fed’s Mester and George keep the focus on inflation As investors continue to try and gauge the path of Federal Reserve rate hikes, Cleveland Fed President Loretta Mester reiterated on Tuesday that lowering inflation remains critical for the central bank, a day after supporting a smaller rate hike in December. Kansas City President Esther George said the central bank may need to boost interest rates to a higher level and hold them there for longer in order to temper consumer demand and cool inflation. Russian oil price cap in the works The Wall Street Journal is reporting that Western countries are set to agree on Russian oil price cap around $60 per barrel. However, it could be as high as $70 per barrel on oil loaded after the December 5 start date. The sanctions that the G7, EU and Australia will set, will ban the provisions of maritime services for shipments of Russian oil unless the oil sells below the cap price. The aim is to reduce petroleum revenues for Russia's war machine while maintaining flows of its oil to global markets and preventing price spikes. Russian Urals crude oil already trades at around a 25-dollar discount to Brent, so the impact on Russia’s revenues at current international prices would be limited. Credit Suisse warns of big loss in Q4 The Swiss bank is stating in a press release this morning that it could lose $1.6bn in Q4 driven by losses in its investment banks. In addition, the bank says that it has seen net outflows of 6% relative to AUM in Q3. To improve profitability the bank is one-third of all investment banking employees in its Chinese subsidiary following a recent staff expansion in the country. HP cuts 6,000 employees as PC demand weakens The technology company reported Q4 results yesterday in line with estimates but its FY2023 (ending 31 October 2023) outlook was below estimates with adj. EPS guidance of $3.20-3.60 vs est. $3.61. Over the next two years the company expects to reduce staff level by 6,000 to improve profitability. The OECD revised downward its 2023 growth forecasts Yesterday, the OECD published its latest Economic Outlook. There is not much surprise. Global growth is expected to slow down significantly in 2023 to 2.2 % and to rebound modestly in 2024 at 2.7 %. This will be a long and painful economic crisis. Asia will remain the main engine of growth in the short-term. But the zero Covid policy in China will likely limit the country’s contribution to global GDP growth. Before Covid, China represented about 30 % of global growth impulse. It is now down to roughly 10 %. The OECD warns that the fight against inflation will take time. But several countries are successful. For example, in Brazil, the central bank moved swiftly, and inflation has started to come down in recent months. In the United States, the latest data also seem to suggest some progress in the fight against inflation. Nevertheless, a pause in monetary policy is unlikely in most countries in the short-term. Read the full report here. The increase in the ECB’s TLTRO funding costs for European banks came into effect Until today, European banks’ outstanding borrowings from the ECB’s Targeted Long-term Refinancing Operations III (TLTRO III). LTRO III has been funded at as low as 50bps below the average of the ECB’s Depository Facility Rate (DFR) over the entire life of those borrowings. The DFR, which is currently 1.5%, has been kept at minus 50bps from Sept 2019 to July 2022. It has been a large subsidy from the ECB in the form of below-market funding costs to European banks. Some banks are depositing these monies back into the ECB and arbitraging the interest rate differential. Last month, the ECB announced to change the calculation of the applicable DFR index with effect from Nov 23 to over the current period as opposed to the whole life of the borrowings. The move will reduce European banks’ net interest income and withdraw liquidity from the banking system. Currently, the TLTRO III balance is EUR 2.1 trillion.     JD.COM cut senior management pays while increasing benefits for all employees JD.Com announced that the company is slashing the pay for about 2,000 managers by 10-20% and using some of the savings from the move to fund planned increases in staff benefits, including health and housing benefits, for all employees including hundreds of thousands of delivery staff. Founder Richard Liu will also donate 100 million yuan of his own money towards staff benefits. Under the quest for “common prosperity” of the top government leadership, Chinese tycoons are mindful of doing their share in redistributing income. What are we watching next? Flash PMIs on the radar for US, UK and EU The S&P flash PMIs for the US, EU and UK will be released in the week, and will likely test the soft-landing rhetoric that has been gaining traction. We will likely see further broad-based easing in the metrics from the October prints, as consumer spending remains constrained amid high inflation and a rise in interest rates. While expectations for December remain tilted towards a downshift in rate hikes for the Fed, ECB and the BOE, the upcoming data point will be more key in determining the terminal rate pricing. Markets are now back at pricing 5% levels for the Fed, but the ECB’s pricing for the terminal rate is still sub-3% while UK’s is 4.7% with fiscal austerity being delayed. Copper demand growth shifting from China to Europe and the US At the FT Commodities Asia Summit in Singapore, Jeremy Weir, the CEO of Trafigura said demand for copper is shifting away from cooling building activities in China to energy transition demand, especially in Europe and the US. Weir said demand for copper has remained strong despite recent global headwinds. “We’re seeing for example very strong copper demand in Europe through electrification and even through the pandemic,” he said. “Even the current crisis and conflict in Ukraine is not reducing the demand for copper.” Following a recent rally, that got rejected ahead of key resistance at $4 per pound, HG copper has dropped back and currently trades near the middle of its established range around $3.55 FOMC minutes to be key for terminal rate pricing The FOMC minutes from the November 2 meeting are scheduled to be released on Wednesday, just ahead of the Thanksgiving holiday. The key message delivered by Powell at this meeting was that the pace of rate hikes will slow down as needed, and that will likely remain the highlight of the minutes as well. However, Powell managed to deliver this hawkish message at the press conference, but the risk from the minutes remains tilted to the dovish side. There is likely to be little consensus about whether the rates are in restrictive territory or there’s still room for that, and the divide within the committee remains key to watch as investors remain on the edge to expect a Fed pivot sometime in 2023. Earnings to watch Today’s US earnings focus is Deere, the US manufacturer of agricultural and forestry equipment, with analysts expecting FY22 Q4 (ending 31 October) revenue growth of 18% y/y and EPS of $7.09 up 72% as momentum and pricing power remain strong due to high commodity prices on agricultural products. Today: Xiaomi, Prosus, Deere Friday: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Nov. Preliminary Manufacturing and Services PMI 0930 – UK Nov. Preliminary Manufacturing and Services PMI 1330 – US Oct. Preliminary Durable Goods Orders 1330 – US Weekly Initial Jobless Claims 1445 – US Nov. Preliminary Manufacturing and Services PMI 1500 – US Nov. Final University of Michigan Sentiment 1500 – US Oct. New Home Sales 1530 – EIA's Weekly Crude and Fuel Stocks Report 1700 – US Weekly Natural Gas Storage change 1905 – US FOMC Meeting Minutes 1905 – New Zealand RBNZ Governor at Parliament committee 2130 – Canada Bank of Canada Governor Macklem to testify to parliament committee Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-23-2022-23112022
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

The Fight Against A Pandemic In China May Have Pushed WTI Crude Oil Prices Lower

Conotoxia Comments Conotoxia Comments 23.11.2022 10:17
Following Monday's Wall Street Journal reports of a possible increase in oil production by the OPEC cartel by 500,000 barrels per day, the price of Brent crude (XBRUSD) fell by more than 5%. When Abdulaziz bin Salman, Saudi Arabia's Minister of Energy, subsequently denied the reports, crude prices returned to pre-announcement levels. However, let's have a look at how the price of crude could evolve in relation to supply and demand. Supply in the oil market According to the aforementioned Saudi Arabian energy minister, "The current cut of 2 million barrels per day by Opec+ continues until the end of 2023 and if there is a need to take further measures by reducing production to balance supply and demand, we always remain ready to intervene." Source: Conotoxia MT5, XBRUSD, Daily Currently, according to data reported by the cartel, global supply of this commodity amounted to 100.38 million b/d, against demand of 99.32 million b/d. At the last OPEC meeting, the decision was taken to make one of the largest production cuts of 2 million b/d, which would give a production level of around 98 million b/d. Let us remember that a production shortfall could significantly affect countries heavily dependent on oil prices. An example of such a country would appear to be the United States, which is also the largest oil producer globally (currently 19 per cent of world production). To patch up the dwindling supply of this commodity, we could see the US respond by reducing its inventory levels by 5.4 million barrels among companies.  Uncertain crude demand situation Reports of a slowdown or possible recession from one of the largest consumers of the commodity, China, may be worrying. They currently account for about 15 per cent of global oil demand and have daily consumption in the region of 15 million b/d. A significant share of the consumption of this crude for China's economy appears to be industrial production, which, according to the latest PMI reading of 49.2, allows talk of a slowdown. Reports of an intensification of the fight against a pandemic in the middle country may have pushed WTI crude oil prices (XTIUSD) lower. Source: Conotoxia MT5, XTIUSD, Daily The OPEC cartel's current forecasts for global demand in 2023 average 101.82 million b/d (up 2.24 million b/d y-o-y). We may approach these with some caution as they were published ahead of reports of a possible slowdown, pandemic restrictions in China and production cuts by the cartel. The latest report will appear on 13 December, after the OPEC meeting (3 December). Possible scenarios  The market situation for this commodity points to several possible scenarios. The first would be for OPEC not to increase production and for Chinese demand to fall. In that case, for demand to equal supply, it would have to decrease in China by about 13 per cent (2 million b/d), which seems unlikely.  A second scenario could be the Wall Street Journal's description of a 500 000 b/d reduction in production and a decline in demand from China. In this case, the equalisation of demand and supply would be caused by a decline in global demand of around 1.5 per cent or in China alone of 10 per cent, which also seems unlikely.  In the latter scenario, China is coping with a recession and a coronavirus attack, causing a crude shortage of around 2 million b/d (around 2 per cent of total demand). This would give signals for an increase in its price over the coming quarters. Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.    
Key Economic Events and Earnings Reports to Watch in US, Eurozone, and UK Next Week

OECD: The Global economy Will Not Stop Into Recession This Year

Swissquote Bank Swissquote Bank 23.11.2022 10:27
The OECD said the global economy will avoid a recession this year, and next year, and that unemployment rates won’t skyrocket. That was the good news. But growth will be low and slow, and inflation will remain high, keeping central bank policies tight. That was the bad news. Stocks The S&P500 gained, as strong earnings from retailers improved sentiment before Thanksgiving. Energy stocks performed well on the back of a sustained recovery in crude oil. Shell rallied 5% on announcement that the company will be reviewing its investment in the UK to avoid paying windfall taxes to the British government. BP rallied 6.52%. Central Banks In central bank news, the Reserve Bank of New Zealand (RBNZ) raised its rates by 75bp as expected today. The US dollar softened, and the EURUSD rebounded past 1.0320 in the middle of mixed comments about what the European Central Bank (ECB) should do at its next meeting. Gold In precious metals, gold slid yesterday despite a softer US dollar, and softer yields. China In China, stocks were not looking good as Beijing and Shanghai put stricter rules to slow the Covid contagion, again! But Alibaba rebounded almost 4% in HK today, on news that Ant Group would pay a fine over a billion USD. Crypto In cryptocurrencies, traders remain on the edge, on news that a ‘substantial amount’ of FTX assets have either been stolen or are missing. Bitcoin however resists. The price of a coin recovered above $16K yesterday, but risks remain tilted to the downside. Watch the full episode to find out more! 0:00 Intro 0:30 OECD says no recession, slow growth but not for UK! 1:45 Market update 2:52 Oil, natural gas up 4:41 Goodbye Shell! 6:15 EUR traders expect softer Dec rate hike 8:00 Gold under pressure 8:22 Alibaba jumps on $1 billion fine 9:08 Bitcoin resists Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #OECD #growth #forecast #Gazprom #natgas #crudeoil #recovery #EU #Russia #price #cap #EUR #USD #ECB #Fed #FTX #contagion #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Saxo Bank Podcast: The FOMC Minutes, The RBNZ Rate Hike And More

Saxo Bank Saxo Bank 23.11.2022 10:35
Summary:  Today we look at the market bouncing back strongly yesterday as we await a data dump from the US today ahead of the long Thanksgiving weekend there. While the focus from the Fed is on how the FOMC delivers its "deceleration of tightening" message, it is worth noting that financial conditions are close to their easiest since the Fed began hiking in 75 basis point increments back in June. Will this receive any comments in the FOMC minutes release tonight? We also look at leading indicators pointing to an incoming recession, talk crude oil, copper and wheat, the RBNZ hiking 75 basis points overnight, stocks to watch and much more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-23-2022-23112022
FXStreet’s Dhwani Mehta Opinion About Gold Movements

Whether Gold Can Build On Its Recovery Rally This Month

Craig Erlam Craig Erlam 23.11.2022 12:11
Is an output hike really feasible? Oil prices are marginally higher on Wednesday, continuing the recovery from a sell-off that was triggered by speculation that OPEC+ could consider a significant hike in output when it meets early next month. The move would certainly come as a surprise considering its two million barrel cut last month, the deteriorating global economic outlook, Chinese Covid restrictions, and the uncertainty around the Russian oil price cap. Of course, the cap may be part of the reason for the discussions, if they have in fact taken place. Without the backing of Russia, that would create a whole new dynamic within the group, even threaten the “+” element of it which would be a big shock. Those rumours have been strongly denied though which is why the price has recovered its losses. The only issue now is the economy, China, and what impact the G7 decision will have on Russian output. I don’t think volatility is going anywhere. Can the FOMC minutes be the catalyst for a breakout? Gold appears to have established a range over the last week or so, with the upper end falling around $1,780 – a major area of support in the first half of the year – and the lower around $1,730 – a major barrier of resistance in September and October. The FOMC minutes may determine which of these levels gives way first and whether gold can build on its recovery rally this month after such a long period of declines. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

The Crude Oil Market Came Under Further Pressure Yet Again

ING Economics ING Economics 24.11.2022 08:40
EU discussions on the proposed level for the G-7 Russian oil price cap put pressure on the oil market with the suggested level higher than many were expecting. Talks on the cap are expected to continue today In this article Energy- oil price cap talks Metals – China Covid concerns weigh on metals Agriculture – Ukrainian wheat exports   Tank farm for storage of petroleum products in Volgograd, Russia   Energy- oil price cap talks The oil market came under further pressure yet again yesterday. ICE Brent settled more than 3.3% lower on the day to close just above US$85/bbl. The key catalyst for this move was a report that EU members were looking at setting the price cap on Russian crude oil at somewhere between US$65-70/bbl. This is above previous reports of around US$60/bbl. Importantly, this is also around price levels that Russia was already receiving, given the discount with which Urals trade to Brent. Therefore, if we do see the cap set within this range, it would be less likely that Russia reduces supply as a result. At this level, the cap would achieve one of the two objectives - it would likely keep Russian oil flowing. As for the other objective of trying to cap Russian oil revenues, some may question how aggressive this level actually is. EU members failed to agree yesterday on the cap level, and we expect discussions to continue today. Weekly EIA data shows that US commercial crude oil inventories fell by 3.69MMbbls over the last week. However, when taking into account SPR releases of around 1.6MMbbls, total US crude oil inventories fell by 5.29MMbbls over the week. This crude draw occurred despite crude oil imports increasing by around 1.5MMbbls/d over the week, hitting their highest levels since the end of July. A pick-up in refinery activity would have helped with the crude draw. Higher refinery runs over the week, along with weaker implied demand for products meant that large builds were seen on the refined product side. Gasoline inventories increased by 3.1MMbbls, while distillate fuel oil stocks grew by 1.72MMbbls.   Metals – China Covid concerns weigh on metals LME aluminium and other major metals, traded lower yesterday as returning lockdowns and covid-related restrictions in China (just weeks after some restrictions were eased) dashed hopes for a demand revival in metals. The latest reports suggest that the ongoing virus controls are affecting operating rates at aluminium fabricators in Guangdong province. Aluminium rod inventories are building up, and demand in the copper market is also softening. Agriculture – Ukrainian wheat exports The Ukrainian grain traders union expects Ukraine to export 13mt of wheat and 20mt of corn in the 2022/23 season. This compares to wheat and corn exports of around 19mt and 27mt respectively in the previous season. The most recent data shows that Ukraine has exported around 6.3mt of wheat so far in the current season, compared to exports of 14mt during the same period in 2021/2022. TagsUkraine Russian oil price cap G-7 EIA China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
US CPI Surprises on the Upside, but Fed Expectations Unchanged Amid Rising Recession Risks

HP Expects To Reduce Staff In Coming Years | Xiaomi Reported Revenue In The Q3

Saxo Bank Saxo Bank 24.11.2022 09:00
Summary:  U.S. equities and bonds rallied on the November FOMC minutes which has a dovish cast stating “a substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate”. The 10-year treasury yield fell to 3.69%. Oil prices slid sharply on Wednesday with WTI futures dipping to sub-$77 lows as the EU proposed a higher-than-expected price cap on Russian crude - between $65-70/barrel. EURUSD rallied above 1.04 and USDJPY fell below 140 amid broad-based dollar weakness. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished higher on dovish signals from the Nov FOMC minutes U.S. equities found support and bounced after the release of the Nov 1-2 FOMC minutes in an otherwise thin trading session ahead of the Thanksgiving holiday. As bond yields fell, Nasdaq 100 rallied 1%, and the S&P 500 gained 0.6%. All sectors in the S&P 500 advanced except energy, which was dragged by a 4.3% decline in the price of the WTI crude. Consumer discretionary was the top gaining sector, led by Tesla (TSLA:xnas) that surged 7.8% after a leading US investment bank called the shares of Tesla “a bargain”. Deere (DE:xnys), the largest supplier of farm tractors and crop harvesters in the world, gained 5.1% after reporting an earnings beat and upbeat guidance citing strong demand. Manchester United (MANU:xnys) surged 26.1% after the club’s owner announced that they were exploring a sale. Coupa Software (COUP:xnas) jumped nearly 29% on a report that Vista Equity Partners is exploring an acquisition. Nordstrom (JWN:xnys) dropped by 4.2% after reporting a decline in sales and excessive inventory. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields fell after the Fed minutes The minutes for the Nov 1-2 FOMC meeting have a dovish cast, saying “a substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate” and some FOMC members had a concern about rate hikes might ultimately “exceed what was required to bring inflation back”. Yields declined across the curve with buying particularly strong on the long end. The 2-year yield dropped by 4bps to 4.48% and the 10-year yield finished the session 6bps richer at 3.69%. The 2-10-year part of the curve became yet more inverted at minus 79. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) China internet stocks gained, led by Kuaishou Technology (01024:xhkg) up 5.7%, Baidu (09888:xhkg) up 3.4%, JD.COM (09618:xhkg) up 3.3%, and Alibaba (09988:xhkg). Kuaishou and Baidu reported better-than-expected Q3 results. Alibaba shares were boosted by the prospect of coming out of the 2-year-long regulatory overhaul with a fine of over USD 1 billion. Meituan (03690:xhgx) underperformed with a loss of 1.1% following a statement from Prosus, shareholder of Tencent, saying that the Company was planning to unload the Meituan’s shares it received from Tencent. China Aluminum (02068:xhkg) continued its advance, rising 25.3% on Wednesday. Hang Seng Index gained 0.6% and CSI 300 climbed 0.1%. In mainland A shares, infrastructure names surged while pharmaceutical and biotech stocks retreated. Overall market sentiment remains cautious as the number of new cases reached 28,883 on Tuesday, just a touch below the April high of 29,317 cases. Large cities, including Beijing, Chongqing, Chengdu, Guangzhou, Zhengzhou, as well as Shanghai have further tightened pandemic control measures. FX: EURUSD above 1.04 and USDJPY falls below 140 amid broad-based dollar weakness The dovish read of the FOMC minutes from the November 2 meeting is hardly a surprise, given the key message has been around a downshift in the pace of rate hikes as expected. But together with weaker than expected flash PMIs for November (read below) suggesting demand slowdown concerns are starting to pick up pace, and a higher-than-expected jobless claims prints sending some early warning signals on the labor market, the focus has completely shifted away from inflation concerns. Market pricing of the Fed December meeting tilted further towards 50bps, and that resulted in a broad-based dollar sell-off. EURUSD surged above 1.04 while USDJPY slid below 139.50. Crude oil (CLZ2 & LCOF3) Oil prices slid sharply on Wednesday with WTI futures dipping to sub-$77 lows and Brent futures touching $84/barrel as the EU proposed a higher-than-expected price cap on Russian crude - between $65-70/barrel after a $60 level was touted yesterday. This higher price cap means that Russian oil can continue to flow into the international markets as it is above Russia’s production costs. Meanwhile, EIA data showed US crude inventories fell a more-than-expected 3.69 million barrels last week, but US gasoline stockpiles rose by 3 million barrels, the largest buildup since July, suggesting a weaker demand heading into Thanksgiving.   What to consider FOMC Minutes signal a smaller pace of rate hikes The FOMC minutes from the November 2 meeting were released on Wednesday, and the general tone of the members confirmed that the committee was leaning towards moving away from jumbo (75bps) rate hikes to a smaller pace. At the same time, "various" officials noted that the peak rate will be "somewhat higher" than previously expected. The minutes saw participants agree there were very few signs of inflation pressures abating (minutes were pre-October CPI) and they generally noted inflation outlook risks remain tilted to the upside. There were also some concerns about the strength of the labour market, where a few participants said ongoing tightness in the labour market could lead to an emergence of a wage-price spiral, even though one had not yet developed. The message remained less hawkish than what the Fed potentially needs to deliver at this point given the considerable easing in financial conditions. US PMIs disappointed, jobless claims rose US S&P flash PMIs for November disappointed, as manufacturing printed 47.6 (exp. 50.0, prev. 50.4) and services fell to 46.1 (exp. 47.9, exp. 47.8), while the composite dropped to 46.3 (prev. 48.2). New orders fell to 46.4, the lowest since May 2020, while employment saw a slight uptick to 50.8 from 50.4. The only good news is that both input and output prices dipped further, offering further positive signals on inflation. The PMIs indicated how concerns are shifting from the supply side to the demand side, with better news on supply chains but demand concerns from weakening new orders. Initial Jobless claims rose more than expected to 240k from 223k and above expectations of 225k, the highest print since August, suggesting that we continue to watch for further signals on whether the tight labor market may be starting to weaken. Better eurozone flash Composite PMI for November This was unexpected. The consensus forecasted that the EZ flash Composite PMI would fall to 47.0 in November from 47.3 in October. It actually improved a bit at 47.8. The increase mostly results from a better-than-expected Manufacturing PMI (out at 47.3 versus prior 46.4 and forecast at 46.0) while the services sector remains stable. There is another positive news. Price pressures are easing quite fast. The PMI price gauge fell to its lowest levels in two years due to a collapse in input prices. On a flip note, the flash Composite PMI Output Index for the United Kingdom (UK) ticked up to 48.3 in November. Surprisingly, the UK seems to hold up better than the eurozone and especially Germany. The jump in the PMI is still consistent with a recession in the eurozone and in the UK but it may be shallow and its steepness will mostly depend from country to country on the impact of the energy shock and fiscal measures taken to mitigate it. China’s State Council is calling on the PBOC to cut the RRR After a meeting on Wednesday, China’s State Council issued a memo calling on the People’s Bank of China (PBOC) to use monetary tools including a cut in the reserve requirement ratio (RRR) at an appropriate time to support the real economy. According to historical observations, the PBOC will do what the State Council says and cut the RRR in the coming days or weeks. Violent protests at Foxconn’s iPhone factory in Zhengzhou Video clips showed violent protests broke out at Foxconn’s iPhone production plant in Zhengzhou. What exactly caused the protests were unclear but speculation was about retention allowance to workers who are willing to stay at the factory until February 15, 2023, and work conditions. New Zealand’s RBNZ hikes 75 basis points to 4.25% The market was divided on whether the bank would go with the larger rate hike after a string of 50 basis points moves prior to the meeting overnight. NZ two-year yields jumped back toward the cycle highs overnight as the market participants raised the anticipated peak in the policy rate by mid-year next year to almost 5.50%, up about 30 basis points after the decision. Xiaomi reported inline revenue and better-than-feared adjusted net profit Xiaomi reported Q3 revenue of RMB70.47 billion, shrinking 10% Y/Y and flat Q/Q. Adjusted net profit came in at RMB2.1 billion, 6% above the Bloomberg consensus, and -59% Y/Y and +1% Q/Q. Excluding new initiative investment, core net profit increased 9% Q/Q to RMB2.9 billion. Blended ASP declined 4% Y/Y.  Gross margin was 16.6% in Q3, falling from 16.8% in Q2 and 18.3% a year ago. Q3 non-IFRS operating margin was 3.0%, down from Q2’s 3.1% and Q3 last year’s 6.7%. Credit Suisse warns of big loss in Q4 The Swiss bank is stating in a press release this morning that it could lose $1.6bn in Q4 driven by losses in its investment banks. In addition, the bank says that it has seen net outflows of 6% relative to AUM in Q3. To improve profitability the bank is one-third of all investment banking employees in its Chinese subsidiary following a recent staff expansion in the country. HP cuts 6,000 employees as PC demand weakens The technology company reported Q4 results yesterday in line with estimates but its FY2023 (ending 31 October 2023) outlook was below estimates with adj. EPS guidance of $3.20-3.60 vs est. $3.61. Over the next two years the company expects to reduce staff level by 6,000 to improve profitability. The Glazer family is exploring the sale of Manchester United The owner of Manchester United said that they are exploring the sale of the English Premier League football club and will consider “all strategic alternatives”. In May this year, Chelsea, another English Premier League club, was sold for around USD5.3 billion. Deere sees strong demand for farm, forestry, and construction machinery Deere said they are expecting high demand for equipment from farmers on elevated prices for agricultural commodities. In addition, the company expects increases in demand for its construction machinery from the oil and gas industry and construction equipment rental businesses. Strong progress in precision agriculture adoption is expected to help boost margins and aftermarket technology product sales. For our look ahead at markets this week - Read our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/market-insights-today-24-nov-2022-24112022
Britain's Rishi Sunak And EU's Ursula Von Der Leyen Will Meet Today To Finalize The Northern Ireland Drama

The Jump In The PMI Is Still Consistent With A Recession In The Eurozone And In The UK

Saxo Bank Saxo Bank 24.11.2022 09:05
Summary:  US stocks and bonds ended higher on Wednesday while the dollar closed at it weakest level since August after the Federal Reserve’s latest meeting minutes showed most officials backing slowing the pace of interest-rate hike soon, a prospect that was given some support following the release of weaker than expected economic data. Crude oil lost ground on growth concerns while the weaker dollar supported a rebound in gold, silver and copper. Today the US markets are closed for Thanksgiving holiday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Bad news is good news in the US with lower than estimated PMI figures for November suggesting the US economy continues to slow down bolstering bets that US interest rates have peaked, and the Fed pivot is alive. The FOMC Minutes also suggested that the pace of interest rate hikes will be lowered going forward.  P 500 futures rallied 0.5% to close at 4,030 getting closer to the falling 200-day moving average at 4,058. In addition to yesterday’s US news, China’s State Council (see below) issued a memo advising the PBOC to use monetary instruments to safeguard and kickstart the Chinese economy. In a time with falling economic growth in the US and Europe, an accelerating Chinese economy would balance the global economy and soften the recessionary dynamics. It is Thanksgiving in the US today so cash equity markets will close at 1300 ET today. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) After a meeting on Wednesday, China’s State Council issued a memo calling on the People’s Bank of China (PBOC) to use monetary tools including a cut in the reserve requirement ratio (RRR) at an appropriate time to support the real economy. According to historical observations, the PBOC will do what the State Council says and cut the RRR in the coming days or weeks. The news helped lift market sentiment which was however tempered by the rise of daily Covid cases to an all-time high of 31,444 in mainland China. Hang Seng Index edged up 0.3% while CSI 300 declined 0.5%. Shares of leading Chinese developers surged by 5% to 12% after several large Chinese banks agreed to provide more than RMB 200bn in total in credit facilities to a number of private enterprise developers. EURUSD above 1.04 and USDJPY falls below 140 amid broad-based dollar weakness The dovish read of the FOMC minutes from the November 2 meeting is hardly a surprise, given the key message has been around a downshift in the pace of rate hikes as expected. But together with weaker than expected flash PMIs for November (read below) suggesting demand slowdown concerns are starting to pick up pace, and a higher-than-expected jobless claims print sending some early warning signals on the labor market, the focus has somewhat shifted away from inflation concerns which remain persistent. Market pricing of the Fed December meeting tilted further towards 50bps, and that resulted in a broad-based dollar sell-off which extended in the Asian session. EURUSD is now attempting a break above 1.0450 while USDJPY slid below 139.00. Japan’s Tokyo CPI for October is due tomorrow and may inch higher again, further fuelling pressure for BOJ to tweak its zero-rate policy and supporting a recovery in the yen even as global yields start to get capped. Crude oil (CLF3 & LCOF3) Crude oil fell again on Wednesday thereby extending what has already been a very volatile week. The FOMC minutes driving a weaker dollar did not add much support with the market instead focusing on a challenged demand outlook in China as Covid cases continue to spread, and a 50% risk of a recession in the US next year. In addition, a price cap on Russian oil in the $65-$70 area currently being discussed by EU officials is far higher than expected and would probably not have a major impact on supply given that Russia is already selling its Urals crude at a 25-dollar discount to Brent. The negative sentiment was also reflected by the markets negative response to an otherwise price-supportive EIA stock report. Gold (XAUUSD) and silver (XAGUSD) Gold and silver both rose in response to weaker US economic data (see below) and after the FOMC minutes talked about moderating the pace of interest rate hike soon. The Bloomberg dollar index dropped to the lowest level since August while US government bonds rallied to send yields lower. Gold was already encouraged by the speed with which it recovered after briefly breaking below support in the $1735 area reached $1756 overnight with silver trading at $21.60 after showing some renewed relative strength against gold this week. With no signs yet of a pick up in demand for ETFs from longer-term focused investors, a further extension will likely require further declines in yields and the US dollar or some other catalyst that sees a run to safety. Resistance at $1757 and $1765. EU gas (TTFMZ2) EU gas jumped 8.3% on Wednesday to close near a one-month high at €130 with weather forecasts pointing to a cold beginning to December and Gazprom threatening to reduced supplies through Ukraine, one of just two remaining pipelines in operation. The Sudzha line is currently sending 42 million cubic meters per day to Europe and while the dispute only relates to part of the 5 mcm/day that goes to Moldova, the market clearly worry that this could lead to a complete closure of the line. However, with Russia’s pipeline flow to Europe already down 79% YoY, the ability to shock the system has been much reduced, hence the limited reaction in the peak winter contract of February which only trades €7/MWh above December US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields fell after the Fed minutes The minutes for the Nov 1-2 FOMC meeting have a dovish cast, saying “a substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate” and some FOMC members had a concern about rate hikes might ultimately “exceed what was required to bring inflation back”. Yields declined across the curve with buying particularly strong on the long end. The 2-year yield dropped by 4bps to 4.48% and the 10-year yield finished the session 6bps richer at 3.69%. The 2-10-year part of the curve became yet more inverted at minus 79, thereby strengthening the prospects for a recession sometime next year. What is going on? FOMC Minutes signal a smaller pace of rate hikes The FOMC minutes from the November 2 meeting were released on Wednesday, and the general tone of the members confirmed that the committee was leaning towards moving away from jumbo (75bps) rate hikes to a smaller pace. At the same time, "various" officials noted that the peak rate will be "somewhat higher" than previously expected. The minutes saw participants agree there were very few signs of inflation pressures abating (minutes were pre-October CPI) and they generally noted inflation outlook risks remain tilted to the upside. There were also some concerns about the strength of the labour market, where a few participants said ongoing tightness in the labour market could lead to an emergence of a wage-price spiral, even though one had not yet developed. The message remained less hawkish than what the Fed potentially needs to deliver at this point given the considerable easing in financial conditions. US PMIs disappointed, jobless claims rose US S&P flash PMIs for November disappointed, as manufacturing printed 47.6 (exp. 50.0, prev. 50.4) and services fell to 46.1 (exp. 47.9, exp. 47.8), while the composite dropped to 46.3 (prev. 48.2). New orders fell to 46.4, the lowest since May 2020, while employment saw a slight uptick to 50.8 from 50.4. The only good news is that both input and output prices dipped further, offering further positive signals on inflation. The PMIs indicated how concerns are shifting from the supply side to the demand side, with better news on supply chains but demand concerns from weakening new orders. Initial Jobless claims rose more than expected to 240k from 223k and above expectations of 225k, the highest print since August, suggesting that we continue to watch for further signals on whether the tight labor market may be starting to weaken. Deere shares up 5% on strong results The US agricultural equipment maker delivered better than expected revenue and net income in its Q4 fiscal quarter (ending 31 October) and issued a FY23 net income guidance of $8-8.5bn vs est. $7.8bn. Order books are full into fiscal Q3 next year (ending 31 July) and the company sees an extended replacement cycle indicating that the best years are still ahead of the company. Better eurozone flash Composite PMI for November This was unexpected. The consensus forecasted that the EZ flash Composite PMI would fall to 47.0 in November from 47.3 in October, it actually improved a bit to 47.8. The increase mostly results from a better-than-expected Manufacturing PMI (out at 47.3 versus prior 46.4 and forecast at 46.0) while the services sector remains stable. There is another positive news. Price pressures are easing quite fast. The PMI price gauge fell to its lowest levels in two years due to a collapse in input prices. On a flip note, the flash Composite PMI Output Index for the United Kingdom (UK) ticked up to 48.3 in November. Surprisingly, the UK seems to hold up better than the eurozone and especially Germany. The jump in the PMI is still consistent with a recession in the eurozone and in the UK but it may be shallow, and its steepness will mostly depend from country to country on the impact of the energy shock and fiscal measures taken to mitigate it. What are we watching next? Earnings to watch Today’s earnings focus is Meituan and Pinduoduo. Chinese earnings in Q3 have been mixed and the technology sector continues to experience headwinds from both the economy and regulation. Analysts expect Pinduoduo, which has so far navigated the environment flawlessly, to deliver revenue growth of 44% y/y and EPS of CNY 4.75 up 288% y/y. Friday: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) US cash markets closed for Thanksgiving. Early closes in some futures markets. 0900 – German IFO for November Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-24-2022-24112022
At The Close On The New York Stock Exchange Indices Closed Mixed

American Stocks Rallied, USD Drop | Tesla Rallies On Citi

Swissquote Bank Swissquote Bank 24.11.2022 09:40
US stocks spent most of yesterday’s session hesitating between slight gains and slight losses, then the release of the latest Federal Reserve (Fed) minutes helped the bulls take the upper hand, as the minutes confirmed that a ‘substantial majority’ of Fed members thought it was a good idea to slow down the pace of the rate hikes. Stocks The S&P500 gained around 0.60% while Nasdaq jumped around 1%. The US 10-year yield eased, as the US dollar sold off quite aggressively across the board. Economy We saw a decent price action yesterday was oil, and that was well before the Fed minutes. The barrel of American crude dropped up to 5% yesterday on news that the Europeans would set the price cap for Russian oil to around $65 to $70 per barrel, levels at which Russian oil is already exchanged. Tesla and Morgan Stanley On individual stocks, Tesla was one of the biggest gainers of yesterday’s session as Citi and Morgan Stanley revised their views higher, but that rally was maybe… exaggerated. Watch the full episode to find out more! 0:00 Intro 0:21 Fed minutes send stocks higher, USD lower 4:11 Crude oil tanks on EU’s new Russian oil price cap 5:55 Foxconn living a nightmare in China, but Apple holds on 6:32 Tesla rallies on Citi, Morgan Stanley upgrades Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #minutes #USD #crudeoil #EU #Russia #price #cap #EUR #GBP #ECB #minutes #Thanksgiving #holiday #Tesla #rally #Apple #Foxconn #China #Covid #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Saxo Bank Podcast: Riksbank's Expected 75 Basis Point Hike Today

Saxo Bank Podcast: Riksbank's Expected 75 Basis Point Hike Today

Saxo Bank Saxo Bank 24.11.2022 10:18
Summary:  Today we look at the market continuing to rally despite US Services PMI figures for November missed estimates suggesting the US economy continues to slow down. This means that equities right now interpret bad news as good news because it will force the Fed to pivot on the policy rate which will be net positive for equities. We also discuss expected PBOC easing, Riksbank's expected 75 basis point hike today, and the weakening USD helping financial conditions to ease globally. In commodities, our focus today is the energy market with Europe's gas market holding up well despite low volumes coming from Russia. Finally, we talk Deere earnings as the US agricultural equipment maker is delivering strong results as pricing power remain high on the back of high commodity prices on agricultural products. Today's pod features Peter Garnry on equities, Ole Hansen on commodities. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-24-2022-24112022
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market

Craig Erlam Craig Erlam 24.11.2022 16:13
Oil tumbles amid price cap talks and stricter Chinese restrictions Oil prices are a little lower again on Thursday as the G7 continues to work towards a price cap on Russian oil. Brent crude fell heavily on Wednesday amid reports that the group could settle on a level around $65 which is roughly where they currently sell it at, and with a sizeable profit. That would blunt the effectiveness of the cap and ensure we don’t see any shortages in supply. But it may be what is necessary to keep all stakeholders on board, with some countries concerned about the domestic implications of a stricter cap. Read next: EUR/USD: The Eurozone Readings Were Just Bad| FXMAG.COM The discussions will continue but these reports have weighed on the price of oil at a time when restrictions, maybe even lockdowns, in China threaten demand in the world’s second-largest economy. And amid a report – since denied – that OPEC+ could boost output next week. I’m not sure what the motive would be at this point but perhaps it’s heavily conditional on the outcome of the G7 talks. Gold buoyed by “dovish pivot” Gold bulls very much welcomed the FOMC minutes on Wednesday and we’re continuing to see the price benefit today. The yellow metal has massively benefited from the “dovish pivot” last month if we can even call it that, as policymakers appeared to support a slower pace of tightening from next month, which was then backed up by the minutes. It remains within a range though, with $1,730 providing support below – around the September and October highs – and $1,780 resistance above – a key area of support in the first half of the year. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices slip, gold higher after FOMC - MarketPulseMarketPulse
Hong Kong’s Hang Seng Had Its Best Month | EU Inflation Slowed

The Pressure On Bank Of Japan To Tighten Policy | China’s Zero Covid Still In Focus

Saxo Bank Saxo Bank 25.11.2022 08:49
Summary:  A quiet overnight session with the Thanksgiving holiday, and most assets remained in consolidation after the FOMC minutes-driven move the day before. China’s zero Covid still in focus as reports suggest that Beijing may go in a lockdown. The US dollar held on to its recent losses, and bets for the December Fed rate hike in favour of a 50bps move. Sweden’s Riksbank hiked 75bps and the pressure on Bank of Japan to tighten policy also remains with Tokyo CPI touching a new 40-year high. Crude oil still below key levels, while Gold and Silver are testing key resistances. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) Closed for the Thanksgiving holiday. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Closed for the Thanksgiving holiday. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hang Seng Index gained 0.8% on Thursday following China’s State Council’s call on the People’s Bank of China (PBOC) to cut the reserve requirement ratio (RRR). In addition, leading Chinese banks offered more than RMB 270 billion in credit facilities to support private enterprise developers. Chinese developers were top performers in the benchmark index, with Country Garden (02007:xhkg) jumping 20%, Longfor (00960:xhkg) up 12%, and Country Garden Services (06098) up 11%. Hang Seng TECH Index climbed 0.8%. Xiaomi was the laggard among tech peers, falling 3.6% after reporting Q3 results. Market sentiment was tempered by the rise of daily Covid cases to an all-time high of 31,444 in mainland China. CSI 300 edged down by 0.4%, driven by large state-owned enterprise names that consolidated recent strong gains. FX: Dollar held on to its losses in a thin trading day The dollar index traded steady below 106 on Thursday amid thin trading markets with US closed for Thanksgiving. The reaction to a dovish read of the FOMC minutes has been a significant slide in USD, which along with higher equities and lower bond yields, suggest financial conditions continue to ease since that softer CPI release. This is sending warning signals on inflation and Fed members may need to be more hawkish to prevent that. Lower US yields, and still-steady expectations of a BOJ pivot, have meant a stronger Japanese yen, with USDJPY now below 139. GBPUSD touched 1.2150, the highest levels since early August. Crude oil (CLZ2 & LCOF3)   Demand concerns, especially from China’s zero covid, continued to underpin the oil markets. A record high in the number of cases and reports that Beijing may go back in a lockdown show the difficulty of opening up the economy. US gasoline demand is also weakening as the travel season ends, and there are signals of overall demand weakness globally after massive tightening this year. This saw oil prices remain below key levels, with WTI still around $78/barrel and Brent around $85. Meanwhile, the proposed price caps on Russian oil continues to cause concern. EU diplomats are locked in negotiations over how strict the mechanism should be. Poland rejected USD65/bbl, while shipping giant Greece said it doesn’t want it below USD70/bbl. Gold (XAUUSD) and Silver (XAGUSD) testing key resistances A dovish FOMC read, along with softer US economic data from the flash PMIs, have returned the focus again on precious metals. Gold tested $1735 support again this week but is now back at over $1750-levels and testing the resistance at $1757. Break above will bring $1765 in focus, but lack of ETF buying still makes it hard to confirm the reversal of the short-term downtrend. Silver is also at key resistance level of $21.50.   What to consider? Sweden’s Riksbank hiked 75bps, more in the pipeline The Riksbank’s 75bps rate hike was larger than the 50bps signalled at the September meeting, and brings its policy rate to 2.5%, the highest since the GFC. Worsening inflation outlook, with October’s inflation at 9.3% and suggesting wage pressures as well, more rate hikes potentially remain in the pipeline. Peak rate is closer to 3% for now, but the bank showed an alternate scenario where persistent inflation above 3.5% could prompt the peak rate move higher from 2.84% to 4.65%. Japan’s Tokyo CPI above expectations again, more pressures to come Japan’s Tokyo inflation for November rose to its highest level in 40 years, suggesting that price pressures have not peaked yet. Tokyo CPI came in at 3.8% YoY from 3.5% previously, while the ex-food was at 3.6% YoY (prev 3.4%) and ex-food and energy was at 2.5% YoY (prev 2.2%). Meanwhile, Asia LNG prices are rising again, as colder temperatures in Europe heat up the competition to secure LNG cargoes again. This suggests price pressures will likely continue, and Bank of Japan could still likely consider tweaking its yield curve control policy. Anwar Ibrahim sworn in as Malaysia’s PM, political chaos to stay Malaysia’s new PM Anwar Ibrahim plans to test lawmakers' support for his leadership with a confidence vote on Dec 19, as he seeks to prove he commands a majority. His party, Pakatan Harapan, got the most but only 82 seats in the 220-seat parliament and lacks a majority. The political divide in the country is getting worse, suggesting policy paralysis that can likely drive foreign investors away. Local governments across China resorted to lockdowns as Covid cases surged to record highs As new Covid cases hit new highs day after day, local governments are torn between the urge to avoid full lockdowns and the instruction to adhere to the zero-Covid policy. Over 40 cities across China, including Guangzhou, Zhengzhou, Chongqing, Shanghai, and Beijing have to resort to some sort of movement restrictions or lockdown.   For our look ahead at markets this week - Read our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: https://www.home.saxo/content/articles/equities/apac-market-insights-25-nov-2022-25112022
RBA Governor Announces Major Changes at RBA Board as US Inflation Expected to Decline

In Zhengzhou Manufacturing Plant Could Cut Production Of iPhones | The Bloomberg Commodity Index Is Showing A Small Gain

Saxo Bank Saxo Bank 25.11.2022 09:05
Summary:  Yesterday was rather quiet as the US was out for the Thanksgiving holiday, with only a half-session of thin trading on tap for today. Overnight, Asian sentiment was somewhat downbeat as Covid concerns continue to weigh in China. In Japan, Tokyo November inflation was reported at new multi-decade highs. In FX, the US dollar is eyeing the key 200-day moving average for the first time since slicing above that indicator all the way back in June of 2021.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The US 10-year yield has opened today’s trading session at a new low for the month trading around the 3.65% level. This is naturally adding tailwind for US equities with S&P 500 futures likely attempting today to break above the 200-day moving average around the 4,058 level. The index futures flirted with the moving average back in August when equities rallied on Fed pivot talk and easing inflation. There are no major earnings or macro releases scheduled for today so we expect a quiet session going into the weekend. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Daily new Covid cases surged to yet another record high at 32,695, including 1,444 cases in Beijing. Beijing imposed district-level lockdowns and suspended food delivery. Alibaba (09988:xhkg), Tencent (00700:xhkg), and Meituan (03690:xhkg) lost 2% - 3%. China developers, Chinese banks, Chinese telco giants, and China Aluminum (02068:xhkg) gained. Hang Seng Index declined by 0.8% while CSI 300 climbed 0.5%. USD hits new lows even with US markets closed for holiday yesterday The US dollar’s losses extended on Thursday after the FOMC minutes reported late Wednesday encouraged the view that the Fed is on course to decelerate its tightening regime starting with the December meeting (and further forward, the late 2024 and beyond projections of Fed policy suggest the market believes a recession will trigger a sharp Fed easing of policy beyond the end of next year. The US dollar index is flirting with the 200-day moving average for the first time since crossing above the indicator since June of 2021, while EURUSD has made a feint at the cycle highs above 1.0450, easing back a bit overnight. Hotter than expected November Tokyo CPI data reported overnight (more below) saw USDJPY heavy overnight, trading near 138.00 before bouncing slightly. Next week looks important for incoming US data, with the October PCE inflation data up on Thursday and the November jobs report next Friday. Crude oil (CLF3 & LCOF3) Crude oil trades lower for a third consecutive week as demand fears, especially from an increasingly locked down China, weigh on sentiment. A G7-sponsored price-cap plan on Russian oil looks dead in the water with EU countries struggling to agree on a level, the result being either no cap or a level so high that it will not have any meaningful impact on supply. The 12-month futures spread in WTI and Brent have both weakened to the lowest backwardation since last December, reflecting a market concerned about recession and a seasonal slowdown in demand hurting the front month contracts. Gold (XAUUSD) Gold trades small up on the week in response to weaker US economic data and after the FOMC minutes talked about moderating the pace of interest rate hike soon. Having found support in the $1735 area a further extension will likely require further declines in the yields and the dollar or some other catalyst that sees a run to safety. A break above $1765 may signal a return to key resistance at $1788, but lack of ETF buying still makes it hard to confirm a major change in direction. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields fell after the Fed minutes The FOMC minutes late Wednesday confirmed the deceleration in the Fed’s tightening path and the market has become increasingly confident that, while the Fed may hold rates quite high next year, the path of easing policy will eventually prove quite steep, presumably on the combination of lower inflation and a recession. US 10-year yields eased to new lows below the recent low of 3.67% overnight ahead of an important period of incoming data before the December 14 FOMC meeting, with 3.50% the next technical level of note (psychological as well as a major pivot high from June). What is going on? Not many insights in the ECB minutes Yesterday, the minutes of the ECB’s October meeting were released. On the key point of the monetary policy pivot, there was nothing new. According to the minutes, there had been no discussion on a potential slowdown in the pace of rate hike. This is certainly a bit too early. But many participants pointed out risks related to the recession, especially in the housing market and in the labour market. On fiscal policy, the ECB has basically reiterated its long-term view: there is a « risk that fiscal compensation packages would turn out to be bigger than warranted ». Finally, a large majority of participants considered that the best option, in the short-term, is to implement a new 75 basis point interest rate increase at the next meeting scheduled for 15 December. Only a majority expressed a different position (in favor of a 50-basis point hike). This was not a market mover, obviously. Apple’s iPhone output at jeopardy in China The worker unrest at Foxconn’s (Apple’s manufacturing supplier in China) Zhengzhou manufacturing plant could cut production of iPhones of up to 30% according to Reuters. This is a growing risk for Apple’s stock price as the company is moving into its best-selling month during the year. Sweden’s Riksbank hiked 75bps, more in the pipeline The Riksbank’s 75-bp rate hike took the policy rate to 2.50% and was larger than the 50-bp signalled at the September meeting, although markets were priced for a move of at least that magnitude. EURSEK fell after a kneejerk rally and trades this morning in the middle of the range since September. The worsening inflation outlook in Sweden, with October’s inflation at 9.3% amidst signs of wage pressures as well, suggests more rate hikes potentially remain in the pipeline. The anticipated peak rate is closer to 3% now, but the bank showed an alternate scenario where persistent inflation above 3.5% could prompt the peak rate move higher from 2.84% to 4.65%. Japan’s Tokyo CPI above expectations again, more pressures to come Japan’s Tokyo inflation for November rose to its highest level in 40 years, suggesting that price pressures have not peaked yet. Tokyo CPI came in at 3.8% YoY from 3.5% previously, while the ex-food was at 3.6% YoY (prev 3.4%) and ex-food and energy was at 2.5% YoY (prev 2.2%). Meanwhile, Asia LNG prices are rising again, as colder temperatures in Europe heat up the competition to secure LNG cargoes again. This suggests price pressures will likely continue, and Bank of Japan could still likely consider tweaking its yield curve control policy. Mixed week for commodities The Bloomberg Commodity Index is showing a small gain of 1.3% with overall support being provided by the softer dollar and lower bond yields. This despite a darkening, but temporary, Covid cloud hanging over the Chinese economy and the bond market increasingly pricing in the risk of a recession hitting some of the major economies next year. Gas prices in Europe and the US leading the gains on cold weather demand followed by coffee on short covering and silver supported by a bouncing gold price. At the bottom we find wheat, US diesel, sugar and crude oil. What are we watching next? An important week ahead for incoming US data Markets have generally celebrated the downward shift in Fed tightening expectations and hopes for an eventual opening up of China’s economy, notwithstanding the ramping of the case count there. Next week will offer an interesting test for markets, including the US dollar, which trades at pivotal levels, as we have a look at the next important data macro data points out of the US, especially the Friday November jobs report. As well, we’ll have a look at the ISM Manufacturing survey for the month on Thursday. The question for the run-up into the December 14 FOMC meeting and in the month or so beyond is how long the market can continue to celebrate the Fed easing off the accelerator, when the reason it is doing so is that economic slowing and an eventual recession threaten. Normally, a recession is associated with poor market performance as profits fall and credit risks mount. Earnings to watch Today’s earnings focus is Meituan and Pinduoduo. Chinese earnings in Q3 have been mixed and the technology sector continues to experience headwinds from both the economy and regulation. Analysts expect Pinduoduo, which has so far navigated the environment flawlessly, to deliver revenue growth of 44% y/y and EPS of CNY 4.75 up 288% y/y. Today: Meituan, Pinduoduo Economic calendar highlights for today (times GMT) US equity markets close three hours early at 1300 local time in NY.  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-25-2022-25112022
Asia Morning Bites: Focus on Regional PMI Figures, China's Caixin Manufacturing Report, and Upcoming FOMC Minutes and US Non-Farm Payrolls"

Saxo Bank Podcast: The US Equity Market Is Working Into A Critical Resistance Zone

Saxo Bank Saxo Bank 25.11.2022 10:56
Summary:  Today we look at the market still in complacent mode as it continues to celebrate easing US yields and the FOMC minutes Wednesday confirming the view that the Fed is set to slow its pace of tightening. We note that the US equity market is working into a critical resistance zone, just as the US dollar eyes important support, with the overriding question of when the market will begin to fret the impact of an oncoming recession rather than maintaining the one-dimensional focus on yields. Thoughts on Apple, commodity performance, platinum vs palladium, Natgas in Europe and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-nov-25-2022-25112022
The Commodities Feed: OPEC+ meeting ahead

Discussions Around The Price Cap On Russian Crude | Gold Is Marginally Lower

Craig Erlam Craig Erlam 25.11.2022 14:28
Oil pares losses as price cap talks continue Oil prices are higher on Friday, continuing to pare losses after being hit heavily in recent weeks by surging Covid cases in China and discussions around the price cap on Russian crude. Lockdowns in all but name appear to be popping up in major Chinese cities in an attempt to get a grip on record cases which will weigh heavily on economic activity once more and in turn demand. It’s now a question of how long they last but clearly investors’ enthusiasm toward the relaxation of Covid restrictions was a bit premature. Talks will continue on a price cap but it seems it won’t be as strict as first thought, to the point that it may be borderline pointless. That’s hit oil prices again this week as the threat to Russian output from a $70 cap, for example, is minimal given it’s selling around those levels already. Gold establishing a range ahead of key data releases Gold is marginally lower today but has been quite choppy throughout the session, and broadly lacked any real direction. We could be seeing a little profit-taking as the dollar edges higher following the relief rally that followed the Fed minutes. The yellow metal is trading roughly in the middle of what may be a newly established range between $1,730 and $1,780, potentially now awaiting the next catalyst ahead of the December Fed meeting. With another jobs and inflation report still to come, a lot could change between now and when the FOMC next meets. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

Sanctions Against Russia And Risk To Supply Of Key Food Commodities Led To Price Spikes Across All Commodity Markets

Saxo Bank Saxo Bank 25.11.2022 14:46
Summary:  Commodity markets maintain a commanding lead over asset classes, such as bonds and stocks, as we head towards the final few weeks of trading in 2022. China lockdowns remain a temporary concerns for crude oil and other China-centric commodities while others like copper, silver and gold have enjoyed the softer dollar and the FOMC showing willingness to slow its pace of rate hike. We take a look at some of the key battlefields that may end up determine the direction commodities will travel into 2023. Commodity markets maintain a commanding lead over asset classes, such as bonds and stocks, as we head towards the final few weeks of trading in 2022. A year that, despite several headwinds, has yielded strong returns – with the Bloomberg Commodity Total Return index trading up close to 20% on the year. Following on from a strong finish to 2021 – driven by a post-Covid surge in demand for goods fuelled by a wall of fiscal stimulus and coordinated monetary support – the year started on tear. With demand rising strongly at a time of under-investments, the attention abruptly turned to supply worries following the Russian invasion of Ukraine. Sanctions against Russia and risk to supply of key food commodities from Ukraine led to price spikes across all commodity markets, not least energy, grains and metals. As a result of this, the Bloomberg Commodity Total Return index spiked by more than 25% during the first quarter before spending the following months slowly deflating. However, despite numerous headwinds, such as the strongest dollar rally in years, rolling Covid related lockdowns in China and central banks hiking rates in order to kill inflation at the expense of growth, the commodity sector has performed very well, as demonstrated by the near 20% year-to-date return. Heading into 2023, four major themes will help determine the direction of the market: The depth of an incoming recession currently being priced in by the market through the most inverted US yield curve since the early 1980s A recession forcing the US Federal Reserve to change its focus from rate hikes to economic support, potentially before inflation has reached a satisfactory low level, thereby supporting a reversal of the dollar and Treasury yields. A reopening in China leading to a stimulus fuelled recovery in demand for industrial metals and energy. The duration of the war in Ukraine and its potential impact on supply of key commodities from crude oil and gas to wheat and key industrial metals. Recession versus tight supply The risk of an economic downturn at a time of tight supply of several major commodities will be one of the key battlegrounds that, together with the strength of a post-Covid recovery in China, will help determine the direction of commodities in 2023. Following months of aggressive rate hikes, the US Federal Reserve is now signalling a slowing pace of future rate hikes – with the eventual peak rate being determined by incoming data. The US bond market is already telling the Fed that it may have overdone the monetary tightening, with the yield spread between the 3-month treasury bill versus the 10-year treasury note tumbling to a twenty-year low at minus 64 basis point. An inverted level of this magnitude has only been seen prior to three previous recessions. Short-term interest rates have been driven higher by the Fed’s actions to raise the overnight Fed Fund rates, while longer-dated bond yields are lower on the prospect of slower growth (or even a recession) together with anchored long-term inflation. You can read more in this fixed income update from my colleague Redmond Wong in Hong Kong. Source: Bloomberg & Saxo Commodities have seen a strong November so far as the Bloomberg Commodity index trading up 3.4%, with gains being led by industrial and precious metals. This is despite the daily news of a worsening situation in China, where local officials battling with a record number of Covid cases are once again under pressure to implement President Xi’s strict and increasingly unpopular Covid zero policy. In order to support the economy, the People’s Bank of China, stepped in Friday and cut banks reserve requirement ratio by 0.25%. While the energy sector has struggled amid a seasonal slowdown in demand that was increased by the developments in China, other markets, especially precious metals, have found support from the drop in long-end yields and a dollar which has softened by almost five percent this month. Driven by a lower-than-expected US CPI print earlier this month, emerging weakness in US economic data and the publishing of the minutes from the recent Federal Reserve meeting which discussed moderating the pace of future rate hikes. Cycle low in gold, silver and copper? Following developments that have supported a strong rebound in gold, silver and copper, as well as the 170 dollar rally from what increasingly looks like a cycle low around $1615, gold spent the past week consolidating before finding support in the $1735 area. Overall, Saxo maintains its long-held bullish view on gold, and with that more so for silver. This is primarily driven by a combination of an incoming economic slowdown and major repricing as the market realises long-term inflation will settle at a higher level than the sub 3% currently being priced in. However, with a continued lack of buying interest from ETF investor and increased competition from bonds as yields drop, a further gold extension above the important $1800 area will likely require further declines in the yields and the dollar or some other catalyst that sees a run to safety. A technical update from Kim Cramer, our Technical Analyst, can be found here. Grains sector weakness led by wheat At the bottom of the performance table, we find the grains sector. Grains are heading for a monthly loss, primarily driven by weakness in wheat prices in the US and Europe. The weakness is driven by a continuation of the Ukraine grains corridor and a bumper Russian crop looking for a home around the world. Speculators have responded to the general weakness by cutting the total net long across the six major grains futures contract to a three-month low at 430k contracts. According to the latest Commitments of Traders Report covering the week to November 15, speculators had the biggest one-week clear-out of corn longs since August 2019. Meanwhile, the wheat net short extended to a 27-month high at 47k contracts with soybeans and soymeal also suffering setbacks.   Crude oil troubled by China lockdowns and recession worries Crude oil trades lower for a third consecutive week as demand fears, especially from an increasingly locked down China, weigh on sentiment. A G7-sponsored price-cap plan on Russian oil looks dead in the water as EU countries struggle to agree on a level – the result being either no cap or a level so high that it will not have any meaningful impact on supply, led alone Russia’s response. The 12-month futures spread in WTI and Brent have both weakened to the lowest backwardation since last December, reflecting a market concerned about recession and a seasonal slowdown in demand hurting the front month contracts. In addition, the fact that the market is not pricing in a premium for oil ahead of the December 5 EU embargo on Russian seaborne crude exports highlights the impact of a sharp slowdown in China – the world’s biggest importer of crude oil. Middle East producers have seen spot premiums for key Persian Gulf graded oil, decline sharply after commanding elevated premiums since the invasion of Ukraine when many buyers started to look elsewhere than Russia, thereby lifting demand for Mideast crude. The slowdown in demand from China will be temporary but having unsuccessfully fought Covid outbreaks with lockdowns for months, the prospect for an improvement looks month away. This is unless Chinese officials start following the 20-point plan to ease Covid Zero policies that were issued earlier this month by the health authorities. Brent trades near the lower end of its established range, but with multiple uncertainties related to demand and supply, the prospect of a downside extension seems limited in our opinion. Source: Saxo   Source: https://www.home.saxo/content/articles/commodities/commodities-torn-between-recession-and-tight-supply-focus-25112022
Crude Oil Upward Trend Remains Limited

Poland, Estonia, And Latvia Disagreed With Range That The G7 Suggested

InstaForex Analysis InstaForex Analysis 26.11.2022 13:06
Even though this week ended in the red, oil prices rose steadily during Friday trading. The market is still being affected by traders' concerns about China's potential oil demand. On Friday, the January Brent crude futures price on the London ICE Futures exchange was $86.67 per barrel, or 1.56% more than the session's closing price. By this point, the price of January WTI crude oil futures traded electronically on the New York Mercantile Exchange had increased by 2.32%, or to $79.75 per barrel. The coronavirus no longer commands the attention of society and the media to the same extent that it did a year ago. It is gradually being forgotten worldwide as attention is drawn to more important events. The coronavirus, however, continues to dominate the front pages of major print publications and the main summaries of television news in China. As a result of its increasing prevalence, the government is forced to enact new quarantine regulations. Major Chinese cities, from the port city of Tianjin in the north to Guangzhou in the south, have strict restrictions on public life that residents are once again required to adhere to. The need for fuel has significantly decreased in these areas due to the noticeable reduction in movement. As we all know, China is the world's largest consumer of black gold, but this time it managed to lower the key indicator of this region's demand for raw materials to a 7-month low. For the first time since April of this year, the premium of Omani oil futures relative to similar-term swaps for Dubai oil collapsed below $1 per barrel. This premium reached $15 in March when many consumers turned away from Russian oil and more toward Middle Eastern varieties. The negotiations in the European Union over the cap on prices for Russian oil are a significant factor influencing the commodity market. According to the most recent news reports, Western European officials have the authority to set a very high price cap. However, the Wall Street Journal reports made it clear that the EU nations are still debating the precise level at which they will set a cap on the price of Russian black gold. However, they needed help to reach a consensus, effectively ending this endeavor. Poland, Estonia, and Latvia disagreed with the $65-70 per barrel price range that the G7 suggested. These nations' leaders are ranting that this price is excessively high and leaves Russia with an excessive income, which it must never receive. Cyprus, Greece, and Malta concurred, stating that this level is incredibly low and should not be generally underestimated. Hungary requests exceptions for itself and is categorically opposed to the measure in principle. Some European diplomats have already stated that calling another meeting of this magnitude would be pointless if the price ceiling issue still needed to be resolved. Additionally, Reuters reported on November 24 that the introduction of marginal oil prices from Russia by Western European nations would have almost no immediate impact on the nation's revenues. Before that, the German TV network N-TV reported that despite the Russian Federation's energy supplies declining due to strict sanctions, the country's sales revenue increased. It would be good to approach the issue of how sanctions might impact Russia's economic situation realistically. Any supply restrictions only result in higher prices for the raw materials derived from these supplies, such as gas, coal, and oil.     Relevance up to 23:00 2022-11-26 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/328217
Hong Kong’s Hang Seng Had Its Best Month | EU Inflation Slowed

The Weighted Average Of RRR Across All Banks In China Falls

Saxo Bank Saxo Bank 28.11.2022 08:52
Summary:  The risk-off mood at the onset of the new week is mostly driven by protests in China over the zero covid policy. This comes after China’s announcement to cut the reserve requirement ratio by 25bps on Friday, which is unlikely to be enough to offset demand weakness. US equity futures gapped lower, and the US dollar got a safe-haven bid as well. Commodity markets are likely vulnerable to this risk aversion and dollar gains, with crude oil prices testing lows as Russian oil price cap discussions resume today. The key week ahead for US data and Fed as Powell takes the stage on Wednesday, but the focus today will be on China and a likely hawkish tilt in the comments from Fed’s Bullard. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished the holiday-shortened week with modest weekly gains In a shortened session with thin trading, the S&P 500 Index finished flat and the Nasdaq 100 Index slid by 0.7%. Over the week, S&P 500 gained 1.6% and Nasdaq 100 was up 0.7%. Among the S&P 500 sectors, real estate, utilities, and healthcare gained while communication services, and information technology were the laggards. Activision Blizzard (ATVI:xnas) dropped 4.1% on reports that the U.S. antitrust regulator might file a lawsuit to bar Microsoft (MSFT: xnas) from acquiring the video games developer. Manchester United (MANU:xnys) surged for the third day in a row, up 13% on Friday or 65% for the week, as the controlling shareholder is exploring a sale. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) advanced with yields falling during the week on the dovish-leaning FOMC minutes U.S. treasuries gained in price and lower in yields last week. The 10-year yield dropped 15bps to 3.68%. The market is increasingly pricing in a recession as the 3-month treasury bills vs 10-year treasury notes spread went to minus-64bps, a level usually seen within 12 months preceding the onset of a recession. For a detailed discussion of our take on the outlook of bonds, please refer to this note we published last Friday. We are having a busy and important calendar this coming week with several potentially market-moving data and events. The JOLT report on Wednesday and the jobs report on Friday will tell us about the state of the U.S. job market. The PCE scheduled to release on Thursday is the Fed’s key inflation gauge. Fed Chair Powell will speak at the Brookings Institute about the economic outlook and the labor market. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Investors were weighing new government measures to support the property sector against the alarmingly explosive uptrend in daily new Covid cases and the reports that megacities returning to the practice of movement restrictions and lockdowns. On Friday, Hang Seng Index declined 0.5% while CSI 300 climbed 0.5%. Over the week, Hang Sang Index fell 2.3% and CSI 300 edged down 0.7%. Chow Tai Fook Jewellery Group (01929:xhkg), tumbling 15.5%, was the biggest loser in the Hang Seng Index on Friday. The jeweller lowered mainland China same-store-sales growth (SSSG) to a high-single-digit year-over-year decline over the half-year from Oct 2022 to Mar 2023. The Australian share market is just 5% off its all-time high; but seems vulnerable The Aussie share market has gained 12% from its October low, after rising 1.5% last week; with Virgin Money up the most, about 23%, on upgrading its outlook, while gold company Ramelius Resources rose 15% on maintaining its production outlook. This week stocks exposed to China are vulnerable of a pullback given forward earnings are likely to be downgraded following further China lockdowns and protests. It also means commodities, oil – iron ore, copper, lithium may see demand slow down and their prices fall – that’s important as its underpin some of our largest’ s companies profits. Fresh data on Friday showed the major iron ore companies, BHP, Rio, Fortescue, will be shipping almost 6% less than last year in the final quarter of this year. So the risk is the situation in China worsens, and iron ore shipments could continue to fall and hurt Fortescue, BHP and Rio. Early Monday AM, iron ore trades 0.6% lower. Be mindful investors could be looking to take profits or write options for downside protection in case markets fall on China concerns. Inversely; stocks not exposed to China could likely continue to rally given its first Christmas with no global lockdowns (excluding China). Consider looking at retailers doing well following Black Friday sales and ahead of the likely Santa rally; Shares in JB Hi Fi, Harvey Norman, Premier Investments (owner of Jay Jays and Peter Alexander) are all trading up 20% from June. FX: Dollar getting a safe-haven bid In the previous weeks, we have often argued that the USD is turning more risk-sensitive rather than being yield-sensitive with most of the interest rate story being priced in by the markets now. A confirmation of that trend was seen this morning when US 10-year yields stayed below 3.7% at the Asia open, while the USD rose higher amid a safe haven bid due to the protests in China. Biggest losers on the G10 board were the AUD and NZD, both down 0.5% with the risk-off move. The Japanese yen was more stable, depicting a risk-sensitivity as well, and USDJPY stayed range-bound around 139.30. EURUSD Crude oil (CLZ2 & LCOF3)to be weighed by China turmoil and high Russia cap As hopes of a China reopening retreated last week with a fresh surge in cases, crude oil prices fell sharply with WTI down ~5%. Meanwhile, EU talks on a cap on Russian oil have hinted at a higher price of $65-70/barrel, which suggests Russia’s supply to international markets could continue. Talks are likely to continue this week, and the protests in China mean more short-term headwinds to oil demand outlook are on the horizon. China’s central bank announced a cut in RRR, but that is unlikely to fully offset the demand weakness concerns. WTI future traded around $76/barrel in the Asian morning while Brent was below $84, and focus is likely to shift to the OPEC meeting on December 4 after we get past the cap negotiations. There were also reports that Iraq could increase oil export capacity, to add 1mn to 1.5mn barrels/day by 2025   What to consider Protests against Covid lockdowns sprang up in several Chinese cities as local governments tightened restrictions Anger over suspected delays to rescue from a deadly fire burst into anti-lockdown protests in Xinjiang. After a fire at a locked-down apartment killed 10 people, hundreds of angry residents in Urumqi, Xinjiang took to the street to protest against the Covid lockdown imposed more than three months ago. Meanwhile, daily new cases shot up to a record high of 39,506, with Beijing, Guangzhou, Chongqing, and Shanghai significantly tightening movement restrictions. Video footage and photos on social media showed that protests against Covid restrictions sprang up in several other cities over the weekend, including Wuhan, Nanjing, Beijing and Shanghai. China’s PBOC cut the reserve requirement ratio (RRR) by 25bps The People’s Bank of China (PBOC) announced a reduction of 25bps for all banks except for some small which had already had their RRR cut to 5% earlier. The weighted average of RRR across all banks falls to 7.8% from 8.1% after the latest move. The PBOC projects that the reduction in RRR will make available to banks an additional RMB400 billion. The 25bps cut this time, the same as the cut in April this year, was small by historical standards when 50bp or 100bp cuts seemed to be the norm. It helps improve banks’ funding costs but it may do little to boost the economy as the demand for loans is subdued. RBA’s Lowe still sees a strong demand; but retail sales turned negative The Reserve Bank of Australia Governor Lowe appeared before the Australian parliament's Senate Economics Legislation Committee and said that demand is still too strong relative to supply. He said he is unsure about labor market, and wage growth is consistent with inflation returning to target. He was worried about housing supply and expects to see rental pressure over the next year. Australia’s October retail sales, however, dipped into negative territory for the first time this year, coming in at -0.2% MoM vs. expectations of +0.5%.  The U.S. bans telecommunications equipment from China’s Huawei, ZTE and more The U.S. Federal Communications Commission said on Friday that the U.S. had decided to ban the import and sale of telecommunication equipment from China’s Huawei Technologies, ZTE, Hytera Communications, and surveillance equipment makers Dahua Technology and Hangzhou Hikvision Digital Technology. The U.S. regulator said these Chinese telecommunication equipment makers pose “an unacceptable risk” to U.S. communication networks and national security. Chevron gets US license to pump in Venezuela Chevron had been banned from pumping due to US sanctions against the government of Venezuelan President Nicolás Maduro. But WSJ reported that on Saturday, the US said it will allow Chevron to resume pumping oil from its Venezuelan oil fields. The shift may open the door to other oil companies that had operated previously in Venezuela, despite the near-term headwinds and the massive investments that may be needed.  Pinduoduo (PDD:xnas) is scheduled to report Q3 results on Monday After a strong beat for Q2, analysts are expecting Pinduoduo’s Q3 results to remain solid with Q3 revenue growth to come at 44% y/y and the EBITDA margin to stay at healthy levels around 21.2%. Was Q3 margin pressure the canary in the coal mine? According to the analysis done by Peter Garnry, with 97% of the companies having reported, S&P 500 earnings were down 2.5% q/q making Q3 the worst earnings season since the market bounced back from the abyss during the early days of the pandemic. European and Chinese earnings have been even worse declining around 9% q/q driven by more intense margin pressures than observed in the US. On revenue European companies did the best with revenue up 6.7% q/q compared to only 3.9%b q/q for S&P 500. The average q/q revenue growth rate in the past two years was 5.3% in Europe and 3.5% in the US. Part of the difference can be explained by the stronger USD. The key dynamic for equities next year is the evolution of operating margins and if they go down to average levels in the past then headwinds will be too much for companies, and lower earnings next year will likely follow.   For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-market-insights-28-nov-2022-28112022
Commodities Outlook 2023: Stainless Steel Is Still Key For Nickel Semand

Iron Ore Shipments Could Continue To Fall And Hurt Earnings And Shares

Saxo Bank Saxo Bank 28.11.2022 09:06
Summary:  Dramatic scenes of widespread protests in China against Covid policies there have pulled sentiment lower, with US yields dipping to new local lows and crude oil prices pushing on cycle lows even after Friday’s drop. The USD has firmed against most currencies, but the Japanese yen is stronger still as the fall in yields and energy prices support the currency. This is a sudden powerful new distraction for markets when this week was supposed to be about incoming US data.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures failed to touch the 200-day moving average in Friday’s trading retreating slightly into the weekend. This morning the index futures are continuing lower bouncing around just above the 4,000 level. The US 10-year yield declining to 3.65% with the 3.5% level being the likely downside level the market is eyeing is naturally offering some tailwind for equities in the short-term. However, the key dynamic to get right now in the medium term is the potential earnings recession caused by margin compression as the economy slows down and wage pressures remain high. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Mainland China and Hong Kong stock markets retreated as investors were wary about the surge in daily new Covid cases across China and the outburst of anti-strict-control protests in several mega cities, including Beijing and Shanghai. The cut in reserve requirement ratio by the central bank on Friday evening did not give the market much of a boost. Hang Seng Index and CSI 300 plunged more than 2% each. The China internet space fell 2%-5%. Macao casino stocks bucked the trend and rallied following the Macao SAR Government’s announcement to renew casino licenses with all incumbent operators. Wynn Macau (01128:xhkg) jumped nearly 16%. The three leading Chinese catering chains listed in Hong Kong gained 4% to 6%. USD and JPY firm overnight as Chinese Covid protests drag on risk sentiment The US dollar was higher overnight against most currencies even as US treasury yields hit new cycle lows as widespread protests in China against the Covid policies there are weighing heavily on risk sentiment. Hardest hit among G10 currencies has been the Aussie, with AUDUSD trading back below 0.6700 after pulling above 0.6780 at one point on Friday. USDCNH jumped above the important 7.200 level. The hit to yields and perhaps lower crude oil prices are driving a strong revival in the Japanese yen, which traded higher even against the US dollar overnight, taking USDJPY back toward the recent lows overnight. This is a sudden new distraction for FX traders, when this week was supposed to be all about the incoming US economic data, including the October PCE inflation data up on Thursday and the November jobs data on Friday. Crude oil plunges as China unrest rattles markets A weak sentiment spread across commodities as markets opened in Asia with crude oil, copper and iron ore all trading sharply lower following a weekend that saw waves of unrest in China, the world's biggest consumer of raw materials. Protest and boiled up frustration against President Xi’s increasingly unpopular anti-virus curbs erupted over the weekend, raising the threat of a government crackdown. While the short-term demand outlook may take a hit and add further downside pressure to prices, the eventual reopening is likely to be supported by massive amounts of stimulus. The market is also watching ongoing EU price cap discussions, next week’s OPEC+ meeting and rollout of an embargo on seaborne Russian crude and Chevron receiving a license to resume oil production in Venezuela. Gold (XAUUSD) Gold trades unchanged with safe haven bids in bonds and the dollar offsetting each other, while silver (XAGUSD), due to its industrial metal link, trades down more than 2% following a weekend of covid restriction protests across China. After finding support in the $1735 area last week, a break above $1765 may signal a return to key resistance at $1788, but lack of ETF buying still makes it hard to confirm a major change in direction. Aside from China, the market will be watching incoming US data for any signs of a slowdown in the pace of future rate hikes (see below) US treasuries find safe haven appeal, driving new local lows in yields. (TLT:xnas, IEF:xnas, SHY:xnas) The risk-off mood overnight is driving strong safe haven flows into US treasuries, as the 10-year benchmark traded to new local lows below 3.65%, with little room left to the pivotal 3.50% level. The 2-10 yield slope hit a new cycle extreme of –80 basis points overnight, a deepening indication of an oncoming recession. The 3-month treasury bills vs 10-year treasury notes spread went to minus-64bps, a level usually seen within 12 months preceding the onset of a recession. For a detailed discussion of our take on the outlook of bonds, please refer to this note we published last Friday. This week, interesting to see how the market balances the implications of what is unfolding in China versus incoming data in the US, especially the November jobs report on Friday. What is going on? Protests against Covid lockdowns in several Chinese cities Anger over suspected delays to rescue from a deadly fire burst into anti-lockdown protests in Xinjiang. After a fire at a locked-down apartment killed 10 people, hundreds of angry residents in Urumqi, Xinjiang took to the street to protest against the Covid lockdown imposed more than three months ago. Meanwhile, daily new cases shot up to a record high of 40,052, with Beijing, Guangzhou, Chongqing, and Shanghai significantly tightening movement restrictions. Video footage and photos on social media showed that protests against Covid restrictions sprang up in several other cities over the weekend, including Wuhan, Nanjing, Beijing, and Shanghai. China’s PBOC cut the reserve requirement ratio (RRR) by 25bps The People’s Bank of China (PBOC) announced a reduction of 25bps for all banks except for some small which had already had their RRR cut to 5% earlier. The weighted average of RRR across all banks falls to 7.8% from 8.1% after the latest move. The PBOC projects that the reduction in RRR will make available to banks an additional RMB400 billion. The 25bps cut this time, the same as the cut in April this year, was small by historical standards when 50bp or 100bp cuts seemed to be the norm. It helps improve banks’ funding costs, but it may do little to boost the economy as the demand for loans is subdued. The U.S. bans telecommunications equipment from China’s Huawei, ZTE and more The U.S. Federal Communications Commission said on Friday that the U.S. had decided to ban the import and sale of telecommunication equipment from China’s Huawei Technologies, ZTE, Hytera Communications, and surveillance equipment makers Dahua Technology and Hangzhou Hikvision Digital Technology. The U.S. regulator said these Chinese telecommunication equipment makers pose “an unacceptable risk” to U.S. communication networks and national security. RBA’s Lowe still sees a strong demand; but retail sales turned negative The Reserve Bank of Australia Governor Lowe appeared before the Australian parliament's Senate Economics Legislation Committee and said that demand is still too strong relative to supply. He said he is unsure about labor market, and wage growth is consistent with inflation returning to target. He was worried about housing supply and expects to see rental pressure over the next year. Australia’s October retail sales, however, dipped into negative territory for the first time this year, coming in at -0.2% MoM vs. expectations of +0.5%. Chevron gets US license to pump in Venezuela Chevron had been banned from pumping due to US sanctions against the government of Venezuelan President Nicolás Maduro. But WSJ reported that on Saturday, the US said it will allow Chevron to resume pumping oil from its Venezuelan oil fields. The shift may open the door to other oil companies that had operated previously in Venezuela, despite the near-term headwinds and the massive investments that may be needed. Bullard and Powell speak – pushback against easing financial conditions? While the economic data continues to slow, and markets continue to cheer on that, it will key for Fed members to bring the focus back to easing of financial conditions and consider what that means for inflation. Chicago Fed national financial conditions index eased further in the week of November 18, bringing financial conditions to their easiest levels since May. Most of the Fed members that have spoken since that soft CPI release for October have pushed back against pivot expectations, but it hasn’t been enough. Further pushback is still needed if the Fed is serious about bringing inflation under control, and only the most hawkish members of the committee Bullard and Powell may be able to deliver that. Both will be on the wires this week. Bullard speaks on Monday while Powell discusses the economic outlook and labor market on Wednesday. Other Fed members like Williams, Bowman, Cook, Logan and Evans will also be on the wires. Commodity companies exposed to China are vulnerable for further pull backs This week focus is on companies exposed to China, given forward earnings are likely to be downgraded following further China lockdowns and protests. Be cautious that investors could be looking to take profits or write options for downside protection in commodity exposed equites. Also note, on Friday fresh data showed that the major iron ore companies, BHP, Rio, Fortescue, are likely to be shipping almost 6% less than last year, in the final quarter of this year, and if lockdowns worsen, iron ore shipments could continue to fall and hurt iron ore majors' forward earnings and shares. On Monday in Asia, the iron ore (SCOA) fell 1.6% dragging down shares of ASX listed BHP, and Rio Tinto, who both lost about 1%+. What are we watching next? Weighing the sudden new intrusion of the Chinese protests story versus incoming US data The recent narrative has been that markets have room to celebrate the downward shift in Fed tightening expectations and hopes that an eventual opening up of China’s economy will help boost global growth. The widespread protests at the weekend have changed the plot, driving new uncertainty on how things will develop and possibly outweighing a considerable portion of the implications of the next important data macro data points out of the US, especially the Friday November jobs report. As well, we’ll have a look at the ISM Manufacturing survey for the month on Thursday. The situation in China aside (which it won’t be), the question for the run-up into the December 14 FOMC meeting and in the month or so beyond is how long the market can continue to celebrate the Fed easing off the accelerator, when the reason it is doing so is that economic slowing and an eventual recession threaten. Normally, a recession is associated with poor market performance as profits fall and credit risks mount. Apple production risk is on the rise. The protests in China and the unrest around Apple’s largest manufacturing hub for its iPhone could lead to a production shortfall of close to 6mn iPhone Pro which was a Morgan Stanley estimate and was published before the intensified issues at the Apple manufacturing site. Earnings to watch 98% of the S&P 500 companies have reported Q3 earnings reducing the earnings release impact from US equities. But European and Chinese companies are still reporting although the volume of earnings releases is also getting lower. Key earnings release to watch today is Pinduoduo which is expected to grow revenue by 44% y/y with EBITDA margin expanding to 21.2% as their online marketing revenue and uptake remain strong despite the slowing Chinese economy. Monday: Pinduoduo, Capitaland, H World Group Tuesday: Li Auto, DiDi Global, Bank of Nova Scotia, Intuit, Workday, Crowdstrike, HP Enterprise, NetApp, Shaw Communication Wednesday: Royal Bank of Canada, National Bank of Canada, Salesforce, Synopsys, Snowflake, Splunk, Hormel Foods, KE Holdings Thursday: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger Economic calendar highlights for today (times GMT) 1400 – ECB President Lagarde to speak 1530 – US Nov. Dallas Fed Manufacturing 1700 – US Fed’s Williams (voter) to speak 1700 – Us Fed’s Bullard (voter 2022) to speak 2330 – Japan Oct. Jobless Rate/Retail Sales Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-nov-28-2022-28112022
Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

Commodities: EU Members Manage To Agree On Price Caps For Russian Oil

ING Economics ING Economics 28.11.2022 09:16
Sentiment in markets remains negative given the latest Covid developments in China. Meanwhile, energy markets will be keeping an eye on whether EU members manage to agree on price caps for Russian oil and TTF natural gas futures In this article Energy - price cap decisions Metals – Aluminum stocks decline in China Agriculture – Downside to Argentine wheat output   Shutterstock Energy - price cap decisions Sentiment in the oil market remains negative, and developments over the weekend in China will certainly not help. China continues to see record daily cases of Covid, which has resulted in some cities tightening mobility restrictions. Reports of Covid protests in China will also likely prove harmful for sentiment. Unsurprisingly, investor appetite has taken a hit in recent weeks - one only needs to look at the price action to see this. Positioning data adds confirmation to this thesis. The latest exchange data shows that speculators reduced their net longs in ICE Brent by 70,502 lots over the last reporting week, leaving them with a net long of 138,048 lots as of last Tuesday. This is the smallest position held since August. The market appears not to be concerned about the ongoing uncertainty over Russian supply. Instead, attention seems fully focused on the demand story.    Over the weekend the US government relaxed oil sanctions against Venezuela by allowing Chevron to restart oil production at some of its joint ventures in the country. The easing in sanctions will have a limited impact on the market, given that volumes will be relatively small. The easing also appears to allow the export of this crude to the US. This will be helpful for US refiners on the hunt for heavier grades of feedstock. As for the week ahead, we should start to get some preliminary production numbers for OPEC members for November. This will obviously give a good insight into which members have reduced their output in accordance with the latest OPEC+ supply cuts. OPEC+ agreed back in October to reduce their production targets by 2MMbbls/d from November. However, the market will likely be closely watching price cap developments this week. EU members failed last week to agree on a level for the price cap for Russian oil. The EU and G-7 will want to come to an agreement this week, before the EU ban on Russian seaborne crude oil kicks in on 5 December. EU members will also have to agree on the proposed price cap on TTF gas futures with the Commission last week suggesting setting the cap at EUR275/MWh, which some members believe is too high. Metals – Aluminum stocks decline in China The latest data from the Shanghai Metals Market (SMM) shows that inventories of aluminium ingots have dropped 10% in the last two weeks and currently stand at 51.8kt (the lowest in almost six years) as of Friday. SMM also said that smelters in northern China are reducing output during the winter months to reduce emissions, while a resumption of plants in the southwest (that were forced to halt production due to power shortages) has been slower than expected. Meanwhile, the latest data from the Shanghai Futures Exchange (ShFE) shows that aluminium inventories on exchange dropped by 15kt (-12% WoW) to 110kt - the lowest since 2017. US miner Freeport-McMoRan agreed with the Chinese copper smelters (Tongling Nonferrous Metals Group Co. and Jiangxi Copper Co.) to set treatment charges at US$88/t (+35% YoY) for copper concentrate supply agreements for 2023. The higher treatment charges indicate expectations of rising mine supply relative to smelting capacity.  There are suggestions that two big mines - Quellaveco in Peru and the Quebrada Blanca 2 project in Chile, will roughly add 616kt of copper to the market once ramped up. The latest monthly update from the International Copper and Study Group shows that the supply deficit for copper stood at 10kt in September, compared to a deficit of 13kt in the previous month. Over the first nine months of the year, the copper market encountered a deficit of 295kt, compared to a deficit of 233kt during the same period last year. Global mine and refined copper production increased by 3.5% YoY and 2.3% YoY respectively, whilst overall apparent refined demand grew 2.6% YoY for January-September 2022. Agriculture – Downside to Argentine wheat output The latest data from a crop tour organized by the Bahia Blanca Grain Exchange shows that wheat production in the southern Buenos Aires and La Pampa provinces in Argentina is set to decline by 31% YoY following drought and frost conditions. The survey estimates for the wheat harvest (which starts next month in the region) is around 3.7mt, compared to 5.3mt last season. Meanwhile, barley production in the region is expected to drop by 20% YoY to 2.3mt. TagsSanctions Russian oil price cap OPEC+ Natural gas Aluminium   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Crude Oil Sees Its Biggest Weekly Pull Back Since April

Chinese Protests Send Crude Oil Lower | Bitcoin Under Pressure

Swissquote Bank Swissquote Bank 28.11.2022 10:05
Massive anti-Covid protests in the biggest Chinese cities marked the weekend. So, the week kicked off on a bad mood in the Asian markets. Australian and Chinese stock markets were painted in red. The Hang Seng index dived more than 2% in Hong Kong, and crude oil has already lost more than 3% at the time of shooting. Black Firday In the US, the record Black Day sales could hammer the joy around a potential Federal Reserve (Fed) pivot on softening US economy. The US shoppers spent more than $9 billion in online sales on Friday, and Cyber Monday is also expected to be a record-breaking one, with more than $11 billion to be spent. This is not exactly what you expect to hear when you think that the US will enter a consumer-led recession in couple of weeks from now… FX And S&P 500 The US dollar kicked off the week on a bullish note. The EURUSD slipped below the 200-DMA, near 1.0380. The S&P500 index closed last week at the highest levels since mid-September, and stands a couple of points from the year-to-date descending channel top, which could bring topsellers in, especially if strong data revives the idea that the Fed has no reason to stop hiking its interest rates. Watch the full episode to find out more! 0:00 Intro 0:38 China doesn’t want Covid zero, but it’s not simple… 2:55 Chinese protests send crude oil lower 4:09 Dear Mr. Powell, Black Friday sales hit record this year… 6:32 … what should we expect? 7:03 Watch China EV deliveries, Tesla, Apple on China unrest 8:26 Bitcoin under pressure, again Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #China #Covid #protests #US #Black #Friday #Cyber #Monday #Fed #expectations #USD #EUR #crudeoil #Bitcoin #Tesla #Apple #Xpeng #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
FX Daily: Upbeat China PMIs lift the mood

The Current Power Politics And Brutality In China Seem To Be Leading To Protests

Conotoxia Comments Conotoxia Comments 28.11.2022 12:15
Unlike European countries or the US, China still maintains a strict policy against the Covid-19 outbreak. The authorities do not hesitate to use violence to blunt any opposition to the policy, as has happened, for example, at the Foxconn factory, which is responsible for, among other things, producing iPhones for Apple. The number of new coronavirus infections in China has risen by 40347, the country's health authorities reported Monday. The latest number represents another daily record for China, with 3822 symptomatic and 36525 asymptomatic cases documented in the past 24 hours. No deaths caused by the virus have been reported in the same period, BBN reported. How are stock markets and the price of oil reacting? The current power politics and brutality seem to be leading to protests, which could have an impact on the markets initially in the short term and then in the long term. Protests against lockdowns in China intensified over the weekend, spreading to cities such as Shanghai, Nanjing and Urumqi. Western media confirmed that demonstrations were taking place on the streets and at universities, and that there was an increased police presence at protest sites. There were also reports of clashes between people and police officers. Asian stock markets appear to have seen declines on Monday as a consequence of the protests, and President Xi Jinping was reportedly urged by some demonstrators to step down. The Shanghai Stock Exchange index fell nearly 1.5 percent, with U.S. index futures posting morning declines ranging from -0.4 percent (Dow Jones Industrial Average) to -0.8 percent, (Nasdaq 100). Crude oil also came under pressure from the protests. WTI crude oil futures fell about 3 percent on Monday to around $74 per barrel, slipping to the lowest levels since last December. The oil price consequently began a fourth week of declines, as uncertainty over politics in China, the country that is the largest importer of crude oil, may affect the outlook for crude demand. Source: Conotoxia MT5, XTIUSD, Daily Possible long-term implications China appears to be a country that would sooner stifle protests by brute force than allow them to affect a change in policy. Nevertheless, if such events were to occur, it would likely be one of the most positive returns for financial markets this year. We saw a foretaste of the market euphoria associated with rumors that China is to abandon its zero Covid policy on November 4. Then, after the market rumor, investors went on a buying frenzy. The lifting of lockdowns could allow China's economy to grow stronger and, as a result, lead to increased demand for raw materials and other goods and products. With the current recessionary-stagflationary sentiment, this could be one of the more positive factors. What are the chances of such a scenario materializing? In the short term, the markets seem to indicate that they are small, but it is worth keeping in mind. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.      
Steady BoE Rate Expectations Amid Empty Event Calendar in the UK

Saxo Bank Podcast: Protests In China, Lower Yields, Lower Crude Oil, Apple Risks A Further Haircut On The Risk And More

Saxo Bank Saxo Bank 28.11.2022 12:24
Summary:  Today we look at how the market is absorbing the news of widespread protests in China against Covid policies there, from lower yields to lower crude oil prices. That combination offers strong support for the Japanese yen, while Apple risks a further haircut on the risk of widening production disruptions. It is worth noting that corn prices in China are diverging from prices elsewhere, also on Covid policy disruptions. Elsewhere, we consider the status of "de-globalization" (or is it re-globalization?), and look at incoming earnings and macro calendar events for the week ahead. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Source: https://www.home.saxo/content/articles/podcast/podcast-nov-28-2022-28112022
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Commodities: Crude oil suffers from situation in China

Craig Erlam Craig Erlam 28.11.2022 19:08
China and the Russian price cap weigh on crude Events in China aren’t just hitting local equity markets, oil prices are also crumbling under the pressure of record Covid cases and huge economic uncertainty. The country’s commitment to zero-Covid has seriously damaged growth in the world’s second-largest economy and by extension, crude demand. This has helped to soften the impact of the Ukraine war on energy markets to some extent and we could be seeing it weigh on oil prices once more. Read next: Meta fined by Irish regulators amidst privacy concerns| FXMAG.COM Discussions are also continuing on the details of the Russian oil price cap. Most notably, where it should be set. It’s looking increasingly likely to be done at a level that doesn’t particularly hinder Russia’s ability to sell crude – which is contributing to the drop in oil prices – or put its buyers in an uncomfortable position. The outcome will likely factor in how OPEC+ responds this weekend and I expect the rumour mill will therefore be busy as the week progresses, which in turn could trigger a lot of oil price volatility over the course of the week. A volatile period ahead for gold? Gold has performed well again over the last week but now appears to be settling ahead of a busy week of economic data. It’s now sitting in the middle of a potential new range between $1,780 resistance – a major level of support in the first half of the year – and $1,730 support – a big resistance level in September and October turned support last week. With so much data coming from the US this week including inflation, GDP, and the jobs report, we could see one of these give way in the coming days, setting us up nicely for the Fed meeting in two weeks. The latest inflation data will also be released a little over 24 hours before that interest rate decision so it could be a volatile couple of weeks for the yellow metal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil under pressure, gold settles down - MarketPulseMarketPulse
The US PCE Data Is Expected To Confirm Another Modest Slowdown

Dallas Fed Manufacturing Index Came In Less Bad Than Expected

Saxo Bank Saxo Bank 29.11.2022 09:06
Summary:  A slew of Fed speakers remained hawkish on Monday, with Bullard saying that markets were under-pricing the risk of a more aggressive Fed This added to the risk-off tone from the protests in China ahead of the focus turning to an array of key US data due in the week. The US Dollar found a fresh bid into the US close, while the yen is being supported by safe haven demand and shifting tone from BOJ officials. Sharp swings in oil prices as well amid demand weakness concerns being reversed by hopes of an OPEC+ production cut, as the cartel meets over the coming weekend. What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated on China Covid protests and hawkish Fedspeak U.S. equities slid on the outbreak of protests against Covid lockdowns across large cities in China and hawkish comments from Fed officials. Nasdaq 100 dropped 1.4% and the S&P500 lost 1.5%. The selloff was board-based as all 11 sectors of the S&P500 declined on Monday. Energy and materials stocks took a hit as oil and other commodity prices retreated. Apple (AAPL:xnas) fell 2.6% as the iPhone maker could fact a production shortfall of as many as 6 million handsets as a result of the labour unrest in the Foxconn factory in Zhengzhou. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) pared early gains and finished Monday little changed U.S. treasuries caught a risk-off bid in Asian hours as the Covid protests in China triggered buying in safe-haven assets. The gains were pared when New York came with the St. Louis Fed President Bullard saying that the Fed is “is going to need to keep restrictive policy…to continue through -- as least through – next year.” The 10-year finished unchanged at 3.68%. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Mainland China and Hong Kong stock markets retreated as investors were wary about the surge in daily new Covid cases across China and the outburst of anti-strict-control protests in several mega cities, including Beijing and Shanghai. The cut in reserve requirement ratio by the central bank on Friday evening did not give the market much of a boost. Hang Seng Index declined 1.6% and CSI 300 lost 1.1%. The China internet space fell 2%-4% except for Meituan (03690:xhkg) which gained 2% on strong Q3 results reported last Friday. Macao casino stocks bucked the trend and rallied following the Macao SAR Government’s announcement to renew casino licenses with all incumbent operators. Wynn Macau (01128:xhkg) jumped nearly 15%. Stocks of the Chinese catering chains listed in Hong Kong gained some market speculation of earlier exit from the dynamic zero-Covid policy due to the now hard-to-contained outbreaks of inflection across the country. Haidilao (06862:xhkg) surged 6.8%. Buying on Hang Seng Index futures emerged in overnight trading in New Your hours and saw the futures contract jump 1.2% and the Nasdaq Golden Dragon China Index rise 2.8%. FX: USDJPY getting a safe haven bid, but there’s more! Choppy moves in the US dollar on Monday amid risk off and volatility in the US yields. But hawkish Fed speak, with Williams and Bullard both hinting at higher rates than the September dot plot, supported a final leg higher in the USD in the late US session. EURUSD touched highs of 1.0500 but reversed all of the day’s gains later with focus on inflation numbers due tomorrow. USDJPY also touched lows of 137.50 before reversing but a clear shift in tone in BOJ officials is being seen in the last few weeks keeping the BOJ pivot narrative alive into early 2023 before Kuroda or just after Kuroda retires. Kuroda referred to wage gains as being supportive of more stable levels of inflation which gave the yen a boost on Monday. Crude oil (CLZ2 & LCOF3) reversed losses on OPEC cut hopes Crude oil prices made a sharp u-turn on Monday after dipping lower earlier in the session on concerns from protests in China which delayed the hopes of a reopening further and a hawkish commentary from Fed speakers (read below). WTI futures fell to lows of $74/barrel while Brent was down to $81. However, losses were reversed later as OPEC+ delegates said deeper production cuts could be an option when they meet this weekend. OPEC+ is scheduled to meet this Sunday to review its current production plan. At the last meeting it cut output quotas by 2mb/d. Saudi Energy Minister Prince Abdulaziz bin Salman said that OPEC+ was ready to intervene with further supply reductions if it was required to balance supply and demand. Meanwhile, European talks on a price cap have stalled.   What to consider? Fed speakers press for higher rates James Bullard (2022 voter) said markets are underestimating the chances that the FOMC will need to be more aggressive next year, adding tightening may go into 2024. He also said that rates will need to be kept at a sufficiently high level all through 2023 and into 2024 even if the Fed reaches restrictive territory by Q1 2023. John Williams (voter) said "there's still more work to do" to get inflation down. He also hinted at “modestly higher” path of interest rates than what he voted for in September, sending another signal that December’s dot plot could see an upward revision, while also hinting at rate cuts in 2024. He provided some clear forecasts: unemployment rate rising from 3.7% to 4.5%-5.0% by late 2023; inflation declining to 5.0-5.5% by the end of 2022 and 3.0-3.5% by late 2023; modest economic growth this year and in 2023. The central bank isn't near a pause, Loretta Mester (2022 voter) told the FT. Richmond Fed President Barkin also spoke about higher-for-longer rates, despite moving slower BlockFi – another casualty in the FTX saga BlockFi Inc. filed for Chapter 11 bankruptcy, the latest crypto-industry operator to seek court protection in the wake of FTX’s collapse. It sold $239 million of crypto ahead of its filing. ECB’s Lagarde maintains tightening stance ECB President Lagarde repeated her previous comments that the ECB will raise rates further but nothing on how much further, and on how fast they need to go. She said the bank will be data-dependent, adding the ECB may need to move into restrictive territory. She also said that she will be surprised if inflation in the Eurozone (due to be reported on Wednesday 30/11) peaked last month. Even if the November print cools slightly, most likely driven by lower energy costs, there is a possibility that inflation will likely remain high in the coming months as winter months progress and cost of living gets worse. Dallas Fed manufacturing signals job stress is building Dallas Fed manufacturing index came in less bad than expected at -14.4 for November, but the underlying metrics indicated a softening in labor markets. 16% of the factories surveyed indicated net layoffs in November, up from 9% previously, and comments suggested more layoffs may be coming as the backlog and holiday season get over. While it may still be early to see any significant signs of softening in Friday’s jobs report, the jobs data remains key to monitor to see if consumers may be vulnerable to a faster-than-expected pullback in spending. Apple production risk is on the rise Reports suggested that the protests in China and the unrest around Apple’s largest manufacturing hub for its iPhone could lead to a production shortfall of close to 6mn iPhone Pro units this year, roughly about 7% of all iPhones scheduled to be delivered this quarter. Apple shares fell 2.6% on Monday on these reports. Pinduoduo (PDD:xnas) beat expectations, Bilibili up next Pinduoduo, after a strong beat in the prior quarter, surpassed again analyst estimates and delivered a strong Q3 beat. The Chinese eCommerce platform’s revenues grew 65% Y/Y, outperforming its peers, for example, Alibaba”s 3% and JD.COM’s 11% revenue growth in Q3. Adjusted operating margin came in at 34.6% vs 33.5% in Q2. 2022 , and 15.2% in Q3 last year. Adjust EPS of RMB 7.33 was much higher than the RMB4.75 consensus. Bilibili ((09626:xhkg) is scheduled to report today.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Hawkish Fedspeak; OPEC+ to consider production cut – 29 November 2022 | Saxo Group (home.saxo)
Russia Look Set To Double Its Exports For The First Half Of 2023

Russian Wheat Continues To Be Offered At About The Cheapest Prices | The ECB Will Be Data-Dependent

Saxo Bank Saxo Bank 29.11.2022 09:13
Summary:  Markets have been on edge as we await further signs of the official stance in China on Covid restrictions after civil unrest on the issue at the weekend, with signs this morning from Chinese officialdom that a cautious easing will remain underway. This has inspired a comeback in some commodities and the Chinese renminbi after sharp weakening moves yesterday, but there is no profound sense of relief across markets as we also await incoming US data ahead of the December 14 FOMC meeting.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are stuck in a tight range between 3,926 on the downside and 4,054 on the upside as the market is struggling to find a clear signal and direction. The noise is filled by the back-and-forth news stream out of China related to it Covid policies and backstop plans for its struggling real estate sector. Meanwhile, the US 10-year yield is also stabilising and earnings releases are minimal except for tomorrow with reports expected from Salesforce and Snowflake. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equity markets rallied strongly with Hang Seng Index and the CSI300 Index each rising more than 3%. The market sentiment was buoyed by new measures from the Chinese securities regulator to relax its restriction on property developers from equity financing. Leading Chinese developers listed in Hong Kong jumped by 5%-12%. In the mainland’s A-share markets, real estate names led the charge higher. Tourism stocks rose on speculation that pandemic control restrictions might be relaxed further. China’s pandemic control regulators are holding a press conference later today. USD firms, but then retreats overnight on hopes China’s reopening prospects Concerns surrounding China’s reopening status after civil unrest at the weekend sparked considerable volatility across FX yesterday, with a US dollar rally yesterday eventually emerging as the dominant development after choppy action. The USD was a bit weaker again overnight, particularly against the USDCNH, which dropped back below the important 7.20 area ahead of a press briefing in China thought to make clear the official central government position on Covid policies. Expect the most volatility in commodity currencies and the Japanese yen depending on how clearly China either a) signals that the path is open to easing restrictions on an accelerated time frame or b) that restrictions will remain in place and could even tighten if virus numbers don’t fall. Crude oil (CLF3 & LCOF3) made a sharp U-turn on Monday ...as one survey after another pointed to an elevated risk that OPEC+, partly depending on the price when they meet next week, will opt to agree on another production cut in order to stem the recent price drop. Having fallen by more than 15 dollars during the past two weeks, a downturn in Chinese demand has been more than priced in, with technical selling and momentum having taken over. Overnight Brent briefly traded $86 after Chinese health authorities announced they would hold a press conference at 7am GMT. At their last meeting OPEC+ cut output quotas by 2mb/d with Saudi Energy Minister Prince Abdulaziz bin Salman saying the group was ready to intervene with further supply reductions if it was required to balance supply and demand. Meanwhile, European talks on a price cap have stalled. Wheat (ZWH3) in Chicago dropped to a three-month low …on Monday on a combination of ample and cheap supply from Black Sea suppliers increasing competing with US origin wheat, and on concerns about the impact of protests in China on growth and demand. Following a bumper crop this summer, Russian wheat continues to be offered at about the cheapest prices in world export markets which is negative for the export prospects of U.S. wheat. In the week to November 22 speculators increased bearish bets on CBOT wheat to the highest since May 2019. Gold (XAUUSD) has recovered from another stronger dollar driven attempt to challenge support ...in the $1735 area after Fed speakers said more rate hikes are coming. pressed for higher rates. Investors will watch this week’s economic data, including ISM on Thursday and Friday’s nonfarm payrolls and US jobs report, for signs the US central bank may soon ease its monetary-tightening trajectory. Total holdings in bullion-backed gold ETFs rose 6 tons last week, the biggest weekly increase since April. During this time investors sold a total of 397 tons, still less than the 400+ tons bought by central banks during the third quarter. After finding support in the $1735 area last week, a break above $1765 may signal a return to key resistance at $1788. US treasury yields recovered after dip to local lows. (TLT:xnas, IEF:xnas, SHY:xnas) Weak risk sentiment after the weekend news of civil unrest in China due to restrictive Covid policies there saw a dip in the 10-year yield benchmark yesterday to new local lows below 3.65%. But there was little energy in the move as the market awaits important incoming US data starting with today’s November Consumer Confidence survey, but more importantly this Friday’s November jobs numbers on Friday. What is going on? The wave of takeover bids continues at the Paris Stock Market This is mostly happening in Euronext Growth – the market segment for small and medium-caps. Yesterday, Abeille Insurance (member of Aema Group, the fifth largest insurance player in France) acquired the small bank Union Financière de France (a bank mostly specialized in wealth management advisory). Abeille Assurance bought the company at a price per action of 21 euros. This represents a premium of 51 %. With the sharp drop in values that has happened since January, we have seen a wave of takeover bids at the Paris Stock Market. This will likely continue in the short-term, especially in the segment of wealth management advisory where there is an ongoing process of consolidation happening. Fed speakers press for higher rates James Bullard (2022 voter) said markets are underestimating the chances that the FOMC will need to be more aggressive next year, adding tightening may go into 2024. He also said that rates will need to be kept at a sufficiently high level all through 2023 and into 2024 even if the Fed reaches restrictive territory by Q1 2023. John Williams (voter) said "there's still more work to do" to get inflation down. He also hinted at “modestly higher” path of interest rates than what he voted for in September, sending another signal that December’s dot plot could see an upward revision, while also hinting at rate cuts in 2024. He provided some clear forecasts: unemployment rate rising from 3.7% to 4.5%-5.0% by late 2023; inflation declining to 5.0-5.5% by the end of 2022 and 3.0-3.5% by late 2023; modest economic growth this year and in 2023. The central bank isn't near a pause, Loretta Mester (2022 voter) told the FT. Richmond Fed President Barkin also spoke about higher-for-longer rates, despite moving slower China relaxes its restrictions on developers from attaining equity financing The China Securities Regulatory Commission (CSRC) fired the so-called “third arrow” to ease some of the restrictions previously imposed on property developers from attaining equity financing. While property developers are still barred from doing IPO in the domestic equity market, they are now domestically listed A-share developers and some Hong Kong-listed H-share developers to issue new shares to raise capital as long as the proceeds are used for restricting, M&A activities, refinancing, buying existing property projects, repaying debts, and project construction. However, proceeds are not allowed to be used in land acquisition. Pinduoduo shares rally 12% Strong Q3 results pushed the shares of the Chinese e-commerce platform to the highest level since November 2021. Q3 revenue was CNY 35.5bn vs est. CNY 30.9bn and adj. EPS at 8.62 vs est. 4.75 driven by tailwinds from the strict Covid policies in China. BlockFi – another casualty in the FTX saga The crypto lender BlockFi Inc. filed for Chapter 11 bankruptcy, the latest crypto-industry operator to seek court protection in the wake of FTX’s collapse. It sold $239 million of crypto ahead of its filing. ECB’s Lagarde maintains tightening stance ECB President Lagarde repeated her previous comments that the ECB will raise rates further but nothing on how much further, and on how fast they need to go. She said the bank will be data-dependent, adding the ECB may need to move into restrictive territory. She also said that she will be surprised if inflation in the Eurozone (due to be reported on Wednesday 30/11) peaked last month. Even if the November print cools slightly, most likely driven by lower energy costs, there is a possibility that inflation will likely remain high in the coming months as winter months progress and cost of living gets worse. Dallas Fed manufacturing signals job stress is building Dallas Fed manufacturing index came in less bad than expected at -14.4 for November, but the underlying metrics indicated a softening in labor markets. 16% of the factories surveyed indicated net layoffs in November, up from 9% previously, and comments suggested more layoffs may be coming as the backlog and holiday season get over. While it may still be early to see any significant signs of softening in Friday’s jobs report, the jobs data remains key to monitor to see if consumers may be vulnerable to a faster-than-expected pullback in spending. What are we watching next? US November Consumer Confidence, September home prices up today The Conference Board’s monthly Consumer Confidence survey has historically correlated most closely with the strength of the US labour market, although after a strong recover from the pandemic lows by mid-2021, confidence fall sharply, hitting a 95.3 local low in July of this year, likely due to steeply rising inflationary pressures (the other major US confidence survey, the University of Michigan sentiment survey, hit the lowest level in its 44-year history in July, likely as the survey contains questions more closely linked to inflation). Confidence then bounced strongly from that July local low, hitting 107.80 in September before dropping sharply to 102.50 last month. The November reading is expected at 100.00. With inflationary pressures easing relative to their peak, a weaker than expected confidence reading today could suggest rising insecurity in the labour market. The September S&P CoreLogic Home Price data is expected to show an ongoing drop in US home prices of some –1.2% MoM after 30-year mortgage rates rose 400 basis points this year to 20-year highs. Apple production risk is on the rise The protests in China and the unrest around Apple’s largest manufacturing hub for its iPhone could lead to a production shortfall of close to 6mn iPhone Pro which was a Morgan Stanley estimate and was published before the intensified issues at the Apple manufacturing site. Earnings to watch Today’s earnings focus is Crowdstrike with analysts expected FY23 Q3 (ending 31 October) revenue growth expected at 51% y/y with operating margin expected to demand as pricing power and demand remain robust in the cyber security industry. Today: Li Auto, DiDi Global, Bank of Nova Scotia, Intuit, Workday, Crowdstrike, HP Enterprise, NetApp, Shaw Communication Wednesday: Royal Bank of Canada, National Bank of Canada, Salesforce, Synopsys, Snowflake, Splunk, Hormel Foods, KE Holdings Thursday: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger Economic calendar highlights for today (times GMT) 0800 – Spain Nov. CPI 0930 – UK Oct. Mortgage Approvals/Consumer Credit 1000 – Eurozone Nov. Confidence Surveys 1300 – Germany Nov. Flash CPI 1330 – ECB's Schnabel to speak 1330 – Canada Sep. GDP 1400 – US Sep. S&P CoreLogic Home Prices 1500 – UK Bank of England Governor Bailey to testify 1500 – US Nov. Consumer Confidence 2130 – API's Weekly Crude and Fuel Stock Report 0030 – Australia Oct. CPI 0130 – China Nov. Manufacturing and Non-manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – November 29, 2022 | Saxo Group (home.saxo)
The Current War Between China And The United States Over Semiconductor Chips Is Gaining Momentum

China Protests Hit Apple | BlockFi Files For Bankruptcy

Swissquote Bank Swissquote Bank 29.11.2022 10:34
The week started with a selloff across global equities. Unrest in China due to protests against the Covid zero policy combined with the Federal Reserve (Fed) members’ hawkish comments led to an early week selloff in both Asian, European and US equities. Crypto Market In cryptocurrencies, it was another day of bankruptcy news. This time, the crypto lender BlockFi, which had strong ties with FTX announced to file for bankruptcy. Bitcoin eased but didn’t damage important support on the news, while Coinbase dived another 4%. Stocks Market Elsewhere, the S&P500 lost 1.54% on Monday, as Nasdaq slid 1.43%. The US dollar traded up and down as US crude fell to $73pb then rebounded to flirt with the $80pb this morning, despite the Chinese slowdown worries. Expectation that OPEC would use the Chinese unrest as excuse to restrict outlook boosted bulls’ appetite. Fed There is still hope that Fed President Jerome Powell talks about slower rate hikes at his speech this week, but again, his words shouldn’t be heard halfway through. The Fed is willing to slow the pace of rate hikes to avoid going too far. But if they slow down, it’s also because they want to go higher than 5%. Watch the full episode to find out more! 0:00 Intro 0:24 China unrest, hawkish Fed comments hit sentiment 1:00 Fed remains haw-kish! 3:34 What does China developments mean for markets? 4:29 Why did crude oil rebound? 6:34 Ghana wants to buy oil with gold 7:00 China protests hit Apple, VW, but Chinese ADRs rebound 8:20 BlockFi files for bankruptcy Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #China #Covid #protests #Apple #Foxconn #VW #Fed #expectations #USD #XAU #crudeoil #Chevron #Venezuela #Bitcoin #BlockFi #FTX #bankruptcy #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH  
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Analysis Of The Movement Of Crude Oil And Gas

Saxo Bank Saxo Bank 29.11.2022 10:49
During yesterday’s session Brent Crude oil broke below support at $83.65 and the 0.786 Fibonacci retracement at 81.43 but managed to close above forming a Hammer candle which is and indication of a bottom and reversal.A bullish candle today could signal a reversal from the current downtrend. A reversal that could take Brent to the 0.618 retracement of the November selling at around 92.32.However, to reverse the medium-term bearish picture a weekly close above 99.56 is needed.The RSI is showing negative sentiment and but testing its falling trendline. A close above could be an indication of this bounce could turn in to a reversal with higher Oil prices.However, if selling pressure returns and sends Brent below 82.40 the down is likely to extend down to 77 possibly lower. Source all charts and data: Saxo Group WTI crude oil bounced from support at around 74.27 and from the upper side of the upper falling trend line in what seemed like a falling wedge pattern. WTI formed a Hammer candle indicating a bounce that could take WTI to the 0.618 retracement at 86.05.At the time of writing RSI has broken above its short-term falling trend indicating this bounce could jump a bit higher. However, the falling daily 55 and 100 SMA’s are providing resistance. If WTI slides back below 73.60 there is not much support until around 66-62.40.For WTI to reverse the medium term down trend a weekly close above 93.65 is minimum requirement. Dutch Gas broke side ways out of its steep falling wedge like pattern and haven’t really been able to get some upside traction. But maybe this is the time. It has broken out of its triangle like pattern and if Dutch Gas moves higher to close above €147 a new uptrend has been established.An uptrend with potential to move toa around 175-188.RSI still showing negative momentum but that will change if it can close above 60 threshold.If Dutch Gas slides back below it very short-term falling trend line in the triangle like pattern it is likely to test October lows around 92.40 Henry Hub Natural Gas is volatile around $7.18 which was the resistance to break for bullish signal. 200 daily SMA seems to offer support an Henry Hub is set for higher levels. RSI showing positive sentiment supports this picture.However, that could all be changed if Henry Hub closes back below 6.50 for a test of support around 5.55       Source: Technical Update - Oil bouncing off new lows forming reversal candle. Gas getting traction but needs to break resistance | Saxo Group (home.saxo)
USD/JPY Weekly Review: Strong Dollar and Yen's Resilience in G10 Currencies

Saxo Bank Podcast: Electricity Prices Spiking In Europe, Crude Oil Rebounding And Wheat Falling And More

Saxo Bank Saxo Bank 29.11.2022 10:54
Summary:  Today we look at the market trying to recover its feet as it hopes that China will remain on the path toward reopening on fresh signs that it wants to avoid curbing activity excessively after recent civil unrest due to Covid restrictions. We also note, ahead of important incoming US data over the next couple of weeks and a Fed Chair Powell speech tomorrow, that the market is taking a very strong view on the path of Fed policy and the economy, assuming the Fed will succeed in its fight against inflation and will cut aggressively in 2024. Will Powell and/or the data challenge this pronounced view? We also look at electricity prices spiking in Europe, crude oil rebounding and wheat falling, stocks to watch and upcoming earnings reports and macro data. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Markets taking a strong view that Fed will succeed | Saxo Group (home.saxo)
FX Daily: Upbeat China PMIs lift the mood

The Chinese Authorities To Prepare For Further Easing In Its Covid Policy

Saxo Bank Saxo Bank 30.11.2022 09:31
Summary:  A dash of optimism on Tuesday with Chinese officials continuing their commitment to ease the Zero Covid policies, but US economic data continued to disappoint and focus remains on how hawkish Fed Chair Powell can get today. Along with that, a slew of pivotal US data in the week ahead kept the US dollar range-bound. Crude oil market however continued to see volatility despite easing China demand concerns, as OPEC+ production cut hopes were shattered with the weekend meeting moving online. Eurozone CPI on watch today while the softer Australia CPI for October paves the way for RBA to maintain its slower rate hike path next week. What’s happening in markets? The major US indices, the Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) continue to retreat The major US indices ended weaker, with NASDAQ100 sliding 0.7% and the S&P500 edging down 0.2% as investors are awaiting Fed Chair Powell’s speech later Wednesday. Powell will likely underscore the Fed’s desire to keep interest rates at elevated levels until inflation eases. The latest US consumer confidence reading (released Tuesday) for November showed US consumer confidence fell to a four-month low. The biggest drag on US markets on Tuesday, were information technology, utilities, and consumer discretionary. Apple (AAPL) shares fell 2.1% after the company said that it would deliver 6 million fewer iPhone Pro units in Q4 due to production disruption in Zhengzhou, China. The real estate, energy, financials, industrials sectors outperformed. United Parcel Services (UPS:xnys) gained 2.8% after the Biden Administration called on Congress to prevent a U.S. rail strike. Apple (AAPL) shares fell 2.1%, continuing their three-day pull back, which totals almost 5% ..on the back of the covid lockdown fallout in China. Apple relies heavily on the key manufacturing hub of Zhengzhou, which is now in lockdown. And as a result Apple’s production shortfall could be close to 6 million iPhone Pro units this year (this is according to people who know about Apple’s assembly operations). These reports are swirling at a time when Apple previously dropped its overall production target to about 87 million units (down from the prior 90 million estimate) on the back of demand slowing. However, Apple and the Foxconn facility are allegedly planning to make up the shortfall in lost output in 2023. But, looking at Apple shares from a technical perspective, its trading 8% lower than its 200 day moving average and the indicators suggest Apple shares could see further downward pressure - as suggested by the weekly and monthly charts. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rose in yields ahead of Fed Chair Powell’s speech Yields edged up across the yield curve with those in the long-end rising the most. The 2-year yield rose 4bps to 4.47% while the 10-year was 6bps cheaper at 3.74%. Large supply from corporate issuance put some upward pressure on yields. There were about 11 deals with a total amount of about USD18 billion, including USD8.25 billion from Amazon, on Tuesday. Fed Chair Powell is scheduled to speak on the economy and labor market at a Brookings Institution event today on Wednesday at 1:30 U.S. eastern time (2:30am SG/HK). Investors are concerned if Powell would give hints of a terminal Fed Fund rate higher than the 5% being priced in by the market. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) surged on renewed optimism about reopening and additional support to the property sector Hang Seng Index surged 5.2% and Hang Seng TECH Index jumped 7.7%. All sectors gained, with information technology, consumer discretionary, and properties leading the charge higher. The CSI 300 gained 3.1%. The market sentiment was first buoyed by new measures from the Chinese securities regulator to relax its restriction on property developers from equity financing. Then the renewed optimism about China reopening from stringent pandemic control added to the market rally. Leading Chinese developers listed in Hong Kong jumped by 3-14%. In the mainland’s A-share markets, real estate, financials, and food and beverage led the charge higher. The strong revenue and margin beat of Pinduoduo (PDD:xnas) aided the surge of Alibaba (09988:xhkg) by 9.1% and JD.COM (09618:xhkg) by 10.9%. The ADR of Bilibili (BILI:xnas) jumped 22% overnight after reporting results beating market expectations. FX: Dollar range-bound ahead of Powell’s speech While the commodity currencies gained on Tuesday after a relief that China officials maintained their commitment to ease the Zero covid policies despite the protests and a recent rise in cases, cyclical currencies like CAD weakened as crude oil futures traded lower. Overall the dollar was range-bound with expectations around a hawkish Powell today picking up given the substantial easing in financial conditions. EURUSD remained stuck below 1.0400 while USDJPY has gains above 139 getting limited. Crude oil (CLZ2 & LCOF3)volatile with large inventory drawdown ahead of OPEC The relief from continued commitment of China officials to ease zero covid restrictions helped crude oil prices gather some momentum early on Tuesday, but the cheer was short-lived as other concerns still clouded the outlook. US economic data showed economic momentum is weakening, while Fed Chair Powell’s speech today will be key for the dollar and the markets. On the supply side, API survey reported a larger than expected crude draw, with inventories down 7.80mm b/d (exp -2.49mm b/d) but production cut expectations from OPEC (read below) this weekend eased as the meeting moved online. WTI futures traded around $79/barrel, while Brent traded lower after touching $86/barrel earlier. Technical update on Brent crude oil from Kim Cramer, our Technical Analyst. The update also takes a closer look at WTI crude oil, Dutch TTF gas and Henry Hub natural gas.   What to consider? US data disappoints, all eyes on Powell Consumer confidence pared back in November to 100.2 from 102.5 (exp. 100.00); the Present Situation Index decreased to 137.4 from 138.7 last month, while the Expectations Index declined to 75.4 from 77.9. Meanwhile, home prices in 20 large cities slipped 1.2% in September, according to the S&P CoreLogic Case-Shiller gauge. More critical data from ISM to PCE to NFP is lined up for the second half of the week, but before we get there, Fed Chair Powell’s speech will be the one to watch. Easing financial conditions raise concerns about inflation shooting back higher, but pushback from Fed officials so far hasn’t been enough for the markets yet. It remains to be seen what more Fed Chair Powell can deliver today. Reopening optimism returned in China While the daily new cases continued to surge and anti-restriction protests sprang up across major cities, investors took comfort from the light-touch reactions from the Chinese authorities and hints of preparing to ease the pandemic control measures further. A Party-controlled newspaper in Beijing published a long article reporting the stories of people having recovered from Covid, which seemingly aimed at easing people’s worries about the disease. The National Health Commission issued a memo pledging to increase the vaccination rate of the country’s senior population. In a press conference later in the afternoon, health officers again emphasized increasing the senior population’s vaccination rate as a priority and highlighted the Omicron variants as being less severe than the original virus. Officials and the state-controlled media have taken a light-touch approach to the recent protests and have not put any political stigma on the incidents. Putting these together, investors are taking the development as hints of the Chinese authorities to prepare for further easing in its Covid policy. China relaxes its restrictions on developers from attaining equity financing The China Securities Regulatory Commission (CSRC) fired the so-called “third arrow” to ease some of the restrictions previously imposed on property developers from attaining equity financing. While property developers are still barred from doing IPO in the domestic equity market, they are now domestically listed A-share developers and some Hong Kong-listed H-share developers to issue new shares to raise capital as long as the proceeds are used for restricting, M&A activities, refinancing, buying existing property projects, repaying debts, and project construction. However, proceeds are not allowed to be used in land acquisition. Softer Australia CPI paves the way for a dovish RBA next week Australian inflation data for October showed inflation is continuing to fall, and far more than expected which supports the RBA’s dovish tone and only hiking rates by 0.25% next week (December 6). Trimmed mean CPI which excludes volatile items, rose 5.3% year-on-year in October, which marks a fall in price rises, compared to the prior read, 5.4% YoY. This also shows prices for consumer goods and services in Australia are falling less than the market expects as Trimmed CPI was expected to rise 5.7%. Meanwhile, headline inflation also rose less than expected, showing consumer prices rose 6.9% YoY, which was cooler than prior 7.3% read, and less than the 7.6% expected. This follows a suite of Australian economic data that supports the RBA remaining more conservative with rate hikes. Earlier in the week, Australian retail trade data unexpectedly fell, showing consumers are feeling the strain of inflation and rising interest rates. As a house, we think spending will likely continue to slow into 2023, with the full impact of rate hikes passing through households under financial duress giving deb to income ratios are some of the highest in the world. China PMIs likely to show demand weakness China’s NBS manufacturing PMI is expected to decline to 49.0 in November, further into the contractionary territory, from 49.2 October, according to the survey of economists conducted by Bloomberg. The imposition of movement restrictions in many large cities has incurred disruption to economic activities. High-frequency data such as steel rebar output, cement plants’ capacity utilization rates, and container throughputs have weakened in November versus October. Economists surveyed by Bloomberg expect the NBS Non-manufacturing to slow to 48.0. in November from 48.7 in October, on the enlargement of pandemic containment measures. OPEC+ weekend meeting goes virtual Instead of meeting in Vienna as planned earlier, OPEC+ has now moved its December 4 meeting online which is downplaying expectations of any significant policy change after production cut expectations gathered hopes this week with crude oil prices falling to test key support levels. Some delegates also suggested that the cartel is leaning towards approving the same production levels agreed in October, when a 2mb/d cut in output was announced. Bilibili (BILI:xnas/09626:xhkg) Q3 beat expectations Bilibili reported 11% Y/Y revenue growth in Q3 and net loss came in at a smaller amount of RMB1.7 billion. User growth was solid, with average daily active users growing 25% Y/Y to 90.3 million, average monthly active users growing 25% to 332.6 million, and average monthly paying users increasing 19% to 28.5 million. Operating margin improved to -31.9% in Q3 from -44.63 in Q2 and -51.1% in Q3 last year. The company guides for a 4-7% Y/Y increase in Q4 revenue, below the consensus estimate of 8% Y/Y. EUR may be watching the flash Eurozone CPI release Eurozone inflation touched double digits for October, and the flash release for November is due this week. The headline rate of the harmonized index of consumer prices (HICP) is expected to ease slightly to 10.4% YoY from 10.7% YoY last month. The core rate that excludes food and energy prices is forecast to however remain unchanged at 5% YoY. This print will be key for markets as the magnitude of the ECB’s next rate hike at the December meeting is still uncertain, and about 60bps is priced in for now. But even with a slight cooling in inflation, which will most likely be driven by lower energy costs, there is a possibility that inflation will likely remain high in the coming months as winter months progress and cost of living gets worse. Crowdstrike (CRWD:xnas) tumbled on guidance miss The shares of Crowdstrike plunged 18.7% in the extended-hour trading after the cybersecurity provider issued Q4 revenue guidance below market expectations. For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: https://www.home.saxo/content/articles/equities/apac-market-insights-30-nov-2022-30112022
Financial World in a Turbulent Dance: Lego, Gold, and Market Mysteries

Florida Governor Ron DeSantis Warned Against Apple’s Monopoly Powers

Saxo Bank Saxo Bank 30.11.2022 09:46
Summary:  Markets are in defensive mode ahead of a speech from Fed Chair Powell later today on fears of hawkish pushback against the recent easing of financial conditions and after having priced in significant rate cuts beyond the end of 2023. Economic data releases continue to roll in, with the Eurozone flash November CPI data up this morning after slightly softer inflation releases around Europe this week and US November ADP private payrolls data up today ahead of Friday’s US jobs report.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are still boxed into a tighter and tighter range between the 100-day moving average at 3,927 and the 200-day moving average at 4,051. The key event today is of course the FOMC rate decision and more importantly the subsequent press conference where all eyes are on Fed Chair Jerome Powell following the latest rally due to the recently lower US inflation print. Financial conditions have eased considerably, and Powell will likely not get away with talking about terminal rates if he wants to tighten conditions again in line with their strategy of easing inflationary pressures. After the US market call, there are key earnings from Salesforce and Snowflake which could impact sentiment in Nasdaq 100 futures. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hang Seng Index climbed 0.8% and The CSI 300 gained 0.2% as optimism returned about an exit from the stringent dynamic zero-Covid policy, if not in name, at least gradually in practice in mainland China. Investors looked beyond the disappointing Manufacturing PMI data, which came at 48, weaker than expectations and further into the contractionary territory. The focus of the investors, however, was on the recent supportive measures to the real estate sector and signs of sticking to or even preparing for more relaxation of China’s stringent pandemic control restrictions even as Covid cases are on the rise. Teleco names outperformed, with China Unicom (00762:xhkg) and China Telecom (00728:xhkg) rising 6-7%. USD edging higher ahead of anticipated hawkishness from Fed Chair Powell Concerns are mounting that Fed Chair Powell is set to administer a hawkish broadside to US markets after a powerful easing of financial conditions in recent weeks and the pricing in of a significant Fed policy easing starting in late 2023 (see more below). But USD bulls have their work cut out for them if they expect to reverse the recent USD sell-off, even if we have seen a solid reversal in places. The key zone for EURUSD stretches from the 1.0223 pivot low and down to perhaps 1.0100, while the similar zone for USDJPY stretches from the 142.25 pivot high all the way to 145.00. Crude oil (CLF3 & LCOF3) volatile with large inventory drawdown ahead of OPEC The relief from continued commitment of China officials to ease zero covid restrictions helped crude oil prices gather some momentum early on Tuesday, but the cheer was short-lived as production cut expectations from OPEC+ this Sunday eased as the meeting moved online and economic data from the US and China showed weakening momentum. Focus on speech from Fed Chair Powell given its potential impact on the dollar, and EIA’s weekly report after the API reported a larger than expected crude draw, with inventories down 7.80mm b/d (exp -2.49mm b/d). WTI futures traded around $79/barrel, while Brent trades back below $84 after touching $86/barrel on Tuesday. US treasury yields recovered after dip to local lows. (TLT:xnas, IEF:xnas, SHY:xnas) Yields edged up across the yield curve with those in the long end rising the most. The 2-year yield rose 4bps to 4.47% while the 10-year rose 6 bps to 3.74%. Large supply from corporate issuance put some upward pressure on yields. There were about 11 deals with a total amount of about USD18 billion, including USD8.25 billion from Amazon, on Tuesday. Fed Chair Powell to speak later today. (more below) What is going on? Reopening optimism returned in China While the daily new cases continued to surge and anti-restriction protests sprang up across major cities, investors took comfort from the light-touch reactions from the Chinese authorities and hints of preparing to ease the pandemic control measures further. A Party-controlled newspaper in Beijing published a long article reporting the stories of people having recovered from Covid, which seemingly aimed at easing people’s worries about the disease. The National Health Commission issued a memo pledging to increase the vaccination rate of the country’s senior population. In a press conference later in the afternoon, health officers again emphasized increasing the senior population’s vaccination rate as a priority and highlighted the Omicron variants as being less severe than the original virus. Officials and the state-controlled media have taken a light-touch approach to the recent protests and have largely refrained from putting any political stigma on the incidents. Putting these together, investors are taking the development as hints of the Chinese authorities to prepare for further easing in its Covid policy. Apple criticized by possible 2024 presidential hopeful DeSantis, also in the anti-trust spotlight Florida governor Ron DeSantis, a potential rival of Donald Trump for the 2024 presidential nomination, inveighed against Apple for providing “aid and comfort to the CCP” by turning off access in China to the AirDrop app that could be used to organize protests. As well, he warned against Apple’s monopoly powers after Twitter CEO Elon Musk complained that Apple had pulled virtually all advertising from the platform and threatened to remove it from their app store. “Don’t be a vassal of the [Chinese Communist Party] on one hand and then use your corporate power in the United States on the other to suffocate Americans and try to suppress their right to express themselves” DeSantis said. US Senators also weighed in against the company on the issue as anti-trust efforts are afoot in Congress. Crowdstrike beats estimates The US cyber security company reported Q3 revenue of $581mn vs est. $574mn and adj. EPS of $0.40 vs est. $0.31 as the underlying structural growth is still strong in the industry. The Q4 outlook on earnings was much better than expected but the Q4 revenue outlook at $620-628mn vs est. $635mn spooked investors, sending shares down 19%. Management said that the lower guidance was due to increased macroeconomic headwinds. Commodities see November gains on China optimism and Fed Pivot The Bloomberg Commodity Index trades up 2% on the month with strong gains among industrial and precious metals offsetting minor declines in energy and grains. The sector has been supported by a 4% drop in the dollar and sharply lower US bond yields on speculation the FOMC will soon slow its pace of rate hikes. The industrial metal sector trades up 12% on optimism that China may shift away from Covid Zero policies and provide additional stimulus to boost demand in the top metal-consuming economy. Copper, up 8%, is heading for its best month since April 2021 while gold and silver has been supported by the change in direction for the dollar and yields.  Wheat prices in Chicago and Paris scrap the bottom with ample supply, especially from the Black Sea region adding downward pressure. What are we watching next? OPEC+ weekend meeting goes virtual Instead of meeting in Vienna as planned earlier, OPEC+ has now moved its December 4 meeting online which is downplaying expectations of any significant policy change after production cut expectations gathered hopes this week with crude oil prices falling to test key support levels. Some delegates also suggested that the cartel is leaning towards approving the same production levels agreed in October, when a 2mb/d cut in output was announced. Fed Chair Powell to speak today – will he lean hawkish? Fed Chair Powell is scheduled to speak on the economy and labor market at a Brookings Institution event today at 13:30 U.S. eastern time. Market participants are expecting hawkish comments from Powell about higher terminal rates for 2023.  Given the huge shift in market pricing of the Fed policy rate in 2024 (cuts of over 150 basis points from the 2023 rate peak are currently priced by end 2024) the more interesting angle on Powell’s comments are whether he pushes back against the recent strong easing of financial conditions and this anticipation that the Fed will be in full retreat in 2024. The September FOMC “dot plot” projections show a wide dispersion of forecasts, but the median projection is that the policy rate will drop about 100 basis points by end 2024 from end 2023. Earnings to watch Today’s earnings focus is US technology sector earnings from Salesforce and Snowflake. Analysts expect Salesforce FY23 Q3 (ending 31 October) revenue growth to slow down to 14% y/y down from 27% y/y a year ago supporting the growth slowdown in the technology sector. To avoid the negative impact from the earnings release Salesforce must deliver meaningful improvement in profitability or face downward pressure on its share price. Snowflake is expected to see FY23 Q3 (ending 31 October) revenue growth to slow down to 61% y/y down from 110% y/y a year ago. As with Salesforce, Snowflake must deliver significant improvements in profitability to avoid a negative impact from falling revenue growth which current trajectory is worse than estimated just one year a ago. Today:  Royal Bank of Canada, National Bank of Canada, Salesforce, Synopsys, Snowflake, Splunk, Hormel Foods, KE Holdings Thursday: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger Economic calendar highlights for today (times GMT) 0745 – France Nov. Flash CPI 0830 – UK Bank of England Chief Economist Huw Pill to speak 0855 – Germany Nov. Unemployment Rate / Change 0900 – Poland Nov. Flash CPI 1000 – Eurozone Nov. Flash CPI 1315 – US Nov. ADP Employment Change 1330 – US Fed’s Bowman (Voter) to speak 1445 – US Nov. Chicago PMI 1500 – US Oct. JOLTS Job Openings 1530 – US Weekly DoE Crude Oil and Product Inventories 1735 – US Fed’s Cook (Voter) to speak 1830 – US Fed Chair Powell to discuss Economic and Policy Outlook 1900 – US Fed’s Beige Book 0145 – China Nov. Caixin Manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – November 30, 2022 | Saxo Group (home.saxo)
Nuclear Power Emerges as Top Theme for 2023, Bubble Stocks Under Pressure

Alberto Gandolfi Statement About Renewables Energy Sources| What To Expect From 2024?

Kamila Szypuła Kamila Szypuła 30.11.2022 11:35
Markets are constantly changing, economic and political situations exert influence on them. Understanding them is very important, and getting acquainted with important events or statements about their team can help in making decisions. In this article: What can bring 2024? UBS Year Ahead 2023 Renewables in Europe The housing market The price of energy insecurity 2024 ahead and what else? Morgan Stanley tweets about the difficulties facing Europe next year. As we head into a new year, Europe faces multiple challenges across inflation, energy and financial conditions, meaning investors will want to keep an eye on recession risk, the ECB, and European equities. https://t.co/0Wtj18Dmbj pic.twitter.com/ImPUGRiuhd — Morgan Stanley (@MorganStanley) November 29, 2022 The new year is approaching. Everyone plans changes, makes resolutions. However, this does not change the fact that the economic situation or the economy will change so suddenly. Therefore, when making their plans, especially Europeans, they should take into account how the geopolitical and economic situation may affect them. And to make this possible, it is worth getting acquainted with the possible scenarios for the next year. We can expect that the fight against inflation will continue, and difficulties on the energy market will also be an important aspect of economic decisions of countries. Stocks and bonds UBS discusses stocks and bonds in their tweet. Is the worst over for stocks and bonds? Or will the years ahead remain challenging? Find out what we think will drive markets in the decade ahead in our UBS Year Ahead 2023: https://t.co/pro4XIuBiG#shareUBS pic.twitter.com/dzcbPOfp7f — UBS (@UBS) November 30, 2022 There is no doubt that the stock and bond markets have had a crazy year. Investors, analyzing the situation, wonder whether the stock and bond markets can expect an improvement or rather a deterioration of the situation. UBS analysts are also looking at this. Their opinion is presented in UBS Year Ahead 2023, and getting to know its results can help investors. Renewables in Europe Goldman Sachs tweets about renewables in Europe. Our head of European utilities research, Alberto Gandolfi, discusses Europe's headstart when it comes to renewables in the utility sector at our #Carbonomics Conference. Listen here: https://t.co/6r5Au9dZ70 #GSsustainability — Goldman Sachs (@GoldmanSachs) November 29, 2022 Alberto Gandolfi, head of utilities at Goldman Sachs, speaks to CNBC’s Steve Sedgwick at the Goldman Sachs Carbonomics event in London mostly about renewables in Europe. According to him, Europe has great potential in this area. The fight for a better tomorrow for future generations is still going on. Renewable energy sources are an important aspect of this. While all non-renewable energy sources: coal, gas or oil, will eventually run out and their further extraction will be impossible, energy obtained from renewable sources is a permanent and reliable source that will never run out. Thanks to this, we can count on safe and predictable energy supplies, without risk. Real estate market Morningstar, Inc. tweets about the real estate market. As the housing market moves into uncharted territory, advisors can help clients feel more comfortable making big financial decisions like buying their first home or refinancing their current one. Join us on December 8th: https://t.co/t5cDNyfB3G #AdvisorPracticeAccelerator pic.twitter.com/ZQ5daEeAJu — Morningstar, Inc. (@MorningstarInc) November 29, 2022 The housing market is important not only for the economy but also for potential buyers. Getting acquainted with it, better understanding it may help in making investment decisions. As the value of the property changes, opportunities arise and advisers can put this knowledge into practice. The price of energy insecurity IMF tweets about the price of energy insecurity. Europe is learning the hard way what happens to an economy tethered and dependent on fossil fuels, writes Bob Keefe. Read our latest Finance & Development for more on the price of energy insecurity: https://t.co/CqabcSqcQw pic.twitter.com/ZpfCi22opn — IMF (@IMFNews) November 29, 2022 Climate change is an environmental issue. This is also clearly an economic issue, and at the heart of the economics of climate change is energy security. The rippling impacts of climate change and the effects of energy security have been sweeping through the global economy throughout 2022, leaving few safe havens from the climate-related economic storm. especially when the supplies are controlled by the Russian dictator. Of course, energy insecurity – and the economic disasters it causes – is just one of the countless side effects of climate change hitting our wallets. How to fix it? Are renewable energy sources the answer? Find out from this tweet.
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

Saxo Bank Podcast: Zoom In Fed Chair Powel's Speech And Apple, Crowdstrike And More

Saxo Bank Saxo Bank 30.11.2022 12:09
Summary:  Today we note that Fed Chair Powell is set to speak later today and will likely try to push back against the recent strong easing of financial conditions and pricing of hefty Fed rate cuts that the market has priced to start as early as late 2023. If Powell can't impress the market, the incoming US data might have to do so, with the November ADP private payrolls up today and the PCE inflation data tomorrow. Elsewhere, we zoom in on the latest on crude oil and commodity performance this month, talk Apple, Crowdstrike and incoming earnings and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Can a hawkish Powell pour cold water on this market? | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The Commodities Feed: WTI Crude Relatively Outperformed Brent

ING Economics ING Economics 30.11.2022 12:17
Sentiment in commodities markets improved after China refined its approach to dealing with Covid-19 and the government said it will bolster vaccinations among senior citizens. The move comes just days after demonstrations against strict Covid curbs across the country In this article Energy – US inventory draw supports crude Metals – Market shifts to risk-on mode Agriculture – US winter-wheat crop rating remains low     Energy – US inventory draw supports crude Crude oil has been supported this morning after the US reported a bigger crude oil inventory draw over the last week, helping offset the broader negative sentiment prevailing over the past few weeks. WTI crude relatively outperformed Brent this week with the ICE Brent/NYMEX WTI prompt-month spread falling to a six-month low of US$4.9/bbl currently. The weekly inventory report from the API was overall constructive for the oil market. The API reported that US crude oil inventories dropped by 7.85MMbbls over the last week, compared to market expectations of a roughly 2.5MMbbls draw. However, the API reported that gasoline and distillate fuel oil stocks increased by 2.9MMbbls and 4MMbbls, respectively, over the week. The official EIA report will be released later today. OPEC and its allies, including Russia, are scheduled to meet virtually on 4 December to decide on output agreements. Some market reports suggest that the group could discuss the possibilities of further output cuts in addition to the 2MMbbls/d of cuts already announced during its October meeting, as the demand slowdown from China continues to weigh on the market balance. A weaker manufacturing PMI report from China has further weakened demand expectations for the rest of the year as Beijing adopted tight measures to control the resurgence of Covid. In refined products, the ICE Gasoil forward curve eased over the last few sessions with the Dec22/Jan23 spread falling to a negative US$4.25/t (contango) yesterday compared to a backwardation of around US$32/t at the end of October 2022. December is the last month when the Russian diesel cargoes can be delivered at ARA storage tanks against ICE future contracts and that appears to have increased the overall availability of diesel cargoes in the spot market. ICE diesel Jan/Feb spread still trades at a backwardation of around US$13/t; although this has also dropped from a high of around US$29/t earlier in the month. In LNG, Qatar agreed to supply Germany with LNG under a long-term deal as it seeks to secure energy options and replace piped flows from Russia. State-owned Qatar Energy and ConocoPhillips signed a deal that will see Qatar send up to 2 million tonnes of LNG a year to Germany from 2026. The deal will last at least 15 years and equates to about 6% of the volumes of Russian gas that Germany imported in 2021. Russian gas accounted for more than half of Germany’s total supplies before the invasion. The gas will come from ConocoPhillips’ joint ventures in Qatar and will be delivered to the Brunsbuttel floating import terminal that is under construction. It is the first long-term agreement for LNG supplies to an EU country since Russia’s invasion of Ukraine in February. Metals – Market shifts to risk-on mode Speculation over the loosening of some of the Covid curbs in China along with a weaker dollar improved sentiment in the metals complex yesterday, with prices of all major metals (with the exception of zinc) trading in the green. However, China released its manufacturing PMI numbers this morning, and at 48 for November (once again below market expectations of 49), this indicates how the newly imposed virus curbs have dampened economic activity in the nation. LME copper 3M prices rose as much as 2% DoD yesterday following the outflows reported in the LME on-warrant inventories. The latest data from the LME shows that on-warrant stocks for copper declined by 4.89kt (biggest daily decline since 9 November) for a second consecutive day to 71.8kt as of yesterday. The majority of the outflows were reported from Busan, South Korea and New Orleans warehouses. Meanwhile, the cash/3m spread for copper jumped by US$22.3/t and reached a contango of US$1.5/t as of yesterday, when compared to a contango of US$23.75/t a day earlier and a contango of US$42.75/t in the previous week. The latest CFTC data shows that speculators decreased their bearish bets in COMEX copper by 11,653 lots over the last reporting week (after four weeks of consecutive gains) leaving them with a net long position of 13,727 lots as of last Tuesday. In precious metals, speculators decreased their bullish bets in COMEX gold by 8,807, to leave them with a net long of 31,919 lots as of the last reporting week. Money managers also lowered their net bullish bets in silver by 3,268 lots as of last Tuesday. Agriculture – US winter-wheat crop rating remains low The final crop progress report from the USDA rated around 34% of the winter wheat crop to be in good-to-excellent condition compared to 32% a week ago and around 44% at this stage in the season last year. The current wheat crop rating is the lowest crop rating in over nine years as the dry conditions in wheat-growing regions weigh on crop development. Meanwhile, the report also shows that the US winter wheat crop is now 91% emerged, compared to around 90% a year ago. Weekly data from the European Commission shows that soft wheat shipments from the EU reached 13.9mt as of 27 November, up from 13.5mt for the same period last year. Algeria, Morocco and Egypt were the top destinations for these shipments. Meanwhile, given lower domestic output, EU corn imports stand at 12.1mt, compared to 5.3mt last year.   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

ING Economics ING Economics 30.11.2022 14:04
2022 has been an extraordinary year for commodity markets. Supply risks led to increased volatility and elevated prices. However, demand concerns have taken the driving seat as we approach year-end. 2023 is set to be yet another year of uncertainty, with plenty of volatility Shutterstock   Russia’s devastating invasion of Ukraine has been a key driver for commodity prices this year. Russia’s willingness to use energy as a weapon and retaliatory sanctions on Russia from the West have had an impact not just on the commodities complex, but the broader global economy. As a result, what started out as concern over supply has now moved more towards growing demand risks as central banks around the world tighten monetary policy in a bid to rein in rampant inflation. Clearly, the longer and more restrictive policy is from central banks, the more downside there is to demand. In addition, whilst much of the world has finally moved on from Covid, key commodity consumer, China, continues to follow a zero-Covid policy. While the government eased quarantine restrictions in recent months, China is facing its largest outbreak of Covid since the start of the pandemic, which clearly does not help the demand picture. In addition to the impact of Covid restrictions, the metal-intensive property market in China remains very weak. Up until now, support from the government has had little impact. It is yet to be seen how helpful the latest measures from the government will be. We will be entering 2023 with markets trying to gauge the demand impact from slowing global growth. It is clear that a number of key economies will enter recession, the big question is how severe. When you couple these concerns with the ongoing weakness in China it is likely that demand will continue to dictate price direction through the early part of 2023. A turning point for the complex would likely be when we see the US Federal Reserve pivoting towards a more accommodative policy (which would also suggest we have seen the peak in the US dollar), but for that to happen, we need to see some clear evidence of a significant fall in inflation. While demand risks are in the driving seat for now, supply risks have certainly not disappeared. In fact, these risks are growing for 2023, particularly when it comes to energy. For oil, the global market will need to see a further change in trade flows as the EU ban on Russian crude oil and refined products comes into force. While other buyers will be keen to pick up discounted Russian oil, their ability to do so is likely limited, which suggests that we see Russian oil supply falling over the course of 2023. This coupled with OPEC+ supply cuts suggest a tighter oil market. Therefore, prices should strengthen over the course of the year. The European natural gas market has seen a massive amount of disruption this year, as Russia cut off the bulk of supply to the region, leading to significant volatility and record-high prices. Demand destruction along with increased LNG imports have helped offset Russian supply losses. For 2023, the EU will likely find it much more difficult to refill storage to adequate levels ahead of the 2023/24 winter. Russian supply losses will be more pronounced and there are limits to how much more LNG Europe can import. Therefore, we will need to see continued demand destruction through 2023. In order to see this demand destruction, prices will have to remain at elevated levels. Tightness in the market also means that volatility is not going to disappear anytime soon.  Metal balances are looking more comfortable for 2023. Supply growth and demand weakness should ensure this. These more comfortable supply and demand balances along with poor sentiment suggest that most metal prices will remain under pressure in the early part of 2023. We are more constructive as the year progresses though on the back of low inventories for a number of metals, expectations that we start to see monetary loosening and a modest recovery from China. Furthermore, there are still clear supply risks for a number of base metals. Up until now, Russian metals have avoided sanctions but clearly, there is always the risk that these are targeted at a later stage.  As for gold, the outlook is fairly constructive. We believe that as soon as we see any signs from the US Federal Reserve of a pivot, that this will provide solid support to prices. Agricultural commodities have also seen significant strength this year, particularly grains, due to the disruption in Ukrainian exports along with poorer weather in a number of key growing regions. These markets are going to remain sensitive to developments in the Russia/Ukraine war. However for now, we believe risks are skewed to the upside. There are some early signs that the winter wheat crop in some key growing regions will be smaller next season, whilst clearly for agri crops in general, yields could suffer due to less application of fertilisers, given the strength in the market this year. Overall, we believe in the short term that there is further downside for commodity markets. However, as we move towards the middle of the year, and once the worst of the demand worries are behind us, supply concerns are likely to take centre stage once again, which should push prices higher.   TagsRussia-Ukraine Metals Energy Commodities Outlook 2023 Agriculture Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

The Global Oil Market Is Expected To Tighten Over 2023

ING Economics ING Economics 30.11.2022 14:15
Oil prices have seen a fair amount of weakness as we approach the end of 2022. Demand concerns are weighing heavily on sentiment. However, the market is expected to tighten during 2023 as the EU ban on Russian crude and products is implemented, along with OPEC+ supply cuts. We see higher prices next year In this article Russian supply set to fall OPEC+ sticks to its guns Could Iran and Venezuela make a comeback? US not there to fill the gap Demand weaker than expected Tighter market in 2023   Russian supply set to fall The key supply uncertainty for the oil market this year has been how well Russian supply would hold up following a number of countries banning Russian oil, along with an increased amount of self-sanctioning. Russian supply has held up better than many were expecting, with India, China and a handful of other smaller buyers increasing their purchases of Russian crude oil, given the steep discounts available as other buyers have pulled back. As a result, exports in October were 7.7MMbbls/d, down just 100Mbbls/d year-on-year. However, the biggest disruption to the crude oil market still lies ahead of us. The EU ban on Russian seaborne crude oil comes into effect on 5 December, which will be followed by a refined products ban on 5 February. The key question is whether India and China can buy even larger volumes of Russian oil. Their ability to do so is likely limited. Russia has already become India’s largest supplier, making up around 20% of total supply, and since the war, Russian barrels make up a little more than 18% of total Chinese imports, making Russia a marginally larger supplier of crude to China than Saudi Arabia. We expect that Russian supply will have to fall once the ban comes into full force and are assuming that supply in the first quarter of 2023 declines in the region of 1.6-1.8MMbbls/d YoY. The other uncertainty around Russian supply is the full impact of the G7 price cap. While the aim of the cap is to ensure Russian oil flows continue but Russian oil revenues are limited, it is still yet to be seen if Russia responds by lowering output. On several occasions, Russia has threatened to cut the supply of crude oil or refined products to any country that follows the G7 price cap. How the Russia/Ukraine war evolves will be important for oil markets in 2023. While a de-escalation might not lead to the return of pre-war oil trade flows, it would remove a lot of supply risk from the market. OPEC+ sticks to its guns OPEC+ has clearly not read the book How to win friends and influence people. The group has largely ignored calls from the US and other key consumers to increase oil supply more aggressively this year amid higher prices and supply concerns. And the group’s decision to reduce output targets by 2MMbbls/d from November 2022 until the end of 2023 has been criticised, particularly by the US. Although, to be fair, with hindsight the decision by OPEC+ appears to be the right one, at least in the near term with it offering stability to the market. Given that the bulk of members are producing well below their production targets, OPEC+ supply cuts work out to an effective cut of around 1.1MMbbls/d. In aggregate, OPEC+ production was 3.22MMbbls/d below target levels in October 2022. However, the cuts may prove to be more destabilising in the medium term, given the expectation of a tighter market through 2023. In addition, we should not rule out the potential for OPEC+ to change policy over the coming months. Intensifying demand concerns could push the group to cut supply further, while significant Russian losses could see a relaxation in cuts. However, to see an easing in cuts, the group would want full clarity on the impact of the ban on Russian oil. Could Iran and Venezuela make a comeback? US sanctions have prevented Iran and Venezuela from fully benefitting from the higher price environment this year. Iranian nuclear talks have failed multiple times over the last year, and it is looking increasingly unlikely that we will see US sanctions lifted anytime soon, particularly given Iranian developments both internally and externally. If sanctions were lifted, Iran could increase supply by around 1.3MMbbls/d over time. However, we are assuming that the Iranian supply remains at current levels through 2023. The potential additional supply from Venezuela is more limited (relative to Iran) if the US were to lift sanctions. However, the likelihood of an easing in these sanctions is probably higher at the moment. We have recently seen some softening in these sanctions already. An easing in sanctions would mean that US Gulf refiners would be able to process the heavy crude that Venezuela produces and replace a large amount of Russian residual fuel that was processed prior to the US-Russian oil ban. The potential for higher Venezuelan supply does not change the global balance significantly.  US not there to fill the gap The response from US producers to the higher price environment this year has been anything but impressive. And this appears to have also given OPEC+ confidence to cut supply without the risk of losing market share. US crude oil supply is forecast to grow by less than 600Mbbls/d to average around 11.8MMbbls/d in 2022. While for 2023 supply is forecast to grow by less than 500Mbbls/d to around 12.3MMbbls/d. This growth is much more modest than the supply growth seen in previous upcycles. For example, in 2018 US crude oil output grew by around 1.6MMbbls/d YoY, after WTI traded from US$42/bbl in June 2017 to as high as US$76/bbl in October 2018. This year, WTI has averaged a little over US$95/bbl, whilst the forward curve has been trading above US$70/bbl all the way through to the end of 2024 for much of the year. The mentality of US producers has changed significantly from producing as much as possible to focusing on shareholder returns, and as a result continuing to show discipline when it comes to capital spending. In addition to showing more restraint with capital spending, supply chain issues, labour shortages and rising costs have also played a role in the more modest supply growth expected over the next year. Demand weaker than expected A key drag on the oil market more recently has been the demand picture. High energy prices, a gloomier macro outlook and China’s zero-Covid policy have all weighed on oil demand this year. At the beginning of 2022, global oil demand was expected to grow by more than 3MMbbls/d YoY and hit pre-Covid levels. However, demand is estimated to grow at a more modest 2MMbbls/d this year, leaving it below pre-Covid levels. While for 2023, demand is expected to grow in the region of 1.7MMbbls/d. Almost 50% of this growth is expected to come from China with the expectation of an economic recovery. Clearly, this is a risk if China’s zero-Covid policy proves to be as disruptive as it has been this year. Global oil balance (MMbbls/d) IEA, EIA, OPEC, ING Research Tighter market in 2023 A combination of lower Russian oil supply and OPEC+ supply cuts means that the global oil market is expected to tighten over 2023. We expect a growing deficit over the course of the year, which suggests that oil prices should trade higher from current levels. We currently forecast ICE Brent to average US$104/bbl over 2023. Clearly, demand is a risk to this view, while if we were to see a de-escalation in the Russia-Ukraine war, a large supply risk would disappear even though we are unlikely to see a return to pre-war oil trade flows. Meanwhile, the potential for the US to refill its strategic petroleum reserves should WTI fall towards US$70/bbl is likely to provide a strong floor to the market.   ING oil price forecasts ING research Tags Russian oil price cap Russia-Ukraine OPEC+ Crude oil 2023 Commodities outlook Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

EU works on a price cap on Russian oil. According to Craig Erlam (Oanda) OPEC+ think of a production cut

Craig Erlam Craig Erlam 30.11.2022 18:27
Immense uncertainty It was always shaping up to be a volatile week in oil markets and it’s certainly living up to that. Brent and WTI are up more than 2% on Wednesday as the EU continues to work towards an agreeable price cap on Russian crude and OPEC+ consider another large production cut this weekend. Both carry significant uncertainty and a wide range of outcomes that should ensure oil remains volatile in the coming days, especially if both go into the weekend still up in the air. When OPEC+ can’t even commit to meeting in person, you know nothing is straightforward. Read next: Euro feels a bit better after the release of European inflation data| FXMAG.COM Despite rumours circulating of another possible two million barrel cut, it wouldn’t come as a surprise for OPEC+ to hold off on this occasion and wait until everything becomes clearer on the price cap and China. Nor would it be alarming for the alliance to wait a couple of extra days for details on the cap which could be more easily factored into its forecast and decision. This may be why they’ve opted for a virtual meeting as it offers more flexibility. Rallying ahead of Powell’s appearance Gold is benefiting from improved risk appetite as the dollar softens and US yields edge lower. It remains very much within the same range though, between $1730 support and $1,780 resistance as we await some major economic reports and, of course, the speech from Jerome Powell. Whether the Fed Chair will be so bold as to say something that could have a material impact on the yellow metal when there is some major data due over the next couple of weeks, I’m not so sure. But there’s certainly a risk he will and a break of either of these levels could be significant. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rallies on China's opening, gold's great month - MarketPulseMarketPulse
Brent hits one-month high! Saudi and Russian cuts supporting recent moves

There Was Good Close On The New York Stock Exchange

InstaForex Analysis InstaForex Analysis 01.12.2022 08:11
At the close of the New York Stock Exchange, the Dow Jones rose 2.18% to a 6-month high, the S&P 500 rose 3.09% and the NASDAQ Composite index rose 4.41%. Dow Jones The leading gainers among the components of the Dow Jones index today were shares of Microsoft Corporation, which gained 14.81 points (6.16%) to close at 255.14. Salesforce Inc rose 8.57 points or 5.65% to close at 160.25. Apple Inc rose 4.86% or 6.86 points to close at 148.03. The least gainers were Walmart Inc, which shed 0.55 points or 0.36% to end the session at 152.42. 3M Company rose 0.13% or 0.16 points to close at 125.97, while Caterpillar Inc rose 0.55% or 1.29 points to close at 236.41. S&P 500 Leading gainers among the S&P 500 index components in today's trading were Estee Lauder Companies Inc (NYSE:EL), which rose 9.70% to 235.79, Netflix Inc, which gained 8.75% to close at 305.53, as well as shares of Hewlett Packard Enterprise Co, which rose 8.57% to close the session at 16.79. The least gainers were NetApp Inc, which shed 5.82% to close at 67.61. Shares of Charles River Laboratories shed 4.56% to end the session at 228.57. Hormel Foods Corporation fell 2.47% to 47.00. NASDAQ The top performers on the NASDAQ Composite Index today were Biophytis, which rose 92.03% to hit 0.67, Corbus Pharmaceuticals Holding, which gained 60.08% to close at 0.19, and Biodesix Inc, which rose 47.06% to end the session at 2.00. The least gainers were Aeglea Bio Therapeutics Inc, which shed 65.98% to close at 0.41. Shares of CN Energy Group Inc lost 44.93% and ended the session at 0.82. Pacifico Acquisition Corp lost 42.81% to 5.41. Number On the New York Stock Exchange, the number of securities that rose in price (2686) exceeded the number of those that closed in the red (442), while quotes of 105 shares remained virtually unchanged. On the NASDAQ stock exchange, 2,913 companies rose in price, 872 fell, and 199 remained at the level of the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, fell 5.98% to 20.58. Gold Gold futures for February delivery added 1.99% or 34.75 to hit $1.00 a troy ounce. In other commodities, WTI crude for January delivery rose 2.86%, or 2.24, to $80.44 a barrel. Futures for Brent crude for February delivery rose 2.93%, or 2.47, to $86.72 a barrel. Forex Meanwhile, in the Forex market, EUR/USD rose 0.76% to hit 1.04, while USD/JPY fell 0.44% to hit 138.07. Futures on the USD index fell 0.75% to 105.96.     Relevance up to 03:00 2022-12-02 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/303272
Hong Kong’s Hang Seng Had Its Best Month | EU Inflation Slowed

Hong Kong’s Hang Seng Had Its Best Month | EU Inflation Slowed

Saxo Bank Saxo Bank 01.12.2022 09:08
Summary:  Fed Chair Powell signaled the moderation of the tightening pace could start as soon as December and the terminal Fed Fund rate would be “somewhat higher” than the FOMC’s September projections. His tone was overall less hawkish than feared. S&P 500 rose to its two-month high and Hong Kong’s Hang Seng had its best month since 1998. Bond prices surged with the 10-year treasury yield falling to 3.61%. Crude oil and commodity currencies gained. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) surged on Powell’s speech and signs of China relaxing Covid-19 restrictions Fed Chair Powell signaled that the Fed would start to moderate the pace of rate hikes as soon as December and the terminal rate might just be “somewhat higher” than the September FOMC’s projections. The less-than-feared comments stirred up another round of risk-on buying in equities. The sentiment was also bolstered by more signs coming out of China on the country’s course to ease Covid restrictions gradually despite the recent outbreaks. The S&P 500 rose by 3.1% to a two-month high. All sectors within the S&P 500, led by information technology and communication services, each rising by around 5%. Nasdaq 100 surged 4.6% to 12,030. The Dow Jones Index rose 2.2% and was said to have technically entered a bull market, after rising more than 20% from is September closing low. US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied on the lack of new hawkishness in Powell’s speech Yields edged up a few basis points after a mixed bag of data in the morning until Fed Chair Powell’s speech hit the wire in the New York afternoon, seeing yields reversing and yields of the 2-year up to the 5-year tumbling by more than 15bps almost immediately from the intra-day highs. The 5-year performed the best and finished the day 19bps richer at 3.74%. The 2-year yield dropped 16bps to 4.31% and the 10-year yield was 14bps lower to settle at 3.61%.  Powell reiterated his well-telegraphed higher-for-longer message but did not add additional hawkish pushback as some feared. He said that it makes sense to moderate the pace of rate increases as the Fed “approach[es] the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting”. Further, his remark of terminal rate being “somewhat higher” than the Fed’s September projection was less hawkish than feared. Australia’s ASX200 (ASXSP200.1) about 3% away from its record high The Aussie market is up 12% from its October low, with commodities back in focus and rallying after the Fed signals a possibly smaller pace of rate hikes ahead. That has pressured the US dollar, with the US dollar index now down 5.4% from its peak, and that’s supported commodity prices higher, plus, as above, there is forward looking optimism on China. Locally, equites also appear supported in Australia as monthly inflation data came out weaker than expected yesterday, which supports the RBA remaining dovish and likely only hiking by 25bps (0.25%) next week. However, the important inflation read (quarterly CPI) is due early next year, which will be a more accurate reflection of price rises, and will likely show inflation in Australia is more sticky than monthly inflation read alluded to. Also consider if the best performers of late (who are all commodity companies) can continue to build momentum if stimulus continues in China’s property sector. In November, copper-gold company Sandfire (SFR) rose 45%, energy business Origin Energy gained 41% while Australia’s fourth biggest iron ore company, Champion Iron (CIA) rose 35%, with Nickel company Nickel Industries (NIC) following up 33%. So, it’s clear to say we are watching commodity companies closely as we believe the world will still struggle with the lack of tangible supply. Hong Kong’s Hang Seng (HIZ2) gained on the removal of lockdown in four Guangzhou districts Hong Kong stocks surged on Wednesday afternoon after Guangzhou lifted the lockdown in four districts even when the number of new cases was still rising in the city. Hang Seng Index climbed 2.2% with consumer discretionary, consumer staples, and industrials rising the most. In the consumer space, food and beverage names surged, with Haidilao (06862:xhkg) up 15.5% and Xiabuxiabu Catering (00520:xhkg) up 10.9%. Bilibili (09626:xhkg) jumped nearly 17% on the earnings beat. The three Chinese airlines listed in Hong Kong gained around 5% each on reopening optimism. The share prices of automakers jumped 4% to 11% on speculation for an extension of purchase tax credits for petrol vehicles. EV maker XPeng (09868:xhkg) surged 16% ahead of earnings. Another EV maker, Li Auto (02015) surged 8.9%. Hang Seng finished November up more than 26%.  It was the best monthly performance since October 1998 at the end of the Asian financial crisis. After Hong Kong market closed, XPeng reported Q3 results, missing analyst estimates but the share price of its ADRs jumped 46%. In A shares, CSI 300 was flat with auto names outperforming. FX: NZDUSD broke above 0.63, USDJPY below 137.50 Lower yields drove the US dollar lower after Powell’s speech lacked any hints of keeping the door open for 75bps in December or laying out a path for rate hikes through the course of 2023. The Euro was supported by Powell's dovish speech taking EUR/USD back above 1.04, but lacked conviction as hawkish ECB bets also retreated after a softer Eurozone CPI for November. The biggest gainers were NOK and NZD, and NZDUSD broke above the pivotal 0.63 which is the 200dma. USDJPY heading lower for a test of 137 with 200dma next in sight at 134.50. Crude oil (CLZ2 & LCOF3) higher on weaker USD and lower US inventories Crude oil markets extended recent gains amid signs of strong demand. US crude oil inventories fell by 12.6mbbl last week, the biggest decline since June 2019, according to EIA data. Meanwhile, Chinese authorities announced relaxation of Zero Covid policies in Guangzhou despite worsening Covid outbreak, signalling a better demand outlook as well. The lack of escalation in Powell’s speech also turned the dollar lower. WTI futures rose to $81/barrel while Brent futures rose above $85. The focus is now shifting to the weekend OPEC meeting, with some expecting a cut while others suggest a rollover of the current deal is more likely. Breakout in Silver (XAGUSD), Gold (XAUUSD) up as well Silver broke above the key 22 level to its highest levels since May this year as Powell signalled that the pace of interest rate hikes will slow in December. Gold edged higher as well and finished the month up over 8%, the biggest gains since July 2020. Next key levels to watch in Gold will be the 200dma and key level at 1808 while Silver may likely be heading to the 0.618 retracement at 23.35.   What to consider? Jerome Powell sticks to the script Fed Chair Powell repeated his comments from the November FOMC and what we have heard more generally from the Fed speakers over the course of the month. He said it makes sense to moderate the pace of interest rate hikes and the time to moderate the pace of hikes may come as soon as December, while he added it seems likely that rates must ultimately go somewhat higher than what was thought in the September SEPs. Powell also said they have made substantial progress towards sufficiently restrictive policy but have more ground to cover and they will likely need to hold policy at a restrictive level for some time. While his comments still tilted towards the hawkish side but there was no escalation that the markets had hoped for. His comment that he does not want to over-tighten but cutting rates is not something to do soon was a slight contrast to his earlier acceptance that risk of tightening less is greater that the risk over-tightening. Fed's Cook (voter) also said it is prudent for the Fed to hike in smaller steps as it moves forward and how far the Fed goes with hikes depends on how the economy responds, overall sticking to the consensus. US economic data broadly weaker, focus now on PCE prices and ISM manufacturing The private ADP jobs report showed US payrolls rose 127,000 this month, the slowest pace in nearly two years, as wage gains moderated. Job openings also fell in October to 10.334mln from September's 10.687mln, reversing a surprise jump in the prior month but still remaining elevated, according to the JOLTS report. The biggest downside surprise came in Chicago PMI for November which came in at 37.2 against an expected 47.0, falling from a prior 45.2. While monthly surveys can be noisy, but this one is now flirting with pandemic lows and puts the focus on ISM manufacturing due today. The only ray of positive news came from the Q3 GDP release which was upwardly revised by to 2.9% from 2.6% previously. Softer EU CPI weakens hawkish ECB bets Euro inflation slowed for the first time in 1.5 years to 10% in November from 10.6% YoY in October. ECB officials have highlighted the data will be key for their next rate decision, suggesting lower chance of another 75bps rate hike at the December 15 meeting. Still, it remains hard to say that inflation in the Eurozone has peaked. ECB members also remain broadly hawkish and suggest that the commitment to bring inflation back to target will stay. Guangzhou lifted the lockdown of several districts as a sign of easing restrictions even as new cases at elevated levels Guangzhou, the third largest city in China and the capital of the southern province of Guangdong, removed the “temporary control areas” restrictions of several districts even though the city’s daily new cases of Covid-19 stayed at nearly 7,000. It was an encouraging sign pointing to China’s willingness to continue the fine-tuning measures that it had recently started despite the surge in new cases across the country. Speaking at a pandemic control policy workshop, Vice Premier Sun Chunlian emphasized the importance of gradually fine-tuning the pandemic control measures in response to the lower fatality of the Omicron, higher vaccination rate, and the accumulation of experience in containing the spread of the virus. Equities in focus that could benefit from rate hikes not being as aggressive, and from the festive season spending It’s the world’s first festive season not in lockdown (excluding China), so we are watching retailer shares given they will likely benefit from retail shopping rising. It’s worth watching travel and tourism companies with the market forward looking and seeing that travel-services revenue could likely continue to gain momentum. Carnival shares are up 44% from October with the company seeing some of its strongest sales since pre-covid, Royal Caribbean shares are up 83% from July. We are also watching other travel affiliated companies do well, like Boeing, which is up 48% from September, as well as airlines, such as Singapore Airlines, Qantas, Air New Zealand. However, we think although the travel and tourism sector, especially airlines, will likely see a pick-up in sales amid the seasonality, we wonder if airlines will be able to extend their share price rally into 2023 as fuel costs are not expected offer respite into 2023. This means, those larger companies or those with a wide moat, might be more in focus, as they will be more likely able to sustain the costs pressures.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Powell’s lack of new hawkishness; Guangzhou restrictions eased – 1 December 2022 | Saxo Group (home.saxo)
Metal Market Insights: Global Aluminium Output Holds Steady, Nickel Spreads Surge, and Indonesia's Copper Exports to Cease

The Commodities: Aluminium Production Is Estimated To Rise

ING Economics ING Economics 01.12.2022 09:20
Commodities received a boost along with other risk assets after some mildly dovish comments from the US Fed chairman. No surprise that this led to USD weakness, providing further support to the complex In this article Energy - US crude oil inventories plunge Metals – Copper output recovers in Chile   Energy - US crude oil inventories plunge The oil market received a boost yesterday from multiple factors. ICE Brent managed to settle more than 3.2% higher on the day. Most risk assets rallied on the back of the US Fed chairman signalling smaller rate hikes as soon as December, while hopes of an easing in China’s covid policy also proved supportive. In addition, noise in the oil market continues to build ahead of the OPEC+ meeting this weekend. It is still not exactly clear what action if any, the group will take. The weakness in the market over the last several weeks means that further supply cuts cannot be ruled out. The EIA’s weekly inventory report was also bullish for the market yesterday. The latest data shows that US commercial crude oil inventories fell by 12.58MMbbls over the week - the largest weekly decline since June 2019. When taking into consideration SPR releases, total US crude oil inventories fell by 13.98MMbbls. Trade played a large role in the significant inventory draws with crude oil imports falling by 1.03MMbbls/d over the week and exports rising by 706Mbbls/d. Refiners also increased their utilisation rates by 1.3pp to 95.2% - the highest levels since August 2019. As a result of stronger refinery throughput, gasoline and distillate fuel oil inventories increased by 2.77MMbbls and 3.55MMbbls respectively. Metals – Copper output recovers in Chile Chile, which accounts for about a quarter of the world supply of copper, just registered its first year-on-year output increase since July 2021. October production edged up 2.2% from the same month last year, according to data from the National Statistics Institute. Month-on-month output jumped 11%. Chile’s copper production has struggled for much of this year amid lacklustre ore grades, labour woes and water scarcity. Rio Tinto expects its iron ore production to remain roughly in line with 2022 and forecasts to ship between 320-335mt of iron ore in 2023 from its Pilbara project in Australia, unchanged from its previous guidance. The group expects medium-term iron ore production capacity to remain between 345mt-360mt. Meanwhile, aluminium production is estimated to rise to 3.1mt-3.2mt in 2023, compared to an estimated 3mt-3.1mt for 2022. TagsOPEC+ Iron ore Federal Reseve EIA Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The International Energy Agency (IEA) Expects Russian Crude Production To Fall

Saxo Bank Saxo Bank 01.12.2022 09:35
Summary:  Jerome Powell signals downshift likely next month; stocks surge. Dow Jones enters bull market. ASX200 is a sneeze off its record all time high. Focus is on commodity companies with China easing some restrictions and retailers ahead of potential festive season rally. We cover the three key areas of equities to be across and the stocks you might like to watch, with some already up 80% from their fresh lows What’s happening in markets? The US; Fed Chair Jerome Powell signaled the Fed will likely not be as aggressive next month, and only hike by 50 bps (0.5%), however he suggested the hiking cycle is far from over to slow inflation. He said the Fed will need "substantially more evidence" to ensure prices are moderating, with the path ahead for inflation remaining highly uncertain. However, amid the somewhat dovish pivot, Bond traders coiled back their peak rate expectations to below 5%, and that resulted in treasury yields falling; the 10-year yield fell 11 bps to 3.63%, pushing the dollar down against the entire G-10 basket. As a result, the S&P 500 rose 3.1% to a two-month high, while it notched its longest monthly winning streak since August 2021. The Dow Jones 30, rose 2.2% and entered a bull market, after collectively rising 20% from its September low. Gold spiked more than 1%, with most commodities rallying up supported by the US dollar falling. Crude oil rose 2.9% to $80.44 - getting an extra boost on forward looking optimism that China is encouraging vaccinations, while at the same time the International Energy Agency (IEA) said it expects Russian crude production to fall by some 2 million barrels of oil per day by the end of the first quarter next year. However gains were capped in oil as OPEC+ is due to hold its December 4 meeting and reports swirled that OPEC is not really likely to shift its policy. In Australia, the ASX200 (ASXSP200.1) is 3% away from its record high The Aussie market is up 12% from its October low, with commodities back in focus and rallying after the Fed signals a possibly smaller pace of rate hikes ahead while one key province in China has eased restrictions. The Fed’s somewhat pivot has pressured the US dollar (with the US dollar index down 5.4% from its peak). This is also supporting commodity prices higher, as well as the forward looking optimism on China. Locally, equites also appear supported as monthly inflation data came out weaker than expected yesterday - which supports the RBA remaining dovish and likely only hiking by 25bps (0.25%) next week. However, the important inflation read (quarterly CPI) is due early next year, which will be a more accurate reflection of price rises, and will likely show inflation in Australia is more sticky than monthly inflation read alluded to.(remember the RBA previously mentioned food and energy prices would rise – we didn’t see that reflected in yesterday’s data, but it will likely be reflected in the quarterly CPI read due out next year).   Three considerations and investment areas to watch  Firstly, consider if the best performers of late (who are all commodity companies) can continue to build momentum if stimulus continues in China’s property sector In November, copper-gold company Sandfire (SFR) rose 45%, energy business Origin Energy gained 41% while Australia’s fourth biggest iron ore company, Champion Iron (CIA) rose 35%, with Nickel company Nickel Industries (NIC) following up 33%. So, it’s clear to say we are watching commodity companies closely as we believe the world will still struggle with the lack of tangible supply. Secondly, watch those companies that could benefit from rate hikes not being as aggressive, and from the festive season spending It’s the world’s first festive season not in lockdown (excluding China), so we are watching retailer shares given they will likely benefit from retail shopping. As we’ve also been reporting, it’s worth watching retailers like perhaps JBH, HVN, Premier Investments (PMV), given they will likely benefit from Xmas shopping revenue rising. Also, travel and tourism companies will be on watch with travel-services spending likely to continue to gain momentum. Carnival shares are up 44% from October with the company seeing some of its strongest sales since pre-covid, Royal Caribbean shares are up 83% from July. We are also watching other travel affiliated companies do well, like Boeing, which is up 48% from September, as well as airlines, such as Singapore Airlines, Qantas, Air New Zealand. However we think although the travel and tourism sector, especially airlines, will likely see a pick up in sales amid the seasonality, we wonder if airlines will be able to extend their share price rally into 2023 as fuel costs are not expected offer respite into 2023. This means, those larger companies or those with a wide moat, might be more in focus, as they will be more likely able to sustain the costs pressures. And thirdly, as well, keep an eye on companies making the news Australia’s biggest oil companies will be a focus with the oil price likely to pick up next year. Woodside (WDS) today announced it sees operating cashflow at around $7-9 billion in the next five years. BHP (BHP) is also in a focus with its CEO saying steel demand from China will grow next year. Mike Henry sees China’s economy only experience a short-term slowdown before returning to a long-term growth. Lastly, other companies to watch include those lockdown stalwarts that aren’t doing so well, like Domino’s Pizza (DMP) with the company planning to raise $165 million in capital. Domino’s operates in Australia, NZ, France, Belgium and Asia. Domino’s Pizza shares are down 56% from their covid high. But the market thinks the business could see a turn around in revenue growth next year and the year after. So if you are a long-term investor, that’s food for thought.   For a weekly look at what to watch in markets - tune into our Spotlight.For a global look at markets – tune into our Podcast.     Source: Daily Dose of financial insights for investors and traders; Fed signals likely downshift, China eases some restrictions. Santa rally? | Saxo Group (home.saxo)
The ECB Has Made It Clear That Rates Will Remain High Until There Is Evidence That Inflation Is Falling Toward The Target

The ECB Members Also Remain Broadly Hawkish | US Payrolls Rose This Month

Saxo Bank Saxo Bank 01.12.2022 09:46
Summary:  The US equity market exploded higher yesterday in the wake of a Fed Chair Powell speech that outlined the Fed’s view on inflationary risks and the preferred course of monetary policy. Powell confirmed the market view that the Fed willl downshift to a smaller 50-bp hike at the December FOMC meeting. Weak US data added to the sense that an economic slowdown is underway, taking long US treasury yields to new local lows.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities exploded higher yesterday after Fed Chair Powell’s speech failed to push back against easing financial conditions and as US yields dropped further. This gives the impression that further soft data from the US (see preview below) that takes yields lower still will see an extension of this market squeeze higher, despite the implications from softer data that a recession draws nearer. The Nasdaq 100 index closed clear of the important 12,000 level for the first time since September yesterday and may extend its rally to the 200-day moving average, currently near 12,550 for the cash index. The S&P 500 spiked to new highs since September as well and cleared its 200-day moving average at 4,050, closing at 4,080 on the day. This is the first time that moving average has fallen since the March-April time frame. THe next major resistance there is the pivot high near 4,325 from August. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hang Seng Index climbed 1.7% and CSI300 Index gained 1.5% following the less-hawkish-than-feared speech from the U.S. Fed Chair Powell overnight and China’s Vice-Premier Sun Chunlan, who oversees containing the spread of Covid-19, acknowledged in a pandemic control export workshop that the Omicron variant is less deadly. Mega-cap China internet stocks surged 4-5%. EV maker XPeng (09868:xhkg) jumped 13% after reporting Q3 earnings. Caixin China PMI Manufacturing came in at 49.4 in November, above the consensus estimate of 48.9 and October’s 49.2. USD blasted after Fed Chair Powell’s speech craters US treasury yields, sparks risk-on rally Fed Chair Powell failed to make any notable pushback against easing financial conditions in his speech yesterday (more below), and US Treasury yields downshifted sharply all along the curve after he confirmed the likely downshift to a 50-basis point hike at the December FOMC meeting, with weak US data also pushing US yields lower. The US dollar was lower across the board: EURUSD rushed back higher, and trades this morning not far below the pivotal 1.0500 area, which could open up for 1.0600+, while the action in US yields was a particular tailwind for USDJPY bears, as that pair fell to new local lows well south of the former 137.50 low water mark, hitting 136.21 overnight and possibly on its way for a test of the 200-day moving average near 134.50. Gold trades higher supported by a breakout in silver Silver’s impressive 16% rally last month extended overnight following Powell’s speech in which he signaled a slowdown in the pace of future rate hikes. It trades around $22.25, the 50% retracement of the March to September selloff, and a close above could see it challenge $23.35 next. In addition, the recent dollar and yield slump, the metal has also been supported by improved supply and demand fundamentals.  Gold has built on last month's impressive 8% gain and has now returned to challenging a key area of resistance between $1788 and $1808. Focus on the dollar and incoming US data starting with today’s ISM and Friday’s job report. Crude oil (CLF3 & LCOF3) supported by weaker USD and lower US inventories Crude oil’s three-day recovery has been supported by a weaker dollar and traders assessing signals that China may soften its Covid Zero policy after China’s Vice Premier in charge of fighting Covid acknowledged the Omicron variant is less deadly. Developments that have forced a reduction in recently established short positions ahead of Sunday’s OPEC+ meeting. A meeting that is likely to be strong on words but low on actions, not least considering the unclear impact of an EU embargo on Russian oil starting next week. In addition, US crude stocks fell by 12.6mbbl last week, the biggest decline since June 2019, while the net crude and product export hit a record, highlighting continued strong demand amid Russian sanctions. US treasury yields recovered after dip to local lows. (TLT:xnas, IEF:xnas, SHY:xnas) With Fed Chair Powell confirming a likely downshift to a smaller hike in December and not pushing back against easing financial conditions, the entire US Treasury yield curve fell sharply yesterday, with treasury buying also encouraged by weak US data, including a terrible Chicago PMI and weak ADP private payrolls growth number. The 10-year treasury yield benchmark hit a new local low near 3.60% and is now only 10 basis points above the pivotal 3.50% area, which was the major pivot high from June. What is going on? Jerome Powell sticks to the script Fed Chair Powell repeated his comments from the November FOMC and what we have heard more generally from the Fed speakers over the course of the month. He said it makes sense to moderate the pace of interest rate hikes and the time to moderate the pace of hikes may come as soon as December, while he added it seems likely that rates must ultimately go somewhat higher than what was thought in the September FOMC projections. Powell also said they have made substantial progress towards sufficiently restrictive policy but have more ground to cover and they will likely need to hold policy at a restrictive level for some time. While his comments still tilted towards the hawkish side, there was no specific hawkish pushback against the markets pricing of significant rate cuts in 2024 that the markets feared. His comment that he does not want to over-tighten but cutting rates is not something to do soon was a slight contrast to his earlier acceptance that risk of tightening insufficiently is greater than the risk over-tightening. The Fed's Cook (voter) also said it is prudent for the Fed to hike in smaller steps as it moves forward and how far the Fed goes with hikes depends on how the economy responds, overall sticking to the consensus. US economic data broadly weaker, focus now on PCE prices and ISM manufacturing The private ADP jobs report showed US payrolls rose 127,000 this month, the slowest pace in nearly two years, as wage gains moderated. Job openings also fell in October to 10.334mln from September's 10.687mln, reversing a surprise jump in the prior month but remaining elevated, according to the JOLTS report. The biggest downside surprise came in Chicago PMI for November which came in at 37.2 against an expected 47.0, falling from a prior 45.2. While monthly surveys can be noisy, but this one is now flirting with pandemic lows and puts the focus on ISM manufacturing due today. The only ray of positive news came from the Q3 GDP release which was upwardly revised by to 2.9% from 2.6% previously. Softer EU CPI weakens hawkish ECB bets Euro inflation slowed for the first time in 1.5 years to 10% in November from 10.6% YoY in October. ECB officials have highlighted the data will be key for their next rate decision, suggesting lower chance of another 75bps rate hike at the December 15 meeting. Still, it remains hard to say that inflation in the Eurozone has peaked. ECB members also remain broadly hawkish and suggest that the commitment to bring inflation back to target will stay Guangzhou lifted the lockdown of several districts as a sign of easing restrictions even as new cases at elevated levels  Guangzhou, the third largest city in China and the capital of the southern province of Guangdong, removed the “temporary control areas” restrictions of several districts even though the city’s daily new cases of Covid-19 stayed at nearly 7,000. It was an encouraging sign pointing to China’s willingness to continue the fine-tuning measures that it had recently started despite the surge in new cases across the country.   China’s Vice Premier in charge of fighting Covid acknowledged the Omicron variant is less deadly Speaking at a pandemic control policy workshop, Vice Premier Sun Chunlan emphasized the optimization measures of the pandemic control were supported by a lower fatality rate caused by the Omicron variant, an increasing vaccination rate, and the accumulation of experience in containing the spread of the virus. She called for the acceleration of vaccination and preparation of therapeutic drugs and the news report did not quote her mentioning the dynamic zero-Covid policy What are we watching next? Melt-up in risk if US data remains tepid or worse? The reaction to Fed Chair Powell’s speech yesterday and soft US data comes ahead of a string of US data through tomorrow’s November US jobs report. If the data is in-line or especially if it is a bit softer than expected, the market may continue to celebrate the implications of a lower peak for the Fed policy rate, as well as for the impact on valuations if longer US treasury yields also continue falling. Despite Chair Powell specifically indicating that peak Fed rates next year are likely set to rise above the Fed’s own forecasts from the September FOMC meeting, the market dropped its forecast for peak rates yesterday by several basis points in the wake of his speech. Eventually, market may begin to fret the impact of an incoming recession on asset valuations, but for now, the one-dimensional focus on the monetary policy outlook and rates persists. For the risk-on to continue, we would likely need to see a benign PCE Core inflation data point today, in-line or below expectations of +0.3% MoM and +5.0% YoY (vs. +5.1% in September and Feb. peak of 5.4%). The ISM Manufacturing survey today (expected: 49.7, which would be first sub-50 reading since 2020) is less important than Monday’s ISM Services, but the jobs report tomorrow is important, as a slackening US jobs market will be a key ingredient to confirm a slowdown (and the weekly jobless claims usually give off a warning for many weeks before the evidence shows up in the monthly report – the latest weekly number is up today and it will take some time for this indicator to point to weakness in the US jobs market. The market will be in for significant churn if we get a hotter core inflation reading and a strong jobs report. Earnings to watch A heavy focus on Canadian banks today, as three are reporting, including the largest of them all, Toronto-Dominion. Marvell Technology is a significant semiconductor company with 5G solutions and has been on the comeback trail, up some 30% from its lows ahead of today’s report after the market close, as will Veeva Systems. Today: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final November Manufacturing PMI 0930 – UK Final November Manufacturing PMI 1000 – Eurozone Oct. Unemployment Rate 1230 – US Nov. Challenger Job Cuts 1330 – US Oct. PCE Inflation 1330 – US Weekly Initial Jobless Claims 1420 – US Fed’s Logan (Voter 2023) to speak 1500 – US Nov. ISM Manufacturing 1530 – US Weekly Natural Gas Storage Change 1645 – ECB Chief Economist Lane to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 1, 2022 | Saxo Group (home.saxo)
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

A Modest Retracement In Crude Oil Prices Lends Support To The USD/CAD Pair

TeleTrade Comments TeleTrade Comments 01.12.2022 10:18
USD/CAD struggles to gain any meaningful traction amid the prevalent USD selling bias. A modest downtick in oil prices undermines the Loonie and helps limit the downside. Traders now look to the US PCE inflation data and ISM PMI short-term opportunities. The USD/CAD pair consolidates the previous day's heavy losses and oscillates in a narrow range, around the 1.3400 mark through the early European session on Thursday. The US Dollar languishes near a multi-month low in the wake of dovish comments by Federal Reserve Chairman Jerome Powell on Wednesday and acts as a headwind for the USD/CAD pair. In fact, Powell sent a clear message that the US central bank will soften its stance and said that it was time to moderate the pace of interest rate hikes. This leads to an extension of the recent sharp decline in the US Treasury bond yields and keeps the USD bulls on the defensive. Apart from this, the risk-on mood - as depicted by a positive tone around the equity markets - is seen as another factor weighing on the safe-haven Greenback. That said, a modest retracement in Crude Oil prices from a one-week high touched on Wednesday undermines the commodity-linked Loonie and lends support to the USD/CAD pair. The likelihood that OPEC+ will leave output unchanged at its meeting on Sunday and demand concerns act as a headwind for the black liquid. Nevertheless, the underlying bearish sentiment surrounding the USD suggests that the path of least resistance for the USD/CAD pair is to the downside. This, in turn, supports prospects for an extension of this week's sharp pullback from the vicinity of mid-1.3600s, or the highest level since November 4 set on Tuesday. Hence, any attempted recovery could be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Market participants now look forward to the US economic docket, highlighting the release of the Fed's preferred inflation gauge - the Core PCE Price Index - and ISM Manufacturing PMI. This, along with the US bond yields and the broader risk sentiment, will influence the USD. Traders will further take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair.
The Challenge to the Dollar: De-dollarisation and Geopolitical Shifts

Fed: The Pace Of Rate Hikes Will Slow Down | Positive Potential Of Crude Oil Is Limited

Swissquote Bank Swissquote Bank 01.12.2022 10:50
Powell said that the Federal Reserve (Fed) will slow down the pace of rate hikes from next month, while insisting that smaller increases are less important than how much further to go and for how long. But all investors heard was ‘the Fed will hike by 50bp next month and bla bla bla…’ US yields and the dollar fell, equities rallied!!! Forex The US dollar’s depreciation is being cheered across the market. The EURUSD pushed above the 200-DMA as the dollar-yen fell to 136.50.And if Japan doesn’t need to spend its FX reserves to strengthen the back of the yen, they could well use it to increase the defense spending, without increasing taxes and without cutting spending. Japan And Japan is not the only country that increases defense spending. Bigger global budget for spending boosts defense stocks! Commodities In commodities, American crude rallied past the $81pb yesterday as US crude oil inventories fell by 12.6 million barrels last week, well above the 3.2 million barrel draw expected by analysts. It is because exports ran hot, and refineries hit their highest capacity since August 2019. But be careful with the rising recession odds, because investors have been cutting their net speculative positions despite the supply concerns, and that’s probably going to limit the topside potential! Watch the full episode to find out more! 0:00 Intro 0:28 Investors don’t want to hear what Powell tries to say! 3:49 FX & data roundup 6:50 Defense stocks to continue outperform 7:56 Crude oil jumps but positive potential is limited Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Powell #speech #USD #economic #data #ADP #JOLTS #GDP #NFP #unemployment #EUR #inflation #TTF #natgas #crudeoil #defense #stocks #Themes #trading #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Gold Is Expected The Further Upside Movement

Powell’s Comments Had Positive Impact On Gold's Bulls

Craig Erlam Craig Erlam 01.12.2022 13:10
A huge few days for oil markets Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful. Gold testing range highs Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Price Of USD/JPY Pair Has To Fight With The Resistance Level

The Japanese Yen (JPY) Gained Versus The US Dollar (USD)

Saxo Bank Saxo Bank 02.12.2022 08:40
Summary:  The U.S. Core PCE came in slightly softer than expected. November U.S. ISM Manufacturing Index dropped by 1.2 percentage points to 49.0, entering the contractionary territory. Treasury yields fell across the curve, with the 10-year yield falling to 3.50%. Yen gained 2% on lower U.S. yields and a BOJ board member called for a review of Japan’s monetary policy. Mores encouraging signs coming out of China pointing to the prospect of further easing of Covid restrictions. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished Thursday flat after softer economic data U.S. stocks fluctuated between modest gains and losses and finished the session nearly flat. Investors were weighing the decline in bond yields resulting from the softer Core PCE prints and the ISM Manufacturing Index entering into the contractionary territory and the concerns about a contraction in manufacturing activities. Eight of the 11 sectors within the S&P 500 were lower with the exception of communication services, healthcare, and information technology which registered modest gains. Salesforce (CRM: xnys) dropped 8% after the enterprise software maker reported an earnings miss, a weak outlook, and CEO resigning. Dollar General (DG:xnys) shed 7.5% on disappointing results and an outlook cut. Snowflake (SNOW:xnys) gained 7.8% on an earnings beat. Netflix (NFLX:xnas) gained 3.7% on news that the company is expanding a program to seek comments from preview audiences. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) fell on softer PCE and ISM Manufacturing A softer core PCE at 0.219% M/M (vs consensus 0.3%; Sept: 0.463% and 4.984% Y/Y in October (vs consensus 5.0%; Sep 5.182%), together with the slide of the ISM Manufacturing Index to 49.0 triggered buying in treasuries. The 2-year yield dropped 8bps to 4.23% and the 10-year yield was 10bps richer, closing at 3.50%.  The long-end outperformed as the 30-year yield fell 14bps to 3.60%. Fed Governor Michelle Bowman echoed Powell’s “somewhat higher” rhetoric as she said that “expectation would be that we ould have a slightly higher rate than I had anticipated in September”. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) gained on a less hawkish Powell and more signs of China preparing to ease Covid restrictions further Hang Seng Index climbed 0.8% and CSI300 Index gained 1.1% following the less-hawkish-than-feared speech from the U.S. Fed Chair Powell overnight and China’s Vice-Premier Sun Chunlan, who is in charge of containing the spread of Covid-19, acknowledged in a pandemic control export workshop that the Omicron variant is less deadly. China is reportedly instructing local authorities to get 90% of the population over 80 years old vaccinated in two months. Caixin China PMI Manufacturing came in at 49.4 in November, above the consensus estimate of 48.9 and October’s 49.2. EV maker XPeng (09868:xhkg) jumped 12.8%. See our update here on a brighter outlook for A shares in 2023, supported by the trend of credit impulse. FX: Yen gained nearly 2% to 135.40 vs the dollar on lower US bond yields and a BOJ board member calling for a review of Japan’s monetary policy The Japanese Yen gained almost 2% to 135.30 versus the dollar as U.S. bond yields fell on a less hawkish Powell and Naoki Tamura, a Bank of Japan board member said that “it would be appropriate to conduct a review at the right time, including the momentary policy framework and inflation target”. What to consider? October U.S. Core PCE softer than expectations The U.S. Core PCE decelerated more than expected to 0.219% M/M (vs consensus 0.3%; Sept: 0.463% revised), and 4.984% Y/Y in October (vs consensus 5.0%; Sep 5.182%). The Core Services Prices excluding Housing Services sub-index, which Fed Chair Powell highlighted as the “most important category for understanding the future evolution of core inflation” in his speech at the Brookings Institution on Wednesday, moderated to 0.33% M/M in October, down from 0.48% M/M in Sep. Headline PCE came in at 0.3% M/M (consensus: 0.4%; Sep 0.3%) and 6.0% Y/Y (consensus 6.0%; Sep: 6.3% revised).  Dropping to 49.0, the U.S. ISM Manufacturing Index entered the contractionary territory  The November ISM Manufacturing Index dropped by 1.2 percentage points to 49.0 (vs consensus 49.7; Oct 50.2) and entered the contractionary territory. It was the lowest since May 2020. The weakness was broad-based with new orders falling to 47.2, order backlogs dropping to 40.0, employment down to 48.4, and prices paid sliding to 43.0. U.S. job data is the key thing to watch today The U.S. Labor Bureau of Statistics is scheduled to release the November job data on Friday. According to the Bloomberg survey of economists, the median forecasts are looking for a 200,000 increase in non-farm payrolls, down from 262,000 in October, and an unchanged unemployment rate at 3.7%. Average hourly earnings are excepted to come in at 0.3% M/M (vs Oct 0.4%) or 4.6% Y/Y (vs Oct: 4.7%) For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Softer US Core PCE, ISM Manufacturing Index entering the contractionary territory – 2 December 2022 | Saxo Group (home.saxo)
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

Weak US Data Took US Yields Lower All Along The Curve

Saxo Bank Saxo Bank 02.12.2022 08:52
Summary:  Risk sentiment fizzled after the strong from the prior day on Fed Chair Powell’s less hawkish than feared speech. That was despite softer than expected October PCE inflation data that helped US treasury yields trade to new local lows all along the curve. Today’s US November jobs report will carry a bit more weight for the treasury market, where yields have helped drag the US dollar to new lows.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) U.S. stocks fluctuated between modest gains and losses and finished the session nearly flat. Investors weighed the decline in bond yields from softer US data (see below). Eight of the eleven sectors within the S&P 500 were lower except for communication services, healthcare, and information technology which registered modest gains. Salesforce (CRM: xnys) dropped 8% after the enterprise software maker reported earnings miss, a weak outlook, and CEO resigning. Dollar General (DG:xnys) shed 7.5% on disappointing results and an outlook cut. Snowflake (SNOW:xnys) gained 7.8% on an earnings beat. Netflix (NFLX:xnas) gained 3.7% on news that the company is expanding a program to seek comments from preview audiences. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hang Seng Index and CSI300 Index consolidated and were modestly lower on Friday after the recent rally on signs of further easing of Covid restrictions in mainland China. Profit-taking selling weighed on Chinese property developers, with leading names dropping 4-5%. Online health platform stocks surged. Alibaba Health (00241:xhkg), JD Health (06618:xhkg), and Ping An Healthcare and Technology (01833:xhkg) gained 9-13%. USD lower still on falling treasury yields, fresh incoming data Weak US data, including a slightly softer than expected core PCE inflation reading and ISM Manufacturing survey, took US yields lower all along the curve and took the US dollar lower as well, with EURUSD trading above the psychologically key 1.0500 area this morning. The next important resistance there is perhaps the pandemic-outbreak low around 1.0636 or the 38.2% retracement of the entire sell-off from the 1.2350 top at 1.0611. The yield-sensitive USDJPY continued lower as well, nearly hitting the 135.00 level overnight after a chunky further drop yesterday and not far from its 200-day moving average at just above 134.50. An important test for US yields and the US dollar today with the November jobs data releases. Strong week for precious metals on Fed pivot speculation Gold rose above $1800 on Thursday supported by softer US data sending the dollar and yields lower, thereby underpinning speculation about a slower pace of future rate hikes. US 10-year real yields have fallen to a two-month low at 1.14% after hitting 1.82% in October while the Bloomberg Dollar Index has lost close to 8% during the past month alone. A break above resistance at $1808 may add further fuel to an ongoing sentiment change towards the metal but with ETF investors not yet engaging the importance of the dollar and yield developments remain key. Silver, supported by a firmer industrial metal sector, trades above $22.25 with the next level of interest being $23.36. Focus today on the US job report given its potential impact on the dollar and yields. Crude oil (CLF3 & LCOF3) trades up on the week Crude oil is heading for its best week in two months following another roller coaster week that saw Brent test support at $80 before finding resistance at $90. From an early lockdown scare in China on Monday, the sentiment improved ahead of Sunday’s OPEC+ meeting and the beginning of an EU embargo on Russian seaborne oil from Monday. Additional support was provided by a weaker dollar, China softened its virus approach and Washington calling for halt to further sales from its Strategic Petroleum Reserves. Ahead of the OPEC+ meeting a Bloomberg survey found that OPEC, led by the four major Gulf producers cut production by 1 million barrels a day last month. We expect the online meeting is likely to be strong on words but low on actions. Focus on today’s US job report given its potential impact on the dollar. US treasury yields edge lower still on weak US data. (TLT:xnas, IEF:xnas, SHY:xnas) The weak US data (see below) took US treasury yields lower all along the curve, with the 10-year benchmark within a basis point of the important 3.50% area yesterday. That level was a major pivot high posted around the time frame of the June FOMC meeting. But the weak data has not seen much steepening in the US yield curve, even if 2-year yields dropped to new lows cine early October yesterday near 4.25% as the market prices in a slightly lower Fed cycle peak next year (currently 4.87% peak priced) and steeper pace of cuts by late 2023 and especially into 2024. The US November jobs report later today offers an important test for the treasury market as the 10-year has hit this pivotal level. What is going on? Weaker US data continues to take the air out of US yields The October PCE inflation data came in softer than expected for the core month-on-month reading at +0.2% vs. +0.3% expected, while the year-on-year level of 5.0% was expected. Another soft data point was the November ISM Manufacturing survey which came in at 49.0 vs. 49.7 expected and suggesting modest contraction in US manufacturing activity for the first time since the pandemic outbreak months. The New Orders component of that survey dropped to 47.2, Prices Paid plunged further to 43.0 and Employment nudged lower to 48.4. Sterling boost yesterday on hopes for Northern Ireland deal EU Commission president Ursula von der Leyen said that Britain and the EU said that the latest talks with UK Prime Minister Rishi Sunak were “encouraging” and that she is “very confident” a solution is possible if the UK government is on board, with Sunak seen as motivated to iron out a deal with a more pragmatic approach to the issue than former Prime Ministers Boris Johnson and Liz Truss. EURGBP briefly touched a multi-month low yesterday below 0.8560 and traded within 10 pips of the the 200-day moving average before rebounding overnight. Blackstone limits withdrawals from large property fund The company said it would limit how much the wealthy individual investors in its $69 billion real estate fund can withdraw funds to 2% of the net asset value of the fund monthly and 5% quarterly. Real estate is a notoriously illiquid asset. What are we watching next? US November Jobs report on tap The November jobs data is up today, theoretically expected to show payrolls growth of +200k, but with the market perhaps leaning a bit lower after the softest ADP private payrolls growth number in more than 20 months. The Unemployment Rate is seen steady at 3.7%, and Average Hourly Earnings are anticipated to rise +0.3% month-on-month and +4.6% year-on-year after the October data point at 4.7% YoY was the lowest year-on-year reading in just over a year. The Atlanta Fed’s median wage tracker, meanwhile, has shown entirely different levels of earnings growth, with +6.4% in October and 6.7% in both of the prior two months. Earnings to watch Earnings next week are a mish-mash of companies, and include high-end homebuilder Toll Brothers on Tuesday, as it will be interesting to hear their outlook on the new home market after the enormous surge in US mortgage rates and collapse in home sales activity. Broadcom (AVGO: xnas) is the market cap giant of the week to report, with the CEO of the company having said that the semiconductor market will not be affected by the US’ new export restrictions on technology to China. Tuesday:  MongoDB, AutoZone, Toll Brothers, Ferguson Wednesday: Brown Forman, Campbell Soup, GameStop Thursday: Broadcom, Costco, Lululemon, Chewy Friday: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT) 1330 – Canada Nov. Employment Change / Unemployment Rate 1330 – US Nov. Change in Nonfarm Payrolls 1330 – US Nov. Unemployment Rate 1330 – US Nov. Average Hourly Earnings 1415 – US Fed’s Barkin (non-voter) to speak 1900 – Us Fed’s Evans (voter 2023) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-dec-2-202-02122022
Weaker Crude Oil Prices Undermine The Loonie Pair (USD/CAD)

The USD/CAD Pair May Witness Further Downside

TeleTrade Comments TeleTrade Comments 02.12.2022 09:13
USD/CAD remains indecisive after two-day downtrend, defends weekly gains. Federal Reserve policymakers’ dovish bias, softer United States data weigh US Dollar. Chatters surrounding China, Oil price cap on Russian exports test WTI bulls. Downbeat expectations from Canada, United States employment report tease Canadian Dollar buyers. USD/CAD portrays the market’s indecision ahead of the monthly employment data from the United States and Canada during early Friday. In doing so, the Canadian Dollar fails to justify the retreat in the WTI crude oil, Canada’s key export item, amid a lackluster US Dollar. That said, the Loonie pair seesaws around 1.3430 by the press time, after a two-day downtrend. Even if the USD/CAD pair remains inactive as of late, the hopes of slower rate hikes from the Federal Reserve (Fed) contrasts with the recently hawkish bias surrounding the Bank of Canada (BOC) to keep the bears hopeful. It’s worth noting that the looming Oil price cap from the Group of Seven (G7) nations and recovery in China’s Covid conditions hint at the further firming of Canada’s key earner, which in turn could weigh on the Loonie pair. Federal Reserve policymakers contrast with Bank of Canada officials to favor USD/CAD bears The dovish bias of the Federal Reserve (Fed) Chairman Jerome Powell, as well as downbeat comments from US Treasury Secretary Janet Yellen, initially raised hopes of easy rate hikes. Following that, Federal Reserve (Fed) Governor Michelle Bowman stated that (It is) appropriate for us to slow the pace of increases. Before him, Fed Governor Jerome Powell also teased the slowing of a rate hike while US Treasury Secretary Yellen also advocated for a soft landing. Further, Vice Chair of supervision, Michael Barr, also said, “We may shift to a slower pace of rate increases at the next meeting.”  It’s worth noting that the recent comments from New York Fed’s John Williams seemed to have tested the US Dollar bears as the policymakers stated that the Fed has a ways to go with rate rises. On the other hand, Bank of Canada (BOC) Governor Tiff Macklem testified in late November while saying, “We expect our policy rate will need to rise further.” Additionally, BOC’s Senior Deputy Governor Carolyn Rogers said, “It will take time to get back to solid growth with low inflation but we will get there.” Differences between United States and Canada data also weigh on Loonie pair On Thursday, United States Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, matched 5.0% market forecasts on YoY but eased to 0.2% MoM versus 0.3% expected. Further, US ISM Manufacturing PMI for November eased to 49.0 versus 49.7 expected and 50.2 prior. Earlier in the week, the US ADP Employment Change marked the lowest readings since January 2021 with 127K figure for November versus 200K forecast and 239K previous readings. Further, the second estimate of the US Gross Domestic Product (GDP) Annualized for the third quarter (Q3) marked 2.9% growth versus 2.6% initial forecasts. Talking about Canada, Labor Productivity jumped to 0.6% in the third quarter (Q3) versus -0.1% expected and 0.1% prior (revised). Further, S&P Global Manufacturing PMI for November increased to 49.6 from 49.3 market expectations and 48.8 prior. Previously, Canada’s Gross Domestic Product Annualized for the third quarter (Q3) eased to 2.9% versus 3.5% expected and 3.2% (revised down) prior. Oil buyers stay hopeful WTI crude oil remains on the bull’s radar despite the latest retreat to $81.00. The reason could be linked to the comments from the Group of Seven Nations (G7) Price Cap Coalition, as well as hopes for China’s economic recovery. Late on Thursday, Reuters quoted an Official from the G7 Price Cap Coalition as saying, “We are 'very very close' to agreement on $60-a- barrel price cap on Russian oil exports.” The diplomat also showed optimism about agreeing on refined products price cap by February 5. Further, the consecutive three days of the downtrend of Chinese daily Covid infections from a record high allowed the policymakers to tease the “next stage” in battling the virus while announcing multiple easing of the activity-control measures. Additionally, a likely inaction at this week’s meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+. Considering Canada’s reliance on reliance on Crude Oil exports and likely hardships for the black gold supplies, as well as improvement in demand, the USD/CAD pair may witness further downside. United States, Canada job numbers are the key Given the likely downbeat outcome from both the Canadian and United States employment data, USD/CAD pair traders may try to find greater details and could react with more aggression in case of a surprise outcome. That said, the headline US Nonfarm Payrolls (NFP) is likely to ease with a 200K print versus 261K prior while the Unemployment Rate could remain unchanged at 3.7%. It should be noted that a likely easing in the Average Hourly Earnings for the stated month could also weigh on the USD/CAD price. On the other hand, Canada’s Net Change in Employment may decline to 5K versus 108.3K prior while the Unemployment Rate could increase to 5.3% from 5.2% previous readings. USD/CAD technical analysis Despite the latest inaction, the USD/CAD pair portrays a clear U-turn from the 50-DMA, as well as a downward-sloping resistance line from October 13, currently joining each other around 1.3570-75. However, a failure to break a two-week-old ascending support line, near 1.3400 by the press time, keeps the Loonie pair buyers hopeful. Even if the quote breaks the 1.3400 support line, a convergence of the 100-DMA and an ascending trend line from August 25, close to 1.3290 at the latest, appears a tough nut to crack for the USD/CAD pair sellers. Alternatively, a clear upside break of the 1.3570-75 resistance confluence will need validation from the recent peak of 1.3645 to convince USD/CAD bulls. Following that, a run-up towards the 23.6% Fibonacci retracement level of the Loonie pair’s August-October upside, near 1.3680, can’t be ruled out. It should be noted that the USD/CAD pair’s advances past 1.3680 may witness a bumpy road around 1.3840 before the bulls could aim for the yearly high marked in October around 1.3980. Overall, USD/CAD is likely to remain sidelined with a short-term downside bias. USD/CAD: Daily chart Trend: Limited downside expected     search   g_translate    
The Commodities: The EU Is Looking At A Price Cap Level Of Around US$60/bbl

The Commodities: The EU Is Looking At A Price Cap Level Of Around US$60/bbl

ING Economics ING Economics 02.12.2022 09:33
OPEC+ is set to meet on Sunday to decide on output policy for 2023. While the EU still needs to come to an agreement on the G-7 price cap ahead of the EU's ban on Russian seaborne crude oil, which comes into force on 5 December Energy - OPEC output falls Preliminary OPEC production numbers for November are starting to come through and it is no surprise that the group significantly reduced output over the month due to the recently agreed production cuts. According to a Bloomberg survey, OPEC output declined by 1.05MMbbls/d MoM to 28.79MMbbls/d. Saudi Arabia led the way with their production falling by 470Mbbls/d, whilst the UAE saw their output decline by 240Mbbls/d. The reduction from the group is broadly in line with the cuts expected under the deal. This weekend we will need to see if OPEC+ stick to the current deal or announce even deeper cuts. The group meets on Sunday and given the recent price weakness, there is the potential for further cuts. EU members are still trying to agree on a level for the Russian oil price cap. They will want to come to an agreement before 5 December, which is when the EU ban on Russian seaborne crude oil kicks in. The latest reports suggest that the EU is looking at a price cap level of around US$60/bbl, which is lower than the original US$65-70/bbl suggested, however, it is still above the current levels that Russia is receiving for its crude oil. Therefore, if agreed at this level, it will have little impact on Russian oil revenues at the moment. Metals – Chinese aluminium surplus The latest forecast from Mysteel shows that the Chinese aluminium market will finish 2022 with a deficit of 340kt, while the market is expected to shift to a surplus of 580kt in 2023. Supply is expected to grow as a result of new capacity as well as production restarts. Demand is estimated to have grown by 1.6% YoY this year, despite weak demand from the property sector. For 2023, Chinese demand is forecast to rise by 2.24% YoY.  The latest reports suggest that a major copper smelter, Daye Nonferrous Metals Group Holding Co. located in Huangshi city in Hubei province started producing copper from its new smelter with an operational capacity of 400ktpa. It is estimated that the plant produced its first batch of refined copper at the end of November. Agriculture – US weekly grain shipments remain soft The latest weekly data from the USDA shows that US grain exports remained weak and came in below market expectations for the week ending on 24th November. Weekly export sales of wheat dropped to 163kt, lower than the 450kt expected. Soybean export sales fell to 694kt, also below the roughly 813kt expected, whilst corn export sales declined to 633kt, compared to expectations of around 763kt. CBOT soybean oil fell sharply yesterday with prices reaching their lowest levels in three months due to the latest proposal from the Biden administration for changes to the US biofuel mandate falling short of expectations for biodiesel quotas. As per the latest Environmental Protection Agency proposal, the agency will ask oil refineries and importers to blend 20.82 billion gallons of renewable fuel into diesel and gasoline in 2023. The agency will also keep raising the quota for biofuels until 2025. The proposal would also moderately boost quotas for biodiesel (made from soybean oil and other fats) to 2.82 billion gallons in 2023 from 2.76 billion gallons currently. The market was expecting and hoping for a higher number. Read this article on THINK TagsRussian oil price cap OPEC+ Oil Grains Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: OPEC+ meeting ahead

Oil Bulls In Charge Before OPEC Meeting | Equities Posted Timid Gains

Swissquote Bank Swissquote Bank 02.12.2022 10:16
Sentiment was mixed at yesterday’s trading session. Equity bulls were timid, while the dollar bears were in charge of the market after the latest PCE data, which is the Fed’s favorite gauge of inflation showed that the core PCE index slowed more than expected in October. USD The softening inflation sent the US dollar index tumbling below its 200-DMA for the first time since summer 2021. The US dollar index slipped below its major 38.2% Fibonacci retracement on 2021-2022 rally, and stepped into the bearish consolidation zone. Finally! Markets Trading in equities was much less festive than the FX yesterday, as the ISM manufacturing index warned that the US manufacturing activity fell below 50, the contraction zone, for the first time since summer 2020.Today, the much-expected jobs data should determine whether the S&P500 deserves to quit the ytd negative trend, or stay in it. How strong, or soft the NFP data should be to keep the equity rally going? Watch the full episode to find out more! 0:00 Intro 0:38 US dollar tumbled on soft PCE data 3:51 But equities posted timid gains on ugly ISM figure 4:44 What NFP print could help the S&P500 extend gains? 6:31 Gold broke important technical resistances 7:11 Oil bulls in charge before OPEC meeting, Russian price cap 8:12 Bitcoin rallies past $17K 9:02 Blackstone limits withdrawals from its real estate fund. Ouch. Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #USD #NFP #jobs #unemployment #PCE #data #Powell #speech #economic #data #EUR #GBP #JPY #XAU #crudeoil #EU #Russia #oil #cap #OPEC #Bitcoin #Blackstone #realestate #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq  Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Technical Analysis: Gold/Silver Ratio Still On The Rise

The Precious Metal Sector Recorded A Strong Month Of November

Saxo Bank Saxo Bank 02.12.2022 12:01
Summary:  The Bloomberg Commodity Index Total Return index traded up 2.7% in November, thereby driving the index to a 19% gain on the year. Led by precious and industrial metals which following several challenging months found support as the dollar weakened and bond yields dropped in response to lower-than-expected CPI and emerging weakness in US economic data. Developments leading to speculation that the US Federal Reserve may soon slow its pace of rate hikes. Also, China signaling a more pragmatic approach to Covid controls potentially laying the fundation for additional metal support in the coming months The Bloomberg Commodity Index Total Return index traded up 2.7% in November, thereby driving the index to a 19% gain on the year. The strong gains among industrial and precious metals offset the minor decline in energy and grains prices. Following several challenging months, the metal sectors found support from a weaker dollar and sharply lower bond yields, both driven by a lower-than-expected US CPI print last month. The emerging weakness in US economic data has led to speculation that the US Federal Reserve may soon slow its pace of rate hikes. A development that was confirmed by Fed Chair Powell in a speech on Wednesday when he signaled a smaller December rate hike as he presented a case for achieving lower inflation without tipping the economy into a deep recession. Whether successful or not may turn out to be a major driver of risk sentiment into 2023, with precious metals especially standing to benefit should he fail. The industrial metal sector jumped 14.5% on the month, thereby reducing the year-to-date loss to 4.5%. The primary driver, apart from the softer dollar, is the optimism that China may shift away from Covid Zero policies and provide additional stimulus to boost demand in the top metal-consuming economy. Copper jumped 11% last month to record its best month since April 2021 and its first monthly advance since March. Having started the year on a high note driven by post-Covid optimism, the subsequent and prolonged Covid zero focus in China drove the price sharply lower from March onwards. The result of this is a metal that, despite the strong November, remains down 17% on the year. The precious metal sector also recorded a strong month of November as the Bloomberg Precious metal index rose by 8%, thereby reducing the annual loss to just 5%. Silver led the charge with a 16% gain to $22.16, clawing back half of the losses that was seen between the March peak at $30 and the September low at $17.50. Gold, out of favor for months by traders and investors as the dollar and Treasury yields surged higher, managed a strong turnaround, rising 8% to reach $1768 – thereby reducing the year-to-date loss in dollar terms to just 3.3%. This is impressive in a year that, despite the recent weakness, has seen the dollar surge by 8% while US ten-year real yields have surged higher by around 2.3%. Silver’s impressive rally has continued into December with the price breaking above $22.25 – a 50% retracement of the March to September selloff – and on route to the next level of resistance at $23.35. Meanwhile, gold is currently working its way through a key area of resistance between $1788 and $1808. However, with the market increasingly focusing on a Fed pivot, potentially without getting inflation under control, an upside break would confirm a cycle low around $1615 and with that a potential push higher.  Source: Saxo Crude oil recovers from unwarranted China demand scare The energy sector suffered a small setback in November but remains up 55% on the year due to very strong gains in diesel and gasoline as well as natural gas. In November, all the major contracts, with the exception of natural gas, traded lower as the market took fright from continued lockdowns in China, a seasonal slowdown in demand and a steeply inverted US yield curve increasingly pointing in the direction of a sharp economic slowdown next year. Crude oil spent the week recovering from a ten-month low after renewed and, in our opinion, unfounded worries about a deteriorating demand outlook in China. The bounce was supported by a weaker dollar and traders assessing signals that China may soften its Covid Zero policy after China’s Vice Premier in charge of fighting Covid acknowledged the Omicron variant is less deadly. These developments forced a reduction in recently established short positions ahead of Sunday’s OPEC+ meeting. A meeting that is likely to be strong on words but low on actions, considering the unclear impact of an EU embargo on Russian oil starting on 5 December. In addition, US crude stocks fell by 12.6 million barrels last week, the biggest decline since June 2019, while US crude and product export hit a record close to 12 million barrels per day – highlighting continued strong demand from buyers looking for alternative supplier than Russia. In addition, the US government is likely to halt sales of crude from its Strategic Reserves soon, thereby removing an important source of supply which has seen 205 million barrels flow into the market this year. Recession versus tight supply The risk of an economic downturn at a time of tight supply of several major commodities will be one of the key battlegrounds that, together with the strength of a post-Covid recovery in China, will help determine the direction of commodities in 2023. Following months of aggressive rate hikes, the US Federal Reserve is now signalling a slowing pace of future rate hikes – with the eventual peak rate being determined by incoming data. From an investment perspective, the commodity sector has beaten most other asset classes this year and, despite a recent softness and easing of tightness, we maintain the view that investors should maintain a broad exposure to commodities into 2023. The one-year implied roll yield, using a weighted average of the 23 commodities in the Bloomberg Commodity Index, remains positive, albeit lower than at the start of the year. The positive roll yield or backwardation signals a tight market outlook across most commodities currently led by commodities from energy, grains and softs.   Backwardation and its positive impact on investment returns A positive roll yield, i.e. selling an expiring futures contract, at a higher price than where the next is bought, has supported the strong return investors have achieved through an investments via futures and ETFs this year. The chart below shows the year-to-date performance of an ETF tracking the Bloomberg Commodity Total Return Index and the Bloomberg Spot index which excludes the extra income achieved from the roll yield. Year to date, the ETF has realised a 17.6% return while the underlying spot index has delivered a six percent lower return. We expect the tailwind from tight markets trading in backwardation will rise again over the coming months. Not least driven by increased tightness across the energy complex as the embargo on Russian oil and, from next year, fuel products increasingly adds upward pressure on the front end of the forward curve. Source: Bloomberg   Source: Weekly Commodity Update: Strong November led by metals | Saxo Group (home.saxo)
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

Russia Already Sells Oil To Its Trading Partners At Significantly Discounted Levels

Craig Erlam Craig Erlam 02.12.2022 13:23
Steady going into a highly uncertain weekend Oil prices are quite steady on approach to the weekend. There remains considerable uncertainty around the action OPEC+ will take when it meets on Sunday, although there’s every chance that the meeting will be delayed or that discussions take longer than normal, as a result of the price cap being finalized by the EU. A cap of around $60 is now reportedly close to being signed off, the impact of which is still unclear as Russia already sells to its trading partners at significantly discounted levels. The Kremlin has threatened countries that abide by the cap with being cut off which will leave some in a very uncomfortable position; choosing between losing access to cheap Russian crude or facing G7 sanctions. As ever, the devil will be in the detail. But one thing is clear, crude carries significantly more weekend risk and could be extremely volatile on the open next week. Read next: If ECB policymakers should make a decision between fighting inflation and avoiding recession, they will likely choose fighting inflation says Ipek Ozkardeskaya| FXMAG.COM Rally pauses ahead of the jobs data Gold is basically unchanged on the day, with traders clearly having an eye on the US jobs report before deciding what to do next. Given the data of recent weeks, Powell’s comments on Wednesday, and the recent trend in the yellow metal, gold bulls may have good reason to be optimistic, especially if handed a remotely favourable – or not overly hot – jobs report. Of course, when the narrative is set this way going into a release, it always feels there’s scope for a nasty shock and unusually large negative reaction. What is interesting is that gold has breached $1,780 which had been a solid area of resistance recently having been a major level of support in the first half of the year. It broke through there in the aftermath of Powell’s comments before settling around $1,800. A break above here following today’s jobs report could put gold in a very bullish position. Can bitcoin continue its relief rally? Bitcoin has benefited from the improved risk appetite in the broader financial markets this week, allowing for a minor relief rally back toward $17,000. This is only the upper end of its range from the last few weeks but a period of not making new lows in response to further disturbing headlines relating to the FTX collapse will always be welcome. A period of consolidation may be the best the crypto community can hope for at this point, although given where it’s trading now, it will be interesting to see how it responds to a weaker jobs report, should it materialise. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Middle Distillate Inventories Are Tight Around The Globe

Middle Distillate Inventories Are Tight Around The Globe

ING Economics ING Economics 03.12.2022 11:13
Middle distillates have been a standout among refined products. Inventories are tight in all regions and there is plenty of uncertainty over Russian flows when the EU ban comes into effect next year. While we expect middle distillate cracks to come off from the highs this year, the market is likely to still trade at elevated levels on a historical basis In this article Low middle distillate inventories What is driving this tightness and will it persist? Will there be relief in 2023?   Shutterstock Low middle distillate inventories Middle distillate inventories are tight around the globe. In the US, distillate fuel oil stocks are at their lowest levels on record for this time of year. And the tightness is even more extreme on the US East Coast. In Europe and specifically the ARA region, gasoil stocks are at their lowest levels since 2008 for this stage of the year, according to Insights Global. In Singapore, middle distillate stocks are down at levels last seen back in 2004 for this time of year. The tightness in the market has led to governments in Europe tapping into emergency diesel stockpiles in a bid to ease the tightness. Emergency inventories have fallen from more than 41m tonnes back in January 2021 to less than 36m tonnes by the end of August. In the US, there have been calls for the release of diesel from the Northeast Home Heating Oil Reserve although these reserves are fairly modest at just 1MMbbls. The US administration is concerned about tight inventories and high prices. As a result, options are being looked at to try to ease price pressures. These options include mandating producers to hold a minimum amount of fuel inventories, increasing the Northeast Home Heating Oil Reserve, and possibly limiting fuel exports. However, any step to limit fuel exports would have to be done in combination with a relaxation of the Jones Act which would make it easier to ship product from the US Gulf Coast to the US East Coast. Furthermore, increasing the size of the Northeast Home Heating Oil Reserve in the short term would only add more pressure given that this product would need to be bought from the market. Middle distillate inventories by region EIA, Insights Global, International Enterprise Singapore, ING Research What is driving this tightness and will it persist? There are multiple factors which have driven the tightness in the middle distillate market, and whilst some of the issues will likely intensify, some will ease. On balance, middle distillates are likely to remain relatively well supported.   Russia/Ukraine war - Russia is a large supplier of middle distillates and a significant portion of this goes into Europe. Prior to the war, Russia was exporting in the region of 1MMbbls/d of gasoil - almost 40% of total Russian refined product exports. While current sanctions and self-sanctioning have affected Russian flows already, the key disruption to these flows will occur once the EU ban on Russian refined products comes into force on 5 February 2023. This means Europe will need to find an alternative for the more than 500Mbbls/d it has been importing from Russia. And this is at a time when the global middle distillate market is already very tight. Whether the EU ban on refined products is manageable will depend on how quickly trade flows can adjust and whether there are willing buyers of Russian gasoil further afield. If so, this would free up alternative supplies for the EU. However, the quality of product and logistics could certainly complicate the necessary shift in trade flows.     China export quotas - China has played an important role in the tightening of the refined products market. Policy has meant that the government has reduced export quotas for refined products in recent years, which has led to a sharp fall in refined product exports, including middle distillates. In 2019, Chinese exports of gasoil averaged 1.78mt per month. So far this year, Chinese gasoil exports have averaged just 554kt per month. The reduction in export quotas has been part of China’s broader aims of reducing emissions and improving efficiency within the refining industry. However, more recently this seems to have taken a back seat, with the government more concerned about trying to prop up the economy. This is evident with the government issuing 15mt of export quotas back in September. In theory, these quotas should be used by the end of 2022, however, it appears as though refiners will be able to use these quotas through until the end of the first quarter in 2023. This should provide some relief to tight middle distillate markets in Asia. Recent trade data is already showing that Chinese gasoil exports picked up significantly in September and October. The refined product markets will have to wait and see if this policy change from China is a complete U-turn or whether in the medium to longer term the aim is still to drive consolidation within the domestic refining industry.   Reduced global refining capacity - Since the start of the Covid pandemic, we have seen a significant amount of refining capacity shut. These closures have been seen in Europe, the US and APAC. This was largely due to weak refinery margins during Covid. As a result of these closures, global refining capacity saw a net decline of 730MMbbls/d in 2021, the first net decline in 30 years. In the US, operable refining capacity has fallen by a little more than 1MMbbls/d or 5% since February 2020. These declines have been predominantly driven by PADD1 (US East Coast), where more than 400Mbbls/d refining capacity has shut - reflecting a 33% decline in capacity in the region. This reduced refining capacity helps to explain the tightness we are seeing in refined product inventories on the East Coast. Reduced capacity has meant that it has been more difficult for refiners to respond as demand has recovered. And it is unlikely that we will see large investment in refineries in Europe and North America given the uncertain demand outlook in the longer term. As a result, the oil market will have to rely on growing capacity from elsewhere. There is a fair amount of new refining capacity expected to ramp up over 2023. The 615Mbbls/d Al Zour refinery in Kuwait recently started the first phase of commercial operations and will ramp up through 2023. In Nigeria, Dangote is scheduled to start up its 650Mbbls/d refinery in the middle of 2023. And in Oman, the 230Mbbls/d Duqm refinery is expected to start operations by the end of 2023. The IEA estimates that a net of 2.7MMbbls/d of new refining capacity will start up between 4Q22 and the end of 2023. While a meaningful amount of capacity is set to start up next year, which will eventually help to offer some relief to middle distillate markets, the bulk of this new supply will only become available quite some time after the EU ban on Russian refined products comes into force.   Gas-to-oil switching - High natural gas prices through the year have led to a significant amount of demand destruction this year. This is particularly the case for industrial users in Europe and also power generators. However, where possible some have likely switched to cheaper fuels, including oil and specifically fuel oil and middle distillates. As for what lies ahead, weaker gas prices more recently have taken some pressure off the market. However, the European natural gas market is still expected to be tight next year, which suggests the potential for continued switching to other fuels like oil.    Will there be relief in 2023? The middle distillate market is likely to remain tight over 2023. There is plenty of uncertainty as we head towards the EU ban on Russian refined products. Clearly, this will see European buyers looking for supply elsewhere. Europe will likely have to rely more heavily on the Middle East for supplies, however, new refining capacity will take time to ramp up and so will not offer immediate relief to markets. In addition, expectations are that natural gas prices will remain elevated through 2023, which should support gas-to-oil switching. We should also not rule out the risk that the US takes action to alleviate tightness in the domestic market, which could have an impact on global middle distillate markets. China could help the middle distillate market if the government releases sizeable export quotas for 2023. However, this is a big unknown for markets at the moment. ING middle distillate forecasts ING Research TagsRussia-Ukraine Middle distillates Gasoil Diesel shortage 2023 Commodities outlook   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

Cities In China Announced To Ease Pandemic Control Restrictions | OPEC Is Keeping The Current Production Levels Unchangeded

Saxo Bank Saxo Bank 05.12.2022 08:56
Summary:  A hot US jobs report on Friday brought about a reversal in Fed rate path expectations, but a big part of the move was later reversed. Fed goes into a quiet period, but China reopening optimism is set to gather further momentum this week with easing measures being implemented in Shanghai. This would mean a further bump to metals and energy prices, especially with OPEC+ staying away from a production cut over the weekend and the next meeting only scheduled for February. Key levels on test this week with 3.50% in US 10-year Treasury yields, and USDJPY heading below the 200-day moving average at 134.50. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished the week higher despite a surge in wage inflation In spite of a strong non-farm payroll print and a surge in average hourly earnings on Friday which might cause some Fed officials to be wary about the unabated upward wage pressure when they meet on Dec 13 and 14, the major U.S. equity benchmark indices were largely flat and managed to retain the 1-2% gains following Fed Chair Powell’s dovish-leaning remarks on Wednesday. S&P500 and Nasdaq sold off more than 1% at the open but staged an impressive clawback of nearly all the losses when the closing bell rang on Friday. Materials and industrials were the top-performing sectors with the S&P 500 while energy stocks, followed by the information technology space were laggards. PayPal (PYPL:xnas) dropped 4.9%. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) clawed back all early losses and more with the 10-year yield down 2bps to 3.49% When the stronger-than-expected 263,000 growth in nonfarm payrolls and white-hot 5.1% Y/Y increase in November average hourly earnings (October revised up to 4.9% Y/Y from 4.7%) hit the wires, yields surged across the curve with the 2-year yield jumping 18bps to 4.41% and the 10-year yield rose 13bps to 3.63% in a matter of minutes. Bids emerged and yields spent the rest of the session grinding lower. By the time of market close, except for the 2-year yield which was 4bps cheaper at 4.27%, treasury yields were 1bp to 5bps richer, with the 30-year being the best performer. The 10-year yield slid 2bps to 3.49% and the 30-year yield dropped 5bps to 3.55%, hitting the lowest yield levels in nearly 3 months. The strong job and wage data made a further drift down to a 25bp hike in February 2023 less likely (only about 20% probability as money market rates suggest) and kept the 2-year yield from falling. The 2-10-year curve inversion widened 6bps to -78bps. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hang Seng Index and CSI300 Index consolidated and were modestly lower on Friday after the recent strong rally on signs of further easing of Covid restrictions in mainland China. Online health platform stocks surged. Alibaba Health (00241:xhkg) and JD Health (06618:xhkg) gained more than 9%, and Ping An Healthcare and Technology (01833:xhkg) jumped 15.4%. Profit-taking selling weighed on Chinese property developers, with leading names, such as Longfor (00960:xhkg) and Country Garden (02007:xhkg) dropping around 4%. More cities rolled out support policies to the property sector. In addition, after the market close, China reportedly told the country’s top state-owned banks to provide offshore financing to help property developers in repaying offshore debts. Overnight in New York hours, the Nasdaq Golden dragon China Index caught a bid, surging 5.4%, and Hang Seng Index Futures gained more than 2%. FX: Dollar continues its downtrend despite a strong jobs report The USD index got a bump higher after the stronger-than-expected jobs report on Friday which suggested that it might not be easy for the Fed to pause or pivot, but gains were reversed later and the index closed back at 104.50. NZDUSD was however a notch weaker this morning staying below 0.64 with AUDNZD testing 1.06 support ahead of RBA meeting tomorrow. USDJPY is testing a critical support level of 134.30 with lower US yields and some BOJ officials hinting at a policy review soon (read below). EURUSD looking stretched above 1.05. USDCNH fell below the 7 handle As cities in China relaxing Covid restrictions across the country and the spread between US treasury and Chinese government bond yields narrowing, the USDCNH dropped below 7.0, the first time since September, to 6.9852. Crude oil (CLZ2 & LCOF3) lower on unchanged OPEC+ output After strong gains in crude oil last week, some softness was seen at the end of the week after speculation of no production cut from OPEC mounted. WTI traded back to $80/barrel from $83 levels mid-week on China’s reopening optimism, while Brent retreated from $90 levels to sub-86. The Sunday OPEC meeting did come out with an unchanged output decision, as expected, while the EU’s price cap on Russian oil was also fixed at $60. This week will be key to watch further China reopening and any signs of a retaliation from Russia on the price cap. European gas prices also continue to pick up as falling weather boosts heating demand, and expectations are for a colder-than-expected winter. Gold (XAUUSD) and Silver (XAGUSD) poised for further upside The supportive factors for precious metals continue to line up – China’s reopening, lower US yields and a weaker dollar. This helped gold run higher to test a break above the key $1800 level for the first time since August. Meanwhile, Silver’s impressive November rally has extended into December with the price breaking above $22.25 – a 50% retracement of the March to September selloff – and on route to the next level of resistance at $23.35. Other metals such as Copper and Iron Ore also charged with China now reopening Shanghai, while the risk of a policy error by the Fed continues to run high. In Australia, home of some of the world’s biggest commodity commodities, BHP and Rio; it could be a positive week The benchmark index, the ASX200  is already trading at a seven-month high and could get a fresh kick this week as the iron ore (SCOA) price is back above $100 for the first time since August on optimism China could increase demand. The iron ore price has moved up 38% from its October low, so if we continue to see easing of restrictions in China, you might except this rally to continue and benefit forward earnings of BHP, Rio, Fortescue and Champion iron. What to consider? Hot US jobs report gives markets a re-think on Fed’s rate path The nonfarm payroll (NFP) data came out stronger-than-expected on Friday, with US employers added 263,000 jobs in November, less than October's upwardly revised 284,000 but well short of the turning point Fed officials seek in their battle against inflation. The unemployment rate was maintained at 3.7% while the wages were very hot: M/M rose 0.6% (exp. 0.3%) and Y/Y rose 5.1% (exp. 4.6%). After a few weeks where markets have been taking the slowdown in the pace of rate hikes by the Fed positively, this report was a reminder that rate hikes will still continue well into 2023. WSJ's Fed Whisperer Timiraos said the report keeps the Fed on track to raise interest rates by 50bps at its meeting in two weeks and underscores the risk that officials will raise rates above 5% in the first half of next year. November Caixin China PMI Services is expected be remain in the contractionary territory Caixin China PMI Services is scheduled to release on Monday. The consensus estimate from the Bloomberg survey is 48.0 for November, shrinking deeper into the contractionary territory from 48.4 in October. The lockdown and pandemic control restrictions during the best part of November when the survey took place weighed on economic activities, especially services. Investors will tend to look beyond this number and focus on the scope and pace of the easing of the pandemic restriction undergoing in China. Beijing, Shanghai, Hangzhou, Tianjin, Guangzhou and other large cities eased Covid policies Cities in China, one after one, announced to ease pandemic control restrictions including removing the requirement to show negative PCR test results when taking public transportation. Shanghai and Hangzhou joined the others on Sunday and announced that the cities no longer require negative PCR test results to enter public venues or taking public transportation. Economic reopening plays and commodities will be in focus this week with China easing some COVID restrictions On Monday, Shanghai and Hangzhou scrapped PCR testing to enter public venues including on public transport and to enter parks. Shanghai and Hangzhou joined other top-tier cities, Beijing, Shenzhen and Guangzhou in relaxing curbs after mass protests took place against China’s stringent policies last week. In equites, focus will be on markets being forwarding looking and hoping of a potential turnaround in consumption, especially cities with easing restrictions.   Another BOJ official fuels policy review speculation New BOJ board member Naoki Tamura urged a policy review, in his conversation with Bloomberg, saying that it would be appropriate for the central bank to conduct a review at the right time – soon or a little later depending on what happens to prices. The yen rose on speculation an assessment flagging policy change may come before Haruhiko Kuroda steps down in the spring. OPEC+ held production unchanged The OPEC+ group decided to keep the current production levels unchanged, as the crude oil prices started to show some tentative signs of a recovery after China’s continued commitment to ease its Zero covid policies. Still, a 2mb/d cut was announced in October, and the full effect of that is yet to be seen. Furthermore, there is volatility expected due to the EU sanctions and a G7 price cap on Russian crude which will go into effect this week, and further changes in China’s zero covid policy are also set to continue. The group’s next meeting is not scheduled until February. EU sets in a price cap for Russian oil, to kick in from today The EU nations have agreed to cap the price of Russian seaborne oil at $60/barrel, with a motive to diminish Russia’s revenues, paving the way for a wider deal with the G7 countries. This price cap is to go in effect on December 5, and represents a discount of ~$27 to the current price for Brent crude, but Urals has been trading at a discount of about $23 in recent days. However the risk of setting a price cap too low is that Russia could slash its output, which would roil markets. It will be important to watch for Russia’s reaction this week, after Putin has repeatedly said that they will not supply oil to countries that implement the price cap.   For a global look at markets – tune into our Podcast. Source: Market Insights Today: Hot US jobs report; No production cut from OPEC – 5 December 2022 | Saxo Group (home.saxo)
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

The RBA Expected To Make Its 3rd Consecutive Quarter-Point Hike

Saxo Bank Saxo Bank 05.12.2022 09:01
Summary:  Last week, bonds, commodities, and equities markets got a lift from a Powell speech that seems to have passed the peak hawkishness for now and a new round of encouraging signs of easing pandemic control restrictions in China and braved the hotter-than-expected wage inflation data on Friday. A light economic and earnings calendar plus the Fed entering into a blackout period before the December FOMC, this week will provide investors time to reassess and rebalance their portfolios in the final month of the year. In China, the politburo meeting will be a key event to monitor. US data watch continues as Fed goes into a quiet period Last week was quite a whipsaw for the markets after a dovish reaction to Fed Chair Powell’s speech which failed to add any new information for the markets that have been trained for a hawkish surprise from him over the last few months, to an expectedly higher US NFP print and a jump in the average hourly earnings data for November as well as October revision on Friday which showed sustained tightness in the labor markets. The Fed now goes into a quiet period ahead of the December 14-15 meeting so the focus turns to incoming data (or WSJ’s Nick Timiraos articles/tweets) for further direction in the yields and the dollar. US 10-year yields traded below the support at 3.50% at Friday’s close despite turning higher after the NFP, and the reaction of the dollar was also short-lived. Key data to watch this week will be the ISM services today, to see if the market is gaining sensitivity to recession concerns or still trying to celebrate the slower pace of rate hikes, and PPI on Friday which will likely continue to show a modest deceleration. China’s Politburo meeting is a key event to watch Before the Central Economic Work Conference convenes in mid/late December, the Chinese Communist Party’s Politburo will meet in early December to discuss economic policies and establish the direction and policy framework for the work conference. Investors will pay close attention to the readout from the Politburo meeting for hints about the macroeconomic policy priorities and how they are balanced with the pandemic control strategy. China’s inflation is expected to have moderated in November The Bloomberg consensus is expecting China’s PPI to shrink further by -1.5% Y/Y in November (vs Oct: -1.3% Y/Y) and CPI to slow to +1.6% in November from +2.1% in October. Weak industrial demand in the midst of countrywide pandemic control-related restrictions during the month and weakness in energy prices would likely have contributed to the decline in the PPI. November CPI would have been dragged by base effects and weakness in food prices. China’s new aggregate financing and RMB loans are expected to have bounced in November Market economists, as surveyed by Bloomberg, are expecting China’s new aggregate financing to bounce to RMB 2,100 billion in November from RMB 907.9 billion in October and new RMB loans to rise to RMB 1,350 billion in November from RMB 615.2 billion as People’s Bank of China urged banks to extend credits to support private enterprises including property developers. Less bond issuance by local governments and corporate and weak loan demand however might have weighed on the pace of credit expansion in November. Australia’s central bank to hike rates by 0.25% for the third straight month. What else to watch down under? On Tuesday the Australian dollar will be a focus with the RBA expected to make its 3rd consecutive quarter-point hike, taking the cash rate from 2.85% to 3.1%. Australian monthly inflation data out two weeks ago showed AU inflation is slowing, while weaker than expected jobs data also supports the RBA remaining dovish. However, the closely watched inflation quarterly print is due out early next year, and will be a more accurate reflection of price rises. It will likely show inflation is more sticky with food and energy prices rising, which is contrary to what the monthly CPI alluded to. The bottom line is, the monthly CPI was a little delusionary. At Saxo, we see energy prices continuing to rise into 2023, which is also line with the RBA’s view. Especially as coal prices are back at record high territory ahead of peak demand season. Meanwhile consider the AUDUSD is up ~10% from its October low on hopes of commodity demand picking up from China, with major cities increasingly start to ease restrictions. As for what else to watch in Australia; third-quarter GDP growth data is released on Wednesday; expected to show GDP grew at 6.2% YoY. Then on, Thursday Australia’s trade data and balance is released for October; expected to show a softening, with the trade surplus expected to fall from $12.4 billion to $11.8 billion. Still the AUDUSD is up ~10% from its October low on forwarding thinking that commodity demand from China will increase as some major cities have started to ease restrictions. G7 sets in a price cap for Russian oil, to kick in from Monday The G7 nations have agreed to cap the price of Russian seaborne oil at $60/barrel, with a motive to diminish Russia’s revenues. This price cap is to go in effect on December 5, and represents a discount of ~$27 to the current price for Brent crude, but Urals has been trading at a discount of about $23 in recent days. However the risk of setting a price cap too low is that Russia could slash its output, which would roil markets. It will be important to watch for Russia’s reaction this week, after Putin has repeatedly said that they will not supply oil to countries that implement the price cap. Key earnings Earnings next week are a mish-mash of companies, and include high-end homebuilder Toll Brothers on Tuesday, as it will be interesting to hear their outlook on the new home market after the enormous surge in US mortgage rates and collapse in home sales activity. Broadcom (AVGO: xnas) is the market cap giant of the week to report, with the CEO of the company having said that the semiconductor market will not be affected by the US’ new export restrictions on technology to China.   Key economic releases & central bank meetings this week Monday, Dec 5 U.S. ISM Services (Nov)Eurozone Sentix (Dec)Eurozone Retail Sales (Oct)China Caixin PMI Services (Nov)Singapore Retail Sales (Oct) Tuesday, Dec 6 Germany Factory Orders (Oct)U.K. PMI Construction (Nov)Japan Consumer Spending (Oct)Japan Total Cash Earnings (Oct)Australia Reserve Bank of Australia Policy Meeting (Dec) Wednesday, Dec 7 Germany Industrial Production (Oct)Eurozone GDP (Q3, final)Japan Reuters Tankan (Manufacturing) (Dec)Japan Economic Coincident Index (Oct)China Exports (Nov)Australia Real GDP (Q3) Thursday, Dec 8 U.S. Initial Jobless Claims (Dec 3)Japan GDP (Q3, sec)Japan Current Account (Oct) Friday, Dec 9 U.S. PPIU.S. University of Michigan Consumer Sentiment (Dec)Japan M2 (Nov)China PPI (Nov)China CPI (Nov) From Dec 9 to 15 (not fixed) China New RMB Loans, Aggregate Financing, and Money Supply (Nov) Key earnings releases this week Tuesday: MongoDB, AutoZone, Toll Brothers, FergusonWednesday: Brown Forman, Campbell Soup, GameStopThursday: Broadcom, Costco, Lululemon, ChewyFriday: Oracle Corp, Li Auto Source: Saxo Spotlight: What’s on the radar for investors & traders for the week of 5-9 Dec? US PPI, China’s Politburo meeting, RBA policy meeting | Saxo Group (home.saxo)      
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Crude Oil Volatility Will Likely Pick Up This Week

Saxo Bank Saxo Bank 05.12.2022 09:07
Summary:  Today's financial insights for investors & traders:- Economic reopening plays, iron ore, copper and oil rally on China easing restrictions. Coal trades back at record highs and stocks exposed to China rip higher. Fortescue Metals shares are back in record high territory. Here are the Saxo equity baskets and stocks to watch, plus what's ahead this week, in this six minute video. Economic reopening plays and commodities will be in focus this week with China easing some COVID restrictions On Monday, Shanghai and Hangzhou scrapped PCR testing to enter public venues including on public transport and to enter parks. Shanghai and Hangzhou joined other top-tier cities, Beijing, Shenzhen and Guangzhou in relaxing curbs after mass protests took place against China’s stringent policies last week.In equites, which are forward looking – focus will be on stocks exposed to a potential turnaround in consumption, especially in cities with easing restrictions. Reflecting on Saxo's equity baskets, the best returns in markets on Friday, over the week, and month, have been in in Saxo’s China Consumer and Technology basket.  In Saxo basket you see stocks like Nio, Alibaba are up 40% on the month, Tencent is up 24%, while consumer spending giant JD.com is up 50%. Recall that Hangzhou is home of Alibaba so its rally continue with restrictions easing there from today.Meanwhile Commodities will also be a focus will be on oil with its trading back above US$81, and posting its biggest weekly gain on hopes that demand will increase from China. OPEC+ met at the weekend they committed to their targets for the rest of 2032. We think oil volatility will likely pick up this week with Venezuela’s top refinery halting gas output after a malfunction while further cities in China may also ease some restrictions. Australia’s share market, home of some of the commodity kings, hit a new high on China easing restrictions The benchmark index, the ASX200 (ASXSP200.1) hit a new seven month high on Monday and momentum could continue with China’s easing some restrictions today. The iron ore (SCOA) price rose 2.3% move the steel ingredients’ price back over back above $100 for the first time since August, on hope China could increase demand. The iron ore price is up 38% from its October low. This is benefiting benefit forward earnings of BHP, Rio, Fortescue and Champion Iron with all their shares trading higher today, with those most exposed to China seeing the biggest rallies. Fortescue shares are up 8% taking the miner back to record highs. To get more inspiration on stocks exposed to China in commodities, use Saxo’s Australian Resources basket Foreign Exchange traders will be busy this week; RBA meets, before the Fed next week The US dollar is higher against most G-10 pairs, with the New Zealand dollar leading risk currencies lower. Why? The market is focused on the Fed’s meeting next week after hotter than expected US jobs report. Still, the US dollar, against most currencies (as measured by the (DXY) is near a five-month low after losing 8.4% from its high; with US inflation cooling and investors betting the Fed will only hike rates by 50 basis points (0.5%) at their December meeting next. Currencies to watch include the AUDUSD, as the RBA meets on Tuesday December 6. The RBA is expected to make its 3rd consecutive quarter-point (0.25%) hike in the cash rate, which will take the cash rate from 2.85% to 3.1%. AUDUSD is up ~10% from its October low on forwarding thinking that commodity demand from China will increase as some major cities have started to ease restrictions.   For a weekly look at what to watch in markets - tune into our Spotlight.For a global look at markets – tune into our Podcast. Source: Financial insights for investors & traders: Economic reopening plays, iron ore, oil rally on China easing restrictions. What's ahead | Saxo Group (home.saxo)    
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

The EU Nations Have Agreed To Cap The Price Of Russian Seaborne Oil

Saxo Bank Saxo Bank 05.12.2022 09:15
Summary:  Strong US November payrolls and especially strong earnings growth data failed to engineer a recovery in US treasury yields or the US dollar, taking both to new cycle lows, which kept global risk sentiment on an even keel for now after the recent rally. Focus tonight swings to Australia’s Reserve Bank which has lagged its global peers in this policy tightening cycle and kept a lid on the Aussie in the crosses, even as hopes for China’s “opening up” have found further encouragement.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continued in Friday’s session to fade the big rally back from Wednesday last week but did however recover from a big dip during the session with S&P 500 futures finishing above the 200-day moving average. This morning S&P 500 futures are trading lower with the 200-day moving average again being key to watch on the downside and then of course the big 4,000 level. There are no major earnings today and the VIX Index remains relatively calm sitting just above the 19 level. The US 10-year yield also remains in a downward trend adding little headwinds to US equities at this point. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and China equity markets surged on yet more signs of easing of Covid-related restriction measures in mainland China. Hang Seng Index soared 3.5% and CSI 300 gained 1.6%. Hang Seng TECH Index rallied 7.4%. Technology stocks, online healthcare platforms, EV makers, and consumer stocks led the charge higher. Bilibili (09626:xhkg) jumped 24% and Alibaba (09988:xhkg) surged 7%. EV maker XPeng (09868:xhkg) soared more than 22%. Leading Chinese catering stocks gained over 10%. USD lower even as earnings data well above expectations The US November payrolls and earnings data (more below) was stronger than expected Friday, which briefly jolted US yields and the US dollar stronger, only to see both rolling back over ahead of the close on Friday and then the US dollar following through lower still to new cycle lows in many places in Asia overnight. USDCNH plunged through 7.00 and EURUSD set a new multi-month high above 1.0550, for example. US data this week is sparse after today’s November ISM Services (that survey’s relative strength compared to the S&P Global measure, which has suggested contraction in the US Services sector for the last five months) as we await next Tuesday’s November CPI data and the FOMC meeting the following day. Without a revival in US treasury yields, the US dollar’s only source of support might be a fresh weakening of risk sentiment. Gold (XAUUSD) and Silver (XAGUSD) poised for further upside The supportive factors for precious metals continue to line up – China’s reopening, lower US yields and a weaker dollar. This helped gold run higher to test a break above the key $1800 level for the first time since August. Meanwhile, silver’s impressive November rally has extended into December with the price breaking above $22.25 – a 50% retracement of the March to September selloff – and on route to the next level of resistance at $23.35. Other metals such as copper and iron ore also charged with China now reopening Shanghai, while the risk of a policy error by the Fed continues to run high. Crude oil (CLF3 & LCOF3) lower on unchanged OPEC+ output After strong gains in crude oil last week, some softness was seen at the end of the week after speculation of no production cut from OPEC mounted. WTI traded back to $80/barrel from $83 levels mid-week on China’s reopening optimism, while Brent retreated from $90 levels to sub-86. The Sunday OPEC meeting did come out with an unchanged output decision, as expected, while the EU’s price cap on Russian oil was also fixed at $60. This week will be key to watch further China reopening and any signs of a retaliation from Russia on the price cap. European gas prices also continue to pick up as falling weather boosts heating demand, and expectations are for a colder-than-expected winter. US treasuries unmoved by strong US payrolls/earnings data (TLT:xnas, IEF:xnas, SHY:xnas) The stronger than expected US payrolls and earnings data failed to inspire a sustained recovery in US yields on Friday, as the US 10-year yield continues to hover near the 3.50% level, having dipped slightly below at times. This was a major high in that important benchmark yield back in June. The strong data pushed the 2-10 yield spread inversion back toward the cycle low of –80 basis points. What is going on? Hot US jobs report takes Fed terminal rate back toward 5.0% The nonfarm payroll change (NFP) data came out stronger-than-expected on Friday, with US employers added 263,000 jobs in November, less than October's upwardly revised 284,000 but well short of the turning point Fed officials seek in their battle against inflation. The unemployment rate was maintained at 3.7% (but with a 0.2% drop in the participation rate, showing once again a discrepancy in the household survey vs. the establishment survey used for the nonfarm payrolls calculation) while the wages were very hot: M/M rose 0.6% (exp. 0.3%) and Y/Y rose 5.1% (exp. 4.6%). After a few weeks where markets have been taking the slowdown in the pace of rate hikes by the Fed positively, this report was a reminder that rate hikes will continue well into 2023. WSJ's Fed Whisperer Timiraos said the report keeps the Fed on track to raise interest rates by 50bps at its meeting in two weeks and underscores the risk that officials will raise rates above 5% in the first half of next year. Another BOJ official fuels policy review speculation New BOJ board member Naoki Tamura urged a policy review, in his conversation with Bloomberg, saying that it would be appropriate for the central bank to conduct a review at the right time – soon or a little later depending on what happens to prices. USDJPY was quiet overnight after the exchange rate touched the 200-day moving average on Friday and near where it trades this morning in early European hours at 134.60. OPEC+ held production unchanged The OPEC+ group decided to keep the current production levels unchanged, as the crude oil prices started to show some tentative signs of a recovery after China’s continued commitment to ease its Zero covid policies. Still, a 2mb/d cut was announced in October, and the full effect of that is yet to be seen. Furthermore, there is volatility expected due to the EU sanctions and a G7 price cap on Russian crude which will go into effect this week, and further changes in China’s zero covid policy are also set to continue. The group’s next meeting is in February. Beijing, Shanghai and other large cities in China eased Covid policies Cities in China, one after one, announced to ease pandemic control restrictions including removing the requirement to show negative PCR test results when taking public transportation. Shanghai and Hangzhou joined the others on Sunday and announced that the cities no longer require negative PCR test results to enter public venues or take public transportation. EU sets in a price cap for Russian oil, to kick in from today The EU nations have agreed to cap the price of Russian seaborne oil at $60/barrel, with a motive to diminish Russia’s revenues, paving the way for a wider deal with the G7 countries. This price cap is to go in effect on December 5 and represents a discount of ~$27 to the current price for Brent crude, but Urals has been trading at a discount of about $23 in recent days. However, the risk of setting a price cap too low is that Russia could slash its output, which would roil markets. It will be important to watch for Russia’s reaction this week, after Putin has repeatedly said that they will not supply oil to countries that implement the price cap. Commodities pegged to China jolt higher Australia’s commodity heavy benchmark index, the ASX200 (ASXSP200.1) hit a new seven month high on Monday as China further eased restrictions in two major provinces. The iron ore (SCOA, SCOF3) price rose 2.2% in APAC trade, taking the steel ingredients’ price over $100 for the first time since August (to $108.30) on hopes China could increase demand. The iron ore price is up 38% from its October low. This is benefiting benefit forward earnings of BHP, Rio, Fortescue and Champion Iron with their shares trading higher today in Australia. Fortescue shares rose 7% taking the iron ore major’s shares to record highs. For inspiration on other commodity stocks exposed to China refer to Saxo’s Australian Resources basket. What are we watching next? Australia RBA’s Cash Target announcement tonight after hot November inflation data The Australia Melbourne Institute Inflation reading for November came out at +1.0% MoM and +5.9% YoY, both new highs for the cycle (the official inflation for October was out last week and was considerably softer than expected) ahead of tonight’s RBA meeting. The RBA has hiked rates at a more cautious pace than many of its peers and consensus is only slightly more than 50/50 that the central bank will hike another 25 basis points at its monthly meeting tonight, which would take the rate to 3.10%. The RBA has maintained a cautious stance on further policy tightening, quite concerned about the impact on households as rises in the adjustable mortgage rates impact disposable income. China’s Politburo meeting is a key event to watch Before the Central Economic Work Conference convenes in mid/late December, the Chinese Communist Party’s Politburo will meet in early December to discuss economic policies and establish the direction and policy framework for the work conference. Investors will pay close attention to the readout from the Politburo meeting for hints about the macroeconomic policy priorities and how they are balanced with the pandemic control strategy. Earnings to watch Earnings this week are a mish-mash of companies, and include high-end homebuilder Toll Brothers on Tuesday, as it will be interesting to hear their outlook on the new home market after the enormous surge in US mortgage rates and collapse in home sales activity. Broadcom (AVGO:xnas) is the market cap giant of the week to report, with the CEO of the company having said that the semiconductor market will not be affected by the US’ new export restrictions on technology to China. Tuesday:  MongoDB, AutoZone, Toll Brothers, Ferguson Wednesday: Brown Forman, Campbell Soup, GameStop Thursday: Broadcom, Costco, Lululemon, Chewy Friday: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Nov. Final Services PMI 0830 – Sweden Riksbank Meeting Minutes 0930 – UK Nov. Final Services PMI 1000 – Eurozone Oct. Retail Sales 1330 – Canada Oct. Building Permits 1445 – US S&P Global Nov. Final Services PMI 1500 – US Oct. Factory Orders 1500 – US Nov. ISM Services 1600 – ECB's Wunsch to speak 2330 – Japan Oct. Labor Cash Earnings 0330 – Australia RBA Cash Target Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Source: Financial Markets Today: Quick Take – December 5, 2022 | Saxo Group (home.saxo)
The Indian Sugar Mills Association (ISMA) Shows That Domestic Sugar Production Rose

The Indian Sugar Mills Association (ISMA) Shows That Domestic Sugar Production Rose

ING Economics ING Economics 05.12.2022 09:17
The EU ban on Russian seaborne crude oil comes into force today, along with the G-7 price cap for Russian oil. Meanwhile, OPEC+ agreed to leave output targets unchanged at its meeting yesterday despite the uncertain demand outlook Source: Flickr Energy: OPEC+ policy remains unchanged The OPEC+ meeting yesterday was a fairly quick affair with the group deciding to leave output policy unchanged. As a result, the group will continue with its cuts of a little over 1MMbbls/d which were announced back in October. OPEC+ will next meet in June, although given the amount of uncertainty, one cannot rule out the potential need of calling for a meeting in the interim. EU members finally agreed on a level for the Russian oil price cap at the end of last week. The EU agreed on a cap of US$60/bbl, which is below the initial proposal of US$65-70/bbl. However, the cap is still above what Russia will be receiving for its Urals, which calls into question how effective the cap will be at the moment. The price cap comes into force today, along with the EU’s ban on Russian crude oil. The level of the cap suggests that we are unlikely to see Russia reducing output as a result. Despite no change in OPEC+ policy and the high level of the price cap, oil prices have been well supported so far in trading today. A further relaxation in China’s Covid restrictions has proven supportive for the market. The latest market positioning data shows that speculators continued to reduce their net long in ICE Brent over the last reporting week. Speculators reduced their net long by 38,837 lots to leave them with a net long of 99,211 lots as of last Tuesday. This is the smallest net long speculators have held since November 2020 and reflects growing demand concerns. Metals: Edging higher as China eases Covid restrictions Copper has continued its rally today after the latest move by Chinese authorities, which sees an easing Covid in testing requirements across major cities. Meanwhile, recent efforts by the Chinese government to revive its property sector have also supported the metals complex. The latest data from Shanghai Futures Exchange (ShFE) shows that weekly inventories for zinc dropped by 2.5kt (-12% WoW) to 17.9kt (fresh record lows) as of Friday. Among other metals, aluminium stocks fell by 14.5kt (-13% WoW) for a seventh consecutive week to 95.5kt (lowest since 2016) as of last week. According to reports, IGO has suspended production at its Nova nickel operation in Western Australia after a fire damaged its power station over the weekend. The company expects that the restoration of full power supply could take up to four weeks. Nova produced 26.7kt of nickel in the last financial year. Agriculture: Ukraine grain shipments continue to lag The latest data from Ukraine’s Agriculture Ministry shows that Ukraine has exported around 18.1mt of grains so far in the 2022/23 season, a decline of 30% from the same period last year. Total corn shipments stood at 9.7mt (+63% YoY), while wheat exports fell 53% year-on-year to 6.9mt as of 2 December. Data from the Indian Sugar Mills Association (ISMA) shows that domestic sugar production rose 1.5% YoY to 4.79mt (until 30 November) in the current 2022/23 marketing year. ISMA also reported that 434 mills were crushing sugar cane by the end of last month compared with 416 operating mills a year earlier. Read this article on THINK TagsRussian oil price cap Russian oil ban OPEC+ China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Weaker Crude Oil Prices Undermine The Loonie Pair (USD/CAD)

Oil Prices Has Gave A Support To The Canadian Dollar (CAD)

TeleTrade Comments TeleTrade Comments 05.12.2022 09:34
USD/CAD is at a make or a break near the round-levels support of 1.3400. Upbeat US Nonfarm Payrolls have failed to provide a cushion to the US Dollar. The Bank of Canada is set to hike its interest rates by 50 bps consecutively for the second time. USD/CAD is expected to deliver more losses on a breakdown of the Ascending Triangle pattern. USD/CAD has witnessed a sheer downside after surrendering the critical support of 1.3442 in the Asian session. The loonie asset has dropped firmly below the round-level support of 1.3400 in the Tokyo session as a significant improvement in risk appetite has impacted the US Dollar. The US Dollar Index (DXY) has turned sideways after registering a fresh five-month low at 104.14. The USD Index is expected to extend its losses ahead as the risk-on impulse has strengthened dramatically. The US Dollar is facing immense pressure as the Federal Reserve (Fed) is shifting its mindset towards a slow rate hike culture to safeguard the United States economy from financial risks. S&P500 futures are displaying a lackluster performance as investors are awaiting the release of US ISM Services PMI data for fresh impetus. Meanwhile, the 10-year US Treasury yields have recovered firmly to near 3.53% on upbeat US Nonfarm Payrolls (NFP) data. Also, hawkish commentary from the Federal Reserve policymaker about interest rate peak has weakened US Treasury bonds. Chicago Fed President Charles Evans said on Friday, "We are probably going to have a slightly higher peak to Fed policy rate even as we slow pace of rate hikes," reported Reuters. Upbeat US Nonfarm Payrolls failed to provide cushion to the US Dollar Markets participants were expecting that only better-than-projected US labor market data could add life to the US Dollar. The Greenback has been facing immense pressure from investors after Federal Reserve policymakers started sounding ‘less hawkish’ on interest rate guidance. On the labor front, the United States economy added 261K fresh jobs against the projections of 200K. The jobless rate remained unchanged at 3.7%. The catalyst that could support the US Dollar ahead is the improvement in Average earnings data. The labor cost index has improved to 5.1%. Robust labor demand along with higher wage rates possess the capability of accelerating inflation as higher wages would force households to more spending on durables. This could refresh troubles for Federal Reserve chair Jerome Powell. Recovery in oil prices and upbeat Canadian employment data supported the Canadian Dollar The Canadian Dollar has been supported by a recovery in oil prices and better-than-projected payroll data.  Oil prices recovered sharply amid multiple tailwinds. Easing lockdown curbs in China and upbeats US Nonfarm Payrolls (NFP) data strengthened global economic projections. It is worth noting that Canada is a leading oil exporter to the United States economy and solid oil prices support the Canadian Dollar.   The Canadian economy added 10.1K jobs in November vs. the projections of 5K. Also, the Unemployment Rate has eased to 5.1% against the projections of 5.3%. This is going to delight the Bank of Canada (BOC) to announce a higher rate hike in its mission of bringing price stability. Bank of Canada is set to hike interest rates further Canada’s inflation rate remained unchanged in October at 6.9%, which indicates that the Bank of Canada is required to continue its policy tightening measures further to curtail inflationary pressures. In October’s monetary policy, Bank of Canada Governor Tiff Macklem hiked interest rates by 50 basis points (bps). As per the estimates from CIBC, the Canada central bank will continue its 50 bps rate hike regime. Analysts at CIBC point out that the Bank of Canada will increase rates by 50 bps on Wednesday, before pausing in 2023. A 50 bps rate hike by the Bank of Canada will accelerate the interest rate to 4.25%. This is going to widen the BOC-Fed policy divergence, which is impacting the Loonie asset for now. USD/CAD technical outlook USD/CAD is at a make or a break near the edge of the upward-sloping trendline of the Ascending Triangle chart pattern on a four-hour scale. The upward-sloping trendline of the chart pattern is placed from November 16 low at 1.3228 while the horizontal resistance is plotted from November 10 high at 1.3571. The Loonie asset has dropped below the 50-and 200-period Exponential Moving Averages (EMAs) at 1.3436 and 1.3459 respectively, which indicates that the short-term and long-term trend is bearish. Meanwhile, the Relative Strength Index (RSI) (14) is hovering around 40.00.  A breakdown of the same will trigger a bearish momentum.     search   g_translate    
Euro-dollar Support Tested Amidst Rate Concerns and Labor Strikes

Chinese Stocks Rallied On Easing Covid Measures | US Dollar (USD) Gained

Swissquote Bank Swissquote Bank 05.12.2022 10:15
US stocks fell on Friday, after the latest data showed that Americans got more jobs in November, and more importantly they got a better pay. More, and better paid jobs fueled US inflation expectations, boosted the Fed hawks, and brought forward the idea that the Fed could be attracted by another, a fifth 75bp hike in the December meeting. US US equities fell and the dollar gained, but the post-NFP pricing fully disappeared. The US dollar kicked off the week on a weak footage – a pricing that raises a flashy red flag. Energy market In energy, the weekend was rather eventless, as OPEC decided to maintain its daily output restriction unchanged at 2mio barrels per day at Sunday’s meeting, which could be seen as a negative development for the bulls. But there are two price-supportive developments that could limit losses and support gains. Watch the full episode to find out more! 0:00 Intro 0:34 What happened to post-NFP pricing?! 4:16 USD will likely soften, but it won’t be a one-way trade… 6:39 OPEC's output cut unchanged, EU sets price cap on Russian oil 7:39 Chinese stocks rallied on easing Covid measures. Time to jump in? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #USD #NFP #jobs #unemployment #data #Fed #expectations #EUR #GBP #crudeoil #EU #Russia #oil #cap #OPEC #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

The Focus Will Be On The RBA Commentary | Crude Oil Pulled Back

Saxo Bank Saxo Bank 06.12.2022 08:43
Summary:  U.S. stocks and bonds sold off on Monday. On the back of the wage inflation in the job report released last Friday, the ISM Services Index and its employment and price-paid sub-indices on Monday increased the uncertainty of the Fed’s interest path in 2023 as officials would now need to think twice before slowing the pace of rate hikes. China and Hong Kong stocks surged on more signs of China loosening Covid restrictions. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) sold off on a solid ISM Services report After an unexpectedly strong ISM Services, U.S. equities sold off. S&P 500 dropped by 1.8% and Nasdaq 100 lost 1.7%. The selloff was broad-based as all 11 sectors within the S&P 500 pulled back, with consumer discretionary, energy, and financials being the top losers. Within the financial sector, regional banks were the worst performers. Telsa (TSLA:xnas) plunged 6.4% on reports that the EV maker plans to cut production in its Shanghai factory. VF Corp (VFC:xnys) dropped by 11.1% after the maker of the North Face and Vans brands, cut revenue and earnings outlooks and announced the retirement of its Chairman and CEO. United Airlines shares gained 2.6% after a leading U.S. investment bank upgraded the airliner on expecting 2023 travel to be a ’goldilocks’ year with earnings to pick up.  US treasuries (TLT:xnas, IEF:xnas, SHY:xnas) sold off with yields higher on a hot ISM Service Index U.S. treasuries sold off and yields surged after a strong ISM Service Index that came in with a rise in the headline to 56.5 and the employment sub-index back to expansion while price-paid moderating only slightly and remaining in strong expansion territory. Wall Street Journal’s Nick Timiraos, who is considered by market participants of the Fed’ media mouthpiece, said in his latest article that “ elevated wage pressures could lead [the Fed officials] to continue lifting [the Fed fund target] to higher levels than investors currently expect”. The 2-year yield surged 12bps to 4.39% and the 10-year yield climbed 9bps to 3.57%. The 2-10 year curve further inverted to minus 81bps. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) rallied strongly on the loosening of Covid-restrictions Hong Kong and China equity markets surged on yet more signs of the easing of Covid-related restriction measures in mainland China. Hang Seng Index gained 4.5% and CSI 300 climbed 2%. Hang Seng TECH Index soared 9.3%. Technology names, online healthcare platforms, EV makers, and Chinese developers led the charge higher.  Bilibili (09626:xhkg) jumped nearly 29%. Alibaba (09988:xhkg) surged 9.3% and Tencent (00700:xhkg) climbed 7.1%. Tech hardware names performed strongly, with Sunny Optical (02382:xhkg) up 10.1% and Xiaomi (01810:xhkg) rising 13.6%. EV maker XPeng (09868:xhkg) soared more than 26%, followed by Nio (09866:xhkg) up 14.9% and Li Auto (02015:xhkg) up 12.2%. Online healthcare platforms were among the top gainers, with Alibaba Health (00241:xhkg) surging nearly 20% and JD Health (06618:xhkg) advancing 15%. Shares of leading Chinese developers gained. Longfor (00960:xhkg) rose 17.1% and CIFI (00884:xhkg) jumped nearly 24%. Macau casino shares soared by 15%-20%. In A shares, infrastructures and financials were among the top performers. Australia’s share market rally halts, metal prices head lower, coal stocks surge. RBA decision ahead  The Australian benchmark index, the ASX200 (ASXSP200.1) today is lower on Tuesday, following global markets; with selling in oil, gas, and gold stocks dragging down the market. As a result, the ASX200 stumbled from its seven-month high on expectations the Fed might keep rates higher for longer, which is also why interest rate sensitive stocks such as Block (SQ2) are in the loser board, down 5.3%, taking its year to date loss to 51%. While on the upside, coal stocks such as New Hope Corp (NHC) are up 2% with Whitehaven (WHC) up 1.2% supported higher by the coal Newcastle futures price heading back toward its record all-time high, on expectations coal demand will peak up.  FX and Commodities Oil pulled back 3.8% and gold plunged 1.6% as the US dollar rallied and bond yield rose. Iron ore (SCOA) fell 1.7% but held onto near its fresh highs of $106.50. USDJPY bounced 1.6% to 136.43. The Chinese renminbi strengthened versus the dollar to 6.9560 on more signs of China reopening from Covid restrictions.   What to consider? U.S. ISM Services Index unexpectedly rose by 2.1pp to 56.5 The U.S.’ November ISM Services Index came in at 56.5, which is 2.1 percentage points higher than October’s 54.4 and is way above the consensus estimate of 53.5. The business activity sub-index jumped 9pp to 64.7, the higher level since last December. The employment sub-index bounced to 51.5, back to the expansion territory, from 49.1 in October. The price paid sub-index remained at an elevated level of 70, down only modestly from 70.7 in October. China may roll out 10 additional measures to loosen Covid restrictions Reuters, citing “sources with knowledge of the matter”, reports that China “may announce 10 new COVID-19 easing measures as early as Wednesday” and downgrade the containment of COVID-19 to Category B management or even Category C, which are less stringent. Category A covers highly transmissible and deadly diseases such as bubonic plague and cholera. Category B includes SARS, anthrax, and AIDS while Category C has diseases such as influenza, leprosy, and mumps. The major focus in Australia is on the outcome of the RBA meeting today   At 2.30 pm Sydney time, Australia’s central bank is expected to hike rates by a quarter-point (0.25%) for the third straight month, which will take the cash rate from 2.85% to 3.1%. The focus will be on RBA commentary potentially ending its rate hike cycle, given that Australian households have the highest debt-to-income ratios in the world; with indebted households highly vulnerable to tightening, with loan arrears and insolvencies increasing. Look for color in the RBA statement that may allude to the RBA pausing rate hikes in early 2023. Lenders in Australia, Commonwealth Bank (CBA), ANZ (ANZ), Westpac (WBC), and National Australia Bank (NAB), as well as Suncorp (SUN) and Bank of Queensland (BOQ) will be on watch as they have been experiencing smaller profits as the property market is at breaking point with mortgage holders under stress. However, insurance companies are continuing to benefit from higher rates and are worth watching. Insurance company QBE Insurance (QBE) is trading up 9.2% this year and is a buy side analyst favorite. For more Australian buy-side analyst favouities, click here. If the RBA mentions a potential rate hike pause, you could expect banks to rally as well as REITs. For a list of Australian REITs, refer to Saxo’s Australian REIT stock basket. Caixin Services PMI slid further into contraction China’s services sector shrank deeper into contraction in November according to the Caixin Services PMI, which came in at 46.7 below both the consensus estimate (48.0) and the prior month (48.4). Covid containment measures weighed on business operations and consumer demand. China’s Xi is attending a China-Arab summit this week in Saudi Arabia China President Xi Jinping is expected to fly to Saudi Arabia on Dec 9 to attend a China-Arab summit. Saudi Arabia is the largest supplier of crude oil to China. China has been pursuing a grand strategy to move westward to secure ties with countries in Central Asia and the Middle East.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Market Insights Today: U.S. Stocks and bonds sold off on a solid ISM Services print – 6 December 2022 | Saxo Group (home.saxo)
The US Dollar Index Is Producing A Reasonable Bullish Divergence

Saudi Arabia And Hong Kong End Their Currency Pegs To The USD

Saxo Bank Saxo Bank 06.12.2022 09:28
Summary:  Recognising the ongoing weaponisation of the USD by the US government, non-US allied countries move to leave the USD and the IMF to create an international clearing union (ICU) and a new reserve asset, the Bancor (currency code KEY), using Keynes’ original idea from the pre-Bretton Woods days to thumb its nose at the practices of the US in leveraging its power over the international monetary system. While less than a fifth of international trade is destined for the US, over a third of international trade is invoiced in USD and nearly 60 percent of global foreign exchange reserves are USD. The ban on transactions with Russian sovereign entities in February 2022 after Russia’s invasion of Ukraine sent shockwaves across countries not allied militarily with the US as the magnitude of the ban far exceeded sanctions on Iran, Venezuela and other countries in recent decades. These countries wonder whether their US assets—and even EUR, JPY and GBP assets—could be subjected to freeze orders imposed by the US Treasury and other US allies overnight.   Many have speculated that the Chinese renminbi might become the new reserve currency, but China has shown no interest in abandoning cross-border capital controls. Another important aspect hampering the use of CNH in trade is that many non-US allies are wary of China’s rise in influence and power.   Rather, a natural solution for China and its many trading partners, particularly energy and other commodities exporters, would be to find a new non-national currency reserve asset upon which to trade. They find inspiration in British economist John Maynard Keynes’ playbook for reconstructing a post-World War II international monetary system without a hegemon. In an epochal conference convened in Astana, Kazakhstan, leaders from OPEC+ countries, mainland China, Hong Kong, India, Brazil, Pakistan, Central Asia countries, and tens of African Union countries gather to establish an ICU based on a new accounting unit and reserve asset: the Bancor (currency code KEY). The KEY can only be held by member central banks and is used as an accounting unit to settle international trades and as a reserve asset. The new KEY is indexed to a basket of traded commodities with crude oil having the largest weight. The currencies of member countries are backed by the KEY at fixed exchange rates and are adjusted according to relative current account shifts among member countries. All the ICU member countries of the newly created monetary union withdraw from the IMF. Saudi Arabia and Hong Kong end their currency pegs to the USD.  Market impact: Non-aligned central banks vastly cut their USD reserves, US Treasury yields soar and the USD falls 25 percent versus a basket of currencies trading with the new KEY asset.    Source: OPEC+ and Chindia walk out of the IMF - Saxo Outrageous Prediction | Saxo Group (home.saxo)
The RBA Raised The Rates By 25bp As Expected

The RBA Warned It Sees Inflation Increasing Over The Months | Tesla Shares Are Now Down

Saxo Bank Saxo Bank 06.12.2022 09:45
Summary:  Markets were surprised yesterday by the strength of the November US ISM Services survey, which suggests a fresh increase in services activity from the October level as opposed to the deceleration expected. In response, US yields rebounded all along the curve, the US dollar rose sharply, and risk sentiment rolled over again, suddenly threatening key areas in the main US index that were taken out on the way up recently.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures gave up most of their gains from Wednesday last week closing just above the 4,000 key level. The rejection of the move above the 200-day moving average suggests to us that the conviction is low at this stage of the rally and if we see a breakdown below the 4,000 level then the 100-day moving average down at the 3,936 level is the next pivot point to watch. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong stocks pulled back following overnight weakness in the U.S. market and the uncertainty in the Fed’s ability to slow down in its pace of hiking interest rates after recent data indicating strength in wage inflation and business activities in the U.S. services sector. Hang Seng Index lost 1.3% while the CSI 300 was 0.3% higher. The rapid surge in the Hong Kong dollar money market interest rates recently also weighed on Hong Kong stocks. USD rebounds on hot ISM Services report, wilting risk sentiment The US November ISM Services survey cam in far stronger than expected, inspiring a fresh surge in US treasury yields, if a relatively modest one, and a significant rebound in the US dollar as risk appetite rolled over. The USD reversal is particularly interesting from a technical perspective as it came after support had broken in a few important USD pairs. EURUSD, for example, has been pushed back below 1.0500 this morning after an attempt on 1.0600 yesterday and after clearing the prior cycle high. USDJPY has surged above 137.00 after touching below 134.00. A more comprehensive reversal of the recent USD sell-off, however, would require EURUSD back below 1.0400 and USDJPY back above perhaps 139.00, with the key oncoming event risk next Tuesday’s November US CPI print and the FOMC meeting the following day. Gold (XAUUSD) took a tumble on Monday ...and following the failure to break above $1808, the August high, it reverted lower to a challenge recently established lows in the $1765 area. The turnaround was triggered by unexpectedly strong US services data adding renewed pressure on the Fed to keep interest rates higher for longer. Total holdings in bullion backed ETF’s suffered a large 13.7 tons reduction on Monday, and it highlights golds continued dependence on the dollar and yields to provide support, and once they fail to do so, selling emerges. Focus on Friday’s PPI report and liquidity which is likely to start drying up, thereby raising the risk of volatile price action ahead of year-end. Silver meanwhile tumbled 5.6% on Monday and has now returned to challenge support at $22.25 Crude oil (CLF3 & LCOG3) traded sharply lower on Monday ...after supportive micro developments such as restrictions on Russian sale of oil and China easing Covid restrictions were offset by a broad shift lower in risk sentiment after stronger than expected US data lifted the dollar and bond yields while sending stocks lower. For now, the price action remains stuck in a ten-dollar range with no clear short-term direction emerging. The market is undoubtedly going through a soft patch regarding demand with Saudi Arabia lowering its official January selling prices to Asia while time spreads continues to soften as the spot price falls faster than prices further out the curve. US treasuries rebound on strong US services survey (TLT:xnas, IEF:xnas, SHY:xnas) The stronger than expected US November ISM Services survey saw a rebound in US treasury yields all along the curve as the market priced the Fed to edge its policy rate a bit higher next year (peak yield seen hitting 5.00% again) as the 2-year Treasury yield surged over 10 basis points higher and the US 10-year benchmark pulled away from the important 3.50% level, although to suggest a reversal of the recent downtrend in yields, the benchmark yield would need to recover above 3.70-75%. What is going on? US November ISM Services surprises on the upside with 56.7 reading This is an important data point as the services sector dominates US economic activity. The market was looking for another deceleration of activity in November (consensus expectations for a 53.5 reading) after 54.4 in October. Among the sub-indices, the Prices Paid index was sticky at the high level of 70.0 vs. 70.7 in October, New Orders were 56.0 vs. 56.5 in October and Employment was 51.5 after 49.1 in October. Australia’s RBA hikes 25 basis points as most anticipated The hike took the cash rate from 2.85% to 3.1%. The AUD was mixed, rebounding sharply from session lows against NZD but that only came after a further slide late yesterday. The RBA maintained cautious guidance, saying the full effects of rates hikes since May have not been felt yet by the economy, while also declaring employment growth had slowed. As such the RBA said its path to achieving a soft landing is narrow, meaning it might be hard to avoid a recession. This also follows news out of Australia today that its current account fell into a deficit for the first time since 2019. The RBA warned it sees inflation increasing over the months ahead, particularly in wages. It conceded inflation is damaging the economy and is making life more difficult for people. The market only anticipates another 50 basis points of tightening in the coming 12 months from the RBA, as it’s rate peak lags the US Fed’s by nearly 150 basis points. Tesla shares fell 6.4% on reports its plans to lower production at its Shanghai factory ...as China’s demand isn’t meeting expectations. Tesla shares are now down 53% from their high and what’s keeping their shares at this level is that the raw material costs are still high, for example the price of lithium is back at record highs, and the market consensus suggests earnings growth will remain at near the 20% mark. US and Europe considering new tariffs on metal imports from China ...arguing that global overcapacity and carbon-intensive production in China could see the duties assessed on imports of key metals. The story is from Bloomberg, which cited “people familiar” with the situation. What are we watching next? China’s Politburo meeting is a key event to watch Before the Central Economic Work Conference convenes in mid/late December, the Chinese Communist Party’s Politburo will meet in early December to discuss economic policies and establish the direction and policy framework for the work conference. Investors will pay close attention to the readout from the Politburo meeting for hints about the macroeconomic policy priorities and how they are balanced with the pandemic control strategy. Expect a modest Q4 contraction for the eurozone Yesterday’s final PMI indicators for November point to a very mild GDP contraction in Q4 in the eurozone (minus 0.1 % or minus 0.2 % in our view). The manufacturing PMI surged marginally to 47.1 from 46.4 in October. The report was rather mixed. The softening of inflationary pressures continues but additional orders are falling once again due to lower client demand at the global level. This was expected. The services PMI was also out in contractionary territory at 48.5 against prior 48.6 in October. This is the exact same number as the flash estimate. This is the lowest level since early 2021. Overall, the services and the manufacturing sectors are more resilient than most expected a few months ago when fears of the energy crisis started to cause panic. Earnings to watch Today’s US earnings focus is the homebuilder Toll Brothers which is expected to see revenue growth slow down to 6% y/y in the quarter that in October as the US housing market is drastically slowing down from the interest rate shock in mortgages. While growth is slowing down for Toll Brothers investors will be looking for evidence that margins might even begin expanding as building materials are coming down in price. Today:  MongoDB, AutoZone, Toll Brothers, Ferguson Wednesday: Brown Forman, Campbell Soup, GameStop Thursday: Broadcom, Costco, Lululemon, Chewy Friday: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT) 0900 – Norway Nov. Region Survey 1330 – US Oct. Trade Balance 1330 – Canada Oct. International Merchandise Trade 1500 – Canada Nov. Ivey PMI 1700 – EIA's Short-Term Energy Outlook 2130 – API's Weekly Report on US Oil and Fuel Inventories 0030 – Australia Q3 GDP Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: https://www.home.saxo/content/articles/macro/market-quick-take-dec-6-2022-06122022
Analysis Of Crude Oil Futures, WTI Prices Recorded A Slight Decline

Saxo Bank Podcast: Supply Worries Over The Russian Oil Price Cap And More

Saxo Bank Saxo Bank 06.12.2022 14:19
Summary:  Today we are announcing our newly released 2023 Outrageous Predictions highlighting improbable, but not impossible, events that could really shake the markets. We discuss the reversal in S&P 500 futures to the big 4,000 level driven by a surprise beat on ISM Services Index yesterday suggesting that the US economy is reaccelerating again. The US yield move higher yesterday is also setting the stage for our attention on USDJPY in today's FX focus. On commodities our focus today is on the oil market given the demand uncertainties over China's reopening and supply worries over the Russian oil price cap. Today's pod features Peter Garnry on equities, Ole S. Hansen on commodities, with John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-dec-6-2022-06122022
Crude Oil Upward Trend Remains Limited

G7, OPEC+ and Covid realties affects crude oil market outlook

Craig Erlam Craig Erlam 06.12.2022 23:11
The only guarantee for oil markets It’s been a volatile start to the week in oil markets, continuing in much the same way we ended last, with traders still working through the announcements from the G7 and OPEC+, as well as the latest Covid moves from China. In many ways, none of the above improve visibility in the crude oil space; they arguably actually make the outlook more uncertain. But the intial response to the above has seemingly been negative for crude prices, with the loosening of Chinese Covid curbs not enough to offset the $60 price cap and unchanged OPEC+ decision. The cap is probably viewed as a business as usual for now, with Russia reportedly selling below these levels already and improving its ability to get around the sanctions. Which means output remains broadly steady. Read next: Canada: A 25bp rate hike is highly expected. BoC terminal rate is expected to hit 4.5%| FXMAG.COM The move from OPEC+ was probably driven by the lack of visibility on China and Russia but as the group has warned in the past, should prices fall too far and the market become imbalanced, it won’t wait until the next scheduled meeting to respond. It seems that the only thing guaranteed in the oil market for now is volatility. Gold paring losses The dollar recovered strongly on Monday as trade became increasingly risk-averse, hitting gold and forcing it back below $1,800 where it briefly traded above. It’s attempting to pare those losses today, up around half a percent on the day but it may struggle in the short-term. It’s been an incredible recovery until now but Friday was a massive setback. We now have to wait for PPI on Friday for some good news, with Fed policymakers in the blackout period ahead of the final meeting of the year, next week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil remains volatile, gold pares losses - MarketPulseMarketPulse
The Commodities Feed: Oil maintains positive momentum

Russia Is Looking To Impose A Price Floor For Its Crude Oil

ING Economics ING Economics 07.12.2022 08:34
Commodities, particularly oil, came under selling pressure yesterday as concerns over the macro outlook continue to grow. In the short term this is likely to remain a key driver for market direction Energy - China oil imports jump Oil prices have come under further pressure as macro concerns continue to weigh on the demand outlook. ICE Brent settled below US$80/bbl for the first time since early January. The prompt timespread also came under pressure, falling into deeper contango. The weakness in the front end of the curve suggests an easing in supply concerns, at least in the spot market.  The outlook for 2023 will be very dependent on how the demand story evolves. The 2023 supply picture is still challenging, with expectations of falling Russian supply and continued OPEC+ supply cuts. The US is also struggling to deliver the supply growth that many were expecting. The EIA released its latest Short Term Energy Outlook yesterday, where it is estimated that US crude oil supply will grow by a little over 460Mbbls/d in 2023 to average around 12.3MMbbls/d. The latest trade data from China shows that crude oil imports in November grew 12% MoM to 11.42MMbbls/d. This is the strongest monthly imports we have seen from China since January. Stronger crude imports are likely a result of refiners looking to make use of the latest batch of export quotas for refined products, which were released earlier in the year. Due to the strong imports over the month, cumulative crude oil imports this year are now just 1.4% lower YoY. There are reports that Russia is looking to impose a price floor for its crude oil in response to the G-7 price cap. It is understood that Russia could look to sell at a minimum fixed price or limit the discount that they would be willing to sell their crude. There is very little detail on the proposal or when it could be imposed, if at all. The latest data from the API shows that US crude oil inventories fell by 6.43MMbbls over the last week. Whilst the crude draw is somewhat constructive, this was more than offset by sizeable builds on the product side. Gasoline and distillate fuel oil inventories grew by 5.93MMbbls and 3.55MMbbls respectively. Metals – Zinc gains on renewed supply concerns LME zinc rallied yesterday following renewed supply concerns and declining LME on-warrant stocks. The latest reports suggest that Nyrstar’s Auby smelter in France would remain closed given the ongoing challenging market conditions. The smelter halted its operations in October for maintenance, however, the company said that the operations will remain shut “until further notice”. Meanwhile, the latest data from LME shows that on-warrant stocks for zinc declined by 8.7kt to 22.3kt. The latest trade numbers from China Customs show that imports for unwrought copper jumped 33.5% MoM and 5.8% YoY to 540kt in November. Cumulatively, imports rose 8.5% YoY to 5.4mt in the first eleven months of the year. Meanwhile, copper ore and concentrate imports rose 29% MoM and 10% YoY to a record high of 2.4mt last month. Overall, concentrate imports rose 8.6% YoY to 23.2mt from Jan’22-Nov’22. For ferrous metals, iron ore imports rose 4% MoM to 98.8mt in November. However, YTD imports are still 2.1% YoY to total 1,016mt. Peru’s latest official numbers show that copper output rose 8.3% YoY and 1.1% MoM to 232.5kt (highest monthly production so far this year) in October. The majority of the gains were driven by Las Bambas, Cerro Verde and Southern Peru Copper. Agriculture – Chinese soybean imports disappoint Trade data from China Customs shows that soybean imports dropped 14% YoY to 7.35mt last month. Cumulatively, soybean imports have fallen 8.1% YoY to 80.5mt over the first eleven months of the year. Weekly data from the European Commission shows that soft wheat shipments from the EU rose 3.5% YoY and reached 14.5mt as of 4 December, up from 14mt for the same period last year. Algeria, Morocco and Egypt were the top destinations for these shipments. Meanwhile, EU corn imports stand at 12.6mt, compared to 5.8mt last year. Read this article on THINK TagsRussian oil price cap Oil China trade API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

Bank Of Canada: Market Pricing Points Towards A Smaller 25bps Rate Hike

Saxo Bank Saxo Bank 07.12.2022 08:51
Summary:  Heightened fear about a higher-for-longer Fed tightening cycle, recession warnings from top U.S. bankers, and crude oil falling into new lows weighed on U.S. equities and saw bond yields lower. The momentum of China reopening trade seems to have somewhat exhausted despite more signs of easing Covid restrictions coming out from China. What’s happening in markets? S&P 500 (US500.I) pared all its gains since Powell’s Brookings Institution speech   Declining for the fourth day in a row, the S&P500 pared all its gains since Fed Chair Powell delivered a dovish-leaning speech at the Brookings Institution at the end of November. The solid average hourly earnings and the ISM Services Index data released since Powell’s speech have heightened once again concerns about more rate hikes to come. Two consecutive days of sharp falls in the crude oil price to USD74 weighed on energy stocks. Warnings about weakness in the U.S. economy from CEOs of Goldman Sachs, Bank of America, and JPMorgan Chase added fuel to the recession fear. S&P 500 dropped 1.4% and Nasdaq 100 tumbled 2% on Tuesday. All sectors except utilities within the S&P 500 declined, with energy, communication services, and information technology the biggest losers. Meta (META:xnas) tumbled 6.8& after reports saying the EU is targeting the company’s advertising business model. Apple (APPL:xnas) declined 2.5% as the company said it is scaling back its self-driving EV plans. NRG Energy (NRG:xnys) plunged 15.1% after the power plant operator announced to acquire  Vivint Smart Home. Textron (TXT:xnys) gained 5.3% on winning a helicopter contract from the U.S. Army. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) lower as equities retreated As equities declined on the prospects of a higher-for-longer Fed tightening cycle after the recent strong U.S. data, treasuries were well bid with yields falling 2bps to 4bps across the yield curve on Tuesday. The buying came in particularly strongly on the 10-year and 30-year segments. Large curve flatter trades, mainly selling the 5-year versus buying the 10-year took place in the futures pit. The 2-year yield fell 2bps to 4.37% while the 10-year was 4bps richer at 3.53%. Hong Kong’s Hang Seng (HIZ2) pulled back on overseas market weakness; China’s CSI300 (03188:xhkg) Hong Kong stocks pulled back following overnight weakness in the U.S. market and renewed concerns about the Fed’s ability to downshift its pace of hiking interest rates after recent data indicating strength in wage inflation and business activities in the U.S. services sector. The China reopening trade has shown signs of exhaustion as market reactions to the announcement from Beijing to ease PCR test requirements were muted. Hang Seng Index edged down 0.4%. Tech stocks retreated. Hang Seng TECH Index lost 1.8%. Alibaba (09988:xhkg) dropped by 3% and Bilibili (09626:xhkg) plunged by 7%. Ping An Health and Technology pulled back after two days of strong advance, falling 8.9%. Leading EV names dropped by around 2%-6% as profit-taking emerged after recent rallies. Chinese property developers and Macao casino operators were among the top gainers. Logan (03380) soared 32%. In A-shares, CSI 300 gained 0.5%, with the consumer staple, technology, and consumer discretionary sectors outperforming. FX: EURUSD back below 1.05; USDJPY at 137 The US dollar maintained a slight bid tone on Tuesday even as a tech rout spread through equities and recession concerns were highlighted by several bank chiefs. There was little data of note, only October US trade seeing a wider deficit but still better-than-expected. EURUSD fell to sub-1.05 levels as ECB’s Lane said that the bulk of work has been done by the ECB and inflation peak may be near. President Lagarde speaks on Thursday, after which focus turns to the December meeting. Meanwhile USDJPY hovered around 137 with BoJ Governor Kuroda remaining dovish as he said that monetary easing will continue even if wages rise 3%. Crude oil (CLZ2 & LCOF3) plummets to its lowest levels in 2022 Oil prices dipped to their lowest levels since the start of the year as concerns of weaker economic growth offset ongoing supply side issues. Equity markets are now starting to price in recession concerns, as seen from a negative reaction to last week’s ISM manufacturing. Yesterday, a number of bank chiefs hinted at recession possibilities, and there were also reports of further job cuts from the likes of Morgan Stanley and even consumer brands like PepsiCo. However, China reopening continues to gather pace but it will continue to be a slow exit from Zero Covid. The Energy Information Administration released its latest market outlook, with a contraction in US economic activity in Q2 2022 and Q1 2023 weighing on demand. It also raised its forecast for US supply to 12.34mb/d in 2023. Meanwhile, Saudi Arabia also lowered oil prices for its crude into Asia and Europe, suggesting demand weakness concerns. Australia’s iron ore kings roar back to six-month highs; Australian economic growth data ahead The Australian benchmark index, the ASX200 (ASXSP200.1) opened 0.7% lower following Wall Street. However, as the iron ore price advanced, iron ore players are testing six-month highs; Fortescue Metals, Champion Iron, BHP, and RIO shares are all higher, testing new six-month highs. Metal companies such as BlueScope Steel and Sims are also higher. In terms of economic news out today, Australian economic growth is due to be released; expected to show an improvement in the gross domestic product (GPD) in the third quarter of 2022. GPD is expected to show growth rose from 3.6% YoY, to 6.3% YoY. We will be watching the Aussie dollar and how it reacts, which a knee-jerk rally up likely if growth is hotter than expected. Also, remember services are the biggest drivers of GPD in Australia; so watch travel stocks, such as Flight Centre, Corporate Travel Management, Webjet, Auckland International Airport, and Qantas. Also keep an eye on stocks affiliated with dining out such as Endeavour Group, Treasury Wine, and Metcash which owns Celebrations, IGA Liquor, and Bottle-O.   What to consider? Saxo’s Outrageous Predictions 2023 are now out! Saxo's ten Outrageous Predictions for 2023 are now out. The theme revolves around a War Economy, not just in military terms, but in economic, political, and social terms as well. Gone are the days when low interest rates could foster dreams of a harmonious world built on renewable energy, equality, and independent central banks. In 2023, world economies will shift into war economy mode, where sovereign economic gains and self-reliance trump globalisation. Some of the calls include Gold rocketing to $3000, the UK holding an UnBrexit referendum, or even a new reserve currency to replace the dollar. Remember, it’s not about being right. The predictions focus on a series of unlikely but underappreciated events which, if they were to occur, could send shockwaves across financial markets. The APAC strats team, together with our CIO Steen Jakobsen, will be hosting a webinar on December 14 to discuss these predictions. The signup link can be found here. Real wages shrank 2.6% Y/Y in Japan In October, the real cash earnings of Japanese workers declined 2.6% Y/Y (consensus -2.2%; Sep: -1.2% revised), the biggest fall in seven years. Nominal wages slowed to a growth of 1.8% Y/Y (consensus: 2.0%, Sep: 2.1%). Household spending growth slowed to 1.2% Y/Y in October from 2.3% in September. Beijing relaxed PCR test requirements Beijing, joining other cities, announced to lift the requirement for negative PCR test results when entering public venues or taking public transport. Australia’s central bank, the RBA says inflation will continue to cause more pain, validating its hiking path Australia’s central bank, the RBA increased the cash rate by 25bps in the eighth consecutive rate hike, taking the cash rate from 2.85% to 3.1% as expected. However, the RBA toed the line staying on a dovish path, saying the full effects of rates hikes since May have not been felt yet by the economy, while also declaring employment growth had slowed. As such the RBA said its path to achieving a soft landing is narrow, meaning it might be hard to avoid a recession. This also follows news out of Australia today that its current account fell into a deficit for the first time since 2019. The RBA warned it sees inflation increasing over the months ahead, particularly in wages. It conceded inflation is damaging the economy and making life more difficult for people, which traders took as an indication the bank won't pause rate hikes any time soon. China’s Xi is visiting Saudi Arabia from Dec 7 to 9 China President Xi Jinping is expected to fly to Saudi Arabia on Dec 7 to attend a China-Arab summit on Friday. Bank of Canada rate decision due today The Bank of Canada statement is due today and consensus expects another 50bps rate hike taking the overnight rate to 4.25%. However, market pricing points towards a smaller 25bps rate hike. The path of interest rates from here is also very cloudy, with a pause likely coming in early 2023. Therefore, any guidance on rate path will be key to watch for CAD which is lately getting hurt due to the lower oil prices. U.S. leading bank CEOs warned about the possibility of a U.S. recession Jamie Dimon, CEO of JPMorgan Chase, said in a CNBC interview that he saw the possibility of a “mild to hard recession” in the U.S. next year. Likewise, David Solomon, Chairman/CEO of Goldman Sachs, said there is a “very reasonable possibility” that the U.S. enters a recession in 2023. Bank of America’s CEO Brian Moynihan said consumer spending is slowing and the bank is slowing its hiring. EU is targeting Meta’s advertising business model EU privacy regulators are reportedly ruling that Meta, the owner of Facebook should not require Facebook users to agree to personalized ads based on their online activity. The move restraints Facebook’s ability to present targeted ads to users. Apple is postponing its self-driving EV launch to 2026 Apple is said to scale back its self-driving EV plans and is postponing the target launch date to 2026 due to technological hurdles in a self-driving EV without a steering wheel or pedals. Geely is taking its ride-hailing firm to do an IPO in Hong Kong Chinese auto maker Geely is said to be talking to investment banks for a Hong Kong IPO of its Cao Cao Mobility ride-hailing arm. The US and EU are weighing new tariffs on Chinese steel and aluminium According to Bloomberg, citing people familiar with the matter, the U.S. and European Union are considering new tariffs on Chinese steel and aluminum products to reduce global overcapacity and  carbon emissions.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Recession concerns hitting markets, WTI at year-lows – 7 December 2022 | Saxo Group (home.saxo)
Crude Oil Upward Trend Remains Limited

Recessionary Fears And A Higher US Dollar Are Causing Selling In Oil

Saxo Bank Saxo Bank 07.12.2022 08:57
Summary:  There is a lot to be said about stepping back and reflecting on what’s driving markets. The most selling over the last few sessions has been stocks and sectors that will likely come under pressure from rates staying higher for longer, combined with a slowdown in US GPD. As such a Tech names like Atlassian, to EV makers including Lucid are down 10% this week. While the most upside in stocks and sectors are in those that will likely benefit from increased consumption in China and increased commodity demand with the nation continuing to map out further easing of restrictions. Here is what you need to watch in markets, in this seven minute video           Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) head lower ahead of Fed decision next week The S&P500 continued to fall below its 200-day average, slipping 1.4% on Tuesday, taking the four-day loss to 3.4%, with the next level of support at perhaps 3900. The Nasdaq 100 fell 2%, taking its three-day fall to 4%. The most selling over the last few sessions has been stocks that will likely come under pressure from rates staying higher for longer, combined with a slowdown in consumption. Luxury EV maker- Lucid Group, team software company-Atlassian, and online dating company Match, have fallen over 10% this week. While stocks exposed to China, such as Baidu and JD.com have rallied over 3%. For more inspiration of other stocks doing well this month, likely to benefit from China easing restrictions; see Saxo’s China Consumer and Technology basket. What’s driving markets and shareholder returns right now? Fed hiking Vs China easing covid restrictions Firstly – what's pressuring stocks is the hotter than expected US service sector, showing the US economy is strong enough for the Fed to keep hiking interest rates to slow inflation. While major investment banks are saying 2023 will be a downbeat year. Goldman’s David Solomon says a US recession is possible, with smaller bonuses and job cuts expected. Morgan Stanley says it will reduce its global workforce by about 2,000, (2% of the total), while BofA’s chief Brian Moynihan says his bank slowed hiring and JPMorgan’s Jamie Dimon warned of a "mild to hard recession" in 2023, saying the economic clouds "could be a hurricane." So damp sentiment is causing bond yields to move higher again, the US 10-year yield hit 3.53%, while the US dollar is rising again - on track to make its biggest weekly gain in almost 12 weeks. Secondly, what’s driving upside in markets is the easing of restrictions in China, with the country preparing to ease further. This is benefiting forward looking Chinese consumption and commodities, as there is expectations demand will pick up. Refer to Saxo’s China Consumer and Technology basket and Saxo’s Australian Resource basket for stock inspiration. In commodities, iron ore heads back to its highest level since August as China prepares to ease Oil pulled fell 3.5% to $74.25 with hedge funds continuing to sell oil amid nervousness about the Fed’s interest rate decision next week, and its path ahead. Recessionary fears and a higher US dollar are also causing selling in oil. The next level of support is perhaps around $71.74. There is talk in Europe the market has shifted toward supply not being as tight. Engie said Europe may pull through this winter and next as it replaces dwindling Russian natural gas flows, with European refiners making more gasoline than the continent needs. Read our head of commodity strategy’s latest update. The precious metal, gold, rose 0.3% to $1769. While the big news of the day, is that Iron Ore (SCOA) price advanced as China is preparing to ease restrictions further, moving iron ore’s price up 0.7% to $108.95 (its highest level since August). Australia’s iron ore kings roar back to six-month highs; Australia’s economy grows, but less than expected The Australian benchmark index, the ASX200 (ASXSP200.1) lost 0.6% on Wednesday, taking its week to date loss to 1%. However, after the iron ore price advanced, iron ore players tested six-month highs; Fortescue Metals, Champion Iron, BHP and RIO shares are all higher. In other parts of the market, insurance companies continued to shine, as they traditionally do when interest rates are rising. QBE and IAG rose almost 2% today taking their YTD gains to over 14% each. In terms of economic news out today; Australian economic growth showed an improvement in in the third quarter of 2022, but the growth was weaker than expected. GDP grew from 3.6% YoY in the 2nd quarter to 5.9% YoY. But more growth was expected (6.3% YoY). The Aussie dollar rose slightly, gaining 0.2% to 67.02 US cents. Also remember services are the biggest drivers of GDP in Australia; and as GDP is expected to slowly grind higher over current quarter, watch travel stocks, such a Flight Centre, Corporate Travel Management, Webjet, Auckland International Airport and Qantas. Also keep an eye on stocks affiliated with dining out such as Endeavour Group, Treasury Wine, and Metcash which owns Celebrations, IGA Liquor and Bottle-O.       For a weekly look at what to watch in markets - tune into our Spotlight.For a global look at markets – tune into our Podcast.
Australia Is Expected To Produce A Bumper Year Of Crops

Australia Is Expected To Produce A Bumper Year Of Crops

Saxo Bank Saxo Bank 07.12.2022 09:50
Summary:  The US equity market rolled over further, with the S&P 500 index crossing back below the pivotal 4,000 level, completing the rejection of last week’s rally attempt. In Asia overnight, further signs that China will continue to lift Covid restrictions failed to buoy sentiment further, with weak November export data spooking sentiment at the margin. In commodities, the major crude oil grades dropped to new lows for the cycle on demand concerns.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures declined another 1.5% yesterday pushing briefly below the 100-day moving average before bouncing back above that average. In today’s session the 100-day moving average which sits around the 3,937 level is the important level to watch on the downside and if it breaks then the 3,900 is the next major area of gravitation. The US 10-year yield remains close to 3.5% adding no further pressure from the cost of capital side and in general the equity market is slowly transitioning into hibernation. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) After a lackluster morning session, Hong Kong and mainland China stocks rallied in the afternoon after investors took note of the no mention of dynamic zero-Covid and a more balanced tone towards economic growth in the readout of the politburo meeting. However, stocks pared their gains and more, with the Hang Seng Index and CSI300 Index reversing and losing 1% and 0.4% respectively as of writing. The Chinese health authorities announced 10 additional measures to further fine-tune its pandemic control strategy ... and are holding a press conference later in the afternoon. Separately, China’s exports in November declined 8.7% (in USD terms) in November from a year ago, weaker than expectations. Geely (00175:xhkg) rose more than 2% as the Chinese automaker is reportedly talking to investment banks for a Hong Kong IPO of its Cao Cao Mobility ride-hailing arm. USD stays bid on weak risk sentiment, BoJ comments overnight A weak session for risk sentiment yesterday helped support the greenback, with treasury yields trading sideways and therefore marginalized as a factor. One of the bigger movers overnight was USDJPY, which is challenging above the important 137.50 area (prior range low) this morning after BoJ board member Toyoaki Nakamura supported the BoJ’s current easy policy, noting that the elevated inflation in Japan in the recent cycle is not wage-driven. Nakamura expressed concern that policy tightening might prompt the return of deflation. Elsewhere, USDCAD is making a bid at establishing a new up-trend, AUDUSD has posted a bearish reversal, and EURUSD & GBPUSD still need more downside to suggest a similar reversal, while all USD traders are holding their collective breath for next Tuesday’s US November CPI print and the FOMC meeting the following day. Gold (XAUUSD) holds above support at $1765 despite dollar strength and weak risk sentiment Stronger than expected US services data on Monday has renewed pressure on the Fed ahead of next week’s FOMC meeting, and with ETF investors still side-lined, gold remains very dependent on movements in the dollar and yields, both of which have been providing some headwind this week. While lower energy prices may ease inflationary concerns, Friday’s US producer price report may provide the next round of price volatility. Key resistance at $1808 with support below $1765 at $1735. Crude oil (CLF3 & LCOG3) suffering a three-day decline of close to 9% Brent closed below $80 on Tuesday for the first time since early January with WTI trading near $74on fading risk appetite as the attention turns to 2023 and increased worries about an economic slowdown hurting demand. The slump comes against a backdrop of low liquidity with Brent open interest falling to a seven-year low, thereby stoking volatility. After five months of cuts the EIA upgraded its 2023 production saying it could average a record 12.34m barrels per day. The API reported another big draw in crude oil stocks while China imported 11.42 million barrels per day last month, up 12% from October and highest since January. Overall, however, the market is undoubtedly going through a soft patch with time spreads softening as the spot price falls faster than prices further out the curve. US treasuries drop again, as safe-haven appeal comes and goes. (TLT:xnas, IEF:xnas, SHY:xnas) US treasury yields at the long end of the curve erased much of the previous day’s rise as risk sentiment was broadly weak yesterday, suggesting a safe-haven appeal. The 3.50% area remains the pivotal one for the 10-year benchmark yield. The 2-year US treasury yield was sideways, meaning that the 2-10 yield curve hit new cycle lows around –84 basis points. What is going on? EU to move forward with cases against China on trade policy at the WTO The first case is related to China restricting Lithuanian exports, a move that came after Lithuania allowed Taiwan to open what is arguably an embassy in the country. The other case revolves around Chinese treatment of patent holders. Apple set to postpone the roll-out of its first EV The company will postpone the launch of its first EV to 2026 (thought to be about a year later than originally intended), according to “people familiar” with the situation cited by Bloomberg. The original intention was for the EV to be fully autonomous, but the realization that this is an insurmountable engineering challenge for now has resulted in the redesign, which is now set to include human controls. TSMC plans to more than triple its investment to $40 billion in building plants in Arizona In an equipment installation ceremony at Taiwan Semiconductor Manufacturing Co’s (TSMC) first microchip production plant in the US, which President Biden attended, TSMC Chairman Mark Liu announced that the Taiwan chip foundry is building a second production plant that will make 3-nanometer chips in Arizona. The additional plant will bring TSMC’s previously announced investment of USD12 billion to USD40 billion. TSMC expects the second facility will begin operation by 2026. Also attending the ceremony were CEOs from Apple, Nvidia, AMD, Applied Materials, and Lam Research. The additional investment is a boost to President Biden’s plan to bring the semiconductor supply chain, in particular the capability to fabricate high-end chips, back to the U.S. CBOT Wheat (ZWH3) trades near a 14-month low Despite floods Australia is expected to produce a bumper year of crops including record wheat production in the current financial year, the government said on Tuesday, despite the impact of widespread flooding in the country's eastern region. An announcement that will pose even tougher conditions for US exporters already dealing with reduced competitiveness from the strong dollar and robust supplies from the Black Sea region. On Tuesday, the CBOT bellwether wheat contract dropped as low at $7.23 to the lowest level since October 2021. Focus on Friday’s WASDE report which will publish the US governments latest projections for production and stocks. Sugar prices likely to remain supported as India sees output drop 7% India, the world’s biggest producer and second largest exporter has said its output is likely to fall 7% this year as erratic weather conditions have cut cane fields. A reduction may, despite global economic growth concerns, lift prices and allow rivals Brazil and Thailand to increase their shipments. Sugar (SBH3) traded in New York recently surged higher by 17% before spending the past couple of weeks pairing back some of those strong gains. The biggest short-term risk remains the potential for speculators reducing exposure ahead of yearend. This following a three-week buying spree to November 22 during which time the net long increased four-fold to 202k lots, the strongest three-week period of buying in more than four years. Toll Brothers beat on margin and home sales The high-end US homebuilder delivered strong earnings yesterday with revenue at $3.7bn vs est. $3.2bn and EPS of $5.63 vs est. $3.96. The gross margin outlook for the current quarter came out at 27% vs 27% expected as pressures in building materials are easing. One negative trend for the homebuilder was the backlog which shrunk to 8,098 vs est. 8,814. Australia: Q3 GDP softer than expected, mining majors rally, then retreat Australian economic improved in the third quarter of 2022, but was weaker than expected at +0.6% QoQ and 5.9% YoY (vs. +0.7%/6.3% expected). The Australian market fell on the day, with mining companies Fortescue Metals, Champion Iron, BHP and RIO testing six-month highs before selling off later in the session. In other parts of the market, insurance companies continued to shine, as they traditionally do when interest rates are rising. QBE and IAG rose almost 2% today taking their YTD gains to over 14% each. China’s exports shrank 8.7% Y/Y in November In USD terms, China’s exports declined 8.7% Y/Y in November, much weaker than the -3.9% consensus estimate and -0.3% in October. The fall in exports was broad-based across destinations, U.S.  down 3.8% Y/Y, European Union down 9.3% Y/Y, and Japan down 4.6%. Exports to ASEAN slowed to a 7.7% growth in November from 19.7% in October. Imports, falling by 10.6% Y/Y, also below expectations. What are we watching next? Bank of Canada meeting today – market divided on anticipated hike size The Bank of Canada has shown considerable flexibility in its tightening path, having hiked 100 basis points in one go back in July, followed by a 75-basis point hike in September and 50-basis points hike in October. With that pattern in mind, the market is divided on whether the BoC will hike 50- or 25 basis points today, with market-pricing leaning for the smaller hike, while the majority of surveyed analysts are looking for another 50 basis points, which would take the policy rate to 4.25%. Regardless, the market is pricing that the Bank of Canada is nearing the end of its hiking cycle, projecting a peak rate next year of sub-4.50%. China opening up trade – has it run out of steam? The latest news in China of a further easing of curbs on activity relative to Covid saw equities in Hong Kong and mainland China posting marginal new highs before rolling over badly and then closing near the lows of the session, suggesting that after a torrid 35% rally off the lows, in the case of the Hang Seng Index, the further potential for this story to continue to support a positive outlook may have run out of steam. The highs overnight in the Hang Seng were within a few points of the 200-day moving average. Earnings to watch Today’s US earnings focus is Campbell Soup which is an US processed food manufacturer of meals and snacks. The company is expected to deliver 9.5% revenue growth for the quarter that ended in October suggesting substitution effects as middle income families are shifting into lower priced options. Today:  Brown Forman, Campbell Soup, GameStop Thursday: Broadcom, Costco, Lululemon, Chewy Friday: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT) 1500 – Canada Bank of Canada meeting 1530 – EIA's Weekly Crude oil and Fuel Stock Report 2000 – US Oct. Consumer Credit 2130 – Brazil Selic Rate Announcement 0001 – UK Nov. RICS House Price Balance 0030 – Australia Oct. Trade Balance Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 7, 2022 | Saxo Group (home.saxo)
USA: Final Q3 GDP amounts to 3.2%. Subtle Micron earnings

Turbulent times on crude oil market. Nasdaq shrank by 2%, Apple and Amazon lost more

Ipek Ozkardeskaya Ipek Ozkardeskaya 07.12.2022 10:24
Equities extend the downside recovery, following the failure to clear an important year-to-date resistance last week, which was the S&P500's year-to-date descending channel top at around the 4080 level. The index cleared the first bearish target, at 3956 level, the minor 23.6% retracement on the latest rebound and tested its 100-DMA to the downside, but managed to close above that level. Nasdaq slumped 2%, with Apple retreating more than 2.50% while Amazon lost 3% as investors dumped technology stocks faster than the others.   And even oil giants joined the selloff this week. Exxon lost more than 2.50% both on Monday and on Tuesday, as the latest drop in oil prices didn't help improve the mood.   The American crude lost more than 7% since the weekly open. If Monday's fall was mostly driven by a global market selloff, yesterday's selloff was definitely due to the EIA revising its oil production forecast higher for next year, after having cut this prediction for the past five months.   Read next: Presumably, stronger-than-expected ISM affected stocks. Aussie gained from the RBA decision | FXMAG.COM So, now, the EIA expects the US to pump around 12.34 mio barrels per day in 2023, approaching the historical high production of 2019.   Yesterday's selloff sent the barrel of Brent crude below the $80 mark for the first time since the very beginning of this year, and pulled the barrel of American crude a couple of cents below the late November dip, at around $73.40. And even the API data – which showed a 6.4-mio-barrel drop in US oil inventories couldn't bring the oil bulls in. The more official EIA data is due today. Trend and momentum indicators hint that the recession fears could well push the barrel of oil toward the $70pb despite falling oil reserves in the US.     Russian oil price cap is a warning for OPEC  What's good about the falling oil prices is that the Russian oil cap becomes somehow meaningless as prices fall, though the Europeans said to revise the cap every two months. For now, there is not much to worry apart from a couple of vessels carrying Russian oil that are stuck near Turkey as Turks ask insurance apparently to let them sail away.   But here is the thing. The fact that the G7, the EU and Australia agreed to cap the price of Russian oil gave a strong message to the rest of the oil producers: they could do the same with OPEC.  So far, US President Joe Biden reassured OPEC that this is not a 'buyers' league' and that the decisions apply only to Russia. But we can't stop thinking that if OPEC goes severely against the US' will to stop messing around with oil prices, there is no reason we won't see a buyers' league emerge from the darkness.
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The Russian Oil Cap Becomes Somehow Meaningless Due To The Falling Oil Prices

Swissquote Bank Swissquote Bank 07.12.2022 11:16
Equities extend the downside recovery, following the failure to clear an important year-to-date resistance last week, which was the S&P500’s year-to-date descending channel top at around the 4080 level. technology stocks were sold faster than the others, but energy stocks suffered on falling oil prices. Oil The barrel of Brent crude trades below the $80 mark for the first time since the very beginning of this year, and the barrel of American crude came a couple of cents below the late November dip. Even the API data – which showed a 6.4-mio-barrel drop in US oil inventories couldn’t bring the oil bulls in. What’s good about the falling oil prices is that the Russian oil cap becomes somehow meaningless at $60pb. But the fact that the G7, the EU and Australia agreed to cap the price of Russian oil gave a strong message to the rest of the oil producers: they could do the same with OPEC and that would be a big blow for oil prices in the long run.Elsewhere, TSM will invest $40bn in two Arizona plants, and Europeans are frustrated to see the US chipmakers get so much help that they are preparing to do the same! Watch the full episode to find out more! 0:00 Intro 0:34 Equities extend downside correction 1:30 Oil slumps on higher EIA forecast for US oil production 3:52 A ‘buyers’ league’ would be a disaster for OPEC 5:35 US banks’ CEOs see gloom in 2023 6:52 Governments back chip investments 9:10 Hawkish BoC hike may not boost Loonie Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Crude #oil #cap #OPEC #energy #crisis #recession #fear #market #selloff #USD #EUR #Bitcoin #TSM #chipmakers #chip #stocks #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr  _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Nigeria Bans Cash Withdrawal Higher Than 225$ To Encourage CBDC Use

Nigeria Bans Cash Withdrawal Higher Than 225$ To Encourage CBDC Use

Kamila Szypuła Kamila Szypuła 07.12.2022 10:59
With the heating season this year, the energy market is attracting special attention. The war in Ukraine has not only damaged economies or caused an energy crisis, but also hinders the transition to zero carbon emissions. In this article: The scramble for energy Energy crisis Commodities Nigeria's payment activities How to avoid spending transitions? Read next: To Simplify The Organization, Pepsico Will Lay Off Thousands Of Workers At The Headquarters In The USA | FXMAG.COM The scramble for energy IMF tweets about the scramble for energy The December 2022 edition of F&D Magazine focuses on the scramble for energy and what geopolitical tensions mean for the clean transition. https://t.co/KsNThOXgxY pic.twitter.com/CScbtFapks — IMF (@IMFNews) December 6, 2022 A few years ago, in an era of abundant energy supplies, the world’s focus was on curbing fossil-fuel use to achieve net-zero carbon emissions. There has been progress in the technology that could help achieve this, and more and more people have access to them. Even with this progress, there may be a challenge. The current geopolitical situation caused by Russia's attack on Ukraine is delaying the transition to zero carbon emissions. Europe in particular, which is dependent on Russia for energy, is struggling the most. Despite this, experts are still looking for alternative solutions. Now we are witnessing that geopolitical tensions have an impact not only on the economy, but also on development in other sectors of life. Energy crisis as seen from the German Javier Blas tweets about the European energy crisis as seen from the German “The lifeblood of Ludwigshafen is natural gas”The European energy crisis as seen from the German town home to the world’s largest chemical complex. (Why, would you ask, the world’s largest chemical complex is in Germany? Cheap Russian natural gas) https://t.co/3LoTQTvvKf — Javier Blas (@JavierBlas) December 7, 2022 Germany is the largest economy and also has the largest gas factory. The driving force of Ludwigshafen is natural gas. It is a substance that flows through a dense network of pipes, fuel for power plants, raw material for chemical processes. And Russia's war in Ukraine knocked out its main supplier. Germany has the largest chemical industry in Europe by far, but is almost entirely dependent on imported energy and raw materials. Now the cost of this dependency is becoming clear. For the past summer, companies across Germany have been trying to wean off Russian natural gas. Of course, not only in Germany, but also for the European economy, the situation of this country is of particular importance. There are difficulties now. Commodities Bespoke tweets about gasoline futures and WTI. Gasoline futures trade less than $30/barrel over WTI versus more than twice that at their peak last summer.Read more in tonight's Closer: https://t.co/9kOPyy03bc pic.twitter.com/aYDQTQxUo1 — Bespoke (@bespokeinvest) December 6, 2022 When looking at energy resources, many people look at gasoline and oil. Recent OPEC+ and G7 decisions have had a big impact on prices. Attention gasoline and oil are especially important for owners of cars powered by these raw materials. Therefore, getting to know your surroundings is extremely important to be able to prepare for extraordinary expenses. Nigeria’s CBDC CoinGecko tweets about Nigeria's payment activities. LATEST: Nigeria has banned ATM cash withdrawals over $225 per week to encourage use of CBDC.📰 https://t.co/iJVTndbnhJ pic.twitter.com/hpW4xmKmJC — CoinGecko (@coingecko) December 7, 2022 Nigeria is coming forward with the full-scale implementation of its digital currency. The actions taken are to encourage the use of this innovative means of payment. Whether it will bring the expected results, only time will tell. How to avoid spending transitions? Charles Schwab Corp in its tweet advises to avoid spending transitions to cash payments. Need to stop overspending? Consider taking a credit card break and switching to cash. #AskCarrie https://t.co/xso38tG0yU — Charles Schwab Corp (@CharlesSchwab) December 6, 2022 Shopping has become easier these days. Just go to the store's website, choose a product and pay. Online payments using krart take place in real time. The lack of control over this tube of purchases can lead us into financial trouble. Therefore, it is worth considering switching to cash payments where we can physically see how much money we have and how much we can afford. It is also worth thinking about savings to be able to build a financial cushion.
Softer New Jobs Reading Would Likely Weigh On The Canadian Dollar

Saxo Bank Podcast: Crude Oil Plunging To New Lows, Focus On Bank Of Canada Meeting And More

Saxo Bank Saxo Bank 07.12.2022 11:59
Summary:  Today we note the US market continuing lower and closing near pivotal level, this time with no notable catalyst driving the selling, as US treasury yields actually dropped at the long end of the US yield curve, taking the yield curve inversion to a new cycle- and multi-decade extreme. It also looks like the easing of China's Covid policy is running out of steam as a factor. In commodities, we look at crude oil plunging to new lows despite alarming supply fundamentals, and wheat prices also on the defensive on unusually elevate export activity for the season. A look at today's Bank of Canada meeting, TSMC making even larger investments in the US, Apple postponing its EV plans and much more on today's pod, which features Peter Garnry on equities, Ole S Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source : Podcast: US equity market limping at pivotal levels after sell-off extends | Saxo Group (home.saxo)
US Corn and Soybean Crop Conditions Decline, Wheat Harvest Progresses, and Weaker Grain Exports

Apple (AAPL) dropped 2.54% after Bloomberg reported that the tech giant plans to delay the launch of its electric vehicle to 2026 - Intertrader

Intertrader Market News Intertrader Market News 07.12.2022 15:20
DAILY MARKET NEWSLETTER December 7, 2022                 Pre-Market Session News Sentiment Technical Views           EUR/USD   Euro Stoxx 50 (Eurex)   Brent (ICE)                 Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.                     Price Movement Analyst Views Target Pivot   Dax (Eurex) 14,353.00 -124.00 (-0.86%) Read the analysis 14,270.00 14,478.00     FTSE 100 (ICE Europe) 0.00 0.00 (0.00%) Read the analysis 7,536.00 7,591.00     S&P 500 (CME) 3,943.25 -60.00 (-1.50%) Read the analysis 3,922.00 3,960.00     Nasdaq 100 (CME) 11,561.25 -244.50 (-2.07%) Read the analysis 11,480.00 11,670.00     Dow Jones (CME) 33,624.00 -362.00 (-1.07%) Read the analysis 33,470.00 33,730.00     Crude Oil (WTI) 74.27 -2.66 (-3.46%) Read the analysis 73.40 75.20     Gold 1,771.23 +2.55 (+0.14%) Read the analysis 1,765.00 1,776.00                     MARKET WRAP           Market Wrap: Stocks, Bonds, CommoditiesOn Tuesday, U.S. stocks remained under pressure. The Dow Jones Industrial Average dropped 350 points (-1.03%) to 33,596, the S&P 500 fell 57 points (-1.44%) to 3,941, and the Nasdaq 100 was down 237 points (-2.01%) to 11,549.Media (-3.11%), energy (-2.65%), and semiconductors (-2.58%) sectors lost the most.Apple (AAPL) dropped 2.54% after Bloomberg reported that the tech giant plans to delay the launch of its electric vehicle to 2026.Meta Platforms (META) slid 6.79% on reports that European Union regulators do not allow the company to place personalized ads.NRG Energy (NRG) plunged 15.08% after the company agreed to buy Vivint Smart Home (VVNT) for 2.8 billion dollars.Goldman Sachs (GS) declined 2.32%. Reuters reported that the bank is considering buying crypto-currency companies.The U.S. 10-year Treasury yield retreated 4 basis points to 3.533%.European stocks also closed lower. The DAX 40 fell 0.72%, the CAC 40 dipped 0.14%, and the FTSE 100 was down 0.61%.U.S. WTI crude futures fell $2.70 (-3.51%) to $74.27 a barrel.Gold price added $2 to $1,771 an ounce.Market Wrap: ForexThe U.S. dollar regained further strength against other major currencies. The dollar index climbed to 105.58.EUR/USD fell 25 pips to 1.0466. Data showed that Germany’s factory orders grew 0.8% on month in October (vs +0.6% expected). November S&P Global construction purchasing managers index was posted at 43.6 for the Eurozone (vs 46.0 expected), at 41.5 for Germany (vs 45.1 expected), and at 40.7 for France (vs 49.9 expected).GBP/USD slid 61 pips to 1.2129.USD/JPY rose 31 pips to 137.06.AUD/USD declined 13 pips to 0.6685.USD/CHF dipped 5 pips to 0.9421, and USD/CAD increased 65 pips to 1.3653.Bitcoin kept struggling around the $17,000 level.Morning TradingIn Asian trading hours, Australia's data showed that third-quarter gross domestic product grew 0.6% on quarter (vs +0.8% expected) and 5.9% on year (vs +6.4% expected). China’s data showed that trade surplus declined to $69.84 billion (vs $81.00 billion expected) in November with exports slumping 8.7% on year (vs -3.5% expected).AUD/USD was stable at 0.6689, while USD/JPY traded higher at 137.20.EUR/USD dipped to 1.0461, and GBP/USD was flat at 1.2130.Gold price was little changed at $1,771 an ounce.Bitcoin managed to take back the level of $17,000.Expected Today  The U.K. Halifax house price index is expected to decline 0.1% on month but rise 7.1% on year in November.Germany’s industrial production is expected to decline 0.8% on month in October.Canada's central bank is expected to hike its key interest rate by 25 basis points to 4.00%.The U.S. Energy Department is expected to report a reduction of 3.88 million barrels in crude-oil stockpiles.           UK MARKET NEWS           Mitchells & Butlers Plc, a pub-&-restaurant operator, posted full-year results: "Total sales across the period were 2,208 million pounds reflecting a 1.3% decline on FY 2019, driven mainly by temporary covid-related sales reductions and closures in the first part of the year plus site disposals since FY 2019. Despite this, adjusted operating profit of 240 million pounds reflects a strong return to profitability. (...) On a statutory basis, profit before tax for the year was 8 million pounds (FY 2021 loss 42 million pounds)."Insurance, basic resources and utilities shares gained most in London on Monday.From a relative strength vs FTSE 100 point of view, Aviva (+0.18% to 444.2p), Barclays (+1.59% to 158.76p) crossed above their 50-day moving average.           ECONOMIC CALENDAR           Time Event Forecast Importance   02:00 Halifax House Price Index MoM (Nov) -0.1% MEDIUM     02:00 Halifax House Price Index YoY (Nov) 7.1% MEDIUM     08:30 Nonfarm Productivity QoQ Final (Q3) 0.3% MEDIUM     08:30 Unit Labour Costs QoQ Final (Q3) 3.5% MEDIUM     10:30 EIA Gasoline Stocks Change (Dec/02) 2.707M MEDIUM     10:30 EIA Crude Oil Stocks Change (Dec/02) -3.305M MEDIUM                                     NEWS SENTIMENT           Standard Chartered PLC STAN : LSE 591.80 GBp -4.15% In the last 5 days         NEWS SENTIMENT (24H) Very Negative       TECHNICAL SCORE Short-Term Medium-Term Long-Term                 Trade                 Deutsche Bank AG DBK : XETRA 10.072 EUR -0.49% In the last 5 days         NEWS SENTIMENT (24H) Negative       TECHNICAL SCORE Short-Term Medium-Term Long-Term                 Trade                 Siemens AG SIE : XETRA 133.76 EUR +1.94% In the last 5 days         NEWS SENTIMENT (24H) Positive       TECHNICAL SCORE Short-Term Medium-Term Long-Term                 Trade                 Glencore PLC GLEN : LSE 556.10 GBp -1.31% In the last 5 days         NEWS SENTIMENT (24H) Negative       TECHNICAL SCORE Short-Term Medium-Term Long-Term                 Trade         TECHNICAL VIEWS           EUR/USD Intraday: under pressure.   Pivot: 1.0485   Our preference: Short positions below 1.0485 with targets at 1.0445 & 1.0425 in extension.   Alternative scenario: Above 1.0485 look for further upside with 1.0515 & 1.0530 as targets.   Comment: The RSI is mixed to bearish.     Trade               Euro Stoxx 50 (Eurex)‎ (Z2)‎ Intraday: consolidation.   Pivot: 3971.00   Our preference: Short positions below 3971.00 with targets at 3921.00 & 3900.00 in extension.   Alternative scenario: Above 3971.00 look for further upside with 3984.00 & 3998.00 as targets.   Comment: As long as 3971.00 is resistance, look for choppy price action with a bearish bias.     Trade               Brent (ICE)‎ (G3)‎ Intraday: under pressure.   Pivot: 80.70   Our preference: Short positions below 80.70 with targets at 78.70 & 77.50 in extension.   Alternative scenario: Above 80.70 look for further upside with 82.40 & 83.65 as targets.   Comment: The RSI is bearish and calls for further downside.     Trade  
China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

Putin Has Now Warned That The Ukraine Conflict Could Go On For A Long Time

Saxo Bank Saxo Bank 08.12.2022 09:17
Summary:  U.S. bond yields plunged on a softer revision of the Unit Labor Cost, WSJ Nick Timiraos’ article on decelerating in housing cost inflation, and Putin’s nuclear threat. U.S. equities were modestly lower on their fifth day of decline. Profit-taking selling in Hong Kong and China stocks after the release of the Politburo meeting readout and 10 additional measures to ease pandemic control policy saw the Hang Seng Index down 3.2% What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) skid again. Campbell Soup boils up S&P 500 fell for the fifth session and briefly breached its 100-day moving average again before bouncing off the low to close slightly above it. S&P 500 was 0.2% lower and Nasdaq 100 was down 0.5% on Wednesday. Eight of the 11 sectors within the S&P 500 declined, with healthcare, consumer staples, and real estate the only sectors advancing. Market sentiment was depressed by the recessionary signals sent out from the bond markets and Putin’s warning of the rising threat of nuclear war. Tesla (TSLA:xnas) dropped 3.2% on reports of cutting prices in China and the U.S. markets. Campbell Soup (CPB:xnys) surged 6% after reporting earnings beating analyst estimates due to strong gross margins. State Street (STT:xnys) jumped 8.2% after announcing a share buyback. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) fell on a softer unit labor cost print, Putin’s nuclear threat and WSJ Nick Timiraos article U.S. treasuries were well bid throughout the session, with yields falling by around 11bps across most parts of the curve. The 2-year was 11bps richer to settle at 4.26% and the 10-year yield fell 11bps to 3.42%. The Q3 unit labor cost was revised down to 2.4% from the previously reported 3.5%. The softer data provided somewhat of a relief to investors who had been concerned about wage inflation might slow the Fed from downshifting rate hikes in 2023. In addition, in his latest article, the Wall Street Journal’s Nick Timiraos, citing street economists, said the deceleration in rental increases in new apartment leases may mean “the end is in sight for one of the biggest sources of inflation” that Fed Chair Powell specifically pointed out as being important to watch in his recent Brookings Institution speech. Adding fuel to the rally in treasuries was the flight to safety bids following Putin’s threat of nuclear war. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) sold the new Covid-19 containment measures news Buy the rumor and sell the news in play yesterday in the Hong Kong and mainland China equity markets. After a lackluster morning session, Hong Kong and mainland China stocks rallied in the early afternoon after investors took note of the no mention of dynamic zero-Covid and a more balanced tone towards economic growth in the readout of the politburo meeting and the release by the Chinese health authorities of additional 10-measures to further fine-tune and ease China’s Covid-19 containment strategy. The markets nonetheless reversed soon afterward and tanked 3.2% as “sell the news” profit-taking came in. Southbound monies had a net outflow from Hong Kong back to the mainland of over HKD5 billion, of which HKD1.9 billion was selling the Tracker Fund of Hong Kong (02800:xhkg). Chinese developers were among the biggest losers following the second share placement in a month from Country Garden (02007:xhkg), with China Resources Land (01109:xhkg) down 5.3%, COLI (00688:xhkg) down 6.2%, Longfor (00960:xhkg) down 12.1%, and Country Garden down 15.5%. Selling was also aggressive in mega-tech names and saw Alibaba (09988:xhkg) down 5.3%, Tencent (00700:xhkg) down 3.7%, and Meituan (03690:xhkg) down 3.6%. The three leading Chinese airlines listed in Hong Kong, however, outperformed and gained by 2% to 6%. In economic data, China’s exports in November declined 8.7% (in USD terms) in November from a year ago, weaker than expectations. CSI 300 was down 0.3%. Australia’s share market holds six month highs, gold stocks charge, Australia's trade surplus beats expectations The Australian benchmark index, the ASX200 (ASXSP200.1) opened 0.3% on Thursday, but holds six month high territory. As for the best performers in the ASX200, clean metal small cap miner Chalice (CHN) rose 12% after drilling confirmed it found new sulphide minerals in Western Australia. CHN would typically be classed as higher risk company as its doesn’t earn income, which is why its share are suffering while interest rates are rising. CHN shares are down 35% YTD. Gold stocks are looking interesting as recessionary calls get louder- gold generally outperforms in a recession. Evolution Mining (EVN) shares are up 5%, continuing to rally it in uptrend and have gained 61%, moving EVN shares up off their 5-year low. In the larger end of town, BHP shares broke higher but profit taking turned its break higher into loss. BHP shares are up 26% this year, with the major miner, along with RIO and Fortescue doing well of late after the iron ore (SCOA) price picked up 7% this month, with China easing restrictions. On the downside, engineering company Downer (DOW) plunged 31% to $3.31, which is its lowest level since April 2020 after Downer downgrading its outlook and flagging irregularities in utilities business. The AUDUSD slides on AU exports falling more in October, and imports sinking; supporting RBA remaining dovish On the economic news front, Australia’s trade surplus fell in October, but less than expected. This reflects that Australia is earning less income as demand for commodities has fallen from its peak, ahead peak energy season and China easing restrictions. The Australian surplus fell from $12.4 billion to $12.2 billion (when the market expected the surplus to fall to $12 billion flat). In October, exports surprisingly fell 1%, vs market expectations they'd rise 1%, while imports fell 1%. This supports the RBA keeping rates low, as such after the data was released, the AUDUSD immediately fell. FX: USD weakens on lower yields The US dollar weakness extended further on Wednesday as US 10-year yields plunged to fresh lows since mid-September breaking below the 3.50% support. There were some concerns on wage pressures as US Q3 Unit Labor Costs were revised lower to 2.4% (prev. 3.5%, exp. 3.1%), which pushed back on some of the wage-price spiral fears while still remaining elevated. GBPUSD pushed above 1.22 and EURGBP is testing the 0.86 handle. NZDUSD came back in sight of 0.64 even as AUDNZD recovered from 1.0532 lows printed after Australian Q3 GDP data came in beneath expectations. The Japanese yen gained on lower US yields, but gains were restrained by commentary from BoJ's Nakamura who reiterated Governor Kuroda, noting it is premature to tweak policy now as service prices remain low and he is not sure now is the right timing to conduct a review of the policy framework. Crude oil (CLZ2 & LCOF3) prices pressured by demand concerns Oil posted its fourth straight day of losses, erasing all of the gains of this year. While demand concerns are rising with the aggressive global tightening seen this year, supply side has remained volatile. US crude inventories fell by a less-than-expected 5.19 million barrels last week, as exports didn't repeat their prior performance. Distillate stocks rose by more than 6 million barrels and gasoline supplies climbed by 5.3 million barrels amid weak demand. Still, the bigger factor is that the short-term technical traders appear to be in control of the oil market currently. WTI plunged to lows of $72/barrel while Brent went to sub-$78 levels. Gold (XAUUSD) higher on China’s central bank purchases Gold’s safe-haven appeal has come back in focus with China joining the long list of other countries who have been strong buyers of bullion. The PBoC added 32 tons to its holdings in November, the first increase in more than three years. This brings it total gold reserves to 1980 tons. This is also potentially a step towards our outrageous prediction on a new reserve asset, as speculations mount that China, Russia and several other countries could be looking to move away from USD reserves. Gold prices gained over 1%, and helped drag the rest of the sector higher as well. Industrial metals like Copper and Nickel also pushed higher due to the weaker US dollar.   What to consider? Putin’s nuclear threat sours risk sentiment Following drone attacks on three Russian air bases that Moscow blamed on Kyiv, Putin has now warned that the Ukraine conflict could go on for a long time and nuclear tensions have also risen because of it. He also did not clearly stay away from pledging that Russia will not be the first to use nuclear weapons, and rather said that Russia will defend itself and its allies “with all the means we have if necessary. The irresponsible talks on nuclear weapons is a sign that Putin is getting desperate with Ukraine gaining military grounds, and his actions will be key to watch. Risk sentiment likely to be on the back foot today, and food prices as well Uranium will be in focus. Japan Q3 GDP continues to show contraction The final print of Japan’s Q3 GDP was released this morning and it was slightly better than the flash estimate of -1.2%, but still showed a contraction of -0.8% annualized sa q/q. Stronger than expected growth in exports and a build of inventories led to the upward revision, private consumption was slower than previously expected at just 0.1% q/q. Lower oil prices and the return of inbound tourists may further aid the Japanese economy, but slowdown in global demand will continue to underpin a weakness in exports. Eurozone Q3 GDP grew more than initially forecasted The final estimate of the Eurozone Q3 GDP shows an increase to 0.3% versus prior 0.2%. Growth fixed capital formation was the biggest contributor to growth (0.8 percentage point) behind household spending (0.4 percentage point). The contribution from government expenditure was negligible on the period. This shows that households and companies are rather resilient despite the negative economic environment and inflation across the board. Based on the latest PMI for November (the last estimate was published on Monday), we expect a small GDP contraction in the eurozone in Q4. This would be marginal (probably minus 0.1%). Bank of Canada hiked 50bps and signalled the next move will be data dependent Bank of Canada hiked policy rate by 50bps to 4.25%, in line with market expectations but higher than the market pricing of 25bps. The central bank signalled the next move will be data dependent by saying that the “Governing Council will be considering whether the policy needs to rise further to bring supply and demand back into balance and return inflation to target.” Still, there was a slight hawkish tilt as the Bank said that the BoC will consider if future rate hikes are necessary to bring supply and demand back into balance and return inflation to target, which means there is potential for more rate hikes after a temporary pause. The Politburo says China will continue to “optimize” its pandemic control measures The Chinese Communist Party ended a politburo meeting that focused on economic policies for 2023 and anti-corruption works in the party on Tuesday. The readout of the meeting released on Wednesday makes no mention of the “dynamic zero-Covid” policy. Instead, it says that China will strive to better coordinate pandemic prevention and control with socioeconomic development and continue to optimize the country’s pandemic control measures. The readout does not reiterate the warning on the property sector and the rhetoric of “housing is for living in, not for speculation” but instead pledges to “be vigilant of large economic and financial risks and strive to prevent systemic risks.” Overall, the readout from the Politburo meeting seems to confirm the policy shift to gradually easing pandemic control measures and supporting the property to the extent of preventing it from causing systemic risks to the financial system and the economy. The readout emphasises stability by the utmost important priority for 2023 and the leadership of the Chinese Communist Party over economic policies as well as economic activities of the country. The readout also pledges to continue the anti-corruption campaign and enhance the governance of  the Chinese Communist Party. China issued 10 additional measures to ease Covid-19 containment practices China’s National Health Commission issued 10 additional measures to further fine-tune and relax the country’s pandemic prevention and control practices. The crux of these new measures are to further reduce the scope and length of lockdowns and quarantines and restrict the use of PCR tests. While these are important relaxation to the current practices, especially in reducing the unit of movement restriction to as narrow as floor or even apartment as opposing to the whole block or community and making quarantine-at-home the default option instead of centralised quarantine. Nonetheless, in comparison with the high expectations in recent days, these measures may be considered a bit underwhelming and do not provide a more definite roadmap of exiting the use of lockdown.  China’s exports shrank 8.7% Y/Y in November In USD terms, China’s exports declined 8.7% Y/Y in November, much weaker than the -3.9% consensus estimate and -0.3% in October. The fall in exports was broad-based across destinations, U.S.  down 3.8% Y/Y, European Union down 9.3% Y/Y, and Japan down 4.6%. Exports to ASEAN slowed to a 7.7% growth in November from 19.7% in October. Imports, falling by 10.6% Y/Y, also below expectations. Some outperforming stocks to watch Generally, there are always outperformers in markets, even when times are tough. A hot scoop for you is that that Campbell Soup shares popped 6% higher on Wednesday, gapping up to $56.18. Its shares are now 15% off their record high that it hit in 2016. That year, the Syrian war escalated, Trump was elected, and there was a string of terror attacks around the world. And amid war talks now escalating this year Campbell Soup shares entered an uptrend, gaining 45% from last November. If recessionary talks and Russia war concerns linger, you might expect this company to continue to benefit. It has free cash flow, and consistent rising profit growth. Another stock that did well overnight was General Mills, rising 2% to an all time high, $87.50 after the wheat price jumped 3% overnight on supply concerns returning. We mentioned General Mills as a company to watch in our Five Stocks to Watch video. Despite the wheat price falling 19% from September after supply returned to the market, General Mills has been able to grow its quarterly profit and free cash flows.      For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Putin’s nuclear warning; China reopening trade is fading – 8 December 2022 | Saxo Group (home.saxo)
It Was Possible That Tesla Would Move Closer To Resistance

Another Margin Loan With Tesla Shares Is Considered, Gold Traded Higher, US Treasury Yields Dropped

Saxo Bank Saxo Bank 08.12.2022 09:32
Summary:  Risk sentiment steadied in the US yesterday as US treasury yields fell further, with the market seemingly increasingly convinced that inflation is set to roll over quickly next year, allowing the Fed to begin cutting rates in the second half of the year and beyond. The 10-year treasury yield fell below the important 3.50% level while gold rose. Sentiment in Europe is a bit more downbeat as frigid weather spikes energy prices.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures closed right on the 100-day moving average yesterday to the lowest close since 10 November washing away most of the gains delivered post the surprise inflation report back in November. The equity market is finding itself in limbo for the rest of the year with no clear narrative to build a direction on. Downside risks are related to the war in Ukraine and higher interest rates if the market begins to doubt itself on the Fed pivot. Upside risks are mostly related to momentum building in Chinese equities and the government seems to strengthen the policy trajectory of reopening society. The 3,900 level in S&P 500 futures is still the key level to watch on the downside. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hang Seng Index rallied strongly, up 2.8% and recovering most of the loss from yesterday. The 10 additional fine-tuning measures to ease pandemic containment may be underwhelming relative to the high expectations. However, when reading together with the readout of the Politburo, an overall direction of a gradual and now seemingly determined loosening of restrictions seems to have taken hold. Omitting the language of “housing is for living in, not for speculation” and pledging to “be vigilant of large economic and financial risks and strive to prevent systemic risks” point to conditional support to the property sector when socioeconomic and financial stability are at stake. Technology names led the advance. Hang Seng TECH Index surged 5.6% with Bilibili being the top gainer within the index. Alibaba, Meituan, and Tencent climbed 5%-6%. Shares of China online healthcare platforms, China education services providers, China consumption, and Macao casino operators were other top performers. USD slightly lower again on steady risk sentiment and decline in treasury yields The USD softened yesterday as risk sentiment trade sideways and, more importantly, as US treasury yields fell all along the curve, taking the 10-year Treasury benchmark yield below the important 3.50% chart point. The USD will likely struggle unless the market begins to reprice its rising conviction that inflation will allow a significantly lower Fed Funds rate in 2024 and beyond and/or risk sentiment rolls over badly as the market prices an incoming recession and not a soft landing. The key event risks for the balance of this calendar year are next Tuesday’s US November CPI print and the FOMC meeting the following day. Somewhat surprisingly, the new lows in US yields have yet to drive USDJPY to new lows: that pair recently traded below 134.00 but trades this morning well clear of 136.00. Gold (XAUUSD) bounces with focus on recession and PBoC buying Gold traded higher on Wednesday as the dollar weakened and US Treasury yields slumped (see below) and the yield curve inversion reached a new extreme on rising recession fears, and after China joined the lengthy list of other countries who have been strong buyers of bullion. The PBoC added 32 tons to its holdings in November, the first increase in more than three years. This brings its total gold reserves to 1980 tons. This is also potentially a step towards our outrageous prediction on a new reserve asset, as speculations mount that China, Russia and several other countries could be looking to move away from USD reserves. Friday’s US producer price report may provide the next round of price volatility. Key resistance at $1808 with support below $1765 and $1735. Crude oil (CLF3 & LCOG3) pressured by demand concerns Oil posted its fourth straight day of losses on Wednesday, erasing all the gains of this year, before bouncing overnight as China edges toward reopening. While demand concerns are rising with the aggressive global tightening seen this year, the supply side has remained equally volatile. US crude inventories fell by a less-than-expected last week as exports slowed and production reached 12.2m b/d. In addition, distillate stocks rose by more than 6 million barrels as demand on a four-week rolling basis slumped to the lowest level since 2015. Short-term technical traders are in control as the overall level of participation continues to fall ahead of yearend. US 10-year treasury benchmark plunges through 3.50% (TLT:xnas, IEF:xnas, SHY:xnas) US treasury yields dropped at the long end of the yield curve, with the 10-year benchmark dipping well below 3.50%, a key chart- and psychological point. The yield curve inverted to a new extreme for the cycle as the market is pricing that inflationary risks are easing and for the Fed to begin cutting interest rates by late next year. What is going on? New deep coal mine in UK the first to be approved in 30-years The new coking coal mine in Cumbria was approved by levelling-up secretary Michael Gove and will employ approximately 500 people and will cost £165 million to develop. Coking coal is used in steel-making, unlike thermal coal used for power stations. Musk may pledge more Tesla shares to avoid debt spiral Elon Musk and his advisors are considering another margin loan with Tesla shares as collateral to swap with more expensive debt carrying high interest rates ($3bn at 11.75% interest rate) issued during the Twitter takeover. These considerations underscore the increased risk in Elon Musk’s investments, including Tesla. EZ Q3 GDP grew more than initially forecasted The final estimate of the EZ Q3 GDP shows an increase to 0.3 % versus prior 0.2 %. Growth fixed capital formation was the biggest contributor to growth (0.8 percentage point) behind household spending (0.4 percentage point). The contribution from government expenditure was negligible during the period. This shows that households and companies are rather resilient despite the negative economic environment and inflation across the board. Based on the latest PMI for November (the last estimate was published on Monday), we expect a small GDP contraction in the eurozone in Q4. This would be marginal (probably minus 0.1 %). Putin’s nuclear threat sours risk sentiment Following drone attacks on three Russian air bases that Moscow blamed on Kyiv, Putin has now warned that the Ukraine conflict could go on for a long time and nuclear tensions have also risen because of it. He also did not clearly stay away from pledging that Russia will not be the first to use nuclear weapons, and rather said that Russia will defend itself and its allies “with all the means we have if necessary. The irresponsible talk on nuclear weapons is a sign that Putin is getting desperate with Ukraine gaining military grounds, and his actions will be key to watch. Risk sentiment likely to be on the back foot today, and food prices as well Uranium will be in focus. MondoDB shares rally 23% on earnings The database provider delivered Q3 earnings that surprised the market with revenue at $334mn vs est. $303mn and adjusted EPS of $0.23 vs est. $0.17, but more importantly MongoDB raised its fiscal guidance on revenue to $1.26bn vs est. $1.20bn. Japan Q3 GDP continues to show contraction The final print of Japan’s Q3 GDP was released this morning and it was slightly better than the flash estimate of -1.2%, but still showed a contraction of -0.8% annualized seasonally adjusted q/q. Stronger than expected growth in exports and a build of inventories led to the upward revision, private consumption was slower than previously expected at just 0.1% q/q. Lower oil prices and the return of inbound tourists may further aid the Japanese economy, but slowdown in global demand will continue to underpin a weakness in exports. Bank of Canada hiked 50bps and signaled the next move will be data dependent Bank of Canada hiked policy rate by 50bps to 4.25%, in line with market expectations but higher than the market pricing of 25bps. The central bank signaled the next move will be data dependent by saying that the “Governing Council will be considering whether the policy needs to rise further to bring supply and demand back into balance and return inflation to target.” Still, there was some “hawkish optionality” as the Bank said that the BoC will consider if future rate hikes are necessary to bring supply and demand back into balance and return inflation to target, which means there is potential for more rate hikes after a temporary pause. Canadian two-year rates were a basis point or two lower after considerable intraday volatility and near the lows for the cycle. US consumer food giants’ Campbell Soup and General Mills shares surge Campbell Soup shares popped 6% higher on Wednesday, gapping up to $56.18 after the company reported stronger quarterly earnings than expected. Its shares are now 15% off their record high that it hit in 2016. Campbell Soup shares are up 45% from last November. Another stock that did well overnight was General Mills, rising 2% to an all-time high of 87.50 after the wheat price jumped 3% on supply concerns returning. Despite the wheat price falling 19% from September, General Mills has been able to grow its quarterly profit and free cash flows. What are we watching next? What is the playbook for the pricing of the coming “landing”? There are several different paths from here, the one the market is least prepared for is one that shows resilient US economic growth and higher than expected inflation in coming months. But even if data does continue to prove the market’s strong conviction that inflation is headed lower and that growth will soften, will markets price some version of a soft landing or will fears of a “standard” recession cycle begin to weigh on risk sentiment as credit spreads widen and asset prices drop on fears of rising unemployment and falling profits? Until this week, financial conditions have been easing sharply and credit markets look complacent, so there is little fear priced in. After a wild year of volatility, large macro players may be unwilling to place large bets on the direction for markets until we have rolled into the New Year. Earnings to watch Today’s US earnings focus is Broadcom, Costco, and Lululemon. With a market value of $200bn, Broadcom is the most important earnings release for market sentiment and analysts remain bullish with a revenue growth expected at 20% y/y for the quarter that ended in October. Today:  Broadcom, Costco, Lululemon, Chewy Friday: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT) 0800 – Hungary Nov. CPI 1200 – ECB President Lagarde to speak 1200 – Mexico Nov. CPI 1330 – US Weekly Initial Jobless Claims 1400 – Poland National Bank Governor Glapinski press conference 1430 – EIA's Weekly Natural Gas Storage Change Report 0130 – China Nov. PPI/CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 8, 2022 | Saxo Group (home.saxo)
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

The Falling Yields Kept The US Dollar (USD) Under Pressure

Swissquote Bank Swissquote Bank 08.12.2022 10:08
Stocks fell for a fifth day, but the sovereign bonds gained, a hint that the market catalyzer shifted from the hawkish Federal Reserve (Fed) pricing – where stocks and bonds fall at the same time, to recession fears, where stocks remain under pressure, while investors seek refuge in safer sovereign assets. Yields and USD The falling yields kept the US dollar under pressure below the critical 200-DMA, which stands at 105.75. American crude oil One big move of the day was oil. The barrel of American crude slipped below the $73 floor and fell to $71.70 on the back of rising recession fears. Oil And note that we have started seeing a structural change in the oil markets. Crude price curve was in backwardation up until a month ago. But over the past weeks we started seeing the front-end of the price curve falling and even going back to contango. I discuss in this episode what that means for oil prices. Gold Elsewhere, news that China increased its bullion reserves for the first time in three years have a boost to gold and silver. The mint ratio fell below 80, but gold could still be a better choice for those preparing their portfolios for recession. Watch the full episode to find out more! 0:00 Intro 0:31 Markets price in recession 2:36 Oil slips below $72pb 3:57 Is contango coming & what does it mean? 6:25 Loonie to remain under the pressure of weaker oil 8:00 Gold or silver?! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Crude #oil #contango #backwardation #energy #crisis #recession #fear #market #selloff #USD #EUR #Gold #silver #mint #ratio #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Commodities: China Reported An Increase In Its Gold Reserves And The EIA Reported A Huge Build-Up In Product Stocks

ING Economics ING Economics 08.12.2022 11:32
Sentiment in commodities markets has mostly improved after China announced that it is further relaxing its Covid-19 measures, including moving from isolation facility quarantine to home quarantine. Energy – A mixed bag of data from EIA Crude oil extended its weakness yesterday, with ICE Brent settling at a fresh YTD low of US$77.2/bbl amid continued uncertainty over demand prospects although it has recovered marginally in morning trade today. The weekly inventory report from the EIA was largely constructive for the crude oil market and provided some support to oil prices, although stock build up of refined products continues to weigh on sentiment. Further helping crude oil prices this morning were expectations of a further easing in China’s zero-covid policy and a softer USD. EIA data show that US commercial crude oil inventories dropped by another 5.2MMbbls over the last week, following a huge 12.6MMbbls of draw over the preceding week. The drop in inventory withdrawals can be largely attributed to a slowdown in exports which dropped by around 1.5MMbbls/d WoW to 3.4MMbbls/d last week. Another 2.1MMbbls of crude oil inventory was withdrawn from the SPR, taking total withdrawals to around 7.3MMbbls for the week. US commercial crude oil inventory - at around 413.9MMbbls as of 2 December 2022 - now stands significantly below the 5-yr average of around 451.9MMbbls at this point in the season. For refined products, the EIA reported a huge build-up in product stocks as refinery utilization increased further to 95.5%, compared to 95.2% a week ago amid lacklustre demand for fuel. US gasoline inventory increased by around 5.3MMbbls to 219.1MMbbls whilst distillate inventory increased by around 6.2MMbbls to 118.8MMbbls as of 2 December 2022. Metals – China boosts its gold purchases Prices of most industrial metals traded higher yesterday, supported by optimism across risk assets along with a declining dollar. LME nickel 3M prices rose over 10% DoD to their highest level in seven months yesterday, leading the gains amongst base metals. The metals complex also benefited from China’s decision to ease its Covid restrictions further across major cities, brightening the outlook for metals consumption in the country. Indonesia is weighing resuming nickel ore exports, according to a report from Kompas newspaper, citing an official at the Fiscal Policy Agency at the Finance Ministry. The Indonesian government is considering a number of options, including imposing taxes on exports of nickel ore, while it appeals the WTO ruling against Indonesia for banning nickel ore exports, the official was quoted as saying. Indonesia banned exports of nickel ore in 2014, relaxed the ban in 2017, and reimposed it for good in January 2020 in a bid to attract foreign investment and to grow a domestic processing industry to produce downstream materials and products in the nickel and EV battery supply chain. A major global aluminium producer offered Japanese buyers a premium of $95/t for the coming quarter. This is the lowest level in more than two years, according to a report from Bloomberg, amid weak demand, particularly from the auto sector and concerns over the economic impact of US monetary tightening. The latest update from Vale SA shows that the company is estimating lower-than-expected iron ore production guidance for next year while also lowering its longer-term outlook. The company plans to stay below pre-disaster levels for the foreseeable future, as part of a shift toward higher-quality ore and value-added production. Vale is targeting output guidance of 310-320mt of iron ore for 2023, below market expectations of 325mt. In precious metals, China reported an increase in its gold reserves for the first time in more than three years. The People’s Bank of China raised its holdings by 32 tonnes in November from the month before, bringing its total to 1,980 tonnes as the country plans to further diversify away from the US dollar. Official gold holdings in China as part of total forex reserves are still at very low levels, which gives more room for further gold purchases over the coming months. Agriculture – Ukraine's grain shipments remain low The latest data from Ukraine’s Agriculture Ministry shows that the nation has exported around 18.5mt of grain so far in the 2022/23 season, a decline of 32.7% compared to the 27.5mt grains exported during the same period last year. Total corn shipments stood at 9.98mt (+38.6% YoY), while wheat exports fell 53.4% YoY to 6.98mt as of 5 December. Heavy rains in Brazil appear to have impacted sugarcane crushing in the country, with most mills reported to be ending the crushing season earlier than usual. Usually, sugar cane crushing in Brazil continues until the end of the first half of December - adverse weather this year has resulted in an earlier end to crushing. Prospects of some supply losses from Brazil have been supportive of sugar prices recently. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

Saxo Bank Podcast: Look At Crude Oil Dynamics, Natural Gas In Europe, Weak Outlook From US Banks And More

Saxo Bank Saxo Bank 08.12.2022 14:26
Summary:  Today, we look at the overall sense that market players don't want to take any strong new bets until we get to the other side of Dec 31. We also look US treasury yields dropping through pivotal levels at the longer end of the curve and the remarkable fact that the curve remains near its most inverted even as the 2-year yield is at local range lows. The market is increasingly convinced that Fed easing is set to start within 12 months after a bit more hiking next week and early next year. We also look at crude oil dynamics, natural gas in Europe, Swedish housing prices, weak outlook from US banks, the latest woes for Tesla, the Bank of Canada keeping CAD the weakest of G10 currencies, and more. Today's pod features Peter Garnry on equities, Ole S Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Will market be allowed to go into hibernation until 2023? | Saxo Group (home.saxo)
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

Craig Erlam Craig Erlam 08.12.2022 14:36
A floor in oil prices? Oil prices remain under pressure as traders continue to price in a slower global economy next year and the prospect of deeper recessions. China’s efforts to reduce restrictions are probably preventing a much steeper decline in the oil price, although this won’t be without disruption as Covid spreads like wildfire throughout the country after such a long period of zero-Covid measures. Then there’s also the pledge by the White House to restock the SPR once oil falls to around $70 a barrel, only a couple of dollars below where it is now, which could in theory put even a temporary floor under the price considering how much it’s been drawn down this year. Gold awaiting the Fed meeting Gold appears to be steadying ahead of the inflation data from the US and, of course, the Fed meeting next week. The jobs report was a setback and one that could stand in the way of another break higher before the Fed meeting. The inflation data tomorrow and on Wednesday could give the yellow metal a boost but it’s the fear of entrenched inflation that could nudge the terminal rate higher. Investors will want to hear what the Fed has to say on the nasty wages surprise last week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Loonie Pair (USD/CAD) Bounces Off An Upward-Sloping Support Line

On Wednesday stocks lost, but sovereign bonds increased. Decline of oil prices affect Canadian dollar

Ipek Ozkardeskaya Ipek Ozkardeskaya 08.12.2022 15:12
Stocks fell for a fifth day, but the sovereign bonds gained, a hint that the market catalyzer shifted from the hawkish Federal Reserve (Fed) pricing – where stocks and bonds fall at the same time, to recession fears, where stocks remain under pressure, while investors seek refuge in safer sovereign assets.   The latest data showed that around $5 billion flowed into US bond ETFs over the past week. Ishares 7–10-year Treasury bond ETF is up by more than 7% since the October dip, up by 3% since the beginning of December and should recover further as investors are expected to return to bonds before they return, sustainably to equities.   The S&P500's latest bear market rally is weakening by the day. The index gave back another, though a slim 0.20% yesterday, and closed near its 100-DMA.   The US 10-year yield slipped below its own 100-DMA for the first time since August – when investors were pricing recession fears remember – although at that time recession fears fed into softer Fed expectations and boosted the stock valuations. Today, it's not the case. The recession fears only increase worries about the future health of the economy, as Fed expectations remain relatively hawkish.   The falling yields kept the US dollar under pressure below the critical 200-DMA, which stands at 105.75.   The EURUSD hovers around the 1.05 mark following the dollar's waltz, while Cable is holding on to its gains above the 200-DMA, near 1.2125, but remains perfectly at the mercy of the next move from the greenback.  Oil's dive  One big move of the day is oil. The barrel of American crude slipped below the $73 floor and fell to $71.70 on the back of rising recession fears.   The fact that the Europeans revised their Q3 GDP higher, that Germany revealed a weaker-than-expected contraction in industrial production, that the Chinese continue relaxing Covid measures, and that the Chinese central bank promised to keep financial conditions soft enough to boost economic growth – and reverse the economic disaster, did nothing to improve the mood. The latest news and data remained fully in the shadow of a sharp 8.7% fall in Chinese exports in November released yesterday. The US crude oil inventories fell more than 5 mio barrels last week, but the gasoline inventories rose more than 5 mio barrels, making the data difficult to give direction.   Read next: BMW Was Fined 30,000 Pounds By CMA, Google Wants To Become More Productive| FXMAG.COM But note that we have started seeing a structural change in the oil markets. Crude price curve was in backwardation up until a month ago. But over the past weeks we started seeing the front-end of the price curve falling and even going back to contango. That means that immediate demand for oil is weakening due to recession fears, and that we may not see a soft landing in the US economy, even less in the world economy next year. The latter could further weigh on crude prices, and we could see the price of a barrel slip below $70 before the year-end.   The 'only' good news...  The softening US dollar gives other pairs space to breathe. This is perhaps why we see the European companies posting mild losses. The German Dax index lost only about 2% since it peaked early December, whereas the S&P500 lost the double that amount, a bit more than 4%.   And if the softer dollar helped some majors like euro and sterling keep their head above water, the USDCAD advanced to 1.37 yesterday, even after the Bank of Canada (BoC) decided to go ahead with a 50bp hike, instead of 25bp, but didn't say that there will be more rate hikes – an absence which has been interpreted as 'maybe there will be no more hikes'.   Of course, the sharp drop in oil prices does impact Loonie negatively as there is a clear positive correlation between oil prices and the Canadian dollar. Therefore, if crude oil continues its journey south, there is little to prevent the USDCAD to advance past the 1.38 level. The only thing that could slow down the Loonie's fall, is the dollar's global depreciation. Otherwise, the year-end outlook for the Loonie looks rather bearish.    If all this is not depressing enough...  Russian President Vladimir Putin said that the nuclear threat is rising and didn't say he wouldn't use a nuclear weapon to defend itself, giving a fresh boost to geopolitical tensions.   Gold may have benefited from rising safe haven flows – although the US dollar remains the ultimate safe haven if you fear a further escalation of military tensions with Russia.   Read next: The Euro Benefited From The Weakening Of The US Dollar, A Potential Downside Risk For The Australian Dollar Over The Next Few Weeks| FXMAG.COM What also made gold and silver shine yesterday – besides from the softer US dollar - was news that China increased its bullion reserves for the first time in three years, in an effort to diversify away from the US dollar. The price of an ounce rebounded to $1790. In this short run, gold bulls will likely see further resistance above the 200-DMA, and the $1800 psychological resistance. But the weakening US dollar outlook strengthens appetite for gold in the medium run. There is potential for around $100 rise to $1880, May peak.
The Melbourne Institute Inflation Gauge For Australia Rose More Than Expected

The Australian Benchmark Index Looks Like It Could Close Off The Week Lower

Saxo Bank Saxo Bank 09.12.2022 08:59
Summary:  U.S. equities rallied after declining for five consecutive days as investors took a pause in the growth-fear-triggered selling as treasury yields bounced. Hong Kong stocks surged by 3.4%, completely reversing their loss on Wednesday after profit-taking being out of the way and investors looking at the potential improvement to the economic outlook in China. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) snapped a 5-day losing streak An interesting recent development in the U.S equity markets was that investors worried about falls in long-term treasury yields and cheered rises of them as their focus shifted from long-term treasury yields’ negative impact on equity valuation to their signaling function of potentially a U.S. recession, especially when the yield curve going more inverted in the process. The bounce of the 10-year treasury yield by 7bps to 3.48% on Thursday was cited as positive for equities by some investors. Optimism about the outlook of an economic recovery in China also contributed to the improvement in sentiment. S&P 500 gained 0.8% and Nasdaq 100 advanced 1.1%. Nine of the 11 S&P500 sectors climbed, with information technology, consumer discretionary, and healthcare leading the gain, while communication services and energy lost by 0.5%. The Federal Trade Commission is seeking to block Microsoft’s (MSFT:xnas) acquisition of Activision Blizzard (ATVI:xnas). Shares of Microsoft rose by 1.2% while Activision dropped by 1.5%. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) bounced on a rise in continuous jobless claims and ahead of PPI and supply U.S. treasury yields took a little pause in their continuous falls. The 2-year yield rose 5bps to 4.31% and the 10-year yield was 7bps cheaper to 3.48%, after retesting the 3.5% level during the day. Initial jobless claims were in line with expectations but traders took note of the larger-than-expected increase in continuous jobless claims to 1,671K from the prior week’s 1,608K. Trading activities were muted ahead of the PPI on Friday and the CPI next week. The Treasury Department announced USD90 billion in the 3-year, 10-year, and 30-year auctions next week. Treasury Secretary Janet Yellen told reporters that “whether or not we can avoid a recession, I believe the answer is yes.” Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) sold the new Covid-19 containment measures news Hang Seng Index rallied strongly, up 3.4% on Thursday and recovered all the loss from “buy the rumor, sell the news” profit-taking selling the day before. The 10 additional fine-tuning measures to ease pandemic containment may be underwhelming relative to the high expectations. However, when reading together with the readout of the Politburo, an overall direction of a gradual and now seemingly determined loosening of restrictions seems to have taken hold. Omitting the language of “housing is for living in, not for speculation” and pledging to “be vigilant of large economic and financial risks and strive to prevent systemic risks” point to conditional support to the property sector when socioeconomic and financial stability are at stake. After the profit-taking selling out of the way, technology stocks led the rally. Hang Seng TECH Index surged 6.6% with Bilibili (09626:xhkg), soaring 22%, being the top gainer within the index. Alibaba (09988:xhkg), Meituan (03690:xhkg), and Tencent (00700:xhkg) advanced 5%-6%. Shares of Macao casino operators soared 12%-22%, following Macao said it will stop requiring negative PCR or RAT test result proof from Chinese visitors. Hong Kong shortened the home isolation period for people infected with Covid-10 to five days from seven days. A newspaper story suggests that the Hong Kong authorities are considering relaxing the outdoor mask rule. Cosmetic chain Sa Sa (00178:xhkg) jumped 19.7%. In A shares, trading was lackluster with CSI300 ending the session flat. Among industries, property, financials, telecom services, and healthcare outperformed. Australia’s share market rises for the first time in four days, with miners leading the charge The Australian benchmark index, the ASX200 (ASXSP200.1) opened 0.7% higher on Friday but looks like it could close off the week lower, with the market now down 1.5%, which marks the first weekly drop in three weeks. The ASX200 holds six-month high territory largely buoyed by the mining sector being bought up (bid) on forward looking hopes that China will ramp up economic activity next year and keep accommodative monetary support in place, which will likely support infrastructure and property. As such, this has supported the key steel making ingredient, iron ore (SCOA) raise 3.6% this week and elevated Fortescue Metals (FMG) shares by 8% this week, with Champion Iron (CIA) up 7%, with Rio Tino (RIO) following. Fortescue Metals shares are on watch as they appear in overbought territory, but what support likely further upside is the iron ore price hit a fresh four-month high today, $109.60, which suggests if this uptrend in iron ore continue, Fortescue Metals earnings could pick up. And it could see subsequent share price upgrades from buy and sell side brokers.  FX: The U.S. dollar index weakened modestly by 0.3% to 104.77 The US dollar weakened modestly against all G10 currencies except for being unchanged versus the Yen. The Aussie dollar gained the most against the U.S. dollar and it rose by 0.7% to 0.6770. Crude oil (CLF3 & LCOF3) declined nearly 10% so far this week At USD72, WTI crude was down nearly 10% over the week on worries of a slowing U.S. economy and larger-than-expected buildup in U.S. fuel product inventories. The first five month of the WTI futures contracts are now in contango. What to consider? Look for more hints about U.S. inflation from the PPI and the University of Michigan Consumer Survey Economists surveyed by Bloomberg are expecting the headline PPI growth in the U.S. to slow to 7.2% Y/Y in November from 8.0% in October and PPI ex-Food and Energy to come at 5.9% Y/Y in November versus 6.7% in October as supply chains continue to improve. Investors will dig in the components of PPI to scrutinize the price changes in various services to gauge their impacts on the more important core personal expenditure price (core PCE). Investors will also look for hints about the trend of the U.S. inflation from the inflation expectation numbers in the University of Michigan Consumer Survey. China’s inflation is expected to have moderated in November The Bloomberg consensus is expecting China’s PPI to shrink further by -1.5% Y/Y in November (vs Oct: -1.3% Y/Y) and CPI to slow to +1.6% in November from +2.1% in October. Weak industrial demand in the midst of countrywide pandemic control-related restrictions during the month and weakness in energy prices would likely have contributed to the decline in the PPI. November CPI would have been dragged by base effects and weakness in food prices. China’s new aggregate financing and RMB loans are expected to have bounced in November Market economists, as surveyed by Bloomberg, are expecting China’s new aggregate financing to bounce to RMB 2,100 billion in November from RMB 907.9 billion in October and new RMB loans to rise to RMB 1,400 billion in November from RMB 615.2 billion as People’s Bank of China urged banks to extend credits to support private enterprises including property developers. Less bond issuance by local governments and corporate and weak loan demand however might have weighed on the pace of credit expansion in November.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: U.S. equities snapped a 5-day losing streak and bond yields bounced ahead of PPI; Hong Kong stocked rallied – 9 December 2022 | Saxo Group (home.saxo)
China's Ninth Straight Month of Gold Holdings Increase; Oil Resilient Despite Russian Tanker Incident; Dollar Supported by Bond Supply Concerns

The USD/INR Pair Pays Little Heed To The Firmer Oil Price

TeleTrade Comments TeleTrade Comments 09.12.2022 09:11
USD/INR takes offers to refresh intraday low as riskier assets cheer US dollar weakness. Recovery in Crude Oil fails to challenge Indian Rupee buyers amid cautious optimism at home and abroad. US consumer sentiment, inflation expectations should be watched for fresh impulse. USD/INR cheers the US Dollar weakness as it drops to the lowest level in three days, around 81.15 during early Friday. In doing so, the Indian Rupee (INR) pair pays little heed to the firmer Oil price, which generally has inverse relations with the INR moves. Although the weekly prints tease the greenback buyers, the US Dollar Index (DXY) prints a three-day downtrend near 104.60, down 0.21% intraday as traders brace for the next week’s busy schedule comprising the Federal Reserve (Fed) monetary policy meeting and the inflation data, not to forget today’s consumer-centric figures. In doing so, the greenback’s gauge versus the six major currencies traces the US Treasury bond yields while justifying the downbeat US data. Talking about the latest data, US Initial Jobless Claims matched 230K market consensus for the week ended on December 02, versus the upwardly revised 226K prior. Further, the four-week average also printed 230K figure compared to 229K in previous readings. Earlier in the week, the US Goods and Services Trade Balance deteriorated to $-78.2 billion versus $-79.1 billion expected and $-73.28 billion prior. Further, the final readings of the Unit Labour for Q3 eased to 2.4% QoQ versus 3.5% first estimations. On the other hand, WTI crude oil prints the first daily gain in six, up 1.08% intraday near $72.35 by the press time, as geopolitical fears join hopes of more demand from China to favor the energy buyers. Even so, the black gold remains near the yearly low marked the previous day. Against this backdrop, S&P 500 Futures and stocks in the Asia-Pacific zone print mild losses while the US 10-year Treasury bond yields remain pressured around the three-month low marked on Wednesday. Moving on, intraday USD/INR traders should pay attention to preliminary readings of the Michigan Consumer Sentiment Index for December, expected 53.3 versus 56.8 prior. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for the said month, 3.0% previous readings. Technical analysis USD/INR justifies the failure to cross a seven-week-old resistance line, around 82.65 by the press time, as bears approach 50-DMA support, at 81.95 as we write
Crude oil: Brent ended yesterday's session 1% lower. Industrial metals gain from weaker greenback, demand could be higher as in China Covid-19 restriction are being eased

Crude oil: Brent ended yesterday's session 1% lower. Industrial metals gain from weaker greenback, demand could be higher as in China Covid-19 restriction are being eased

ING Economics ING Economics 09.12.2022 11:09
The weak macroeconomic outlook continues to weigh on the oil market, overshadowing any optimism from China’s easing of Covid-19 restrictions Energy – weakness persists Weakness in the oil market persists with ICE Brent settling with more than 1% losses yesterday to a fresh year-to-date low of US$76.7/bbl. Reports of the disruption to the keystone pipeline in the US helped the NYMEX WTI rally above US$75/bbl, although a quick sell-off at the higher prices pushed WTI back to below US$72/bbl later in the day as demand concerns and a softer US dollar continue to weigh. The Keystone Pipeline remained shut on Thursday after a spill on Wednesday night prompted the pipeline operator (TC Energy Corp) to close it for crude oil flow. The operator declared force majeure on Keystone crude oil supplies for now and the restart of the pipeline remains uncertain. The 600Mbbls/d crude oil pipeline is a major link between the oil fields in Canada and refineries in the US, hence any prolonged disruption could result in tight oil supply in the US market. A continued halt to the pipeline flow could also push Canadian crude oil into a deeper discount compared to WTI; WCS crude was trading at a discount of US$29/bbl compared to US$26/bbl on Tuesday. The latest data from Insights Global shows that refined products inventory in the ARA region (Amsterdam, Rotterdam, and Antwerp) dropped by 54kt over the last week to 5.22mt. Inventory of light products dropped significantly with naphtha inventory down 104kt and gasoline inventory falling by 63kt. On the other hand, stocks and middle and heavy distillate increased over the week. Gasoil stocks increased by 49kt to 1.77mt whilst fuel oil inventory also increased by 79kt to 1.08mt. Read next: UK Santander Bank Fined USD 132 Million, The Cost Of The Pandemic To The US Economy| FXMAG.COM Freeport has delayed the restart of its LNG plant in the US to the end of December against its earlier plan of mid-December. The 2.1bcf/d LNG export plant has been shut since June 2022 after an accident. The plant closure has reduced LNG exports from the country since then with LNG shipments falling to 295.4Bcf in September 2022 compared to 351.5Bcf in May 2022. Further, the plant restart will be done in phases, in a slow and deliberate manner considering the safety aspects and full capacity utilisation may be achieved towards the end of the first quarter only. Slower exports from the US could help keep the European and Asian gas markets tight especially when winter demand increases. In Asia, Australia has capped natural gas and coal prices for domestic consumers which could help keep domestic demand firm for gas during winter months and potentially limit the availability of gas for exports. Metals – prices firm on China optimism Industrial metals extended their upward rally yesterday following a softer dollar (which declined for a third consecutive day) and continued optimism building over better demand prospects as China starts easing Covid-19 restrictions. Meanwhile, Chinese authorities could further soften their stance on real estate policies at a key economic meeting scheduled for next week. LME copper 3M prices rose over 1% day-on-day to close at US$8,543/t yesterday, the highest since 22 June. The latest survey from the Shanghai Metals Market (SMM) shows that refined copper output in China fell marginally to 899.6kt in November as a smelter brought forward maintenance due to tight blister supply. The market was estimating the copper production to be around 903.3kt for November. The group expects copper output to drop further to 887.9kt in December due to the continued maintenance and tight availability of blister feedstock. Amongst other metals, primary aluminium production in the nation stood at around 3.34mt last month (an increase of 1000t/d from a month earlier), as the higher operating rates in Guangxi and Sichuan offset production cuts elsewhere due to winter pollution curbs. For December, the group expects aluminium output to rise further resulting in increasing inventories of aluminium ingots. Meanwhile, zinc production also picked up in November as smelters resume operations. Meanwhile, the latest data from the China Passenger Car Association (CPCA) shows that passenger car sales in China fell 9.2% year-on-year to 1.65M units in November. Cumulatively, sales rose 1.8% YoY to 18.4M units in the first 11 months of the year. Agri – CONAB reduces Brazil's corn production estimates Brazil’s National Supply Company, CONAB, has reduced its corn production estimates from 126.4mt to 125.8mt (up 11.2% YoY) for 2022/23 as excessive heat and irregular rains impacted yields; the market was expecting a number closer to 127.8mt. For soybeans, CONAB left production estimates almost unchanged at 153.5 (up 22.2% YoY) for 2022/23. The adverse weather has delayed soy planting in some of the regions which may reduce the ideal period for winter corn seeding and likely weigh on corn yields. The latest weekly data from the United States Department of Agriculture shows that US grain exports remained strong for the week ending 1 December. Weekly export sales of soybean rose to 1,746kt compared to 694 kt over the preceding week and higher than the average market expectations of 825kt. For corn, the agency reported that the US export sales rose to 692kt for the last week, higher when compared to 633kt in the previous week. Similarly, US wheat export sales also rose to 190kt compared to 163kt a week ago, although the market was expecting a higher number of around 284kt. Read this article on THINK TagsOil Corn Commodities Agriculture Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Key Economic Events and Earnings Reports to Watch in US, Eurozone, and UK Next Week

Credit Suisse Said That Cost Cuts Has Already Done

Saxo Bank Saxo Bank 09.12.2022 11:37
Summary:  Risk sentiment rebounded ever so cautiously as many traders are likely sitting on their hands in anticipation of next Tuesday’s US November CPI release and the FOMC meeting the following day, with many likely wanting to close their books on a very volatile year. Ahead of those event risks, US treasury yields and the US dollar are perched near cycle lows as the market anticipates that the Fed “terminal rate” will peak in the first half of next year.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rallied 0.7% yesterday on strong economic data and more positive growth optimism tied to China’s reopening trajectory. The 4,000 level is the average level for the trading range since mid-November and thus the likely gravitational point in S&P 500 futures in the short-term. US 10-year yield remains below 3.5% and the VIX Index suggests hibernation is setting in the last couple of weeks of the year. Today’s potential market mover events for US equities are the PPI report for November and later consumer confidence survey from University of Michigan. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hang Seng Index rallied 2% on Friday on continued recovery optimism as the country reopening from Covid containment restrictions and more supportive government policies. Premier Li Keqiang said China will strive to achieve steady growth. Defaulted Chinese property developer Sunac said it had reached agreement with creditor to restrict USD9 billions of debts, including swapping $3-4bn of debts into ordinary shares or equity-linked instruments. Reportedly another defaulted mainland developer Evergrande is meeting offshore creditors later today to discuss restructuring proposals. The Chinese authorities are reportedly considering allowing REITs to invest in long-term rental and commercial real estates. Leading mainland Chinese property developers listed in Hong Kong surged 5% -12%. A day after shortening the home isolation period for people infected with Covid-10 to five days from seven days, a Hong Kong health official said the city is considering ending its vaccine pass scheme. Hong Kong local property developers gained 1%-5%. In A-shares, the CSI300 Index rallied 0.8% US 10-year treasury benchmark plunges through 3.50% (TLT:xnas, IEF:xnas, SHY:xnas)  US treasury yields are quiet after the 10-year benchmark broke down through the pivotal 3.50% level this week, with the 2-year yield also trading at the lower end of the recent range as the market awaits the incoming Tuesday CPI next week and the refresh of the Fed’s staff economic projections and “dot plot” forecasts of the Fed Funds rate at the December FOMC meeting next Wednesday. Next Monday sees the auction of 3-year and 10-year treasuries, with a 30-year T-bond auction up on Tuesday. USD pushing on cycle lows in many pairs on risk sentiment rebound The most USD-negative mix of weak US treasury yields and strong risk sentiment kept the US dollar on the defensive yesterday, as EURUSD edged back toward the cycle highs, trading as high as 1.0586 overnight versus the recent high just below 1.0600. Elsewhere, AUDUSD rebounded back toward 0.6800, erasing much of its recent sell-off even if it is still choppy within the range. It is tough to see traders emboldened to take the USD to new lows and holding them without a look at the next key event risks, and really the final major event risks of the year for the US dollar: next Tuesday’s US November CPI print and the FOMC meeting the following day. Industrial and precious metals showing continued strength so far this month Copper (HGH3) trades near the highest level since June while iron ore (SCOc1) traded in Singapore trades near a four-month high. Together with other industrial related metals they have received a boost from President Xi’s sudden Covid pivot towards loosening Covid-19 controls amid protests from increasingly frustrated citizens together with fresh measures to support the property sector. Precious metals led by silver, given its industrial metal link, trades up on the month supported by falling treasury yields and a weaker dollar amid worries about an incoming economic slowdown. Focus on US inflation data with PPI on tap today and CPI next week. Key resistance in gold at $1808 with support below $1765 and $1735. Crude oil (CLF3 & LCOG3) remains stuck at the lowest level of the year. Crude oil is heading for a weekly loss with Brent crude trading below $77 and down more than 11% on the month after spending the week trading within a wide 13-dollar range. A weakening macroeconomic outlook which has seen the US yield curve inversion extend to levels signalling an incoming recession has overshadowed the EU embargo on Russian oil and the prospect of a pickup in demand in China as lockdowns continue to ease. A disruption on the Keystone pipeline temporarily roiled the markets on Thursday giving WTI a temporary boost which sellers took advantage of. Short-term technical traders looking to squeeze existing longs remain in control as the overall level of participation continues to fall ahead of yearend. What is going on? US FTC will sue to stop Microsoft’s $75 billion acquisition of Activision Blizzard The FTC saying that the combination would give Microsoft too large a footprint in the gaming industry. The offer for Activision Blizzard shares was originally 95 dollars, but shares have dipped from hitting above 85 dollars on the announcement of the intended acquisition back in January to near 75 dollars yesterday after a volatile day. US Atlanta Median Wage Tracker rises to 8.1% YoY in November for Job Switchers This was a strong rebound from the 7.6% level posted in October and could suggest a reset in inflation potential going forward. The previous high for this metric in its 25-year history before the recent surge was in the late 1990’s, when it peaked near 6.5%. The overall median wage growth in November was steady at +6.4%. Credit Suisse raises $4.3bn in capital The Swiss based investment and wealth bank has raised $4.3bn in capital to execute its new strategy in which the company is scaling back in investment banking activities and geographies to improve profitability. The bank says that cost cuts already done represent 80% of target for 2023. China and Saudi Arabia upgrade relationships with top-level dialogue During President his visit to Saudi Arabia this week, China’s President Xi Jinping met with King Salman bin Abdulaziz Al Saul and Crown Prince Mohammed bin Salman. The two sides agreed to upgrade the relationship of the two countries with heads of state meeting every two years and moving established joint committees for trade, tech, security and other areas from vice-premier to premier level. The two countries have signed more than 30 agreements and MOUs from petrochemical, hydrogen energy, information technology, and infrastructure projects to cultural exchanges, and are planning to sign another 20. China’s CPI softened to 1.6% Y/Y; PPI stayed at -1.3% Y/Y China’s CPI inflation decelerated to 1.6% Y/Y in November from 2.1% Y/Y in October, in line with expectations as food inflation slowed and consumer demand was weak during lockdown. In the PPI, price increases in the raw materials sector decelerated while the price declines in mining and processing sectors slowed in November. US earnings recap (Broadcom, Costco, and Lululemon) The US semiconductor company Broadcom delivered Q4 (ending in October) earnings and revenue in line with estimates and the Q1 revenue guidance was a bit above estimates. The company says that China has slowed down in terms of consumptions of products, but demand across the business excluding China remains strong. Broadcom shares rose 3% in extended trading. Costco Q1 revenue and earnings were in line with estimates and the US retailer said it is seeing modest improvement in inflation and a slowdown in big tick discretionary items. Costco is also seeing gains among higher income households. Costco shares were unchanged. Lululemon delivered revenue in line with estimates while adjusted earnings were a bit weaker than estimated and the Q4 revenue outlook was slightly below estimates. Lululemon shares declined 8% in extended trading. Soybeans supported by Chinese demand; Wheat pressured by record Russian crop Soybean futures in Chicago (ZSF3) gained more ground on Friday, trading close to their highest since mid-September, as strong demand led by top importer China underpinned the market. While soybeans were likely to post a weekly gain, wheat (ZWH3) was on track for a fifth consecutive weekly decline as export sales continued at a slow pace due to competition from a record Russian production and corn (ZCH3) was down for a second straight week with the fall being cushioned by the strength seen in soybeans. Overall the grain sector now awaits Friday’s monthly crop forecasts (WASDE) from the US Department of Agriculture. What are we watching next? US preliminary University of Michigan Sentiment survey is out later today Sentiment has rebounded from the lows, according to the survey, although sentiment is still very downbeat after hitting an all-time low of 50.2 in the more than 40-year history of the survey in July. The December reading is expected at 57.0 vs. 56.8. Another focus in the survey could be on longer-term inflation expectations, which have rebounded to 3.0% for the next 5-10 years, according to the survey, close to the high of the range. Earnings to watch . Today’s US earnings focus is Oracle which is expected to report earnings after the US market close with revenue up 16% y/y and EPS up 23% y/y. Today: Oracle Corp, Li Auto Economic calendar highlights for today (times GMT)0930 – UK Bank of England to release inflation attitudes survey1330 – US Nov. PPI1500 – US preliminary University of Michigan Sentiment1700 – World Agriculture Supply and Demand Estimates Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 9, 2022 | Saxo Group (home.saxo)
The Challenge to the Dollar: De-dollarisation and Geopolitical Shifts

Saxo Bank Podcast: The Market's Conviction That The Fed Will Be Cutting Rates, Today's Important WASDE Report And Much More

Saxo Bank Saxo Bank 09.12.2022 11:46
Summary:  Today, we look at recent commodity market performance, where hopes for a reopening of Chinese activity is weighed against concerns for the forward outlook elsewhere. We also highlight the market's conviction that the Fed will be cutting rates in the second half of next year and wonder how the market will treat a less accommodative dot plot from the Fed at next Wednesday's FOMC meeting. A look at recent earnings reports, soybeans ahead of today's important WASDE report and much more on today's pod, which features Peter Garnry on equities, Ole S Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Next week’s likely FOMC dot plot is not what the market is pricing | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Rumors The Americans May Be Manipulating Oil Prices

Conotoxia Comments Conotoxia Comments 09.12.2022 11:50
The price of crude oil on world markets may be on its way to a 10 percent drop this week. Since the beginning of the year, contract prices for a barrel of WTI appear to have dropped 4 percent to around $72. WTI crude oil futures stabilized around $72 a barrel on Friday, falling in recent days as renewed recession fears may have worried financial markets, overshadowing optimism over China's loosening of Covid restrictions and lingering demand concerns, tradingeconomics reported. The U.S. oil benchmark may have been under pressure all week, possibly due to economic concerns, with top U.S. company executives in the U.S. "sounding the alarm" on a potential recession next year. This was also the view expressed by the Fitch rating agency this week. Tightening financial conditions may also have taken a toll on the markets, as it is expected that the U.S. Federal Reserve may continue to raise interest rates and keep them higher for longer. Meanwhile, investors seemed to welcome the easing of Covid restrictions in China for a while, raising hopes of a broader economic opening that could boost demand in the world's largest oil importer. Source: Conotoxia MT5, XTIUSD, Weekly China to change oil supply direction? Chinese President Xi Jinping said Thursday that Beijing is ready to increase oil trade with Saudi Arabia, as well as strengthen coordination on energy policy. China also intends to deepen its ties with the kingdom in areas such as infrastructure construction, investment, e-commerce, aerospace research, security and counterterrorism efforts, Xi told Saudi Crown Prince Mohammed bin Salman during his visit to Riyadh, according to Chinese state media and information from the BBN service. An opportunity to replenish U.S. strategic oil reserves? There are also rumors in the market that the Americans may be manipulating oil prices in some way to be able to replenish strategic oil reserves at the lowest possible cost. At the beginning of December, they fell to their lowest level since 1984, as the Americans, by releasing them into the market, are trying to whip up fuel prices to lower inflation. However, only further data will be able to show whether the Energy Department has actually replenished them, at what appear to be currently attractive prices. Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.    
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

OPEC+ Supply Cuts Suggests That The Oil Market Will Tighten Over The Course Of 2023

ING Economics ING Economics 11.12.2022 10:12
This year has been extraordinary for commodity markets. Supply risks led to increased volatility and elevated prices. However, demand concerns have taken the driving seat as we approach year-end. Next year is set to be another year plagued by uncertainty and volatility  In this article Tighter oil market European natural gas prices to remain elevated Demand woes take centre stage for aluminium   We believe that the oil market will tighten over the course of 2023 1Tighter oil market There is still plenty of uncertainty over Russian oil supply given the EU’s ban on Russian crude oil and refined products. However, we believe that Russian supply will fall significantly early next year – in the region of 1.8MMbbls/d year-on-year in the first quarter. This supply loss coupled with continued OPEC+ supply cuts suggests that the oil market will tighten over the course of 2023. US supply growth will not be able to fill the gap, with US producers showing a lot more capital discipline. As a result, we expect ICE Brent to average US$104/bbl next year. 2European natural gas prices to remain elevated This winter appears as though it will be more manageable for Europe due to the late start to the heating season. This left European natural gas storage virtually full in mid-November. However, 2023 will be a tough year for the European natural gas market. It is unlikely the region will be able to build storage at the same pace as seen in 2022. Annual Russian gas flows will fall in the region of 60% YoY, even if flows remain at similar levels to what they are currently. Unfortunately, the liquefied natural gas (LNG) market will not be able to fully offset losses. Therefore, demand destruction will need to continue to ensure adequate supply for the 2023/24 winter. In order to see this demand destruction, prices will have to remain at elevated levels. We forecast TTF to average €175/MWh over 2023. 3Demand woes take centre stage for aluminium Aluminium prices have been highly volatile this year due to the Russia-Ukraine war, logistical issues, increasing recessionary fears and the Covid-19 pandemic. Looking ahead to the first quarter of next year, the risk for aluminium prices will be mainly to the downside, with the prolonged war in Ukraine, rising energy prices, low gas availability, high inflation and weakening downstream demand all adding to the bearish outlook for the lightweight metal. In the short-term, the market’s focus will remain on the bigger macroeconomic and demand-side problems, with prices expected to fall further to $2,150/t in the first quarter of 2023. We believe a recovery in price should start in the second quarter, although any recovery is likely to be slow. TagsOil Natural gas Commodities Aluminium 2023 outlook Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

The Price Of Russian Crude In Asia Appears To Be Holding Well Above The $60 Cap

Saxo Bank Saxo Bank 12.12.2022 08:59
Summary:  U.S. treasuries and stocks sold off after the hotter-than-expected PPI prints which suggest inflation not cooling enough and making the water murkier in the week of CPI and FOMC. The 10-year yield surged 10bps to 3.58%. Other key central bank meetings from the ECB to Bank of England also on watch this week. Hong Kong and Chinese stocks rallied on Friday on continuous optimism about reopening from Covid restrictions and supportive economic policy from the Chinese authorities. The Chinese Communist Party’s Central Economic Work Conference is expected to convene this week. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated on hot PPI data U.S. equities edged down after the producer price Index (PPI), headline as well as core, came in stronger-than-expected and stirred up concerns about risks of pushing the Fed back towards a more hawkish leaning. Nasdaq 100 declined by 0.6% and S&P500 fell by 0.7%. 10 of the 11 S&P sectors declined, with energy, healthcare, and materials dropping the most. Lululemon (LULU:xnas) plunged 12.9% after a gross margin miss, inventory build-up, and below-expectation full sales guidance. Tesla (TSLA:xnas) bounced 3.2%. US treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) bounced on higher producer inflation prints U.S. treasuries sold off on the hotter-than-expected PPI headline as well as core prints. With heavy selling in the 10-year and 30-year segments, the yield curve became less inverted. Two-year yield rose 4bps to 4.34% and 10-year yield surged 10bps to 3.58%. The 2-year-10-year yield curve closed at 76bps on Friday, after hitting as low as 85bps during the week. The money market curve is predicting a 77% probability for a 50bp rate hike on Wednesday. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) rallied on growth optimism Hang Seng Index rallied 2.3% on Friday on continuous optimism on the prospect of a recovery in the growth of the Chinese economy in 2023 as the country reopens from Covid containment restrictions and more supportive government policies. Premier Li Keqiang said China will strive to achieve steady growth. Defaulted Chinese property developer Sunac (01918:xhkg) said it is in discussion with creditors to restructure USD9 billion of debts, including swapping USD3-4 billion of debts into ordinary shares or equity-linked instruments.  Reportedly another defaulted mainland developer Evergrande is meeting offshore creditors to discuss restructuring proposals. The Chinese authorities are considering allowing REITs to invest in long-term rental and commercial real estates. Leading mainland Chinese property developers listed in Hong Kong surged 5% to 18% with Longfor (00960:xhkg) soaring the most. A day after shortening the home isolation period for people infected with Covid-10 to five days from seven days, a Hong Kong health official said the city is considering to end its vaccine pass scheme. Hong Kong local property developers gained 2%-5%. In A shares, the CSI300 Index rallied 1%. The Chinese Communist Party is expected to convene its annual Central Economic Work Conference this week to formulate the macroeconomic policy blueprint for 2023. In Australia; this week the focus will be consumer confidence, employment data and China reopening talk vs pre lunar new year production halt There are a couple of economic readouts that could move the market needle, the ASX200 (ASXSP200.1) this week. Weakening confidence is expected; starting with Consumer Confidence for December (released on Tuesday), followed by Business Confidence for November. Employment reports are due on Thursday for November, and likely to show employment fell; 17,000 jobs are expected to be added, down from the 32,200 that were added in October. So focus will be on the AUD and a potential pull back if the data is weaker than expected. On the equity side, with iron ore (SCOA) trades at four month highs $110.80 but is lower today. We mention on Friday the price of iron ore has been rallying as China on  easing restrictions and because of whispers that Chinese property developers will get more support, which would support demand for iron ore rising. However we mentioned why iron ore could pull back, as buying volume appears slowing. So be mindful of potential pull back in iron ore pricing and mining equities. Secondly, consider seasonable halt of Chinese steel plants ahead of the Lunar New year. Restocking typically occurs 5-8 weeks before the holiday, but plants could be closed earlier, due to poor profits and weak demand. So keep an eye on iron ore majors, Fortescue Metals, Champion Iron, BHP and Rio as they could see profit taking as well after rallying ~25-55% from October.  FX: A weaker start for NZD in Asia, Japan’s November PPI above expectations The US dollar started the week on a firmer footing with a big week ahead as the US CPI and FOMC meeting is eyed. A reversal of the short-term downtrend would however require US 10-year yields to get closer to 4% again. NZDUSD has been a strong performer since the softer October US CPI print and maybe the one to watch if the Fed fails to surprise hawkish this week, given that the RBNZ remains committed to its fight against inflation. Pair dropped below 0.64 in early Asian trading hours this morning as New Zealand Institute of Economic Research (NZIER) published slower GDP growth forecasts through 2025. A higher-than-expected Japan’s November PPI of 9.3% YoY/0.6% MoM, along with an upward revision to last month’s print, may create more talks of a possible policy review (read below) and USDJPY headed higher to 136.80. Crude oil (CLF3 & LCOF3) prices to watch Russia’s response to G7 price cap this week Crude oil prices saw a steadier start to the week after plunging sharply last week on demand concerns from a weakening macro backdrop as well as thin liquidity and control of short-term traders. The uncertainty surrounding European sanctions on Russian oil and the related price also kept volatility high, but was overshadowed by recession concerns. The impact of the potential pickup in demand from China as lockdowns continue to ease also started to fade. This week Russia will announce how it intends to counter the introduced price cap with the risk of a production cut potentially adding fresh support to the market ahead of what looks like a challenging 2023 where supply worries in our opinion will keep prices elevated, despite the risk of lower demand. WTI futures rose above $72 in the Asian morning, while Brent was seen above $77/barrel.   What to consider? Stronger-than-expected US PPI suggests inflation not cooling enough Headline PPI rose 7.4% in November Y/Y, above the expected 7.2% albeit down from the upwardly revised 8.1% for October. The core (ex-food and energy) Y/Y was also above expectations at 6.2% (exp. 5.9%), but cooler than the prior upwardly revised 6.8%. on a M/M basis, headline rose 0.3% while core was stronger at 0.4%, beating expectations. While the PPI data continued to show a peak in inflation in the Y/Y terms, but the downward surprise remains limited and may not be enough to support the Fed pivot expectations. Attention now turns to the US CPI data on Tuesday to see if a similar inflation story is seen for December ahead of the FOMC rate decision on Wednesday. Preliminary University of Michigan survey for December was also strong across the board, as the headline rose to 59.1 from 56.8, and above the expected 56.9. The headline was supported by current conditions and the forward-looking expectations both lifting to 60.2 (prev. 58.8, exp. 58.0) and 58.4 (prev. 55.6, exp. 56.0), respectively. Putin threatening to curb crude exports Vladimir Putin said Russia may lower crude output in response to the G-7 price-cap and added the country won't sell to price-cap participants. The price of Russian crude in Asia appears to be holding well above the $60 cap as it finds enough shipping and insurance capacity. While the crude oil prices last week have remained in the grip of technical traders and seen little impact from the price cap decision, there could be more volatility in store this week as Russia’s response is awaited which could range from production cuts to retaliatory measures. Bank of Japan board members continue to differ on timing for ending YCC All eyes are turning to who could be the possible replacement of Bank of Japan Governor Kuroda in April 2023. One of the contenders, Takehiko Nakao, said that subtle changes in policy framework should be considered as the leadership is changed next year. This comes after board member Naoki Tamura called for a policy review last week and hinted that it may come as early as next year (before Kuroda retires. However, another board member Toyoaki Nakamura said its too early to conduct a review now. Likewise, board member Hajime Takata also said it is too soon to start a policy review. While the timing may be uncertain, the open discussions about a possible BOJ policy review at some point is keeping expectations of an eventual BOJ pivot alive. China and Saudi Arabia upgrade relationships with top-level dialogue; Xi calls for using the renminbi to settle oil and gas trades During his visit to Saudi Arabia last week, China’s President Xi Jinping met with King Salman bin Abdulaziz Al Saul and Crown Prince Mohammed bin Salman. The two sides agreed to upgrade the relationship between the two countries with heads of state meeting every two years and moving established joint committees for trade, tech, security, and other areas from vice-premier to premier level. The two countries have signed a large number of agreements and MOUs from petrochemical, hydrogen energy, information technology, and infrastructure projects to cultural exchanges. Xi reiterates his call for using the renminbi more often to settle trades in crude oil and natural gas but it is not clear how well his call has been received by Saudi Arabia and the other oil-exporting countries at the China-Arab summit last week. China’s CPI softened to 1.6% Y/Y; PPI stayed at -1.3% Y/Y China’s CPI inflation decelerated to 1.6% Y/Y in November from 2.1% Y/Y in October, in line with expectations as food inflation slowed and consumer demand was weak during the lockdown. In the PPI, price increases in the raw materials sector decelerated while the price declines the in mining and processing sectors slowed in November.     Sign up for our Outrageous Predictions 2023 webinar - APAC edition: Wed, 14 Dec, 11.30am SGT For a global look at markets – tune into our Podcast. Source: Market Insights Today: Hot US PPI brings focus to CPI/Fed meeting; HK/China stocks on watch – 12 December 2022 | Saxo Group (home.saxo)
Rates and Cycles: Central Banks' Strategies in Focus Amid Steepening Impulses

U.S. Treasury Bond Yields Rose On Friday, Crude Oil Started The Week With Gains

Saxo Bank Saxo Bank 12.12.2022 09:26
Summary:  Sentiment is off to a cautious start this week after US treasury yields rebounded on Friday, pressuring equity market sentiment and supporting the US dollar. This week should prove a volatile one, with the November US CPI data point up tomorrow, one that has triggered huge swings in markets nearly every month for the last several months, this time with an FOMC meeting to follow on Wednesday and ECB and other central bank meetings up on Thursday.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equity markets rolled over again on Friday after US treasury yields jumped on a hotter-than-expected PPI release on Friday, taking the S&P 500 Index back toward the key support here, which comes in between 3900 and 3900 for the cash index, with the equivalent area around 11,430 in the Nasdaq 100 Index. Markets may be in for a fresh down-draft if US yields rise farther this week, whether due to the CPI release tomorrow, the FOMC meeting on Wednesday, or for any other reason. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Ahead of two key events, the FOMC meeting in the U.S. and the Central Economic Work Conference (CEWC) in China, investors in Hong Kong and mainland Chinese stocks took profits and saw the Hang Seng Index nearly 2% lower and the CSI300 sliding 0.8%. Meituan (03690:xhkg) declined nearly 7% and Country Garden Services (06098:xhk) plunged almost 17%. The CEWC will set out the blueprint for the macroeconomic policies in China for 2023 but will likely not release specific growth targets which be for the National People’s Conference in March. USD rebounds slightly as US treasury yields bounce back The US dollar rebounded on Friday and overnight as US treasury yields bounced back after the release of hotter than expected November PPI data on Friday. USDJPY was one of the bigger movers intraday, rebounding from sub-136.00 levels and trading above 137.00 this morning. EURUSD eased away from the recent cycle high of 1.0595 and was trading near 1.0515 this morning. Markets should be prepared for the risk of significant volatility on the CPI release tomorrow, with the market likely lease prepared for surprisingly firm core CPI readings – the surprisingly soft October CPI data released November 10, for example, triggered some 600 pips of USDJPY downside intraday. Crude oil (CLF3 & LCOG3) focus on Russia, China Covid cases and US pipeline closure Crude oil has started the week trading higher after plunging sharply last week on demand concerns from a weakening macro backdrop as well as thin liquidity leaving short sellers in control. No signs yet of calmer conditions ahead of year-end with multiple uncertainties still unresolved: The Keystone pipeline supplying Canadian oil to refiners on the US Gulf Coast remains shut with no date set for a restart. The market awaits news from Russia on whether it will make good on its threat to cut supply to price cap supporters. Meanwhile in China, surging virus case counts are raising concerns about a slowdown in demand. Focus on US CPI, FOMC and oil market reports from OPEC and IEA. Gold (XAUUSD) trades softer ... ahead of US CPI data on Tuesday and the FOMC rate decision on Wednesday. This after Friday’s stronger than expected US PPI, suggesting inflation is not cooling enough, helped trigger profit taking and another rejection at $1808, a key level of resistance. Ahead of the key data print, the current strength of the market would be tested on a break below $1765, a level where support was found on several occasions last week. US 10-year treasury benchmark rebounds above 3.50% (TLT:xnas, IEF:xnas, SHY:xnas) After teasing below the key 3.50% level for a couple of days last week, the 10-year treasury yield benchmark surged back higher to 3.59% Friday after higher-than-expected November PPI data (see more below) before easing a few basis points overnight. The US November CPI print tomorrow data will likely spark considerable volatility all across the curve, especially given the market’s strong expectation that inflation will fall back sharply already by late next year. What is going on? Stronger-than-expected US PPI suggests inflation not cooling enough Headline PPI rose 7.4% in November Y/Y, above the expected 7.2% albeit down from the upwardly revised 8.1% for October. The core (ex-food and energy) Y/Y was also above expectations at 6.2% (exp. 5.9%), but cooler than the prior upwardly revised 6.8%. on a M/M basis, headline rose 0.3% while core was stronger at 0.4%, beating expectations. While the PPI data continued to show a peak in inflation in the Y/Y terms, but the downward surprise remains limited and may not be enough to support the Fed pivot expectations. Attention now turns to the US CPI data on Tuesday to see if a similar inflation story is seen for December ahead of the FOMC rate decision on Wednesday. Preliminary University of Michigan survey for December was also strong across the board, as the headline rose to 59.1 from 56.8, and above the expected 56.9. The headline was supported by current conditions and the forward-looking expectations both lifting to 60.2 (prev. 58.8, exp. 58.0) and 58.4 (prev. 55.6, exp. 56.0), respectively. Bank of Japan board members continue to differ on timing for ending YCC All eyes are turning to who could be the possible replacement of Bank of Japan Governor Kuroda in April 2023. One of the contenders, Takehiko Nakao, said that subtle changes in policy framework should be considered as the leadership is changed next year. This comes after board member Naoki Tamura called for a policy review last week and hinted that it may come as early as next year (before Kuroda retires. However, another board member Toyoaki Nakamura said it’s too early to conduct a review now. Likewise, board member Hajime Takata also said it is too soon to start a policy review. While the timing may be uncertain, the open discussions about a possible BOJ policy review at some point is keeping expectations of an eventual BOJ pivot alive. UK power prices hit a new record on freezing temperatures The Monday price for UK power surged to a record on Sunday with the Met Office having issued snow and ice warnings throughout the country through to Thursday. The combination of low wind generation and surging demand for heating saw the day-ahead price for power double and reach a record £675/MWh (€785/MWh). The UK power grid operator has ordered two out of three coal-fired plants kept in reserve for emergencies to fire up in case they are needed on Monday.  German day-ahead power prices jumped 33% to €434/MWh, the highest since September 13 while the French contract rose 40% to €465/MWh on Epex Spot.  In the US meanwhile, natural gas prices jumped 12% on the opening today, thereby extending a four-day surge to $7/MMBtu, after a powerful Pacific storm knocked out power to thousands across California and is forecast to deliver heavy snow and blizzard conditions from Montana to Minnesota in coming days. What are we watching next? US November CPI data point tomorrow and FOMC meeting Wednesday The market is aggressively pricing for inflation to drop back sharply this year, with inflation swaps suggesting inflation will be below 2.5% by year-end, even more aggressive than the Fed’s inflation forecast of 2.8% headline and 3.1% core PCE inflation by year-end. This leaves the “surprise side”, as we saw with the Friday US November PPI release, any data that suggests hotter than anticipated inflation, particularly for the core month-on-month ex Food and Energy reading (expected at +0.3%). Meanwhile, due to the market’s anticipation of quickly retreating inflationary pressures and a softening economy, it is pricing the Fed to begin cutting rates as soon as Q4 of this year, something the FOMC forecasts will likely push back against, although the market will likely lean on incoming data more than Fed guidance, which now that the Fed is seen decelerating the pace of hikes to 50 basis points on Wednesday, is only given credence for the next few meetings. Some argue that this could be the Fed’s last rate hike of the cycle, with the “dot-plot” of Fed policy forecasts on Wednesday also likely to push back strongly against that notion with an end-2023 forecast rate of above 5.0% (which would require another 75 basis points of hiking beyond this week’s 50 basis point move, which will take the rate to 4.25-4.50%. Putin threatening to curb crude exports Vladimir Putin said Russia may lower crude output in response to the G-7 price-cap and added the country won't sell to price-cap participants. The price of Russian crude in Asia appears to be holding well above the $60 cap as it finds enough shipping and insurance capacity. While the crude oil prices last week have remained in the grip of technical traders and seen little impact from the price cap decision, there could be more volatility in store this week as Russia’s response is awaited which could range from production cuts to retaliatory measures. In Australia this week the focus will be consumer confidence and employment data There are a couple of economic read outs that could move the ASX200 (ASXSP200.1) needle this week. Weakening confidence is expected; starting with Consumer Confidence for December (released on Tuesday), followed by Business Confidence for November. Employment reports are due on Thursday for November, with payrolls growth of +17k jobs, down from the rise of 32.2k in October. So focus will be on the AUD and a potential pull back if the data is weaker than expected. Several central bank meetings this week The U.S. Federal Reserve (Wednesday), the Bank of England (Thursday) and the European Central Bank (Thursday) are expected to hike interest rates by 50 basis points each this week. Less than two weeks ago, Fed Chairman Jerome Powell said a December rate-hike slowdown is likely. But the hawkish tone should remain based on the latest Non Farm Payroll and Producer Prices reports which indicated that inflation remains high and broad-based. In the eurozone, this is a done-deal that the central bank will hike rates by 50 basis points. Pay attention to the updated economic forecasts (Is a recession the new baseline for 2023?) and to any indication regarding the expected quantitative tightening process. In the United Kingdom, the money market overwhelmingly believes (78%) that the Bank of England will hike its rate by 50 basis points to 3.5% this week. Only a minority (22%) foresees a larger increase, to 3.75%. Earnings to watch This is a quiet period in the earnings season, though a couple of interesting names are reporting this week, with former high-flyer Adobe up on Thursday. Adobe has something to prove as the US software company has seen a negative share price reaction on its past five earnings releases. Trip.com, China's leading online travel agency, reports on Wednesday and investors will judge the result on the company's outlook for Q4 and ideally 2023 as China's reopening is raising the expected travel demand in China for 2023. Read more here. Monday: Oracle Tuesday: DiDi Global Wednesday: Lennar, Trip.com, Nordson, Inditex Thursday: Adobe Friday: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 0800 – Czech Nov. CPI 2330 – Australia Nov. Westpac Consumer Confidence Index 0030 – Australia Nov. NAB Business Conditions survey Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 12, 2022 | Saxo Group (home.saxo)
Economic Calendar Details and Trading Analysis - August 7 & 8

USD/INR Pair Takes Clues From The Recent Recovery In Oil Prices

TeleTrade Comments TeleTrade Comments 12.12.2022 09:28
USD/INR prints three-day losing streak as it takes the bids to refresh intraday high. Precursors for US inflation suggest hawkish rate hike announcements from the Federal Reserve. India inflation, Industrial/Manufacturing Production keeps traders on the edge, recovery in oil prices also fuels USD/INR prices. USD/INR stays firmer for the third consecutive day, up 0.20% intraday near 82.70, as traders await India inflation and industrial output figures during early Monday. In doing so, the Indian Rupee (INR) pair takes clues from the recent recovery in oil prices, as well as the firmer US Dollar amid the risk aversion. Fears of recession join the market’s cautious mood ahead of the key data/events to underpin the US Dollar’s haven demand. That said, US Treasury Secretary Janet Yellen said, “There's a risk of a recession, but it certainly isn't something that is necessary to bring inflation down.” Further, the economic slowdown fears could be linked to the yield curve inversion as the US 10-year Treasury bond yields and the two-year bond coupons portray a negative difference. Also favoring the US Dollar could be the recently firmer data. Among them, the Producer Price Index (PPI) matched the market forecasts of 7.4% YoY for November versus 8.1% prior. Further, the Core PPI rose to 6.2% YoY versus 6.0% expected and 6.7% previous readings. Additionally, preliminary readings of the University of Michigan’s (UoM) Consumer Sentiment Index rose to 59.1 for December versus 53.3 market forecasts and 56.8 final readings for November. Moreover, the 1-year inflation expectations dropped to 4.6%, the lowest since September 2021 while compared to 4.9% expected whereas 5-10 year expectations were stable at 3.0%. It should be noted that the US ISM Services PMI improved to 56.5 versus 54.4 expected. It should be noted that the WTI crude oil snaps a six-day losing streak as it rises 0.20% intraday gains near $71.60. India’s reliance on oil imports makes the INR susceptible to energy price moves. Against this backdrop, the S&P 500 Futures print mild losses near 3,960 while tracking Friday’s downbeat close of Wall Street. Further, the US 10-year Treasury yields remain firmer around 3.56%. It should be observed that the US 2-year Treasury bond yields flash 4.33% as the latest quote. Looking forward, India’s monthly Consumer Price Index (CPI) for November, expected 6.92% YoY versus 6.77% prior, as well as Industrial and Manufacturing Output for October, will be important for the USD/INR pair traders to watch. However, major attention will be on the US CPI and the Federal Open Market Committee (FOMC) as the hawkish bets on the Fed increased of late. Technical analysis USD/INR again pierces a two-month-old descending resistance line, around 82.60 by the press time, amid firmer MACD signals and upbeat RSI (14). As a result, the bulls are likely to overcome the stated upside hurdle this time, which in turn could challenge the all-time high marked in October around 83.42.
Share of Russian metal grows in LME warehouses

The Latest CFTC Data Shows That Speculators Increased Their Bullish Bets In COMEX Copper By 3,241 Lots

ING Economics ING Economics 12.12.2022 12:45
Oil is supported as a crucial North American pipeline remains shut while metals are under pressure this morning as growing Covid-19 cases in China are weighing on the demand outlook over winter Rising Covid-19 cases in China are weighing on the demand outlook for oil Energy – Oil prices supported ICE Brent prices have been consolidating at around current levels of US$77/bbl as the market awaits demand/supply estimates to be released later in the week by IEA and OPEC. The supply disruptions in the US due to the Keystone pipeline closure continue to be supportive for NYMEX WTI with Brent-WTI spread trading at around a 6-month low of around US$4.7/bbl currently compared to the spread of around US$8/bbl a month ago. The latest market report suggests that TC Energy Corp. is progressing with its recovery efforts to resume operations at its shuttered Keystone pipeline; however, the company has still not given any timeline for the pipeline restart. Meanwhile, the latest comments from Russian President, Putin indicated the possibility of an oil supply cut in response to the oil price cap imposed by G7 last week; Russia has already made it clear that it will not sell oil to the countries participating in the price cap. The latest positioning data from CFTC shows that speculators increased their net long position in NYMEX WTI by 5,688 lots (after three consecutive weeks of decline) over the last week, leaving them with net longs of 171,277 lots as of 6 December 2022. Meanwhile, money managers trimmed their net longs in ICE Brent by 4,186 lots over the last week for a fourth consecutive week, leaving them with a net long position of 95,025 (least bullish in more than two years) lots as of last Tuesday. Henry Hub was trading with gains of over 10% today, following the threats of a pacific storm, which could push up the demand for natural gas for heating requirements in the Northern and Western US. The latest 6-10 days outlook reports from the US Climate Prediction Centre predicts a colder temperature across much of the US with below-average temperatures likely to be in the Northern, Western and Central parts of the US along with heavy snowfall. According to the latest EIA data, US natural gas inventory is around 58bcf lower than the 5-yr average at this point in the season and a stronger demand could tighten the market further in the short term. As for the calendar this week, EIA will be releasing its monthly drilling productivity report later today which will be followed by OPEC’s monthly oil market report on Tuesday and IEA’s monthly report on Wednesday. EIA will have its usual weekly petroleum report also on Wednesday. China will be releasing its monthly oil and refining statistics on Thursday which will be looked closely for any hints of the oil demand in the country. Metals – supply concerns for copper The ongoing political uncertainty in Peru has increased some supply-side risks for metals (copper and zinc specifically) where the South American country is a major supplier. As per latest market reports, protestors in Peru have threatened to stop work at Glencore’s Antapaccay and MMG’s Las Bambas copper mines in protest against the country’s new president and to demand fresh general elections. Any escalation to the protests could make it challenging to mine and transport the metals from the country and create short-term supply disruptions. Meanwhile, Anglo American Plc has trimmed its copper mines output guidance to 840kt-930kt in 2023 due to declining ore grades at its Chilean mines, when compared to its previous estimates of 910kt-1.02mt. For the current year, the miner expects the copper production to average between 650kt-660kt, compared to its previous estimates of 640kt-680kt. The latest CFTC data shows that speculators increased their bullish bets in COMEX copper by 3,241 lots (after two consecutive declines) over the last reporting week, leaving them with a net long position of 15,951 lots as of last Tuesday. In precious metals, speculators increased their bullish bets in COMEX gold by 9,609, to leave them with a net long of 37,618 lots as of last reporting week. Agriculture – WASDE report mildly positive for corn The latest WASDE report was mildly constructive for the corn market as harvest delays from Ukraine/Russia could tighten the market in short term. For soybean and wheat, the report was a non-event as estimates were left unchanged for the US market and very marginal changes were made to the global market. The USDA increased its estimates for US corn stocks at the end of 2022/23 to 1.26b bushels compared to earlier estimates of 1.18b bushels and largely in line with the market expectations of around 1.24b bushels. The increase in inventory comes largely on account of softer exports which are now estimated at 2.08b bushels (lowest in three years) compared to earlier estimates of 2.15b bushels, primarily due to higher domestic prices. Domestic production, demand and beginning stocks estimates were left unchanged at 13.9b bushels, 12.0b bushels and 1.4b bushels respectively. Globally, corn production estimates were lowered by around 6.5mt with major supply cuts coming from Ukraine (-4.5mt) and Russia (-1mt) due to harvest delays. Meanwhile, global demand estimates were also reduced by 4.8mt leaving inventory changes to be marginal. Global inventory estimates were lowered by 2.4mt to 298.4mt at the end of 2022/23; the market was expecting a number closer to around 301mt. The USDA left its domestic soybean balance sheet completely unchanged with the domestic inventory at around 220m bushels at the end of 2022/23 with production and demand of around 4.35b bushels and 2.25b bushels respectively, and exports at around 2.05b bushels. For the global market, the USDA increased global inventory estimates marginally from 102.2mt to 102.7mt at the end of 2022/23, largely on account of higher stocks at the start of the year. It was also slightly higher when compared to the average market estimates of 102.3mt. Global soybean beginning stocks for the year increased from 94.7mt to 95.6mt. Global soybean production estimates were increased by around 0.6mt to 391.2mt on account of higher output from India and Ukraine. Global demand estimates for soybean rose marginally from 380.2mt to 380.9mt for 2022/23. The USDA left its estimates for the US wheat balance sheet also unchanged for 2022/23 with ending stocks at around 571m bushels. However, the global market underwent some changes. The USDA decreased production estimates to 780.6mt (-2.1mt) with supply cuts from Argentina (-3mt) and Canada (-1.2mt) offsetting gains in Australia (+2.1mt). Similarly, the agency lowered demand estimates by 1.6mt to 789.5mt with demand downgrades seen from the EU and Ukraine. The agency lowered ending stock estimates for wheat from 267.8mt to 267.3mt at the end of 2022/23, the market was expecting a number closer to 268mt. Read this article on THINK TagsOil prices Metals Commodities Feed Agriculture Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
FX Daily: Upbeat China PMIs lift the mood

China’s New Aggregate Financing Increased Less Than Expected | Tesla And Rivian Shares Fell

Saxo Bank Saxo Bank 13.12.2022 09:09
Summary:  U.S. equities had a broad-based rally ahead of the CPI data with energy leading the gains. USDJPY bounced, approaching 138, as US yields moved higher. Crude oil prices rose snapping a 5-day losing streak amid supply worries from Keystone pipeline. Traders took profits in Hong Kong and Chinese stocks, selling Chinese property, technology and EV names. All eyes on November US CPI now where a softer print is generally expected but room for an upside surprise remains. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) advanced ahead of the CPI report Softer prints in the one, three, and five years ahead inflation expectation numbers in the New York Fed’s Consumer Expectations Survey on Monday boosted risk-on sentiments ahead of the release of the most watched CPI report on Tuesday. The S&P500 bounced from its 100-day moving average, gaining 1.4%. All 11 sectors of the benchmark advanced, with energy, utilities, and information technology leading the gains. Valero Energy, surging 5.2%, was the best performer in the S&P500. The tech-heavy Nasdaq 100 rose 1.2%. Tesla (TSLA:xnas) shed 6.3%, falling to the stock’s lowest level in two years on concerns about suspending output in stages at his Shanghai factory ahead of the Lunar New Year and Musk pledged more Tesla shares for margin loans. US Treasury yields (TLT:xnas, IEF:xnas, SHY:xnas) rose after a weak 10-year notes auction In a thin-volume session ahead of the CPI report on Tuesday and the FOMC on Wednesday, yields on Treasuries were 1bp to 3bps higher. The auction of USD32 billion of 10-year notes, awarded at 3.625%, 3.7bps cheaper than at the time of the auction, was the worst since 2009.  The one, three, and five years ahead consumers’ inflation expectations in the New York Fed’s Consumer Expectations Survey fell to 5.2%, 3%, and 2.3% in November from 5.7%, 3.1%, and 2.4% respectively in October. The yields on the 2-year notes and 10-year notes added 3bps each to 4.38% and 3.61% respectively. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) consolidated ahead of key events Ahead of two key events, the FOMC meeting in the U.S. and the Central Economic Work Conference (CEWC) in China, investors in Hong Kong and mainland Chinese stocks took profits and saw the Hang Seng Index 2.2% lower and the CSI300 sliding 1.1%. Chinese property developers and management services, technology, and EV stocks led the charge lower. Country Garden Services (06098:xhk) tumbled 17% after the property services company’s Chairman agreed to sell more than HKD5 billion worth of shares at a 10.9% discount. Longfor (00960:xhkg), The Hang Seng Tech Index dropped by 4%, with Meituan (03690:xhkg) declining by 7%. Li Auto (02015:xhkg) tumbled 12% after reporting larger losses and a large gross margin miss. In A shares, property and financials stocks were top losers while pharmaceuticals gained. FX: USDJPY heading to 138 ahead of US CPI release The US dollar remained supported ahead of the big flow of key data and central bank meetings later in the week. The modest run up higher in US Treasury yields, along with higher oil prices, brought back some weakness in the Japanese yen. USDJPY reached in sight of 138 and the US CPI release today will be key for further direction. EURUSD remained capped below the key 1.06 handle, but a break of that if it was to happen will open the doors to 1.08. NZDUSD eying a firmer break above 0.64 but would possibly need help from CPI for that. Crude oil (CLF3 & LCOF3) prices gain further on China’s easing while Keystone pipeline remains shut Crude oil prices rose on Monday after a week of heavy losses on demand concerns and fading China reopening. Prices were underpinned by further easing of China’s restrictions despite concerns earlier in the week from a rapid surge in cases. Despite reports that the Keystone pipeline was being partially reopened, it remains completely shut on Monday which suggests a potential drop in storage levels at Cushing, Oklahoma, the WTI delivery hub. WTI futures rose to $74/barrel, while Brent touched $78.50. The market awaits news from Russia on whether it will make good on its threat to cut supply to price cap supporters, while the focus will also turn to US CPI today and the FOMC decision tomorrow, as well as the oil market reports from OPEC and IEA.   What to consider? Stronger UK GDP growth but clouded energy outlook, expect more volatility Some respite was seen in UK’s growth trajectory as October GDP rose 0.5% M/M after being down 0.6% M/M last month’s due to the holiday for Queen’s funeral and a period of national mourning. However, the UK may already be in a recession and the outlook remains clouded which suggests there isn’t enough reason for Bank of England to consider anything more than a 50bps rate hike this week. Energy debate continues to run hot and create volatility in gas prices, after weaker wind generation led to talks of refiring the reserve coal plants, but the request was cancelled later on Monday as wind generation rose. The situation continues to highlight the vulnerability of the energy infrastructure due to lack of baseload, and a bigger test probably lies ahead in 2023. Focus will be on energy companies amid the cold snap in the northern hemisphere with coal plants on standby. Agriculture commodities also a focus Australia’s ASX200 (ASXSP200.1) is expected to have a positive day of trade on Tuesday, as well as Japan’s market, while other Asia futures are lower. In Australia, consumer and business confidence are due to be released. In equites, focus will be on energy commodities and equities, given weather forecasts show a deep chill is descending on the northern hemisphere, and threatening to erode heating fuel stockpiles. Natural gas futures surged, while Oil rose 3% $73.17 a barrel. Energy stocks to watch include Australia’s Woodside, Beach Energy and Santos, Japan’s Japan Petroleum Exploration, Eneos, JGC, Chiyoda and Hong Kong-listed PetroChina, CNOOC and China Oilfield Services. Separately, coal futures are also higher, with Asia set to face a coal winter, and coal plants were previously asked to be on high alert in the UK, with snow blanketing parts of the UK. For coal stock to watch, click here. Separately, wheat prices rose 2.8% on expectations supply could wane; so keep an eye on Australia’s wheat producers GrainCorp, and Elders. Elsewhere, Australian beef output is poised to ramp up in the first half of next year, as the herd continues to rebuild. Australia’s Rural Bank agriculture outlook expects increased slaughter rates, and beef production to rise 5% in the first half, (mind you that’s well below average). So keep an eye on Elders, which helps sell and buy livestock, and Australian Agricultural Co – Australia’s largest integrated cattle and beef producer. EV car makers dominate headlines; revving up competition, despite concerns demand could soften Tesla shares fell 6.3% Monday, to its lowest level since November 2020, making it the worst performer by market cap. TSLA shares have fallen about 54% this year. TSLA is reportedly suspending output at its Shanghai electric car factory in stages, from the end of the month, until as long as early January, amid production line upgrades, slowing consumer demand and Lunar New Year holidays. Most workers on both the Model Y and Model 3 assembly lines won’t be required in the last week of December. Rivian shares also fell 6.2% on reports its scrapping plans to make electric vans in Europe with Mercedes. Instead, Rivian will focus on its own products. While Mercedes-Benz says it will continue to pursue the electrification of its vans and its shares closed almost flat in Europe. VW shares were also lower in Europe, despite it announcing plans to increase market share in North America to 10% by 2030 from 4%. VW wants to produce more electric SUV models in the US; and produce ~90,000 VW’s ID.4 model in 2023 in America. NY Fed consumer expectations survey shows slowing inflation, but.. NY Fed’s Survey of Consumer Expectations indicated that respondents see one-year inflation running at a 5.2% pace, down 0.7 percentage point from the October reading. Expectations 3yrs ahead fell to 3.0% from 3.1% and expectations 5yrs ahead fell to 2.3% from 2.4%. However, it is worth noting that inflation expectations remain above fed’s 2% target and unemployment and wage data was reportedly steady. Softer US CPI to offer mixed signals and considerable volatility Last month’s softer US CPI report was a turning point in the markets and inflation expectations have turned markedly lower since then. Consensus is looking for another softer report in November, with headline rate expected at 7.3% YoY, 0.3% MoM (from 7.7% YoY, 0.4% MoM) while the core is expected to be steadier at 6.1% YoY, 0.3% MoM (from 6.3% YoY, 0.3% MoM). While the case for further disinflationary pressures can be built given lower energy prices, easing supply constraints and holiday discounts to clear excess inventory levels, but PPI report on Friday indicated that goods inflation could return in the months to come and wage inflation also continues to remain strong. Easing financial conditions and China’s reopening can be the other key factors to watch, which could potentially bring another leg higher in inflation especially if there is premature easing from the Fed. Shelter inflation will once again be key to watch, which means clear signs of inflation peaking out will continue to remain elusive. China’s aggregate financing and RMB loans weaker than expectations In November, China’s new aggregate financing increased less than expected to RMB1,990 billion (Bloomberg consensus: RMB2,100bn) from RMB908 billion in October. The growth of total outstanding aggregate financing slowed to 10.0% Y/Y in November from 10.3% in October. New RMB loans also came in weaker than expected at RMB1,210 billion (Bloomberg consensus: RMB1,400bn; Oct: RMB615.2bn). Despite the push from the authorities to expand credits, loan growth remained muted as demand for loans were sluggish. Japan and the Netherland joining the U.S. in restricting semiconductor equipment exports to China According to Bloomberg, Japan and the Netherland have agreed in principle with the U.S. to join the latter in restricting the exports of advanced chipmaking machinery and equipment to China. The decisions have yet to be confirmed but it is expected that announcements will be made in the coming weeks.     Detailed US CPI and FOMC Preview – read here. Sign up for our Outrageous Predictions 2023 webinar - APAC edition: Wed, 14 Dec, 11.30am SGT For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: US CPI day, expect considerable volatility – 13 December 2022 | Saxo Group (home.saxo)
Corn Prices Recorded Their Biggest Weekly Gain, Gold Demand In India May Suffer A Temporary Setback

The USDA On Friday Cut The Global Supply Outlook For Corn

Saxo Bank Saxo Bank 13.12.2022 09:24
Summary:  Risk sentiment rebounded yesterday, even as US treasury yields rose further and closed at their highest level in more than a week. Markets are on tenterhooks ahead of the US November CPI print later today as traders recall the explosion higher in risk sentiment in the wake of the October CPI release last month, where the reaction function may have been about extreme short-term option exposure as anything else. The same volatility risk is present over today’s release. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equity markets rebounded yesterday even as US treasury yields edged higher on the day, as traders nervously recall the heavy volatility around the US CPI releases of recent months, particularly the October CPI release on November 10, which saw an explosion higher in US equities of over 5% on the day after softer-than-expected numbers. Today’s release is complicated by the upcoming FOMC meeting tomorrow. The key downside area for the S&P 500 Index remains 3900-10 the cash index, with the equivalent area around 11,430 in the Nasdaq 100 Index. A sharp rise in the VIX yesterday despite the positive session suggests traders are scrambling to protect themselves with short-term options over the key event risks of the coming couple of days, which aggravates the volatility risk further. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hang Seng Index advanced 0.4% after Hong Kong lifted all travel restrictions for visitors arriving the city and relaxed the QR code scanning requirements for residents.  Local Hong Kong catering and retailer stocks surged 5% to 12%. In A-shares, the CSI300 index was little changed. Lodging, tourism and catering stocks outperformed. FX: USDJPY teased 138 ahead of US CPI release The US dollar was mostly sideways ahead of the big flow of key data and central bank meetings later in the week, but a run-up in US treasury yields and higher oil prices yesterday drove a weaker JPY across the board again, with USDJPY nearly reaching 138.00 before pulling back slightly. The US dollar is set to key off the US CPI release today. EURUSD remained capped below the key 1.06 handle, where a break above, for example, on soft data and an indifferent FOMC meeting on Wednesday, possibly opening the doors to 1.08. Crude oil (CLF3 & LCOG3) Crude oil trades higher for a second day after last week's heavy losses on demand concerns. Prices were underpinned by further easing of China’s restrictions despite concerns earlier in the week from a rapid surge in cases. Despite reports that the Keystone pipeline was being partially reopened, it remains completely shut on Monday which suggests a potential drop in storage levels at Cushing, Oklahoma, the WTI delivery hub. The market awaits news from Russia on whether it will make good on its threat to cut supply to price cap supporters, while the focus will also turn to US CPI today and the FOMC decision tomorrow, as well as monthly oil market reports from OPEC today and IEA Wednesday. First level of resistance in Brent at $80.50 and $75 in WTI. Gold (XAUUSD) and silver (XAGUSD) await CPI report Both metals trade steady while awaiting today’s key US CPI print and tomorrow’s FOMC meeting. Having been rejected on a couple of occasions above $1800, the outcome of these will likely determine whether the metal will break higher to signal a strong start to 2023 or whether investors will book some profit ahead of the quiet period before year-end. In such a case, the current strength of the market will be tested with focus on support at $1765 and not least $1735. Silver meanwhile trades near an eight-month high with half an eye on copper as the potential driver for additional strength. US 10-year treasury benchmark rebounds further (TLT:xnas, IEF:xnas, SHY:xnas) In a thin-volume session ahead of the CPI report on Tuesday and the FOMC on Wednesday, yields on Treasuries closed the day higher, with the US 10-year benchmark closing 4 bps up to 3.61% and nearly 10 bps above intraday lows. The auction of USD 32B of 10-year notes, awarded at 3.625%, 3.7bps cheaper than at the time of the auction, was the worst since 2009.  The one, three, and five years ahead consumers’ inflation expectations in the New York Fed’s Consumer Expectations Survey fell to 5.2%, 3%, and 2.3% in November from 5.7%, 3.1%, and 2.4% respectively in October. What is going on? Stronger UK GDP growth but clouded energy outlook, expect more volatility Some respite was seen in UK’s growth trajectory as October GDP rose 0.5% M/M after being down 0.6% M/M last month’s due to the holiday for Queen’s funeral and a period of national mourning. However, the UK may already be in a recession and the outlook remains clouded which suggests there isn’t enough reason for the Bank of England to consider anything more than a 50bps rate hike this week. Energy debate continues to run hot and create volatility in gas prices, after weaker wind generation led to talks of refiring the reserve coal plants, but the request was cancelled later Monday as wind generation rose. The situation continues to highlight the vulnerability of the energy infrastructure due to lack of baseload, and a bigger test probably lies ahead in 2023. NY Fed consumer expectations survey shows slowing inflation, but... NY Fed’s Survey of Consumer Expectations indicated that respondents see one-year inflation running at a 5.2% pace, down 0.7 percentage point from the October reading. Expectations 3yrs ahead fell to 3.0% from 3.1% and expectations 5yrs ahead fell to 2.3% from 2.4%. However, it is worth noting that inflation expectations remain above the Fed’s 2% target and unemployment and wage data was reportedly steady. Corn (ZCH3) advances following biggest clear-out of longs since 2019  Corn futures in Chicago trade higher for a third day, as dry and hot weather conditions in Argentina, an important Southern Hemisphere producer, stresses the crop. In addition, the USDA on Friday cut the global supply outlook for corn due to a smaller crop in Ukraine, and from where supply could slow after Russian attacks on energy infrastructure have affected cargo loading at the Black Sea ports. Renewed support for corn emerged just after money managers in the week to December 6 sliced their corn net long by 37% to 120k lots, lowest since Sept 2020 and biggest one-week reduction since March 2019. Novozymes shares in focus following acquisition news Yesterday should have been a celebration day for Novozymes shareholders according to management as the enzymes manufacturer announced a $12.3bn acquisition of food flavouring manufacturer Chr. Hansen. However, Novozymes shares traded down 15% so the shares will be in focus this morning. The main question is whether regulators will allow the two companies to merge given their respective size and possible market power in the food ingredients business. What are we watching next? US November CPI to likely to trigger considerable volatility Last month’s softer US CPI report was a turning point in the markets and inflation expectations have turned markedly lower since then. Consensus is looking for another softer report in November, with the headline rate expected at 7.3% YoY, 0.3% MoM (from 7.7% YoY, 0.4% MoM in October) while the core, ex-Food & Energy reading is expected to show a steady rise of 6.1% YoY and 0.3% MoM (from 6.3% YoY, 0.3% MoM in October). While a case can be made for further disinflationary pressures, given lower energy prices, easing supply constraints and holiday discounts to clear excess inventory levels, the PPI report on Friday indicated that goods inflation could return in the months to come and wage inflation also remains strong. Easing financial conditions and China’s reopening can be the other key factors to watch, which could potentially bring another leg higher in inflation especially if there is premature easing from the Fed. Shelter inflation will once again be key to watch, which means clear signs of inflation peeking out will continue to remain elusive. Several central bank meetings this week The U.S. Federal Reserve (Wednesday), the Bank of England (Thursday) and the European Central Bank (Thursday) are expected to hike interest rates by 50 basis points each this week. Less than two weeks ago, Fed Chairman Jerome Powell said a December rate-hike slowdown is likely. But the hawkish tone should remain based on the latest Non Farm Payroll and Producer Prices reports which indicated that inflation remains high and broad-based. In the eurozone, this is a done-deal that the central bank will hike rates by 50 basis points. Pay attention to the updated economic forecasts (Is a recession the new baseline for 2023?) and to any indication regarding the expected quantitative tightening process. In the United Kingdom, the money market overwhelmingly believes (78%) that the Bank of England will hike its rate by 50 basis points to 3.5% this week. Only a minority (22%) foresees a larger increase, to 3.75%. Earnings to watch This is a quiet period in the earnings season, though a couple of interesting names are reporting this week, with former high-flyer Adobe up on Thursday. Adobe has something to prove as the US software company has seen a negative share price reaction on its past five earnings releases. Trip.com, China's leading online travel agency, reports on Wednesday and investors will judge the result on the company's outlook for Q4 and ideally 2023 as China's reopening is raising the expected travel demand in China for 2023. Read more here. Tuesday: DiDi Global Wednesday: Lennar, Trip.com, Nordson, Inditex Thursday: Adobe Friday: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 1000 – Germany Dec. ZEW Survey 1030 – UK Bank of England Financial Stability Report 1100 – US Nov. NFIB Small Business Optimism 1330 – US Nov. CPI 2230 – Australia RBA Governor Lowe to Speak 2350 – Japan Q4 Tankan Survey 0005 – New Zealand RBNZ Governor Orr before Parliamentary Committee 2130 – API's Weekly Crude and Fuel Stock Report During the day: OPEC’s Monthly Oil Market Report Source: Financial Markets Today: Quick Take – December 13, 2022 | Saxo Group (home.saxo)
The Commodities Digest: US Crude Oil Inventories Decline Amidst Growing Supply Risks

Focus On US CPI | In Cryptocurrency Market The Drama Continues With Binance

Swissquote Bank Swissquote Bank 13.12.2022 10:37
European equities traded in the red at the start of the week, but equities in the US rebounded as investors are hanging on to hope of slower inflation and reasonably hawkish Federal Reserve (Fed) by their fingernails. US CPI Today and tomorrow will tell whether they are right to be optimistic or not. If, by any chance, we see a softer CPI figure, then the S&P500 could easily jump above its 200-DMA, and even above the ytd descending channel top. But, but, but… today’s US CPI data, unless there is a huge surprise, will probably not change the Fed’s plan to hike the interest rates by 50bp this week. Therefore, even if we see a great CPI print and a nice market rally today, it may not extend past the Fed decision on Wednesday. US In energy, US nat gas prices jumped more than 30% since last week due to a powerful Pacific storm bringing cold and snow to the norther and central plains in the US. UK In the UK, power prices hit another ATH yesterday. European nat gas futures Happily, we haven’t seen a significant rise in the European nat gas futures, which in contrary kicked off the week downbeat. Crude Oil But crude oil rallied as much as 2.60% on Monday on several factors that could however not lead to sustainable gains in the mid-run. Watch the full episode to find out more! 0:00 Intro 0:29 US CPI: possible scenarios 2:50 But the Fed may not care much about the data 4:10 Opportunity to sell the latest crude oil rally? 6:17 Is it time for Chinese stocks to recover… sustainably? 8:03 UK grows more than expected, but… 8:43 Binance may have processes $10bn illegal funds. Bitcoin stable. 9:11 Amgen buys Horizon Therapeutics, Microsoft takes 4% stake in LSE Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #USD #CPI #inflation #data #FOMC #Fed #rate #decision #dotplot #enery #crisis #natgas #crudeoil #Russia #China #Covid #reopening #HangSeng #Alibaba #Amgen #HorizonTherapeutics #Microsoft #LSE #acquisition #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Commodities: Production Of Zinc At George Fisher Zinc Mine (Australia) Has Stopped As A Grassfire Continued For A Third Day

Commodities: Production Of Zinc At George Fisher Zinc Mine (Australia) Has Stopped As A Grassfire Continued For A Third Day

ING Economics ING Economics 13.12.2022 12:03
Oil prices continued to rise as no timeline has been given yet for the reopening of the Keystone pipeline, which suffered an oil leak last week.  Source: Shutterstock Energy – US shale production recovery continues The oil market strengthened for a second consecutive session amid supply disruptions and as China further eased its Covid restrictions. However, climbing Covid case numbers in the country are clouding once again the demand outlook as new cases have started to strain medical resources. TC Energy Corp. has yet to submit a restart plan needed to resume the operation of the Keystone pipeline following recent oil spill. The EIA released its latest drilling productivity report yesterday and expects US shale oil production to increase to 9.32MMbbls/d in January, up from an estimated 9.23MMbbls/d in December and 9.13MMbbls/d in November. Most of the addition would come from the Permian region, where output is expected to increase by 37Mbbls/d, whilst Bakken and Eagle Ford are forecast to see output increase by 21Mbbls/d and 10Mbbls/d, respectively. If realized, planned shale oil production in January will surpass the previous record of 9.27MMbbls/d set in November 2019. The report also showed that drilled but uncompleted wells (DUCs) increased last month, after falling continuously for more than two years. DUC inventory rose by 22 to a total of 4,443 at the end of November, rebounding from the lows of 4,421 (lowest since 2014) reported in October. An increase in DUC inventory reflects slower investment in completing oil wells, and could weigh on shale oil production growth in 2023 if crude oil prices remain at lower levels. Metals – China Covid concerns weigh on the complex A resurgence of Covid infections in China weighed across risk assets yesterday, with base metals mostly falling across the board. LME copper fell almost 2% to close at US$8,374/t yesterday with the market largely ignoring the ongoing protests in Peru. The latest market report suggests that the latest move by Peru’s president to bring elections forward to 2024 failed to curb ongoing protests in the country. Freeport-McMoRan reported that its Cerro Verde copper mine is experiencing delays in the transport of supplies and products due to political protests but that mine operations are running normally as of now. For aluminium, the latest LME data shows that total on-warrant stocks for the metal reported an increase of 37.4kt (the biggest daily addition since 19 October) to 261.4kt as of yesterday. All of the inflows were reported from Port Klang, Malaysia warehouses. Meanwhile, Shanghai Metals Market (SMM) reported that aluminium smelters (Zunyi Aluminium Industry Ltd. and Guizhou Liupanshui Shuangyuan Aluminum Ltd) in Guizhou province in China have received orders from the local government to reduce power usage by 20%, starting from 13 December for at least five days. Cold weather across the region has resulted in increased energy consumption and reduced supplies. For zinc, the latest reports suggest that production at George Fisher zinc mine located outside Mount Isa, Australia has stopped as a grassfire continued for a third day. Hundreds of underground workers have been evacuated due to health safety concerns. Stocks of zinc on the LME fell for a tenth consecutive day on Monday and are now  at their lowest level in three decades as producers cut output. Soaring energy costs following Russia’s invasion of Ukraine have squeezed producers’ margins, with energy-intensive metals, including zinc, having been particularly affected. Last week, Nyrstar said its Auby smelter would remain closed indefinitely due to challenging market conditions. Agriculture – UNICA reports higher cane crush The latest fortnightly report from the UNICA shows that sugar cane crushing in Centre-South Brazil increased significantly by 319% YoY to 16.2mt over the second half of November, with cumulative crushing up 2.1% YoY so far this season to stand at 532mt. Sugar production increased 532% YoY to 1.03mt over the 2nd half of November, with around 47.6% of cane allocated to sugar production. Cumulatively, sugar output has risen 2.8% YoY to 33mt in the season so far. UNICA reported that 84 sugar mills were still operating at the end of November 2022, nearly three times more than last year due to a delayed start to the season. The group expects 23 sugar mills to close operations by the first half of December; typically crushing season ends in Brazil by the first half of December. A longer crushing season this year could push up supply from Brazil. The crushing report from UNICA is at odds with other market reports - where crushing looks to have concluded due to adverse weather. USDA weekly export inspection data shows the demand for US grains remained weak over the last week. US weekly inspection of soybean for export fell to 1,840kt over the last week, lower when compared to 2,080kt in the previous week. It was slightly higher when compared to 1748kt same time last year. For wheat, export inspections weakened last week, from 342kt to 219kt; also  lower than the 269kt at the same time last year. Corn shipment inspections fell to 505kt over the last week, compared to 824kt from a week ago and 930kt at the same time last year. Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Worrisome Growth Signals in Eurozone PMI: Recession Risks Loom Amid Persistent Inflation Pressures

Saxo Bank Podcast: Market Speculators And Hedgers Are Revving Up For Another Blast Of Volatility

Saxo Bank Saxo Bank 13.12.2022 13:41
Summary:  Today, we highlight the absurd levels of volatility around recent US CPI releases ahead of today's US November CPI data point, noting signs that market speculators and hedgers are revving up for another blast of volatility in the wake of today's release. At the same time, we suggest that the reaction function may be difficult as the FOMC meeting follows hot on the heels of this release the following day. Elsewhere, we look at precious metals and copper levels, whether regulators will (or should) approve mergers like the Novozymes-Christian Hansen attempt, earnings to watch for the rest of the week and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities, with John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-dec-13-2022-13122022
US Equities Slide 1.5% as Bond Yields Soar Amid Consumer Confidence Drop

The Increase In Orlen's Revenue May Also Have Been Largely Due To The Acquisition Of Lotos Group

Conotoxia Comments Conotoxia Comments 13.12.2022 14:42
The drastic reduction in crude oil quotations on world stock exchanges has not gone hand in hand with a fall in fuel prices at filling stations in Poland. According to data from the Autocentrum portal, the average price of petrol 95 reached its peak in June this year, amounting to PLN 7.84 per litre (6,78 USD/gallon), and has fallen by 17.6% to date (currently the average is PLN 6.46 per litre around 5,58 USD/gallon). At the same time, the average pump price in the US peaked at US$ 4.84 per gallon (approx. PLN 4.12/l) and has now fallen by 32% to US$ 3.26 per gallon (approx. PLN 2.84/l). In the US, station prices seem to follow oil market trends, which  could not be said for Poland, where prices have remained at similar levels since August. Source: Conotoxia MT5, XTIUSD What can Exxon do that Orlen can't? Despite falling oil prices, the margin (percentage of net profit on revenue) on every litre sold of one of the largest US oil companies, Exxon Mobile, rose from 15.4% to 17.5% in Q3 this year. At the same time, Orlen's margin rose from 7.45% to 10.7%. As it turns out, it may not have been caused by the company's improved service delivery. The increase in profitability with falling station prices (at least those in the US) may have been due to increased refinery capacity utilisation and increased revenues in Q3 of this year. As we can learn from a comment by US CEO Darren Woods: "Rigorous cost control and growth of higher-margin petroleum and chemical products also contributed to earnings and cash flow growth in the quarter." The US company's production costs fell by 6% quarter-on-quarter. Over the same period, these costs for Orlen increased by as much as 34%. Source: Conotoxia MT5, ExxonMobil, Daily In the case of Orlen, the quarterly result could have been significantly influenced by a hedging position on foreign exchange contracts (hedging), which generated a PLN 3.5 billion profit for the company in the event of a weakening of the Polish currency. The increase in Orlen's revenue may also have been largely due to the acquisition of Lotos Group and the inclusion of its result in the company's results, which generated an additional PLN 2.3 billion in revenue. Perhaps a different route for CEO Obajtek (Orlen)? It seems that instead of imposing ever-higher margins and charges on Polish motorists, it is possible, following the example of Exxon Mobile, to focus on cutting costs and increasing production instead of monopolising the Polish fuel market and graciously bailing out Poles with VITAY cards. Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The Challenge to the Dollar: De-dollarisation and Geopolitical Shifts

The Fed Is Expected To Lift Its Federal Funds Rate Target By 50bps

Saxo Bank Saxo Bank 14.12.2022 08:48
Summary:  U.S. equities and bonds faded the initial hype after softer CPI prints and ended the volatile session with muted gains. USD sold off and USDJPY dipped below 135 at one point. Crude rallied for the second day in a row, rising 3% as supply issues remained. A 50bp hike at today’s FOMC is cemented and the market’s focus will be on the dot plot about the Fed’s rate projections for 2023 and Powell’s comment at the press conference. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) jumped at the open before paring most of the gains After a strong opening, soaring at much as 4% in the S&P 500 and 3.9% in Nasdaq 100, the U.S. market spent the rest of the day pulling back from the intraday highs. S&P500 finished the volatile session at 4019.65, up 0.7%, and Nasdaq 100 closed at 11834.21, 1.1% higher.  A large portion of the early surge was in ETFs. A huge USD3.9 trillion notional value of options expiring this Friday may tend to pin the benchmark S&P 500 as well. All sectors with the S&P 500, except consumer staples, advanced. The interest rate-sensitive real estate sector was the top gainer, rising 2%, which was followed by the energy sector which was boosted by a 3% rise in the crude oil price. Meta Platforms (META:xnas) gained 4.7% as Republican Senator Rubio is seeking a pass a bi-partisan bill to ban Tik Tok from operating in the U.S. Moderna (MRNA:xnas) soared 19.6% on news of positive trial data from an experimental skin cancer vaccine in collaboration with Merck (MRK:xnys). Merck climbed 1.8%. Airlines were notable laggards on Tuesday. A 3% drop made airfares one of the largest items contributing to the softness in the CPI report. In addition, Alsska Air (ALK:xnys) warned about slowing corporate travel and JetBlue (JBLU:xnas) which was more leisure travel-focused, mentioned weaker bookings in Q4. US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) bull steepened on soft CPI data Immediately after the release of the soft CPI data which increased the chance of further downshift to a 25bp hike instead of 50bps in February, the whole yield curve shifted down with the 2-year at one point shedding 24bps to 4.13% and the 10-year 20bps richer to as low as 3.41%. The money market curve now prices the terminal rate at around 4.82% in 2023, down from 4.98%. The long-end however did not manage to keep their gains after some large block selling in the 10-year contracts and a weak 30-year auction. The 10-year gave back nearly half of the gain to close the session 11bps richer at 3.50%. The 2-10-year curve steepened to 72bps. The yield on the 30-year long bonds finished the day only down 4bps at 3.53%. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hang Seng Index advanced by 0.7% after Hong Kong lifted all travel restrictions on visitors arriving in the city and relaxed the QR code scanning requirements for residents.  Catering and retailer stocks outperformed. Cosmetic chain operator Sa Sa (00178:xhkg) jumped 14.2%. Local developers and commercial landlord stocks rose by 3% to 4%. Cathay Pacific climbed 3.2%. Macau casino operators gained between 1% and 4%. Shares of the semiconductor industry jumped on media reports suggesting that the Chinese Government is going to spend RMB 1 trillion to support the industry. SMIC (00981:xhkg) gained 9.7% and Hua Hong Semiconductor (01347:xhkg) soared 17.4%. In A-shares, the CSI300 index was little changed. Farming, textile, and transportation stocks outperformed. FX: USDJPY dipped below 135 before a recovery in Asian hours The US dollar sold off on Tuesday following the softer November CPI print in the US saw US yields plunge lower. AUDUSD was however seen paring some of the gains in early Asian trade and slid below 0.6840 amid concerns on China’s Covid cases ramping up further which also led to the postponement of the Central Economic Work Conference. USDJPY took a brief look below 135 after the CPI release but some of the move was erased later. EURUSD surged to 1.0673 and remains supported above 1.0620 ahead of Fed meeting today and ECB meeting tomorrow. Crude oil (CLF3 & LCOF3) pauses after two days of gains Crude oil prices gained further on Tuesday after a softer-than-expected US CPI print for November spurred hopes that the Fed will slow down its pace of rate hikes. Supply side issues were also supportive. TC Energy Corp has yet to submit a restart plan for the Keystone pipeline following a leak last week, and plans have been delayed by bad weather. Russia’s President Putin is planning to sign a decree banning the sale of Russian oil through any contract that specifies the recipient as a nation that joined the G7 price cap. OPEC urged caution as its members implement the recent 2mb/d production cut. It now expects to see a finely balanced market in Q1 2023, instead of the deficit implied by its forecasts a month ago. It sees demand increasing by 2.2mb/d next year to average 101.77mb/d. Demand concerns may pick up further in Asia today as Covid cases in China continue to rise and impede the reopening trade, but caution will prevail ahead of Fed meeting later today.   What to consider?   Another softer US CPI print is still not enough The November CPI report was cooler-than-expected across the board, highlighted by the headline cooling to 7.1% from 7.7% (exp. 7.3%), with a M/M gain of 0.1%, slowing from the prior 0.4% and beneath the expected 0.3%. Core metrics saw Y/Y print 6.0% vs 6.3% prior and beneath the 6.1% expectation, while the M/M saw a 0.2% gain, lower than the prior and expected 0.3%. The market pricing has shifted towards a 25bps rate hike for February after we potentially get a 50bps today, while the terminal rate forecast has drifted lower to 4.82%. If we dig into the details, the disinflation is clearly driven by goods and energy, while services prices continue to rise further. This means wage pressures will continue and provides room for the Fed to continue to beat the drum on rates being higher-for-longer.  December FOMC and dot plot may have little new to offer, so focus remains on Powell’s press conference The Fed is expected to lift its Federal Funds Rate target by 50bps to 4.25-4.50%, according to the consensus as well as the general commentary from Fed officials signalling a downshift in the pace of rate hikes. The updated economic projections will also be released, and are expected to show a higher terminal rate than the September projections (4.6%), as has been alluded to by Chair Powell at the November FOMC and in remarks made in December. Easing financial conditions and expected China stimulus could mean Fed continues to chase the inflation train from the back into the next year as well, so Powell’s press conference remains key to watch. There will have to be a lot of focus on pushing out the rate cuts of ~50bps that are priced in for next year, and emphasise that the Fed will not ease prematurely if Powell and committee want to avoid further easing of financial conditions. China’s Central Economic Work Conference is reportedly postponed According to Bloomberg, which cites unnamed sources, the Chinese Communist Party is postponing the Central Economic Work Conference that was previously scheduled for this week due to the spread of Covid-19 inflections in Beijing. No signs, however, show that the Chinese authorities are reversing the recent trend of relaxing pandemic restrictions. New Zealand forecasts a recession starting Q2 2023 New Zealand Treasury Department issued 2022 half-year economic and fiscal update, forecasting three quarters of negative GDP growth from Q2 2023. Overall, the forecast calls for 0.8% contraction in 2023. Still, comments from RBNZ this morning suggested inflation focus will continue to drive more rate hikes, even as spending slows and unemployment levels increase as more people join the workforce over the coming year, partially helped by improving migration levels. Bank of Japan’s Tankan shows weakening business sentiment Sentiment among Japan's large manufacturers deteriorated slightly in the three months to December amid concerns over the global economic slowdown. The main index for sentiment among large manufacturers was +7, compared with +8 in Q3, according to the Bank of Japan's quarterly Tankan survey. Non-manufacturers still took a more positive view as the economic reopening gathered momentum, and large non-manufacturer index rose to 19 in Q4 from 17 previously.     Detailed FOMC Preview – read here. Sign up for our Outrageous Predictions 2023 webinar - APAC edition: Wed, 14 Dec, 11.30am SGT For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Softer-than-expected US CPI puts the focus on FOMC dot plot and Powell’s comments – 14 December 2022 | Saxo Group (home.saxo)
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Headwinds Are Mounting For Tesla As EV Demand Is Coming Down In China | Risk Sentiment Rushed Higher

Saxo Bank Saxo Bank 14.12.2022 08:57
Summary:  Risk sentiment rushed higher on the soft US November CPI data yesterday, although sentiment rapidly turned more cautious as traders recognize the risk that the Fed may be less willing to react as quickly to signs of easing inflation as the market in today’s FOMC meeting, which will refresh the Fed’s latest economic projections and the “dot plot” of projected Fed rates for coming years. Four G10 central bank meetings follow tomorrow, including the BoE and ECB.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The US November CPI report was exactly what the market was hoping for, sending S&P 500 futures on a rally to the 4,180 level before being sold off declining 3% from the high to the close. This rejection indicates that the market is doubting itself despite the lower US core inflation print. A weak session by Tesla suggests that while inflation fears might be disappearing growth fears will begin to take hold instead posing a new threat to the equity market. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and Chinese stocks edged up higher. The news about a delay in China’s central economic work conference due to a surge in Covid inflections in Beijing. Investors are encouraged by signs that the Chinese authorities are not reversing course despite outbreaks after the easing of restrictions. China will stop reporting infections without symptoms as mandatory testing has been dropped. Hang Seng Index climbed 0.7%, led by technology names. Chinese educational services providers were among the top gainers. In A-shares, CSI 300 gained 0.3%, with tourism, lodging, Chinese liquor, and semiconductor outperforming. FX: USD dumped after another soft CPI print The US dollar sold off on Tuesday on the softer November CPI print in the US taking US treasury yields sharply lower. AUDUSD pared some of the gains in early Asian trade and slid below 0.6840 amid concerns on China’s Covid cases ramping up further which also led to the postponement of the Central Economic Work Conference. USDJPY took a brief look below 135 after the CPI release but some of the move was erased later. EURUSD surged to 1.0673 and remains supported above 1.0620 ahead of the FOMC meeting today and ECB meeting tomorrow. Crude oil (CLF3 & LCOG3) pauses ahead of FOMC Crude oil trades softer ahead of FOMC after rallying 6% over the previous two sessions, driven by an improved risk appetite following Tuesday's CPI print and encouraging signs from China where easing restrictions eventually will boost demand. The rally however slowed after the API reported a 7.8 million barrel rise in crude inventories versus expectations for a +3 million barrel draw from EIA later, and OPEC urged caution as it cut its Q1 23 oil demand forecast. The IEA will publish its monthly report later today. Goldman cut its Q1 price forecast by $20 to $90/bbl siting weak demand while saying “The structural oil cycle has taken a pause this year”. Apart from IEA, also focus on a potential Russian response to the price cap and not least today’s FOMC result. Gold (XAUUSD), silver (XAGUSD) and copper (HGH3) all rallied strongly following the lower-than-expected US CPI print Gold closed at its highest level since July above $1808 while silver reached an 8-month high above $24. The recovery in silver has been impressive with the market only requiring 15 weeks to recover half of what it lost during an 82-week period from Feb 2021 to Sept this year. Copper meanwhile briefly traded above its 200-day moving at $3.913/lb before finding stiff resistance ahead of the $4/lb area. All metals finding support from a weaker dollar and lower bond yields on signs that the worst inflation has likely passes, suggesting the Fed could further slow the pace of rate hikes next year. US 10-year treasury benchmark rebounds further (TLT:xnas, IEF:xnas, SHY:xnas) Immediately after the release of the soft CPI data which increased the chance of further downshift to a 25bp hike instead of 50bps in February, the whole yield curve shifted down with the 2-year at one point shedding 24bps to 4.13% and the 10-year 20bps richer to as low as 3.41%. The money market curve now prices the terminal rate at around 4.82% in 2023, down from 4.98%. The long-end however did not manage to keep their gains after some large block selling in the 10-year contracts and a weak 30-year auction. The 10-year gave back nearly half of the gain to close the session 11bps richer at 3.50%. The 2-10-year curve steepened to 72bps. The yield on the 30-year long bonds finished the day only down 4bps at 3.53%. What is going on? Another softer US CPI print The November CPI report was cooler-than-expected across the board, highlighted by the headline cooling to 7.1% from 7.7% (exp. 7.3%), with a M/M gain of 0.1%, slowing from the prior 0.4% and beneath the expected 0.3%. Core metrics saw Y/Y print 6.0% vs 6.3% prior and beneath the 6.1% expectation, while the M/M saw a 0.2% gain, lower than the prior and expected 0.3%. The market pricing has shifted towards a 25-bp rate hike from the Fed for February after we are nearly certain to get a 50bp hike today, while the terminal rate forecast has drifted lower to 4.82%. If we dig into the details, the disinflation is clearly driven by goods and energy, while services prices continue to rise further. This means wage pressures will continue and provides room for the Fed to continue to beat the drum on rates being higher-for-longer. Tesla shares down another 4% Headwinds are mounting for Tesla as EV demand is coming down in China and VW CEO said yesterday that EV sales in Europe is slowing down due to high price points and elevated electricity prices. Tesla shares closed just above the $160 level, which is just below the 200-day moving average at $164, the lowest levels since November 2020. High battery materials prices are also weighing on the outlook for EV makers. Finally, CEO Elon Musk’s endeavour at Twitter is potentially pressuring Tesla shares as he might be forced to put up Tesla shares as collateral for refinanced Twitter debt. Inditex Q3 results in line with estimates The European fast fashion retailer has delivered nine-months results (ending in October) with revenue at €23.1bn and EBIT at €4.2bn in line with estimates. Apple to allow alternative App Stores on its devices This move is a response to new European Union requirements under the Digital Markets Act that are set to go in effect in 2024. The move will initially only apply to the European market unless regulators elsewhere make similar moves. This will allow app developers to avoid paying Apple up to 30% of revenues for payments made through Apple’s app store. Several large app makers’ shares, including those for streaming service Spotify and dating services app Match group jumped on the news. New Zealand forecasts a recession starting Q2 2023 New Zealand Treasury Department issued 2022 half-year economic and fiscal update, forecasting three quarters of negative GDP growth from Q2 2023. Overall, the forecast calls for 0.8% contraction in 2023. Still, comments from RBNZ this morning suggested inflation focus will continue to drive more rate hikes, even as spending slows and unemployment levels increase as more people join the workforce over the coming year, partially helped by improving migration levels. Bank of Japan’s Tankan survey shows weakening business sentiment Sentiment among Japan's large manufacturers deteriorated slightly in the three months to December amid concerns over the global economic slowdown. The main index for sentiment among large manufacturers was +7, compared with +8 in Q3, according to the Bank of Japan's quarterly Tankan survey. Non-manufacturers still took a more positive view as the economic reopening gathered momentum, and large non-manufacturer index rose to 19 in Q4 from 17 previously. US places 30 additional Chinese companies on Entity List, a trade blacklist The companies included Yangtze Memory Technologies, China’s top memory chip producer and others and will prevent them from purchasing selected American components. This expands the original Entity List of companies that were blacklisted back in October for their connection with China’s military. What are we watching next? December FOMC and dot plot may have little new to offer, so focus remains on Powell’s press conference The Fed is expected to lift its Federal Funds Rate target by 50bps to 4.25-4.50%, according to the consensus as well as the general commentary from Fed officials signalling a downshift in the pace of rate hikes. The updated economic projections will also be released, as will the latest “dot plot” projections of the Fed policy rate, which are expected to show a median terminal rate that is higher than the September projections (4.6%, with the market currently projecting 4.32%), as has been alluded to by Chair Powell at the November FOMC and in remarks made in December. Easing financial conditions and an anticipated China stimulus could see the Fed Chair Powell remaining in hawkish mode, so Powell’s press conference remains key to watch. There will have to be a lot of focus on pushing back against the market’s anticipation that the Fed will be trimming rates by Q4 of next year, emphasising that the Fed will not ease prematurely if Powell and committee want to avoid further easing of financial conditions. Four more central bank meetings tomorrow The Swiss National Bank, Norway’s Norges Bank, Bank of England and the European Central Bank will all meet tomorrow, with the Norges Bank expected to hike 25 basis points and the three others expected to hike 50 basis points.  Markets will look for the relative degree to which the central banks signal that they are ready to declare at least a pause in the hiking cycle soon. The Norges Bank has hinted that it sees its tightening cycle near an end and the BoE has said that the peak rate will likely prove lower than the market was forecasting around the time of its last meeting. With the late dollar weakness, a dovish shift is more likely. Earnings to watch Inditex has reported its Q3 results in early European hours (see review above) which extends today’s earnings focus to the US session where our focus will be on Lennar, a US homebuilder. Lennar is expected to show 20% revenue growth y/y in its FY22 Q4 period (ending November), which is expected to decline to 5% y/y in FY23 Q1 (ending February). Today: Lennar, Trip.com, Nordson, Inditex Thursday: Adobe Friday: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 0900 – IEA's Monthly Oil Market Report 1000 – Euro Zone Oct. Industrial Production 1330 – Canada Oct. Manufacturing Sales 1530 – EIA's Weekly Crude and Fuel Stock Report 1900 – US FOMC Meeting 1930 – US Fed Chair Powell Press Conference 2145 – New Zealand Q3 GDP 0030 – Australia Nov. Employment Change / Unemployment Rate 0120 – China Rate Decision 0200 – China Nov. Retail Sales 0200 – China Nov. Industrial Production Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 14, 2022 | Saxo Group (home.saxo)
Russia Look Set To Double Its Exports For The First Half Of 2023

Commodities: Soft Wheat Shipments From The EU Rose 6% Year-On-Year

ING Economics ING Economics 14.12.2022 10:57
On Tuesday, gold jumped to its highest price since June after US consumer prices posted the smallest monthly gain in more than a year, sparking hopes that the US Federal Reserve will ease the pace of interest rate hikes Energy – OPEC left supply/demand forecasts largely unchanged ICE Brent was firm yesterday along with the broader commodity index as a softer CPI report from the US buoyed sentiment – lower inflation could push the Fed to slow down its rate hikes and support a recovery in commodities. The Fed is expected to hike rates by 50bp later today. Supply disruptions and the easing of Covid-19 curbs in China provided further support. The monthly oil market report released from the OPEC group yesterday was largely flat for the oil market. The group left demand growth estimates largely unchanged for both 2022 at around 2.5MMbbls/d and 2023 at around 2.2MMbbls/d although it made some adjustments to quarterly demand numbers. The group revised down demand estimates for the first quarter of 2023 from 101.3MMbbls/d to 100.9MMbbls/d and it revised higher demand estimates for the third quarter with similar numbers. Similarly, the group left non-OPEC supply growth estimates largely unchanged at around 1.9MMbbls/d for 2022 and 1.5MMbbls/d for 2023. The group maintained its estimates for OPEC crude oil supply requirements at around 29.22MMbbls/d for 2023 compared to around 28.59MMbbls/d for 2022. The weekly inventory report from the API was bearish for the oil market. The API reported that US crude oil inventories increased by 7.82MMbbls over the last week, compared to market expectations of roughly 3.9MMbbls of withdrawals. The API also reported that gasoline and distillate fuel oil stocks increased by 0.9MMbbls and 3.9MMbbls, respectively, over the week. The official EIA report will be released later today. Metals – softer inflation supports gold rally Yesterday's US inflation report helped gold prices to rally strongly, rising to a near six-month high of US$1,820/oz as a slowdown in rate hikes could increase the investment appeal of gold in the longer term. US retail inflation slowed from 7.7% in October to 7.1% in November whilst core inflation dropped to 6% compared to 6.3% in October. Whilst inflation is still higher than the Fed’s comfortable range, softening of inflation reinforces the view that the peak of the rate-hike cycle might be in sight. The interest rate hike this year has pushed investment money away from gold as investors chased higher returns (along with safety) in US treasuries. Total known gold exchange-traded fund (ETF) holdings have dropped by around 13.2mOz from the peak in April this year as the Fed hiked interest rates. A slowdown in rate hikes or the possibility of rate cuts later in 2023 could reverse the trend and help bring investment money back into gold ETF. Copper traded with high volatility yesterday as low inflation in the US boosted sentiments and pushed LME copper prices to above US$8,600/t at one point, although the rally was quickly followed by a sell-off with LME copper settling at US$8,497/t, still up 1.5% for the day. LME aluminium and zinc also witnessed similar price action as expectations of a slowdown in rate hikes led to optimism. The time spread of LME nickel contracts has widened significantly this week to US$280-290/t of contango as the illiquidity in the spot market makes it challenging for traders to roll-forward long positions without a huge discount. The spread was only around US$100/t at the start of the month. Weaker demand for nickel in the physical market and higher borrowing costs have further accentuated the issue. Agriculture – Russia targets 80mt-85mt of wheat harvest next year The Russian Agriculture Ministry said that the nation is aiming for an 80-85mt harvest target for wheat next year and a total grain harvest of around 125-127mt. These initial targets from Russia are lower compared to the harvest in 2022 and may tighten the global market if realised. The Ukraine Agriculture Ministry said that as the harvesting of grains is nearing completion in the nation, the farmers have harvested 17.2mt (66%) of corn as of 13 December, with a yield of 61.9 centners per hectare. Meanwhile, wheat harvest stood at 19.4mt (100%) during the abovementioned period, with a yield of 41.2 centners per hectare. Weekly data from the European Commission shows that soft wheat shipments from the EU rose 6% year-on-year and reached 15.4mt as of 12 December, up from 14.5mt for the same period last year. Morocco, Algeria and Egypt were the top destinations for these shipments. Meanwhile, given lower domestic output, EU corn imports increased to 13.1mt, compared to around 6mt last year. Read this article on THINK TagsMetals Gold Energy Commodities Agriculture Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
It Was Possible That Tesla Would Move Closer To Resistance

Tesla Trades At Cheapest, Crude Oil Rallied More Than 2.50%

Swissquote Bank Swissquote Bank 14.12.2022 11:19
Yesterday’s inflation report in the US filled investors with joy and further hope that inflation in the US may have peaked this summer and we will be heading lower from here, and that the Federal Reserve (Fed) will adopt a softer monetary policy stance and hike, yes, by 50bp today, but certainly not more than another 25bp in February. Powell  But Powell could also stress the fact that inflation remains significantly high compared with the 2% policy target, and that relaxing the tightening measures prematurely is not a good idea. US Dollar In the FX, the US dollar index fell following the softer-than-expected CPI print, and hit a fresh low since summer. Markets The softer US dollar, and stronger euro sent the European indices to fresh highs since summer. The DAX flirted with the June peak, and the Eurostoxx50 traded at the highest level since FebruaryCrude oil rallied more than 2.50% yesterday, on hope that the Fed could slow down the rate hikes, and not push the US into a deep recession to fight inflation. The FTX drama In cryptocurrencies, the FTX drama continues with the arrestation of Sam Bankman-Fried in the Bahamas, news that investors withdrew $3.7 billion worth of funds from Binance since last week, and that Binance reportedly stopped the stablecoin USDC withdrawals. Bitcoin But Bitcoin couldn’t care less. The price of a coin advanced more than 3% yesterday, showing that the FTX drama has been priced in and out and further drama should not hit the coin harder. Watch the full episode to find out more! 0:00 Intro 0:27 How does the Fed will about falling US inflation? 5:24 US dollar falls, majors & global equities rally 6:45 Crude oil tests short-term resistance 7:35 Bitcoin up despite unideal sector news 8:33 Tesla trades at cheapest ever PE Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FOMC #Fed #rate #decision #dotplot #USD #CPI #inflation #data #EUR #GBP #JPY #XAU #crudeoil #DAX #EU50 #Bitcoin #SamBankmanFried #FTX #Binance #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Analysis Of Tesla: A Temporary Corrective Rally Should Not Come As A Surprise

Saxo Bank Podcast: Look At Tesla Posting New Cycle Lows, Equity Market Upside Fading Quickly And More

Saxo Bank Saxo Bank 14.12.2022 13:06
Summary:  Today we look at yesterday's reaction to the softer than expected US November CPI data, with equity market upside fading quickly even as the reaction in US yields and the US dollar was stickier. We also discuss today's upcoming FOMC meeting, with the Fed facing a tough task if it wants to push back against easing market conditions and policy expectations today. We also look at Tesla posting new cycle lows and concerns for the stock and EV market, Apple, Inditex, crude oil, precious metals, and more. Today's pod features Peter Garnry on equities, Ole S Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: FOMC will have a hard time moving the needle today | Saxo Group (home.saxo)
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Craig Erlam Craig Erlam 14.12.2022 20:22
Huge uncertainty for oil There remains immense uncertainty over the outlook for crude demand and supply which is leading to plenty of volatility in oil markets. The price has rebounded in recent days after WTI fell close to $70, the level at which the White House has previously indicated it will start refilling the SPR following a year of repeatedly drawing it down. With China finally navigating away from zero-Covid, which alone brings huge uncertainty for next year, the global economy slowing, Russia continuing its war in Ukraine, and OPEC+ seeking to maintain balance, I don’t expect volatility to subside in any significant way soon. Gold eyeing Santa rally Gold is paring its post-CPI gains ahead of the US interest rate decision. It finally broke $1,810 but failed to hold on and eventually ended the day back around that level. A dovish Fed today could seal the deal and deliver a Santa rally for the yellow metal in the final weeks of the year. Read next: The Australian Dollar Held Above $0.68, Today The Fed Will Make Its Last Decision Of The Year| FXMAG.COM For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil showing volatility, gold eyes Fed - MarketPulseMarketPulse
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Overall Crude Consumption Is Expected To Rise Next Year | The ECB And The Bank Of England Are Expected To Follow The Fed

Saxo Bank Saxo Bank 15.12.2022 08:50
Summary:  The widely expected 50bps rate hike by the Fed came along with hawkish revision of the dot plot in which the terminal rate projection was increased to 5.1% from September’s 4.6%. Equities and bonds fell but the reaction faded later at Chair Powell’s presser where he hinted that policy is close to “sufficiently restrictive”. Dollar ended the day lower. Meanwhile, China’s plan to go ahead with the Central Economic Work Conference despite the surge in cases boosted sentiment. Crude oil prices were firmer on IEA expecting higher prices next year. A plethora of G10 central banks, including the BoE, ECB, SNB, & Norges Bank, meet today. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) erase part of the post-FOMC announcement declines Equity markets were in a whipsaw falling sharply after the announcement of a 50bps rate hike which was accompanied by a hawkish shift in the dot plot which brought the terminal rate projections to 5.1% for end-2023 from 4.6% at the September meeting. Some of the decline was however reversed later as Chair Powell press conference went underway. Fed Chair Powell started the press conference with a hawkish tone in which he noted there is still some ways to go and the Fed needs to see substantially more evidence to have confidence inflation is on a sustained downward path back to target, although there was some reprieve after Powell stated during the Q&A that he thinks policy is getting to a pretty good place and close to sufficiently restrictive. S&P 500 ended the session down 0.6% and Nasdaq 100 was down close to 0.8%. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) edged higher in a lackluster session Hong Kong and Chinese stocks edged up higher. The Bloomberg story speculating about a delay in China’s annual Central Economic Work Conference due to a surge in Covid inflections in Beijing did not worry investors much. Investors were encouraged by signs that the Chinese authorities were not reversing course despite outbreaks after the easing of restrictions. China will stop reporting infections without symptoms as mandatory testing has been dropped. Hang Seng Index climbed 0.4%. CSPC Pharmaceutical (01093:xhkg), rising 6.5%, was the best performer in the benchmark index. Hengan (01044:xhkg), Sunny Optical (02382:xhkg), Techtronic Industries (00669:xhkg), Li Ning (02331:xhkg), and Baidu (09888:xhkg) were other outperformers, gaining between 3% and 6%. Previously battered Chinese educational services providers soared while online healthcare names pulled back from recent strength on profit-taking. Alibaba Health (00241) slid 7%. In A-shares, CSI 300 gained 0.3%, with semiconductor, tourism, lodging, and Chinese liquor stocks advancing. FX: Hawkish Fed unable to provide a lasting bid to the dollar The USD eventually settled lower on Wednesday following the FOMC rate decision and the press conference by Chair Powell. Initial positive reaction following the upside adjustment in the dot plot was erased as Chair Powell said he thinks policy is getting to a pretty good place and policy is getting close to sufficiently restrictive. GBPUSD tested the critical 1.2450 with UK CPI also coming in softer than expected at 10.7% and cooled from the prior 11.1%. EURUSD got in close sight of 1.0700 while USDJPY fluctuated between 135-136. Crude oil (CLF3 & LCOG3) extended the rally on IEA outlook Crude oil prices surged higher again on Wednesday with the IEA warning that prices may rise next year as sanctions squeeze Russian exports. It expects its output will fall by 14% by the end of the first quarter. It also increased estimates for global demand by 300kb/d, in a nod to China’s reopening. Overall crude consumption is expected to rise 1.7mb/d next year to average 101.6mb/d. A weaker US dollar despite the Fed’s hawkish shift in the dot plot also underpinned, while the unexpectedly large increase in US inventories was shrugged off. WTI futures rose above $77/barrel while Brent touched $83.  Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM What to consider? FOMC sets the terminal rate forecast at 5.1%, above market expectations The Fed voted unanimously to lift the Federal Funds Rate target by 50bps to 4.25-4.50%, as expected, downshifting the pace of rate hikes. While the statement was broadly unchanged, the updated economic projections showed Fed Funds at 5.125% by December 2023 and core PCE still at 3.5% by that time. That implies 75bps of more tightening in this cycle, which will be seen in 2023, but the markets are still pricing in a peak rate of 4.87%. After that point, the dot plot is far more distributed, but the median projects the Federal Funds Rate target at 4.1% by the end of 2024, suggesting 100bps of rate cuts. Equities did see a negative reaction to the upside surprise in terminal rate projections, but this may remain short-lived as markets remain focused on incoming data. Bond markets had little reaction to the Fed’s updated dot plot. Dollar fell. Australia employment report better-than-expected Australia’s November employment rose 64k, higher than the +19k estimate and more than the revised +43k gains for October. Jobless rate was steady at 3.4% and participation rate came out higher to return to the record highs of 66.8% (vs. estimate 66.6%). The strength in the labor market will continue to provide room to the Reserve Bank of Australia to continue with its modest rate hikes, after it has already downshifted to a smaller rate hike trajectory. A weak set of Chinese activity data is expected Economists surveyed by Bloomberg are forecasting that China’s retail sales shrank sharply by 3.9% Y/Y in November. The potential weakness is likely attributed to poor performance of auto sales, dining-in activities, and sales during the “double-11” online shopping festival in the midst of Covid-19 lockdowns during the best part of November. November auto sales in China fell by 9.2 %Y/Y and by 10.5% M/M. Courier parcels processed on Nov 11 fell 20.7% Y/Y. The growth in industrial production is expected to fall to 3.7% Y/Y in November from 5% to 3.7%, following a weak November NBS manufacturing PMI and soft high-frequency data of steel production. Year-to-date fixed asset investment is expected to edge0 down to 5.6% from 5.8%, dragged by stringent pandemic control practices. ECB also likely to downshift to a smaller rate hike The European Central Bank (ECB) is also expected to slow down its pace of rate hikes to a 50bps increase this week. Headline inflation eased slightly in November, coming in at 10.0% YoY (exp. 10.4%), but was overshadowed by an unexpected rise in core inflation 6.6% YoY (exp. 6.3%, prev. 6.4%). While there is likely to remain some split in ECB members at this week’s meeting, the central bank’s Chief Economist Lane remains inclined to take into account the scale of tightening done so far. There is also uncertainty on the announcement of quantitative tightening. Bank of England may remain more divided than the other major central banks The Bank of England is also expected to follow the Fed and the ECB and downshift to a smaller rate hike this week, but the decision will likely see a split vote. A host of key data, including GDP, employment and inflation will be due this week in the run up to the BOE decision, and significant positive surprises could tilt the market pricing more in favour of a larger move which also creates a bigger risk of disappointment from the central bank. Headline annualised inflation advanced to 11.1% Y/Y in October, while the core rate remained at an elevated level of 6.5%. Consensus expects inflation to cool slightly to 10.9% Y/Y in November, but the core to remain unchanged at 6.5% Y/Y. Wage pressures are also likely to be sustained, and the cooling in the labor market will remain gradual. The U.S. is adding China’s top memory chips maker to the trade blacklist The U.S Department of Commerce is reportedly moving Yangtze Memory Technologies, a leading memory chip maker in China, together with 30+ other Chinese companies, from the Unverified List to the Entity List, after the expiry of a 60-day period for the company to answer requests for information about its business and customers. The Entity List is the official export control blacklist that restricts companies from access to American technologies. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM New Zealand Q3 GDP comes in above expectations A big positive surprise in NZ Q3 GDP which came in at 2.0% Q/Q sa vs expectations of 0.9% and higher than last quarter’s revised 1.9%. With the possibility of a recession in 2023 highlighted yesterday, this print suggests that there is a substantial amount of work left to be done by the Reserve Bank of New Zealand to dampen demand in order to curb inflation. Bank of Japan policy review speculation gathers further pace Some reports suggested that the BOJ could review policy next year, after pay growth and any slowdown in the global economy are closely examined. The results of spring wage negotiations come in mid-March, after Governor Haruhiko Kuroda's final policy meeting, so an assessment would probably be done after he departs. The review could reaffirm the existing ultra-loose framework, but possibility of some tweaks to the yield curve control policy remains as inflationary pressures remain a concern.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: FOMC’s hawkish dot plot; more G10 central bank meetings ahead – 15 December 2022 | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Commodities: The IEA Now Expects Global Oil Demand To Grow

ING Economics ING Economics 15.12.2022 10:32
Supply concerns eased after TC Energy Corp restarted a section of the Keystone pipeline, allowing some flows to resume, which should see a partial recovery of crude oil supply flow from Canada to the US TC Energy Corp has restarted a segment of the Keystone pipeline a week after a leak triggered the whole pipe's shutdown Energy – IEA revises oil demand outlook slightly higher ICE Brent prices settled higher for a third consecutive day yesterday following an upward revision in the oil demand forecast by the International Energy Agency (IEA). However, the weekly petroleum report from EIA and softer demand data from China this morning weighs on the sentiment. TC Energy Corp restarted a segment of its Keystone oil pipeline, extending between Hardisty, Alberta to Wood River and Patoka, Illinois. This should see a partial recovery of crude oil supply flow from Canada to the US. A restart for the remaining section of the pipeline remains uncertain. The IEA released its latest monthly oil market report yesterday and the agency made revisions higher to its demand growth forecasts for 2022 and 2023 on account of stronger demand from non-OECD countries including China, India and the Middle East. The IEA now expects global oil demand to grow by 2.3MMbbls/d (+140Mbbls/d compared to last estimates) in 2022 and 1.7MMbbls/d (+100Mbbls compared to previous estimates) in 2023. The IEA also said that total OECD oil stocks declined in November, pointing to a rise in refinery demand. As for the Russian oil supply, the agency predicted that the output could fall by 1.4MMbbls/d over the next year following the latest price cap imposed by the G7. Meanwhile, Russian oil exports rose by 270Mbbls/d to 8.1MMbbls/d in November, the highest since April. Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM The latest data from the EIA shows that US commercial crude oil inventories increased by a huge 10.2MMbbls over the last week despite the supply disruptions witnessed due to the outages at the Keystone pipeline. Withdrawals from the Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil, continued over the week and SPR crude oil inventory dropped by around 4.7MMbbls, limiting the total crude oil inventory increase to 5.5MMbbls for the week, still the biggest increase since March 2021. The market was expecting a drawdown of 3.4MMbbls. Refined product inventory has also increased over the last week reflecting a slowdown in demand for the fuels. EIA data shows that gasoline inventories rose by 4.5MMbbls, against a forecast of an increase of 2.8MMbbls; whilst distillate stockpiles rose by 1.4MMbbls last week, compared with expectations for a build of 2.7MMbbls. The latest data from China’s National Bureau of Statistics showed that crude oil processing increased around 5% month-on-month to 14.6MMbbls/d in November 2022 as demand for Chinese fuel products in the overseas market increased further. China’s refined products exports increased to 6.1mt in November, the highest in more than a year and up 38% compared to October exports. Meanwhile, domestic demand for crude oil continues to be soft with apparent demand falling 2.5% year-on-year to around 13.8MMbbls/d. The Covid-19 spike this month and previously-imposed restrictions may keep domestic demand under pressure in December and crude oil demand could remain soft in the country in the short term. Metals – China steel output declines further The latest data from the National Bureau of Statistics shows that monthly crude steel production in China declined for a second consecutive month in November, due to the nationwide Covid-19 restrictions, the ongoing property crisis, and the start of winter pollution curbs. Steel production in China dropped by 6.5% MoM (up 7.3% YoY) to 74.5mt in November; cumulatively, output fell 1.4% YoY to 935mt over the first 11 months of the year. Meanwhile, steel products output gained 7.1% YoY to 109mt last month while remaining almost flat at 1,226mt between January 2022 and November 2022. For aluminium, Chinese primary aluminium production rose 9.4% YoY to 3.4mt over the month as the higher runs in Guangxi and Sichuan provinces offset winter production cuts elsewhere. For the first 11 months of the year, output rose 3.9% YoY to a total of 36.8mt. For copper, the latest LME data shows that total on-warrant stocks for copper reported inflows of 5.1kt (the biggest daily addition since 15 November) to 62.8kt as of yesterday. The entire inflows were reported in Rotterdam warehouses. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM Data from the International Lead and Zinc Study Group shows that the global zinc market remained in a supply deficit of 117kt over the first ten months of 2022, slightly lower when compared to a deficit of 125kt during the same period a year ago. Total refined production fell 3.2% YoY to 11.1mt majorly due to lower output in Europe, whilst total consumption declined 3.2% YoY to 11.2mt between January 2022 and October 2022. For lead, total production fell 1.3% YoY to 10.1mt, while consumption fell marginally by 0.4% YoY to 10.2mt in the first ten months of the year. The lead market reported a supply deficit of 46kt between January 2022 and October 2022 when compared to a surplus of 48kt during the same time last year. Iron ore dropped for a third day yesterday as traders weigh the impact of China's Covid surge on the economy as the country pivots away from its zero-Covid policy. Covid cases in China are surging after the government embarked on a faster-than-expected reopening, abandoning mass testing and isolation rules. The postponement of an economic policy meeting in China, which was due to start this week, has also weighed on the sentiment. The market was expecting the meeting to announce more measures to support the property sector, which accounts for around 40% of steel consumption. Read this article on THINK TagsSteel Oil Metals Energy Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Saxo Bank Podcast: Market Reaction To Fed Decisions And Today's Heavy Central Bank Calendar And More

Saxo Bank Saxo Bank 15.12.2022 11:13
Summary:  Today we look at the FOMC waxing about as hawkish as one could expect with higher inflation and rate projections for next year, especially relative to market expectations. And yet, despite some churning, US yields and the US dollar reacted very modestly to the meeting. Still, this morning has seen some sudden USD strength and weak risk sentiment - could this be due to forward liquidity concerns rather than anything the Fed delivered yesterday? Thoughts on precious metals, crude oil, today's heavy central bank calendar and more also today's pod, which features Ole Hansen on commodities and John J. Hardy hosting and on FX. Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.  Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Source: Market shrugs off FOMC. Another agenda now? | Saxo Group (home.saxo)
At The Close On The New York Stock Exchange Indices Closed Mixed

On The New York Stock Exchange 2,473 Shares Declined More Than The Gain Of 595

InstaForex Analysis InstaForex Analysis 16.12.2022 08:00
At closing bell on the New York Stock Exchange, the Dow Jones fell 2.25 percent to a one-month low, the S&P 500 index shed 2.49 percent and the NASDAQ Composite fell 3.23 percent. Dow Jones The leaders among Dow Jones index components in Thursday trading were shares of Verizon Communications Inc. which gained 0.32p (0.85%) to close at 37.77. Chevron Corp dropped 1.29p (0.75%) to close at 171.04. Walmart Inc shares shed 1.31p (0.89%) to close at 145.36. International Business Machines were the least gainers, with shares falling 7.50p (5.00%) to close the session at 142.36. Shares of Apple Inc soared 6.71p (4.69%) to 136.50, while Intel Corporation dropped 1.11p (3.93%) to 27.15. S&P 500 The gainers among S&P 500 index components in today's trading were Lennar Corporation shares, which gained 3.82% to 94.29, DR Horton Inc. which gained 3.49% to close at 90.45 and Align Technology Inc. which gained 3.15% to close the session at 201.97. Western Digital Corporation shares were the least gainers, dropping 10.10% to close at 32.21. Shares of Nucor Corp lost 9.35% and closed the session at 134.10. Warner Bros Discovery Inc. dropped 8.93 percent to 10.00. NASDAQ The top gainers among NASDAQ Composite index components in today's trading were Core Scientific Inc, which gained 72.00% to 0.43, Imv Inc, which gained 66.55% to close at 3.64, and Scopus Biopharma Inc, which gained 44.85% to close the session at 0.34. Third Harmonic Bio Inc shares were the least gainers, down 78.28% to close at 4.30. Shares of Axcella Health Inc lost 50.78% and closed the session at 0.44. Novavax Inc's stock declined 34.30% to 11.32. Numbers On NYSE, 2,473 shares declined more than the gain of 595, while 113 remained almost flat. On NASDAQ, 2,775 stocks declined, while 961 gained and 197 remained flat. The CBOE Volatility Index, which is based on S&P 500 options trading, rose 7.99% to 22.83. Gold Gold futures for February delivery lost 1.75% or 31.80 to hit $1.00 a troy ounce. In other commodities, WTI crude for January delivery fell 1.37%, or 1.06, to $76.22 a barrel. Futures for Brent crude for February delivery fell 1.58%, or 1.31, to $81.39 a barrel. Forex Meanwhile, in the Forex market, EUR/USD fell 0.53% to hit 1.06, while USD/JPY edged up 1.74% to hit 137.82. Futures on the USD index rose 0.79% to 104.23. Relevance up to 03:00 2022-12-17 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/305167
Gold Stocks Have Performed Very Well Under Pressure

Oil Prices Fell, Gold Will Also Weaken Due To The Increase In US Dollar

Saxo Bank Saxo Bank 16.12.2022 08:51
Summary:  Equities tumbled across the world after the ECB and the Bank of England followed the footstep of the Fed in hiking 50bps, but the ECB gave a hawkish surprise by pulling forward QT and warning of more rate hikes to come as inflation remains high. The US dollar regained strength amid risk-off sentiment as US economic data deteriorated further but labor market strength was sustained. The US accounting regulatory body, PCAOB, successfully concluded an inspection on the audit work of eight U.S. listed Chinese companies and removed the delisting risks of Chinese ADRs for now. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) plummeted on Fed follow-through and hawkish ECB Nasdaq 100 tumbled 3.2% and S&P 500 declined by 2.5% on Thursday, as a rate hike plus hawkish comments from the ECT, and follow-through from a higher terminal rate on the Fed’s projection dot plot the day before weighed on equities. The decline in stocks was broad-based and all 11 sectors of the S&P 500 fell. The decline was led by the communication series, information technology, and materials sectors. Alphabet (GOOGL:xnas) declined 4.4%. Netflix (NFLX:xnas) tumbled 8.6%, following a media report saying the streaming giant is refunding advertisers because it missed viewership guarantees. Lennar (LEN:xnys) gained 3% and was among the top gainers in the S&P 500 on Thursday after the home builder said the cancellation rate for new homes had peaked in October and declined significantly in November. Adobe (ADBE:xnas) surged 4.7% in extended-hour trading on earnings beat. US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) turned more inverted on hawkish central banks and weak data Following a hawkish rate path dot plot from the Fed the day and hawkish remarks from ECB President Lagarde and pull-forward of QT by the ECB on Thursday but a weak U.S retail sales report, the Treasury yield curve flattened. The 2-year yield rose 3bps to 4.24% while the 10-year yield shed 3bps to 3.45%, bringing the 2-10-year inversion to more negative to -79bps. After Lagarde pledged Eurozone “interest rates will still have to rise significantly higher at a steady pace”, the German 2-year yields jumped as much as 30bps and closed 24bps higher at 2.36%, a 14-year high. The Treasury Department announced a USD12 billion 20-year auction and a USD19 billion 5-year TIPS auction next week. In the futures pit in Chicago, large-size curve flattening trades were seen on selling the five-year contracts versus buying the ultra-10-year contracts. The money market curve is pricing a terminal rate of 4.9% in 2023, significantly lower than the Fed’s dot plot of 5.1%. Hong Kong’s Hang Seng (HIZ2) retreated on Fed rate hike; China’s CSI300 (03188:xhkg) little changed Hong Kong opened sharply lower after the U.S. Fed raised the target Fed Fund rate the day overnight and traded sideways throughout the day to finish 1.6% lower. HSBC (00005:xhkg), down 1.8%,  raised its prime rate by 25bps to 5.625%, and Standard Chartered (02888:xhkg), down 1.4%, lifted its prime rate by 25bps to 5.875%. Other leading banks in Hong Kong also raised their prime rates by 25bps. Shenzhou (02313:xhkg), Wuxi (02269:xhkg), Baidu (09888:xhkg), and Alibaba (09988:xhkg), each declining more than 4%, were the top losers with the benchmark. China’s industrial production, retail sales, and fixed asset investments all came in worse than expected and pointed to Covid containment restrictions’ severe disruption to the economy in November. Investors tend to look beyond the weakness in November as the Chinese authorities have eased the pandemic containment practices substantially in December. China’s CSI300 (03188:xhkg) was little changed on Thursday. Semiconductor and new energy names gained. FX: Dollar strength returned amid weakness in risk sentiment After the markets reacting in a limited way after the hawkish shift of the dot plot by the FOMC on Wednesday, the USD strength returned the following day. Concerns that Fed will be hiking into a recession gathered pace as US economic data deteriorated further but labor market resilience prevailed. Money market pricing for the Fed has still not budged to catch up with the dot plot, suggesting that it is likely the risk sentiment weakness that led to the dollar surge. AUDUSD was the biggest loser on the G10 board, sliding lower to 0.67 from 0.6850+ as weak China activity data offset the impact from positive employment numbers in Australia yesterday. GBPUSD also plunged below 1.22 and EURGBP rose above 0.87 amid relative ECB hawkishness. USDJPY touched 138 again despite a lower in US yields. Crude oil (CLF3 & LCOG3) prices dip on global rate hikes and partial restart of Keystone pipeline Crude oil prices fell on Thursday after the fed’s hawkish tilt was followed by a slew of other G10m central banks especially the ECB which highlighted the struggle to get inflation under control and hinted at more rate hikes and QT was to come. Along with that, a partial restart of the Keystone Pipeline after last week’s oil spill eased some supply concerns. WTI futures tested the $76/barrel support while moved towards $81. However, there are tentative signs that key Russian oil exports from a port in Asia are dipping following G7 sanctions, and this may impede the supply relief, but demand weakness concerns still continue to remain the biggest worry as of now with China’s full reopening demand also likely to be delayed due to the vast spread of infections. Gold (XAUUSD) back below 1800 on central banks hawkishness The return of the strength of the US dollar on Thursday meant weakness in gold. Fed’s message from a day before finally seemed to have been understood by the markets, and hawkishness from other central banks, especially the ECB, further sounded the alarm on rates remaining higher for longer globally. Gold broke below the 1800-mark in the Asian session on Thursday, and the lows extended further to sub-1780 in the European/NY hours. Silver plunged as well to move back towards $23.   What to consider? Bank of England followed the Fed with a 50bps hike, likewise for SNB and Norges Bank The Bank of England opted to step down the pace of its rate hiking cycle to 50bps from 75bps, taking the Base Rate to 3.5%. The decision to move on rates was not a unanimous one with two dovish dissenters and one hawkish dissenter. The markets are pricing in a peak for the BOE at 4.25% in H1 2023, as inflation continues to cool. The MPC is of the view that CPI inflation has reached a peak, but is expected to remain high in the coming months. The Norges Bank and SNB also hiked 50bps, in-line with expectations. ECB surprises with a hawkish tilt The European Central Bank (ECB), much in line with the Fed and the BOE, stepped back from its 75bps rate hike trajectory and announced an increase of 50bps, taking the Deposit rate to 2.0%. It was reported that a third of the Governing Council favored a 75bps increase, and Christine Lagarde warned investors to expect more 50bps moves and not to see this as a ‘pivot’. The commentary was hawkish saying that "interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive". Moreover, the bank announced a start of QT in the first quarter of 2023, even though with a small amount. The APP portfolio will decline at an average pace of EUR 15bln per month until the end of Q2 with its subsequent pace to be determined over time. The inflation forecast also came as a surprise, with 2023 HICP raised to 6.3% from 5.5%, and 2024 and 2025 seen at 3.4% and 2.3% respectively and therefore indicative that further tightening will be required to bring inflation back to target over the medium term. On the growth front, 2022 GDP was upgraded to 3.4% from 3.1% and 2023 now seen at just 0.5% (prev. 0.9%) with the upcoming recession likely to be shallow and short-lived. US economic slowdown concerns continue to be offset by a strong labor market Several economic indicators in the US pointed to concerns of an economic slowdown. Headline retail sales declined 0.6% in November, deeper than the 0.1% expectation and paring from October's gain of 1.3%. The December NY Fed Manufacturing survey fell into contractionary territory at -11.2, deeper than the expected -1.0 from the prior +4.5. US manufacturing output fell -0.6% in November, well beneath the expected 0.1% decline and against October's rise of 0.3%, which was upwardly revised from +0.1%. However, labor market resilience was confirmed by jobless claims unexpectedly dropping to 211k from a revised 231k last week, well below the expected 230k. PCAOB concluded its inspection and removed the delisting risks of Chinese ADRs for now The Public Accounting Oversight Board (PCAOB) announced on Thursday that the U.S, accounting regulatory body has “conducted inspection field work and investigative testimony” of the audit work of KPMG Huazhen LLP in mainland China and PwC in Hong Kong on eight Chinese ADR issuers, “in a manner fully consistent with the PCAOB’s methodology and approach to inspections and investigations in the U.S. and globally.” The PCAOB was satisfied that its “investors and investigators were able to view complete audit work papers with all information included, and the PCAOB was able to retain information as needed” without consultation with, or input from Chinese authorities. The PCAOB’s conclusion removes the risk of forced delisting of Chinese ADRs for now. The PCAOB will continue to do regular inspections starting in early 2023. China’s retail sales, industrial production, and fixed asset investment were weak in November November activity data in China came in worse than the already low expectations. Retail sales shrank by 5.9% Y/Y in November (Consensus: -4.0%; Oct: -0.5%). The weakness partly reflected the high base last year and mostly as a result of the outbreaks of Covids and the relevant containment restrictions then were still the modus operandi. Revenue growth tumbled to -6% Y/Y for merchandise, -4.2% Y/Y for auto, and -8.4% Y/Y for catering. Industrial production growth slowed to 2.2% Y/Y in November (consensus: 3.5%; Oct: 5.0%). The manufacturing and utility sectors were weak while the mining sector improved in growth. Smartphone volume shrank by 19.8% Y/Y in November as Foxconn’s factory in Zhengzhou experienced disruption from Covid restrictions and labor unrest. The growth of fixed asset investment plummeted to 0.8% Y/Y in November from 5.0% Y/Y in October. The weakness of fixed asset investment was mainly in the manufacturing and property sectors. Infrastructure fixed asset investment climbed to 13.9% Y/Y in November from 12.8% in October. Adobe delivered earnings and guidance beating expectations Adobe (ADBE:xnas) reported a fiscal Q4 net income of USD1.176 billion, a 4.6% increase from last year and above the USD1.158 billion expected by analysts. Adjusted earnings per share came in at USD3.60, beating the USD3.50 consensus forecast. Revenues increased 10% from a year ago to USD4.525 billion, in line with expectations. The software giant gave an upbeat fiscal Q1 EPS guidance of USD3.65 to USD3.70 on revenue of USD4.60 to USD4.64 billion, above analysts’ estimates of USD3.64 on revenue of USD4.26 billion.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Fed’s message comes through; ECB outpaces other central banks on hawkishness – 16 December 2022 | Saxo Group (home.saxo)
Pound Slides as Market Reacts Dovishly to Wage Developments

European Stocks Posted Their Biggest Drop In Months

Saxo Bank Saxo Bank 16.12.2022 08:59
Summary:  Markets tanked yesterday in part on the very hawkish ECB meeting. Lagarde and company’s commitment to significant further tightening just as a recession is getting under way in Europe took short German yields to new highs for the cycle and pummeled European stocks, which posted their steepest drop in months. In the US, volatility has picked up significantly not only on this week’s big event risks, but also on the estimated $4 trillion of options set to expire today.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The market continues to lick its wounds following hawkish central bank messages across the US, UK, and Euro area with S&P 500 futures extending the declines since the late Wednesday to a close of 3,927 which is just below the 100-day moving average. Nasdaq 100 futures are under more pressure following the latest central bank messages, being more sensitive to the interest rate level and direction. Nasdaq 100 futures are trading around the 11,444 level this morning which is a critical level and the lower bound of the trading range since the US October inflation report on 10 November. Euro STOXX 50 (EU50.I) Ugly session yesterday following ECB’s hawkish outlook on the policy rate surprising most market participants. Stoxx 50 futures declined 3.6% to close at 3,835 erasing all the gains since the rally following the US October inflation report on 10 November. Today’s trading will be a key test of the market’s belief in ECB’s forecast. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland Chinese stocks had a choppy morning session. Hang Seng Index opened lower on the back of tumbling overseas markets overnight despite the positive news from the US accounting regulatory body removing the delisting risk of Chinese companies listed in the U.S. bourses for now. Stocks had a brief rally on market chatter of reopening of the border between Hong Kong and the mainland earliest next month before the gains waned and the Hang Seng Index was flat by noon. The front page editorial at the mouthpiece People’s Daily this morning is upbeat about growth in China but it does not catch much attention from investors. Leading Chinese property developers were the top gaining stocks, with Longfor (00960:xhkg) and Country Garden (02007:xhkg) each gaining around 3.7%. In A-shares, CSI300 was modestly lower, driven by profit-taking in semiconductor names and weaknesses in autos. Real estate and educational services outperformed. FX: Dollar strength returned amid weakness in risk sentiment USD strength returned, and in a big way yesterday after the markets hardly registered the hawkish shift of the dot plot by the FOMC on Wednesday. Concerns that Fed will be hiking into a recession gathered pace as US economic data deteriorated further but labor market resilience prevailed. Money market pricing for the Fed has still not budged to catch up with the dot plot, suggesting that it is likely the risk sentiment weakness that drove the dollar surge. AUDUSD was the biggest loser on the G10 board, sliding lower to 0.67 from 0.6850+ as weak China activity data offset the impact from positive employment numbers in Australia yesterday. GBPUSD also plunged below 1.22 on a dovish Bank of England and EURGBP rose above 0.87 amid relative ECB hawkishness. The ECB meeting saw EURUSD relatively unchanged on the day after a rally, while EURJPY was two figures higher on the day on the ECB impact on EU Yields. USDJPY touched 138 again despite a drop in US yields. Crude oil (CLF3 & LCOG3) trades lower as risk sentiment takes a fresh hit Crude oil traded sharply lower on Thursday, thereby reversing some of the strong gains seen earlier in the week, after the Fed’s hawkish tilt was followed by a slew of other G10 central banks, especially the ECB which highlighted the struggle to get inflation under control. However, there are tentative signs that Russian oil exports to Asia are dipping because of the price cap, a development that may support the 2023 outlook for tight supply, especially when China gets through a period of surging virus cases that my cloud the short-term outlook for demand. Given the current focus on recession potentially hurting demand, a supply side struggle may not positively impact prices until the second quarter, and with that in mind, the price of Brent may settle into a range below $90 until then. Gold (XAUUSD) continues to find support ... as the combination of a hawkish Fed and a steeply inverted yield curve points to an increased risk the FOMC will be hiking into a recession. This focus gathered pace on Thursday, the day after the hawkish shift of the dot plot by the FOMC, after weak US economic data supported the dollar as risk sentiment deteriorated across markets, not least the stock market, and bond yields softened. Gold looks ripe for a period of consolidation with some end of year profit taking emerging following the +200-dollar surge since the November 3 low and after the price got rejected above $1800. However, the prospect for a recession and the FOMC joining other central hiking into economic weakness – potentially without succeeding getting inflation under control - continues to strengthen the upside risk for investment metals in 2023.  US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) turned more inverted on hawkish central banks and weak data Following a hawkish rate path dot plot from the Fed on Wednesday, hawkish remarks from ECB President Lagarde on Thursday, and a weak U.S retail sales report, the Treasury yield curve flattened. The 2-year yield rose 3bps to 4.24% while the 10-year yield shed 3bps to 3.45%, bringing the 2-10-year inversion to more negative to -79bps. After Lagarde pledged Eurozone “interest rates will still have to rise significantly higher at a steady pace”, the German 2-year yields jumped as much as 30bps and closed 24bps higher at 2.36%, a 14-year high. The Treasury Department announced a USD12 billion 20-year auction and a USD19 billion 5-year TIPS auction next week. In the futures pit in Chicago, large-size curve flattening trades were seen on selling the five-year contracts versus buying the ultra-10-year contracts. The money market curve is pricing a terminal rate of 4.9% in 2023, significantly lower than the Fed’s dot plot of 5.1%. What is going on? ECB fails to impress market after hawkish meeting The ECB administered a hawkish broadside yesterday, raising its forecasts for headline inflation to 6.3% for next year and 3.4% for 2024 (From 5.5% and 2.4% previously, suggesting a far longer time frame with uncomfortably high inflation. The core CPI forecasts were raised to 4.2% ex food and energy for 2023 and 2.8% for 2024, versus 3.4%/2.3% in September). It also outlined its quantitative tightening plan to start rolling off EUR 15 billion of asset per month from March, with ECB President Lagarde claiming the willingness to continue to hike 50 basis points at several coming meetings if necessary, with far more rate tightening to do from here. But after an initial sprint higher that saw EURUSD trading well above 1.0700 despite relative USD firmness elsewhere, the EURUSD collapsed back toward 1.0600 before stabilizing closer to 1.0650. STill, the euro was very firm against most of the rest of G10 currencies as the German 2-year yield jumped a full 25 basis points on the day and closed the day at a cycle high (and high since 2008) of 2.39%. Bank of England followed the Fed with a 50bps hike, likewise for SNB and Norges Bank The Bank of England opted to step down the pace of its rate hiking cycle to 50bps from 75bps, taking the Base Rate to 3.5%. The decision to move on rates was not a unanimous one with two dovish dissenters favoring no rate hike and one hawkish dissenter. The markets are pricing in a peak for the BOE at 4.25% in H1 2023, as inflation continues to cool. The MPC is of the view that CPI inflation has reached a peak, but is expected to remain high in the coming months. The dovish expectation that inflation would return to below target in two years and guidance that further rate tightening would come in The Norges Bank and SNB also hiked 50bps, in-line with expectations. Adobe shares rise 5% on stronger than expected profitability FY22 Q4 revenue at $4.5bn was in line with estimates and adjusted EPS at $3.60 vs est. $3.50 was the positive surprise. The 2023 revenue outlook was $19.1-19.3bn vs est. $19.4bn and management reiterates expectations that its Figma acquisition will go through in 2023. US economic slowdown concerns continue to be offset by a strong labor market Several economic indicators in the US pointed to concerns of an economic slowdown. Headline retail sales declined 0.6% in November, deeper than the 0.1% expectation and paring from October's gain of 1.3%. The December NY Fed Manufacturing survey fell into contractionary territory at -11.2, deeper than the expected -1.0 from the prior +4.5. US manufacturing output fell -0.6% in November, well beneath the expected 0.1% decline and against October's rise of 0.3%, which was upwardly revised from +0.1%. However, labor market resilience was confirmed by jobless claims unexpectedly dropping to 211k from a revised 231k last week, well below the expected 230k. US oversight board concluded its inspection and removed the delisting risks of Chinese ADRs for now The Public Accounting Oversight Board (PCAOB) announced on Thursday that the U.S, accounting regulatory body has “conducted inspection field work and investigative testimony” of the audit work of KPMG Huazhen LLP in mainland China and PwC in Hong Kong on eight Chinese ADR issuers, “in a manner fully consistent with the PCAOB’s methodology and approach to inspections and investigations in the U.S. and globally.” The PCAOB was satisfied that its “investors and investigators were able to view complete audit work papers with all information included, and the PCAOB was able to retain information as needed” without consultation with, or input from Chinese authorities. The PCAOB’s conclusion removes the risk of forced delisting of Chinese ADRs for now. The PCAOB will continue to do regular inspections starting in early 2023. China’s retail sales, industrial production, and fixed asset investment were weak in November November activity data in China came in worse than the already low expectations. Retail sales shrank by 5.9% Y/Y in November (Consensus: -4.0%; Oct: -0.5%). The weakness partly reflected the high base last year and mostly as a result of the outbreaks of Covid and the relevant containment restrictions then were still the modus operandi. Revenue growth tumbled to -6% Y/Y for merchandise, -4.2% Y/Y for auto, and -8.4% Y/Y for catering. Industrial production growth slowed to 2.2% Y/Y in November (consensus: 3.5%; Oct: 5.0%). The manufacturing and utility sectors were weak while the mining sector improved in growth. Smartphone volume shrank by 19.8% Y/Y in November as Foxconn’s factory in Zhengzhou experienced disruption from Covid restrictions and labor unrest. The growth of fixed asset investment plummeted (FAI) to 0.8% Y/Y in November from 5.0% Y/Y in October. The weakness of FAI was mainly in the manufacturing and property sectors. Infrastructure FAI climbed to 13.9% Y/Y in November from 12.8% in October. What are we watching next? Enormous US options expiry today, as much as $4 trillion Many traders hedged portfolios or engaged in directional speculation on this week’s important event risks, including the US CPI release on Tuesday and the FOMC meeting Wednesday. Short terms options trading has taken on record proportions in recent months and today, some $4 trillion in options are set to expire, with today’s “witching” or expiry of quarterly financial futures also in the mix and potentially adding to directional volatility today. Earnings to watch Today’s US earnings focus is Darden Restaurants which is expected to deliver 7% y/y revenue growth for the quarter that ended in November highlighting the resilience of the US consumer in some types discretionary spending. Today: Accenture, Darden Restaurants Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Dec. Preliminary Manufacturing and Services PMI 0930 – UK Dec. Preliminary Manufacturing and Services PMI 1000 – Eurozone Final Nov. CPI 1445 – US Dec. Preliminary S&P Global Manufacturing and Services PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – December 16, 2022 | Saxo Group (home.saxo)
The Commodities Feed: Oil maintains positive momentum

The WTI Crude Oil Price Is Likely To Witness Durther Selling Pressure

TeleTrade Comments TeleTrade Comments 16.12.2022 09:14
WTI remains pressured around intraday low, defends previous day’s U-turn from two-week top. Downbeat RSI conditions, pullback from short-term key DMA hints at further weakness. 11-week-old bullish triangle gains major attention, highlighting $78.20 as the key hurdle. WTI crude oil extends the previous day’s pullback from a two-week top as it drops to $75.70 while refreshing intraday low during early Friday morning in Europe. The black gold’s latest weakness could also be linked to the failure to cross the 21-DMA, around $77.00. Given the downbeat RSI conditions, the WTI crude oil price is likely to witness further selling pressure. However, November’s low of around $73.65 could act as immediate support for the energy benchmark. Following that, a downward-sloping trend line from September, forming part of the bullish triangle formation around $69.80, will gain the bear’s attention. In a case where WTI remains weak past $69.80, the December 2021 low near $62.35 should lure the commodity sellers. Alternatively, the 21-DMA hurdle surrounding $77.00 guards the quote’s immediate recovery, a break of which could quickly propel the WTI towards the upper line of the stated triangle, near $78.20. Should the WTI buyers manage to keep the reins past $78.20, the same will confirm the bullish chart pattern and suggest further advances of the quote towards the theoretical target surrounding $101.00. During the run-up, the previous monthly peak of $92.90 and the August month high near $97.30 can act as buffers. WTI: Daily chart Trend: Limited downside expected
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Gold was having a good time, while Fed entered the room and ended the party

Craig Erlam Craig Erlam 16.12.2022 23:14
Can WTI break $70? Oil prices are slipping once more in volatile trade. There are so many driving forces in the oil market at the moment and a more sombre economic outlook on the back of the hawkish central bank message this week appears to be the dominant one going into the weekend. The interesting thing for me remains how prices respond to the December lows, should they be tested again, with the level in WTI also representing the point at which the White House has indicated it will start refilling the SPR. We’ll see how much of a floor that puts in the price but in the short term it could at least offer some support. Read next: German and Eurozone manufacturing rise above expectations of 46.1 and 47.1 respectively| FXMAG.COM A correction on the cards? It hasn’t been the best week in the end for gold, which appeared to be on the brink of a very bullish breakout following the US inflation data on Tuesday. The Fed appeared to put an end to those hopes in the near term and a wave of risk-aversion towards the back end of the week has boosted the dollar and yields, further weighing on the yellow metal. With momentum already waning in the run-up to this week’s events, we could be looking at some exhaustion combined with the hawkish commentary to drive a correction. It’s seen some support around $1,770-1,780 over the last day or so, with the next key level falling around $1,760 and then $1,730. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil under pressure, Fed weighs on gold - MarketPulseMarketPulse
Saxo Bank Podcast: The Bank Of Japan Meeting And More

The Japanese Authorities May Be Considering A Policy Review In 2023 | Elon Musk Is Seeking New Investors For Twitter

Saxo Bank Saxo Bank 19.12.2022 09:01
Summary:  A chorus of hawkish Fed speak and weakening US PMI data, together with global tightening concerns elevating further last week, continued to weigh on risk sentiment. The Japanese yen will remain in focus amid BOJ policy review chatter as the central bank meets this week. Musk’s Twitter saga continues, weighing further on Tesla. China’s reopening concerns also remain as the Covid waves spreads rapidly, but a steady economic growth focus by the authorities is seen. Oil and gold start the week being bid. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated for the third day on concerns about the Fed’s rate path in 2023 On Friday, the U.S, stock market continued to slide for the third day in a row since Fed Chair Powell’s hawkish leaning comments on the post-FOMC presser on Wednesday. Remarks from several other Fed officials reiterating that the Fed may have a long way to go and may need to raise rates beyond the 5.1% peak projected added to the risk-off sentiment. S&P 500 shed 1.1% and Nasdaq 100 declined 0.9%. All sectors within the S&P 500 lost, with real estate, consumer discretionary, and utilities falling the most. Ford Motor (F:xnys) was the biggest losing stock within the S&P500. The automaker dropped nearly 7% on Friday after it announced a price increase for its electric truck due to rising material costs and supply chain issues. Tesla (TSLA:xnas), falling 4.7%, was the second biggest laggard with the Nasdaq 100, following Moderna (MRNA:xnas) which declined 6.7%. Adobe, gaining 3% after reporting an earnings beat, was the best performer within Nasdaq 100, followed by Meta (META:xnas) which rose 2.8% on an analyst upgrade. US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) steepened as the 2-year yield fell and the 10-year yield rose The 2-year notes were well bid and finished the Friday session 6bps richer at 4.18%. The 2-year notes are now yielding not only less than the 3-month Treasury bills but also the lower bound of the Fed Fund target rate. Softer than expected S&P Global US manufacturing as well as services PMI added fuel to the demand for the front end of the Treasury curve. Hawkish comments from the Fed’s Williams, Daly, and Mester might have contributed to the selling in the long end of the curve. Yields on the 10-year notes rose 4bps to 3.48%. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland Chinese stocks had a morning session on Friday. Hang Seng Index opened lower on the back of tumbling overseas markets overnight despite the positive news from the US accounting regulatory body removing the delisting risk of Chinese companies listed in the U.S. bourses for now. Stocks had a rally on market chatter of reopening of the border between Hong Kong and the mainland earliest next month before the gains waned and the Hang Seng Index was 0.4% higher. The front page editorial at the mouthpiece People’s Daily this morning is upbeat about growth in China but it does not catch much attention from investors. Leading Chinese property developers outperformed, gaining 2% to 6%.  In A-shares, CSI300 was modestly lower, driven by profit-taking in semiconductor names and weaknesses in autos. Real estate and educational services outperformed. In the evening, a readout was released setting out the key results of the Central Economic Work Conference. FX: Dollar starts the new week on a weaker footing as JPY gains on 2023 policy review speculations The US dollar ended last week lower again, albeit modestly, with majority of weakness against the NOK. EURUSD also took a brief look above 1.07 on ECB hawkishness but is heading below 1.06 this morning as peripheral spreads remain a concern and continue to cast doubts on how far ECB’s hawkishness can run. USDJPY had a volatile week as a drop below 135 was not maintained despite US yields remaining capped. A fresh bout of strength in coming to JPY this morning on reports of Japan PM Kishida considering a tweak in BOJ’s 2% inflation goal next year (read below). GBPUSD also reversed back below 1.2200 after a look above 1.2400 last week. AUDUSD traded close to 0.67 to start the new week, with one eye on RBA minutes due this week but another on China reopening delays resulting from a large number of workers calling in sick. Crude oil (CLF3 & LCOG3) prices advance on China’s growth push and US refilling SPR Oil prices started the week on a firmer footing, with WTI rising towards the $75/barrel mark and Brent heading back towards $80. While there are unconfirmed reports of massive number of cases and fatalities in China from the spread of Covid, the government’s official message continues to stress upon the need to expand consumption as the key economic priority for 2023. This helps paint a better demand outlook for oil, as global demand slowdown concerns continue to mount. Moreover, it was reported that the US is starting to replenish the Strategic Petroleum Reserve (SPR), starting with a 3-million barrel, fixed-price purchase.   What to consider? Hawkish Fed speak continues A number of Fed speakers on Friday continued to highlight the case for higher-for-longer inflation as investors give too much weight to peaking inflation in the US. Fed’s Daly (non-voter in 2023) said she was prepared to hold peak rates for more than 11 month if necessary, and highlighted the core services ex-housing inflation which is still quite elevated. Mester (non-voter in 2023) said she expected the Fed to hike more than its median forecast, and the Fed will need to maintain rates for an extended period once hikes are done. Williams (2023 voter) said it is possible that Fed hikes more than terminal rate forecast. US flash PMIs send warning signals Flash December PMIs for the US slumped to fresh lows, sending more warning signals about the economic momentum going into 2023. Manufacturing PMI came in at 46.2, below last month’s 47.7 and the expected 47.8, while the services PMI receded to 44.4 from 46.2 previously. Markets have however understood the Fed’s message on hiking rates into a possible recession, and do not take bad news as good news anymore. Japan PM Kisihda hinting at altering inflation goal for central bank Reports suggested that Japan PM Kishida plans to revise a ten-year-old accord with the BOJ and will consider adding flexibility to the agreement's 2% price goal. Kishida will discuss the matter with the next central bank governor, who'll take office in April. Furthermore, some more comments from officials this morning continued to signal that the authorities may be considering a policy review in 2023, and more hints are awaited at the BOJ meeting tomorrow. Ex-BOJ Deputy Governor Yamaguchi said that the BOJ must stand ready to tweak YCC next year if Japan's economy can withstand overseas economic risks, while also warning that once inflation expectations become entrenched, it is very hard to control them. China’s Central Economic Work Conference emphasized economic stability and had a conciliatory tone towards platform companies The Chinese Communist Party held its annual Central Economic Work Conference (CEWC) on Dec 15 and 16 to formulate China’s macroeconomic policy frameworks for 2023. According to the readout released, the CEWC emphasized policy priorities as being economic stability and high quality of development. Fiscal policies will be expansionary and monetary policies will be forceful and precise. The focus is however more on quality than quantity and the choice of words tends to imply “best effort” rather than hard targets. Mainland economists are expecting the GDP growth target, which will not be released until the two-session meetings in March 2023, to be around 5% for 2023. While there will be supportive measures to ensure stability in the housing markets, the rhetoric of “housing is for living in, not for speculation” is once again in the readout. Domestic consumption is a key focus. In industrial policies, weak links in manufacturing technology, energy, mining, agriculture, new energy, AI, biomanufacturing, green and low carbon, quantum computing, and the digital economy are priorities. Encouragingly, the CEWC removes last year’s “preventing the disorderly growth and expansion of capital” from its readout this year and instead pledges “support to platform enterprises in leading development, creating employment, shining in competing globally” and “support the development of the private sector and private enterprises”. EU considering cutting the proposed natural gas price The EU nations are likely to discuss cutting the gas price cap by almost a third today after the EUR275 per megawatt-hour was proposed last month. As energy crisis continues to threaten a fresh surge in inflation and growth slowdown in the region, it is also stretching government budgets to maintain popularity. But this will eventually be inflationary again, as price caps hardly work effectively. Elon Musk hinting at stepping down from Twitter Elon Musk is seeking new investors for Twitter at the same price he paid when he took the company private in October, Semafor reported. Musk is asking on Twitter the question that “should I step down as head of Twitter? I will abide by the results of this poll”. He said he is going reverse his prior decision to suspend the Twitter accounts of several journalist and reinstate them based on the results of a Twitter survey. Meanwhile, Musk's actions are weighing heavily on Tesla shares — and the selloff may continue.   For a global look at markets – tune into our Podcast. Source: Market Insights Today: Fed’s hawkish speak; BOJ’s policy review hints – 19 December 2022 | Saxo Group (home.saxo)
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

The Energy Crisis Continues To Threaten A Fresh Surge In InflationAand Growth Slowdown In The Eurozone

Saxo Bank Saxo Bank 19.12.2022 09:14
Summary:  Markets stumbled into the close last week, shaken in Europe by a resolute, and possibly unrealistic ECB stance at last Thursday’s ECB meeting, while a heavy calendar of event risks combined with trillions in options expiries roiled US markets last week. The two final weeks of a remarkable 2022 await. Are traders willing to put any risk to work here after an exhausting year or hanging up their spikes until 2023?   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Following a close at the 50-day moving average on Friday, S&P 500 futures are attempting to rebound this morning trading around the 3,885 level driven by fresh sentiment change over China’s alleged move to enact pro-business policies and stimulus in 2023. There are no meaningful earnings or macro releases expected today so we expect a calm trading session with Friday’s low in S&P 500 at the 3,855 level being the key level on the downside and the 100-day moving average at the 3,935 level being the key upside level to watch. Euro STOXX 50 (EU50.I) European equities are still digesting their decline last week, biggest decline in many months, as the ECB delivered a more hawkish message than expected. STOXX 50 futures are trading around the 3,818 level getting a little bit of tailwind electricity prices coming down from excessive levels. The IFO December survey out at 0900 GMT is today’s main macro release that could jolt market sentiment. Analysts expect an improvement in the IFO survey for December. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and Chinese stocks pared all the early gains and turned lower as investors turned cautious during a surge in media reports of rises in Covid inflections and death tolls. The lack of commitment to more large-scale economic stimulus measures from the Central Economic Work Conference was considered underwhelming. Nonetheless, a shift to a more conciliatory stance towards the private sector from the meeting may be a positive that will contribute to growth and reduce risk premium in the medium-term. More details about the Central Economic Work Conference can be found here. Hang Seng Index dropped 0.9% and the CSI300 Index tumbled 1.8%. FX: Dollar off to a weak start to the week as JPY gains on 2023 policy review speculation EURUSD has rebounded slightly from the Friday close as the market must decide whether the ECB can maintain the hawkish bluster on display at last Thursday’s meeting, which initially supported the euro, but subsequently saw doubts emerging as peripheral EU spreads widened sharply. USDJPY had a volatile week as a drop below 135 was not maintained despite US yields remaining capped, but a fresh bout of JPY strength arrived overnight on reports that Japan PM Kishida is considering a tweak in BOJ’s 2% inflation goal next year (read below). Crude oil (CLF3 & LCOG3) prices advance on China’s growth push and US refilling SPR Oil prices started the week on a firmer footing, with WTI rising towards the $75/barrel mark and Brent heading back towards $80. While there are unconfirmed reports of massive number of cases and fatalities in China from the spread of Covid, the government’s official message continues to stress upon the need to expand consumption as the key economic priority for 2023. This helps paint a better demand outlook for oil, as global demand slowdown concerns continue to mount in the US and Europe and Russian flows show no signs of slowing. Moreover, it was reported that the US is starting to replenish the Strategic Petroleum Reserve (SPR), starting with a 3-million barrel, fixed-price purchase. In week to Dec 13 funds cut bullish Brent and WTI bets to lowest since April 2020. Gold (XAUUSD) trades near $1800 as it continues to find support Since the current run up in gold started in early November, the price has not dipped below its 21-day moving average, today at $1775. Speculators increased bullish gold and silver bets by 50% in the week to December 13 when prices briefly spiked in response to a softer dollar and CPI print. The subsequent setback following Wednesday’s hawkish FOMC, however, was not big enough to rattle recent established longs. For that to happen the price in our opinion as a minimum need to break below $1765. The risk of a recession and the FOMC hiking into economic weakness – potentially without succeeding getting inflation under control - continues to strengthen the upside risk for investment metals in 2023.  US Treasury yield curve (TLT:xnas, IEF:xnas, SHY:xnas) steepens as market refuses to price Fed rate projections Soft US preliminary PMIs on Friday and weak risk sentiment kept treasuries supported and the 2-year benchmark yield remains near recent lows as the market refuses to price in the projected Fed Funds rate projections from last week’s FOMC meeting, as the market persists in pricing in high odds of Fed rate cuts late next year. At the longer end of the curve the 10-year yield remains pinned near the 3.50% level and the 2-10 slope steepened to –67 basis points this morning, near the highest reading in a month. What is going on? New Zealand Q4 Westpac Consumer Confidence plunges to lowest ever measured The survey reading was 75.6, a huge drop from 87.6 in Q3 and the lowest reading in the 34-year history of the survey and below the 78.7 former record low from Q2 of this year and the 81.7 trough during the global financial crisis. NZD gapped lower after another strong week on the recent relative hawkishness of the RBNZ, a stance that may soften in coming weeks. AUDNZD hit lows since late 2021 over the last couple of weeks after trading at the highest in years as recently as last September. EU considering cutting the proposed natural gas price The EU nations are likely to discuss cutting the gas price cap by almost a third today after the EUR275 per megawatt-hour was proposed last month. As the energy crisis continues to threaten a fresh surge in inflation and growth slowdown in the region, it is also stretching government budgets to maintain popularity. But this will eventually be inflationary again, as price caps hardly work effectively. US flash PMIs send warning signals. Flash December PMIs for the US slumped to fresh lows, sending more warning signals about the economic momentum going into 2023. Manufacturing PMI came in at 46.2, below last month’s 47.7 and the expected 47.8, while the services PMI receded to 44.4 from 46.2 previously – that survey has shown little correlation with the ISM Services survey, which continues to suggest an expanding US services sector. Japan PM Kishida hinting at altering inflation goal for central bank Reports suggested that Japan PM Kishida plans to revise a ten-year-old accord with the BOJ and will consider adding flexibility to the agreement's 2% price goal. Kishida will discuss the matter with the next central bank governor, who'll take office in April. Furthermore, some more comments from officials this morning continued to signal that the authorities may be considering a policy review in 2023, and more hints are awaited at the BOJ meeting tomorrow. Ex-BOJ Deputy Governor Yamaguchi said that the BOJ must stand ready to tweak YCC next year if Japan's economy can withstand overseas economic risks, while also warning that once inflation expectations become entrenched, it is very hard to control them. Speculators bought investment metals and sold dollars ahead of FOMC The latest Commitment of Traders report covering the week to December 13, when the market responded to a softer dollar and CPI print, showed speculators increase their dollar short against nine IMM currency futures to a 17-month high. The selling of CAD being more than offset by short covering in AUD, GBP, and not least the JPY. Since the turn of the dollar in early November, the speculative short in JPY has almost halved. In commodities, the net longs in gold, silver and platinum all increased strongly. Crude oil was mixed with the Brent long being cut to a 26-month low, the natural gas short was cut in half. Across the agriculture sector, the soymeal long hit a 4-½ year high, the cocoa position flipped back to long while buyers returned to coffee. What are we watching next? The calendar roll after a volatile 2022 Many long only equity funds have suffered their worst year since 2008, and “balanced” stock-bond funds have put in their worst year in modern memory on the surge in bond yields this year that has seen the 2022 calendar year providing nowhere for the passive investor to run and hide. On the flip side, some hedge funds and volatility traders enjoyed the market environment of the last 12 months. As we wind down 2022, note that new themes can quickly develop in 2023, as many have closed their books on taking risk as liquidity thins out for the holiday time frame and may be set to put on significant risk on the rollover into the New Year. Earnings to watch This week’s earnings focus is Nike, FedEx, and Carnival which we previewed in the earnings watch note on Friday. The bar is set high for Nike earnings as sell-side analysts have recently hiked their price target on the stock and increased their expectations for 2023 on margins. Today’s earnings focus is HEICO which sells aerospace products to the airline industry and defense contractors. Analysts expect FY22 Q4 (ending 31 October) revenue growth of 18% y/y and EPS of $0.70 up 12% y/y. Today: HEICO Tuesday: Nike, FedEx, General Mills, FactSet Research Systems Wednesday: Toro, Micron Technology, Cintas, Carnival Thursday: Paychex, CarMax Friday: Nitori Economic calendar highlights for today (times GMT) 0900 – Germany Dec. IFO Survey 1330 – Canada Nov. Teranet/National Bank Home Price Index 1500 – US Dec. NAHB Housing Market Index Bank of Japan meeting (Asian hours Tuesday)   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – December 19, 2022 | Saxo Group (home.saxo)
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Russian Drones Attacked Kyiv Again | Most respondents do not want Musk

Kamila Szypuła Kamila Szypuła 19.12.2022 12:40
The beginning of a new week brings surprising news. Yesterday, the eyes of the world were on the 2022 World Cup final. The Argentines and the fans supporting the team celebrated yesterday. But this morning news came from Ukraine, which is still struggling with the occupiers. The war in Ukraine also has consequences on the energy market, OPEC's actions are not in favor of the UAE. Elon Musk still in the spotlight. In this article: Russia attacked again Musk’s polls The UAE and OPEC Russia attacked again Russia launched 35 "kamikaze" drones into Ukraine in the early hours of Monday as many people were asleep, damaging critical infrastructure in and around the capital, Kiev. The attack is Moscow's third air attack on the city in six days. The governor said three areas in the region were left without power after that Ukraine war live updates: Russian drone attack takes out power supplies in Kyiv; Ruble tumbles https://t.co/8dVyqymLa9 — CNBC (@CNBC) December 19, 2022 Read next: The Disney Challenges Now Belong To Iger, Ford And Arguments For A New Trial In A Truck Overturning Case| FXMAG.COM Musk’s Twitter polls Elon Musk knows how to focus attention and even keep it for a longer time. Yesterday there was a lot of publicity about his actions against the accounts of journalists. On Sunday, Twitter's new owner and CEO, Elon Musk, posted an informal poll of users of the social media platform asking if he should step down as head of the company. Sunday's poll by Musk followed an online backlash after "Chief Twit" (as he called himself) made abrupt changes to rules affecting Twitter users last week. Twitter polls are straw polls, meaning they are informal and not comparable to professional opinion polls. Malicious bots or unauthentic accounts may also be able to record a response to a Twitter survey. The majority of respondents (57.5%) were in favor of the billionaire leaving office. Should I step down as head of Twitter? I will abide by the results of this poll. — Elon Musk (@elonmusk) December 18, 2022 The UAE and OPEC The United Arab Emirates is a key member of the Organization of the Petroleum Exporting Countries. The UAE has been irritated by OPEC restrictions before, in 2020 and 2021. Currently, the state can only pump 3 million barrels a day, well below its 4 million barrels. It is even further below the 5 million barrels daily production target. The seemingly current OPEC cuts are meant to offset the risk of oil prices falling as the US and Europe enter recession. President Mohammed bin Zayed al-Nahyan, known as MbZ could change that by quitting, as Qatar did in 2019. The UAE would then get the proceeds from being able to pump whatever it likes, while also benefitting from a warm fuzzy glow in the eyes of the United States and its allies. Officially, OPEC believes that oil demand will continue to grow until 2035, and it would be awkward to drop OPEC to pump more oil while hosting a climate conference. So the UAE is going to have a busy year 2023. The Gulf State wants to pump more oil, reinforce its status as a prime destination for the western capital in the region, and make a big buzz. From Breakingviews - UAE will look to a world beyond OPEC https://t.co/F0aYGw31C0 — Reuters Business (@ReutersBiz) December 19, 2022
The Results Of The March Meeting Of The Bank Of Japan Are Rather Symbolic

The Bank Of Japan Remains Focused On Achieving Wage Inflation | European Nations' Deal To Cap Natural Gas Prices at €180 Per MWh

Saxo Bank Saxo Bank 20.12.2022 08:55
Summary:  US equities declined on rise in bond yield with noted weaknesses in big tech, even though the USD remained range-bound. The announcement from the Bank of England to include long-maturity gilts in the winding down of QE portfolio in Q1 pushed up yields. Bank of Japan decision will the focus today in Asia, along with China’s Loan Prime Rates, and the US PCE is due later in the week. Earnings from Nike and Fedex today may give investors insights into consumer spending and global economic activities. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) were dragged down by higher bond yields and tech weaknesses U.S. equities declined for a fourth consecutive session. Nasdaq 100 dropped 1.4% and S&P 500 was 0.9% lower on Monday. All sectors, except energy, within the S&P 500 declined, led by communication services, consumer discretionary, and information technology. The 10bp jump in the 10-year yield weighed on growth stocks. The NAHB Housing Market Index plunged to 31, approaching the March 2020 Covid-19 recession low. Key U.S. stock movers Warner Brothers (WBD:xnas), down 6.6%, Meta (META:xnas), down 4.1%, and Amazon (AMZN:xnas) were among the top losers in the Nasdaq 100. Warner Brothers said the entertainment company is to record a large restructuring charge. Meta was hit by news that the European Union antitrust regulators were probing the company for allegedly unfairly squeezing out rivals. Walt Disney (DIS) slid 4.8% after releasing the debut weekend box office of Avatar: the Way of Water, below expectations. Supported by the possibility that Musk stepping down from Twitter, the shares of Tesla were little changed despite general market weakness and a probe by German prosecutors on suspected illegal storage of hazardous materials. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) cheapened as UK yields surged on BOE QT The surge in yield across the pond in the U.K. and Eurozone dragged U.S. Treasury yields higher, with the yield on 2-year notes 8bps higher to 4.26% and that on 10-year notes up 10bps to 3.58%. At the futures trading pits, large selling was on the 10-year (ZNH3) and the ultra 10-year (TNH3) contracts. The 2-10-year curve steepened by 3bps to -68bps. The move was triggered by a 17bp jump in the yield on the U.K. 10-year Gilts after the Bank of England announced the Q1 2023 bond selling schedule for its Asset Purchase Facility portfolio (i.e. bonds accumulated during QE) starting from January 9, 2023, in five auctions for a total of GBP9.75 billion, dividing equally in short, medium, and long-maturity bonds (including the first time). Adding further to the upward pressure on yields were the remarks from ECB’s Simkus and Guindos on more 50bp rate hikes in the Eurozone. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) slid on surge of Covid cases in mainland China Hong Kong and Chinese stocks pared all the early gains and finished the session lower as investors turned cautious following media reports of rises in Covid inflections and death tolls across large cities in China. The lack of commitment to more large-scale economic stimulus measures from the Central Economic Work Conference was considered underwhelming by investors who had higher expectations ahead of the meeting. The positive development of shifting to a more conciliatory stance towards the private sector was buried in the risk-off sentiment. Alibaba (09988:xhkg), Tencent (00700:xhkg), and Meituan (03690:xhkg) gained between 0.7% and 1.7%. Online healthcare providers were among the largest losers, Alibaba Heath (00241:xhkg), JD Health (06618:xhkg), and Ping An Healthcare tumbled by 4% to 8%. Chinese pharmaceuticals and Macao casino operators were among the largest losers. In A-shares, pharmaceutical and biotech names led the decline while the new energy space bucked the broad market and rise. FX: Dollar range-bound ahead of key PCE data this week The US dollar saw mild selling on Monday in thin markets and lack of any tier 1 data or Fed speak. Focus remains on US PCE data due later in the week which remains the Fed’s preferred inflation gauge. EURUSD rose above 1.06 again supported by hawkish commentary from ECB's Kazmir. Kazmir noted rates will not only need to go to restrictive territory but they will need to stay there much longer, noting inflation requires a strong policy response. Meanwhile, Germany's IFO Business climate data came in better than expected on the headline, led by a rise in both expectations and current conditions. USDJPY saw a modest uptick to 137+ levels in the Asian morning hours on Tuesday as the BOJ policy announcement was awaited, and expected to remain dovish (read preview below). GBPUSD testing a break below 1.2150 following the BOE’s long-end QT announcement. AUDUSD was little changed ahead of the RBA minutes. Crude oil (CLF3 & LCOG3) prices modestly higher Crude oil prices continue to find it challenging to balance the varied narrative around the demand outlook. China demand faces short-term headwinds as the Covid wave spreads, but is likely poised for a rebound in the medium term as authorities remain committed to driving up consumption recovery. Meanwhile, global demand outlook faces headwinds amid the massive tightening seen by global central banks this year. Supply side volatilities also persist with US refilling its SPR and sanctions on Russian oil. Crude oil prices were slightly higher, with WTI futures above $75/barrel and Brent futures getting close to $80.   What to consider? BOE announces restart of long-end bond selling, triggering another sell-off in Gilts After pausing the sales of long-end bonds recently to help the market to stabilize after the September rout, the Bank of England has announced that it will now start selling evenly across short, medium and long maturity bonds starting from Jan 9, as part of its QT. 2yr gilt yields up 20bps and 10yr up 17bps. Still, gilt yields are well below the peaks near 5% struck in late September and early October, when prices slumped in response to plans for tax cuts and extra spending from former British Prime Minister Liz Truss's short-lived government. Further pressure on gilts cannot be ignored as BOE likely to raise rates by another 50bps at the Feb 3 meeting. EU energy ministers lower gas price cap European nations reached a deal to cap natural gas prices at €180 per MWh, in a measure that will be applicable for a year from Feb 15. The price cap is significantly lower than an earlier proposal by the European Commission, and will only take effect if the benchmark Dutch TTF gas prices are above €180 per megawatt-hour, and their price difference with global LNG prices is greater than €35 per megawatt-hour. While this may take the immediate pressure off the consumers who are reeling under the energy crisis, we think price caps rarely work and only transfer the pressure somewhere else. Watch for Bank of Japan’s policy review hints The Bank of Japan is set to announce its policy decision today, and no change is expected in its monetary policy stance. The BOJ is expected to keep rates unchanged at -0.1% while maintaining its cap on the 10-Year JGB at 0.25%. Even as inflation increased to 3.6% YoY in October, the BOJ remains focused on achieving wage inflation before it considers a shift in policy stance. However, keep an eye out for any comments about a monetary policy review, which can trigger a strong JPY correction. There have been some mentions by BOJ members regarding a review of how monetary policy is conducted, they have generally been dismissed. While the timeline is still expected to be closer or after Governor Kuroda’s retirement in spring, any notes on who will succeed him or what policy change can be expected would be critical. US December NAHB housing market index slips further The NAHB housing index fell for a 12th straight month from 84 in December 2021 to 31 this month. However, the rate of decline moderated to its slowest in 6 months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment. Of the index’s three components, current sales conditions fell 3 points to 36, buyer traffic was unchanged at 20, but sales expectations in the next six months increased 4 points to 35, also indicating an improved outlook. Better German business climate than expected in December The headline German IFO business climate index, which is based on 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction, was out better than expected in December. It climbed to 88.6 versus prior 86.3 and expected 87.2. The current economic assessment and the expectations also improved to 94.4 and 83.2, respectively. Companies are slightly less pessimistic about the macroeconomic trajectory. Though a recession is certainly unavoidable in Germany, the impact of the energy crisis has been so far more limited than initially feared. On a flip note, ECB policymaker Gediminas Simkus, who serves as the Chairman of the Bank of Lithuania, indicated that a 50 basis points rate hike in February is a done-deal. This is aligned with comments from ECB president Christine Lagarde at last week’s ECB press conference. The market reaction was muted. Nike and FedEx earnings on watch today Recently sell-side analysts have raised their price targets on Nike (NKE:xnys), citing potential margin recovery. The sportswear giant reports FY23 Q2 (ending Nov 30, 2022) today and the street consensus is expecting its revenue to grow 11% Y/Y to USD12.6 billion. Peter Garnry suggests in his note that the focus will be on the outlook for the holiday season quarter ending in February 2023 which can give investors some ideas if consumers are still keeping up their spending on discretionary items. Analysts covering Nike seem more optimistic about consumer spending in 2023 than the US bank CEOs who recently suggested that US consumer spending has been coming down. FedEx (FDX:xnys) earnings are also key to watch today. FedEx is now on the other side of the pandemic boom in logistics and expectations for revenue growth have collapsed to zero revenue growth over the next two quarters which in real terms are very low given the inflation. This means that the bar is set low for FedEx when its earnings hit the wire today.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Markets grinding lower; BOE to restart long-end QT; Eyes on BOJ – 20 December 2022 | Saxo Group (home.saxo)
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

The Bank Of England Will Now Start Selling Bonds | A Shift In Bank Of Japan Policy Overnight

Saxo Bank Saxo Bank 20.12.2022 09:08
Summary:  The Bank of Japan surprised global markets overnight with a tweak to their yield curve control policy that came as a large shock to currency traders and even shook risk sentiment more broadly. Not only did the JPY surge broadly, especially against non-USD major currencies, but global yields jumped on the news as yields on Japanese government bonds rose in step-wise fashion on the shift higher in the yield cap on 10-year JGB’s from 0.25% to 0.50%.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) After a weak session yesterday that saw the major indices losing about a percent, futures traded lower still overnight after the Bank of Japan decision to tweak its policy (more below) took US long yields sharply higher overnight. The next technical focus lower could be the 61.8% retracement of the rally from the October low – which is at a rather lower level for the cash index at 3,724 because the wild spike higher in US equity futures on the CPI release last week was not traded in the cash market. Equity traders will keep at least one eye on treasury yields after the surge overnight. Euro STOXX 50 (EU50.I) STOXX 50 futures are some 1.5% lower this morning from yesterday’s close after the surprise BoJ policy shift overnight cratered sentiment and have tumbled over 5% since the ECB’s hawkish meeting last week. The next technical focus lower could be the 200-day moving average, which for the cash index comes in near 3,675. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Overnight U.S. stock market weaknesses, concerns about spreading of Covid-19, and the upward adjustment of yield cap by the Bank of Japan contributed to the risk-off sentiment in the Hong Kong and mainland Chinese stock markets.  Both the Hang Seng Index and CSI300 Index plunged around 2%. Technology stocks underperformed. Hang Seng TECH Index tumbled 4%, with Alibaba (09988:xhkg) and Tencent (00700:xhkg) dropping by more than 4% and Bilibili (09626:xhkg) tumbling more than 8%. Placement of shares at discount from two Hong Kong listed Chinese developers weighed on the property sector. Chinese banks fixed their 1-year and 5-year loan prime rates unchanged. FX: BoJ move sees massive JPY surge, particularly in the crosses The market was surprised to see a shift in BoJ policy overnight, as Governor Kuroda and company shifted the cap on the 10-year JGB to 0.50% from 0.25%, even as they left the base policy rate of -0.10% alone. The move took the JPY sharply higher, with USDJPY trading some 3% lower to new cycle lows below 133.00, while non-USD JPY crosses surged somewhat more as the BoJ’s move triggered a global surge in bond yields and took risk appetite down a few notches, helping support the US dollar elsewhere. Crude oil (CLF3 & LCOG3) prices modestly higher Crude oil prices continue to find it challenging to balance the varied narrative around the demand outlook. China demand faces short-term headwinds as the Covid wave spreads but is likely poised for a rebound in the medium term as authorities remain committed to driving up consumption recovery. Meanwhile, global demand outlook faces headwinds amid the massive tightening seen by global central banks this year. Supply side volatilities also persist with US refilling its SPR and sanctions on Russian oil with a government response close to being completed. In week to Dec 13 funds cut bullish Brent and WTI bets to lowest since April 2020 and it highlights the risk of large price swings as the short-term outlook remains very clouded. Crude oil prices were slightly higher, with WTI futures above $75/barrel and Brent futures getting close to $80. Gold (XAUUSD) maintains a bid near $1800 ... after Bank of Japan’s surprise tweak of its yield cap sent mixed signals for bullion as the dollar dropped and bond yields rose. Overall, however, the prospect of higher yields in Japan following years of artificially low rates could potentially be seen as gold negative given that the BOJ’s steadfast commitment to defending its 10-year yield cap has served as an anchor indirectly helping keep borrowing costs low around the world. Since the current run up in gold started in early November, the price has not dipped below its 21-day moving average, today at $1777. With momentum showing signs of slowing a break below may signal a period of consolidation ahead of yearend while a close above $1815 is needed for that risk to fade. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) drop on BOE and BOJ actions The surge in yield across the pond in the U.K. and Eurozone as well as the surprise announcement from the BOJ that it will lift the yield cap on 10-year JGB’s from 25 bps to 50 bps has driven U.S. Treasury yields higher, with the yield on 2-year notes rising to 4.27% and that on 10-year notes to 3.68%. In futures, large selling was seen on the 10-year (ZNH3) and the ultra-10-year (TNH3) contracts. The 2-10-year curve steepened to -60bps from the recent peak at -84bps. The move was supported on Monday by a 17bp jump in the yield on the U.K. 10-year Gilts after the Bank of England announced the Q1 2023 bond selling schedule for its Asset Purchase Facility portfolio. What is going on? Bank of Japan surprises with lift of yield cap on 10-year JGB’s The BoJ left the policy rate unchanged at -0.10%, but lifted the cap on 10-year JGB’s to 0.50% from 0.25%, triggering an avalanche of JGB selling that immediately took the 10-year JGB yields close to the new target. The market was caught very off-guard despite recent rumblings that the BoJ would likely eventually shift policy. Most observers assessed, given Governor Kuroda’s constant stout defense of the BoJ’s policy mix, that a change to BoJ policy would take place after Kuroda’s exit on April 8 of next year. This decision overnight finally shows a willingness to move that will have the market more likely to anticipate follow up moves after next April, even hikes of the policy rate. For now, this decision took the JPY some 3% higher overnight and sent global bond yields sharply higher and risk sentiment broadly lower as the tightening move comes at a time when many other central banks are shifting to a deceleration of their respective tightening regimes. Better German business climate than expected in December The headline German IFO business climate index, which is based on 9,000 monthly survey responses from firms in the manufacturing, service sector, trade and construction, was out better than expected in December. It climbed to 88.6 versus the prior 86.3 and expected 87.2. The current economic assessment and the expectations also improved to 94.4 and 83.2, respectively. Companies are slightly less pessimistic about the macroeconomic trajectory. Though a recession is certainly unavoidable in Germany, the impact of the energy crisis has been so far more limited than initially feared. On a flip note, ECB policymaker Gediminas Simkus, who serves as the Chairman of the Bank of Lithuania, indicated that a 50-basis points rate hike in February is a done deal. This is aligned with comments from ECB president Christine Lagarde at last week’s ECB press conference. US December NAHB housing market index slips further The NAHB housing index fell for a 12th straight month from 84 in December 2021 to 31 this month. However, the rate of decline moderated to its slowest in 6 months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment. Of the index’s three components, current sales conditions fell 3 points to 36, buyer traffic was unchanged at 20, but sales expectations in the next six months increased 4 points to 35, also indicating an improved outlook. BOE announces restart of long-end bond selling, triggering another sell-off in Gilts After pausing the sales of long-end bonds recently to help the market to stabilize after the September rout, the Bank of England has announced that it will now start selling evenly across short, medium and long maturity bonds starting from Jan 9, as part of its QT. 2yr gilt yields up 20bps and 10yr up 17bps. Still, gilt yields are well below the peaks near 5% struck in late September and early October, when prices slumped in response to plans for tax cuts and extra spending from former British Prime Minister Liz Truss's short-lived government. Further pressure on gilts cannot be ignored as BOE likely to raise rates by another 50bps at the Feb 3 meeting. European nations reached a deal to cap natural gas prices at €180/MWh The deal that will apply for one year from February 15 have no impact on markets this winter given the timing of the implementation and ample supply with stock levels still up 290 TWh year-on-year, the equivalent of 39 days of peak winter demand. The Dutch TTF benchmark gas contract trades near €100/MWh in response to milder weather during the next week and increased power production from renewables reducing demand for gas. The price of gas for the winter 2023/24 period meanwhile has slumped to €110, further reducing the outlook for economic pain next year. Gas consumption in Europe is set to shrink by more than 50 billion cubic meters in 2022, a 12-15% drop and “the sharpest decline in history,” led by price-driven demand destruction and mild weather according to Bloomberg Intelligence. What are we watching next? Follow-on from Bank of Japan move overnight The Bank of Japan move overnight was an uncomfortable one for global markets as it sent global bond yields sharply higher, including the US 10-year yield, which jumped over 10 basis points at one point overnight. Yields also rose elsewhere and this sudden new development in less liquid markets here toward the end of the calendar year could aggravate volatility risks across equity and bond markets. Earnings to watch The bar is set high for Nike earnings as sell-side analysts have recently hiked their price target on the stock and increased their expectations for 2023 on margins. The stock recently tried to retake the 200-day moving average above 110.00, but that effort failed and closed yesterday near 103 ahead of today’s earnings report after today’s close. FedEx will also report after the close. Today: Nike, FedEx, General Mills, FactSet Research Systems Wednesday: Toro, Micron Technology, Cintas, Carnival Thursday: Paychex, CarMax Friday: Nitori Economic calendar highlights for today (times GMT) 1330 – US Nov. Housing Starts and Building Permits 1330 – Canada Oct. Retail Sales 1500 – Eurozone Dec. Consumer Confidence 2100 – New Zealand Dec. ANZ Consumer Confidence 2130 – API's Weekly Report on US Crude and Fuel Inventories  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – December 20, 2022 | Saxo Group (home.saxo)
The USD/CAD Pair Has The Strong Downside Momentum

Crude Oil Prices Significantly Affect The USD/CAD Pair

TeleTrade Comments TeleTrade Comments 20.12.2022 09:14
USD/CAD picks up bids to reverse the week-start losses. US Dollar benefits from the BOJ-inflicted losses in bond, stock markets. Oil price weaken amid economic fears surrounding China. Canada Retail Sales, US housing data eyed for fresh impulse. USD/CAD clings to mild gains around 1.3700 as the US Dollar reverses the intraday losses heading into Tuesday’s European session. The Loonie pair’s run-up could also be linked to the downside move of Canada’s main export item, namely WTI crude oil. That said, the US Dollar Index (DXY) picks up bids to pare recent losses around 104.50 as the Treasury bond yields rally on the Bank of Japan’s (BOJ) surprise. Recently, the BOJ tweaked its policy to widen the Yield Curve Control (YCC) measures while keeping the monetary policy unchanged. Also underpinning the US Dollar’s latest rebound could be the economic fears surrounding China, as well as the globe. Behind the moves could be the World Bank’s cut in China’s economic forecasts as well as the hawkish actions of the major central banks to tame inflation, especially when the recession fears are already looming. However, comparatively less hawkish comments from the Fed officials join softer US PMIs to challenge DXY bulls. Elsewhere, WTI takes offers to refresh intraday low near $75.50, down half a percent at the latest. The European leaders’ agreement on the oil price cap for Russian energy exports also seems to exert downside pressure on the black gold prices. Amid these plays, S&P 500 Futures and the Asia-Pacific stocks print losses while the US 10-year Treasury yields rise for the third consecutive day to refresh the monthly peak near 3.70%, at 3.67% by the press time. Looking forward, the risk-aversion wave may help USD/CAD buyers ahead of the Canadian Retail Sales for October, expected -0.3% versus 0.5% prior. On the other hand, US Building Permits and Housing Starts for November may also direct short-term pair moves. Technical analysis A daily closing beyond the 1.3700 hurdle, comprising multiple tops marked in the last two weeks, becomes necessary for the USD/CAD bulls to aim for the previous monthly high near 1.3810. Otherwise, a pullback towards the 50-DMA support of 1.3557 can’t be ruled out.
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

Fears About A Global Recession Are Pushing Brent Oil Down

Marek Petkovich Marek Petkovich 20.12.2022 11:13
Even though the world's leading central banks are slowing down the rate of monetary policy tightening, they continue to raise rates. Even as signs emerge that economies are either moving toward recession, as in the case of the United States, or are already in recession, as in the case of the eurozone and Britain. The fact that monetary tightening continues cannot but affect oil prices. Recession will lead to a reduction in global demand, which in the context of stable supply leaves the downward trend for Brent in force. If the latest "dove" in the face of the Bank of Japan takes a step towards abandoning its ultra-loose monetary policy, widening the boundaries of the target range of yields, what should we expect from the rest? If inflation suddenly picks up in 2023, the Fed and companies will have no choice but to keep raising rates. Recession will become a reality, global oil demand will decline, and the Brent bulls will be left fooled. Dynamics of recession probabilities in the world's leading economies Their recent activity was associated with China's departure from the zero-COVID policy, with the U.S. decision to start buying oil to replenish strategic reserves after their reduction by 180 million barrels, as well as with the weakening of the U.S. dollar. Nevertheless, the rapid opening of China's economy is fraught with an increase in deaths by 1 million and an increase in infections to 10 million at its peak. If people actively get sick, productivity will decrease, supply chain problems will worsen, which will affect the entire global economy. No one knows exactly how the situation in China will develop, and uncertainty increases the chances of Brent consolidation. On the one hand, the drop in business confidence in China, according to a World Economics survey, has fallen to its lowest level since January 2013, which undermines domestic demand in the largest consumer of oil. On the other hand, Xi Jinping promised to focus on the economy, which is encouraging for Brent fans. So far, there are no particular problems with the proposal. Russia continues to supply oil to India on tankers insured by the EU, which indicates that the established price ceiling of $60 per barrel is observed by counterparties. Contrary to Moscow's loud statements that sales will not be made. The current price of oil seems to suit everyone. Problems may start later if prices fall. Thus, fears about a global recession are pushing Brent down, but U.S. oil purchases to replenish strategic reserves, a weakening U.S. dollar and faith in additional monetary and fiscal stimulus from China are helping to stabilize oil. Technically, on the daily chart of Brent, a 1-2-3 reversal pattern could be activated if the pivot point at $83.35 per barrel is broken. This would increase the risks of a pullback. On the contrary, a drop below $78.45 would be a reason to sell. Relevance up to 08:00 2022-12-25 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/330268
The USD/JPY Price Seems To Be Optimistic

The Japanese Yen (JPY) Soared More Than 3% Versus Major Currencies

Saxo Bank Saxo Bank 21.12.2022 09:23
Summary:  The top story of the day was the unexpected decision from the Bank of Japan to raise its cap on the 10-year government bond yield to 0.50% from 0.25%. The Yen jumped versus all major currencies and strengthened by 3.7% to 131.80 versus the U.S. dollar. The U.S. 10-year Treasury yield surged 10bps to 3.68% while the S&P 500 managed to snap a four-day losing streak to finish slightly firmer. In extended-hour trading, Nike and FedEx gained on earnings beats. Chinese and Hong Kong stocks declined in a risk-off session. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished the session mixed S&P 500 pared the post-BOJ upward yield cap adjustment loss and managed to snap a four-day losing streak to finish 0.1% higher on Tuesday. Nasdaq 100 edged down by 0.1%. Energy, rising 1.5%, was the top gainer within the S&P500 as the WTI crude gained 1%. Consumer discretionary, dropping by 1.1%, was the biggest losing sector. On single stocks, Tesla (TSLA:xnas) was the biggest loser within both the S&P500 and Nasdaq 100. The electric vehicle maker tumbled 8% on Tuesday, following analyst downgrades. The stock shed 23.8% in December, significantly underperforming the 3.8% decline in Nasdaq 100 and the 3.4% loss in S&P 500. Nike (NKE:xnys) jumped nearly 12% in the extended-hour trading after the sportswear company reported revenue and earnings beats. Yields on 5-30-year US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) surged on the hawkish BOJ surprise From the Intermediate through the long-maturity Treasuries sold off on the Bank of Japan’s decision to move its cap on 10-year Japanese government yields to 0.5% from 0.25%. Large blocks selling came in the five-year and 10-year futures contracts. The 10-year yield jumped 10bps to 3.68%, breaking the upper bound (in yield) of the trading range in December. Yields on the 2-year, anchored by the Fed’s rate path, finished the session unchanged. The 2-10-year yield curve steepened by 9bps to 58bps. The housing data released on Tuesday was mixed. Housing starts shrank by 0.5% M/M, less than the -1.8% expected but housing permits were down 11.2% M/M in November, much weaker than the -2.1% consensus in the Bloomberg survey. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) declined in a risk-off day Overnight U.S. stock market weaknesses, concerns about the spreading of Covid-19 in mainland China, and the upward adjustment the of yield cap by the Bank of Japan contributed to the risk-off sentiment in the Hong Kong and mainland Chinese stock markets.  Hang Seng Index declined 1.3% and CSI300 Index plunged 1.7%. Technology stocks underperformed. Hang Seng TECH Index tumbled 3.1%, with Alibaba (09988:xhkg) and Tencent (00700:xhkg) dropping by around 3.4% each and Bilibili (09626:xhkg) tumbling 6.7%. Placement of shares at discount from two Hong Kong-listed Chinese developers, Agile (03383:xhkg) down 17.4%, and CIFI (00884:xhkg) down 16.5% weighed on the property sector. Country Garden (02007:xhkg) shed 8.8%. FX: USDJPY tumbled 3.7% to 131.80 on BOJ’s 25-bp hike to the 10-year JGB cap The Bank of Japan surprised with a 25 basis point hike to the 10-year JGB cap, even as Governor Kuroda tried to ease the impact of the move on markets in his post-meeting press conference with statements suggesting that was “not a rate hike” and that it is too early to consider a general exit from or review of its Yield Curve Control (YCC) policy framework. USDJPY shed 3.7% to 131.80. The Japanese Yen soared more than 3% versus major currencies. Saxo’s Head of FX Strategy, John Hardy notes that the scale of the JPY reaction and its more than 12% rally off the lows against the US dollar, together with far lower commodity prices help ensure that we are very unlikely to see further policy tweaks under Governor Kuroda’s leadership. The ability of the JPY to continue higher after this step-wise reset will depend on the follow-up direction in global yields. FedEx (FDX:xnys) surged 4.3% in the extended hours on results beating earnings estimates. Crude oil (CLF3 & LCOG3) bounced on API inventory drawdown WTI crude oil gained 1% to USD76.1 as the American Petroleum Institute (API) said crude oil inventories in the U.S. dropped by 3.1 million barrels last week. What to consider? BOJ’s surprise policy tweak Bank of Japan tweaked its long-held Yield Curve Control (YCC) policy in a surprise announcement after the December 19-20 meeting. The central bank widened the band in which it would allow rates for 10-year Japanese government bonds to move to -/+ 0.5% from -/+ 0.25% previously. The rest of the monetary policy levers were left unchanged, including the 10-year target still being held at 0%. In her notes, Charu Chanana suggests that the run higher in Japanese yields is likely to create further volatility in global equity and bond markets. As the market once again pressures the BOJ to move towards an eventual exit, the short JGB or long yen trades could potentially have more room to run. This is not just yen positive, but also negative for foreign assets. In terms of equities, this could mean a favourable stance towards Japanese financials vs. exporters and technology companies. For more details about the BOJ policy change, please refer to Charu’s notes. Results from Nike and FedEx beat expectations Nike reported results from FY23 Q2, that ended on Nov 30, beating analyst estimates in sales and margins. Adjusted EPS came in at USD0.85, well above the US0.65 forecasted by analysts. Although inventories increased by 43% Y/Y, the management attributed the buildup to “abnormally low levels” resulting from supply chain disruption a year earlier. The company’s management gave an upbeat assessment of the holiday season sales momentum. FedEx reported FY23 Q2 Adjusted EPS at USD3.18, beating the USD2.8 expected. The positive surprise resulted from a combination of price increases and cost cuts despite a decline in package volume. The logistics giant guided an additional USD1 billion of projected cost cuts in fiscal 2023.   For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: – Yen soared to 131.80 versus the dollar and global bond yields rose after the BOJ raised its yield cap on 10-year bonds - 21 December 2022 | Saxo Group (home.saxo)
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

OPEC+ Will Remain Proactive And Pre-emptive In Managing The Global Oil Market

Saxo Bank Saxo Bank 21.12.2022 09:27
Summary:  The US equity market found its feet again yesterday, pulling itself off the lowest levels in over a month and closing approximately unchanged as traders mull whether there is more to wring out of this calendar year before capital is put to work in the New Year. The soaring JPY found resistance ahead of 130.00 in USDJPY, with higher US global yields pushing back against further upside after the big reset higher for the yen. Elsewhere, gold has pulled up to cycle highs.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rebounded yesterday from the intraday lows of 3,803 and the rebound has continued this morning with the index futures trading around the 3,867 level. Nike posted stronger than expected earnings and an optimistic outlook for the new year bolstering the view that US consumer spending is still going strong. Tesla is a key stock to watch today as shares were down 8% yesterday despite a positive session suggesting big flows are adjusting the price to the new reality of lower EV demand and demanding prices input materials for batteries. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) Hong Kong and China stocks started the session firmer but fizzled out and were about flat at the time of writing. Chinese property developers continued to trade weak after recent rounds of placements and headlines in state-owned media reiterating the “housing is not for speculation” rhetoric. Tech names outperformed with Hang Seng TECH Index climbed 0.6%. In A-shares, consumption, lodging, and banking stocks gained while solar, auto and machinery underperformed. FX: JPY finds resistance as global yields reset higher There is some irony at work here as global yields jumped on the Bank of Japan decision to reset the yield cap on 10-year JGB’s to 0.50% yesterday, in that global yields reset higher. But if the BoJ is seen standing pat with its new policy, any further rise in yields can also serve to push back against follow-on JPY strength after the one-off reset (for now, at least.) that fell short of taking 130.00 to the downside in USDJPY before a significant bounce from yesterday’s lows. Elsewhere, the USD is mixed and not the focus, stuck in a tight range versus the euro, but with EURUSD having run out of upside momentum. Elsewhere in G10, the Aussie rallied against a weak NZD as another New Zealand confidence survey, the ANZ Consumer Confidence, slipped badly to 73.8 versus 80.7 and far and away the worst reading of the survey since its inception in 2004. Crude oil (CLG3 & LCOG3) holds onto its recent gains ... supported by a drop in US crude stocks, data pointing to a notably drop in Russian seaborne oil shipments this month and Saudi Arabia warning that OPEC+ will remain proactive and pre-emptive in managing the global oil market. Having been vindicated in the necessity of their November production cut as demand slowed, the comment from the Saudi oil minister points to a soft floor under the market below which additional cuts could be implemented if necessary to support the price. The risk of large price swings as liquidity dries up ahead of yearend cannot be ignored with focus today on EIA’s stock report. Crude oil prices were slightly higher, with WTI futures above $76/barrel and Brent futures above $80. Gold (XAUUSD) and silver (XAGUSD) surged higher on Tuesday ... after the Bank of Japan surprised the market by revising its yield-curve-control policy. The move saw the dollar weaken sharply against the Japanese yen while an accompanying rise in bond yields played no role as a potential headwind. Silver reached an eight-month high before running into some profit taking while gold closed saw its highest close since June above $1800. The extent of the move surprised the market and may signal some trigger happy investors not waiting for the new year to get involved amid expectations for an investment metal friendly 2023.  Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) surged on the hawkish BOJ surprise From the Intermediate through the long-maturity Treasuries sold off on the Bank of Japan’s decision to move its cap on 10-year Japanese government yields to 0.5% from 0.25%. Large block selling came in the five-year and 10-year futures contracts. The 10-year yield jumped 10bps to 3.68%, the highest close this month. Yields on the 2-year, anchored by the Fed’s rate path, finished the session unchanged. The 2-10-year yield curve steepened by 9bps to 58bps. The housing data released on Tuesday was mixed. Housing starts shrank by 0.5% M/M, less than the -1.8% expected but housing permits were down 11.2% M/M in November, much weaker than the -2.1% consensus in the Bloomberg survey. What is going on? Tesla shares slide another 8% even as Musk promises new Twitter CEO Tesla CEO Elon Musk promised to abide by the results of a Twitter poll to step down as the Twitter CEO, and yet the prospect of fewer distractions for Musk failed to help Tesla’s shares, which stumbled badly yesterday, also as two analysts cut their targets for the company. One could speculate that Elon Musk has engineered an escape route out of Twitter because things are deteriorating fast at Tesla and that Tesla is ultimately more important for his personal wealth and other money losing assets. Results from Nike and FedEx beat expectations Nike reported results from FY23 Q2, that ended on Nov 30, beating analyst estimates on sales and margins. Adjusted EPS came in at $0.85, well above the $0.65 forecasted by analysts. Although inventories increased by 43% y/y, the management attributed the buildup to “abnormally low levels” resulting from supply chain disruption a year earlier. Nike’s management gave an upbeat assessment of the holiday season sales momentum. FedEx reported FY23 Q2 Adjusted EPS at $3.18, beating the $2.8 expected. The positive surprise resulted from a combination of price increases and cost cuts despite a decline in package volume. The logistics giant guided an additional $1bn of projected cost cuts in fiscal 2023. Housing weakness continues in the United States Housing starts were mostly flat in November (minus 0.5 % month-over-month) while building permits continued to tumble (drop of 11.2 % month-over-month). Permits are now at their lowest level since June 2020. Many analysts consider that such a drop is consistent with an imminent recession. However, there are other signals showing the U.S. economy is still very resilient despite several headwinds (such as widespread inflation, tight labor market and high level of private debt). Nonetheless, we agree that the evolution of the housing market in the coming months will determine the pace of economic activity in the United States in 2023. This is the most important economic sector to monitor at the moment. What are we watching next? US Dec. Consumer Confidence This survey of US consumer confidence tends to correlate most closely with the labor market prospects in the US historically, although the impact of the massive inflation spike this year was felt in this survey during the spring and summer months despite the strong jobs market as confidence dropped from 128.9 in late 2021 to as low as 95.3 in July, before stabilizing, perhaps on gasoline prices in the US retreating sharply after June. The November survey came in at 100.2, a four-month low, and is expected flat at 101 for the December release later today. Earnings to watch Today’s US earnings focus is Micron and Carnival. Analysts expect Micron to report FY23 Q1 (ending 30 November) negative revenue growth of 46% y/y and adjusted EPS of $-0.01 down from $2.10 a year ago. The memory chip industry is going a tough period with falling prices and lower demand. Carnival is still cruising the high wave of travel and leisure post the pandemic with FY23 Q4 (ending 30 November) revenue expected to increase 205% y/y but still delivering negative earnings with adjusted EPS expected at $-0.87 improving from $-1.72 a year ago. Today: Toro, Micron Technology, Cintas, Carnival Thursday: Paychex, CarMax Friday: Nitori Economic calendar highlights for today (times GMT) 1100 – UK Dec. CBI Reported Sales 1330 – US Q3 Current Account 1330 – Canada Nov. CPI 1500 – US Nov. Existing Home Sales 1500 – US Dec. Consumer Confidence 1530 – EIA's Weekly Crude and Fuel Stock Report Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – December 21, 2022 | Saxo Group (home.saxo)  
Crude decreases amid risk boosting greenback and unclear situation in China

Crude oil: black gold production reached 5.4% more year-on-year

Conotoxia Comments Conotoxia Comments 21.12.2022 15:15
OPEC (Organisation of the Petroleum Exporting Countries) brings together oil producing and exporting countries. Every month, it also issues a report with detailed information on the oil market and forecasts of production and demand for crude. Clues could be extracted from these, such as the rate of economic development of individual countries or regions. Black gold production In the third quarter of this year, total crude production was 100.46 million barrels per day, up 5.4% year-on-year. The US was the largest single producer of this crude, providing 19.21% of the total world supply. It is worth noting that production in the US, which is not an OPEC member, increased by more than 8% from the previous year. OPEC cartel countries (including Saudi Arabia, the UAE and Kuwait) supplied 29.3% of world supply. Although they reported production cuts, their daily output increased by 11.75% year-on-year, translating into the largest increase among the world's producers. Crude oil prices on world markets appear to have fallen recently. They have already fallen by more than 30% since their March peaks. This seems to have been heavily influenced by the increase in oil production. Many experts suggest that more available oil on the market may lead to a fall in the price of oil. Source: Conotoxia MT5, XTIUSD, Daily The prediction for the coming months is that oil production growth would continue at a fairly high level. In the current quarter, it is expected to average 1.7% over the previous quarter. Estimates for next year assume an average increase in production of 1.5% over the previous year. Whether this could actually happen would become clear in a few months. There will be no crisis, please disperse Oil consumption usually reflects well the level of economic development of a country. Data provided by the cartel indicate that an economic slowdown may occur in the first quarter of 2023 in China and Russia. Forecasts for the following quarters are more favourable compared to the current year. Average oil demand growth in 2023 could be 2.2% over the previous year (currently at 2.6%). For this reason, we can expect declines in the listings of a Chinese equity fund such as the iShares MSCI China ETF (MCHI), which may not count this year as one of its best. Source: Conotoxia MT5, MCHI, Weekly According to market projections and the number of orders contracted, India's economy could grow the fastest, at an average rate of 4.95% year-on-year. Therefore, the listing of the iShares MSCI India ETF (INDA), which mirrors India's main index, could prove to be a long-term investment opportunity. It seems worth considering such an investment. Source: Conotoxia MT5, INDA, Weekly   Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75,21% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read the article on Conotoxia
The Commodities Feed: China's 2023 growth target underwhelms markets

The China-Australia Comprehensive Strategic Partnership: The Removal Of China’s Trade Sanctions On Australian Goods

Saxo Bank Saxo Bank 22.12.2022 08:50
Summary:  The S&P 500 and Nasdaq 100 jumped by 1.5% on the Conference Board Consumer Confidence index rising to an 8-month high and 12-month inflation expectations sliding to the lowest since Sep 2021. Energy stocks led the gains as crude oil prices rose by nearly 3% on a larger-than-expected EIA crude oil inventories drawdown. USDJPY stabilized at 132.40 after the sharp decline the day before. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) rallied 1.5% on consumer confidence survey US equities jumped on a bullish combination in the Conference Board Consumer Confidence survey with consumer confidence improving to an 8-month high and inflation expectations for the next 12 months falling to 6.7% in December from 7.1% in November. S&P 500 and Nasdaq 100 each climbed 1.5%. Nike (NKE:xnys), soaring 12.2% on an earnings beat and upbeat assessment of demand, was the best-performing stock within the S&P500 on Wednesday. All 11 sectors of the S&P500 gained, with energy, industrials, and financials leading. Energy stocks were boosted by a 2.9% rise in crude oil prices. APA (APA:xnys) gained 5.8%. Shares of FedEx climbed 3.4% after reporting a decline in earnings less than feared and plans to cut costs. Carnival rose by 4.7% after the cruise liner reported a smaller-than-expected loss. In extended-hour trading, Micron (MU:xnas) shed 2.1% following the chipmaker reporting FY23 Q1 earnings and Q2 revenue guidance weaker than expectations. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) finished firmer with the 2-year outperforming Yields on the 2-year shed 4bps to 4.21% and the 10-year was 2bps richer to 3.66%. The 20-year auction went well with a decent demand from investors. Hong Kong’s Hang Seng (HIZ2) edged up modestly; China’s CSI300 (03188:xhkg) was flat Hong Kong stocks started the session firmer but fizzled out to finish the session only 0.3% higher in light volume. Textiles manufacturer Shenzhou (02313:xhkg), which supplies to Nike (NKE:xnys) surged 6.7% following Nike’s upbeat outlook guidance, making the stock the top gainer in the Hang Seng Index. Chinese catering stock Haidilao (06862:xhkg) gained 4%; white goods home appliances manufacturer Haier Smart Home (06690:xhkg) climbed 2.9%. In A-shares, CSI300 closed nearly unchanged from the day before. Consumption, lodging, tourism, catering, food and beverage, and Covid drugs gained. FX: bids for the dollar returned somewhat with USDJPY stabilized at 132.40 After sliding 3.7% on Tuesday after the BOJ decision, the USDJPY stabilized at around 143.40 for now. EURUSD edged down modestly to 1.0600. AUDUSD gained, rising to 0.6710. Crude oil (CLF3 & LCOG3) rallied 2.9% to USD78.50 on EIA inventory drawdown WTI crude jumped 2.9% to USD78.50 following a 5.9 million barrel drawdown on U.S. inventories reported by the EIA. The Biden administration’s plan to replenish the strategic petroleum reserve in February also helped the market sentiment. What to consider? Mixed U.S. data: weaker home sales, higher consumer confidence, lower inflation expectations Economic data were mixed. The 1-year-ahead inflation expectation in the Conference Board Consumer Confidence survey softened from 7.1% in November to 6.7% in December, the lowest since September 2021. Existing home sales shrank 7.7% M/M in November, the 10th consecutive month of decline. On the other hand, Headline consumer confidence as well as the present situation and expectations components rose in the Conference Board Consumer Confidence survey. The headline consumer confidence improved to 108.2, (vs consensus 101.0; Nov: 101.4), the highest level since April this year. China and Australia seek to improve the relationship between the two countries During a phone call to mark the 50th anniversary of the official diplomatic relationship between China and Australia, Chin’s President Xi told Australian Prime Minister Anthony Albanese that China would seek to “promote a sustainable development of the China-Australia comprehensive strategic partnership”. Meanwhile, Australian Foreign Minister Penny Wong told reporters that China and Australia agreed to continue high-level dialogue on issues including the removal of China’s trade sanctions on Australian goods. For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: U.S. stocks rallied on stronger consumer confidence and lower inflation expectations – 22 December 2022 | Saxo Group (home.saxo)
Saxo Bank Podcast: The Bank Of Japan Meeting And More

The Rally In The Japanese Yen (JPY) Will Help Moderate The Relative Inflation Risks For Japan

Saxo Bank Saxo Bank 22.12.2022 08:57
Summary:  Risk sentiment bounced yesterday after December US Consumer Confidence came in far stronger than expected, jumping to an eight-month high. And yet, US Treasury yields fell gently all along the curve yesterday, in part as the same US confidence survey showed inflation expectations dropping more quickly than expected and on a strong 20-year US treasury auction. In FX, the Aussie has rebounded sharply on hopes for stimulus measures in China and a friendly diplomatic tone in recent talks between Australian and Chinese leaders.   Note: This is the final Saxo Market Quick Take until Monday January 2, 2023. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rallied 1.5% yesterday closing above the 50-day moving average as positive earnings from Nike helped lift sentiment yesterday and provided a positive assessment of the US consumer. Equity trading will slowly enter hibernation as the holiday period approaches so expect little price action today and tomorrow. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) rallied on stimulus rhetoric and talk of shortening quarantine The Hang Seng Index rallied 2.4% and CSI 300 climbed 0.4% as of writing, after China’s State Council, the People’s Bank of China, and the China Securities Regulatory Commission separately released meeting readout or statements to pledge to implement the decisions from the recent Central Economic Work Conference to boost the economy, support the property sector, and the internet platform companies. Adding to the risk-on sentiment is market chatter about the shortening of quarantine to three days. Mega-cap China internet stocks surged 3% to 6%. Leading retail and catering stocks jumped by 2% to 11%. FX: choppy markets as USD starts day on a weak footing Some gentle back and forth in FX yesterday as the USD put on a show of rallying, while most of the action has been in the crosses and the greenback has eased back lower after a strong session for risk sentiment yesterday and lower US treasury yields helping USDJPY back lower after its traumatic sell-off and broad JPY rally on Tuesday’s surprise tweak of BoJ policy. The biggest mover to the upside has been the Aussie, which is enjoying the more friendly diplomatic tone with China and has suddenly rallied in the crosses, especially in AUDNZD, on more rhetoric overnight from China on its intent to boost growth. Crude oil (CLG3 & LCOG3) rally extends on US inventory data Crude oil closed at the highest level since December 5 after the US DoE inventory reports showed a nearly 6M barrel draw on crude oil stocks, while gasoline inventory levels rose nearly 2.5M barrels, a half million more than expected, and distillates inventories fell –242k vs. A rise of 1.5M barrels expected. Gasoline and distillate stocks have been generally building of late, but the latter remains slightly below the inventory range of the past 5 years. Gold (XAUUSD) and silver (XAGUSD) remain near recent highs ... after surging in the wake of the Bank of Japan policy tweak on Tuesday and despite yields easing lower yesterday in the US. BOth 2020 and 2021 saw gold ending the year on a strong note and then sharp follow-on rallies in January were quickly reversed. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) remained subdued despite surge in US Consumer Confidence US Treasury yields eased lower all along the curve yesterday despite a large and unexpected surge in US Consumer Confidence as that same survey’s drop in inflation expectations may have received more attention. Later in the day, a strong US 20-year auction, where bidding metrics were the firmest since this spring. End-of-year portfolio rebalancing may obscure the next bigger move for treasuries until we roll into the New Year. What is going on? Mixed U.S. data: weaker home sales, higher consumer confidence, lower inflation expectations Economic data were mixed. The 1-year-ahead inflation expectation in the Conference Board Consumer Confidence survey softened from 7.1% in November to 6.7% in December, the lowest since September of 2021. On the other hand, Headline consumer confidence as well as the present situation and expectations components rose in the Conference Board Consumer Confidence survey. The headline consumer confidence improved to 108.2, (vs consensus 101.0; Nov: 101.4), the highest level since April this year. Elsewhere, the annualized rate of existing home sales fell -7.7% in November, the 10th consecutive month of declines as the historic surge in US mortgage rates this year continues to pressure the US housing market. Micron shares down 2% as glut in memory chips continues The US memory chip manufacturer delivered last night a positive surprise on FY23 Q1 (ending 1 December) adjusted EPS at $0.04 vs est. $-0.88 and announced a 10% headcount reduction to reduce costs. The real negative surprise was the Q2 revenue outlook of $3.6-4bn vs est. $3.9bn and the Q2 adjusted gross margin of 6-11% vs est. 17.8% suggesting significant pricing headwinds compared to market expectations. Micron is also drastically reducing its 2024 capex plans. China and Australia seek to improve the relationship between the two countries During a phone call to mark the 50th anniversary of the official diplomatic relationship between China and Australia, China’s President Xi told Australian Prime Minister Anthony Albanese that China would seek to “promote a sustainable development of the China-Australia comprehensive strategic partnership”. Meanwhile, Australian Foreign Minister Penny Wong told reporters that China and Australia agreed to continue high-level dialogue on issues including the removal of China’s trade sanctions on Australian goods. What are we watching next? Japan’s November Inflation data up tonight After an historic move in the JPY this week, the market will be watching the latest batch of Japan’s CPI data, which has surged to multi-decade highs recently and is expected in at +3.9% YoY for the headline and +2.8% YoY ex Fresh Food and Energy. The rally in the JPY by some 12% from its lows of two months ago will help moderate the relative inflation risks for Japan. US PCE inflation data for November out tomorrow This is arguably the last interesting macro data point out of the US until the first week of the New Year. The PCE data is expected to show that core inflation will drop sharply to 4.6% YoY vs. 5.0% in October, while the headline is expected in at 5.5% versus 6.0% in October. Hotter than expected inflation readings will be an interesting test for markets in coming months as the market has a strong view that the Fed is poised to halt rate hikes as soon as Q2 of next year and will be cutting by year end, despite the Fed “dot plot” projections suggesting the Fed will have a policy rate at the end of next year of above 5% (versus 4.25%-4.50% now). Earnings to watch The earnings calendar is winding down for the year, with payroll and HR-services company Paychex reporting today before the market opens and struggling US used car seller and servicer CarMax, which is trading near its lows for the year, likewise reports before the market open today. Today: Paychex, CarMax Friday: Nitori Economic calendar highlights for today (times GMT) 1100 – Turkey Rate Announcement 1330 – US Weekly Initial Jobless Claims 1530 – US Weekly Natural Gas Storage Change 2330 – Japan Nov. CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:   Source: Financial Markets Today: Quick Take – December 22, 2022 | Saxo Group (home.saxo)
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

The Summary Of Forex And Commodity In 2022 And What Can Be The Trade Of 2023?

Swissquote Bank Swissquote Bank 22.12.2022 10:07
he Dollar King was back in 2022. Will anything change in 2023? And how will safe haven assets fare in this context of high inflation and geopolitical tensions? Gold & Oil: is further strength still on the table?   Find out all the answers in our Market Outlook 2023! 00:00 Intro 00:29 How impressive was the 2021-2022 US dollar rally? Could it extend in 2023 or will it extinguish? 2:47 Japanese yen was the worst G20 performer of 2022. What's next for the yen and the BoJ? 5:29 Has the Swiss National Bank given up on its fight against the strong franc? 7:35 Why did Gold perform so poorly in a year of rising inflation and geopolitical tensions? 10:53 Wasn't Crude Oil supposed to grow to $200pb? Is further oil strength still on the table? 15:33 What's the trade of 2023? You can find the first part of the Outlook 2023 Stocks & Indices here: https://youtu.be/OIMXEAxIRrE Glenn began his investment management career in 1997 and has managed private client and family office wealth ever since. Glenn is the Founder & Managing Director of Harver Capital, an active macro investment manager at www.harvercapital.com. Ipek Ozkardeskaya has begun her financial career in 2010 at the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst at the London Capital Group in London and in Shanghai. She returned to Swissquote Bank as a Senior Analyst in 2020. _____ #swissquote #forex #forextrading #commodities #inflation #crudeoil #chf #usd _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars, and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Market Insights with Nour Hammoury: S&P 500 and Bitcoin Projections for H2 2023

US Inflation Is Cooling, Japan Headline CPI Ticked Up To 3.8% Y/Y

Saxo Bank Saxo Bank 23.12.2022 08:55
Summary:  Summary: S&P500 shed 1.5% and Nasdaq 100 tumbled 2.2% following an upward revision to the U.S. Q3 GDP data that dashed investors’ optimism of goldilocks of moderation of inflation and a potential soft landing. Among today’s several economic data releases from the U.S., all eyes will be on the November PCE report which has the most potential to shape expectations on the Fed’s policy path. This is the last Market Insights Today for 2022. Our first edition for 2023 will be on 3 January. We would like to wish all our readers a joyous festive season and happy New Year.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) reversed and fell on upward revision in Q3 GDP U.S. equities reversed the gains from the previous session and tumbled on an upward revision in the Q3 GDP to 3.2% from the previously reported 2.9%. Coming in at 216K, the initial jobless claims increased less than the 222K expected. Investors were whipsawed by the hope of goldilocks of moderation of inflation and a soft landing and the fear of the persistent strength in the labor market and the economy preventing the Fed from lifting its foot from the brake. A day after the hope on Wednesday, investors succumbed to fear on stronger than expected economic data that were taken as bad news for the market. S&P500 fell by 1.5% and Nasdaq 100 shed 2.2% on Thursday. All 11 sectors within the S&P 500 declined, with laggards of consumer discretionary, information technology, and energy falling over 2% each. Tesla (TSLA:xnas), plunging 8.9% was once again the top loser in the S&P 500 as well as the Nasdaq 100. Please refer to Peter Garnry’s notes on more about the harsh reality that Tesla is facing. Following the gloomy demand outlook from Micron (MU:xnas), the semiconductors were sold off, with Lam Research (LRCX:xnas) falling 8.7%, Applied Material (AMAT:xnas) down 7.8%, Nvidia (NVDA:xnas) down 7%, and Advanced Micro Devices (AMD:xnas) down 5.6%. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) cheapened on strong economic data Q3 GDP was revised up to 3.2% from the previously reported 2.9%. The personal consumption component was revised up to 2.3% from the previously reported 1.7% on firmer services consumption. The quarterly core PCE in the Q3 GDP report was revised up to 4.7% from the previously reported 4.6%. The monthly PCE and core PCE for November are scheduled to release today. The stronger-than-expected GDP revision saw yields on the 2-year Treasuries 6bps cheaper to 4.27%. The long-end’s reaction to the data was muted with yields on the 10-year 2bps higher to 3.68%. The demand in the 4-week and 8-week bill auctions was good while the demand in the 5-year TIPS auction is relatively subdued. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) rallied on stimulus rhetoric and talk of shortening quarantine The Hang Seng Index rallied 2.4% and CSI 300 climbed 0.4% as of writing, after China’s State Council, the People’s Bank of China, and the China Securities Regulatory Commission separately released meeting readouts or statements to pledge to implement the decisions from the recent Central Economic Work Conference to boost the economy, support the property sector, and the internet platform companies. Mega-cap China internet stocks surged, with Alibaba (09988:xhkg) up 4.1%, Tencent (00700:xhkg) up 4.1%, Meituan (03690:xhkg) up 6.8%, and Bilibili (09626:xhkg) up 9.6%. Adding to the risk-on sentiment is market chatter about the shortening of quarantine to three days. Leading retail and catering stocks soared. Xiabuxibu (00520:xhkg) jumped 15.7% and Haidilao (06862:xhkg) rose by 7.6%. Li Ning (02331) surged 7.4%. Educational services providers continued to rise in anticipation of potential loosening restrictions over the sector. FX: US dollar little changed versus major currencies The U.S. dollar tread water in thin trading ahead of a busy economic calendar today in the U.S. with the closely watched PCE deflators, plus personal spending, durable goods, new home sales, and the U. of Michigan Consumer Sentiment Survey. USDJP and EURUSD were nearly unchanged at 132.30 and 1.0600 respectively. GBPUSD was moderately lower at 1.2030, down 0.4% and AUDUSD was down 0.5% to 0.6670. What to consider? Japan’s November CPI in line with expectations Japan’s national CPI released this morning came in basically in line with expectations. The headline CPI ticked up to 3.8% Y/Y from 3.7% in October but below the 3.9% consensus forecast. CPI excluding fresh food and CPI excluding fresh food and energy were as expected, being at 3.7% Y/Y (vs consensus: 3.7%, Oct: 3.6%) and 2.8% Y/Y (vs consensus: 2.8%, Oct: 2.5%) respectively in November. US November PCE may be on course for further easing for now US inflation is cooling, but we argue that the debate at this point needs to move away from peak inflation to how low inflation can go and how fast it can reach there. Fed’s preferred inflation gauge, the Core PCE, will continue t,o remain in focus especially after Powell has highlighted it a key metric recently at both the Brookings Institute and the December FOMC press conference. However, PCE may now slow as rapidly as CPI with the two key restraining components – goods and energy – likely to play a smaller part in PCE. Expectations are for a November reading of 5.5% Y/Y reading vs a previous reading of 6.0% Y/Y while the core is expected to come in at 4.6% Y/Y from 5.0% Y/Y in October. Still, risks to inflation remain tilted to the upside going into 2023 as financial conditions have been easing and China’s reopening brings a fresh wave of inflation risks. For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: U.S. stocks reversed and fell on upward Q3 GDP revision ahead of today’s November PCE deflator – 23 December 2022 | Saxo Group (home.saxo)
For What It Is Worthy To Pay Attention Next Week 23.01-29.01

Saxo Bank Podcast: Discussing These Pressing Wish List Items For The New Year

Saxo Bank Saxo Bank 23.12.2022 11:32
Summary:  In this Special Edition of the podcast, we discuss what investors are hoping to see in 2023 after the most traumatic year for "balanced" portfolios in modern memory. Items on the Wish List include hopes for a soft landing, easing pressure from central banks as inflation fades, a weaker US dollar, Chinese demand returning and more. But is this what investors will get? Discussing these pressing wish list items for the New Year on this special edition podcast are Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Read next:Migration Of Sports From Traditional Television To Streaming Is Chugging Ahead- The NFL Sunday Ticket On YouTube| FXMAG.COM Source: Podcast: Special Edition - Investors' Wish List for 2023 | Saxo Group (home.saxo)
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

The Impact Of The EU Ban On Russian Crude Oil Is Still Playing Out

ING Economics ING Economics 24.12.2022 07:37
The key supply uncertainty for the oil market this year has been how well Russian supply would hold up following a number of countries banning Russian exports, along with an increased amount of selfsanctioning. Russian supply has held up better than many were expecting, with India, China and a handful of other smaller buyers increasing their purchases of Russian crude oil, given the steep discounts available. As a result, exports in October were 7.7 million barrels a day (MMbbls/d), down just one hundred thousand barrels per day (Mbbls/d) YearonYear (YoY). However, the impact of the EU ban on Russian crude oil is still playing out, and we will have to wait until early February for the ban on Russian refined products. The ability of India and China to absorb a still more significant amount of Russian oil is l As a result, we expect Russian supply to fall in the region of 1.6ikely limited. 1.8MMbbls/d Year Year in the first quarter of 2023. As for the G-- on7 price cap, we expect it to have little direct impact on Russian oil supply for now, given that at US$60/ Urals are trading. bbl, it is above where Russian How the Russia/Ukraine war evolves will be important for oil markets in 2023. While a de escalation might not lead to the return of pre lot of supply risk from the market. OPEC+ sticks to its guns war oil trade flows, it would remove a OPEC+ has largely ignored calls from the US and other key consumers to increase oil supply more aggressively this year amid higher prices and supply concerns. And the group’s decision to reduce output targets by 2MMbbls/ d from November 2022 until the end of 2023 has been criticised, particularly by the Amcericans. Although, with hindsight, the decision by OPEC+ might appear to be the right one, at least in the near term, as it offers stability to the market. Given that mo st of its members are producing well below their production targets, OPEC+ supply cuts work out to an effective cut of around 1.1MMbbls/d. In aggregate, OPEC+ production was 3.22MMbbls/d below target levels in October. However, the cuts may prove to be mo re destabilising in the medium term, given the expectation of a tighter market through 2023. US oil producers are not there to fill the gap The response from US producers to the higher price environment this year has been anything but impressive. And t his appears to have also given OPEC+ confidence to cut supply without the risk of losing market share. US crude oil supply is forecast to grow by less than 600Mbbls/d to average around 11.8MMbbls/d in 2022. While for 2023 supply is forecast to grow by less than 500Mbbls/d to around 12.3MMbbls/d. This growth is much more modest than the supply growth seen in previous upcycles. The mentality of US producers has changed significantly from producing as much as possible to focusing on shareholder returns and as a result, continuing to show discipline when it comes to capital spending. Supply chain issues, labour shortages and rising costs have also played a role in the more modest supply growth expected over the next year. Oil demand is weaker than expected High energy prices, a gloomier macro outlook and China’s zeroCovid policy have all weighed on oil demand this year. At the beginning of 2022, global oil demand was expected to grow by more than 3MMbbls/d YoY and hit predemand is e Covid levels. However, stimated to grow at a more modest 2MMbbls/d this year, leaving it below preCovid levels. While for 2023, demand is expected to grow in the region of 1.7MMbbls/d. recovery. Almost 50% of this growth is expected to come from China with the expectation of an economic recovery. Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bank of Japan to welcome Kazuo Ueda as its new governor

Bank Of Japan Threw A Hawkish Bomb | A Quiet Trading Week Is Expected

Swissquote Bank Swissquote Bank 27.12.2022 11:21
It has been quite a quiet start to the week with many major markets still closed for Xmas holiday, but no one saw Santa coming this year, have you? Japan, Azazon, USD On the contrary, the Bank of Japan led drama across the global financial markets reminded that the year will certainly not end on a positive footage, Amazon became the first US megacap to lose more than a trillion USD in market cap, and the expectations for the S&P500 are very much mixed… …even though the last trading week of the year is expected to be marked by a ‘Santa rally’. US PCE data, China A few encouraging news could, indeed, give a minor boost to equity markets, among them the softer US PCE data, and the Chinese reopening news despite hundreds of millions of new Covid cases that threaten a smooth coming back. Watch the full episode to find out more! 0:00 Intro 0:31 Kuroda bangs the last nail on Santa’s coffin 4:16 US inflation gives further easing signs 5:19 But stock investors may not get too excited… 6:17 Amazon lost $1 trillion market cap 8:28 Expect thin trading before year-end 8:56 Hectic China reopening could still boost crude oil Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #hawkish #BoJ #ECB #Fed #USD #EUR #GBP #JPY #Amazon #crudeoil #China #Covid #reopening #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Rates Spark: Action at Both Ends of the Curve - US 10yr Treasury Yield and European Rates

Higher Oil Prices Are Hurting The Indian Rupee (INR)

TeleTrade Comments TeleTrade Comments 28.12.2022 08:42
USD/INR is trading inside the woods but is expected to reach 83.00 sooner. A decline in overall economic activities in the US economy might trim inflation expectations further. Firmer oil prices are impacting the Indian Rupee, being one of the leading importers of oil. The USD/INR pair is oscillating in a rangebound territory below 83.00, following the footprints of the US Dollar Index (DXY). The asset is inside the woods from the past two trading sessions but is expected to recapture the critical resistance of 83.00 ahead. The US Dollar Index (DXY) is attempting to recapture the crucial hurdle of 104.00 as progressive steps from China for the reopening of the economy after a longer follow-up of no-tolerance Covid-19 policy failed to support risk-perceived currencies. S&P500 failed to make progress in the revival move recorded on Friday as faced selling pressure on Tuesday. The 10-year US Treasury yields have sensed marginal correction after reaching to near 3.85%, displaying a risk-off mood in the global market. Going forward, investors will keep eye on views from think tanks about the decline in the inflation-related indicators in the United States economy. The recent slowdown in demand for Durable Goods and consumption expenditure compelled think tanks to trim the longevity of hawkish monetary policy by the Federal Reserve (Fed). Economists at ING shared an opinion that the recession will accelerate inflation's slide and will allow the Fed to respond with rate cuts before CY2023 is out. Now, a decline in US International deficit led by a slowdown in overall economic activities is signaling the mounting side-effects of higher interest rates by the Fed. On the oil front, oil price is struggling to recapture the $80.00 hurdle but is still in a bullish trajectory. The deadly duo of solid oil prices and volatility in the global market are impacting the India Rupee. It is worth noting that India is one of the leading importers of oil and higher oil prices weaken Indian Rupee.
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

Russia Responded To The Europeans' Price Cap, China Reopening Story Is Not All Rosy!

Swissquote Bank Swissquote Bank 28.12.2022 10:24
Yesterday, Russia finally responded to the EU’s price cap on its oil exports, saying that they will simply stop exporting their oil to parties that ‘directly or indirectly use the mechanism of setting a price cap’. Crude Oil The latter announcement gave a minor boost to crude oil yesterday, but the barrel of American crude remained offered into the 50-DMA, near $81.60pb, and the price is back below the $80pb this morning. BUT, an eventual decrease in Russian oil supply gives support to the oil bulls’ in the medium run, along with other factors as China reopening and cold winter in America. China reopening news IMPORTANT to note: If the Chinese reopening story is positive for oil and commodity prices - and for the massively battered Chinese stocks, it’s bad news for global inflation. This is why we don’t see the US stocks gain on China reopening news, but we rather see them under a decent pressure, as the surge in Chinese demand will certainly boost inflation through higher energy and commodity prices. Inflation And in response to higher inflation, the central banks will continue hiking rates. As a result, the sovereign bond yields are higher, the stocks are lower, while the US dollar is mixed. Apple And Tesla Apple is down to lowest levels since summer 2021, and Tesla’s deep dive deepens by the day. Watch the full episode to find out more! 0:00 Intro 0:44 Russians won't sell oil to parties involved in price cap 3:32 China reopening story is not all rosy! 6:03 Bitcoin hash rate rings alarm bell 7:30 Tesla races to the bottom Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Russia #oil #ban #China #Covid #reopening #crudeoil #rally #inflation #expectations #USD #EUR #AUD #XAU #Bitcoin #Apple #Amazon #Tesla #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH  
Oil Is An Indicator Of The Health Of The Global Economy

Commodities Worthy The Attention i.e. Coffee, Precious Metals And Key Energy Resource Goods

XTB Team XTB Team 28.12.2022 13:04
The most interesting goods. Gold (GOLD) Gold is the most important precious metal in the world. Due to its attractive appearance, it is used primarily in jewelry. However, historically, gold was the first type of money, which was related to the chemical properties of this metal, as well as its appearance. Monetary systems around the world were also based on gold, although this changed with the collapse of the Bretton system Woods , which kept the ratio of gold prices to the U.S. dollar constant. Since then, in addition to being used in jewelry, gold has also served as an investment or a store of value (e.g. as a reserve in central banks). To a lesser extent, gold is also used in industry. The most important market report for gold is the quarterly World Gold Council Supply and Demand Report . It contains data on the use of metal in individual sectors, mining, international trade and the impact of market factors on prices. The report is released to the market approximately 1-1.5 months after the end of a given quarter. In addition, it is worth following data on the amount of gold in the possession of ETFs that hedge with this metal, or data on the positioning of speculative investors on this market. Investors interested in the gold market can take a riskier investment and invest in the world's largest gold mining companies such as Newmont NEM.US , Anglogold Ashanti AU.US , Barrick Gold GOLD.US or Wheaton resources WPM.US , which will also provide exposure to other precious metals. On the other hand, investors looking for a safe ETF that provides exposure to gold prices may lean towards iShares Physical Gold IGLN.UK. _ This fund hedges its investors' positions with physical gold deliveries, accumulates stocks of this metal and reports them regularly, thus attracting investors interested in investing in physical gold. Petroleum (OIL) Oil is by far the most important commodity in the world. Without oil, it would not be possible to travel or produce the plastic products that are essential in the modern world. Crude oil is mainly extracted from deep boreholes, either on land or in seas and oceans, but also from tar sands (mostly in Canada). The key report for the oil market is the DOE (US Department of Energy) report, presented every Wednesday at 4:30 p.m. Central European Time. Then, data on crude oil stocks, petroleum products, production, imports and exports are presented. This data only applies to the US, but since it is the most important market, this data shapes the behavior of prices in the market. In addition, every month OPEC, EIA and IEA publish reports on the demand and supply outlook. The OPEC report is released roughly 1.5 weeks into the month. Companies that typically benefit from oil price volatility include ExxonMobil XOM.US , Chevron CVX.US and Occidental Petroleum OXY.US , whose shares were purchased in Q1 2022 by Warren Buffett . Exposure to a diversified portfolio of oil exploration and trading companies is ensured by, among others, Euro-denominated ETF iShares STOXX Europe 600 Oil&Gas Exploration UCITS SXEPEX.DE . Natural Gas (NATGAS) Along with crude oil and coal, natural gas is a key energy resource. Depending on where it is used, it is used for heating or for generating electricity. In the case of gas, the market is not homogeneous due to major problems with its transport. The price of gas transported by pipeline is much lower than gas that must be liquefied and shipped by ship. The most important producers of natural gas in the world are the United States, Russia, Arab countries and Australia. The largest importers are European countries, China, India and Japan. The most important report for the gas market is the weekly change in DOE inventories published every Thursday at 16:30 CET. In addition, it is worth following the daily change in gas stocks in Europe according to GIE ( Gas Infrastructure Europe) and TTF gas prices in the import-export hub in the Netherlands. These data may show how much demand for American gas may come from Europe. Volatility could then affect the shares of Cheniere Energy LNG.US , the company responsible for transporting LNG from the US to Europe. British may be worth mentioning gas ETF NGAS.UK , which tracks the natural gas sub -index offered by Bloomberg. Silver (SILVER) In terms of chemical properties, silver is very similar to gold, but because there is much more of it in the ground, it is also many times cheaper. Due to its price, this metal is used in industry in about 50%, but it also has its investment and jewelery significance. From a fundamental analysis point of view, it is useful to track the amount of silver held by ETFs, as well as the gold/silver price ratio, which shows whether a particular market is overbought or oversold relative to the long-term average. The metal is also dependent on copper as silver is mined together with this raw material. High copper production means new supply in the silver market. The key companies in the silver market sector are Pan American Silver (PAAS.US) , Fresnillo (FRES.UK) , Polymetal Silver Corp (POLY.UK) , Hecla Mining (HL.US) and KGHM (KGHM.PL) . The most popular ETF that allows you to invest in physical silver is iShares Physical Silver (ISLN.UK) . The leveraged ETF CFD Global X Silver Miners S (SIL.US) is also gaining popularity among speculators . Coffee (COFFEE) A very interesting aspect related to coffee is the fact that it is the second most traded commodity in the world after oil. On the other hand, the impact of the coffee trade on global GDP is negligible. Coffee belongs to the group of so-called. soft goods ( soft commodities ) and theoretically too high prices may lead to the search for alternative solutions. However, the final market price of coffee for the consumer depends only 1-2% on the price quoted on world stock exchanges. Coffee is grown mainly in the countries of South and Central America, Southeast Asia and Africa. There are two types of coffee: Arabica and Robusta . At XTB, we trade CFDs on Arabica coffee , which is definitely more popular and considered to be of higher quality. In the case of coffee, it is also worth tracking the daily change in stocks, tracked by ICE (International Commodity Exchange) and WASDE monthly report from USDA or CONAB monthly report from Brazil regarding production prospects. Companies that remain sensitive to the coffee market and prices include Starbucks (SBUX.US) and Keurig Dr. Pepper (KDP.US) . Read next: The Future Outlook Of Commodities Market And How To Trade Them On A Short Position| FXMAG.COM
Underestimated Risks: Market Underestimating Further RBA Tightening

WTI Crude Oil’s Weakness Allows The Indian Rupee (INR) To Remain Firmer

TeleTrade Comments TeleTrade Comments 29.12.2022 08:57
USD/INR stays defensive amid sluggish markets, grinds lower of late. China Covid concerns weigh on risk profile in Asia but softer US Treasury yields probe Indian Rupee bears. India Trade Deficit for Q3, US Initial Jobless Claims eyed for fresh impulse. USD/INR holds lower ground near 82.75 as bulls and bears jostle during Thursday’s Asian session. The Indian Rupee (INR) pair welcomed bears the previous day but the broadly firmer US Dollar challenges the downside moves before the latest weakness, mainly due to the downbeat US Treasury yields. In doing so, the quote cheers softer Oil prices amid lackluster trading days through the end of 2022. That said, the US 10-year Treasury yields drop 2.8 basis points to 3.858% by the press time, after rising the most since October 19 the previous day. The pullback in the benchmark US bond coupons from a three-week high also weighs on the US Dollar Index (DXY), down 0.15% intraday near 104.35 by the press time. It’s worth noting, however, that the sour sentiment in the Asia-Pacific markets, mainly due to China-linked Covid woes, seems to challenge the USD/INR bears. On the contrary, WTI crude oil’s weakness allows the Indian Rupee (INR) to remain firmer, due to India’s reliance on energy imports. Multiple countries, including India, announced requirements of Covid tests for Chinese travelers as doubts over Beijing’s reporting of data and a hidden jump in the virus numbers weigh on sentiment. On the same line could be Russia’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories, as well as an escalated war in the city of Kherson. Against this backdrop, MSCI’s Index of Asia-Pacific outside Japan extend the previous day’s losses while India’s BSE Sensex drops half a percent at the latest. Moving on, the India Trade Deficit for the third quarter (Q3) will precede Infrastructure Output for November to direct short-term USD/INR moves. On the other hand, weekly prints of the US Initial Jobless Claims and Chicago PMI for December will be eyed for short-term directions. Overall, the year-end inaction could allow the pair to consolidate the monthly gains. Technical analysis Although multiple failures to cross the 83.00 hurdle on a daily closing basis keep USD/INR bears hopeful, the 21-DMA support restricts the immediate downside of the pair to around 82.45.
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

Oil Prices Are Falling, Markets Have Been Volatile Over The Last Few Weeks And There Are No Signs Of A Change Next Year

Craig Erlam Craig Erlam 29.12.2022 13:58
We continue to drift into year-end with investors having little to cling onto that’s going to drive markets one way or another. That is so often the case this time of year and while 2022 could have been different, given how chaotic the rest of the year has been, it has proven to not be the case. Investors are going into 2023 with a cautious mindset, prepared for more rate hikes, and expecting recessions around the globe. The bar is low but arguably reasonably so. While markets have remained choppy over the last couple of weeks, we haven’t seen any major developments that have changed the narrative at all going into next year. Well, perhaps ex-Japan where the central bank’s policy tweak may embolden those wanting to take it on more forcefully in the months ahead. Elsewhere, the focus will remain on terminal rates and just how forceful central banks will be in their bid to defeat inflation. The Fed in particular has remained very bullish on its rate intentions, so much so that it may have spooked investors a little at this month’s meeting. But that could quickly change in Q1 if the data allows. And then there’s China and its u-turn on Covid prevention. It’s been quite the shift from fighting every case to living with the virus and that creates enormous uncertainty for the start of the year as case numbers surge and the health system is overwhelmed. How the leadership will respond is about as clear as the data itself so for investors it will be a case of learning as we go using what little data and anecdotal evidence we have. That creates challenges domestically and in all likelihood globally as well. Paring gains again Oil prices are dropping for a second day, erasing some more of the pre-Christmas rally amid uncertainty over the Chinese outlook and the limited impact of Russia’s response to the G7 price cap. Volatility is likely going nowhere fast as we navigate another highly uncertain year, albeit one that surely promises plenty of surprises and twists and turns along the way. The US refilling the SPR should be supportive for the market and could have put a bit of a floor in place, although with so many moving parts, I don’t think anyone can say anything with any strong degree of conviction. OPEC+ could make an announcement at any point and suddenly everything changes. Not to mention Russia’s war in Ukraine and how that develops. Read next: EUR/USD Pair Remains Within Its Horizontal Trading Range, The Aussie Failed To Break The Resistance At 0.68| FXMAG.COM Settling around $1,800 Gold is continuing to hover around $1,800 where it has traded roughly $30 on either side throughout the bulk of December. It seems gold traders, like the rest of us, have an idea of what the Fed will do early next year but are holding back as it doesn’t quite align with the hawkish narrative coming from the central bank. Patience may well be key on that front but with momentum running thin, the prospect of a correction is growing. More twists and turns ahead Bitcoin continues to happily tread water and watch the storm pass as it fluctuates in a range of around $16,000-$17,000. That’s broadly been the case over the last couple of weeks and it doesn’t look like changing in the coming days, barring any unexpected headlines. The question for many now is whether it has bottomed and how long it will take confidence to return, enabling a strong recovery. I’m not convinced by either in the near term and think there are plenty more twists and turns to come early next year. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Analysis Of Crude Oil Futures, WTI Prices Recorded A Slight Decline

TC Energy Corp Has Announced That It Is Aiming To Fully Reactivate The Keystone Oil Pipeline System After The Largest Reported Spill In The Pipeline's History

Kamila Szypuła Kamila Szypuła 30.12.2022 11:46
Keystone comes from the Canadian province of Alberta and supplies approximately 622,000 barrels of oil per day to refineries in the Midwest and the Gulf Coast. It is one of nearly twenty pipelines that pass through the oil storage complex in Cushing - the center for pricing US West Texas Intermediate crude oil and the physical delivery point for benchmark oil futures on the New York Mercantile Exchange. The company partially reactivated the pipeline earlier this month, but the so-called Cushing extension remained offline. Repairs completed Oil pipeline operator Keystone TC Energy Corp said on Thursday that it had completed repairs, inspections and testing of the pipeline and that the system was now operational at all delivery points. Last week it said it had received approval from the U.S. Pipeline and Hazardous Materials Safety Administration to restart a 300-mile branch linking Steele City, Nebraska, with a major U.S. oil storage facility in Cushing, Oklahoma. The company said it would operate the line at reduced operating pressure. Previously, regulators allowed the pipeline to operate at a higher pressure than otherwise allowed, saving costs for the operator. Read next: Japan Is Trying To Maintain Cover For LNG Vessels In Russian Waters, How Digital Money Could Look Like According To The IMF| FXMAG.COM What happened? According to TC Energy, the 2,700-mile Keystone pipeline was shut down on December 7 after a rupture in Kansas spilled about 14,000 barrels of crude oil - the largest reported spill in the pipeline's history. TC Energy said it shut down the pipeline, a key conduit for Canadian oil to the US, at around 8pm local time on Wednesday after detecting a pressure drop in its systems. The company said it has since mobilized teams to stop oil spilling into a stream about 20 miles south of Steele City, Nebraska. The affected segment was isolated and outriggers were deployed to control the downstream migration of versions. The system remained disabled as crews actively responded and worked to contain and recover the oil. Despite the scarcity of oil entering Cushing, there were about 25 million barrels in storage tanks in the week ending December 23, according to the Energy Information Administration, about a million more than at the start of the month. The buildup was partly attributed to traders shipping more oil from the Gulf Coast to Oklahoma as they sought to store and sell barrels at a profit at a later date. TC Energy did not say what caused the spill, prompting stream cleanup operations involving hundreds of people. Cleaning continues. As of December 20, TC Energy had extracted 7,599 barrels of oil from the stream, according to the company's records. It has not been stated when the repair and repair operations will be completed. How has this affected oil prices? U.S. oil prices rose more than 2% on Thursday morning (8th druph) after the Keystone Pipeline initiated an emergency shutdown to contain a spill near the Nebraska-Kansas border. On the other hand, West Texas Intermediate futures fell to $78.40 a barrel on Thursday after announcing the end of the repair. TC Energy Corp Share Prices The company's shares are the worst of the year at 39.65. A sharp drop from 43.20 occurred a few days after the pipeline leak. Source: wsj.com, finance.yahoo.com
Crude Oil Upward Trend Remains Limited

Prices Of Energy Resources In Europe Have Already Started To Fall, The Picture Of Forex And Crypto Market

XTB Team XTB Team 30.12.2022 14:36
Energy resources: OIL, NATGAS The entire world is heavily dependent on conventional energy sources such as oil petroleum, natural gas or coal, so there is a clear connection between the raw materials energy and inflation. When prices move moderately, producers do not they change react immediately because they can take advantage of economies of scale. The problem occurs in when the price increases several times and the producers' costs have to be passed on to consumers. As we mentioned earlier, the current situation is reminiscent of the 70s of the last century, when the energy crisis led to an inflationary spiral. As then, so now the supply of oil is strongly limited (initially artificially, and now due to problems in the supply chain and lack of appropriate investment in production capacity). It is true that the supply is slowly growing, but the demand recovers much faster, which has led to a huge increase in raw material prices. Oil and natural gas prices in Europe have already started to fall from near historic highs. The question, however, is whether the market is experiencing demand destruction? Stocks of raw materials are at exceptionally low levels, with no greater ones on the horizon investment in the extractive sector, and countries with spare production capacity will take advantage of the current high prices. Therefore, there is a risk of extending the period of highs prices, as it was in the 1970s and in 2011-2014. In addition, when we adjust oil prices for inflation, we can see that after the initial increase at the beginning in the 1970s, the valuation of this raw material remained at a high level until the early 1980s. It is another argument proving that without an adequate increase in supply, high oil prices can stay with us longer. Forex market: EURUSD, USDJPY The recent return of higher and volatile global price dynamics has triggered a surge exchange rate volatility and depreciation of the currencies of countries with the highest inflation rate. In In times of economic uncertainty, investors tend to turn to safe haven currencies (the so-called safe havens of the foreign exchange market), mainly the US dollar. Also and this time it was no different, and the dollar index rebounded from the June 2021 lows by over 20%. Meanwhile, the trade-weighted index (TWI) remains at elevated levels. This index, adjusted for inflation, measures the strength of the US dollar against the currencies of major partners of the United States. We see that the TWI REER USD index has strengthened significantly in recent years, which may indicate that the dollar is overvalued. When it comes to EURUSD, however, the situation is more complicated. In mid-July 2022 euros reached parity with the dollar, falling to its lowest level in 20 years. this fall it was triggered not only by the strength of the US currency, but also because of the crisis as a consequence of the war between Russia and Ukraine. High energy prices in Europe have worsened trading conditions in the euro area, leading to an even greater depreciation of the single currency. There is no indication that energy prices will fall in the near future, but if such a scenario materializes, the euro would have a chance to move away from the parity level. In the case of EURUSD, the market's attention is focused on the weakness of the euro, while in the case of USDJPY monetary policy sets the pace. Since the early 2000s, the Bank of Japan has pursued an ultra-loose policy monetary policy while controlling the bond yield curve. This has not changed even after inflation started to rise. Meanwhile, the Fed turned its stance 180 degrees to strangle inflation through aggressive interest rate hikes. The difference in bond yields is a key factor for this pair, even if the Bank of Japan decides to change its current policy. Cryptocurrencies: BITCOIN, ETHEREUM Cryptocurrencies are still a young asset class. The history of Bitcoin goes back a little over 10 years, a most of the remaining cryptocurrencies (so-called altcoins) were created after 2017, which is why the reactions of the cryptocurrency exchange rate to the increase in the level of inflation are not sufficiently known. from this Therefore, when trying to assess digital asset quotes, it is difficult to rely solely on on historical data. Due to the tendency of investors to buy cryptocurrencies as part of diversifying their exposure to traditional financial markets, as well as the involvement of institutions in this market, begins to be a visible correlation between the reactions of debt-financed companies and the price of Bitcoin. Movements Cryptocurrency rates in response to rising inflation are beginning to resemble stock market reactions, which based on historical data are a bit easier to track and analyze. As a rule, rising inflation is not conducive to the valuation of risky assets and becomes a disadvantage for them burden when central banks decide to tighten monetary policy. Rate hikes interest rates, difficulties in obtaining capital and the rising cost of living in a recessionary environment indicate a decrease in risk sentiment and decreases in the valuation of risky assets. having it in mind, the cryptocurrency market will not be helped by rising inflation, which prompts banks to raise Stop. Therefore, even if the trend of cryptocurrency adoption continues - and they are noticeable signals that this is the case - movements on the charts of individual cryptocurrencies may resemble those of US100, only on a larger scale. Five key facts about cryptocurrency adoption BlackRock creates a bitcoin trust fund for US investors institutional and begins cooperation with Coinbase JP Morgan creates an open living room inside the Decentraland metaverse and explores the possibilities blockchain technology Ethereum processed 1.45 million smart contracts in Q1 2022 vs. 1.16 million in Q4 2021 (up 25%) NFT popularity is growing: 7.84 million transactions in OpenSea in Q1 2022 vs. 4.85 million carried out in Q4 2021 (up 61.6%) 46 million Americans own Bitcoins and 1 billion people will use cryptocurrencies in over the next 4 years
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

The First Inflation Data In The New Year From Europe May Show A Decline

Kamila Szypuła Kamila Szypuła 31.12.2022 20:55
After two years of lockdowns, COVID deaths, and rising sentiment and unrest, it was hoped that 2022 would bring some relief. Instead, 2022 turned out to be a difficult year in a year where no gnews would fall very well. We have wars, rising interest rates, rising inflation. Central banks around the world have taken action to combat the high level of inflation, including the ECB. The data is far from the expected 2% and as you can see the fight is not over. Inflation reports from the old continent will be presented next week. CPI data The week between Christmas and New Year's is usually very data-poor, and there were no Tier 1 events in Germany or the Eurozone this week. Spain released flash CPI estimates for December, which showed that inflation continued to weaken. CPI fell to 5.8% from 6.8% and below estimate of 6.0%. Inflation in Spain fell for the fifth consecutive month as energy costs continue to fall. The next week may prove to be more important for the European Union, as the inflation report will appear. Moreover, reports from Member of UE will be just as important. The ECB will be keeping a close eye on these inflation reports and the data will be an important factor in the ECB's decision on the pace of future rate hikes. Next Friday, Eurostat will give its first look at consumer prices in the euro area at the end of 2022. It predicts a decrease in the annual growth rate of basic consumer prices from 10.1% in November to 9.6% in December. Source: investing.com Energy situation Russian President Vladimir Putin's invasion of Ukraine on February 24 triggered a price shock, sparked an energy crisis and brought supply chains to a halt. Not to mention thousands dead, millions homeless and a kind of Cold War that pits Russia, with the exception of Iran and North Korea, against the rest of the world. The high volatility in the markets has persisted since the invasion and there is no end in sight. In 2021, Europe imported $117 billion worth of energy from Russia, which was about 40% of Europe's consumption of natural gas and 30% of its oil. It has yet to move away from relying on Russia, leaving European countries struggling to replenish their underground gas reserves for the colder winter months. Until recently, Europe received large amounts of natural gas from Russia via the Nord Stream pipeline. However, flows were halted in late August when Russia cut off flows to Europe via Nord Stream in response to Western sanctions. Russia is set to increase diesel exports next month before EU oil sanctions go into effect in February. Fuel deliveries from Russian ports in the Baltic and Black Seas will increase to 2.68 million tons in January. By February 5, the European Union will ban imports of Russian petroleum products, which it heavily relies on for diesel production. This follows a ban on Russian oil that came into effect in December. Should a recession be expected? Recessions in Europe seem inevitable as gas prices rise. Meanwhile, the central banks of Europe and the UK are determined to bring down inflation by continuing to raise interest rates. While recessions around the world have been suggested, analysts say they will only be mild. The outlook for 2023 remains uncertain. The war continues. Interest rates will go up until inflation goes down. Source: investing.com
The South America Are Looking For Alternatives To The US Currency

The US Dollar Is Trading On Its Back Foot Despite A Solid Back Up In US Treasury Yields

Saxo Bank Saxo Bank 02.01.2023 10:51
Summary:  Equity markets churned back and forth in the last week of 2022 and we start 2023 off with a holiday for UK and US markets today as traders get their bearings in the New Year. The US dollar is trading on its back foot despite a solid back up in US treasury yields in the final weeks of 2022 and ahead of the first important macro data this Friday in the form of the December US jobs report.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) It is a US holiday today so US equity markets will be closed. US equities fell the most in 2022 since 2008, ending a year that saw inflation and interest rates coming back to haunt excessive equity valuations. The first two weeks of the year are going to be very exciting to see whether last year’s momentum in commodities and defence stocks continues or new trends in our theme baskets will start to emerge. Stoxx 50 (EU50.I) First day of trading under way in Europe with STOXX 50 futures up 0.7% despite several recent remarks from ECB members that policy rates must remain high or go even higher to curb inflation. STOXX 50 futures remain in a tight trading range established since mid-December with the 3,782 level being the key level to watch on the downside and the 3,875 level on the upside. FX: USD trades near multi-month lows as 2023 gets under way Interesting to see the USD weakness despite a solid surge in US treasury yields, especially at the long end of the yield curve, as 2022 drew to a close. The first week or two of this year will be needed to see if some portion of the USD’s weakening was down to end-of-year effects. USDJPY trades not far above the important 130.00 level as investors anticipate that the new Bank of Japan leadership change in April will finally bring some tightening, while the market still predicts that the Fed will quickly reach its “terminal” high in the policy rate and eventually ease policy before the year is over. But will the first data points of the year, starting with this Friday’s December US jobs data, support this view? Crude oil (CLG3 & LCOH3) Crude oil futures ended a volatile 2022 close to unchanged after having traded within the widest range since 2008. Another volatile year undoubtedly lies ahead with multiple uncertainties still impacting supply and demand. The two biggest that potentially will weigh against each other in the short term remain the prospect for a recovery in Chinese demand being offset by worries about a global economic slowdown. Covid fears, inflation fighting central banks, lack of investments into the discovery of future supply, labour shortages and sanctions against Russia will also play its part in the coming months. Ahead of yearend, hedge funds raised bullish Brent crude oil bets by the most in 17 months. At 144k contracts, however, it remains around half the five-year average. Gold (XAUUSD) and silver (XAGUSD) ended 2022 on a high note Having closed 2022 near unchanged despite massive headwinds from a stronger dollar and surging treasury yields, the outlook for 2023 looks more price friendly with recession and stock market valuation risks, an eventual peak in central bank rates combined with the prospect of inflation not returning to the expected sub-3% level by yearend all adding support. In addition, the de-dollarization seen by several central banks last year, when a record amount of gold was bought look set to continue, thereby providing a soft floor under the market. As always, the dollar and yield movements will be a key focus while in the short term the market will look ahead to Wednesday’s FOMC minutes and Friday’s US job report. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) start the year near multi-week highs US Treasury yields backed up higher as 2022 drew to a close, particularly at the longer end of the yield curve, helping to steepen the yield curve from its most inverted levels in some four decades earlier in December, but still starting the year with an inversion for the 2-10 yields of around –50 basis points as market participants figure that a recession is on the way this year that will see the Fed chopping rates by year end. The 10-year yield level to watch to the upside is perhaps the 4.00% area ahead of the 4.34% high from October, which is a 15-year high. Read next: Walmart Has Ambitions To Become An E-Commerce Leader| FXMAG.COM What is going on? 2022 was the worst year for combined stock and bond portfolios in modern memory The year of 2022 was so unusual as bonds failed to provide any diversification in what investors have traditionally seen as “balanced” portfolios of, for example, 60 percent stocks and 40 percent bonds. An FT article calculated that 2022 was the worst year, in nominal terms, for combined equity and stock portfolios, since 1871. China official December Non-manufacturing PMI plunges to 41.6 ... as December was the month (December 7 seen as the major turning point) that China finally backed away from its zero Covid policy, ironically meaning that in the short term, activity levels have plunged as the virus spreads rapidly throughout the country rather than due to official restrictions on activity. In a New Year’s address, President Xi Jinping discussed the “new phase of Covid response”. Hedge funds increased commodities exposure ahead of year-end Speculators went on a buying spree ahead of yearend with broad demand lifting the combined net long across 24 major commodity futures contracts by 16% to a six-month high of 1.4 million lots. Except for natural gas all other contracts saw net buying led by Brent crude which saw the net long jump by the most in 17 months. The other main contributors were gas oil, gold, grains led by corn, as well as sugar and cocoa. Combined with the prospect of a recovery in demand from China, continued dollar weakness ahead of yearend may have played a role supporting demand. Speculators exited 2022 with the biggest dollar short since July 2021, but it is worth noting the bulk being against the euro where the €18.5 billion long is the biggest in 23 months. What are we watching next? US Data this week relative to market expectations for Fed policy The market continues to express the view that inflationary pressures will decelerate and that the labour market will loosen up sufficiently for the Fed to begin chopping rates before year-end. Last week’s US Consumer Confidence survey for December showed a strong surge in confidence, a development that is at odds with past patterns for the survey if the country is tilting into a recession. Further strong US data for December and the next month or two would be an interesting challenge of the market expectations. This week sees the release of the December ISM manufacturing survey on Thursday and the December jobs report on Friday. Earnings to watch The earnings calendar is light in the first week of the new year, but in a couple of weeks the first Q4 earnings releases will begin to be released. The Q4 earnings season will continue its focus on margin pressures related to input costs on employees and raw materials including energy. Thursday: Walgreens Boots Alliance, Conagra Brands, Lamb Weston, Constellation Brands, RPM International Friday: Naturgy Energy Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final Manufacturing PMI UK Markets Closed US Markets Closed 0145 – China Dec. Caixin Manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 2, 2022 | Saxo Group (home.saxo)
Navigating Adobe's Earnings with Options: Opportunities and Risks for Investors

Saxo Bank Podcast: The Summary Of The End Of 2022 In The Markets

Saxo Bank Saxo Bank 02.01.2023 10:57
Summary:  Today, we look at how markets closed last year, noting the weakening of the US dollar in to year-end even as US treasury yields backed up into year end. Despite those higher yields, USDJPY trades near multi-month lows in anticipation of the Bank of Japan and the Fed moving in opposite directions with their policy for the balance of this year. Elsewhere, we dive into commodity positioning and the energy market as mild weather continues to drive gas and power prices down in Europe while crude oil actually rallied. A look at energy stories to track this year and more also on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com. Source: Podcast: First weeks of a New Year often pivotal | Saxo Group (home.saxo)
The Commodities Feed: Oil maintains positive momentum

COT: Bullish Bets Across All Five Crude Oil And Fuel Products Rose

Saxo Bank Saxo Bank 02.01.2023 12:36
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, December 27. A week that saw speculators showing a continued and broad interest in adding exposure to commodities, led by oil, gold and corn. The dollar short extended further as the euro long reached a 23-month high Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities while in forex we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, December 27. A week that despite seeing activity grind to a near halt ahead of yearend saw speculators showing a continued interest in adding exposure to commodities, led by oil, gold and corn, while the yield on 10-year US Treasuries climbed. Developments both driven by an improved outlook for demand in China as the economy reopens following months of lockdown restrictions. The Nasdaq dropped 2.3% as it headed towards a 33% annual slump while continued selling of the dollar primarily benefitted the euro and the Japanese yen. Commodities The Bloomberg commodity index traded higher by 1.3% during the reporting week as it headed for another strong yearly gain, not least driven by tight markets keeping most futures contracts in a state of backwardation. While the Bloomberg Spot index ‘only’ delivered a 6.8% return last year, the tightness and with that elevated backwardations especially during the first half of the year helped drive the BBG Total Return index, which included the positive carry of selling (rolling) an expiring contract at a higher price than where the next month was bought, to an annual return of 16%. During the reporting week all but one of the 24 major commodity futures tracked in this saw net buying, resulting in the combined net long rising by 16% to 1.4 million lots, a six-month high. Two-thirds of the increase was driven by fresh longs being added while the remaining third was driven by traders cutting back on short positions. With all sectors getting bought with natural gas the only exception, the driver behind these developments has to be found in overall macroeconomic developments, most notably the weaker dollar and emerging optimism about the demand outlook in China.   Energy Bullish bets across all five crude oil and fuel products rose, driven by a combination of fresh longs being added and reduced short positions. Biggest change was seen in Brent where a 44% jump, the biggest in 17 months, lifted the net long to 144k lots, a seven-week high. The continued collapse in natural gas, despite the pre-Christmas winter freeze, helped boost the net short by 63% to 59k.Crude oil futures ended a volatile 2022 close to unchanged after having traded within the widest range since 2008. Another volatile year undoubtedly lies ahead with multiple uncertainties still impacting supply and demand. The two biggest that potentially will weigh against each other in the short term remain the prospect for a recovery in Chinese demand being offset by worries about a global economic slowdown. Covid fears, inflation fighting central banks, lack of investments into the discovery of future supply, labour shortages and sanctions against Russia will also play its part in the coming months. Metals   The gold long reached 67.3k contracts, and highest since early June, primarily driven by short sellers scaling back exposure in frustration over the yellow metals ability to weather a fresh rise in US bond yields. While gold has yet to make a decisive break to the upside the sentiment has nevertheless changed from a sell-into-strength to a buy-into-weakness market.Having closed 2022 near unchanged despite massive headwinds from a stronger dollar and surging treasury yields, the outlook for 2023 looks more price friendly with recession and stock market valuation risks, an eventual peak in central bank rates combined with the risk of inflation not returning to the expected sub-3% level by yearend all adding support. In addition, the de-dollarization seen by several central banks last year, when a record amount of gold was bought, look set to continue, thereby providing a soft floor under the market. As always, the dollar and yield movements will be a key focus while in the short term the market will look ahead to Wednesday’s FOMC minutes and Friday’s US job report.  Read next:Twitter Did Not Pay $136,260 Rent, Microsoft Reported Its Worst Quarterly Results In Years| FXMAG.COM Agriculture The prospect of a reopening in China giving demand a boost helped drive continued demand for key crops with speculators raising bullish bets across the six main grain and soy contracts to a four-week high at 429k contracts, well below the April peak at 819k contracts when panic buying in the aftermath of the Russian invasion of Ukraine saw prices surge higher. The change was primarily driven by a 40% boost to the corn net long to 159k contracts while the soymeal long reached 130k contracts, just shy of the 2018 record at 134k. In softs, the sugar net long jumped to 258k contracts to a 16-month high and not far from the peaks in 2016 (286k) and 2021 (270k) which both ended up signaling months of subsequent selling. The cocoa position flipped back to a small net long after 19k contracts were added in a week that saw the price jump 5.4%.   Forex Speculators was leaving 2022 behind holding the biggest dollar short since July 2021. Against nine IMM futures and the Dollar Index, the gross dollar short reached $7.4 billion with a $19.6 billion equivalent long in the euro being partly offset by short, albeit reduced, positions in JPY, AUD, CAD and MXN. The additional length being added to the euro long occurred ahead of Thursday’s Golden Cross when the 50-day simple moving average crossed above the 200-day. The 3% increase lifted the net long to a 23-month high at 146k contracts.    Source:COT: Funds loaded up on commodities ahead of yearend | Saxo Group (home.saxo)
Oanda Podcast: US Jobs Report, SVB Financial Fallout And More

An Overall Bullish View Maintain On Commodities, U.S. Economy May Turn Out To Be More Resilient Than The Market Is Expecting

Saxo Bank Saxo Bank 03.01.2023 08:38
Summary:  Both stocks and bonds declined substantially in 2022 on the surge of inflation and monetary tightening in the U.S. Looking ahead to 2023, the U.S. economy may turn out to be more resilient than the market is currently expecting and inflation is not falling to 2% but staying at or above 4%. Commodities may have another bull run and the U.S. equity market may register positive returns driven by the tangible industries in 2023. China’s reopening from Covid containment and support to its property sector benefit Chinese stocks as well as boost demand for commodities globally. What’s happening in markets? Nasdaq 100 (NAS100.I) dropped 33% S&P 500 (US500.I) slid 19% in 2022 U.S. equities were closed on Monday. Last Friday, Nasdaq 100 edged down 0.10% to finish the year of 2022 with a 33.1% decline, its worst since 2008. S&P500 was off 0.3% on Friday and slid 19.4% on the year. In 2022, energy stood out as the lone gaining sector with the S&P500 and rose a stunning 59%. All the other 10 sectors declined and communication services, down 40.4%, consumer discretionary, down 37.6%, information technology, down 28.9%, and real estate, down 28.5%, were the laggards. Throughout the year, the stock market was driven down by higher interest rates which resulted from the Fed slamming hard on the brake after waking up to the fact that the inflation genie had been out of the bottle. Stocks bounced from their October lows in November as the Fed’s hawkish rhetoric peaked and investors started positioning for a pause of the Fed in tightening in Q2 2023 but the rally lost momentum in December. The outlook for equities remains challenging as inflation may not be falling as much as investors are hoping for in 2023. For a detailed review of 2022 from a wider perspective of the structural shifts beyond interest rates, we refer you to our Head of Equity Strategy, Peter Garnry’s brilliant article, Equites in 2022: a fork  in the road for globalization. You can also find the technical analysis of major equity indices from Kim Cramer Larsson, Saxo’s Technical Analyst, on his note, Quarter Technical Outlook – S&P 500, Nasdaq 100, DAX, FTSE 100, FTSE 250 and Hang Seng Index. For a summary of Peter and Kim’s views on the equity outlook for 2023, you can listen to this special edition of the Saxo Market Call here. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) had a huge down year not seen for decades The U.S. Treasury market was closed on Monday. In 2022, yields on the 2-year soared 372 basis points to 4.43% from 0.72% in 12 months. Yields on the 10-year jumped 237 bps to 3.87% from 1.51%. The iShares 20+ Treasury Bond ETF (TLT:xnas) plunged 32.7% in 2022. The sharp rise in yields and decline in prices in Treasury notes and bonds meant that investors had few placed to seek safety and the popular 60-40 portfolio, which protected investors well in the Great Financial Crisis in 2008 did not work this time in 2022 as both bonds and stocks were dragged down by the rise in inflation and therefore interest rates. As yields have risen to levels that provide more meaningful returns and the Fed has signaled a shift to a data-dependant risk management mode of operation, we argue that bonds will be a valuable component again in diversified investment portfolios. Nonetheless, as inflation, while its growth may be slowing, will likely stay at elevated levels, there are likely to be opportunities again for investors to pick up bonds at yields higher than the current levels in 2023. Treasury inflation-protected securities (TIPS) look attractive at 1.6% real yields plus inflation compensation (currently at 7.68% p.a.; likely to fall towards 4% in 2023) in the form of indexation of the principal to the consumer price index. For details, please refer to our recent Fixed Income Updates: Bonds to shine in 2023 as the U.S. economy slows and the Fed moves into a risk management mode, and Elevated inflation and Fed downshift could potentially be a sweet spot for Treasury Inflation-protected Securities (TIPS). Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) rallied since November 2022 on China’s shift in Covid containment policy The Hong Kong and China equity markets were closed for holiday on Monday. Over the year of 2022, the Hang Seng Index was down 15.5% and the CSI300 Index slid 21.6%. Over the past two months, stocks traded in Hong Kong and mainland China rallied as the China has effectively abandoned its stringent Dynamic Zero-Covid policy and moved to reopen the economy despite the surge in cases of infection. While it is inevitable to see further surges and more widespread in inflection at the initial stage of opening, the outlook for the Chinese economy has brightened for 2023.  In addition to the reopening, China has intensified its effort to support the distressed property sector and given property developers access to credits and equity financing which had been denied to them for the most part of 2022. The Chinese authorities have also shifted to more friendly gesture towards private enterprises, in particular the internet platform companies in the recent Central Economic Work Conference.  This new development, together with improvement in the credit impulse since last summer, the outlook for Hong Kong and mainland Chinese equities have gained a more positive tendency for 2023. FX: US dollar stumbles into the New Year In his latest note, Saxo’s Head of FX Strategy wrote that the year 2023 is starting off with the US dollar on its back foot even as US treasury yields rose into year-end as the market continues to believe that we are nearing the end of the Fed rate hike cycle, with easing to follow, while the ECB has grown increasingly hawkish and the Bank of Japan is seen further adjusting its policy mix under new leadership from early Q2. Will the first key data of 2023 on Friday, the U.S. employment report, play well with the market’s strong convictions? Commodities’ continue to have a positive outlook in 2023 We maintain an overall bullish view on commodities, especially in energy, industrial metals, and precious metals for 2023 despite the near-term price volatilities that will be driven by the state of the U.S. economy and the development in the reopening of China from Covid containment. Saxo’s Head of Commodity, Ole Hansen, discussed the outlook for commodities in this special edition of the Saxo Market Call podcast. What to consider? U.S. recession is unlikely to come anytime soon as the market is expecting In his latest Macro Digest: Powell just started the next bull run in commodities, and a special edition of the Saxo Market Call podcast: A look ahead at 2023 with Steen Jakobsen, Saxo’s Chief Investment Officer, Steen Jakobsen argues that the U.S. economy is going to run hot in Q1 2023, as opposing to the market’s expectation of a recession. The U.S. services sector and the labor market are resilient and the fall in gasoline prices since last summer is a tailwind to consumer spending. The long-term equilibrium of U.S. inflation is likely to be 4% than 2%. While the growth of the headline inflation may slow somewhat, the structural inflationary force of deglobalization means the long-term equilibrium of inflation in the U.S. will more likely to be at around 4% rather than the 2.25% that the bond market and inflation derivative market are currently pricing in and many other asset prices base their valuation on. The Fed may not be able to deliver rate cuts as the market is hoping to get As the U.S. economy is resilient and not falling into a recession and inflation stays well above the Fed’s on average 2% target, the Fed is unlikely to be able to cut rates in the first half of 2023 or may not even be able to do some in the whole year of 2023. The Fed may pause and become data dependent and focus on risk management including ensuring proper market functioning and the U.S. federal government’s ability to service its mounting debt burdens. In the equity space, the tangibles are likely to do well in 2023 A resilient U.S. economy, elevated inflation, higher costs of capital due to high interest rates and more realistic equity valuation, and China reopening provide the backdrop for the tangible industries, such as defense, mining, energy, and biotech to outperform in 2023. The board equity markets may retrace as the disappointment of Fed easing kicks in but 2023 may turn out to be a positive year for equities driven by the tangible industries and companies that can improve productivity or be innovative. China’s PMIs declined further in December China’s Official NBS manufacturing PMI fell to 47.0 (consensus: 47.8; Nov: 48.0) and non-manufacturing PMI slid to 41.6 (consensus: 45.0; Nov: 46.7), further into contraction. The weakness was board-based and seems to be a result of the surge and widespread of Covid inflections during the initial stage of abandoning stringent containment measures. For a global look at markets – tune into our Podcast. Source: Market Insights Today: – Tangible industries to outperform in the U.S. and China to pick up momentum in 2023 - 3 January 2023 | Saxo Group (home.saxo)
UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

UK GDP Already Falling And Continuing To Do So For This Calendar Year, Copper Is Still Within A Tightening Range

Saxo Bank Saxo Bank 03.01.2023 09:36
Summary:  While Japan, the UK and the US have yet to start trading this year, markets are on the move elsewhere, as mainland European stocks put in a strong session yesterday and the Hang Seng in Hong Kong is making a bid at multi-month highs overnight. Despite Japan’s closed markets, the JPY is surging, as are the Chinese renminbi and gold, which rose overnight to a six-month high in USD terms.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures opened 0.7% higher on the first print of the year but have since retreated lower up 0.3% for the session compared to the last day of trading in 2022. The positive sentiment from yesterday’s European equity session and positive trading session in Asia, despite a slightly weaker than estimated China PMI manufacturing figures for December, are carrying over into US equity futures. We still expect equity markets to be quiet and not reveal anything meaningful in terms of information of positioning and flows until early next week. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) On its first day of trading in 2023, Hang Seng Index opened lower but rallied to post a 2% gain as of writing. China telcos, electricity generating companies, pharmaceuticals, autos, and Macao casino operators led the charge higher. It is widely expected that the border between the mainland and Hong Kong will be reopened as soon as January 8, 2023. Investors brushed the weak December NBS PMI reports released during the holiday and the Caixin PMI today and the inevitable surge and spread of Covid inflections during the initial stage of relaxation of pandemic containment in China to focus on the improved economic outlook in mainland China and Hong Kong for 2023. China’s CSI 300 Index gained 0.5%. FX: The action in FX remains firmly centred on Asia … with the Japanese yen surging to new highs overnight versus the rest of G10 currencies as the 130.00 level in USDJPY gave way without much fight and EURJPY is poking below 138.50, its lowest level since September of last year as the market has grown increasingly convinced that the Bank of Japan is set for a further policy tightening this year and despite the ECB’s overt hawkishness. The Chinese renminbi is also off to a strong start in 2023 despite dramatic disruptions to activity on the ground from Covid as a further CNH rally overnight has taken USDCNH to within striking distance of its 200-day moving average near 6.86. The USDJPY performance is particularly interesting, given the tight correlation of USDJPY with US treasury yields over the last 12 months and more, as US yields backed up sharply to end 2022 and have yet to trade this year. Crude oil (CLG3 & LCOH3 ) Crude oil futures fluctuated around unchanged as a new year got underway overnight in Asia. Another volatile year undoubtedly lies ahead with multiple uncertainties still impacting supply and demand. The two biggest that potentially will weigh against each other in the short term remain the prospect for a bumpy recovery in Chinese demand being offset by worries about a global economic slowdown. Covid fears, inflation fighting central banks, lack of investments into the discovery of future supply, labour shortages and sanctions against Russia will also play its part in the coming months. Sentiment, however, did improve ahead of yearend after hedge funds raised bullish Brent crude oil bets by the most in 17 months. Gold (XAUUSD) and silver (XAGUSD) strongly out of the starting blocks Gold trades at a fresh six-month high above $1840 and silver an eight-month high at $24.50 as the positive momentum from December gets carried over into the new year. The US treasury market opens later today but futures are signalling softer yields from where we left off on Friday while the dollar trades soft led by a strong yen. In general, we are looking for a price friendly 2023 supported by recession and stock market valuation risks, an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by yearend all adding support. In addition, the de-dollarization seen by several central banks last year, when a record amount of gold was bought look set to continue, thereby providing a soft floor under the market. In the week ahead we focus on Wednesday’s FOMC minutes and Friday’s US job report. Above $1842, the 50% of the 2022 correction, gold will be looking for resistance at $1850 and $1878 next. Copper jumps despite short-term headwinds HG copper trades up more than one percent at the start of a new trading year, but still within a tightening range, currently between $3.8 and $3.94 per pound. We expect to see a bumpy start to the year with China’s reopening process potentially being delayed by virus outbreaks and companies shutting down early ahead of the Lunar New Year, starting already on January 23 this year.  In addition, the risk of a global economic slowdown as highlighted by the IMF in its latest update may also weigh at the start of a year. Overall, however, the medium term offers further upside driven by reduced mining supply and increased focus on the electrification of the world, a copper intensive process that may offset weakness from the housing sector. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) start the year near multi-week highs US Treasuries have just started trading for 2023 this morning in Europe, opening some five basis points lower for the 10-year benchmark at 3.82% after backing up sharply as 2022 drew to a close, particularly at the longer end of the yield curve, helping to steepen the 2-10 portion of the treasury yield curve from its most inverted levels in some four decades earlier in December at around –80 basis points, to closer to –50 basis points as market participants figure that a recession is on the way this year that will see the Fed chopping rates by year end. The 10-year yield level to watch to the upside is perhaps the 4.00% area ahead of the 4.34% high from October, which is a 15-year high. What is going on? ECB President Lagarde out with fresh hawkish rhetoric yesterday … warning of a further rise in borrowing costs to fight inflation - “It would be even worse if we allowed inflation to become entrenched.” Bundesbank president Joachim Nagel was also out yesterday warning of a “significant increase in long-term inflation expectations”. European yields surged in the wake of the December 15 ECB meeting on Lagarde’s hawkish blast at the press conference, with German 2-year yields, for example, rising from 2.13% before that meeting to as high as 2.77% last Friday before easing a few basis points yesterday. Tesla deliveries for Q4 fell short of estimates, despite incentives The company delivered 405.3k vehicles in the fourth quarter, which fell short of consensus expectations for over 420k. Still, the number was a record for quarterly deliveries and strongly higher from the 308.7k vehicles Tesla sold in Q4 of last year. Tesla shares lost 65% last year, though they did surge over 10% off late December lows just ahead of year-end. UK Economy may face worst recession in 2023 An FT poll of over 100 economists suggested that four out of five respondents think that UK growth will fall short of global peers, with GDP already falling and continuing to do so for this calendar year, after the inflationary shocks of the last two years will required that the Bank of England continues to raise borrowing costs and as the new Sunak-Hunt government is bent on stabilizing the country’s debt trajectory with a more austere fiscal regime than its predecessors. Recession will hit a third of the world this year The new year has kicked off with a warning from the IMF head that a third of the global economy will be hit by recession this year. In their latest update Kristalina Georgieva warned that the world faces a “tougher” year in 2023 than the previous 12 months as the US, EU and China are all slowing simultaneously. China could see its annual growth in line with global growth for the first time in 40 years and potentially acting as a drag on instead of a driver of worldwide growth. She did sound more optimistic on the prospects for the US saying it may avoid recession because unemployment is so low. What are we watching next? US data this week relative to market expectations for Fed policy The market continues to express the view that inflationary pressures will decelerate and that the labour market will loosen up sufficiently for the Fed to begin chopping rates before year-end. Last week’s US Consumer Confidence survey for December showed a strong surge in confidence, a development that is at odds with past patterns for the survey if the country is tilting into a recession. Further strong US data for December and the next month or two would be an interesting challenge of the market expectations. This week sees the release of the December ISM manufacturing survey and the December jobs report, both on Friday. US Debt Ceiling issue as the new 118th US Congress convenes today in Washington D.C. The perennial debt ceiling issue was largely skirted over the last couple of years as pandemic priorities may have prevented partisan grandstanding. But Republican lawmakers have promised a fight to extract concessions from the Biden administration. Watching for how hard the Republicans are willing to take this issue as the debt ceiling will be reached by summer of this year. Earnings to watch The earnings calendar is light in the first week of the new year, but in a couple of weeks the first Q4 earnings releases will begin to be released. The Q4 earnings season will continue its focus on margin pressures related to input costs on employees and raw materials including energy. Thursday: Walgreens Boots Alliance, Conagra Brands, Lamb Weston, Constellation Brands, RPM International Friday: Naturgy Energy Economic calendar highlights for today (times GMT) 0855 – Germany Dec. Unemployment Change 0930 – UK Dec. Final Manufacturing PMI 1300 – Germany Dec. CPI 1430 – Canada Manufacturing PMI 1445 – US Dec. Final Manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 3, 2023 | Saxo Group (home.saxo)
Norges Bank Takes Bold Steps: Signals Strong Tightening to Strengthen Weaker Krone

Saxo Bank Podcast: Picture Of The Market Situation In Relation To The US Dollar And Other Markets

Saxo Bank Saxo Bank 03.01.2023 10:43
Summary:  Today, we remind traders that the market action doesn't really start for much of global liquidity until today's opening of UK and US markets, with Japan not even set to start trading until tomorrow. This makes the JPY volatility in particularly difficult to interpret in thin markets. Most of the USD move that has unfolded this morning did so during and after the recording of this podcast, but we suggest that it is important to wait for the US data on Friday for a firmer sense of where the market stands on the US dollar and other markets, including gold. Today we also discuss the important year ahead for Tesla, with more products and platforms in the mix than at any time in its history, contrasting its outlook with that of Volkswagen. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Read next:The Korea Fair Trade Commission (KFTC) Will Impose A Fine Of $2.2 Million On Tesla Inc| FXMAG.COM If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source:Podcast: 2023 really starts today and tomorrow | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The Recovery Of The Chinese Economy Will Inflate The Oil Demand

Marek Petkovich Marek Petkovich 03.01.2023 10:58
2022 was a year of increased volatility and market division for oil to those who buy from Russia and those who refuse it. Brent ended it at +4%, a far cry from the triple-digit gains at the beginning of the armed conflict in Ukraine. The trading range for the North Sea grades was $64–$139 per barrel, the widest since the 2008 global economic crisis. What's in store for oil in 2023? Despite its rally at the turn of the year, Reuters experts are pessimistic, at least for the first few months of 2023. They lowered the median estimate of the average Brent price by 4.6%, from $93.65 in November to $89.37 per barrel in December. In 2022, the figure was $99. Such forecasts suggest that the downward trend in the North Sea variety is likely to continue. And there are justifications for this. Dynamics of forecasts for Brent The main reasons for the further fall in oil prices are the aggressive tightening of monetary policy, which will lead to a recession, and the difficulty of opening China's economy in conditions of increased infection and mortality. According to the head of the IMF, Kristalina Georgieva, the simultaneous slowdown of three whales, the United States, the eurozone, and China, indicates that a third of the world economy will face a recession in 2023. In the language of fundamental analysis, this means lower oil demand and lower prices. The fact that China is having a hard time fighting COVID-19 is evidenced by the slowdown in December manufacturing activity from Caixin from 49.4 to 49. The index has been below the critical mark of 50, which signals a contraction in GDP for five consecutive months. As for potential production cuts that could support Brent, Reuters experts do not expect any breakthrough in this area in the new year. In their opinion, the Western sanctions will have a limited impact on the Russian oil supplies, as the process of reorientation of its flows from the West to the East is under way, and the price ceiling of $60 per barrel is too high to speak about a sharp reduction of the oil production in Russia. Thus, the main grade Urals currently trades at $42, including due to high transportation costs. Dynamics of offshore flows of Russian oil In addition, if Russian oil production drops sharply, OPEC may increase it to limit the rise in prices. However, in the second half of 2023 the situation might change dramatically. The recovery of the Chinese economy will inflate the oil demand. As, however, the termination of the cycle of tightening monetary policy with a potential "dovish" reversal of the Fed. Technically, the implementation of the 1-2-3 pattern takes place on the Brent daily chart. We keep the long positions formed due to this, but as we approach the previously announced targets of $86.4, $87, and $89.2 per barrel, we fix profits and look for signals for a reversal.     Relevance up to 08:00 2023-01-08 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331339
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Traders Continue To Price In Stronger Chinese Demand For Crude Oil, Gold Is Rallying Strongly

Craig Erlam Craig Erlam 03.01.2023 12:32
Oil recovery continues Oil prices are a little higher this morning as they continue to rebound strongly from their lows. Brent and WTI have recovered almost 15% from the lows a few weeks ago as traders continue to price in stronger Chinese demand. At the same time, the US is looking to refill the SPR after huge withdrawals during last year’s oil price spike. The outlook remains highly uncertain though which should ensure oil prices remain highly volatile. The G7 price cap has had little impact so far, the same can be said of Russia’s response, but that could change if oil prices keep moving higher, nudging Russian crude ever closer to the cap level and forcing some very difficult decisions. Read next: New Record For Electric Car Manufacturer - Tesla Deliveries Increased By 40% Year-On-Year| FXMAG.COM Finding momentum Gold is rallying strongly on Tuesday, up more than 1% and gathering momentum after seeing it slip in recent weeks. The yellow metal appeared to be stuttering around $1,800 but that’s suddenly changed, perhaps buoyed by the mild risk-aversion we’re seeing in the markets and the expectation that the environment is looking more favourable. This could be a year in which global growth slows significantly and traders are questioning whether that will warrant monetary policy to be loosened later in 2023. Central banks have pushed back strongly against the idea and I imagine the IMF would too at this point but we could see markets moving in that direction if the data doesn’t continue to haunt us. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Source: Oil continues to rise, gold rallies - MarketPulseMarketPulse  
Share of Russian metal grows in LME warehouses

Commodities: Weak Manufacturing Data From China Made Some Pressure On Copper Prices, European Gas Storage Increasing

ING Economics ING Economics 04.01.2023 08:45
USD strength weighed on much of the commodities complex yesterday, while milder weather continues to put pressure on natural gas prices Energy - milder weather continues to weigh on gas Energy markets came under significant pressure yesterday, along with the rest of the commodities complex. A stronger USD weighed heavily on markets, while milder weather across much of the Northern Hemisphere has put further downward pressure on prices. ICE Brent fell by more than 4.4% yesterday - its largest daily decline since September. The weakness in the market comes despite the China reopening story, which should be constructive for the demand outlook in the medium to longer term. Although admittedly, rising Chinese covid infections could weigh on demand in the immediate term.   There were also reports that the Chinese government issued 18.99mt of refined product export quotas in the first tranche for 2023, up 46% from the same period last year. This should also be seen as a constructive factor for crude demand in the near term as it should support Chinese refinery runs, particularly at a time when there are concerns over Chinese domestic demand in the immediate term due to rising covid infections. Preliminary OPEC production numbers are starting to come through and a Bloomberg survey estimates that the group’s output in December averaged 29.14MMbbls/d, up 150Mbbls/d MoM. The increase was largely driven by a recovery in output from Nigeria, where production increased by 150Mbbls/d to 1.35MMbbls/d. There were marginal changes amongst other OPEC members. Milder weather across large parts of Europe continues to weigh on natural gas prices. TTF fell by more than 6% yesterday, leaving it to trade just above EUR72/MWh. Milder weather has meant that storage is not drawing as quickly as initially expected. In fact, in recent days we have seen European gas storage increasing. At the moment storage is a little under 84% full compared to a 5-year average of almost 70% for this time of year. The milder weather has eased concerns and it is looking as though the region will make it through this heating season in a comfortable manner.  Concerns also appear to be easing for next winter with the entire TTF forward curve trading below EUR90/MWh. However, there are still clear risks for the market as we move through the year and prices will need to remain elevated in order to ensure the market remains in balance. Metals- Gold climbs to six-month high Gold rose to its highest level in six months as Treasury yields declined. Speculation of the Federal Reserve softening its hawkish stance has supported the non-yielding asset. Any hints from the Fed of an easing in its aggressive hiking cycle should provide further support to prices. Copper prices came under some pressure yesterday following the release of weak manufacturing data from China. Surging Covid-19 cases in China are hurting consumption in the country with fabricators cutting runs or bringing forward Lunar New Year breaks because of sick workers and lower winter demand, according to the Shanghai Metals Market (SMM). Operating rates at 21 major copper-rod producers fell to about 60% of capacity last week, the lowest since June, SMM said. For aluminium, the latest data from SMM showed inventories of aluminium ingots increasing for a third consecutive week, totalling 561kt as of 3 January, up 68kt from last Thursday. The data showed inventory accumulation across all eight major markets due to increased arrivals and muted demand during the New Year holiday. Meanwhile, the latest reports suggesting that some Chinese downstream factories have already been closed ahead of the Lunar New Year holidays are raising concerns about more inventory build-up over the coming weeks. Agriculture – Indian sugar output rises The latest data from the Indian Sugar Mills Association (ISMA) shows that 2022/23 Indian sugar production rose 3.7% YoY to 12.1mt through until 31st December, compared to 11.64mt during the same period last year. The group said that by the end of December, 509 mills were crushing cane, compared to 500 mills at the same time last year. Read this article on THINK TagsUSD strength Sugar OPEC Natural gas Gold China Covid Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Current War Between China And The United States Over Semiconductor Chips Is Gaining Momentum

Concerns Among Investors About The Demand Outlook For The Products Of Apple

Saxo Bank Saxo Bank 04.01.2023 08:57
Summary:  The share price of Tesla plunged 12% following releasing weak deliveries in December. Apple’s market value fell below US2 trillion for the first time since March 2021 on weakening demand for its MacBooks, the Apple Watch and Airpods. The USD bounced by 1% against EUR and GBP. Crude oil slid by 4% on higher OPEC daily production. On Wednesday, all eyes are on the US ISM Manufacturing Index, JOLTS job openings, and the December Fed minutes. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) slid with significant weakness in Apple and Tesla U.S. equities started the year weaker on Tuesday. S&P 500 slid 0.4% and Nasdaq 100 lost 0.8%. Energy, plunging 3.6% on a 4% decline in crude oil, was the worst-performing sector within the S&P 500 Index. Communication Services, up 1.4%, advanced the most, with Meta (META:xnas) up 3.7% and Alphabet (GOOGL:xnas) up 1.1%. Nasdaq 100 was dragged down particularly hard by the declines in the share prices of Apple (AAPL:xnas) which accounts for 13% index weighting and Tesla (TSLA:xnas) which accounts for 2.5% index weighting. Tesla fell by 12.3% after releasing weak December delivery data. Apple slid 3.4% on a Nikkei report suggesting potential weak demand for the company’s products, taking the company’s market value down below USD2 trillion, the first time since March 2021. Apple accounted for 13% in Nasdaq 100 weighting. Tesla plunged 12.3% on weak December deliveries Tesla announced Q4 deliveries of 405.3K coming short of the estimate at 420.8K and significantly below the 439.7K units produced in Q4. In this article, Peter Garnry suggests that Telsa is facing problems of elevated battery costs that forced the EV maker to raise prices and excessive electricity costs in Europe that weighs on demand. Some demand in the U.S. in Q4 might have been pushed into Q1 2023 by the EV purchase tax credit in the Inflation Reduction Act. The share price of Tesla plunged 12.3% on Tuesday, its largest decline by percentage since September 2020. Apple fell by 3.4% on reportedly weakening demand for its MacBooks, the Apple Watch and Airpods A Nikkei article reported that “Apple has notified several suppliers to build fewer components for Airpods, the Apple Watch and MacBooks for the first quarter, citing weakening demand”. The article stirred up concerns among investors about the demand outlook for the products of the consumer electronics giant. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied with yields on the 10-year 14bps richer to 3.74% Bids returned to Treasuries as German Bunds jumped in price following German CPI coming in softer than expectations.  Yields on 10-year German bunds fell by 6bps on Tuesday and by 18 bps since the New Year. On the tape, former Fed Chair Aland Greenspan and former New York Fed President Bill Dudley said a not-too-severe U.S. recession was the most likely outcome. The 10-year segment led the rally, with yields 14bps richer to 3.74%. Yields on the 2-year fell by 6bps to 4.37%. The corporate issuance calendar was busy with 19 investment grade bonds for a total of over 30 billion issued on Tuesday. Hong Kong’s Hang Seng (HIZ2) and China’s CSI300 (03188:xhkg) On its first day of trading in 2023, Hang Seng Index opened lower but rallied to post a 1.8% gain. Hang Seng TECH Index (HSTECH.I) climbed 1.9%. Chinese telco, consumer, electricity utilities, pharmaceuticals, autos, and Macao casino operators led the charge higher. It is widely expected that the border between the mainland and Hong Kong will be reopened as soon as January 8, 2023. In addition, a rebound in mobility data in some large Chinese cities, such as Guangzhou, Chongqing, Shanghai, and Beijing helped market sentiment. Investors brushed off the weak December NBS PMI reports released during the holiday and the Caixin PMI on Tuesday and the seemingly inevitable surge and spread of Covid inflections during the initial stage of relaxation of pandemic containment in China to focus on the improved economic outlook in mainland China and Hong Kong for 2023. Southbound flows into Hong Kong amounted to a decent HKD4.25 billion, of which buying in Tencent (00700:xhkg) accounted for HKD1.58 billion. Following the release of strong December sales, BYD rose by 4.7%, Li Auto by 10.5%, and Xpeng by 7.8%.  China’s CSI 300 Index gained 0.4%, with computing, communication, media, and defense names gaining the most. FX: the dollar gained 1% versus EUR and GBP As Saxo’s Head of FX Strategy, John Hardy, put it in his note, USD wakes up with a bang ass US market come back on line. Softer CPI prints from Germany triggered selling in the Euro and saw EURUSD down 1%. The pound sterling also slid 1% versus the dollar. The Yen held on relatively well, after briefly strengthening to 129.52, finished the day little changed at around 131. Crude oil fell nearly 4% on higher OPEC production WTI crude fell 3.9% on Tuesday following production by OPEC countries increased by 150,000 barrels to 29.14 million barrels a day, partly due to higher output from Nigeria. The warmer-than-normal weather in the U.S. and Europe also weighed on the market sentiment. What to consider? German December CPI softer than expectations Germany released headline CPI at 8.6% Y/Y below the street estimate of 9.0%Y/Y and November’s 10.0%. Germany’s EU Harmonized CPI came in at 9.6% Y/Y, falling from the 10.2% expected and 11.3% in November. U.S. ISM Manufacturing Index, JOLTS Job openings, and the December FOMC minutes to focus on Wednesday We have a busy economic calendar in the U.S. on Wednesday. The ISM Manufacturing Index is generally considered by investors as one of the key indicators in the recession question. The Bloomberg consensus estimate is calling for a further decline into the contractionary territory to 48.5 in December from 49.0 in November. JOTLS job openings (consensus 10.05 million; Nov 10.33 million) will also be closely monitored as the data series was highlighted by Fed Chair Powell almost every time in his assessment of the state of the labor market and monetary policies. Finally, at 2pm US EST, we will have the minutes from the Fed’s December FOMC meeting. For a global look at markets – tune into our Podcast. Source: Market Insights Today: – Apple and Tesla plunged; ISM, JOLTS, and Fed minutes the focus on Wednesday - 4 January 2023 | Saxo Group (home.saxo)
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Tesla Had A Bad Start To 2023, US Treasury Yields Fell Sharply

Saxo Bank Saxo Bank 04.01.2023 09:10
Summary:  US equities got off to a choppy start in 2023 with a slightly weak session yesterday, but with notable weakness in high profile companies like Tesla after it reported weak Q4 deliveries, while market cap leader Apple posted a new cycle low. The US dollar traded was choppy in volatile trading but generally ended the day on the strong side, even as US treasury yields dropped. Gold chopped back and forth but surged back toward yesterday’s highs overnight.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures started the year’s first day of trading yesterday with the element that they had plenty of in 2022, namely volatility. The index futures started rallying in the beginning of the session helped by positive sentiment in Europe and China trading up as much as 1.2% at the intraday high, but spillover effect on sentiment from the slide in Tesla shares and related technology stocks took S&P 500 futures down 0.4%. The intraday price range in S&P 500 futures was more than 2%. The first important macro events of the year are the ISM Manufacturing and the JOLTS Job Openings report for December which could move interest rates and inflation expectations and thus US equity futures later in the session. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index rallied for the second straight session in 2023 rising by 1.8%. Hang Seng TECH Index surged 3.4%, led by Alibaba (09988:xhkg)  soared more than 7% following the news that the Chinese authorities approved an increase in registered capital of the consumer finance unit of Ant Group. Shares of Chinese developers and management services providers climbed on anticipation of state support from the state-owned Economic Daily emphasizing the importance of the real estate sector to the economy in its editorial. Longfor (00960:xhkg) and Country Garden Services (06098:xhkg) each jumped around 10%, being the top performers of the Hang Seng Index. Sunny Optical (02382:xhkg), a supplier to Apple (AAPL:xnas), plunged 12% on analyst downgrades and a Nikkei report that “Apple has notified several suppliers to build fewer components for Airpods, the Apple Watch and MacBooks for the first quarter, citing weakening demand”. CSI 300 is unchanged. FX: Yesterday’s USD rally moderates. AUD surges on possible end of Chinese coal ban The US dollar surged yesterday for no readily apparent reason, even as US treasury yields dropped and risk sentiment was strong early in the day. The rest of the day saw very choppy action that suggests currency traders are struggling to find their feet in 2023, although the greenback generally ended the day stronger than where it started ahead of the first important macro data of the year this Friday. Overnight, the Aussie surged sharply, erasing the AUDUSD losses yesterday and seeing AUDNZD to new local highs as Chinese authorities discussed a partial lifting of the Australia coal import ban. Crude oil (CLG3 & LCOH3) Crude oil futures, led by gasoline and diesel, turned sharply lower during its first full day of trading with the early 2023 focus being centred around a short-term deterioration in demand as China struggles with Covid-19, milder weather reduces demand for heating fuels and the IMF’s latest warning that one third of the world may suffer recession in 2023. OPEC increased production by 150k b/d last month according to a Bloomberg survey as Nigeria, currently producing below its quota, ramped up production. US production meanwhile is expected to rise by just 600k b/d in 2023, with the pre-pandemic record peak at 13m b/d remaining out of sight. On the supply side Russia’s December shipments of oil slumped to the lowest for 2022 driven by storm disruptions and a shortage of vessels. In Brent, the uptrend from early December looks challenged with a break below $81 signalling further loss of momentum, initially towards $79.65.  Gold (XAUUSD), silver (XAGUSD) and platinum (XPTUSD) This trio of investment and semi-industrial metals, led by gold’s break higher, are the only commodities trading in the black this week. On Tuesday, sudden dollar strength was being offset by a sharp fall in US treasury yields, both highlighting weak risk sentiment at the beginning of a new trading year. In general, we are looking for a price friendly 2023 for investment metals supported by recession and stock market valuation risks, an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by yearend. However, in the short-term continued dollar strength - as risk appetite elsewhere suffers - may prove too hard to ignore, thereby raising the prospect for a correction and better buying levels. Focus on today’s FOMC minutes and Friday’s US job report. Key support in gold at $1801 with trendline resistance at $1852 being followed by $1878. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) fall sharply on US first trading day of 2023 US Treasury yields fell sharply all along the curve, but fell the most at the longer end of the curve, with the 10-year yield benchmark down almost 15 basis points to 3.73%. Some of the move was in sympathy with European yields, which dropped on a much softer than expected German CPI print.  The 10-year US Treasury yield level to watch to the upside is perhaps the 4.00% area ahead of the 4.34% high from October, which is a 15-year high. To the downside, the cycle lows below 3.50% (intraday cycle low was 3.40%) are the focus, with the first major test of the US Treasury market up this Friday on the release of US jobs data and the December ISM Services index and next week on the December CPI report on Thursday, January 12. What is going on? US House Republicans so far failing to elect new Speaker of the House A minority of more Trumpist-leaning Republicans are holding back the election of Kevin McCarthy to become the next Speaker, as he failed to win approval after three rounds of voting yesterday. The House is unable to conduct any kind of business until a new Speaker is elected, and the degree of dysfunction in the House over the next two years will likely be determined by the identity of the leader in the house. Inflation is cooling down in Germany Germany December CPI rose 8.7 % year-over-year against prior 10.4 %. The monthly decline is astounding: minus 1.0 % from November to December. In parallel, inflation also slowed down in Germany’s largest state by population – North Rhine Westphalia – with CPI out at minus 1.0 % month-over-month. This matters because it is one of the major industrial states. The drop is partially explained by the drop in energy prices and the one-time government support to reduce the gas bills of households and SMEs. This means the decline in inflation may not last. It will highly depend on the evolution of energy prices this winter. But this is a welcome figure as we kick off the new year. Officials in China discuss easing Australia coal import ban Bloomberg is breaking this story, citing sources familiar with the matter, which claim that bureaucrats are proposing allowing a few major coal consumers in China to resume imports as soon as April 1. The Australian dollar jumped sharply in response, as did Australian coal exporters, and even major miner BHP Billiton posted a strong session overnight. Tesla shares plunge 12% to lowest levels since August 2020 Tesla had a bad start to 2023 as the EV maker reported worse than expected Q4 deliveries Tuesday night trailing the productions figures for the quarter expanding the gap between production and deliveries to a new high. Investors are speculating whether Tesla is facing a demand issue and the recent implemented discounts to entice buyers are still in place suggesting Tesla is willing to sacrifice its operating margin at the expense of keeping up demand to maintain high utilization of its factory capacity. Read our take on Tesla in yesterday’s equity note. What are we watching next? November JOLTS Job openings up later, FOMC Minutes up tonight The JOLTS survey of job openings dropped in October back toward the low for 2022 at just above 10.3M as the November release today is expected to post a new cycle low near 10.0M. Still, these numbers are far north of the previous pre-pandemic record near 7.5M. The FOMC minutes tonight may not move markets much, but are worth watching for where FOMC members are expressing their inflation concerns. Earnings to watch The earnings calendar is light in the first week of the new year, but in a couple of weeks the first Q4 earnings releases will begin to be released. The Q4 earnings season will continue its focus on margin pressures related to input costs on employees and raw materials including energy. This week’s earnings focus is Walgreens Boots Alliance (WBA) and Conagra Brands, with WBA expected to -3% revenue growth y/y for the quarter that ended on 30 November adding to the series of quarters with negative revenue growth. Conagra Brands is expected to deliver 7% revenue growth y/y for the quarter that ended on 30 November as the manufacturer of packaged foods is able to pass on inflation to its customers. Thursday: Walgreens Boots Alliance, Conagra Brands, Lamb Weston, Constellation Brands, RPM International Friday: Naturgy Energy Economic calendar highlights for today (times GMT) 0745 – France December Flash CPI 0815-0900 – Eurozone final December Services PMI 0930 – UK Nov. Consumer Credit/Mortgage Approvals 1500 – US Dec. ISM Manufacturing  1500 – US Nov. JOLTS Jobs openings 1900 – US FOMC Minutes 2130 – API's Weekly Crude and Fuel Inventory Report 0145 – China Dec. Caixin Services PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 4, 2023 | Saxo Group (home.saxo)
The Commodities Feed: OPEC+ meeting ahead

Exxon And Chevron Abandon The Global Market And Focus On The Americas

Kamila Szypuła Kamila Szypuła 04.01.2023 12:29
The two fossil fuel giants plan to spend most of their annual budgets in the both Americas this year. Focus on Noth and South America For much of their modern history, Chevron and Exxon have scoured the world for oil to add to their reserved reserves. Chevron saying it will pour 70% of the capital allocated for production into oil fields in the U.S., Argentina and Canada, and Exxon saying it will spend a similar portion of its budget in the Permian Basin of New Mexico and West Texas, Guyana, Brazil and liquefied natural-gas projects. Their focus on the Western Hemisphere is expected to continue for years as they give priority to growing shareholder returns and cut costly frontier drilling projects. The Chevron planned to sell off at least $15 billion in assets as of 2018, reducing its global reach and focusing on its most valuable assets. Last year, Irving, Texas-based Exxon sold or proposed to sell assets in Chad, Cameroon, Egypt, Iraq and Nigeria. Read next: New Record For Electric Car Manufacturer - Tesla Deliveries Increased By 40% Year-On-Year| FXMAG.COM Exxon and Chevron Situation The company's oil and gas production is down nearly 18% in 2021 from its annual peak in 2011. Around this time, Exxon had dozens of projects around the world and made most of its money outside the United States. Meanwhile, Chevron's international production fell 3% last year after concessions in Thailand and Indonesia expired. Last year, she promised to leave Myanmar, citing human rights violations. Chevron has kept some international assets close to home. The US re-granted it a new license to pump oil in Venezuela after years of sanctions. So far it has said it will not make new investments in the country, but will only hold existing assets while it collects debt from its state-owned joint venture partner. The involvement of Venezuela In October last year, information appeared about the possibility of easing the sanctions imposed by the US on Vezeuela. The Biden administration has taken steps to reduce the sanctions imposed on the regime in Venezuela, provided authoritarian President Nicolás Maduro agrees to negotiate with the US-backed opposition to hold a free and fair presidential election in 2024 on the matter. Venezuela was once a major oil producer, pumping more than 3.2 million barrels a day in the 1990s, but the state-owned industry has collapsed over the past decade due to underinvestment, corruption and mismanagement. The sanctions imposed by the Trump administration have further curtailed production and forced Western companies out of the country. Chevron wrote off its Venezuelan assets in 2020, charging a $2.6 billion fee, just months after the Trump administration tightened sanctions that barred U.S. companies from drilling, transporting or selling Venezuelan oil. The speed at which Chevron can resume operations in Venezuela, mainly in the Orinoco belt to the east, will depend largely on how quickly modifications to the Trump-era sanctions can be implemented. Read next: How Dream Sports Built Its Value, High Inflation And Its Impact On The Hedge Fund| FXMAG.COM Chevron will have to deal with everything from fuel shortages to an accident-prone oil infrastructure to security threats and corruption that could hamper its efforts to revitalize the country's gutted oil industry. The involvement of Venezuela, which sits on top of some of the world's largest oil reserves, could serve as a long-term strategy for the United States and European countries trying to secure new energy sources as Russia's war in Ukraine drags on and overturns commodity markets. Chevron share price The war in Ukraine has mainly hit the goods market, which has made energy companies gain. Chervron gained over 40% last year. The share price last year was mostly above 150, and this year it started the year with levels above 170. Exxon share price Exxon's stock didn't do as well as Chevron's, but it was on the rise and in 2022 it was trading above 85. Currently, the company's stock is above 100. Source: wsj.com, finance.yahoo.com
Russia's Weekend Mutiny and Gold's Bounce off Support Raise Concerns; Verbal Intervention in USD/JPY and US Banking Stocks Tumble Ahead of Fed's Stress Test Results

Saxo Bank Podcast: Lifting Risk Sentiment And Seeing A Weaker US Dollar

Saxo Bank Saxo Bank 04.01.2023 12:45
Summary:  Today, we note that today's inter-market picture makes far more sense than what we saw yesterday as some low inflation data in Europe is helping to drive global bond yields lower, lifting risk sentiment and seeing a weaker US dollar. This came after a volatile and confusing day yesterday. The biggest winner of the first couple of days this year has been gold, which has soared above major resistance. We also look at the latest Tesla plunge and some of the network effects that may be aggravating its decline, discuss the reversal in crude oil prices and new lows in natural gas prices and how markets may continue to flourish on signs of a weakening economy. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Read next: How Dream Sports Built Its Value, High Inflation And Its Impact On The Hedge Fund| FXMAG.COM Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Read next:Exxon And Chevron Abandon The Global Market And Focus On The Americas| FXMAG.COM Source: Podcast: Global markets getting back in synch today | Saxo Group (home.saxo)
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

European Investors Got An Energy Boost From Lower Inflation Reads

Swissquote Bank Swissquote Bank 04.01.2023 12:59
European investors got an energy boost from lower inflation reads, and the falling nat gas futures, but US investors didn’t follow up on the cheery market mood. However, US sovereign bonds gained yesterday as an indication that the latest market moves were backed by recession fears, rather than hawkish Federal Reserve (Fed) expectations… The risk-off investors will likely continue And if the first trading day of the year is any indication, we could see the holy negative correlation between stocks and bonds come back in 2023. This is what many investors think will happen. The risk-off investors will likely continue exiting stocks on profit recession – and not on hawkish Fed expectations, and they could go back to bonds and to gold instead. US economy Due today, the ISM manufacturing index will reveal if and how fast US manufacturing contracted last month. If yesterday’s PMI is any hint, we could see a fastening contraction in ISM manufacturing, which would then boost recession worries, hit the stocks, but not necessarily the bonds and gold. Also, JOLTS data will show if, and by how much the US job openings fell in November. Read next: Exxon And Chevron Abandon The Global Market And Focus On The Americas| FXMAG.COM But regardless of the ISM data, and the US job openings, the FOMC minutes will likely confirm that the Fed remains serious about further tightening policy, even if it slows the pace of interest rate hikes. Remember, if the Fed decided to go slower on its rate hikes, it’s to be able to go higher! And the more resilient the US economy and the US jobs market, the more eager the Fed will be to continue its journey north… Watch the full episode to find out more! 0:00 Intro 0:35 European stocks rally but… 3:04 US stocks fall, as bonds rise… 4:08 … hinting at the eventual return of negative correlation btw stocks and bonds? 5:51 …from which Gold could also benefit? 6:30 What to watch today? 7:38 Oh Tesla, Apple and Exxon… 9:06 Do you dare going back to Chinese stocks? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Stock #bond #correlation #USD #EUR #JPY #XAU #economic #data #recession #pricing #Tesla #Apple #Exxon #crude #oil #DAX #CAC #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Commodities: Europe Is No Longer Trading At A Premium To Spot Asian LNG

ING Economics ING Economics 05.01.2023 08:34
The commodities complex came under further pressure yesterday. Energy, metals and agri were unable to escape the broader weakness. Rising covid infections in China are a key demand concern in the short term, while milder weather in Europe is adding further pressure to the energy complex Rising Covid-19 cases in China are weighing on the demand outlook for oil Energy - prompt demand concerns The weak start to the New Year has continued for oil. ICE Brent fell by a further 5.19% yesterday, which left the market trading convincingly below US$80/bbl. Time spreads have also weakened along with the flat price. The prompt ICE Brent spread has slipped back into a contango, after trading stronger over much of the second half of December. Chinese Covid infections are a concern for demand in the immediate term, however, the medium to long-term outlook is more constructive following the change in China’s covid policy. The oil market is looking better supplied in the near term and risks are likely skewed to the downside. However, our oil balance starts to show a tightening in the market from the second quarter through to the end of the year, which suggests that we should see stronger prices from 2Q23 onwards. API numbers released overnight show that US crude oil inventories increased by 3.3MMbbls over the last week. Part of the build would have likely been driven by refinery shutdowns along the US Gulf Coast as a result of the extremely cold conditions seen in December. For refined products, gasoline stocks increased by 1.2MMbbls, whilst distillate stocks fell by 2.4MMbbls.   European natural gas prices have also continued their slide. TTF declined by around 10% yesterday, leaving the market at a little over EUR65/MWh- the lowest level since 2021. Mild weather has meant that storage is still looking very comfortable in the middle of winter and milder weather is expected to continue for a while longer. Interestingly, Europe is no longer trading at a premium to spot Asian LNG. In fact, Asia is trading at a premium of more than US$9/MMBtu to TTF, which suggests that we could start to see more LNG cargoes diverted towards Asia at the expense of Europe. Metals – Demand hit by rising China Covid infections Demand for industrial metals is being hit by surging coronavirus infections in China following an abrupt exit from Beijing’s zero-Covid policy. Any gains are likely to be capped as Lunar New Year approaches. LME copper 3M prices traded below $8,300/t while nickel prices fell by more than 4% on the day and led the declines amongst base metals yesterday. The latest data from LME shows exchange inventories for zinc falling for a ninth consecutive day by 1.6kt to 30.5kt (the lowest level since 1989), whilst lead on-warrant stocks dropped to the lowest since 1997 as of yesterday. Nexa Resources has halted production at its Atacocha San Gerardo open-pit zinc mine in Peru due to a road blockade by a local Machcan community. The zinc producer, controlled by Brazilian holding company Votorantim SA, said the obstruction of the road to the mine has not had a material impact on production to date. Atacocha accounts for less than 3% of the company’s total zinc production. Read this article on THINK TagsZinc Oil Natural gas Copper China Covid API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Supply Trends Resurface: Analyzing the Impact on Market Dynamics

The Australian Dollar (AUD) Was The Best Performer Among Major Currencies Against The Dollar

Saxo Bank Saxo Bank 05.01.2023 08:51
Summary:  European and U.S. equities as well as bonds gained on a large-than-expected decline in the rate of inflation in France. Hong Kong stocks had a strong day in anticipation of more economic stimulus, support to the real estate sector, and relation on regulations over the internet sector in mainland China. The U.S. JOLTS job openings report shows the Fed has more work to do to cool off the labor market. The December FOMC minutes sent mixed signals of warning against an easing of financial conditions and concerns about two-sided risks of under- and over-tightening. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) ended higher in a choppy session U.S. stocks had a strong start on Wednesday through the morning and then oscillated after the release of the FOMC minutes in the afternoon digesting the hawkish warnings from the Fed about an unwarranted easing in financial conditions and the dovish signal of an increasing number of Fed FOMC members being concerned about two-sided risks. S&P 500 ended the session 0.8% higher and Nasdaq 100 climbed 0.7%. The rally was broad-based as all 11 sectors within the S&P 500 gained. The interest rate-sensitive real estate sector was the best performer while the energy sector was close to flat as crude oil slid nearly 5%. Tesla (TSLA:xnas) rebounded 5%. Micorsoft (MSFT:xnas) plunged 4.4% on analyst downgrades and concerns about the company’s cloud computing business. The next key focus of investors will be the employment report this Friday. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) gained on softer French CPI prints, and the FOMC minutes showed more Fed officials concerned about two-sided risks Treasuries caught some strong bids in tandem with the European bond markets that rallied on softer-than-expected CPI prints from France. The market pared some gains after a stronger-than-expected JOLTS job openings report and position squaring ahead of the release of the FOMC minutes. Yields, in particular, those in the longer-end segment, fell again after the FOMC minutes. The 10-year finished Wednesday 6bps richer to 3.68% which yields on the 2-year falling only 2bps to 4.35%. The December FOMC minutes highlighted Fed officials’ worries about “an unwarranted easing in financial conditions” due to a misinterpretation by the market of the Fed’s downshift from 75bp to 50bp hike as a pivot. Nonetheless, the minutes showed that “many participants” argued for balancing the two-sided risks of under- and over-tightening in the December meeting. Minneapolis Fed President Kashkari said in an article that he saw rate hikes “at least at the next few meetings”, leading to a terminal rate of 5.375%. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index rallied for the second day in a row in 2023, registering an impressive gain of 3.2% and rising to above its 250-day moving average. A pledge of fiscal expansion from China’s Finance Minister fueled investors’ optimism in more economic stimulus measures. Hang Seng TECH Index surged 4.6%, led by Alibaba (09988:xhkg) which soared 8.7% following the news that the Chinese authorities approved an increase in registered capital of the consumer finance unit of Ant Group. Shares of Chinese developers and property management services providers climbed on anticipation of state support, following the state-owned Economic Daily emphasizing the importance of the real estate sector to the economy in its editorial, a recent message from the Financial Stability and Development Committee to support “systematically important” property developers, and Asset Management Association of China’s decision to resume approvals for private equity funds investing in property projects. Longfor (00960:xhkg) and Country Garden Services (06098:xhkg) each jumped more than 11%, being the two biggest gainers within the Hang Seng Index. Sunny Optical (02382:xhkg), a supplier to Apple (AAPL:xnas), plunged 10% on analyst downgrades and a Nikkei report that “Apple has notified several suppliers to build fewer components for Airpods, the Apple Watch and MacBooks for the first quarter, citing weakening demand”. Semiconductors names were among the laggards as China was reportedly going to slow its investment push for developing the country’s chip-making industry due to pressures on its fiscal budget. In A-shares, CSI 300 finished the day little changed, with real estate and financials outperforming and weakness in semiconductors and new energy. FX: AUD gained 1.6% to 0.6840 as China is considering resuming coal imports from Australia The Australian dollar was the best performer among major currencies against the dollar following news headlines saying that China is considering ending its import ban on Australian coal. EUR and GBP also rebounded from the loss the day before and each up about 0.7% against the dollar. The Japanese yen was the laggard among major currencies and weakened to 132 against the dollar. Crude oil fell nearly 5% to USD73.17 WTI crude oil fell 4.9% to US73.17 on concerns of a slowing global economy and higher-than-average temperatures in Europe and the U.S. Read next: The EUR/USD Pair Is Trading Above 1.06 Again, The USD/JPY Pair Is Close To Level Of 131| FXMAG.COM What to consider? FOMC minutes warned about an unwarranted easing in financial conditions while highlighting a shift toward risk management The FOMC minutes sent out mixed messages. FOMC participants worried that the downshift from a 75bp hike to a 50-hike would be interpreted by the market as the signal of a pivot and warned that “an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability”. Nonetheless, the minutes showed that “many” participants argued for balancing two risks: the risk “insufficiently restrictive monetary policy could cause inflation to remain above the Committee’s target for longer than anticipated” and the other risk of “the lagged cumulative effect of policy tightening could end up being more restrictive than is necessary to bring down inflation to 2 percent and lead to an unnecessary reduction in economic activity”. That points to a data-dependent risk management approach going forward. Fed’s Kashkari expects the Fed to raise the policy rate another 100 basis points Saying in an article, Minneapolis Fed President Neel Kashkari said that “it would be appropriate to continue to raise rates at least at the next few meetings” and indicated that he saw the ultimate rate going 100 basis points higher to 5.25%-5.50%, in 2023. He suggests that any sign of slow progress that keeps inflation elevated for longer will warrant the policy rate potentially much higher. Softer-than-Expected French CPI A day after a softer-than-expected German CPI report, December CPI in France also came in softer. French December headline CPI decelerated to 5.9% Y/Y from 6.2% in November as opposed to the expectation of a rise to 6.4% Y/Y.  French CPI EU Harmonized slowed to 6.7% Y/Y in December (consensus estimate: 7.3%) from 7.1% in November. U.S. JOLTS job openings stronger than expected U.S. JOLTS job openings declined to 10.46 million in November, above the consensus estimate of 10.01 million, from a revised 10.51 million (previously reported 10.33 million) in October. It implies that the ratio of vacancies to unemployment is 1.74, above the pre-pandemic level and the labor market will be considered by the Fed as being too tight. U.S. ISM Manufacturing Index fell to 48.4, slightly below expectations The ISM Manufacturing Index slid more than expected to 48.4 in December (consensus: 48.5) from 49.0 in November. New orders were weak, falling to 45.2 from 47.2. The price-paid sub-index decelerated to 39.4 in December (consensus: 42.9) from 43.0 in November. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Softer inflation prints from France, solid JOLTS job openings report, mixed messages from the FOMC minutes – 5 January 2023 | Saxo Group (home.saxo)
Russia Look Set To Double Its Exports For The First Half Of 2023

Russia Look Set To Double Its Wheat Exports For The First Half Of 2023

Saxo Bank Saxo Bank 05.01.2023 09:00
  Summary:  Equity markets managed to keep an even keel yesterday, with a lack of direction in US equity markets continuing well into its third week. Late yesterday, the minutes from the last FOMC meeting offered the latest pushback against market expectations for rate cuts as soon as year-end, while gold and especially the JPY eased back lower from their recent strength on treasury yields halting their slide. Tomorrow’s US jobs report for December offers the next test for global markets.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The US equity market once again chopped back and forth yesterday as the action has been bottled up in a range in the S&P 500 for nearly three weeks. The market may be waiting for the next batch of US data and the impact on treasury yields for choosing a direction, with tomorrow’s batch of data the next important hurdle for markets. The technical focus for S&P 500 traders is the range low and the 61.8% Fibonacci retracement near 3,780 for the March futures contract. For Nasdaq 100 trader, the cycle low near 10, 750 and the nominal intraday lows from last October a bit lower still are the key focus. Ironically, strong US economy data may be the most negative for equity markets in the short run if yields jump. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index climbed more than 1% and CSI300 surged nearly 2% as China continue to roll out additional reopening measures and supports to the economy. On Thursday, China announced the much-anticipated gradual reopening of the border between Hong Kong and the mainland starting from January 8, 2023. Internet platform giants Alibaba (09988:xhkg) and Meituan (03690:xhkg), China restaurant chain Haidilao (06862:xhg), beer brewers China Resources Beer (00291:xhkg) and Budweiser (01876:xhkg) were among the top gainers within the Hang Seng Index. In A-shares, baijiu (Chinese white liquor) surged in anticipation of rebound in consumption. Electric equipment, household electronic appliances, and logistics stocks also outperformed. FX: JPY rally reversed, USDCNH testing key levels The US dollar found a modicum of support yesterday as treasury yields stabilized and as the Fed delivered the expected message in its latest set of meeting minutes – a pushback against market expectations for the Fed to cut rates as soon as this year. The next important step for the USD will be on tomorrow’s December jobs report and next Thursday’s December CPI release. USDJPY bounced well above 132.00 after its recent test below 130.00 on signs that the yen’s recent surge may need more support from new developments (a larger drop in global yields in particular) after resetting from 150.00+ in USDJPY terms. The Chinese yuan continued its resurgence on hopes for a boost to Chinese growth on the other side of the current Covid trauma, with USDCNH testing its 200-day moving average near 6.87 for the first time since April. Crude oil (CLG3 & LCOH3) Crude oil found a bid on Wednesday following a two-day tumble of more than 9% tumble on China demand and global growth worries. The bounce has so far primarily been driven by short covering while also signalling an end to selling from funds who bought the market aggressively ahead of yearend. For now, a surge in Covid-19 cases across China is clouding the near-term demand outlook, overshadowing optimism and delaying the timing of when commodity consumption in the world’s top importer will eventually rebound. The API reported a 3.3-million-barrel increase in US crude stocks with gasoline stocks also rising while distillates dropped. The EIA will release its weekly report later today. Gold (XAUUSD) sees increased two-way action after hitting fresh six-month high Gold’s run of gains extended to a fourth day on Wednesday but after touching $1865 some two-way actions emerged potentially signalling traders have started to book profit. Gold, silver and platinum have been favoured by traders during the first days of trading, with momentum from last year being carried over. Driven by recession and stock market valuation risks, an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by yearend. It is worth remembering that traders' conviction at the beginning of a new year always tends to be low for fear of catching the wrong move. At the same time, however, the fear of missing out can also drive a rapid build-up in positioning which subsequently can be left exposed should a change in direction occur. Focus on Friday’s US job report with resistance at $1865 & $1878 while the current strong uptrend may not be challenged unless the price breaks below $1800 Europe’s gas price (TTFMc1) slump continues Europe’s gas prices have fallen by more than 50% during the past month and on Wednesday the Dutch TTF futures contract closed at €65/MWH ($20/MMBtu), the lowest since October 2021. The slump has been driven by a combination of mild weather and at times strong production from renewables as well as reduced industrial consumption resulting in an unusual seasonal increase in inventories. Gas held in storage across Europe is currently 164 TWh above the five-year average and close to a full month of peak winter withdrawals. With LNG imports still strong and demand down by more than 10% the continent has now ended up in a situation, unthinkable just a couple of few months ago, where prices need to stay low in order to divert LNG shipments away from Europe in order not to overwhelm storage facilities. Wheat (ZWc1) tumbles on ample Black Sea supply. The Chicago wheat contract has lost more than 5% during the first trading days to trade near a one-month low. Forced lower by an abundance of low-price wheat from Russia and Ukraine providing stiff competition to U.S. exporters where production has been hit by drought, and recently, by severe cold. Russia, the world's largest wheat exporter, look set to double its exports to a record 21.3 million tons for the first half of 2023. This following a record grain crop of 151.0 million tons last year, including 102.7 million tons of wheat. In addition to strong Russian shipments, European Union soft-wheat exports are running about 6% higher than a year earlier, and Australia’s top shipper loaded a monthly record 2.18 million tons of grain in December. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) stabilized after their steep fall to start the year US Treasury yields arrested their descent yesterday after the 10-year benchmark hit 3.66%, rising a few basis points. At the short end of the curve, yield pulled back slightly higher as well, perhaps lifted at the margin by a strong JOLTS survey for November and the ISM Manufacturing survey showing a stronger employment sub-index. The price action was little affected by the FOMC minutes release, which saw the Fed continuing its pushback against market expectations for easing as soon as year-end. Tomorrow’s US data, including the December jobs report and ISM Services Index, offer the next test for the treasury market. Read next: The EUR/USD Pair Is Trading Above 1.06 Again, The USD/JPY Pair Is Close To Level Of 131| FXMAG.COM What is going on? France’s inflation is cooling down BUT… Inflation is cooling down in several eurozone countries. France is the last example. In December, the EU-harmonized CPI rose 6.7 % year-over-year versus expected 7.3 %. On a monthly basis, inflation decreased 0.1 % versus expected +0.4 %. This is positive, of course. But it will likely not be sufficient for monetary policy to shift out of tightening mode just yet. There is a high risk that inflation will increase again in Spring/Summer this year due to higher energy prices. This could be fueled by a deficit in the oil market due to OPEC+ cuts and EU ban on Russian oil and difficulties filling gas inventories for next year in the EU. Therefore, it is too early to believe the peak in inflation is effectively behind us in the eurozone. The FOMC minutes sent out mixed messages FOMC participants worried that the downshift from a 75bp hike to a 50-hike would be interpreted by the market as the signal of a pivot and warned that “an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability”. Nonetheless, the minutes showed that “many” participants argued for balancing two risks: the risk “insufficiently restrictive monetary policy could cause inflation to remain above the Committee’s target for longer than anticipated” and the other risk of “the lagged cumulative effect of policy tightening could end up being more restrictive than is necessary to bring down inflation to 2 percent and lead to an unnecessary reduction in economic activity”. That points to a data-dependent risk management approach going forward. Separately, Minneapolis Fed President Kashkari said in an article that he saw rate hikes “at least at the next few meetings”, leading to a terminal rate of 5.25-5.50%. UK Mortgage Approvals plunged in November A clear sign that higher interest rates are impacting the UK housing market, approvals plunged to 46.1k in November, a stunning drop from 59k in October and for wider perspective, a sign of very weak activity relative to the average of well over 60k approvals per month in the years before the pandemic outbreak. Amazon to lay off over 18k employees This was more than previously expected as the company over-expanded its warehouse and logistics infrastructure after the wild increase in demand from pandemic-era stimulus. Shares rose some 1.7% after hours yesterday. US House of Representatives still has no speaker The narrow Republican majority in the House after the mid-term elections last November means that nearly all Republicans must agree on a candidate, with a small cabal of Trumpist-leaning Republicans continuing to block the candidacy of Keven McCarthy, who failed three more votes yesterday in his effort to become the next Speaker of the House. This issue could gain considerable importance for the debt ceiling issue in the US if a more confrontational figure acceptable to the GOP extremists is eventually found. What are we watching next? US data today and tomorrow Today we will get the latest weekly US jobless claims number as this data series has yet to show material weakening in the US labour market, market bets of Fed cuts by year-end notwithstanding. The December ADP Private Payrolls data is also up today, with that data series showing a rather persistent decline in payrolls growth since Q2 of last year. It is expected at +150k after +127k in November. Tomorrow’s calendar is important as the Fed has clearly expressed the most uncertainty on the inflationary pressures from the employment-intensive services side of the economy. This could make the market sensitive to strong surprises in the Nonfarm payrolls change number (expected around +200k, with considerable recent attention on the divergence in this survey relative to the far weaker household survey used to calculate the overall unemployment rate) and average hourly earnings. Ninety minutes after the jobs data, we’ll have a look at the December ISM Services survey after November saw a surprising improvement in the survey to 56.5 after the cycle low of 54.4 in October. Earnings to watch The earnings calendar is light in the first week of the new year, but in a couple of weeks the first Q4 earnings releases will begin to be released. The Q4 earnings season will continue its focus on margin pressures related to input costs on employees and raw materials including energy. Today’s earnings focus is Walgreens Boots Alliance (WBA) and Conagra Brands, with WBA expected to -3% revenue growth y/y for the quarter that ended on 30 November adding to the series of quarters with negative revenue growth. Conagra Brands is expected to deliver 7% revenue growth y/y for the quarter that ended on 30 November as the manufacturer of packaged foods is able to pass on inflation to its customers. Today: Walgreens Boots Alliance, Conagra Brands, Lamb Weston, Constellation Brands, RPM International Friday: Naturgy Energy Economic calendar highlights for today (times GMT) 0900 – Poland Dec. Flash CPI 0930 – UK Final Dec. Services PMI 1000 – Eurozone Nov. PPI 1000 – Italy Dec. CPI 1230 – US Dec. Challenger Job Cuts 1230 – US Fed’s Harker (2023 FOMC voter) to speak 1315 – US Dec. ADP Private Payrolls change 1330 – Canada Nov. International Merchandise Trade 1330 – US Nov. Trade Balance 1330 – US Weekly Initial Jobless Claims 1400 – Poland National Bank Governor Glapinski press conference 1530 – EIA Natural Gas Storage Change 1600 – EIA Weekly Crude and Fuel Stock Report 1830 – US Fed’s Bullard (non-voter) to speak 2330 – Japan Nov. Labor Cash Earnings Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 5, 2023 | Saxo Group (home.saxo)
Brent hits one-month high! Saudi and Russian cuts supporting recent moves

The US Stock Market Is Off To A Low Start Before The Bull Market Resumes

InstaForex Analysis InstaForex Analysis 05.01.2023 11:47
Following the decline that occurred on January 2, which was due to the collapse of TESLA and APPLE shares, stock indices rose as investors focused on the latest economic statistics from the US and the minutes of the December Fed meeting. Data in the Euro area also caused a strong surge not only in local indices, but also in EUR/USD. Conversely, the US indicator was in decline, which should have led to a decline in the US stock market. However, this did not happen, probably due to growing expectations that the Fed will soon stop raising rates. Investors are clearly hopeful that the local equity market will not fall further as they believe that the worst has already happened. It can be said that the US stock market is off to a low start before the bull market resumes. The positioning of short and long positions has reached the strongest divergence in favor of sellers, which can be overcome at any time if the market thinks that it is time to start buying. The upcoming inflation data in the US will be a signal to buy, but only if there is a noticeable decline in the figures. Read next: Samsung Suffers From Weakening Demand, Amazon Will Increase The Total Number Of Layoffs To Over 18,000| FXMAG.COM Forecasts for today: USD/JPY The pair is trading around 132.70. A break above this level, which could happen if there is positive sentiment in the market, will push it to 134.45. WTI Oil found support at 73.00. If this level holds and positive sentiment prevails, a rise to 75.00 can be expected.   Relevance up to 07:00 2023-01-07 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331508
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Saxo Bank Podcast: The Gold Rally Fading, Crude Oil Ripping Lower And The Japanese Yen (JPY) Mean Reverting To Weakness And More

Saxo Bank Saxo Bank 05.01.2023 11:56
Summary:  Today, we look at the market continuing to stumble around in the range, with little conviction emerging so far this year. Will this mean a trigger-happy reaction to incoming data? Elsewhere, we look at the gold rally fading, crude oil ripping lower and the Japanese yen mean reverting to weakness after its spectacular two-month rally, a likely sign of near-term exhaustion for that move. We also discuss Amazon chopping more jobs than expected, the still tight US labor market and much more. Today's podcast features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: The Bank Of England Urgently Needs To Tame Stubbornly High Inflation| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Market stumbling around, awaiting incoming data | Saxo Group (home.saxo)
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

FOMC Minutes Were Hawkish, All Eyes On US Jobs Data, Weaker Energy Gives Hope

Swissquote Bank Swissquote Bank 05.01.2023 12:06
Released yesterday, the FOMC minutes were hawkish enough to get the S&P500 erase early gains, but not hawkish enough to get the index to close in the red. The index closed the session 0.75% higher. Nasdaq gained 0.50%. UD Data Today, we will see what the ADP report tells about new hirings in December. Analysts believe that the US economy may have added around 150’000 new private jobs last month. Note that the latter is not a good indication regarding what’s to come on Friday. Last month, the ADP printed a weak 127’000 figure, while the NFP came in at 263’000. Therefore, even the avalanche of layoff news from big companies, and a soft ADP print may not be enough convince that the US jobs market is cooling. Energy In energy, weaker nat gas prices, combined to the past few days’ recession fears, and news that OPEC output increased in December thanks to the recovery in Nigerian supply from outages – despite the OPEC+ will to cut output to keep prices sustained - pulled the price of American crude 5% lower yesterday. Forex In the FX, the Australian dollar is surfing on the positive Chinese vibes, while the US dollar index couldn’t extent the early week gains, and we are about to see a death cross formation on the daily chart. Read next: Samsung Suffers From Weakening Demand, Amazon Will Increase The Total Number Of Layoffs To Over 18,000| FXMAG.COM The EURUSD is bid around 1.0550, as Cable sees buying interest below 1.20 despite its worse economic fundamentals compared to other G7 economies. One of the most popular trades of the moment is long the Japanese yen against EUR, USD and pound. Watch the full episode to find out more! 0:00 Intro 0:31 FOMC minutes… hawkish as expected 2:58 All eyes on US jobs data 5:54 Weaker energy gives hope, but oil could hold support above $70pb 7:45 Chinese stocks shine, as Aussie gets decent boost from China reopening 10:04 Long yen is among the most popular trades of the momet! Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FOMC #minutes #US #jobs #ADP #NFP #data #USD #EUR #JPY #AUD #China #Covid #reopening #natural #gas #crude #oil #Alibaba #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Economic Data From China Positively Affected Copper, Aluminum, Zinc And Iron Ore

Commodities: Copper And Iron Ore Prices Rose, Aluminium Exchange Inventories Continue To Show Signs Of Recovery

ING Economics ING Economics 09.01.2023 08:26
Commodity markets had a weak start to the year, driven predominantly by the energy complex. Immediate demand concerns from China and milder weather in Europe were key catalysts. For this week, market direction (at least towards the end of the week) will likely be dictated by US CPI data Source: Shutterstock Energy - Speculators add to Brent long position The first trading week of 2023 saw a lot of weakness in the oil market. ICE Brent fell by almost 9% over the week. Global growth concerns and Chinese covid infections have hit sentiment in the immediate term. However, the change in China’s covid policy is constructive for the market in the medium to long term. Speculators also appear to have taken advantage of the recent weakness to enter the market. The latest positioning data shows that speculators increased their net long in ICE Brent by 17,753 lots over the last reporting week, to leave them with a net long of 161,456 lots as of last Tuesday. According to Bloomberg, the US Department of Energy rejected a number of offers it received for the potential purchase of crude oil in February in order to start refilling the strategic petroleum reserve. Reports suggest that the DOE will delay the process after offers were either too high or didn’t meeting the necessary specifications. The Biden administration had previously said that it would look to refill the SPR if WTI was to trade towards US$70/bbl. And in doing so providing some good support to prices around these levels.-  Looking at the calendar for the week, the EIA will release its monthly Short Term Energy Outlook on Tuesday, which will include the latest forecasts for US crude oil output. The outlook for US production growth has become increasingly more modest over the last year and the recent weakness in prices will likely not help this trend.  Then on Thursday, broader markets will be focused on US CPI data, with this an important data point for assessing what the US Fed may do in terms of monetary policy in upcoming meetings. Finally, on Friday, China will release its first batch of trade data for December, which will include oil import data. Metals - Boosted by more property measures in China Copper and iron ore prices rose again on Friday, on a report that China may ease curbs on borrowings by developers. Beijing may allow some property firms to add leverage by easing borrowing caps and pushing back the grace period for meeting debt targets, according to a report from Bloomberg. A raft of policy moves in recent weeks in China has boosted confidence that the economy is stabilizing, improving the outlook for industrial metals. In mine supply, Peru’s latest official numbers showed copper output in the country rising 15.3% YoY (although declining 3.2% MoM) to 225kt in November. Most of the annual production gain came from mines including Antamina, Cerro Verde and Southern Peru Copper. Amongst other metals, zinc production in the country declined 2.9% YoY in November. Aluminium exchange inventories in Chinese warehouses continue to show signs of recovery. The latest data from Shanghai Futures Exchange (ShFE) showed weekly inventories for aluminium increasing by 22.6kt for a fourth consecutive week to 118.5kt as of Friday. Other base metals stocks also reported inflows over the week. In nickel, Tsingshan Holdings Group Co., the largest nickel producer, has started a primary nickel plant in Hubei province with monthly capacity of 1,500 tonnes, according to a report from SMM. Agriculture – Ukraine corn harvest progress The latest data from Ukraine’s Agriculture Ministry shows that farmers in the nation harvested 22.1mt of corn from 3.4m hectares as of 6th January, which accounts for 81% of corn area for the 2022/23 season. The USDA released its weekly export sales report on Friday, which shows that US soybean sales remained strong, while shipments for wheat and corn remained weak for the week ending 29th December. Export sales of soybean rose to 872kt for the week, higher than the 706kt a week ago. For wheat, the agency reported that US export sales fell to 144kt for the above-mentioned week, lower than the 511kt seen the previous week. US corn export sales declined to 319kt; from 952kt a week ago. The latest CFTC data shows that money managers increased their net longs in CBOT soybeans by 14,378 lots over the last week, leaving them with a net long position of 142,994 lots as of 3 January. The move was predominantly driven by rising long positions with gross longs increasing by 15,672 lots to 166,894 lots. For wheat, speculators decreased their net short position in CBOT wheat by 3,497 lots to 57,715 lots. Speculative net longs in CBOT corn increased by 37,142 lots to 196,457 lots. Read this article on THINK TagsSpeculators Oil Iron ore Grains CPI inflation China property   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
FX Daily: Upbeat China PMIs lift the mood

The Chinese Authorities Are Considering To Relax Restrictions On Highly-Leveraged Property Developers

Saxo Bank Saxo Bank 09.01.2023 08:32
Summary:  U.S. stocks surged over 2% following the ISM services index shrinking to 49.6 and average hourly earnings growth slowing to 0.3% M/M in December from a downward revised 0.4% in November (previously reported 0.6%). Investors became more optimistic about inflation having peaked because of these unexpected weaknesses in services and wages. Yields on 10-year Treasury notes plunged 16 basis points to 3.56%. The dollar fell against all G10 currencies with the Dollar Index shedding 1.1%. Gold and copper advanced. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) surged more than 2% on slowing wage growth and activities in services in contraction Bad news once again was good news for equities last Friday when the U.S. released slower wage growth in December as well as in November (a downward revision) and the ISM services index plunged unexpectedly by 6.9 points to 49.6 and into the contraction territory.  Investors noted that Fed Chair Powell had emphasized in his recent speeches that the price of core services other than housing, which was driven by wages and service sector activities, is the most important price category to consider for understanding the future evolution of inflation. Despite the higher-than-expected prints in non-farm payrolls and a lower unemployment rate, Nasdaq 100 rose 2.8% and S&P 500 climbed 2.3%. All 11 sectors within the S&P500 gained, with materials, up 3.4%, leading, followed by information technology, and real estate. Tesla recovered from early losses on cutting prices in China and bounced 2% Tesla China has cut again the price of its Model 3 by 13.5% to RMB 20,990 (USD3,350) and Model Y by 10% to RMB 25,990 (USD3,790) in China within three months from the prior price cut.  Following the news, shares of Tesla (TSLA:xnas) plunged as much as 7.7% in early trading but recovered throughout the day and managed to finish the Friday session 2% higher. Costco (COST:xnys) surged 7.2% on strong December sales Costco reported U.S. comparable sales rose 6.4% in December 2022, above the 5% expected by street analysts. The strong holding sales performance saw the bulk retailer’s share price advance 7.2% last Friday. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) soared with yields on the 10-year notes 16bps richer to 3.56% Treasuries were bid following the growth in average hourly earnings slowed to 0.3% M/M and 4.6% Y/Y from a revised down 0.4% M/M (previously reported 0.6%) and 4.8% Y/Y (previously reported 5.1%). Yields oscillated for a while as investors weighed the soft wage growth against the solid payrolls and fall in unemployment rates. Decisive declines in yields came after the release of the ISM Services Index which unexpectedly collapsed to 49.6 in December from 56.5 in November, indicating contracting activities in the service sector. A service sector in contraction may help cool down inflation in core services excluding housing which is the focus of Fed Chair Powell. Yields on the 2-year notes fell by 21bps to 4.25% and those on the 10-year notes became 16bps richer to 3.56%. What should you be watching today in equities across APAC; Copper, gold, iron ore The Australian share market (ASXSP200.I) opened 1% higher today, following the stellar close of US shares. This week we could also see some money deployed that was removed from the market from the end of US financial year two weeks ago. In terms of key pockets of potential gains to watch; Commodity stocks could likely to do well as there is room for the Fed to not be as hawkish. The copper price rose 2.4% to its highest level since November, which will could likely boost copper stocks today and this week, and spot gold price jumped 1.8% to a range it last traded in June last year. Also keep an eye on coal stocks this week, as coal demand usually peaks in January and Chinese authorities are in discussion on a partial end to the Australian coal ban. So keep an eye on Whitehaven Coal and New Hope. Meanwhile, iron ore equities may be possible laggards. Vale, Champion Iron, Fortescue Metals, BHP and Rio will be on watch as the Iron ore price (SCOA) has fallen 1.3% from its five month high as buying of iron ore is expected to grind lower as China heads to lunar new year holidays. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hong Kong stocks consolidated in a choppy session. Shares of Chinese developers surged in the morning session, following China’s central bank and bank regulator jointly issued a directive to allow banks in cities with declining home prices to lower mortgage interests below the floor dictated current policies. Adding to fuel the rally in property developers was the comment from China’s Minster of Housing and Urban-Rural Development in an interview with the People’s Daily, pledging support to the financing needs of developers and reports suggesting that China is considering relaxing the “three red lines” that constraining highly leveraged developers from getting new financing. Stocks however turned to the south after the lunch break. President of the China Society of Economic Reform said the Chinese Government will roll out “some forceful measures” to redistribute income and “establish a mechanism to regulate wealth accumulation” in order to advance “common prosperity”.   Hang Seng Index finished last Friday 0.3% lower. Alibaba Health (00241:xhkg), Meituan (03690:xhkg), and Haidilao (06862:xhkg) were among the biggest losers with the Hang Seng Index. EV stocks fell, following the news that Tesla China has cut again the price of its Model 3 and Model Y in China within three months from the prior price cut. In A-shares, China’s CSI300 advanced by 0.3% with solar names, lithium battery makers, electric equipment, non-ferrous metal, petrochemicals, and basic chemicals leading. FX: the dollar declined versus G10 currencies on Friday The USD posed a bullish breakout from the three-week range at the start of 2023 but aggressively snapped back after a disappointing PMI release on Friday as 10-year yields dipped back towards 3.55%. NOK, AUD and NZD were the biggest gainers against the USD on Friday, with AUD also benefitting from China reopening. AUDNZD remains supported above 1.0800 with USDCNH testing support at 6.8200 on the Chinese reopening wave with extra vigour via strong PBoC midpoint fixes and measures aimed at propping up the ailing real estate sector. USDJPY slid to 132 with BOJ Governor Kuroda sticking to dovish intentions but PM Kishida once again saying over the weekend that he will have 'discussions' with new BOJ governor. The Aussie dollar flagged a bullish signal, crossing above the 200-day moving average The US dollar suffered its longest streak of weekly falls in two months. So that’s supporting other currencies higher. In particular, the commodity currency, the Aussie dollar broke above its 200-day moving average, which could be seen as a bullish sign. The Aussie dollar trades at two-month highs of 68.85 US cents. What's also supporting the Aussie dollar is that China’s reopening is expected to add considerably to Australia’s GDP. Some economists predict a 0.5% addition to GDP in a year once Chinese students and tourists return. JPMorgan thinks over the next two years Aussie GDP will grow near 1% thanks to inbound Chinese students and holiday makers likely returning. Crude oil (CLG3 & LCOH3) remains volatile amid China’s chaotic reopening The first week of 2023 was tough for crude oil, with global demand concerns weighing and China outlook remaining mixed. Despite removing most virus-related restrictions, a surge in cases across the country could stifle economic activity. Meanwhile, the IMF warned that a third of the global economy could be in recession in 2023. Supply side concerns are also seen with European sanctions on Russian oil having kicked in, while OPEC has reiterated that it is willing to step in with further production cuts. WTI futures traded slightly higher to $74/barrel in Asian morning while Brent was close to $78.90. Gold (XAUUSD) advanced over 2% on weaker USD Gold is off to a positive start in 2023, and a further boost was seen on Friday after the mixed jobs report and weakness in ISM services saw a plunge in the USD. However, demand ahead of Lunar New Year is likely to stay strong, and central banks are also active in the physical market. People’s Bank of China bought another 30 tonnes of gold in December 2022, following 32 tonnes in November, boosting the country's stash of gold to 2,010 tonnes. Speculation remains rife that these are steps for China to move away from dollar-based trading as geopolitical tensions remain high. Gold prices are testing $1870 this morning and support at $1808 will be key to hold to maintain the uptrend. US CPI data due this week remains key. Copper getting in close sight of $4 as China stimulus continues Copper is leading a rebound in base metals as China looked to support its property sector. Beijing may allow some firms to add leverage by easing borrowing caps and push back the grace period for meeting debt targets. These were part of the “three red lines” policy that contributed to the downturn in recent years. HG Copper broke above resistance at the 200-day at $3.8525, and will be targeting the $4 per pound next.  Read next: The U.K. Economy Is In Trouble, Fall Of GDP Is Expected!| FXMAG.COM What to consider? US macro: Big miss in ISM services overshadows NFP gains The ADP report from last week had set up expectations for a stronger NFP print on Friday, and while the headline came in stronger and with a drop in unemployment but the market instead focused on significantly slower wage growth and the reaction was dovish, with the US dollar sagging. Still, the report doesn’t change the fact that US labor market remains tight and WSJ’s Timiraos also noted that Friday’s employment report does little to clarify how much the Fed will raise interest rates at its next policy meeting. Nonfarm payrolls showed US employers added 223,000 jobs last month, from a downwardly revised 256,000 in November, with the unemployment rate hitting a cycle low of 3.5% again. Wage growth however slowed to 4.6% YoY (0.3% MoM) in December from a revised 4.8% YoY (0.4% MoM) in November, keeping the market reaction to the overall jobs report mixed, before the big disappointment from ISM services which surprisingly dipped into contraction for the first time since May 2020 to 49.6 vs. expected 55. The forward-looking sub-indicator, new orders, fell 10.8 pts to 45.2 but details were still mixed with 11 of the 18 services sector remaining in expansion. Fed speakers continue to highlight inflation concerns A host of Fed speakers were on the wires on Friday, and key message was the need for more rate hikes still despite signs of price pressures cooling. Cook (voter) said inflation is "far too high" and "of great concern" despite recent encouraging signs, while Bostic (non-voter) said the Fed needs a target rate above 5% and he expects Fed to hold at a peak policy rate for an extended period, "well into 2024". Barkin, another non-voter, touched more on inflation saying that that the Fed is still resolute on inflation, and needs to stay on the case until inflation is sustainably back to the 2% goal. Retiring member Evans however called for a slower pace of rate hikes. The eurozone inflation is cooling down It was largely expected that the eurozone inflation would cool down in December. But the first estimate is actually much lower than forecasted, at 9.2 % versus prior 10.1 % in November. This is a positive development and it goes in the right direction, of course. But this is still a high number. Looking at the main components, energy had (without surprise) the highest annual rate in December at 25.7 %), followed by food, alcohol and tobacco (13.8 %), non-energy industrial goods (6.4%) and services (4.4%). What is worrying is that core CPI continues to increase at 5.2 % versus prior 5.0 % and expected 5.1 %. This will push the European Central Bank (ECB) to keep hiking interest rates in the short-term. But the peak in interest rates is getting closer (Mario Centeno) and the eurozone macroeconomic outlook is not that bad actually (if there is a recession underway, it is at the mild end according to the ECB chief Philip Lane). Alibaba’s Jack Ma cedes his control of Ant Group According to a statement released by the company on 7 January, Jack Ma terminated his acting-in-concert arrangement with other individuals. Under the new structure, 10 individuals, including Mr. Ma, have independent voting rights in the management of the company, as opposed to the prior arrangement that gave Mr. Ma indirect control of 53,46% of the voting rights. Mr. Ma’s stake in Ant Group is reduced to 6.2% from 10.6%. China’s government think-tank said China is launching measures to regulate wealth accumulation President of the China Society of Economic Reform, which is under the National Development and Reform Commission (NDRC), said in a reform forum that the Chinese Government is launching “some forceful measures” to redistribute income, increase taxes, social security, and transfer payments, and “establish a mechanism to regulate wealth accumulation” in order to advance “common prosperity”. Establishing a mechanism to regulate wealth accumulation was first mentioned in President Xi’s work report delivered at the Chinese Communist Party’s 20th National Congress as a means to advance common prosperity. China is reportedly considering to relax the three red-line policy that restrained developers from borrowing According to Bloomberg, the Chinese authorities are considering to relax restrictions on highly-leveraged property developers from increasing their borrowings. The uplift of the restrictions would be important addition to the recent support measures to the real estate sector in China. The three red lines that were introduced in 2020 restrict developers’ ability to borrow if their debts have gone beyond the stipulated limits relative to assets, net debt, or cash. For our look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Contraction in US ISM services and soft wage growth overshadows strong jobs numbers – 9 January 2023 | Saxo Group (home.saxo)
Underestimated Risks: Market Underestimating Further RBA Tightening

Hopes Of An Upbeat US Earnings Season Also Seem To Favor The USD/INR Bears

TeleTrade Comments TeleTrade Comments 09.01.2023 08:49
USD/INR dribbles near the lowest levels in one month. China reopening joins PBOC headlines to underpin risk-on mood in Asia. Downbeat US wage growth weigh on Treasury yields and hawkish Fed bets. Japan holiday, light calendar and upbeat oil prices allow bears to lick their wounds. USD/INR bears lick their wounds near 82.30, after refreshing a one-month low, as the Indian Rupee (INR) buyers await fresh clues during early Monday. In doing so, the quote remains indecisive after printing a three-day downtrend at the latest. That said, China-inspired risk-on mood joins the broadly softer US Dollar to weigh on the USD/INR prices. However, a light calendar and the cautious mood ahead of this week’s key US inflation data, as well as the holiday in Japan, restrict the pair’s immediate moves. It’s worth noting that China’s reopening of the international borders after a three-year blockage bolstered optimism in Asia. Also favoring the risk appetite could be early signals suggesting Beijing’s heavy shopping amid the year-end festive season. Furthermore, comments from the People’s Bank of China (PBOC) Official also hinted at robust growth expectations from the dragon nation and underpinned the firmer sentiment. On the other hand, Friday’s downbeat prints of US Average Hourly Earnings, ISM Services PMI and Factory Orders pushed back the hawkish hopes from the Fed as the figures raised the US recession concerns, which in turn weighed on the US Dollar Index (DXY). Additionally, weighing on the DXY could be the mixed comments from the Fed policymakers and hopes of an upbeat US earnings season also seem to favor the USD/INR bears. Alternatively, a light calendar and upbeat prices of Crude Oil put a floor under the USD/INR prices. The reason could be linked to India’s reliance on energy imports. Amid these plays, S&OP 500 Futures print mild gains while India’s benchmark equity index BSE Sensex rises over 1.0% by the press time. Moving on, a lack of major data/events and firmer oil prices can restrict the USD/INR pair’s immediate moves ahead of Thursday’s US Consumer Price Index (CPI) data. Technical analysis A clear downside break of the 82.40 horizontal support favors USD/INR bears targeting the early December 2022 swing low near 82.10
Sterling Slides as Market Anticipates Possible Final BOE Rate Hike Amidst Weakening Consumer and Housing Market Concerns

The Market Is Betting On A Shallow Recession In Some Parts Of The World

Saxo Bank Saxo Bank 09.01.2023 09:58
Summary:  Markets jumped higher on Friday after a mixed December jobs report from the US, mostly reacting a bit later in the session to the very weak December ISM Services survey, which suggests a rapidly decelerating services sector. US rates plunged all along the curve and the USD tanked as the market lowered Fed rate hike expectations, and risk assets rallied, with a further tailwind from China’s huge policy shifts in recent weeks.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) On Friday, it seems the market was looking past the strong labour market data focusing on the miss on the ISM Services Index in December at 49.6 vs 55. This bolsters the view that bad news is good news as it will cause the Fed to halt its monetary tightening sooner rather than later. Our view is still the same that inflation will remain stickier than what the market expects and thus even a mild slowdown in the economy will not lead to substantially lower interest rates. When the market recognizes this, it will begin to price equities more on slowing growth not offset by lower interest rates. Nevertheless, the US equity market is picking up momentum with S&P 500 futures extending their gains up 0.2% trading around the 3,924 level and above the upper level of the recent trading range. If momentum extends and the news flow remains supportive then the 3,950 level could quickly come into play. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Alibaba (09988:xhkg), surging 7.6%, was the best performing stock within the Hang Seng Index on Monday, following Ant Group announcing a new arrangement in which Alibaba’s founder Jack Ma cedes his indirect control of Ant Group. The new arrangement, which apparently has the blessing of the Chinese authorities, signals that Alibaba and its affiliates may be close to an end of the government-imposed reorganization and return to relative normal business.  Separately, Chairman of the China Banking and Insurance Regulatory Commission said that the rectification of the financial arms of internet platform companies had basically finished. Hang Seng Index surged 1.4% as of writing. China’s CSI300 gained 0.7% with non-ferrous metal, education services, and poultry farming leading. FX: USD sells off on weak ISM Services survey The US dollar sold off after a mixed jobs report delivered not signal, but then a shocking drop in the December ISM Services (more below) took down US treasury yields sharply all along the curve. By this morning’s trade, the move sent EURUSD back above 1.0675 and within reach of the 1.0700+ highs from December, while AUDUSD jumped to new cycle highs above 0.6900 on the weaker greenback together with surging metals prices on China’s policy shift (more below.). Despite the big drop in yields, USDJPY reacted less than other USD pairs as the strong rally in risk sentiment saw flows focusing on more pro-cyclical currencies, like AUD, NZD and NOK. Crude oil (CLG3 & LCOH3) remains volatile amid China’s chaotic reopening The first week of 2023 was tough for crude oil, driven by global growth concerns, a very mild winter across the Northern Hemisphere dampening demand, and a mixed outlook for China. Despite removing most virus-related restrictions, a surge in cases across the country has hit the short-term demand outlook while at the same time setting the economy on a path to recovery. Meanwhile, the IMF warned that a third of the global economy could be in recession in 2023. Supply side concerns are also seen with European sanctions on Russian oil having kicked in, while OPEC has reiterated that it is willing to step in with further production cuts. Short-term resistance being the 21-day moving at $75.65 in WTI and $81.15 in Brent. Gold (XAUUSD) surged higher on weak US ISM Gold’s already positive start to 2023 received a further boost on Friday after the mixed jobs report and very weak ISM services (see below) triggered a plunge in yields and the dollar. Total ETF holdings reached a one-month high while central banks remain active with the PBoC saying that it bought another 30 tonnes of gold in December 2022, following 32 tonnes in November, boosting the country's stash of gold to 2,010 tonnes. Speculators started the new year by boosting their net futures long to a seven-month high, supported by the current strong momentum and a general gold friendly outlook for 2023 driven by recession risks and peak dollar and yields. The next major hurdle for gold being $1896, the 61.8% retracement of the 2022 correction, with a break above confirming the change in direction that has been under way since November. Copper trades near key $4 level as China stimulus continues Copper jumped to a six-month high in Asia on Monday, driven by a general rebound in base metals as China looked to support its property sector. Beijing may allow some firms to add leverage by easing borrowing caps and push back the grace period for meeting debt targets. These were part of the “three red lines” policy that contributed to the downturn in recent years. Copper has advanced since November after lockdown protests led to an abrupt change in direction towards reopening the economy following months of fruitless lockdowns. The change in direction set by the government has bolstered the outlook for demand beyond the first quarter. Having broken above its 200-day moving average on Friday, now support at $3.8475, HG copper almost touched the key $4 level overnight. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) soared with yields on the 10-year notes 16bps richer to 3.56% Treasuries were bid Friday following the news of slowing average hourly earnings. Yields oscillated for a while as investors weighed the soft wage growth against the solid payrolls and fall in unemployment rates. Decisive declines in yields came after the release of the shockingly wevak December ISM Services Index (more below on the ISM and US jobs report), indicating contracting activities in the service sector. Two-year yields fell 21bps to 4.25% and those on the 10-year notes dropped some 16 bps to 3.56%. What is going on? Asian and EM equities enter bull market The leading MSCI indices tracking these two segments of the global equity market have entered a bull market up 20% since their lows in October fueled a more positive narrative. The market is betting on a shallow recession in some parts of the world, while inflation keeps coming down, and on top of a successful kickstart of the Chinese economy. All three wishes may not be able to be fulfilled simultaneously and our view is that the market is getting too excited about growth too early as a lot of uncertainty persists. Eurozone inflation is cooling off It was largely expected that the eurozone inflation would cool in December. But the first estimate was much lower than forecasted, at 9.2 % versus 10.1 % in November. This is a positive development and goes in the right direction, but this is still a high number. Looking at the main components, energy had (without surprise) the highest annual rate in December at 25.7 %), followed by food, alcohol and tobacco (13.8 %), non-energy industrial goods (6.4%) and services (4.4%). What is worrying is that core CPI continues to increase at 5.2 % versus prior 5.0 % and expected 5.1 %. This will push the European Central Bank (ECB) to keep hiking interest rates in the short term. But the peak in interest rates is getting closer (Mario Centeno) and the Eurozone macroeconomic outlook is not as bad as feared (if there is a recession underway, it is at the mild end according to the ECB chief Philip Lane). US macro: big miss in ISM services overshadows NFP gains The ADP report from last week had set up expectations for a stronger NFP print on Friday, and while the headline came in stronger than expected at ´+223k and the unemployment rate dropped back to the cycle low of 3.5%, the market instead focused on significantly slower wage growth than expected. The Average Hourly Earnings in December slowed to 4.6% YoY (0.3% MoM) from a revised 4.8% YoY November, keeping the market reaction to the overall jobs report mixed. Ninety minutes later, the December ISM services survey saw a shocking drop into contraction for the first time since May 2020 at 49.6 vs. expected 55 and 56.5 in November. The forward-looking New Orders sub-index fell over 10 points to 45.2 but details were still mixed with 11 of the 18 services sectors remaining in expansion. AUDUSD jumps to new 4-month high, clears 200-day moving average With the US dollar suffering its longest streak of weekly drops in two months, the Aussie dollar broke above its 200-day moving average for the first time since last April, and traded above 0.6900 for the first time since last August. Also supporting the currency is that China’s reopening is expected to add considerably to Australia’s GDP. There’s a potential 0.5% addition to GDP in a year once Chinese students and tourists return, and an anticipated rise in commodity exports to China, especially coal after a prior ban, could add an extra boost to GDP. JPMorgan thinks that over the next two years, Aussie GDP will grow 1% alone thanks to inbound Chinese students and holiday makers likely returning. The next catalyst for the currency is inflation (CPI) data out on Wednesday Jan 11. Core or trimmed CPI is expected to have risen from 5.3% YoY to 5.5% YoY. Fed speakers continue to highlight inflation concerns A host of Fed speakers were on the wires on Friday, and key message was the need for more rate hikes still despite signs of price pressures cooling. Cook (voter) said inflation is "far too high" and "of great concern" despite recent encouraging signs, while Bostic (non-voter) said the Fed needs a target rate above 5% and he expects Fed to hold at a peak policy rate for an extended period, "well into 2024". Barkin, another non-voter, touched more on inflation saying that that the Fed is still resolute on inflation, and needs to stay on the case until inflation is sustainably back to the 2% goal. Retiring member Evans however called for a slower pace of rate hikes. Read next: Plans To Sell FTX Assets Met With Opposition From US Trustee Andrew Vara| FXMAG.COM What are we watching next? How long will market celebrate any additional signs of a slowing US economy? The market’s primary focus on Friday after a very weak US ISM Services survey was the celebration of lower US treasury yields as weak data drives expectations that the Fed can ease its policy tightening more quickly than previously expected, but typically, a weaker economy would mean falling earnings and a credit crunch, which drives markets lower. Only hopes for a benign “soft landing” can continue to see the market celebrating signs of a weakening economy, if that is indeed what we get. This week includes very little in the way of important US data outside of Thursday’s December CPI (perhaps less focus there than previously, given we have seen a number of softer inflation-related data of late). Q4 Earnings season begins this Friday with the largest US financial institutions reporting and the reports and guidance coming over the following couple of weeks will bear close watching. Earnings to watch The Q4 earnings season kicks off this Friday with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth this year. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession or maybe no recession at all in the US economy. With higher interest rates level expectations are that banking revenue will slowly begin to accelerate and if high interest rates persist for an extended period, the longer-term growth for banks could be quite attractive. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Tuesday: Albertsons Thursday: Fast Retailing, Seven & I Friday: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic Economic calendar highlights for today (times GMT) 1000 – Eurozone Nov. Unemployment Rate 1200 – Mexico Dec. CPI 1330 – Canada Nov. Building Permits 1530 – UK Bank of England Chief Economist Huw Pill to speak 1730 – US Fed’s Bostic (non-voter) to speak 1730 – US Fed’s Daly (non-voter) to speak 2000 – US Nov. Consumer Credit 2330 – Japan Dec. Tokyo CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 9, 2023 | Saxo Group (home.saxo)
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

European Inflation Fell, US Jobs Data Pleased Investors

Swissquote Bank Swissquote Bank 09.01.2023 11:38
Friday’s jobs data in the US, and more specifically, the market reaction to Friday’s jobs data helped stock markets to record their best boost since more than a month on Friday. Friday’s jobs report However, Friday’s jobs report was rather… mixed, and spurred a lot of discussions and debates regarding whether the data was soft enough to convince the Federal Reserve (Fed) officials that the inflation battle is over, or it was strong enough to make them further scratch their heads. US markets US markets, however, gave a strong positive reaction to Friday’s jobs data. Both the US 2 and 10-year yields fell more than 4% after the data, pulling the US dollar index lower along with them. The S&P500 jumped around 2.30%, while Nasdaq 100 rallied near 2.80%. Gold Gold reached our $1880 per ounce medium term target, boosted by lower US yields, which made the opportunity cost of holding the non-interest-bearing gold lower, and increased appetite. Fed, US CPI data and Jerome Powell speach Activity on Fed funds futures now price in a 25bp hike at the next FOMC meeting at around 75%, but the Fed has not hesitated to disappoint markets since last year to cool down the optimism and send the stocks to turmoil. So the dovish pricing in Fed expectations make the latest gains a bit bitter-sweet, as the slightest news, or hints that the Fed would not step back from its hawkish tone could vanish the latest rally. So, this week’s US inflation data will be key in either giving the bulls a further boost or bringing back the bears with revenge. Jerome Powell will speak on Tuesday, and the US CPI data will be released on Thursday. On the corporate calendar, the earnings season will kick off with big bank earnings due Friday. Watch the full episode to find out more! 0:00 Intro 0:32 Strong NFP, soft wages… US jobs data pleased investors 03:36 But did it please the Fed? 4:59 Thu’s US inflation data is crucial for market mood 6:02 European inflation fell, but… 7:21 Crude oil flirts with $75pb 8:18 Bitcoin, Ethereum advance 8:36 Earnings season kicks off ! Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #jobs #NFP #wages #unemployment #inflation #data #dovish #Fed #expectations #USD #EUR #XAU #Bitcoin #Ethereum #earnings #season #banks #JPMorgan #WellsFargo #Citigroup #Blackrock #Tilray #BBBY #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Silver's Retreat to $22 per Ounce: Assessing the Path to Historic Highs

Silver Has Great Potential At Current Price Levels

InstaForex Analysis InstaForex Analysis 09.01.2023 12:52
With precious metals gaining momentum at the end of the year, Main Street investors raised their forecast of gold and silver for the new year. Data has shown that gold ended the year unchanged, while silver is up almost 3%. Spot gold started at around $1,828 an ounce last year and ended just above $1,822 an ounce, while spot silver opened at $23.28 an ounce and ended at $23.93 an ounce. In a survey conducted quite recently, 37.5% chose gold as the best performing asset for 2023, while 36.8% chose silver. The third most favored asset was copper, with 8% of votes, followed by oil and Bitcoin, which has 4.7% votes each. Platinum and lithium have 3.7% votes. Palladium was the least popular choice, garnering just 0.9% of the vote. Wall Street investors are also optimistic about gold and silver as it is well positioned for growth since the US is entering economic recession. DoubleLine Capital CEO Jeffrey Gundlach said he believes the Fed will move another 50 basis points in February, pushing the rate to peak at 5% in 2023. But once the Fed reaches 5%, rates will certainly be cut, Gundlach warned. Read next: After The Correction, Jacek Ma's Share In Shareholder Votes Will Fall To 6.2%| FXMAG.COM ANZ strategist Daniel Hynes also believes market sentiment is shifting in favor of gold. "With the Fed pause likely to be followed by a reversal, gold has already started to appreciate," added Wells Fargo head of real asset strategy John Laforge. The company sees gold hitting $1,900 to $2,000 in 2023. Many analysts are even more optimistic about silver in the new year. Laforge, for instance, said that with the price returning to $23, there is a chance that a further rise will be seen in the market. Everett Millman, a precious metals expert at Gainesville Coins, explains that silver has great potential at current price levels because investors have neglected it. "It is more likely that silver will outperform gold. Its recent behavior is encouraging, and the available supply of investment products is quite limited," he said. Relevance up to 09:00 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331738
EUR/USD Trading Analysis and Tips: Navigating Signals and Volatility

Saxo Bank Podcast: The Wild Reaction To A Very Weak December ISM Services Survey And More

Saxo Bank Saxo Bank 09.01.2023 12:56
Summary:  Today we look at the mixed US jobs report on Friday and more importantly, the wild reaction to a very weak December ISM Services survey, while we question whether a single data point deserves such a strong reaction function. Regardless, the market took down US treasury yields and the US dollar in the wake of the data. Elsewhere, the market is scrambling to absorb the remarkable policy shift out of China, with metals, AUD and especially CNH firming further. A look at stocks to watch, perspective on the big US banks as they are the first to report for the upcoming earnings season on Friday. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: Incorporating Slack And Other Apps Into The Salesforce Platform Can Actually Put Buyers Off| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Over-reacting to a single data point? | Saxo Group (home.saxo)
Gold Stocks Have Performed Very Well Under Pressure

Gold Has Been The Star Performer During The First Week Of Trading

Saxo Bank Saxo Bank 09.01.2023 13:09
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, January 3. A week that saw bullish dollar bets being reduced while money managers added exposure to gold and grains while China's changed virus approach, recession risks and warm weather saw net selling of WTI, natural gas and copper Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities while in forex we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to last Tuesday, January 3. A week that given the timing saw limited activity across markets. Stocks were mixed, the dollar a tad stronger while bond yields softened after the IMF began the new year by warning a third of the world would be in a recession this year. This warning together with China’s messy and abrupt change from lockdowns to removing all restrictions helped send commodities sharply lower, led by energy while the metals, both precious and industrials received a boost.  Commodities The energy sector began 2023 on the defensive, thereby driving the Bloomberg Commodity Index to a 2.7% loss in the reporting week to January 3. Recession worries and mild winter weather reducing demand for natural gas and fuel products helped send the energy sector sharply lower. The abrupt change from the Chinese government on several key policies received a mixed reaction across industrial metals with a short-term challenging demand outlook being offset by the prospect for a recovery gathering pace in the coming months.    Hedge funds, responded to these developments by adding exposure to grains, especially soybeans and corn while reducing length in energy, especially WTI and natural gas. The metal space was mixed with gold length rising to a seven-month high while copper length was almost cut in half.      Energy: A challenging start to the new year being driven by China, recession and warm weather demand worries saw natural gas tank by more than 22% while crude oil traded softer by around 3%. The response to these price changes were a 23% increase in the natural gas short while crude oil was mixed with WTI seeing a 30k lots reduction to 165k driven by a combination of longs being reduced and especially fresh short selling. Brent crude oil meanwhile saw buying extend to a third week as funds continued to buy into price weakness, a sign that funds sees limited downside below $80 at this stage.  Market comment from today’s quick take: The first week of 2023 was tough for crude oil, driven by global growth concerns, a very mild winter across the Northern Hemisphere dampening demand, and a mixed outlook for China. Despite removing most virus-related restrictions, a surge in cases across the country has hit the short-term demand outlook while at the same time setting the economy on a path to recovery. Meanwhile, the IMF warned that a third of the global economy could be in recession in 2023. Supply side concerns are also seen with European sanctions on Russian oil having kicked in, while OPEC has reiterated that it is willing to step in with further production cuts. Short-term resistance being the 21-day moving at $75.65 in WTI and $81.15 in Brent. Metals: Demand for gold, which started to recover after the yellow metal made a triple bottom around $1620 back in November, extended into the new year with funds raising their net long by 8% to 7.8k lots, a seven-month high. Supported by momentum and the outlook for a friendlier 2023 for investment metals gold has been the star performer during the first week of trading. While many wise traders over the years have refrained from getting involved during the first few weeks of a new year, the continued rally has increasingly forced technical focused traders to get involved. Further upside momentum will need support from central banks purchases and renewed demand from long term investors through ETFs. Both of which are playing out after China’s PBoC added 62 tons during November and December while ETFs last week saw its first back to back week of buying since last April.    Copper jumped to a six-month high in Asia on Monday, driven by a general rebound in base metals as China looked to support an economic rebound. In addition, the under siege property sector has also received fresh support after the government showed signs of abandoning its “three red lines” policy that contributed to the downturn in recent years. Copper has advanced since November after lockdown protests led to an abrupt following months of fruitless lockdowns.  The change in direction set by the government has bolstered the outlook for demand beyond the first quarter thereby supporting the latest run higher. Friday’s break above the 200-day moving average towards key resistance in the $4 per pound area is likely to have been driven by hedge funds caught off guard by rapid changing outlook for China. In the week to January 3 they almost cut in half their High grade copper net long to 8.3k lots, in line with the five-year average but some 90% below the late 2020 peak. Agriculture: Funds bought grains for a second week with the combine net long across the six futures contracts tracked in this rising to 494k lots, an eight-week high. Despite the normally quiet time of year, funds nevertheless bought 83k lots of corn in the two weeks ending last Tuesday, the most in any two weeks since November 2021. Elsewhere the soybean net long jumped to 143k lots, the largest since June while the wheat short remained elevated despite seeing a 6% reduction. Softs were sold in response to price weakness across all four contracts, the exception being coffee, after funds reduced their net short.  Forex After accumulating the biggest dollar short since July 2021, short sellers started the year on the defensive as the dollar showed signs of early strength against most of the major currencies, expect for the Japanese yen. The result being a 43% reduction in the gross dollar short against nine IMM futures and the Dollar index. The main flows as per the table below were selling of EUR, GBP and JPY being partly offset       Source: COT: Gold and grains in demand | Saxo Group (home.saxo)
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Is Taking Advantage Of The Weakness Of The Dollar, Oil Prices Also Started The New Week On A Positive Note

Walid Koudmani Walid Koudmani 09.01.2023 14:44
Positive sentiment across european markets Indices across europe started the week trading higher and with a positive mood which has spread throughout markets extending after an upbeat session in asia. This also comes after a strong post-NFP Wall Street session on Friday which did not seem to have a major impact on sentiment. Furthermore, news of an expected massive increase in traffic during Chinese New Year helped support investor confidence as the country has also been significantly reducing its restrictive policies related to covid-19. The FTSE100 is still hovering at the highest level in several years after gaining over 3% since the start of 2023 and despite a slight pullback at the start of this week, positive general sentiment may be able to sustain the upward move. However, it will be important to keep an eye on any impactful geopolitical developments along with central banker speeches, as a major unexpected event may derail this performance and lead to a continuation of the pullback. Oil prices boosted by potential increase in China demand Oil prices also started the new week on a positive note with Brent and WTI trading almost 3% higher on the day as the removal of significant restrictions in China along with a major reopening appear to be the main causes of this move. Starting from January 8, 2023 China no longer requires people arriving in the country to undergo a quarantine with negative Covid test results being enough to enter the country now. Moreover, Chinese authorities expect traffic during the upcoming Chinese New Year holiday to double from 2022 levels and after several years of serious limitations placed on the world's second largest economy. While it remains to be seen if this upward move will continue, these are clearly positive signs when it comes to the demand side of the equation and without a move from the supply side we could see prices potentially test nearby resistance areas. Read next: Euro could perform better-than-expected thanks to less severe energy crisis| FXMAG.COM Gold reaches 8 month high As the US dollar continues to show signs of weakness, with the USD index consolidating at the lowest levels since mid 2022, we have seen a noticeable strengthening of Gold with the price reaching an 8 month high as it hovers in the $1873 area following a 2% increase from the end of last week. It appears that this upward move also coincides with the positive sentiment seen across stock markets, as a main driver for that also seems to be a key focus on central bank policy and in particular the Federal Reserve, who may be approaching the end of its hawkish policy goals this year. Much is still uncertain but a weaker dolar along with declining US treasury bond yields may sustain the price increase of the previous metal while on the other hand, the risk-on moods seen across markets may limit a further upside in the near future. Naturally, this situation could change given the potential volatility.
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

Commodities: Russia Is Struggling To Find Homes For Its Oil Since The EU Ban

ING Economics ING Economics 10.01.2023 08:25
A weaker USD provided some support to the commodity complex, while expectations for an improvement in the Chinese demand outlook provided a further boost Energy- USD supports the complex The oil market managed to push higher yesterday, aided by a weaker USD. In addition, growing optimism around China provided further support. However, Brent still failed to settle back above US$80/bbl, whilst the prompt Brent time spread is still in contango, reflecting a comfortable spot physical market. That said, we still believe that the oil market will become increasingly tight as we move through the year. There were reports yesterday that China issued a second batch of crude oil import quotas for independent refiners. The latest release was for 111.8mt, which takes the total quota issued for 2023 to almost 132mt. By this stage last year, the government had issued only one batch of quotas totalling 109mt. Higher quotas support the view of recovering Chinese demand this year and the quicker-than-expected change in Covid policy means that the demand recovery could be more robust than initially expected. For 2023 global oil demand is expected to grow in the region of 1.7MMbbls/d, of which 50% will be driven by China. There could be some upside risk to this. There are signs that Russia is struggling to find homes for its oil since the EU ban on Russian seaborne crude oil came into effect back in early December. According to Argus, Urals in the Baltic are trading at a little under US$38/bbl, which is around a US$40/bbl discount to Brent. Ship tracking data also shows that weekly exports have been generally trending lower recently. If Russia struggles to find buyers for its oil, it will have to start reducing output. And demand for Russian oil will fall even further from February as the EU ban on Russian refined products comes into effect. Metals – Prices rise on China reopening optimism Base metal prices rose yesterday amid optimism over China’s economic recovery and declining exchange inventories. A weakening US dollar further boosted the metals complex. LME copper 3M prices rose more than 3% yesterday, while zinc and aluminium rallied by more than 6%. Nickel was the only base metal to settle lower, likely a result of reports that Tsingshan is looking to boost refined nickel output by repurposing some copper facilities in China. This move would be to take advantage of the large premium for class 1 refined nickel, a part of the market which is still tight. Copper inventories immediately available to withdraw from the LME warehouses fell by the most in a month. On-warrant stockpiles declined by 2,050 tonnes to 71,850 tonnes, driven by declines in warehouses in Rotterdam. The latest SMM survey shows that China’s copper cathode production fell 3.3% MoM to 870kt in December, as some smelters undertook maintenance last month resulting in reduced monthly output. Meanwhile, Covid outbreaks also lowered smelter production, while output from the two newly commissioned smelters remained below expectations. Chinese primary aluminium production rose 8.3% YoY to 3.44mt in December. For full-year 2022, output rose 4.1% YoY to 40.1mt. In alumina, a production unit has been taken offline at Alcoa’s Kwinana Alumina refinery in Australia, representing about a 30% cut in production at the refinery, amid ongoing gas supply challenges in Western Australia. No timeline has been given for restoring full output. Read this article on THINK TagsUrals Russian oil ban Oil Nickel China demand Alumina Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
China: PMI positively surprises the market

The China Government Considering CNY3.81trn Of Local Government Bond Issuance In 2023

Saxo Bank Saxo Bank 10.01.2023 08:54
Summary:  While the US markets remained mixed overnight with the post-wage growth and ISM gains cooling off, focus in Asia shifts back to China’s reopening and policy measures. A fresh round of fiscal boost and a likely higher budget deficit target could mean more infrastructure spending, and hence further gains for industrial metals. Copper broke the key $4/lb mark. Furthermore, higher import quotas for crude oil were also announced. Tesla charged ahead, but remains in a technical long-term downtrend. What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) consolidated, waiting for the Fed and upcoming earnings U.S. equity benchmark indices pared their over 1% gains in the morning and finished the Monday session mixed. Nasdaq 100 gained 0.6% while S&P 500 was nearly flat. Among S&P 500 sectors, information technology was the top winner and advanced 1.1%, led by the strong performance of Nvidia (NVDA:xnas) and Advanced Micro Devices (AMD:xnas). Tesla (TSLA:xnas), rallying 5.9%, was the best-performing stock within S&P 500. The stock however is still in a long-term downtrend. Healthcare was the worst-performing sector. Lululemon Athletica plunged 9.3% after saying the company expected lower profit margins in Q4. Uber gained 3.8% on an analyst upgrade. Apple plans to drop Broadcom chips and Qualcomm modem Apple (AAPL:xnas) plans to drop Broadcom (AVGO:xnas) chips from its devices and use in-house chips. Apply also aims to replace the modems from Qualcomm (QCOM:xnas) with in-house designs. Shares of Broadcom fell nearly 2% and those of Qualcomm shed 0.6%. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) extended gains After a strong session last Friday, Treasuries extended their gains to finish 2 to 4 bps richer across the curve. Yields on the 10-year edged down 3bps to 3.53% and those on the 2-year slid by 4bps to 4.21%. The market is pricing a 77% chance of a 25bp hike at the February FOMC. Comments from Fed’s Bostic and Daly, both non-voter this year, did not offer new insights. Bostic said he was in favor of “raising rates to the 5%-5.25% range”. Fed Chairman Powell will speak in a panel discussion on central bank independence at a Riksbank event today. The New York Fed survey showed U.S. consumers expecting 1-year, 3-year and 5-year inflation expectations at 5%, 3% and 2.4% respectively. What should you be watching today in equities across APAC? The Australian share market (ASXSP200.I) opened slightly lower on Tuesday down 0.2%, while Japan’s market is suggested to outperform in APAC today, with the futures suggesting the Nikkei could rise 0.9%. Keep an eye on coal stocks particularly as China’s National Development and Reform Commission has issued three notices urging parties to secure and speed up the process of locking in medium and long-term supply deals, to ensure China does not run out of power. China banned the imports of Australian coal for over two years, however yesterday, reports suggested BHP struck a deal, and sold two shipments of met coal to China. This highlights that trade relations are improving but also means the price of coal is likely to remain supported as demand is increasing. Keep an eye on Coronado (CRN) Whitehaven Coal (WHC), and New Hope (NHC). In Australia and Asia today, Copper stocks are in focus after the copper price rose 2.4% to over $4, which is a six month high. Copper stocks to potentially watch include BHP, Oz Minerals. It’s also worth watching the Bloomberg Commodity Index which jumped 1.1%. There also affiliated ETFs that are worth watching given China is easing restrictions and likely to ramp up commodity buying after the lunar new year. Iron ore (SCOA) trades flat today, but holds a five month high, as buying of iron ore is expected rise after the new year holidays as it typically does. This notion is also supporting iron ore stocks in the industry like Vale, Champion Iron, Fortescue Metals, BHP and Rio. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) advanced in anticipation of a less uncertain regulatory environment Alibaba (09988:xhkg), surging 8.7%, was the best-performing stock within the Hang Seng Index on Monday, following Ant Group announcing a new arrangement in which Alibaba’s founder Jack Ma cedes his indirect control of Ant Group. The new arrangement, which apparently has the blessing of the Chinese authorities, signals that Alibaba and its affiliates may be close to the end of the government-imposed reorganization and return to relatively normal business. Separately, Guo Shuqing, who is Party Secretary of the People's Bank of China (PBOC) and Chairman of the China Banking and Insurance Regulatory Commission, said that the rectification of 14 internet platform companies' financial businesses had basically been completed and China will support platform companies to play a bigger role in job creation and global competition. Hang Seng Index climbed 1.9% and Hang Sang TECH Index surged 3.2%. In A-shares, CSI300 gained 0.8% with non-ferrous metal, non-bank financials, food and beverage, beauty care, education services, and poultry farming being top gainers. FX: Post-ISM dollar selling extended The USD was further lower on Monday continuing the post-NFP and ISM Services decline as risk assets enjoyed a bid on the back of China reopening optimism, seen throughout Asia, Europe, before paring in the US afternoon. The latest NY Fed consumer inflation expectations were mixed, but the cooling in 1yr ahead expectations gained the most attention. Fed speakers failed to add anything new, but clearly opened the door for a 25bps in February resulting in some dovish Fed repricing, and focus is now on Chair Powell and US CPI. EURUSD continues to look stretched as it rose to 7-month highs of 1.0761. AUDUSD capped at 0.6950 for now but China optimism continues to underpin with USDCNH now below 6.8000. Crude oil (CLG3 & LCOH3) prices higher on China hopes Crude oil prices opened the week with gains on continued China optimism as fiscal stimulus measures bode well for the demand outlook in China. China also issued a fresh batch of import quotas, of about 112 million tons in its second allocations for 2023, in a signal that the world’s largest importer is ramping up to meet higher demand. The upcoming Lunar New Year is also keeping the travel demand robust. Meanwhile, Russian oil exports are likely suffering on the back of sanctions (read below). WTI futures traded close to $75/barrel in the Asian morning while Brent was close to $80. Copper breaks the $4/lb mark With the China government considering CNY3.81trn of local government bond issuance in 2023, there is expectations of a further push to infrastructure spending which will continue to bump up industrial metals prices. Beijing may also bump the budget deficit to 3% of GDP, up from 2.8% last year. Meanwhile, copper inventories for immediate withdrawal from LME warehouses fell 2.8%, the most since 8 December. That leaves stockpiles at just above a 17-year low. Having touched the $4.05 level overnight, HG copper prices are now back the $4 mark, and support is seen at $3.8475.  Read next: The Aussie Pair Is Trading Above 0.69$, The Euro Above 1.07, The British Pound Also Benefits From A Weak Dollar| FXMAG.COM What to consider? China likely to add fiscal stimulus China exempts value-added tax (VAT) among small businesses with monthly revenues less than RMB100,000 a month till the end of 2023, according to Bloomberg. China is also considering a record special debt quota and a wider budget deficit with a new special bond quota of up to CNY 3.8tln and a deficit ratio of around 3% for the year. China is on track to spend more on infrastructure and support the real estate sector, both will bump up demand for industrial metals. Japan’s December Tokyo CPI touched the 4% mark Tokyo CPI for December was released this morning, with the headline coming in at 4.0% YoY as expected from a revised 3.7% YoY in November, suggesting price pressures in Japan haven’t started to cool off yet. Tokyo core CPI (ex-food) was higher than expected at 4.0% YoY from 3.6% YoY previously while the core-core measure (ex-food and energy) was also higher at 2.7% YoY from a revised 2.4% YoY in Nov. With Tokyo CPI numbers leading the broader print, there are clear signs that further upside pressures are likely to stay and continue to keep a policy tweak option alive for the BOJ. Asian and EM equities enter bull market The leading MSCI indices tracking these two segments of the global equity market have entered a bull market up 20% since their lows in October fuelled by gains in China and a weaker USD. The market is betting on a shallow recession in some parts of the world, while inflation keeps coming down, and on top of a successful kickstart of the Chinese economy. All three wishes may not be able to be fulfilled simultaneously and our view is that the market is getting too excited about growth too early as a lot of uncertainty persists. The rally has been fast and furious, so it is only natural to expect some profit-taking. There are also some risks to keep a tap on, such as BOJ's hawkish shift and company earnings. But that being said, there is still room for Asian markets to outperform its global peers in 2023. The labour market remains tight in the eurozone There is not much on the eurozone calendar this week. According to the latest Eurostat figures, the labour market remains well-oriented both in the eurozone and in the European Union (EU). The eurozone unemployment was at 6.5 % in November and at 6.0% in the EU. The figures are stable compared to October. Within the EU, Spain scores the highest official unemployment rate (12.4%) and Germany and Poland the lowest one (3.0%). In a working paper published yesterday, ECB economists pointed out the risk of high wage growth in the coming quarters – way above historical patterns. This reflects robust labour markets that so far have not been substantially affected by the slowing of the economy, increases in national minimum wages and some catch-up between wages and high rates of inflation. We tend to disagree with this assessment. Wage growth is of course fuelling inflation in the CEE area. But this is clearly not the case in Western Europe. The likelihood that wages will increase significantly, thus becoming an issue in regard to the fight against inflation, is rather low in our view. The United Kingdom is certainly the only European country (but not belonging to the EU) which may potentially face a wage-price spiral this year.  Russian crude exports coming under pressure Russia’s Urals grade, a far bigger export stream than any other crude that Russia sells, was $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, according to data provided by Argus Media. Global benchmark Brent settled at $78.57 on the same day. Combined flows to China, India and Turkey hit the lowest last week since October, suggesting sanctions and EU embargo may be impacting Russia’s key exports.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: China’s fiscal boost charges Copper; Can Tesla gain further? – 10 January 2023 | Saxo Group (home.saxo)
Gold Is Showing A Good Sign For Further Drop

Gold Received Support From A Weaker Dollar And Softer Yields

Saxo Bank Saxo Bank 10.01.2023 09:29
Summary:  A further squeeze in US equities yesterday, perhaps inspired by the recent drop in US treasury yields, peaked out mid-session and was entirely erased by the end of the day, establishing an important line in the sand on charts ahead of the next important macro event risk on the US economic calendar, the Thursday December CPI release. Interesting session ahead for European equities after yesterday saw major indices in Europe closing at their highest levels since Russia invaded Ukraine.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures erased all of their gains in yesterday’s session, declining 1.5% from the intraday highs. The culprit was Fed member Mary Daly’s comments that she expects the policy rate to move to 5% or a bit above. Despite these comments, the US 10-year yield declined downplaying the comments from Daly suggesting the market keeps betting that the Fed will pivot before reaching the 5% level. S&P 500 futures are trading lower again this morning hovering just above the 3,900 level taking the futures back into the upper part of the trading range established since mid-December. The next important event for US equities is the December CPI report on Thursday. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hong Kong and Chinese equities retraced after a strong start in the new year. Hang Seng Index edged down 0.3% and CSI300 was nearly flat as of writing. China is exempting value-added tax (VAT) among small businesses till the end of 2023 and is considering a record special debt quota and a wider budget deficit. The news stirred little excitement among investors as expectations for stimulus measures are already high. Chinese leading EV maker, BYD (01211:xhkg) slid 2% following Berkshire Hathaway reduced its stake to 13.97% from 14.06%. FX: Currencies swing with risk sentiment, USDCNH rejects new lows after huge slide The US dollar found support late yesterday after an extension of its recent sell-off on a squeeze higher in equities. EURUSD spilled over to a new high since last June, posting a 1.0761 high water market before easing back as risk sentiment weakened late in the US yesterday, supporting the greenback. A good portion of the EURUSD upside was on a firmer euro, as other USD pairs remain within recent trading ranges, including USDJPY, trading mid-range this morning just below 132.00. Elsewhere, USDCNH extended its remarkable run lower in the Asian session but was quickly gathered up after hitting new lows since last August at 6.76. Several central bankers are out speaking at a conference in Stockholm, Sweden today, while the market awaits the next major US macro event risk, Thursday’s December CPI release. Crude oil (CLG3 & LCOH3) trades steady with Brent hovering around $80 Gains being driven by excitement over a rapid reopening in China with the upcoming Lunar New Year driving a pickup in demand for travel. Near-term weakness in demand will be discussed when the OPEC+ monitoring committee (JMMC) meets on February 1 and despite a drop in Russian exports, due to sanctions, forcing the price of its flagship Urals below $40 per barrel last Friday, the committee could still spring a surprise and recommend another production cut. China meanwhile issued another generous quota for crude imports that will allow 44 non-state-owned refiners to import a total 132 million tons compared with 109 this time last year. Brent trades within a small uptrend with resistance being the 21-day moving average, today at $81.30 and support at $78. Gold (XAUUSD) holds onto its gains Supported by a weaker dollar and softer yields despite comments on Monday from two Fed officials that rates may rise above 5% before pausing and holding for some time. The metal has also been buoyed by the reopening in China with pictures of very crowded gold markets seeing pre-Lunar demand and the PBoC announcing it bought 62 tons of gold during the last two months of the year. However, following two back-to-back weeks of ETF buying, total holdings dropped slightly on Monday as some investors remained cautious. Focus this week on Thursday’s US CPI print with the next major hurdle for gold being $1896, the 61.8% retracement of the 2022 correction, with support now at $1830. HG Copper breaks higher on China demand optimism With the China government considering CNY3.81trn of local government bond issuance in 2023, there is expectations of a further push to infrastructure spending which will continue to bump up industrial metals' prices. Beijing may also bump the budget deficit to 3% of GDP, up from 2.8% last year. Meanwhile, copper inventories for immediate withdrawal from LME warehouses fell 2.8%, the most since 8 December. That leaves stockpiles at just above a 17-year low. HG copper reached $4.05 on Monday with the 50% retracement of the 2022 correction now offering resistance at $4.0850, with support being the 200-day moving average at $3.84. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields ease lower, 10-year close to 3.50% Ahead of three days of treasury auctions starting with today’s auction of 3-year notes, US treasury yields dropped a few basis points all along the curve. The two-year yield is nearing the range low since last September just below 4.15%, while the 10-year benchmark yield has another 10 basis points of range to work with into the cycle low near 3.40%. A 10-year auction is up tomorrow and 30-year T-bond auction on Thursday, with prior auctions for those maturities rather weak. Read next: The Aussie Pair Is Trading Above 0.69$, The Euro Above 1.07, The British Pound Also Benefits From A Weak Dollar| FXMAG.COM What is going on? The labour market remains tight in the Eurozone The Eurostat figures for Eurozone unemployment were out at 6.5 % in November and at 6.0 % for the EU. The figures are stable compared to October. Within the EU, Spain scores the highest official unemployment rate (12.4 %) and Germany and Poland the lowest one (3.0 %). In a working paper published yesterday, ECB economists pointed out the risk of high wage growth in the coming quarters – way above historical patterns.  “This reflects robust labour markets that so far have not been substantially affected by the slowing of the economy, increases in national minimum wages and some catch-up between wages and high rates of inflation”. We tend to disagree with this assessment. Wage growth is of course fuelling inflation in the CEE area. But this is clearly not the case in Western Europe. The likelihood that wages will increase significantly, thus becoming an issue regarding the fight against inflation, is rather low in our view. The United Kingdom is certainly the only European country which may potentially face a wage-price spiral this year.  Commodities supported on optimism over a speedy reopening in China  China will return to “normal” growth soon as Beijing steps up support for households and businesses, according to party secretary of the China’s central bank. That adds to hopes that the government will expand measures to steady the economy and potentially roll out more infrastructure spending that could support industrial metals prices. The HG copper price rose over $4 at on one point, for the first time in six months, with demand likely to rise while inventory stockpiles remain near 17-year lows while the Iron ore (SCOA) price surged 2.4% to a new six month high, $119.80 on expectations for a seasonal post-Lunar new year ramp up in demand.  China reopening, authorities are anxious the nation could run out of power China’s National Development and Reform Commission has issued three notices urging parties to secure and speed up the process of locking in medium and long-term supply deals, to ensure China does not run out of power. China had banned imports of Australian coal for over two years, however, yesterday reports suggested BHP struck a deal and sold two shipments of met coal to China. This highlights that trade relations are improving but also means the price of coal is likely to remain supported as demand is increasing. Japan’s December Tokyo CPI touched the 4% mark Tokyo CPI for December was released this morning, with the headline coming in at 4.0% YoY as expected from a revised 3.7% YoY in November, suggesting price pressures in Japan haven’t started to cool off yet. Tokyo core CPI (ex-food) was higher than expected at 4.0% YoY from 3.6% YoY previously while the core-core measure (ex-food and energy) was also higher at 2.7% YoY from a revised 2.4% YoY in Nov. With Tokyo CPI numbers leading the broader print, there are clear signs that further upside pressures are likely to stay and continue to keep a policy tweak option alive for the BOJ. Russian crude exports coming under pressure Russia’s Urals grade, a far bigger export stream than any other crude that Russia sells, was $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, according to data provided by Argus Media. Global benchmark Brent settled at $78.57 on the same day. Combined flows to China, India and Turkey hit the lowest last week since October, suggesting sanctions and EU embargo may be impacting Russia’s key exports. Microsoft considers $10bn investment into OpenAI The recently published ChatGPT has surprised the world by being quite good at answering all sorts of questions whether they are simple or complex. ChatGPT reached a 1mn users in just one week of beta testing. There have been serious talks about that ChatGPT might be something that could one day upend Google’s classic and very profitable search engine business. This might be the exact opportunity Microsoft is pursuing. What are we watching next? US December CPI up on Thursday The latest CPI data out of the US is the next important test for global markets, which have grown perhaps over-confident that the Fed will not only halt its policy tightening soon after perhaps 50 basis points of further tightening, but will be signalling rate cuts by year-end. The US CPI releases have triggered considerable volatility in recent months, particularly in equity markets on aggressive trading in very short-dated options. The market expects that inflation will actually fall month on month by –0.1% and only rise 6.5% year-on-year versus +7.1% in November. The core, ex Food and Energy number is expected to rise +0.3% MoM and +5.7% YoY vs. +6.0% YoY in November and a peak rate of 6.6% in September. Earnings to watch The Q4 earnings season kicks off this Friday with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth this year. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession or maybe no recession at all in the US economy. With higher interest rates level expectations are that banking revenue will slowly begin to accelerate and if high interest rates persist for an extended period, the longer-term growth for banks could be quite attractive. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Today: Albertsons Thursday: Fast Retailing, Seven & I Friday: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic Economic calendar highlights for today (times GMT) 1000 – Sweden Riskbank Governor Thedeen to speak 1010 – Bank of England Governor Bailey, Bank of Canada Governor Macklem, ECB’s Schnabel speak Stockholm 1100 – US Dec. NFIB Small Business Optimism 1400 – US Fed Chair Powell to speak at Riksbank even in Stockholm 1535 – ECB's de Cos, Knot to speak in Stockholm 1700 – EIA's Short-term Energy Outlook (STEO) 1800 – US 3-year Treasury Auction 2130 – API's Weekly US Oil and Fuel Inventory Report 0030 – Australia Nov. Retail Sales 0030 – Australia Nov. CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – January 10, 2023 | Saxo Group (home.saxo)
Pound Slides as Market Reacts Dovishly to Wage Developments

Saxo Bank Podcast: The Major European Equity Markets, The Future Of Internet Search And More

Saxo Bank Saxo Bank 10.01.2023 11:17
Summary:  Today we note that the major European equity markets have come full circle since the Russian invasion of Ukraine last February, in part driven by a near freefall in natural gas prices over the last few weeks on mild weather. How much more can the market wring out of this development? We also note the reversal in the US equity market rally yesterday ahead of the important CPI data on Thursday. In equities, focus toward the end of the week on the major US banks reporting, but in the meantime, we have the important news for Google of a $10 billion investment in OpenAI as the future of internet search is heating up for the first time in many years. This and more on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Read next: The Weather-Driven Crash Showed The Southwest Airline's Bigger Problems| FXMAG.COM Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next:The Aussie Pair Is Trading Above 0.69$, The Euro Above 1.07, The British Pound Also Benefits From A Weak Dollar| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com   Source: Podcast: European equities have come full circle since Russian invasion | Saxo Group (home.saxo)
Warsaw Stock Exchange SA Approves Dividend Payout: Neutral Impact Expected

US Dollar Is Under Pressure, Russian Crude Shipments On Falling Trend

Swissquote Bank Swissquote Bank 10.01.2023 11:25
Good news is that Asian stocks entered bull market. Bad news is that the Federal Reserve (Fed) President Jerome Powell could hammer the post-NFP stock rally in US stocks. Sentiment is mixed and investors are tense before Powell’s speech, and Thursday’s US inflation data. S&P500 The S&P500 was unable to extend gains above the 3900, rapidly started erasing early-session gains and ended the session 0.08% lower. Nasdaq also gave back early-session gains, though closed the session 0.60% higher. US makret US equity futures are in the negative this morning, as the King of market disappointment, the Fed Chair Jerome Powell, will be speaking at an event in Stockholm today, and he will probably not pop the champagne just because the wages grew less than expected last month, especially when you think that the US economy added a near record 4.5 million jobs last year, and that the unemployment rate fell to 3.5%. Forex In the FX, the US dollar index remains under a decent selling pressure, as a result of the dovish Fed expectations since last Friday’s US jobs data. The EURUSD advanced to 1.0760 yesterday, Cable flirted with 1.22 this morning, and gold consolidates gains. Energy market In energy, crude oil remains under pressure despite the Chinese reopening talk, and the falling Russian supply. We see that the European sanctions weigh on Russian oil supply, as the 4-week average shipments decline despite a small gain posted last week. That means that the lower Russian supply will be another supportive factor of oil prices. Watch the full episode to find out more! 0:00 Intro 0:27 Asian stocks enter null market 1:25 Powell could shoot Fed doves down 5:18 Another big S&P500 is possible 7:11 US dollar under pressure 8:32 Russian crude shipments on falling trend 9:32 Copper futures rally, but risks prevail Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #Powell #speech #Fed #expectations #USD #EUR #GBP #XAU #earnings #season #Lululemon #banks #MSCI #AsiaPacific #bull #market #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

Russia Has Adopted China's CIPS For Its Oil Transactions

InstaForex Analysis InstaForex Analysis 10.01.2023 14:15
Gold will be a deciding factor for China as the country seeks to bolster the yuan's international standing and continues to advance its plans to buy oil from Saudi Arabia. In early December, during a visit to Saudi Arabia, Chinese President Xi Jinping urged the leaders of the largest oil-exporting country to accept the yuan for oil as the two countries seek to strengthen their geopolitical ties. Saudi Crown Prince Mohammed bin Salman called the talks a "historic new phase in relations with China." If Saudi Arabia starts trading oil in yuan, this will create additional incentive for the Chinese currency, bringing it one step closer to reaching critical mass at the international level. Gold is a key factor in the further development of the petro-yuan system. A gold-backed petro-yuan does not require full renminbi convertibility to function, so it allows China to both maintain control of its capital account and stimulate the internationalization of the yuan. Support for oil trading in yuan with gold will play an important role in building the petro-yuan system. The convertibility of the yuan into gold effectively turns the currency into a global investment asset for foreign renminbi holders, increasing their confidence in and demand for the Chinese currency. Last December, China bought 30 tonnes of gold. A month before, they have already purchased about 32 tonnes. This was the first officially registered purchase since September 2019. China's gold reserves currently stand at 2,010 tonnes. Analysts at the French bank  Analysts at the French bank said China has already made strategic progress in global currency markets as it seeks to weaken the U.S. dollar's position as the world's reserve currency. They noted that because of Western economic sanctions, primarily from the U.S., Russia has adopted China's CIPS (Cross-Border Interbank Payment System) for its oil transactions, bypassing the global payment system SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is dominated by the U.S. dollar. Countries such as Iran, Venezuela and Indonesia currently settle some of their oil transactions in yuan. The volume of trade and the ability to use the yuan for international payments may grow as more countries diversify to avoid the risk associated with the U.S. dollar. This event may eventually challenge the U.S. dollar-based global financial system, as the dollar's status and importance is largely based on energy and commodity markets.   Relevance up to 10:00 2023-01-24 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/331851
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Momentum Remains Favourable For The Bulls, Turbulent Session In The Oil Market

Craig Erlam Craig Erlam 10.01.2023 15:32
Demand to pick up later this year It’s been a choppy session in the oil market, where Brent is hovering around $80 and WTI $75. We’ve now seen three sessions on the bounce in which oil prices have rallied before ending the day well off the highs. Not a particularly bullish signal. There’s a lot to consider in oil markets at the moment and the near-term risks probably are more tilted to the downside. The start of the year could see countries fall into recession as the cost-of-living crisis bites, interest rates are hitting a level that could significantly hurt economic activity and China is likely to experience the worst of the Covid surge after relaxing its approach. Beyond that, things could start to look up for a number of reasons. China could bounce back strongly, especially if backed by monetary and fiscal stimulus, central banks may discover they have room to cut rates if inflation falls substantially and economies are in recession and Russian output could be squeezed as sanctions take their toll. A lot of ifs and buts of course, but that is the uncertain world we now live in. Holding on Gold is holding onto gains well considering the Fed’s efforts to address market interest rate expectations. Yields remain near their recent lows and gold near the highs around $1,880, indicating that policymakers have a lot more convincing to do. That may be made harder on Thursday if core inflation is lower than expected, undermining the central bank’s hawkish stance. Of course, there will come a time when that will have to change and it may be fairly abrupt. For now, the yellow metal faces strong resistance around $1,880-$1,920, a region that we’ve seen a lot of activity around in recent years. Momentum remains favourable for the bulls but that may change now that the price is testing that $40 range. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

Commodities: US Crude Oil Output Is Forecast To Average A Record 12.41MMbbls/d This Year, The Nickel Surplus Is Expected To Grow Further

ING Economics ING Economics 11.01.2023 08:44
The bulk of the commodities complex managed to edge higher yesterday despite some hawkish comments from Fed officials. Markets await US CPI data which will be released on Thursday Energy- Record US oil output expected in 2023 and 2024 The oil market managed to eke out a small gain yesterday despite some hawkish comments from Fed officials. However, in early morning trading today, the market appears to be coming under some pressure following the release of US inventory numbers from the API. The API reported that US crude oil inventories increased by 14.9MMbbls, while gasoline and distillates also saw builds of 1.8MMMbbls and 1.1MMbbls respectively. Expectations were for a crude oil draw of around 2MMbbls. The more widely followed EIA inventory numbers will be released later today. The EIA published its latest Short-Term Energy Outlook yesterday, which included the latest US oil output forecasts for 2023 as well as the first forecast for 2024. US crude oil output is forecast to average a record 12.41MMbbls/d this year, up a little more than 500Mbbls/d YoY. Early estimates are for 2024 output to continue growing, increasing by around 400Mbbls/d to a record 12.81MMbbls/d. These annual growth rates remain fairly modest compared to previous upcycles seen in the oil market in recent years. Metals – nickel market developments First Quantum Minerals is close to striking a deal with Panama’s government on a copper mine after reporting progress on resolving tax and royalty terms for the project. First Quantum and Panama have been negotiating new tax terms for more than a year on the open pit mine. First Quantum started commercial production at Cobre Panama in 2019.  The mine can produce 300,000 metric tonnes of copper a year. Lead inventories in the LME warehouses fell by 9.3% to the lowest since October 2007. Total stocks fell by 2,400 tonnes to 23,375 tonnes with the decline driven by withdrawals from Taiwan. Xiang Guangda’s (the billionaire at the centre of last year’s nickel short squeeze) Tsingshan Holding Group Co. is in discussions with several struggling Chinese copper plants about processing its material into the more valuable refined metal, according to a report from Bloomberg. If successful, Tsingshan’s plant, together with similar moves by its peers, could double Chinese refined nickel production this year, from about 180,000 tonnes in 2022 – adding roughly a fifth to global refined output, according to Bloomberg. According to the latest report from SMM, the nickel surplus is expected to grow further in 2023. In 2023, total supply will reach 3.808mt in Ni content while demand will be 3.54mt in Ni content, resulting in a supply surplus of 269kt in Ni content, which is mainly driven by Nickel Pig Iron (NPI) supply. The LME published the results of a report into March’s crisis in the nickel market, recommending the exchange tighten its rules and enforcement processes to avoid a similar situation in the future. The LME said it will announce a plan by the end of March to implement the recommendations. Read this article on THINK TagsUS oil production Oil Nickel EIA Copper API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The RBA Raised The Rates By 25bp As Expected

Australia Is Likely To See A Modest Further Reduction In Inflation

ING Economics ING Economics 11.01.2023 08:53
The November monthly inflation series surprised markets with a stronger-than-expected rise. While this will be a disappointment for the Reserve Bank of Australia, many of these factors look likely to reverse in the months ahead Australian retail sales Source: Shutterstock 7.3% November inflation YoY% Higher than expected A bad number, but it should soon fade After falling to 6.9% in October, the return of inflation to 7.3% in November is quite disappointing and highlights the fact that inflation in Australia is not going to be a pushover for the Reserve Bank as it tries to squeeze it back to its 2-3% target. A relatively muted month-on-month gain in the price level in November last year meant that at best we were only likely to have seen a modest further reduction in inflation this month instead of the rise we actually saw. But some outsize rises in the price of a number of components mean that we may be waiting another month or two before we can confidently call "peak inflation" in Australia.   Rain stops play The monthly data tells the story quite well. Let's start with food. And after two consecutive months of large declines, food prices, especially fruit and vegetables, were pushed strongly higher. Poor weather and more flooding in New South Wales and Victoria are probably to blame for much of this. And December wasn't by any means a return to normality either, with the Bureau of Meteorology noting rainfall was 33% above average for the month as a whole with temperatures below or very much below normal (though New South Wales and Victoria were drier than normal after the previous month's rain).   Australian December rainfall - percentage of mean Source: Australian Bureau of Meteorology Oil isn't helping The second 2.2% month-on-month increase in a row for the transport component is largely a reflection of crude oil and retail gasoline prices, with the motor fuel component up 5.6% MoM after a 7% MoM increase in October. National pump prices in December more than reversed the November increase, though they are on the rise again in January, so any respite in December may be short-lived. Then there is the recreation component, which is being driven by holidays, the price of which rose 4.3% in November due to a choppy and hard-to-forecast combination of air fares (a derivative of oil prices) and pressure on holiday vacancies (a function of global reopening). Rising overseas visitors for Christmas mean that these November figures may only partially reverse in December after the latest spike.   Australian inflation by component MoM% Source: CEIC, ING Better news buried in the detail However, all of this could be regarded as the death throes for inflation in Australia, as there are some encouraging developments elsewhere that could signal lower inflation once this latest volatility is out of the way, and absent any renewed climate-related impacts (a very big "if" these days).  Firstly, clothing, which is a good reflection of discretionary spending strength, dropped 2.4% MoM, though it is also extremely volatile, so we aren't reading too much into just one month's reading. More importantly, housing registered only a 0.1% MoM increase in November, with house purchase costs also only up 0.1%, while rents rose only 0.2% MoM, down from 0.6% in October. These prices tend to be much less volatile, and having softened, we could anticipate even weaker figures in the months ahead, which may help to soften any residual volatility in the other components that we still need to work through.  What does this mean for markets? Interestingly, after a brief spike higher on the news, 10Y Australian bond yields have tended to drift lower today following the CPI numbers. This could indicate that markets also view this as a last hurrah for inflation rather than any meaningful setback for the Reserve Bank of Australia. The same seems true for RBA expectations, where December 2023 bank bill futures have risen, signalling an expectation for lower, not higher yields. The Australian dollar did push higher against the US dollar following the release, though drifted back before strengthening again later, though not clearly a direct result of today's data.  Certainly, today's data adds more risk to our view that the RBA will stop raising rates once it reaches 3.6% (another two 25bp rate hikes from here), and we may have to raise that to 3.85% if we don't see some more encouragement from other figures, for example, the labour data. But we are not throwing in the towel just yet. This latest inflation data offered just enough hope that this is a temporary setback to enable us to defer that decision for a little while longer.   Read this article on THINK TagsRBA rate policy Australian inflation Australian economy AUD Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Inflation Rises but Core Inflation Falls to Two-Year Low, All Eyes on ECB Rate Decision on Thursday

The World Bank Cut Its Global Growth Forecast To 1.7%, Copper Continues To Get Support From China’s Reopening

Saxo Bank Saxo Bank 11.01.2023 09:05
Summary:  Despite Powell’s relative silence on policy outlook, there were other Fed and non-Fed speakers that continued to sound hawkish and raising alarms on inflation. Bonds slumped although equities and USD struggled to find direction in pre-US CPI positioning moves. Some optimism seen on European growth outlook while the World Bank still cautious about a global recession. Australia’s November CPI was hotter-than-expected, aiding further gains for the AUD which is underpinned by China’s reopening and policy stimulus.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) rise and trade near key technical levels After two Fed speakers reminding markets US rates could rise to over 5%, JPMorgan CEO Jamie Dimon joined the party, saying there’s 50% chance rates could go to 6%, while money managers BlackRock and Fidelity (among others) warned that markets are underestimating the ultimate rate peak. The World Bank slashed growth forecasts in half, saying new adverse shocks could tip the global economy into a recession. It estimates GDP will rise 1.7% this year, (that’s almost half the pace forecast in June). So this sets the stormy tone for the major indices in 2023. That said, JPMorgan's trading desk says there a two-in-three chance Thursday’s inflation data for December (released on US Thursday), could be on the soft side and spark a 1.5-2% S&P500 rally. On Tuesday the major US indices rose in choppy conditions; the Nasdaq 100 (USNAS100.I) rose for the third day, adding 0.9%, edging closer toward its 50 day moving average, the S&P 500 (US500.I) fluctuated around 3,900, which is a possible technical key resistance level. Others signs of caution were see in bonds, as the two-year US Treasury yield rose to 4.25%, the 10-year jumped 9 bps to 3.62%, while gold nudged up, to 8-month highs, $1,881, while the US dollar advanced modestly. Ten of the 11 sectors within the S&P 500 gained on Tuesday, led by communication services, consumer discretionary, and materials. The only sector that declined was consumer staples. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) sold off on supply Fed Chair Powell’s speech did not have much impact on Treasuries as he did not discuss U.S. monetary policy specifically and only noted generally “restoring price stability when inflation is high can require measures that are not popular in the short term”. Yields on Treasuries rose as European government bonds sold off on supply from Italy and Belgium and ahead of today’s supply from Germany. Yields on 10-year bunds rose 8bps. Traders also sold Treasuries going into the auction of USD40 billion 3-year Treasury notes, bringing yields to the intraday high right before the auction. The 3-year auction went well with strong demand and saw Treasury yields off their intraday highs afterward. Yields on the 2-year finished the session 4bps higher at 4.25% and those on the 10-year were 9bps cheaper at 3.62%. What should you be watching in equities across APAC? As in what's the big picture with China's reopening and what does it mean to investors? The Australian share market (ASXSP200.I) opened 0.7% higher, with other APAC markets expected to also open most higher. Japan’s futures suggest the Nikkei could rise the most across APAC today. But big picture, we think the most important thing for investor right now, is to consider, that… China’s economic recovery could be the dictator for the course of commodity assets, travel, and property. Not just China tech and consumer spending. China’s pivot away from its Covid Zero stance, led by a sooner-than-expected January 8 lifting of quarantines for cross-border travel, is poised to fast track its international air-transport recovery in 2023. But China’s recovery is not just about travel reviving. Chinese developers have also been seen kicking off recoveries in early 2023, having hit a bottom for contracted sales last year. As China’s economic recovery surges, stocks remain supported and are indeed rallying. A similar trend occurred in 2020 when mainland China reopened after a series of lockdowns following a breakout in Wuhan. But, reflecting on global trends, you’d think China has a better chance of putting Covid behind it this time around… which could support commodities and travel in particular. But, let’s see. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) trod water After a strong first week in the new year, Hong Kong and China stocks trod water on Tuesday. Hang Seng Index edged down 0.3% and CSI300 was nearly flat. Bilibili (09626) fell 4.3% after the company issued ADSs at a 7% discount to buy back convertible bonds. Chinese automakers rallied, especially EV names. Li Auto (02015:xhkg), Nio (09866:xhkg), and XPeng (09868:xhkg) surged each surged over 6%. BYD (01211:xhkg) pared all its initial weaknesses following the news that Berkshire Hathaway had reduced its stake to 13.97% from 14.06% and gained 2.9%. According to its CEO, Li Auto’s Model L7 is gaining market shares from Tesla’s Model 3 and Model Y. BYD reportedly will raise the prices of its EVs, as opposed to Tesla’s price cuts in China. Social media stories speculate that some Chinese cities are going to relax passenger car licensing restrictions in order to boost consumption. Shares of Geely (00175:xhkg) were up 6%, GAC (02238:xhkg) +3.1%, and BAIC (01958:xhkg) up 2.2%. Macao casino operators outperformed with Sands (01928:xhkg) rising 4.8%, MGM (02282:xhkg) up 3.6%, and SJM (00880:xhkg) up 3.1%. In A-shares, automakers, retailing, electric equipment, and beauty care names gained while financial, petrochemical, and steeling makers were among the biggest losers. FX: Dollar range-bound as it eyes the US CPI Lack of data and anu relevant commentary from Fed Chair Powell left the USD struggling to find direction in the pre-CPI trade. EURUSD was the outperformer, with better growth outlook underpinning, but it continued to find resistance at 1.0760. USDJPY is back above 132 amid higher yields, while AUDUSD rose back above 0.69 following the higher-than-expected November CPI. USDCNH also still below 6.7900. The Aussie dollar rallies after hotter than expected CPI and retail data The Aussie dollar rose 0.3% to 0.6911 US, with inflation and retail sales coming in hotter than expected, which shows the RBA has room to keep rising rates, and as such this theoretically supports the AUD. Core or trimmed CPI (which the RBA looks at) rose from 5.3% YoY to 5.6% YoY in November - hotter than 5.5% YoY expected. Retail sales rose 1.4% in November, beating the 0.6% expected, while also importantly showing Aussie retail sales strongly recovered from the October drop in sales. Some traders have a view the Aussie dollar will push up over the medium term, in lieu of China’s reopening notion which is likely to add to Australia’s GDP, with hot sauce coming from China buying Australian coal for the first time in two years. Crude oil (CLG3 & LCOH3) choppy amid China optimism and inventory build Crude oil prices wobbled on Tuesday as the market remained buoyed by optimism of China demand recovery. European session was supported by upbeat Eurozone outlook. Meanwhile, EIA raised its forecast for demand growth in 2023 to 1.05mb/d. However, it also expects US output to rise to meet this demand, with US shale oil providing the bulk of the gains. The API report showed a strong inventory build of 14.9mn barrels in crude as against expectations of a 2.2mn draw, and focus now turns to EIA figures today. WTI futures touched $76/barrel before sliding back below $75, while Brent reversed from $81. Copper continues to march higher Copper continues to get support from China’s reopening and policy support to fuel economic recovery. Gains were further boosted by Chair Powell staying away from a pushback on easing financial conditions, and the weaker USD as a result. Having retraced close to 50% of the 2022 sell off, HG copper is now seeing resistance ahead of $4.08 (LME $8900), potentially opening up some scope for a correction to check the strength of support. Focus in that regard being $3.84, the 200 DMA, the break above which started this latest runup.  Read next: The EUR/USD Pair Is Still Above 1.0700$, The USD/JPY Pair Was Little Changed| FXMAG.COM What to consider? Powell stays away from policy guidance With some expectations that Powell would likely pushback on the easing financial conditions, equity markets celebrated the lack of any clear guidance on policy direction. Fed Chair Powell did not comment on the current US economic or monetary policy outlook in his prepared remarks, only stating that restoring price stability when inflation is high can require measures not popular in the short term. The pushback on market’s rate cut expectations from Kashkari (voter) was more direct, saying that "They are going to lose the game of chicken." Bowman, also a voter, was also relatively hawkish with comments hinting at more work to do on inflation. When a sufficiently restrictive rate level is reached, the Fed needs to hold the policy rate there "for some time". The story is shifting on Europe Softer energy prices, the lack of black-out and resilient hard data (notably in Germany) are pushing forecasters to review their 2023 recession calls. Goldman Sachs is the first international bank to drastically revised upward its growth forecasts, from minus 0.1 % in 2023 to 0.6 %. Said differently, the U.S. based bank does not expect a recession in the eurozone this year anymore. Early Q4 indications are out this Friday with the preliminary 2022 FY growth estimate. This should certainly confirm a milder-then-expected economic downturn. A mild recession (meaning drop in GDP of 0.1 or 0.2 %) is still our baseline this year. But we agree that the economy is surprisingly resilient. We also believe there will be no extreme macro and market events in 2023 – which could be positive from a growth perspective. If the economy performs much better, this will however give ECB policymakers more confidence in hiking rates as laid out in December by Christine Lagarde. World Bank warns of a global recession The World Bank cut its global growth forecast to 1.7% this year, down from an estimate of 3.0% in June. This marks the third weakest pace of global growth in nearly 30 years, overshadowed by only the 2009 and 2020 downturns. Growth estimate for 2024 was also slashed, down to 2.7%, as persistent inflation and high interest rates weigh. Meanwhile, the agency urged for global action to mitigate the risks of a global recession and debt distress. Growth of aggregate financing slowed to 9.6% Y/Y in China while loans to corporate picked up In December, the growth of outstanding aggregate financing, the broad measure of credit in China, decelerated to 9.6% Y/Y from 10.0% Y/Y in November. New aggregate financing declined to RMB1,310 billion in December (below consensus RMB1,850 billion) from RMB1,987 billion in November, dragged by a decline in new bond issuance from local governments and a net bond redemption by corporate. New RMB loans rose to RMB1,400 billion (above consensus RMB1,200 billion) from RMB1,214 billion in November and were also above RMB1,130 billion in December 2021. The growth of RMB loans picked up to 11.1% Y/Y in December from 11.0% in November. The better-than-expected growth in RMB loans was driven by new loans to the corporate sector which rose to RMB1,264 billion in December from RMB884 billion in November and above RMB 662 billion a year ago, as the Chinese authorities had asked banks to extend credits to support the housing market and other key industries. New loans to households came in weak, falling to RMB175 billion in December from RMB263 billion in November and RMB372 billion in December a year ago. The daily number of domestic flights in China rose to over 10,000, the first time since August China’s Lunar New Year travel season started last Saturday 7 January with 9,454 flights or a 2.26% growth from the first day of the same travel season last year. The number of daily flights increased to 10,123 on 8 January, an 13.65% increase from the same period last year and above 10,000 for the first time since August 2022. China suspends short-term visas for visitors from Japan and South Korea In retaliation to travel restrictions imposed on visitors from China, China stops issuing short-term visas for visitors from Japan and South Korea. Restrictions from both sides could be a temporary setback to the trend of the reopening of the Chinese economy but it is likely to be resolved in the near term. Microsoft may invest USD10 billion in OpenAI Microsoft is reportedly in discussion to make an investment of USD 10 billion in Open AI, the creator of AI bot ChatGPT. This would be Microsoft’s second investment, after acquiring a USD1 billion stake in 2019. Microsoft is expected to integrate ChatGPT into the software giant’s search engine.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Powell’s silence on policy puts the focus back on US CPI – 11 January 2023 | Saxo Group (home.saxo)
UK Manufacturing Surge Lifts Q2 Growth: Insights and Outlook

Apple Is Aiming To Replace Screens From Samsung By 2024

Saxo Bank Saxo Bank 11.01.2023 09:11
Summary:  Risk sentiment found its feet yesterday after the prior day’s reversal ahead of the important December US CPI release tomorrow, though markets seem confident that the trajectory of inflation is not a threat in the near term. The US dollar hovers near multi-month lows in many USD pairs ahead of that data and gold has notched new eight-month highs overnight, while copper is cementing its move higher above four dollars per pound.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rallied 0.7% after a weak Tuesday’s session in a strong signal that the market remains upbeat about growth prospects and inflation cooling. US equities are still stuck in an odd range with moving averages of different lengths pointing in all directions. The key trading focus is tomorrow’s CPI report and whether the market dares to extend momentum into the report. Tuesday’s intraday high in S&P 500 futures at 3,973 is naturally the hard resistance level on the upside. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) The Hang Seng Index resumed its uptrend to make a new recent high to trade above 21600, up more than 1% from yesterday and a level last seen in July last year. China’s Lunar New Year travel season started last Saturday 7 January with 9,454 flights or a 2.3% growth from the first day of the same travel season last year. The number of daily flights increased to 10,123 on 8 January, a 13.7% increase from the same period last year and above 10,000 for the first time since August 2022. Other high frequency data also showing increases in inter-city travelling. Chinese mega cap internet names led the charge higher, with Alibaba (09988:xhkg) and Tencent (00700:xhkg) gaining over 3%. Coal miner, China Shenhua Energy (01088:xhkg), rising by 5.6%, was the top winner within the Hang Seng Index. Mainland China’s CSI300 was flat. Coal mining, oil and gas exploration and development, and property management services stocks gained. FX: USD dips on rebounding risk sentiment ahead of December CPI data Thursday Lack of data and any relevant commentary in Fed Chair Powell’s short comments at a conference of central bankers yesterday saw the USD easing lower by this morning as risk sentiment rebounded. EURUSD was the outperformer, with better growth outlook underpinning, but it continued to find resistance at 1.0760. USDJPY is back above 132 amid higher yields, while AUDUSD rose back above 0.69 following the higher-than-expected Australian November CPI print released overnight. USDCNH also still below 6.7900. Tomorrow’s US December CPI release will prove important in confirming or rejecting the recent USD weakening move. Crude oil (CLG3 & LCOH3) choppy amid China optimism and inventory build Crude oil prices continue to pivot around $80 per barrel in Brent and $75 in WTI as the market remained buoyed by optimism of China demand recovery while yesterday’s European session was supported by upbeat Eurozone outlook. Meanwhile, EIA raised its forecast for demand growth in 2023 to 1.05mb/d. However, it also expects US output to rise to meet this demand, with US shale oil providing the bulk of the gains. The API report showed a strong inventory build of 14.9mn barrels in crude as against expectations of a 2.2mn draw and focus now turns to EIA figures today. Near-term futures spreads meanwhile are holding in a bearish contango structure, signalling ample supply. Resistance around the 21-day moving average in Brent at $81.50 and $76 in WTI Gold (XAUUSD) pushed higher overnight ... supported by general metal strength amid the current focus on the reopening of the Chinese economy and pent-up seasonal demand ahead of the Lunar New Year holiday. Developments that are being supported by a softer dollar and a drop in US bond yields ahead of tomorrow’s US CPI print, which is expected to show further softening, leading to speculation the FOMC may slow the pace of future rate hikes. While momentum supports technical and speculative buying, for now primarily through short covering, activity in ETF market from longer-term investors remain tepid, raising the short-term risk of a correction. The next major hurdle for gold being $1896, the 61.8% retracement of the 2022 correction, with support now at $1865 and $1830. Copper continues to march higher Copper continues to gain momentum as it remains buoyed by the reopening of Chinas economy and increased policy support to fuel an economic recovery to offset the economic fallout from President Xi’s failed and now abruptly abandoned covid-zero policies. Gains were further boosted by Chair Powell staying away from a pushback on easing financial conditions, and the weaker USD as a result. While the metal increasingly looks ripe for a correction, the sharply improved technical outlook and limited investor positioning may drive it higher in the short term. Overnight futures prices in London and New York managed to retrace 50% of the 2022 sell off, in HG copper at $4.0850 and LME at $8900. Support at $3.96 followed by the 200 DMA at $3.84 US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) edge higher, 10-year auction up today After nearly touching 3.50% at the start of the week, the US 10-year benchmark yield rebounded above 3.60% yesterday before settling slightly lower as risk sentiment improved. An auction of 3-year treasuries saw strong demand yesterday, with a 10-year auction up later today after a string of weak auctions for longer maturity US paper in late 2022. Read next:According To Analysts, Russia May Collapse Within A Decade, Guaranty Trust Bank Has Fined| FXMAG.COM What is going on? The Aussie dollar rallies after hotter than expected Australian CPI and retail data The Aussie dollar nudged up 0.3% to 0.6906 US, with local inflation and retail sales coming in hotter than expected, reflect that the RBA can continue to tighten, as inflation remains above the RBA target. Today's data also reflects stagflation could hit the nation in 2023; with unemployment likely to rise, and real GDP to fall to 2% (consensus). The biggest contributors to inflation (housing price rises, food and transport (petrol costs)) are also sticky and are not expected to subside in the near term. (Core CPI rose from 5.3% YoY to 5.6% YoY in Nov (beating 5.5% expected). Moving to retail sales in November, which jumped 1.4%, boosted by Black Friday, also reflect Australian's are not perturbed by rate hikes. Over the medium term, the Aussie could remain supported amid China’s reopening, with GDP to also benefit from China buying Australian coal for the first time in two years.    The story is shifting on Europe Softer energy prices, the lack of black-out and resilient hard data (notably in Germany) is pushing forecasters to review their 2023 recession calls. Goldman Sachs is the first international bank to drastically revise its growth forecasts upward, from minus 0.1 % in 2023 to 0.6 %. Said differently, the U.S. based bank does not expect a recession in the eurozone this year anymore. Early Q4 indications are out this Friday with the preliminary 2022 FY growth estimate. This should certainly confirm a milder-then-expected economic downturn. A mild recession (meaning drop in GDP of 0.1 or 0.2 %) is still our baseline this year. But we agree that the economy is surprisingly resilient. We also believe there will be no extreme macro and market events in 2023 – which could be positive from a growth perspective. If the economy performs much better, this will however give ECB policymakers more confidence in hiking rates as laid out in December by Christine Lagarde. China’s aggregate financing slowed to 9.6% y/y while loans to corporate picked up In December, the growth of outstanding aggregate financing, the broad measure of credit in China, decelerated to 9.6% y/y from 10.0% y/y in November. New aggregate financing declined to RMB1,310bn in December (below consensus RMB1,850bn) from RMB1,987bn in November, dragged by a decline in new bond issuance from local governments and a net bond redemption by corporate. New RMB loans rose to RMB1,400bn (above consensus RMB1,200 billion) from RMB 1,214bn in November and were also above RMB1,130bn in December 2021. The growth of RMB loans picked up to 11.1% y/y in December from 11.0% in November. The better-than-expected growth in RMB loans was driven by new loans to the corporate sector which rose to RMB1,264bn in December from RMB884bn in November and above RMB 662bn a year ago, as the Chinese authorities had asked banks to extend credits to support the housing market and other key industries. New loans to households came in weak, falling to RMB175bn in December from RMB263bn in November and RMB372bn in December a year ago. Apple aims to start using own screens by 2024 replacing Samsung Apple is accelerating its vertical integration with the news yesterday that it plans to replace Broadcom chips by 2025 and today it is aiming to replace screens from Samsung by 2024. It is a classic move for a big company increase profit margins by insourcing parts of the value chain, but the key risk long-term is the potential loss of innovation and lower prices. The alternative to integrating components is to let a competitive market supplying what you need as Samsung and LG do today in fierce competition. French labor unions call for strike to start Jan 19 on Macron pension plan French president Macron unveiled a plan to raise France’s minimum retirement age to 64 by 2030 from the current level of 62. France has one of the highest pension costs as a percentage of GDP in the EU (nearly 14%) and the ranks of the retired are set to grow for at least another 15 years if no changes are made. Iron ore price above $120 The iron ore futures traded in Singapore reached a 5-month high overnight, underpinned by China reopening and stimulus for the property sector. Look for a reversal as China had warned of tightening the supervision on iron ore pricing on Friday to crack down on speculators. Supply outlook is also relatively better, with an estimated 40 million tons of additional supply in 2023, while demand will likely be suppressed due to constraints on crude steel production in China. Wages set to rise in Japan? The fast-fashion Japanese retailer Uniqlo is set to hike pay for many full-time staff in Japan by as much as 40% and will raise the salary for newly hired graduates by over 17%. Bank of Japan Governor Kuroda has long stated that inflation is only rising sustainably if Japanese wages also begin to rise in line with commodity- and other input costs. What are we watching next? US December CPI up on Thursday The latest CPI data out of the US is the next important test for global markets, which seem confident that the Fed will not only halt its policy tightening soon after perhaps 50 basis points of further tightening but will even be signalling rate cuts by year-end. The US CPI releases have triggered considerable volatility in recent months, particularly in equity markets on aggressive trading in very short-dated options. The market expects that inflation will actually fall month on month by –0.1% and only rise 6.5% year-on-year versus +7.1% in November. The core, ex Food and Energy number is expected to rise +0.3% MoM and +5.7% YoY vs. +6.0% YoY in November and a peak rate of 6.6% in September. Earnings to watch The Q4 earnings season kicks off this Friday with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth this year. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession or maybe no recession at all in the US economy. With higher interest rates level expectations are that banking revenue will slowly begin to accelerate and if high interest rates persist for an extended period, the longer-term growth for banks could be quite attractive. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Thursday: Fast Retailing, Seven & I Friday: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic Economic calendar highlights for today (times GMT) 0800 – Czech Dec. CPI 1530 – EIA’s Weekly Crude and Fuel Stock Report 2350 – Japan Nov. Current Account data 0030 – Australia Nov. Trade Balance 0130 – China Dec. PPI, CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – January 11, 2023 | Saxo Group (home.saxo)
EUR/USD: Looking beyond the market’s trust issues with the Fed and ECB

The Euro, The Aussie Gain On Hawkish Central Bank Expectations, Crude Oil Under Pressure

Swissquote Bank Swissquote Bank 11.01.2023 12:29
US equities first struggled to find direction, as the Federal Reserve (Fed) Chair Jerome Powell kept mum on monetary policy in Stockholm yesterday, worried about the World Bank’s morose growth projections, but then turned north on hope that a softer US inflation print tomorrow could boost the Fed doves and enhance appetite in US equities. Gold Gold benefits from softer US yields, and softer dollar on expectation that a softer inflation could soften the Fed’s policy stance. World Bank The World Bank predicts a global growth of about 1.7% this year, about half the pace it predicted last summer. Although the slowing economic growth softens the rate expectations – and boost equities, a weaker global economy should weigh on corporate profits and should not let the rally run too far. Forex In the FX, European Central Bank (ECB) officials stand behind their hawkish view despite the latest softening in inflation. The EURUSD pushes higher as the positive pressure is the fruit of the divergence between softening Fed expectations and hawkish ECB bets. Australia In Australia, inflation advanced more than expected to 7.3% in Q4 fueling the expectation that the Reserve Bank of Australia (RBA) could opt for another 25bp hike in its February meeting. Energy Finally, in energy, crude oil is dragging its feet below the $75 this morning and will likely remain under pressure as yesterday’s API data showed that the US oil inventories rose by a little less than 15 mio barrels last week as the refining activity returned to normal following weather-related shutdowns. Watch the full episode to find out more! 0:00 Intro 0:23 Stocks rallied on softer US inflation bets 1:58 ‘Be careful what you wish for!’ 3:20 World Bank cuts growth forecasts… 3:53 … but Goldman calls off the Euro recession!? 5:48 Euro, Aussie gain on hawkish central bank expectations 6:55 Crude oil under pressure on 15-mio US stockpile build 7:34 Gold benefits from softer dollar, yields 7:56 Microsoft could be on a good path with ChatGPT! Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #inflation #expectations #USD #EUR #GBP #XAU #earnings #season #Microsoft #ChatGPT #tech #stocks #World #Bank #Goldman #Sachs #growth #forecast #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH        
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

Aluminium, Copper And Iron Ore Rose To New Highs, The EUR/USD Pair Broke Above 1.0760

Saxo Bank Saxo Bank 12.01.2023 09:32
Summary:  US stocks rallied as yields fell ahead of the CPI release later today where a softer reading is widely expected. Key to watch in the inflation release will be the services ex-housing print, and significant volatility can be expected due to large hedging flows. Oil prices higher despite inventory builds. Meanwhile, the metals space continues to run hot amid positive sentiment from China’s reopening and policy stimulus, with Aluminum, Iron Ore and Copper all rising to fresh highs. Gold also held onto its recent gains, but could be ripe for a temporary correction with CPI on the radar.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) rallied on lower bond yields, short covering, and optimism of upcoming CPI data potentially soft With relatively quiet corporate headlines, S&P 500 gained 1.3% and Nasdaq 100 advanced 1.8% as bond yields slid. The interest rate-sensitive real estate sector, up 3.6%, was the top winner within the S&P 500 Index, followed by consumer discretionary and information technology. Traders notably covered some of their shorts ahead of today’s CPI as the most-shorted names were among the best performers on Wednesday. The Nasdaq 100 closed above its 50 day moving average. Meanwhile, the S&P 500 (US500.I) rose for the second day and closed at the high of the day. Tesla and Amazon shares trade at key levels; but caution is thick in the air Indeed these were some of the standouts share on Wednesday with Tesla shares up 3.7% after failing to move above a key resistance level. It appears there is some skepticism about the rally as Tesla is selling less EVs than its making and is cutting prices in China. Amazon meanwhile, gained 5.8%, closing near its high of the day and around 15% up from its low last Friday, and moved further above its 50-day moving average. These are positive signs. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied on dovish ECB comments, strong 10-year auction U.S. Treasuries were well bid through European hours in tandem with German bunds which rallied on dovish remarks from a typically hawkish Holzmann, an ECB Governing Council member. Treasuries held on to their gains and traded sideways for the most part of the New York session before rallying further with yields on the long-end falling further on a strong 10-year note auction. Yields on the 10-year were 8bps richer to 3.54%. Yields on the 2-year were off by 3bps to 4.22, bringing the 2-10-year curve 5bps more inverted to -68. Boston Fed’s Collins (non-voter) said she would “lean at this stage to 25 [basis point hike], but it’s very data-dependent.” Traders’ focus is now on the CPI data scheduled to release today. What to watch in Australia and Asia: Oil rises for 5th day, Iron ore clears $120, copper rises to six month high entering a bull market The Australian share market (ASXSP200.I) rose 1% in early trade, with Hong Kong’s market futures in the positive, as well as Japan’s futures. A major focus will be on resources, with the oil price jumping 3% to $77.41, as well as focus on industrial metal equites, that will likely rally again on optimism of China’s reopening, which has pushed some commodities into bull markets. The Copper price rose to $4.18 on the Comex market, rising 2.5% in New York, taking its rally of its July 2022 low to 29%. With copper at $9000 per tonne for the first time since June, Goldman thinks it could hit $11,500 by year-end. Copper remains Saxo’s preferred metal for its use in electrification and urbanisation (for more click here). Popular copper equities include BHP, Oz Minerals, Rio Tinto. Meanwhile, iron ore (SCOA) cleared $120 for the first time in 6-months, with the iron ore price up 54% from its October low. BHP is trading at its highest level in history. It makes 48.7% of its revenue from iron ore, 26.7% from copper and the remainder from coal. It has a PE of 8 times earnings, and a dividend yield of 13.8%. Rio Tinto also trades near its all-time high and it’s also involved in the key metals mention too; making 58% of its revenue from iron ore, 11% from copper, and the rest from aluminum and others. Rio’s PE is 6.8 times earnings, its dividend yield is 8.6%. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) pared gains after making a 6-month high After having taken out the top of trading range resistance and making a six-month new high, Hang Seng Index pared most of the gains to finish the Wednesday session up only 0.5%. Alibaba (09988:xhkg) gained 3.1% on the news report that the eCommerce platform giant entered into a strategic cooperation agreement with the municipal government of Hangzhou and a People’s Daily article sounded complimentary to the Ant Group. Air China (00753:xhkg) dropped by 1.2% and China Southern Airlines (01055:xhkg) shed 1.5% following China suspended issuing visas to visitors from South Korea and Japan. EV names gained even though the China Passenger Car Association (CPCA) dismissed the speculation on the relaxation of licensing restrictions in Beijing. EV maker BYD (01211:xhkg) and coal miner China Shenhua Energy (01088:xhkg), each rising around 4.7%, were the two top winners within the Hang Seng Index. Mainland China’s CSI300 was down 0.2%. Stocks in coal mining, oil and gas exploration, and development industries gained. FX: USDJPY drops below 132 on possible BOJ action next week The USD was range-bound on Wednesday as it awaited the key US CPI release, despite a drop in yields taking the 10-year yields closer to 3.50% support once again. Fed member Susan Collins, although a non-voter, she is leaning towards a 25bps hike at the February 1st meeting although the data will help guide her decision, adding further dovish hints in the day. However she still favoured rates above 5% and a pause thereafter throughout 2023. EURUSD broke above 1.0760 and EURCHF rose above parity for the first time since July. ECB’s De Cos said he sees “significant” rate hikes at the upcoming meetings. USDJPY saw a big move lower in the Asian morning to drop below 132 from highs of 132.88 yesterday with expectations of BOJ likely considering further tweaks to its YCC policy (read below). FX watch: Australian trade data surged beyond expectations. US CPI next catalyst for AUDUSD Australia’s trade balance data released today, rose well beyond expectations, with the trade balance surging to $13.2 billion, when consensus expected exports and imports to have fallen considerably in November, with the market expecting the surplus would fall from $12.2 billion to $11.3 billion. This data shows that trade has been improving, well ahead of China’s easing of restrictions – which is a positive sign. The AUD rallied to 69.18 US, which is the level it hit yesterday after Australian inflation and retail data came out hotter than expected. The next resistance level is a psychological one, 0.700 for the AUD vs the USD. However, if core US CPI comes out hotter than expected (5.7% YoY), then a hotter USD may pressure the AUD back down. Our Head of FX Strategy suggests if that happens the AUD could drop back to another support level. However the next few days are pivotal. Click for more on FX. Crude oil (CLG3 & LCOH3) prices continue higher on China story Crude oil prices rallied again overnight as signs of improving Chinese demand boosted sentiment. Chinese buyers have become active in the physical market, with Unipec snapping up about 3-4mbbl of US crude for March and April in recent days. This comes following news that China had issued a fresh batch of import quotas as it reopens following years of COVID-19 restrictions. Supply was supported by a huge build in US inventories, but could not dampen the price sentiment as higher inventories was expected. US crude oil stocks jumped 19m barrels last week, the biggest since Feb 2021, driven by a 2m b/d drop in exports to 2.1m b/d. WTI futures rose above $77.50/barrel while Brent got in close sight of $83. No stopping the gains in metals space, yet Industrial metals continued to march higher on positive signals from China on Zero Covid and policy stimulus. An apparent peak in infections follow the sudden dropping of COVID-19 restrictions has raised the prospect of an earlier than expected jump in industrial activity. Pent up consumer demand is likely to add to the clamour for metals. Aluminium, copper and iron ore, all rose to new highs. Iron ore (SCOF3) could be potentially ripe for a reversal, given China’s warning on tightening the supervision on iron ore pricing on Friday to crack down on speculators. Meanwhile, Copper’s gains to $4.16 have also been fast and could see scope for a correction, but the sharply improved technical outlook and limited investor positioning may drive it higher still in the short term. Gold (XAUUSD) sees correction risks ahead of CPI Gold prices are hovering around an 8-month high, but our Head of Commodity Strategy sees risk of correction even if ‘lower-than-expected’ CPI print sends gold higher to test the resistance level around $1900. He sees potential of profit taking emerge. He says, “Gold’s price action during the past week has in my opinion showed us the correct direction for 2023, but while the direction is correct, I believe the timing could be wrong.”  Read next: The EUR/USD Pair Maintains A Steady Upward Trend, The Aussie Pair Keeps Close To 0.69| FXMAG.COM What to consider? US CPI remains the most key data point to watch There is enough reason to believe that we can get some further disinflationary pressures in the coming weeks. Economic momentum has been weakening, as highlighted by the plunge in ISM services last week into contraction territory, particularly with the forward-looking new orders subcomponent. An unusually warm winter has also helped to provide some reprieve from inflation pains. Bloomberg consensus forecasts are pointing to a softening in headline inflation to 6.5% YoY, 0.0% MoM (from 7.1% YoY, 0.1% MoM prev) while core inflation remains firmer at 5.7% YoY, 0.3% MoM (from 6.0% YoY, 0.2% MoM). Still, these inflation prints remain more than three times faster than the Federal Reserve’s 2% target. Fed officials have made it clear they expect goods price inflation to continue to ease, expecting another big drop in used car prices. But officials are seemingly focused on services ex-housing which remains high. So even a softer inflation print is unlikely to provide enough ammunition for the Fed to further slow down its pace of rate hikes. Volatility on watch if US CPI sees a big surprise The last two months have shown that big swings in US CPI can spark significant volatility in the equity markets, given the large amounts of hedging flows and short-term options covering. With a big focus on CPI numbers again this week, similar volatility cannot be ruled out. Volume might be thin still this week as many are still on holidays, so moves in equities could be amplified in either direction. Meanwhile, FX reaction to CPI has been far more muted, but some key levels remain on watch this week. A higher-than-expected CPI print could keep expectations tilted towards a 50bps rate hike again in February, while a miss could mean expectations of further slowdown in Fed’s tightening pace to 25bps in February could pick up which can be yield and dollar negative. Apple plans to use its own displays in mobile devices Apple (AAPL:xnas) aims to its own custom displays in the consumer electronic giant’s mobile devices starting in 2024, as opposed to procuring from Samsung and LG. It is the latest move in a series of initiatives from Apple to reduce reliance on sourcing components from partners, including chips from Broadcom and modems from Qualcomm. China’s CPI expected modestly higher, PPI less negative Economists surveyed by Bloomberg had a median forecast of China’s December CPI at an increase of 1.8% Y/Y, edging up from 1.6% in November, mainly due to base effects, as food prices are likely to be stable and higher outprices in the manufacturing sector might be offset by a fall in services prices. PPI in December is expected to be -0.1% Y/Y, a smaller decline from -1.3% Y/Y in November, benefiting from base effects. The decline in coal prices was likely to be offset by an increase in steel prices. Signs of wage growth in Japan; could we see more action from BOJ next week? The fast-fashion Japanese retailer Uniqlo (owned by Fast Retailing) is set to hike pay for many full-time staff in Japan by as much as 40% and will raise the salary for newly hired graduates by over 17%. Bank of Japan Governor Kuroda has long stated that inflation is only rising sustainably if Japanese wages also begin to rise in line with commodity and other input costs. Meanwhile, Yomuiri reported that BOJ officials will review the side effects of the ultra-easy monetary policy at their policy meeting next week, opening the door for further adjusting the yield curve control policy or the bond-buying as the central bank continues to see 10-year yields testing the new upper limit of 0.5%. Fast Retailing (9983:xtks) reports earnings today and a 10th straight quarter of operating profit growth is seen, although the pace of growth is likely to slow amid China’s lockdowns in the November-ended quarter and fading FX benefits. TSMC (TSM:xnys) reporting Q4 results, 1H23 outlook and overseas expansion plans key to watch Given the industry-wide inventory overhang, investors will be closing monitoring the world’s largest foundry’s 1H2023 revenue outlook when TSMC reports Q4 2022 results today. Investors will also pay much attention to the management’s comments on TSMC’s plans for building manufacturing capacities outside of Taiwan and mainland China which have implications on margins and capex spending. For Q4 results, analysts surveyed by Bloomberg, on average, are forecasting revenues coming at TWD636 billion and adjusted earnings at TWD11.087 per share. For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: US CPI day, Bank of Japan policy tweak speculation – 12 January 2023 | Saxo Group (home.saxo)
Czech National Bank Prepares for Possible Rate Cut in November

CPI In China Rose, US CPI Print Are For A Rise For The Year-On-Year At 6.5%

Saxo Bank Saxo Bank 12.01.2023 09:40
Summary:  Markets have charged higher again, seemingly confident that today’s US December CPI data won’t provide any pushback against this rally, which is pulling up into the psychologically important 4,000 area in the US S&P 500 Index. Elsewhere, the USD remains on its back foot on hopes for a soft CPI print, while EURCHF has suddenly pulled above parity for the first time in over six months in a delayed reaction to ECB hawkishness. Oil jumped.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures extended momentum all the way up to the falling 200-day moving average closing at 3,990 and in early trading this morning the index futures are hovering around the 200-day moving average. This average was hit back in mid-December before US equities were weighed down by hawkish central bank comments and sold off into New Year. Today’s US December CPI report is naturally the key report to watch today as the previous three inflation reports have caused significant volatility over the release. If the market gets it lower inflation print then S&P 500 futures might push above 4,000 and even all the way up to 4,050. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) After making a new six-month high this morning, Hang Seng Index reversed and pared gains. Profit-taking weighed on recent policy beneficiaries, such as mainland Chinese property developers, domestic consumption names, mega-cap internet stocks, and Macao casino operators. Shares of EV makers bucked the market trend of retracement to advance, led by BYD (01211:xhkg) up 5.7%. FIT Hong Teng (06088:xhkg), a subsidiary of Foxconn, soared 23% on speculation that the company might replace GoerTek (002241:xsec) to assemble AirPods for Apple. In A-shares, defense, aerospace, auto industrial equipment and wind power outperformed as the domestic consumption space retraced. As of writing, Hang Seng Index and CSI300 edged up around 0.3%. FX: USD still low, JPY resurgent. EURCHF blasts higher The greenback remains on its back foot coming into today’s US December CPI release, with market players likely very unclear around the reaction function (more on that below in What’s Next?) to in-line or even soft data today. EURUSD etched marginal new highs above 1.0760 yesterday, but clearly faces a test over today’s data and may have been driven yesterday by flows in EURCHF, which suddenly bursts out of its range and traded well above parity – likely on the hawkish ECB outlook finally sending the pair over the edge. ECB’s De Cos said he sees “significant” rate hikes at the upcoming meetings, while ECB’s Holzmann soft-pedaled the message on QT, saying he was very cautious on moving too fast.  USDJPY dipped on the news flow overnight as described below, and many other USD pairs are still within recent ranges, if toward important USD support in places, especially AUDUSD. Crude oil (CLG3 & LCOH3) remains supported by China recovery story Crude oil prices rallied strongly on Wednesday with the improved outlook for Chinese demand and the softer dollar driving a fifth day of gains. Chinese buyers have become active in the physical market, with Unipec snapping up about 3-4mbbl of US crude for March and April in recent days. This comes following news that China had issued a fresh batch of import quotas as it reopens following years of COVID-19 restrictions. Supply was supported by a huge 19m barrels build in US inventories, the biggest since Feb 2021, but it could not dampen the positive price sentiment as higher inventories was expected after the late December cold blast reduced exports while temporarily shutting down some refineries. Fresh momentum was seen in both WTI and Brent after breaking their 21-day moving averages, now offering support at $76.35 and $81.65 respectively. Gold sees raised correction risk as US CPI looms Gold’s price action and gains during the past week has in our opinion showed us the correct direction for 2023, but while the direction is correct, we believe the timing could be wrong, and with momentum showing signs of slowing ahead of key resistance around $1900, and a potential weaker-than-forecast US CPI print today having been priced in, the risk of correction has risen. Pent-up demand in China ahead of the Lunar New Year may soon fade, while India’s demand may slow as traders adapt to the higher price level. In addition, we have yet to see demand for ETF’s, often used by long-term focused investors, spring back to life with total holdings still hovering around a near two-year low at 2923 tons. The next major hurdle for gold being $1896, the 61.8% retracement of the 2022 correction, with support around $1865 followed by $1826, the 21-day moving average. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields drop, strong 10-year auction supports The US 10-year yield dropped back toward 3.50% support overnight after falling some 7-basis point yesterday, supported in part by a solid US 10-year auction, with bidding metrics sharply improving relative to the prior couple of weak auctions. The 2-10 year yield slope inverted back toward –70 basis points. Treasuries may find additional support if today’s December US CPI report proves softer than expected. Read next: Discussion Of Bank Representatives On Financing The Ecological Transformation | FXMAG.COM What is going on? The Eurozone economy is more resilient than forecasted Economic surprises are improving significantly in the eurozone. The consensus forecasts a drop in GDP of minus 0.1% this year. Based on hard data, this seems excessively conservative. It is bound to be revised up, in our view. The German economy is especially very resilient. While gas consumption has collapsed by double digits, industry output has remained largely flat. This is a remarkable achievement. Based on the latest data on industrial production (for the month of November), it looks like there will be no recession in German industry in Q4. However, the year 2023 will be challenging in the eurozone: credit stress is on the rise (this is the first time in a decade we start the year with European IG credit yield above the 4 % level), and the market will need to absorb about 700bn euros of liquidity due to the ECB quantitative tightening. Metals pause after powering higher on China optimism Industrial metals are pausing ahead of today’s CPI print and after having marched higher on positive signals from China on Zero Covid and policy stimulus. An apparent peak in infections follow the sudden dropping of COVID-19 restrictions has raised the prospect of an earlier than expected jump in industrial activity. Pent up consumer demand is likely to add to the clamour for metals. Aluminium, copper and iron ore, all rose to new highs on Wednesday. Iron ore (SCOF3) could be potentially ripe for a reversal, given China’s warning on tightening the supervision on iron ore pricing on Friday to crack down on speculators. Meanwhile, Copper’s year-to-date gain of 9% to near $4.20 has also been fast and could see scope for a correction, but the sharply improved technical outlook and limited investor positioning may continue to provide some support in the short term. USDJPY drops below 132 on possible BOJ action next week The Bank of Japan meets next Wednesday and may be set to guide for further policy tweaks after a regional Bank of Japan report released overnight . In other news in Japan, the Yomiuri newspaper reported that the BoJ will review the side effects of its policy at next week’s meeting and a quarterly Bank of Japan report raised its assessment of the economy in four of Japan’s nine regions, noting that in “there were many cases where companies were increasing winter bonus payments, or plan to hike wages.” Also JPY-supportive, preliminary data from Japan’s Ministry of Finance suggest that Japan’s life insurers sold a record amount of foreign bonds last month. CPI and PPI inflation remained low in China CPI in China rose to 1.8% y/y in December from 1.6% in November, in line with expectations. The rise was due to a low base and on CPI was unchanged m/m. Excluding food and energy, core CPI came in at 0.7% y/y in December, edging up slightly from 0.6% y/y in November. The change in PPI however rebounded less than expected to -0.7% y/y versus -0.1% expected and -1.3% y/y in November. TSMC Q4 earnings beat estimates The world’s largest foundry of semiconductors beat on net income in Q4 driven by gross margin at 62.2% vs est. 60.1%. TSMC says company to face margin headwinds in 2023 with revenue growth slowing down. CAPEX in 2023 is expected at $32-36bn vs est. $35bn against $36bn in 2022. The company is considering a second manufacturing plant in Japan and a new automotive chips plant in Europe. It has also expanded its 28nm production in China and is planning to mass produce its new 2nm in 2025 in its facilities in Taiwan. Fast Retailing sees big miss in Q1 operating income The parent company behind the Japanese fashion retailer Uniqlo reports Q1 operating income of JPY 117bn vs est. JPY140bn but maintains its outlook for profit and revenue growth amid its commitment from yesterday to raise wages up to 40% for its Japanese retail workers. KB Home outlook hit by interest rates When the price of capital goes up the demand on homes often goes down, and this is exactly what KB Home is experiencing. The US homebuilder reported Q4 EPS of $2.47 vs est. $2.86, but it was the FY23 outlook of revenue between $5bn and $6bn missing the consensus of $6bn in revenue, but with new orders down 80% more profit warnings could come during the year. What are we watching next? WASDE report on tap with grain traders watching stock levels The Bloomberg Grains Index, rangebound for the past six month has opened a new trading year with a loss of 3.5% primarily driven by lower wheat prices on ample supply from the Black Sea region, will receive some fundamental input later today when the US Department of Agriculture releases its monthly supply and demand report. Market estimates point to a trimming of the global corn and soybeans inventories, while wheat is expected to show a small rise. US inventories, meanwhile, is expected to rise across the board driven by weakness in Chinese demand and strong competition from overseas supplies, in part due to the dollar. Also focus on Argentina where an ongoing drought may drive a 6% reduction in the country's soy and corn output. US December CPI up today – what is the reaction function? The latest CPI data out of the US is the next important test for global markets, which seem confident that the Fed will not only halt its policy tightening soon after perhaps 50 basis points of further tightening but will even cut rates cuts by year-end. The US CPI releases have triggered considerable volatility in recent months, and the November CPI release on December 13 ullustrates the potentially treacherous reaction pattern to this data points, as softer than expected inflation levels reported saw risk asset jump aggressively as US treasury yields eased, only for the equity market move to get erased within hours and the US yields to bottom out on the following day. Consensus expectations for today’s CPI print are for a fall in the month-on-month headline data of –0.1% and a rise for the year-on-year at 6.5% versus +7.1% in November. The core, ex Food and Energy number is expected to rise +0.3% MoM and +5.7% YoY vs. +6.0% YoY in November and a peak rate of 6.6% last September. Earnings to watch The Q4 earnings season kicks off tomorrow with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth in 2023. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession or maybe no recession at all in the US economy. With higher interest rates level expectations are that banking revenue will slowly begin to accelerate and if high interest rates persist for an extended period, the longer-term growth for banks could be quite attractive. In addition, US banks have extended credit at the fastest pace in 2022 since the year leading up to the Great Financial Crisis. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Today: Fast Retailing, Seven & I Friday: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic Economic calendar highlights for today (times GMT) 1330 – US December CPI 1330 – US Weekly Initial Jobless Claims 1345 – US Fed’s Harker (voter 2023) to discuss economic outlook 1530 – EIA Natural Gas Storage Change 1630 – US Fed’s Bullard (non-voter) to speak 1700 – UK Bank of England’s Mann to speak 1700 – USDA's World Agriculture Supply and Demand Estimates (WASDE) Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Craig Erlam Craig Erlam 12.01.2023 11:49
Oil steadies as traders grow more optimistic Oil prices have steadied this morning after recovering strongly on Wednesday. Enthusiasm is building in the aftermath of last week’s jobs report and a positive inflation reading today could further fuel that. The prospect of a softer landing, even avoiding recession, is as good as investors could have realistically hoped for once it became clear how high inflation was going to rise last year. A softer landing for the US, and perhaps elsewhere, combined with a strong economic rebound in China following the current Covid wave could make for a much better year than feared and stimulate extra crude demand. Of course, this case very much focuses on the promising scenarios but they are also increasingly looking like the more plausible ones as well. Read next:The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz| FXMAG.COM Gold trading around pivotal technical zone The gold rally is continuing to stall around $1,880, the lower end of a range that has been a major point of support and resistance in recent years. The range between $1,880 and $1,920 could be pivotal once more, either as a barrier of resistance in the event that inflation disappoints, or a signal of renewed bullishness if a positive report is the catalyst for a break above. Either way, we could see plenty of volatility in the aftermath of the release. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Prices Of The Natural Gas Extended The Rebound

Commodities: US Natural Gas Prices Managed To Strengthen Yesterday

ING Economics ING Economics 13.01.2023 08:38
US CPI data came in line with expectations, which provided broad support to the commodities complex. Next week, there is a fair amount on the energy calendar, including OPEC and IEA monthly oil reports Gold climbed above $1,900/oz (very briefly) for the first time since May after US inflation data matched forecasts Energy: China refined product export surge After a weak start to the trading year, the oil market has performed better this week. ICE Brent is on course to settle higher this week, although we will need to see what happens in trading today. Yesterday’s US CPI data would have provided some support to the market, with it suggesting less aggressive action from the US Federal Reserve in the months ahead. Optimism around the China demand story has only provided further support to the oil market. Our balance shows that the oil market should tighten as we move through the year. This should prove constructive for prices, particularly when you consider the modest net long speculators currently hold in Brent. The latest trade data from China was released this morning, showing that crude oil imports in December averaged 11.35MMbbls/d, up around 4.1% year-on-year. This leaves crude oil imports over the whole of 2022 at 10.21MMbbls/d, down 0.9% YoY. We would expect stronger growth through 2023. In addition, refined product exports in December grew by 138% YoY to total 7.7mt, following the release of substantial export quotas towards the end of the year. However, full-year 2022 exports were still down around 11% % YoY to total 53.7mt. Given the increase in product export quotas we have seen from the Chinese government, it is likely that exports will edge higher this year, although this will also depend on how domestic demand performs over the course of the year. Refined product inventories in the ARA region edged higher over the week according to data from Insights Global. Total refined product stocks increased by 228kt to total 5.87mt. Increases were seen across all products, but naphtha saw the largest weekly move, increasing by 73kt. Gasoil stocks in the region are looking more comfortable than we saw at stages last year, but inventories still remain quite some distance below the 5-year average. In addition, we would expect to see some further tightening in middle distillates once the EU ban on Russian refined products comes into force in early February. US natural gas prices managed to strengthen yesterday, despite storage increasing over the last week. EIA numbers show that US natural gas storage increased by 11bcf, which is very different from a five-year average draw of 157bcf. The market appears to be more focused on a forecast for colder temperatures later this month. In addition, it appears as though Freeport LNG could see yet further delays to its restart. The plant was shut in June following a fire and the restart date has been pushed back several times already. The latest official comment was for a restart in the second half of January, however, recent reports suggest that this could be pushed into February. Metals: gold briefly climbs above $1,900/oz Gold climbed above $1,900/oz (very briefly) for the first time since May after US inflation data matched forecasts, raising hopes that the Fed will slow the pace of its rate hikes. The consumer price index fell 0.1% month-on-month in December, pushing the US dollar lower. Excluding food and energy, the core CPI rose 0.3% last month and was 5.7% higher than a year earlier, the slowest pace since December 2021. Central bank tightening and US dollar strength weighed heavily on gold prices for much of 2022. Russians bought a record 57 tonnes of gold from 13 local banks last year equating to more than 15% of the country’s annual output of gold. That compares to only six tonnes of gold bought in 2021. Russia cancelled value-added tax on retail gold purchases in March following the invasion of Ukraine, to boost gold sales. In July, retail buyers were also exempt from profit tax on gold purchases through to the end of 2023. Russia is the world’s second-biggest gold producer. The country mined more than 330 tonnes of gold in 2021. Aluminium Dunkerque, the EU’s largest aluminium smelter, is ramping up output back to full capacity as power prices decline. The company expects the plant to produce at full capacity by the end of May, with falling electricity prices and government support for heavy energy users helping boost profitability. The plant in Dunkirk, which produced 290,000 tonnes in 2021, cut output by 22% in September amid soaring energy prices. The UK’s FCA is blocking the LME’s plans to resume trading of nickel during Asian hours due to concerns the exchange won’t be able to run an orderly market, according to a report from Reuters. The exchange halted trading of nickel in Asian hours in 2022 after a historic price spike during Asian trading hours. The UK’s FCA had told the exchange its measures to supervise trading during that time zone were still not adequate. Agriculture: WASDE revisions The latest WASDE report from the USDA was constructive for grain prices. US corn production estimates for 2022/23 were lowered by around 200m bushels. And this revision was largely driven by unexpected lower acreage. As a result, ending stocks for 2022/23 were lowered from 1.26b bushels to 1.24b bushels, which was also below the roughly 1.31b bushels the market was expecting. For the global corn balance, 2022/23 ending stocks were marginally lowered from 298.4mt to 296.4mt. It was also slightly below the roughly 297.7mt expected. The USDA lowered its US production estimates by 70m bushels to 4.28b bushels, with yield estimates reduced from 50.2 bushels/acre to 49.5 bushels/acre. The agency decreased 2022/23 US ending stocks estimates for soybeans from 220m bushels to 210m bushels; which was lower than the more than 230m bushels the market expected. For the global market, the USDA increased 2022/23 global soybean ending stocks from 102.7mt to 103.5m, largely on account of higher stocks at the start of the season. However, global soybean production estimates were revised down by around 3.2mt to 388mt, as supply losses from Argentina weighed on total production and offset the slight production gains from Brazil. It was a fairly neutral report for global wheat markets as the USDA left both production and demand estimates largely unchanged at 781mt and 789mt respectively. Global ending stocks for wheat increased slightly from 267.3mt to 268.4mt, broadly in line with market expectations. However, for the US wheat balance, ending stocks for 2022/23 were lowered from 576m bushels to 571m bushels, as higher domestic use offset a sharp rise in beginning stocks. The market was expecting ending stocks of around 580m bushels. In addition to the WASDE, the USDA also released its quarterly grains stocks report which showed that US stocks as of 1 December 2022 all came in below market expectations. US corn stocks totalled 10.8b bushels, down 7% YoY and below market expectations of more than 11.1b bushels. US soybean stocks came in at 3.02b bushels, down 4% YoY and lower than the 3.3b bushels expected. Finally, for US wheat, stocks were down 7% YoY to total 1.28b bushels, which was also below the 1.34b bushels expected. Read this article on THINK TagsWASDE Refined product Oil Natural gas LNG Gold China trade Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Gold Traded Softer In Response To Dollar Strength, The Bank Of Japan Left Its Policy Levers Unchanged

A Softer US Inflation Data Helps Gold, The Japanese Yen Was The Biggest Gainer

Saxo Bank Saxo Bank 13.01.2023 09:03
Summary:  A Fed downshift to 25bp hikes may be firmer in the cards with the in-line 0.3% M/M increase in the core CPI bringing the measure to 3.1% on a three-month annualized basis. Yields on the 10-year Treasury notes plunged 10bps to 3.44% and the S&P 500 closed just below its 200-DMA. The Japanese Yen was the biggest winner in the currency space on speculation for further policy shifts by the BOJ next week. Bank of America, JPMorgan Chase, and Citigroup report Q4 earnings today.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) advanced on CPI prints supporting a Fed downshift U.S. stocks climbed, following CPI data that support the Fed to slow the pace of rate hike to 25bps in February. Nasdaq 100 gained 0.5% and S&P 500 edged up 0.3%. Closing at 3983.17, the S&P 500 has its 200-day moving average of 3,984.39 within reach. Energy, rising 1.9, was the best-performing sector within the S&P 500 as WTI crude oil climbed over 1% to USD78.29. Interest rate-sensitive REITS was the other top winning sector. American Airlines (AAL:xnys) surged 9.7% on upbeat revenue growth and earnings guidance and a debt reduction plan.   US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) rallied, yields on the 10-year sliding to 3.44% After choppy initial reactions when traders digested the CPI prints, U.S. Treasuries advanced and their yields slid decisively. The headline and core CPIs in December were in line with expectations. Investors noted the decline of the core inflation on a three-month annualised basis to 3.1% and the softness in core services excluding shelter and concluded that the Fed is on track to downshift to a 25bp hike in February. Comments from Fed’s Harker (voter) that “hikes of 25bps will be appropriate going forward” added conviction to the notion. The strong results from the USD18 billion 30-year auction saw yields on the long end richer further. Yields on the 10-year finished the session 10bps lower to 3.44% and those on the 2-year were 4bps lower to 4.12%. In Australia and Asia today focus is on; risk-on assets, Oil, Iron Ore and Copper charging The Australian share market (ASXSP200.I) opened 0.8% higher, with most other Asian markets are set to open in the positive. Ahead of Australia’s company reporting season kicking off next month, we’re thinking we could likely see many commodities companies upgrade their outlooks for 2023, expecting higher earnings as many resources prices have quickly entered bull markets amid China easing restrictions sooner than expected. However today, eyes will once again be on commodities and affiliated equites; as the oil price jumped for the 6th day, moving up to $78.30, after rising 1.1%, The copper price rose 0.1% to $4.17 on the COMEX market in New York. Iron ore (SCOA) is 0.6% higher at $123, a new 6-month high. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) traded sideways on profit taking After making a new six-month high, Hang Seng Index reversed and pared gains to finish Thursday only 0.4% higher. Profit-taking weighed on recent policy beneficiaries, such as mainland Chinese property developers, domestic consumption names, mega-cap internet stocks, and Macao casino operators. Country Garden, down 6.3%, was the biggest loser within the Hang Seng Index. Shares of EV makers bucked the market trend of retracement to advance, led by BYD (01211:xhkg) which was up 5.3% and was the top winner among Hang Seng Index constituents. NetEase (09999:xhkg) outperformed other China internet names with a 3.7% gain on collaborating with the state-owned CCTV to broadcast the Lunar New Year gala on the company’s metaverse platform. FIT Hong Teng (06088:xhkg), a subsidiary of Foxconn, soared 17.2% on speculation that the company might replace GoerTek (002241:xsec) to assemble AirPods for Apple. In A-shares, telecommunication, electric equipment, EV, non-bank financials, and new energy outperformed as the domestic consumption space retraced. CSI300 climbed 0.2%. FX watch; Australian dollar is on the heels of 0.70 US After US CPI data showed US prices have continued to fall, the US dollar vs the AUD continued to fall, taking its fall from its peak to 10%. Inversely, Australia's trade balance data released yesterday, as well as Aussie retail and Aussie CPI earlier in the week, plus the all-important easing of China’s restrictions sooner than expected, all support upside in the AUD. As such the Aussie versus the US rallied to new four-month highs, 69.67 US. The next resistance level, the psychological 70.00 US is the next hurdle to get over. Aussie home loan data released today is the next catalyst to watch. If it’s stronger than expected, the AUDUSD could march on up. FX: USDJPY crumbles on weaker USD and BOJ speculation The Japanese yen was the biggest gainer on Thursday, boosted both by lower US yields as well as speculation around a policy tweak by the Bank of Japan at the next week’s meeting. USDJPY slid from 132.50 to 129 handle. Japanese 10-year bonds continued to test the upper limit of the permitted trading band, and rose higher to 0.53% in early Asian hours testing the central bank’s resolve on a dovish policy. EURUSD broke above 1.08 to fresh highs of 1.0867 with expectations of Fed-ECB divergence setting a bullish tone. Crude oil (CLG3 & LCOH3) rounding in at about 6% gains for the week Crude oil prices gained further on Thursday amid the risk on tone set by further softening in inflation pressures. China’s steady commitment to reopen the economy and provide a stimulus to the economy continued to support sentiment this week, along with Chinese buyers become more active in the physical market as import quotas were increased. WTI futures rose to $79/barrel while Brent moved above $84/barrel. Gold (XAUUSD) reached $1900 on expectations of Fed downshift Gold saw another rally with a softer inflation print in the US bolstering the case for a further downshift in the Fed’s rate hike trajectory. A broadly dovish tone from the Fed members also saw a plunge in US yields and weighed on the USD, helping support gains in Gold as well. Silver outperformed gold, and platinum and palladium gained as well.    Read next: GM, Ford, Google And Solar Producers Would Work Together To Set Standards For Increasing The Use Of VPPs| FXMAG.COM What to consider? US CPI boosts the case for a Fed downshift A further slowdown was seen in US CPI last night, with the headline sliding to 6.5% YoY as expected from 7.1% YoY in November, stepping into the disinflationary territory on a m/m basis with a negative 0.1% print from +0.1% previously. Core inflation also eased in-line with expectations to 5.7% YoY in December from 6.0% YoY previously but still higher on m/m basis at 0.3% from 0.2% in November. Services inflation was still higher, being the more sticky component of inflation, but with six consecutive months of softening in inflation, the Fed could take some comfort that its tightening moves are working. Market is pricing in another step down at the Fed’s next decision on Feb 1 to 25bps rate hike, but the terminal rate pricing still stands at sub-5% levels compared to a unanimous voice from the FOMC members calling for rates over 5%. Meanwhile, US jobless claims unexpectedly fell to 205,000 from a revised 206,000 the previous week, suggesting labor market is still tight. Continuing claims also surprisingly improved, dropping to 1.63 million from 1.7 million. Fed members also signal a further downshift Patrick Harker (voter) said 25-bp increases "will be appropriate going forward" after data showed inflation moderating. Thomas Barkin (non-voter) also emphasised that Fed has more work to do, although he signalled that "it makes sense to steer more deliberately." Bullard was relatively more hawkish, but he also doesn’t vote this year. He said that he favors getting the benchmark above 5% as soon as possible before holding. US Bank earnings kickstart today US banking earnings kick off the Q4 earnings season today, most notably from Bank of Bank of America, JPMorgan Chase, and Citigroup. Analysts remain muted on US banks with earnings expected to show another quarter of negative growth compared to a year ago. Peter Garnry, Saxo’s Head of Equity Strategy, wrote in his recent article that the interest rate shock had been bad for banking earnings and activity levels across the investment banking division. As credit portfolios have an average maturity of around seven years banks will slowly begin rolling their assets into higher interest rate levels which will begin to accelerate their net revenue figures improving profitability over time. If the US economy just experience a shallow recession in real terms and strong nominal growth then US banks should be considered as a good tactical trade over the coming years. CPI and PPI inflation remained low in China CPI in China rose to 1.8% y/y in December from 1.6% in November, in line with expectations. The year-on-year growth was due to a low base. On a month-on-month basis, CPI was unchanged in December. Excluding food and energy, core CPI came in at 0.7% y/y in December, edging up slightly from 0.6% y/y in November but remaining subdued. The change in PPI rebounded less than expected to -0.7% y/y versus -0.1% expected and -1.3% y/y in November. Deflation in the processing sector narrowed to -2.7% Y/Y in December from -3.2% Y/Y in November. The mining component in the PPI swung to 1.7% Y/Y in December from -3.9% Y/Y in November. TSMC (TSM:xnys) Q4 earnings beating estimates, expecting revenue decline and CAPEX cuts in 2023 The world’s largest foundry of semiconductors beats on net income in Q4 driven by a gross margin of 62.2% versus the 60.1% expected. TSMC says the company is to face margin headwinds in 2023 with revenue growth slowing down. For Q1 2023, the management expects revenues to fall to between USD16.7 billion and USD17.5 billion from USD17.57 billion in Q1 2022. CAPEX in 2023 is expected to be between USD32 billion and USD36 billion, against $36bn in 2022. The company is considering a second manufacturing plant in Japan and a new automotive chips plant in Europe. It has also expanded its 28nm production in China and is planning to mass produce its new 2nm in 2025 in its facilities in Taiwan. TSMC expects that revenues of the global semiconductor industry, excluding memory chips, to fall 4% in 2023. UK November GDP to signal an incoming recession UK’s monthly GDP numbers are due this week, and consensus expects a contraction of 0.3% MoM in November from +0.5% MoM previously which was boosted by the favourable M/M comparison vs. September, which was impacted by the extra bank holiday for the Queen’s funeral. The economy is clearly weakening, and another quarter of negative GDP print remains likely which will mark the official start of a recession in the UK.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Softer US CPI supports Fed downshift, Bank earnings ahead - 13 January 2023 | Saxo Group (home.saxo)
The Commodities Digest: US Crude Oil Inventories Decline Amidst Growing Supply Risks

CPI In The US Slowed Down Further, Falling To 6.5% y/y With Expectations

Saxo Bank Saxo Bank 13.01.2023 09:13
Summary:  The market churned wildly in the wake of perfectly in-line US CPI data yesterday after perhaps hoping for even stronger signs of decelerating inflationary pressures than the data delivered. Alas, in the end the market celebrated the data, sending US treasury yields and the USD lower and risk sentiment higher, with the S&P 500 testing its 200-day moving average. Gold touched $1,900 per ounce.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities chopped around after the in-line December CPI data release, with the S&P 500 index taking a stab at trading above the 4,000 level and the 200-day moving average just above that level for the March future (and at 3,984 for the cash index – the cash index never traded north of 4,000 yesterday, peaking at 3997). For its part, the Nasdaq 100 has been interacting with the prior support areas now resistance around 11,550. Interesting days and weeks ahead as we trade up into pivotal technical levels just ahead of earnings season. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index had a lackluster session on Friday trading sideways around yesterday’s close. Mainland’s CSI300 advanced 0.8% led by a bounce in domestic consumption, brokerage, and insurance names. China’s exports in December fell 9.9% in U.S. dollar terms from a year ago and imports declined 7.5%. The Chinese authorities have reportedly drafted an action plan to help “quality” property developers to strengthen their balance sheets. Shares of Chinese developers however have generally retraced and registered modest losses. The three Chinese state-own oil companies traded in Hong Kong advanced between 1% and 3% on higher oil prices. NetEase, rising 3%, stood out among China internet names. FX: USD drops on in-line CPI data. JPY strongest on BoJ expectations, falling yields The US dollar fell after a chaotic knee-jerk reaction to in-line CPI data, as the market may have been leaning for a softer-than-expected surprise. In the end, US yields dropped and risk sentiment rallied anew, the ideal combination for USD bears. The selling was most intense for the balance of the day in USDJPY, which probed new cycle lows below 129.00 and much of the move coming ahead of the US data as the market was busy absorbing the news flow from earlier in the day on the potential for a shift in BoJ policy at next Wednesday’s BoJ meeting. Japanese 10-year bonds continued to test the 0.50% upper limit of the permitted trading band, rising to above 0.57% by late Asian hours hours and testing the central bank’s resolve. EURUSD broke above 1.08 to fresh highs of 1.0867 with expectations of Fed-ECB divergence setting a bullish tone. EURUSD also cleared the prior highs and traded as high as 1.0868, while AUDUSD touched a new high of 0.6983, just ahead of the key 0.7000 level. Crude oil (CLG3 & LCOH3) seen heading for a 6% weekly gain Crude oil has rallied strongly this past week on China’s improving outlook and after US inflation continued to cool, thereby supporting the general level of risk appetite, not least through a weaker dollar. China, the world's biggest importer is expected to hit record consumption this year, a development already gathering pace with Chinese buyers becoming more active in the physical market as import quotas are increased. Gains in the energy sector being led by gasoline after its premium over WTI rose to the highest since August. In the short-term WTI may now find some resistance at $80, where the 50-day moving average is lurking while in Brent that level can be found at $84.75. Gold trades near $1900 as cooling inflation softens up the dollar Gold is heading for a fourth weekly gain as US inflation continues to ease thereby supporting a further downshift in the Fed’s rate hike trajectory. A broadly dovish tone from Fed members also supported gold as the dollar and bond yields softened. Trading just below $1900 and within an area of resistance, today’s price action ahead of the weekend will be important in order to gauge the underlying strength. Physical demand may struggle in the short term as traders warm to higher prices, not least in India where demand according to Reuters plunged by 79% in December from a year earlier. In addition, we have yet to see demand for ETF’s, often used by long-term focused investors, spring back to life with total holdings still hovering near a two-year low at 2923 tons. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) drop, long yields perched near cycle lows The in-line US CPI data release yesterday saw a choppy market but eventually saw treasuries strongly bid later in the session, sending the 2-year to a test just below the prior 4.13% low at one point and the US 10-year yield toward the 3.40% pivot low from back in early December. A 30-year T-bond auction saw the strongest bidding metrices since last March. Read next: GM, Ford, Google And Solar Producers Would Work Together To Set Standards For Increasing The Use Of VPPs| FXMAG.COM What is going on? US December CPI in-line with expectation, boosts the case for a Fed downshift A further slowdown in US CPI as expected yesterday, as the headline slid to 6.5% YoY as expected from 7.1% YoY in November, stepping into the disinflationary territory on a m/m basis with a negative 0.1% print from +0.1% previously. Core inflation also eased in-line with expectations to 5.7% YoY in December from 6.0% YoY previously but still higher on m/m basis at 0.3% from 0.2% in November. Services inflation was still higher, being the stickier component of inflation, but with six consecutive months of softening in inflation, the Fed could take some comfort that its tightening moves are working. The market is pricing in another step down at the Fed’s next decision on Feb 1 to 25bps rate hike, but the terminal rate pricing still stands at sub-5% levels compared to a unanimous voice from the FOMC members calling for rates over 5%. Meanwhile, US jobless claims point to a tight labour market, unexpectedly falling to 205,000 from a revised 206,000 the previous week. Continuing claims also surprisingly improved, dropping to 1.63 million from 1.7 million. Resources companies: earnings upgrades could be on the cards Commodities companies are likely to start to upgrade their outlooks for 2023, ahead of reporting full year results in February. Iron ore, copper and aluminium companies in particularly are likely to upgrade their 2023 earnings as these respective commodity prices quickly entered bull markets +64%, +30%, and +20% respectively from their lows as China eased restrictions sooner than expected. The Iron ore (SCOA) price as an example, rose 2% alone in Asia today, hitting a new 6-month high. BHP shares in Australia hit a new record high of A$49.64 while Rio Tinto trades about 3% shy of its record, with both iron ore, and copper giants trading higher in anticipation of higher free cashflow in 2023. WASDE report sees corn prices jump the most since September The USDA on Thursday unexpectedly cut its outlook for US domestic production and available stocks of both corn and soybeans, a sign that an ongoing drought from last year may continue to underpin prices. The worst Argentinian drought in 60 years also led to a downgrade in the outlook for soybeans and corn production, some of that being partly offset by an expected bumper harvest in Brazil. One bright spot was wheat where the USDA raised its outlook for global production. Following the WASDE report corn (ZCH3) rose 2.5%, soybeans (ZSH3) 1.8% while wheat (ZWH3) was up by less than 1%. Sweden December CPI hits new cycle highs as weak krona aggravates inflation The December headline number came in at +2.1% MoM and +12.3% YoY vs. 1.8%/12.0% expected, respectively and vs. 11.5% YoY in Nov. The core data was +1.9% MoM and +10.2% YoY vs. +1.6%/+9.8% expected, respectively and vs. +9.5% YoY in Nov. What are we watching next? Bank of Japan meeting next Wednesday shaping up as major event risk The recent news flow and rumor mill sees the Bank of Japan announcing further tweaks to its policy next Wednesday at its meeting. Ironically, the anticipated further widening of its yield curve control “band” (de facto more of a “cap”) on 10-year JGB’s comes as long yields are dropping sharply elsewhere, accentuating the tightening of spreads between Japanese yields and those in, for example, Europe and the US. Earnings to watch The Q4 earnings season kicks off today with banking earnings from Bank of America, JPMorgan Chase, and Citigroup with consensus expecting earnings to continue contracting among US banks before coming back to growth in 2023. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession or maybe no recession at all in the US economy. With higher interest rates level expectations are that banking revenue will slowly begin to accelerate and if high interest rates persist for an extended period, the longer-term growth for banks could be quite attractive. In addition, US banks have extended credit at the fastest pace in 2022 since the year leading up to the Great Financial Crisis. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Today: DiDi Global, Aeon, Bank of New York Mellon, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, UnitedHealth, BlackRock, Delta Air Lines, First Republic Economic calendar highlights for today (times GMT) 1000 – Eurozone Nov. Trade Balance 1000 – Euro zone Nov. Industrial Production 1330 – US Dec. Import Price Index 1500 – US Fed’s Kashkari (Voter 2023) to speak 1500 – US Jan. Preliminary University of Michigan Sentiment 1520 – US Fed’s Harker (Voter 2023) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – January 13, 2023 | Saxo Group (home.saxo)
The Loonie Pair (USD/CAD) Bounces Off An Upward-Sloping Support Line

Higher Oil Prices Will Strengthen The Canadian Dollar (CAD)

TeleTrade Comments TeleTrade Comments 13.01.2023 09:25
USD/CAD has picked strength amid caution in the market mood, however the overall sentiment is still positive. Federal Reserve is likely to trim the pace of policy tightening due to a downward trend in US inflation. A sheer recovery in oil prices led by expectations of economic recovery in China may strengthen the Canadian Dollar. USD/CAD is likely to continue its downside journey toward the horizontal support plotted at 1.3226. USD/CAD has picked strength and has extended its recovery to near the round-level resistance of 1.3400 in the early European session. Earlier, the Loonie asset picked up demand after dropping to near 1.3345 as the risk appetite of the market participants dropped. Investors trimmed their longs in risk-sensitive assets after a stretched rally. The S&P500 futures have sensed selling pressure after remaining extremely bullish consecutively in the past three trading sessions, portraying caution in the overall positive market mood. A decline in the risk appetite has also impacted the demand for US government bonds, which has increased the 10-year US Treasury yields to 3.47%. The US Dollar Index (DXY) has turned sideways below 102.00 after registering a fresh seven-month low at 101.65. Soften US Inflation supports lower interest rate hike by the Fed Thursday’s release of the United States Consumer Price Index (CPI) has provided confidence that the price pressures are softening and the Federal Reserve (Fed)’s blueprint of achieving price stability is operating effectively. From a peak of 9.1%, the annual headline price index has dropped to 6.5% in a few months. Thanks to the declining gasoline and used car prices have decelerated the pace of inflation in the United States economy. A meaningful decline in the US price index has triggered odds of further deceleration in the pace of the interest rate hike already after slowing in December’s monetary policy meeting as Federal Reserve chair Jerome Powell and his teammates are working in the right direction. Philadelphia Fed Bank President Patrick Harker said on Thursday that it was time for future Fed rate hikes to shift to 25 basis points (bps) increments, as reported by Reuters. S&P500 to achieve recovery if Fed trims policy tightening pace The equity domain in the United States economy witnessed an intense sell-off in CY2022 as the Federal Reserve was on a trip of hiking interest rates to achieve the 2% inflation target. The US central bank hiked the borrowing rates with four 75 basis points (bps), two 50 bps, and one 25 bps rate hike announcements to 4.25-4.50%. As inflation is getting under control gradually and the Federal Reserve won’t be so hard on interest rates, it looks like the S&P500 will get back into the picture. The slowdown in the pace of the interest rate hike will allow firms to achieve a sense of optimism, which will support them in executing expansion plans and boosting operations. No doubt, the pace of policy tightening will be trimmed but short-term pain will stay. Philadelphia Fed Bank President Patrick Harker cited that recession in the United States economy is not into the picture but the Gross Domestic Product (GDP) could slow to 1% this year. Oil faces barricades for around $79.00 After a perpendicular rally led by support from recovery in the Chinese economy led by sheer reopening measures and expectations of further sanctioning on Russia, oil prices are facing a halt around $79.00. Moscow is expected to face further sanctions from Western countries for oil supply as nations want to restrict it from getting liquidity to fund arms and ammunition in its fight against Ukraine. Further upside in the oil price looks likely amid a decline in US inflation, which will trim the policy tightening pace of the Fed. Meanwhile, the United States administration has denied oil supply to China from its Strategic Petroleum Reserve (SPR). This will force the Chinese economy to look for alternative suppliers, which could accelerate oil prices in a short span of time. It is worth noting that Canada is a leading exporter of oil to the United States and higher oil prices will strengthen the Canadian Dollar. Read next: The USD/JPY Pair Drop To 130, The Aussie Pair Keeps Trading Above 0.69$| FXMAG.COM USD/CAD technical outlook USD/CAD has delivered a breakdown of inventory distribution placed in a range of 1.3500-1.3700 on a four-hour scale. A breakdown of the inventory distribution phase results in extreme volatility expansion which triggers wider ticks to the downside. The Lonnie asset is likely to find a cushion around the horizontal support plotted from November 15 low at 1.3226. Meanwhile, downward-sloping 20-and 50-period Exponential Moving Averages (EMAs) at 1.3414 and 1.3460 respectively, add to the downside filters. A bearish momentum will be triggered if the Relative Strength Index (RSI) (14) will slip into the bearish range of 20.00-40.00.
The Commodities Feed: First US crude draw this year

The Upside Bias Of Crude Oil Is Still Solid

TeleTrade Comments TeleTrade Comments 13.01.2023 09:31
Oil prices have turned sideways after failing to extend recovery to near $80.00. The black gold price has not run out of steam as the US administration is ceasing oil supply to China. Falling US inflation has triggered odds of a slowdown in the pace of the Fed’s policy tightening. West Texas Intermediate (WTI), futures on NYMEX, have sensed a lack of strength in its upside journey toward the critical resistance of $80.00. The oil price has faced barricades in stretching its rally further around $79.40 amid profit-booking, however, the upside bias is still solid. The oil price has been in a bullish trajectory from the past week as the Chinese economy has picked the path of recovery after remaining locked for a lengthy period to augment lockdown curbs to cease the further spread of the Covid-19 epidemic. The reopening measures by the Chinese economy after dismantling restrictions on the movement of men, materials, and machines and allowance of international travelers is going to spurt the economic growth ahead. Read next: The USD/JPY Pair Drop To 130, The Aussie Pair Keeps Trading Above 0.69$| FXMAG.COM Meanwhile, a fresh decline in the United States inflation figures led by a recent fall in gasoline and used car prices has accelerated the odds of further recovery in oil demand ahead. According to Bill Diviney, Sr. Economist at ABN – AMRO, data released on Thursday in the US confirmed a slowdown in inflation, with the annual CPI rate falling to 6.5%, the lowest level since October 2021. And, falling inflation paves way for a 25 basis points (bps) Federal Reserve (Fed) interest rate hike, instead of a 50 bps hike. The oil price is likely to get strengthened further as the US administration is ceasing oil supply to China from its Strategic Petroleum Reserve (SPR). In this scenario, the Chinese administration will be forced to look for alternative suppliers to augment their oil demand, which could trigger short-term pain for the oil supply but will strengthen oil prices further.  
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Is Continuing Its Powerful Start, Curde Oil Also Is Rising

Craig Erlam Craig Erlam 13.01.2023 14:41
Will economic optimism be spoiled? Oil prices are on the rise again on Friday, buoyed by renewed optimism on interest rates. The fact remains that the first half of the year, at least, will be enormously challenging for the global economy but lower terminal rates and even cuts later in the year will cushion the blow and could see it outperform current expectations. That, along with the resurgence in China, will be a big plus for crude demand and could keep the price well supported. Of course, it now has to contend with what Wall Street has to throw its way in the coming weeks. That will likely include weak earnings, bleak forecasts and potentially job loss announcements. Maybe we’ll all feel a little less hopeful if that materialises as feared which could weigh a little on oil after the recent surge. Record highs in sight? Gold is continuing its powerful start to the year with another small gain on Friday, breaching $1,900 in the process. It’s now right in the middle of the $1,880-$1,920 range that has been so pivotal in recent years. That could see it run into strong resistance in the coming sessions, although as yet momentum is only improving. That will give gold bulls comfort and should it hold long enough to breach the upper end of that range, it could be a very positive signal. Suddenly $2,000, even record highs, could be in sight. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
All EMs In Latin America Rose, Colombia Being The Top Performer In The Region

All EMs In Latin America Rose, Colombia Being The Top Performer In The Region

Franklin Templeton Franklin Templeton 14.01.2023 09:33
Emerging Market Insights Three things we’re thinking about today We are optimistic that emerging markets, in particular Chinese equities, can post positive returns in 2023. Drivers of our optimism include: China dismantles its zero-COVID policies: The removal of almost all COVID-19 restrictions in China is resulting in a wave of infections, with up to 80% of people in urban areas contracting the virus. As the wave subsides, economic activity is expected to normalize. Durable goods and financial services are likely beneficiaries of a resumption in normal patterns of human interaction and trade. A recovery in outward-bound tourism is expected to benefit economies in Asia, which prior to 2020 were the prime beneficiaries of the large number of Chinese tourists. Peak in US interest rates: Consensus expectations point to two further increases in the US federal funds rate in 2023. While the timing of eventual rate cuts remains uncertain, the peak in rate hikes is the first step on this journey. The US dollar has already reacted to expectations of a peak in interest rates in 2023, trending lower in recent months. US dollar weakness should benefit emerging market fund flows, reversing the outflows of recent years, which in turn is supportive of emerging market equities Acceleration in renewable energy investments: The “new normal” of elevated fossil fuel prices is likely to incentivize emerging markets to accelerate decarbonization efforts in order to reduce energy costs and meet their Paris Climate accord targets. This will create potential opportunities for emerging market investors. The battery industry—for both electric vehicles and battery electric storage systems—as well as the solar industry, stand out. China and South Korea are at the forefront of new battery technologies, commanding 83% global market share between January-October 2022. India is also investing heavily in the solar industry as it seeks to become self- sufficient in photovoltaic panel production. Outlook As we head further into 2023, we find many reasons to be constructive about emerging markets (EMs). Markets such as Chile and Indonesia have started to pause interest-rate hikes or scale back the magnitude of their rate hikes. We expect a policy pivot to revive consumption and spur economic growth as inflation slows. In addition, after a slowdown in earnings in 2022, there is a prospect for a recovery in earnings growth in 2023. We view China as a leader with a near-15% estimated growth, based on consensus expectations.However, we are of the view that earnings may continue to still be relatively weaker in China in the near term, with a recovery timed toward the end of 2023 instead. Nonetheless, a pickup in earnings revisions in EMs would signify better times ahead for earnings and in turn, equities. Although a weakening global outlook appears to be on the horizon, economies with a greater focus on domestic demand are better placed to weather a challenging environment. These markets include EM countries such as India, Brazil and Indonesia. India has attracted investors looking to diversify their manufacturing bases from China. Similarly, the Middle East is experiencing an upturn in consumption, due to a spillover from high energy prices. China’s recent policy changes and low equity valuations have created opportunities locally as well as in Asia more broadly, as China is the largest driver of economic activity in the region. China’s reopening could benefit EMs outside of Asia as well. As mobility in China bounces back to pre-pandemic levels, its demand for oil will also likely increase. This benefits several non- Asian EMs which supply crude oil to China, including Saudi Arabia, Kuwait and Colombia. While the risks of 2022 have abated slightly, we remain watchful for developments that could change our overall EM outlook, including China’s relationship with Taiwan and the United States. As the investment environment evolves, an important feature that we seek in EMs is resilience, in terms of both economies and companies. A particular area of focus for us is the sustainability of corporate earnings, whether in the face of COVID-19, policy changes, technology disruption or other challenges. We see companies with structural growth drivers aligned with digitalization, decarbonization and premiumization emerging as long-term winners. Emerging markets key trends and developments The combination of a weaker US dollar, receding inflation and China’s pivot away from zero-COVID spurred investor confidence in the latter months of 2022. The release of third-quarter corporate earnings results and confidence in the growth outlook for several EM economies also buoyed returns. However, political uncertainties capped gains—the Chinese equity market’s selloff after the 20th National Congress and a lack of policy clarity in the wake of Brazil’s presidential elections are two examples. Nonetheless, global equities still rose over the fourth quarter of 2022 (4Q22), with both EMs and developed markets performing on par. The MSCI Emerging Markets Index rose by 9.8%, while the MSCI World Index advanced by 9.9%, both in US dollars in 4Q22. The most important moves in emerging markets in the fourth quarter of 2022 Emerging Asian stocks finished the quarter higher. Stocks in China contributed to regional gains after policymakers dismantled their zero-COVID policies. The long-embattled property sector also received a boost from support measures, with leading Chinese institutions extending loans to the sector. India’s equity market also advanced amid softening inflation and lower oil prices. Indonesia’s market, the sole laggard within emerging Asian economies, fell as its central bank raised its policy rate again.5 The policy rate was most recently raised by 25 basis points (bps)—a smaller magnitude than past hikes—reaffirming that inflation was easing. Latin American EM equities also swung higher in 4Q22. All EMs in Latin America rose during the quarter, with Colombia being the top performer in the region. Market-watchers welcomed Colombia’s aim to take advantage of higher energy prices by targeting a 15% increase in crude oil output. Heavyweight Brazil’s equity market also advanced, albeit at a more moderate 2.5% for the quarter, as consumer prices rose less than expected. EMs in the Europe, Middle East and Africa (EMEA) region saw mixed results, although the region as a whole managed to eke out gains. Saudi Arabia’s market declined, capping gains for the region, as soft oil prices and a weaker US dollar weighed on sentiment—the Saudi riyal is pegged to the US dollar. Turkish equities led gains as investors increased their equity allocation to hedge against inflation and a low-yield environment. Source: Emerging Market Insights (widen.net)
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

ING Economics ING Economics 16.01.2023 08:48
Most commodities saw a fair amount of strength last week after the US CPI print came in line with expectations, while optimism around Chinese demand continues to grow. There is quite a bit on the calendar for energy markets this week with reports from both OPEC and the IEA Source: iStock Energy- Brent recovers After the strong performance from the oil market last week, ICE Brent is almost back to where it was trading at the start of this year. ICE Brent managed to rally more than 8.5% last week and settled at US$85.28/bbl. Time spreads did not benefit from the same strength. The prompt Brent spread weakened over the last week. While there is still plenty of optimism around Chinese demand, in the near term the oil market remains relatively well supplied. We see further upside from 2Q23, as the market tightens. The latest market positioning data shows that there was little change in the ICE Brent speculative long position, despite the moves seen in the market so far this year. Speculators trimmed their net long in ICE Brent by 4,344 lots to leave them with a net long of 157,112 lots as of last Tuesday. Given the move in the market along with the increased open interest since then, it is likely that the net long is somewhat larger currently.   There is a lot on the calendar this week for energy. Firstly, trading may be a bit thinner today due to a holiday in the US. Tuesday will see OPEC release its monthly oil market report, whilst China will also release industrial production data for December, which will include both crude production and refinery processing. This will be followed by the IEA’s monthly oil market report on Wednesday. Both API and EIA inventory numbers will be delayed by a day due to today’s public holiday in the US. Metals – China's monthly copper imports fall Copper ore and concentrate imports fell 12.7% MoM to 2.1mt in December as some domestic smelters shut for maintenance, according to Chinese Customs data. However, imports were still up 2.1% YoY. Overall, full-year 2022 concentrate imports rose 8% YoY to 25.3mt. Unwrought copper imports fell 4.8% MoM and 12.8% YoY to 514kt last month due to slowing demand amid rising covid infections, while full-year imports were still up 6.2% YoY to 5.87mt. In ferrous metals, iron ore imports fell 8% MoM to 90.86mt in December (lowest since June) due to weaker end-use industry demand. Meanwhile, total iron ore imports in 2022 fell 1.5% YoY to 1,107mt. On the exports side, Chinese unwrought aluminium exports rose 3.5% MoM to 471kt in December, while full-year exports rose 17.6% YoY to 6.6mt in 2022. The latest LME data showed total on-warrant stocks for copper reported outflows of 2,350 tonnes (the biggest daily decline since 8th December) to 64,650 tonnes on Friday. The outflows were driven by the decline in Rotterdam warehouses. In mine supply, according to the latest reports, MMG’s Las Bambas copper mine halted copper concentrate transportation due to ongoing protests in Peru. According to the reports, protestors attacked Glencore’s Antapaccay copper mine on Thursday, which is located along the same route used by Las Bambas to transport copper, known as the mining corridor. On Friday afternoon, an LME data-entry error showed the global benchmark price for copper down 77% in the latest glitch from the exchange. The error came at the close of trading in the LME’s second open-outcry pricing session. While the final price in the trading ring was set at $9,130/t, according to a report from Bloomberg, the LME’s external data feed showed a price of $2,130/t. Agriculture – China soybean imports jump Recent trade numbers from Chinese customs show that soybean imports into China increased for a second straight month in December. Imports rose 44% MoM and 19% YoY to 10.6mt (the highest monthly total since June 2021). However, full-year soybean imports were still down 5.6% YoY to 91.1mt. The latest data from Ukraine’s Agriculture Ministry shows that farmers harvested 23.6mt of corn from 3.4m hectares as of 12th January, which accounts for 85% of corn area for the 2022/23 season. CFTC data shows that money managers decreased their net long in CBOT soybeans by 11,290 lots (after four consecutive weeks of gains) over the last week, leaving them with a net long position of 131,704 lots as of 10 January. The move was predominantly driven by longs liquidating. For CBOT wheat, speculators increased their net short position by 10,419 lots to 63,134 lots. Finally, the speculative net long in CBOT corn decreased by 46,852 lots to 149,605 lots. Read this article on THINK TagsSpeculators Oil Iron ore Copper China Trade China demand Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Tesla Cut Prices Across Models In The U.S., The BOJ Bought Roughly 10 trillion yen In JGBs Over The Past Two Days

Saxo Bank Saxo Bank 16.01.2023 09:09
Summary:  U.S. equities charged higher with the S&P 500 rising above its 200-day moving average despite bond yields surging higher on profit-taking. The four biggest U.S. banks reported Q4 earnings, beating expectations but the weaker outlook for net interest income and higher provision for credit losses weighed on share prices initially before reversing and finishing the session higher. Stocks in Hong Kong and mainland China gained as the Chinese Government took up “special management shares” in local units of Alibaba and Tencent. The Japanese Yen strengthened to 127.87 against the dollar on mounting speculation on BOJ policy adjustment at this week’s meeting.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) gained as bank stocks bounced U.S. equities opened lower as shares of banking stocks initially got hit by disappointing guidance on net interest income and credit loss provision, despite reporting Q4 earnings beating expectations. Shares of JP Morgan, (JPM:xnys), Bank of America (BAC:xnyg), Citigroup (C:xnys), and Wells Fargo (WFC:xnys) recovered fully from early losses and more, having finished Friday between 1.7% and 3.3% higher. Consumer discretionary names gained, with Target (TGT:xnys) and Amazon.com (AMZN:xnas) each rising around 3%. The S&P 500 Index edged up 0.4% to close at 3999.09, breaking to the upside its 200-day moving average (currently at 3981.22). The Nasdaq 100 Index rose 0.7% to 11,541.48, above its 100-day moving average (currently at 11523.33). Tesla (TSLA:xnas) fell 0.9% after the EV giant cut prices in the U.S. and Europe. Share of General Motors (GM:xnys) slipped 4.8% and Ford (F:xnys) plunged 5.3%. Delta Airlines (DAL:xnys) declined 3.5% on Q1 guidance which was below analyst estimates. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) jumped on profit-taking Yields on Treasuries bounced from their lows and finished the Friday session cheaper on profit-taking. Selling concentrated in the front end and saw the yields on the 2-year jump 9bps to 4.23%. Yields on the 10-year rose 6pbs to 3.50%. The 2-10 year curve went more inverted at -73bps. The University of Michigan survey’s inflation expectations came in mixed. A softer print in the 1-year inflation expectation, falling to 4.0% Y/Y in January from 4.4% Y/Y in December was offset by the ticking of 5-year inflation expectation to 3.0% Y/Y from 2.9% Y/Y a month ago. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) continued to rally Hong Kong and mainland Chinese stocks rallied last Friday afternoon. Hang Seng Index gained 1%, bringing its advance to nearly 10% since the beginning of the year. China’s CSI 300 climbed 1.4% last Friday and gained 5.2% so far in 2023. Within the Hang Seng Index, healthcare and consumer stocks gained the most. Wuxi Biologics (02269:xhkg), up 6.4%, was the best performer, followed by Chow Tai Fook Jewellery (01929:xhkg), up 4.8%. Hang Seng TECH Index gained 1.5% on further signs that the regulatory crackdown against Chinese internet platform companies is being replaced by institutionalized and hopefully more predictable supervision and regulation. The Chinese authorities have taken up “special management shares” in local units of Alibaba (09988:xhkg), up 1.7%, and Tencent (00700.xhkg), up 2%. Didi is reportedly to gain approval for relaunching its ride-hailing app at app stores. The People’s Bank of China has reportedly drafted an action plan to help “quality” property developers to strengthen their balance sheets. Trade in shares of Chinese developers was mixed. The three Chinese state-own oil companies traded in Hong Kong advanced between 1% and 2% on higher oil prices. NetEase, rising 4.7%, stood out among China internet names. Australia’s share market is a touch away from a record high; gold stocks charge in 2023 The Australian share market (ASXSP200.I) opened 0.5% higher on Monday with interest rates sensitive stocks charting the most, in anticipation of the Fed’s likely downshift in policy following on from last week's roll over in monthly CPI. The Aussie share market is trading at a two week highs, just a puff or 2.6% from its record high. The most momentum in 2023 is from the Mining sector, up 9%, in anticipation of higher earnings from China’s reopening. Gold stocks are the biggest shiners this with the most momentum, in anticipation of a higher gold price as global growth moderates, while the US dollar and bond yields retreat. At Saxo, we believe Gold may be likely to have a correction in the shorter term, but in 2023 gold should see a strong year of buying amid appetite from global central banks, as our head of Commodity Strategy mentioned.  Silver Lake Resources, De Grey Mining , Remelius Resources, up 18-23% so far in 2023. FX: JPY takes centre stage this week The Japanese yen gained by over 3% against the USD last week, moving from highs o f132.87 to lows of 127.46 on Friday. The yen was also stronger on all the crosses amid Bank of Japan’s unscheduled bond buying operations as the markets continued to test the policy yield cap of 0.5%. USDJPY and yen crosses will remain key this week as well as BOJ meets for the first time this year and speculation about a further policy tweak is rife. EURUSD gained to 1.080+ levels amid better growth prospects for Eurozone and a dovish bent in US CPI and Fed communications that has shifted the February rate hike pricing towards 25bps. AUDUSD has been basking in China’s reopening glory, testing 0.7000, but Australia’s employment data will be key this week. GBPUSD also has a host of UK data from CPI to retail sales to labor market to consider which could bring the 200DMA of 1.2000 in focus. Crude oil (CLG3 & LCOH3) opens steady after last week’s gains Crude oil prices were steady in the Asian morning hours after recording over 8% gains last week on China’s reopening optimism. WTI traded near $80/barrel while Brent was close to $85.50. China’s road traffic levels are continuing to rebound from record low levels following the easing of COVID-19 restrictions. A congestion index comprising the 15 cities with the most vehicles registrations has risen by 31.3% vs a week earlier. China’s crude oil imports rose to 48mt in December, up by 2.8% m/m. Meanwhile, increased import quotas by China saw oil demand pick up in the physical market. Sentiment was also bolstered by expectations of the Federal Reserve slowing its interest rate hikes, following lower than expected inflation. Higher inventory levels were to be expected, driven by the late December cold blast reducing exports while temporarily shutting down some refineries. Iron ore (SCOA) reverses amid China pledging crackdown Iron ore fell in Singapore back to $120.90 a ton from highs of $126 last week after China’s National Development and Reform Commission (NDRC), the top economic planner, said in a statement on Sunday that it would crack down on illegal activities including spreading false information, hoarding and price gouging to keep the iron ore market stable. Corn (ZCH3) closes the week with strong gains following the US crop output report Corn prices recorded their biggest weekly gain since August as droughts curb the world’s supply buffer. The US Department of Agriculture unexpectedly cut its outlook for US domestic production and available stocks of both corn and soybeans, a sign that an ongoing drought from last year may continue to underpin prices. The worst Argentinian drought in 60 years also led to a downgrade in the outlook for soybeans and corn production, some of that being partly offset by an expected bumper harvest in Brazil. Corn prices were up over 3% in the week and Soybeans up over 2%. Read next: The UK Economy Expects A Slightly Fall In Inflation, Expected To Fall By 0.1%| FXMAG.COM What to consider? U.S. bank Q4 earnings beat but guidance on interest income and credit loss provision disappoint The four largest commercial banks in the U.S., JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo reported Q4 earnings beating analyst expectations. Q4 profits grew 6% at JPMorgan and 2% at Bank of America and fell 21% at Citigroup and 50% at Wells Fargo from a year ago. Revenues at JPMorgan Chase, Bank of America, and Citigroup in Q4 came in above analyst estimates while those at Well Fargo missed. Despite the overall solid earnings and revenues, provisions for credit losses were higher than expected and the outlooks guided by the management of these large banks on net interest income were weaker than analyst estimates. JPMorgan Chase made a provision for credit losses at USD 2.3 billion, above the street estimate of USD 2.1 billion.  JPM is guiding net interest income of $73bn in 2023, below the USD74.4 billion analyst estimate. CEO Jamie Dimon says there is still a lot of uncertainty around the impact of the macro headwinds and that the bank’s macroeconomic outlook has deteriorated modestly. Bank of America guided below expectations net interest income at USD 14.4 billion in Q1 2023. Wells Fargo reported a negative surprise on credit provisions ($57mn vs est. $860mn). Wells Fargo’s CFO is also saying that the bank is preparing for the economy to worsen. Bank of Japan prepares to buy more Japanese Government Bonds The Bank of Japan again broke its daily record for Japanese government bond purchases Friday as yields defied its 0.5% cap, in a sign of the rising market pressure for another policy tweak by the central bank as it meets this week in its first meeting of 2023. The BOJ bought roughly 10 trillion yen ($78 billion) in JGBs over the past two days, with a 5 trillion yen purchase on Friday topping the high it had just set Thursday and is preparing to purchase more Japanese government bonds on Monday, according to the Nikkei. China’s exports declined 9.9% Y/Y in December; the import volume of iron ore grew while copper shrank In U.S. dollar terms, China’s exports in December fell 9.9% Y/Y in December, further decelerating from the -8.9% in November but slightly better than the -11.1% feared as per the survey by Bloomberg. In real terms, that is, after adjusting for inflation in export prices, the decline in exports was deeper. The fall in exports was most notable to the European Union, which fell 17.9% Y/Y in December versus -9.3% in November. Export to the US shrank 18.4% Y/Y in December, negative but having improved from -24.7% Y/Y in November. On the other hand, exports to ASEAN grew by 6.6% Y/Y in December, accelerating from 5.9% in November. Imports shrank 7.5% Y/Y in December, less negative than -10.6% Y/Y in November and above the consensus estimate of -10.0%. The improvement however was largely a result of the base effect. In volume terms, the import of crude oil slowed to 4.2% Y/Y in December from 11.8% in November. Coal imports rebounded to almost flat in December from a fall of 7.8% Y/Y in November. Iron ore imports grew 5.6% Y/Y in December, reversing from a 5.8% decline in November. Copper import shrank 12.7% Y/Y versus a rise of 5.8% a month ago. Tesla cut prices in the US and Europe Tesla cut prices across models in the U.S., including shedding the price of its baseline Model Y lower by almost 20% and its high-performance Model 3 by 14%. The price reduction may allow buyers to entitle to federal tax credits. Telsa is also cutting prices in Germany, France, and other European countries by about 13%. Recently, Telsa has cut prices in China. China took up “special management shares” in Alibaba and Tencent The Chinese authorities have taken up “special management shares” also known as “golden shares” in local units of Alibaba and Tencent (00700.xhkg) apparently to exert influence over business decisions far beyond the around 1% equity stake that otherwise represents under normal situations. Investors generally welcome the move as it tends to signal that the Chinese authorities are shifting from a less predictable and heavy-handed crackdown on internet platform companies to more institutionalized, consistent, and predictable regulation and supervision of the industry.  Comments from the Davos forum on watch The World Economic Forum’s annual meeting kicks off in Davos, Switzerland this week. The theme this year is “Cooperation in a Fragmented World’, suggesting deglobalisation trends remain key to watch as has been a regular theme at Saxo. The meeting brings together heads of nineteen central banks and 56 finance ministers. Comments on key global issues, ranging from inflation to recession, as well as energy and food crisis will remain on watch. Geopolitical crisis will also constitute a key discussion as the war in Ukraine rages on and US-China tensions may come back in focus.   For a global look at markets – tune into our Podcast.   Source: Market Insights Today: U.S. bank Q4 earnings beat but weaker outlook; Yen surged on BOJ policy adjustment speculation; US holiday - 16 January 2023 | Saxo Group (home.saxo)
Corn Prices Recorded Their Biggest Weekly Gain, Gold Demand In India May Suffer A Temporary Setback

Corn Prices Recorded Their Biggest Weekly Gain, Gold Demand In India May Suffer A Temporary Setback

Saxo Bank Saxo Bank 16.01.2023 09:14
Summary:  US equity markets ended last week on a high note, as the US S&P 500 Index closed above its 200-day moving average and within a point of the psychologically pivotal 4,000 level as Q4 earnings season is now under way. The currency market could steal the limelight this week as a pivotal Bank of Japan is up on Wednesday. Will Governor Kuroda declare victory on bringing inflation back to Japan and shift policy again, triggering a further spike in the Japanese yen?   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continue to toy with key resistance levels as Q4 earnings season got underway on Friday, dipping intraday but ending the week on a high note, just one point shy of the psychologically important 4,000 level in the S&P 500 index (cash index, the future trades clear of 4k), which is also just above the 200-day moving average and near other technical levels. Today is a market holiday in the US, but through next week’s heavy calendar of megacap earnings reports, traders will watch whether the market can clear this key resistance area and make a bid to surpass the December pivot highs near 4,100 for the cash index. The Nasdaq 100 index has more work to do, still trading almost 600 points below its 200-day moving average and the December pivot highs above 12,100. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) The CSI300 surged over 2%, led by pharmaceuticals, computing, and nonbank financials. Expectations of reacceleration of economic activities as a result of reopening and relaxation of regulation continued to boost market sentiment. Corporate filing information showed that The Chinese authorities had recently taken up “special management shares” also known as “golden shares” in local units of Alibaba and Tencent (00700.xhkg) apparently to exert influence over business decisions far beyond the around 1% equity stake that otherwise represents under normal situations. Investors generally welcome the move as it tends to signal that the Chinese authorities are shifting from a less predictable and heavy-handed crackdown on internet platform companies to more institutionalized and predictable supervision of the industry. By mid-day Monday, Alibaba and Tencent each gained about 1% and the Hang Seng Index advanced 0.7%. FX: JPY takes centre stage this week as BoJ to meet Wednesday The Japanese yen gained over 3% against the USD last week, moving from highs of 132.87 to lows of 127.46 on Friday. The yen was also stronger on all the crosses amid Bank of Japan’s unscheduled bond buying operations as the markets continued to test the policy yield cap of 0.5% ahead of the BoJ meeting this week and speculation of further policy tightening (more below). The US dollar was also broadly weaker, as EURUSD posted marginal new cycle highs overnight above 1.0870. AUDUSD has found a bid of late on anticipation of China’s reopening, testing 0.7000 overnight but reversing back a bit lower into early European trading today. Australia’s employment data will be key on Thursday. GBPUSD will focus on the host of UK data, from labour market data tomorrow morning, to the CPI release on Wednesday and Retail Sales data on Friday. Crude oil (CLG3 & LCOH3) trades softer after last week's strong gains Crude oil prices were steady to softer in early Monday trading after recording over 8% gains last week on China’s reopening optimism.  China’s road traffic levels are continuing to rebound from record low levels following the easing of COVID-19 restrictions. A congestion index comprising the 15 cities with the most vehicles registrations has risen by 31.3% vs a week earlier. Meanwhile, increased import quotas by China saw oil demand pick up in the physical market. Sentiment was also bolstered by expectations of the Federal Reserve slowing its interest rate hikes, following lower than expected inflation. Shale executives looking to substantially increase drilling would need US oil prices to climb to $89 a barrel, according to the latest energy survey by the Federal Reserve Bank of Kansas City. OPEC and IEA release their monthly oil market reports on Tuesday and Wednesday. Gold and copper trades softer following last week's surge Gold together with copper has been the in-demand commodities at the start of the year on China demand recovery hopes and not least the softer dollar and bond yields as the market adjust lower their expectations for future US rate hikes. Gold reached an eight-month high and copper a six-month high overnight before running into some light profit-taking. With RSIs on both in overbought territory, the underlying strength of both metals will sooner or later be tested, and the dollar probably holds the key. Hence the importance of Wednesday’s BoJ meeting, the outcome of which may trigger a major move in USDJPY (see below). Gold demand in India may suffer a temporary setback as traders adapt to near record prices. In addition, we have yet to see demand for ETF’s, often used by long-term focused investors, spring back to life with total holdings still hovering near a two-year low. US Treasury yields rebounded slightly Friday (TLT:xnas, IEF:xnas, SHY:xnas) After trading near the cycle lows of late last year into 3.40% for the 10-year benchmark on benign inflation data last week and a series of very strong auctions for especially longer-dated US Treasuries, the 10-year yield rebounded toward 3.50%. US treasury markets are closed for a holiday today. Read next: The UK Economy Expects A Slightly Fall In Inflation, Expected To Fall By 0.1%| FXMAG.COM What is going on? Iron ore loses heat, falling 4.5% after China accuses parties of price gouging The key steel making ingredient, iron ore (SCOA) fell 4.5% to $119.85 in Asia today, after China’s top economic planner, the National Development and Reform Commission (NDRC), said its cracking down on illegal activities such as hoarding and price gouging as it attempts to keep the iron ore price stable, after the iron ore price had risen 65% from October. Still iron ore inventory levels are lower than they were a year ago, when China’s economy was effectively in lockdown. Shares of iron ore majors, however, remained near their record highs with investors remembering that China has made such accusations in the past, and the iron ore price has recovered. BHP ended slightly higher, closing around record high territory, Rio fell slightly from its records while Fortescue Metals fell 2%. Corn (ZCH3) closed last week with strong gains following the US crop output report Corn prices recorded their biggest weekly gain since August as droughts curb the world’s supply buffer. The US Department of Agriculture unexpectedly cut its outlook for US domestic production and available stocks of both corn and soybeans, a sign that an ongoing drought from last year may continue to underpin prices. The worst Argentinian drought in 60 years also led to a downgrade in the outlook for soybeans and corn production, some of that being partly offset by an expected bumper harvest in Brazil. Corn prices were up over 3% in the week and Soybeans up over 2%. Part of the rally being driven by wrongfooted speculators who ahead of the report had cut bullish corn bets by 24%. Hedge funds opened their 2023 accounts by aggressively cutting exposure across the agriculture sector With energy also being sold, the latest COT report covering the week to January 10 saw buying being concentrated in just a few metal contracts led by copper and gold. Overall, the gross long across the 24 major commodity futures tracked in our weekly update fell by 15% to 1,194,000 contracts, the biggest one-week drop in six months. The changes were in line with price development across the different sectors with gains in precious (0.6%) and industrial metals (1.7%) being offset by losses in energy (-3.9%) grains (-2.7%), softs (-3%) and livestock (-1.5%). What are we watching next? Bank of Japan meeting on Wednesday shaping up as major event risk The recent news flow and rumor mill sees the Bank of Japan announcing further tweaks to its policy this Wednesday at its meeting, with a further JPY surge on Friday a clear sign that the market sees the meeting as a major event risk. As well, the Bank of Japan again broke its daily record for Japanese government bond purchases Friday as yields defied its 0.5% cap. The BOJ bought roughly 10 trillion yen ($78 billion) in JGBs over the past two days, with a 5 trillion yen purchase on Friday topping the high it had just set Thursday and is preparing to purchase more Japanese government bonds today, according to the Nikkei Somewhat ironically, the anticipated further widening of the BoJ’s yield-curve-control “band” (de facto more of a “cap”) on 10-year JGB’s this week or at a future meeting comes as long yields are dropping sharply elsewhere, accentuating the tightening of spreads between Japanese yields and those in, for example, Europe and the US. Earnings to watch The Q4 earnings season continues this week, with a relatively light schedule before next week’s mother lode of mega-cap earnings reports.  The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession, or even whether there will be a recession at all in the US economy. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. Interesting names this week include a former high-flyer like Netflix, which has achieved a more than 100% rally of its 2022 lows coming into this week’s report, even if it trades at under 50% of its peak valuation back in late 2021. Tuesday: Sartorius Stedim, Morgan Stanley, Goldman Sachs, Interactive Brokers Wednesday: EQT, Charles Schwab, PNC Financial Services, Kinder Morgan Thursday: Procter & Gamble, Netflix Friday: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) US Markets Closed for Martin Luther King, Jr. Holiday 1300 – Poland Dec. Core CPI 1500 – UK Bank of England Governor Beaily to testify on financial stability 2330 – Australia Jan. Westpac Consumer Confidence 0200 – China Dec. Industrial Production/Retail Sales/Q4 GDP Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 16, 2023 | Saxo Group (home.saxo)
Bank of Canada keeps the rates unchanged. After the release of the US inflation, Fed's Barkin drew attention to cooling demand, but still strong labour market and inflation

A Modest Pullback In Crude Oil Prices Could Undermine The Commodity-Linked Loonie (CAD)

TeleTrade Comments TeleTrade Comments 16.01.2023 09:16
USD/CAD comes under renewed selling pressure on Monday amid sustained USD weakness. Rising bets for smaller Fed rate hikes and a positive risk tone continue to weigh on the buck. A modest pullback in oil prices could undermine the Loonie and help limit any further losses. The USD/CAD pair struggles to capitalize on Friday's bounce from the 1.3320 area, or its lowest level since November 25 and meets with a fresh supply on the first day of a new week. The pair remains on the defensive through the Asian session and is currently placed near the daily low, around mid-1.3300s. The US Dollar extends its recent sell-off and drops to a fresh seven-month low amid speculations that the Fed may be nearing the end of its rate-hike cycle. This, in turn, is seen as a key factor exerting downward pressure on the USD/CAD pair. Investors now seem convinced that the US central bank will soften its hawkish stance and have started pricing in a smaller rate hike going forward. The bets were lifted by last week's US consumer inflation figures, which showed that the headline CPI fell for the first time in more than 2-1/2 years in December. Read next: The UK Economy Expects A Slightly Fall In Inflation, Expected To Fall By 0.1%| FXMAG.COM Adding to this, several Fed officials backed the case for a 25 bps lift-off in February. This, along with a generally positive tone around the equity markets, continues to weigh on the safe-haven buck. That said, growing worries about a deeper global economic downturn should keep a lid on the optimism and lend some support to the greenback. Apart from this, a modest pullback in crude oil prices could undermine the commodity-linked Loonie and further contribute to limiting the downside for the USD/CAD pair, at least for the time being. The mixed fundamental backdrop warrants caution for aggressive bearish traders and positioning for any further losses. The US markets will remain closed on Monday in observance of Martin Luther King Jr. Day. Moreover, there isn't any major market-moving economic data due for release from Canada. Hence, traders will look to the Bank of Canada's Business Outlook Survey report for some impetus around the USD/CAD pair. Apart from this, oil price dynamics should influence the Canadian Dollar and allow traders to grab short-term opportunities around the major.
West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

TeleTrade Comments TeleTrade Comments 16.01.2023 09:31
The oil price has corrected after failing to sustain above the crucial resistance of $80.00. A Symmetrical Triangle formation is indicating volatility contraction in oil price. A recovery move in the oil price has pushed it above the 20-and 50-EMAs firmly. West Texas Intermediate (WTI), futures on NYMEX, have failed to sustain above the crucial resistance of $80.00 in the Asian session. The oil price has corrected and dropped to near $79.46 after a firmer rally despite an upbeat market mood. Meanwhile, selling pressure in the oil price is also backed by a recovery in the US Dollar Index (DXY). The USD Index has recovered after dropping to near 101.40 and is struggling to extend its upside journey above 101.60. The black gold is displaying a Symmetrical Triangle chart pattern on a daily scale that indicates volatility contraction. The upward-sloping trendline of the chart pattern is placed from December 9 low at $70.27 while the downward-sloping trendline is placed from December 5 high at $82.74. The aforementioned chart pattern is a neutral triangle and results in wider ticks and heavy volume after an explosion. A recovery move in the oil price has pushed it above the 20-and 50-period Exponential Moving Averages (EMAs) at $77.57 and $79.00, which adds to the upside filters. The Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates that investors are awaiting the release of any potential trigger for fresh cues. For an upside move, the oil price needs to break above the January 3 high at $81.56, which will drive the asset toward December 1 high at $83.30 followed by November 17 high around $85.00. Read next: The Swedish Real Estate Market Will See Significant Price Drops| FXMAG.COM Alternatively, a break below January 5 low at $72.64 will drag the oil price toward December 9 low at $70.27. The asset would be exposed for more downside to near 14 December 2021 low at $69.32 after surrendering the support at December 9 low at $70.27. WTI daily chart  
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

All Eyes Are On The Japanese Yields, US Crude Oil Rallies

Swissquote Bank Swissquote Bank 16.01.2023 11:00
Earnings season kicked off last Friday when the big US banks reported their Q4 results. The results were mixed. But overall, despite the skyrocketing inflation, and slowing economy, the banks continued raking in the dough… US banks Further good news is that, the major US banks said that they all expect ‘mild recession’, and that unemployment in the US would rise to between 4.9 and 5.5% depending on who is talking- fueling dovish Federal Reserve (Fed) expectations and the equity bulls. Forex In the FX, all eyes are on the Japanese yields, and the yen, as last week saw the 10-year JGB yield go past the Bank of Japan’s (BoJ) 0.50% ceiling, boosting rumours that the BoJ could abandon the YCC policy. In Europe, the euro shines brighter with every ray of sunlight that pushes away the risk of energy shortage and recession. In the US, a warning from Treasury Department that the US will reach the debt limit on January 19th and will need extraordinary measures from Congress to avoid a government default, is weighing on the US dollar, while boosting appetite in gold. Energy And, in energy, US crude cleared the 50-DMA to the upside last Friday. Watch the full episode to find out more! 0:00 Intro 0:48 Mixed US bank earnings support stock rally 4:03 Japanese yen bid on hawkish BoJ expectations 6:14 Fed doves, warnings of US default weigh on USD, boost gold 8:12 US crude rallies past 50-DMA 8:43 Euro shines brighter with every ray of sunlight Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #bank #earnings #BoJ #policy #decision #YCC #Europe #mild #winter #USD #EUR #JPY #XAU #crude #oil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Economists At TD Securities Expect Gold Markets Return To A Downtrend

The Change In Expectations For The Fed's Aggressive Monetary Policy Remains The Biggest Bullish Factor For Gold

InstaForex Analysis InstaForex Analysis 16.01.2023 14:11
Despite the fact that the precious metal can be considered overbought, market sentiment suggests that prices will rise in the near future. The first weekly review of gold shows that sentiment from both Wall Street analysts and Main Street investors is overwhelmingly bullish, with many analysts suggesting it is only a matter of time before reaching the $2,000 an ounce target. "There is a gravitational pull to $2,000 and will only build as prices continue to move higher," said Phillip Streible, chief market strategist at Blue Line Futures. While momentum favors higher prices, analysts advise investors not to chase the market. Streible believes that gold will rise and plans to buy from the pullback. Daniel Pavilonis, senior commodities broker with RJO Futures, said he is also bullish on gold but advised investors not to buy at current levels. Last week, 18 Wall Street analysts took part in the gold survey. Among the participants, 11 analysts, or 61%, were bullish in the short term. At the same time, three analysts, or 17%, are bearish, and four analysts, or 22%, believe prices are trading sideways. Meanwhile, 825 votes were cast in online polls. Of these, 524 respondents, or 64%, expected gold prices to rise this week. Another 190 voters, or 23%, said the price would go down, and 111 voters, or 13%, were neutral. Read next: USD/JPY Pair Is Trading Above 128 Again, The Testimony Of Bank Of England Governor Andrew Bailey May Have Affect On The Pound (GBP/USD)| FXMAG.COM   Some analysts say the change in expectations for the Federal Reserve's aggressive monetary policy remains the biggest bullish factor for gold. Those analysts say that lower inflationary pressures have given the Federal Reserve room to further slow its pace of rate hikes next month, with bond yields and the U.S. dollar somewhat reversing last year's massive upward trend. Kevin Grady, president of Phoenix Futures and Options, said the momentum of the U.S. dollar is turning bearish as market expectations change. He added that while gold could reach excessive levels, it still has upside potential. According to Grady, the bond market will decline and that is beneficial for gold. However, not all analysts are convinced that gold will be able to maintain the current momentum. Ole Hansen, head of commodity strategy at Saxo Bank, said that despite his optimism for gold, there are growing risks of price consolidation at current levels. And Colin Cieszynski, chief market strategist at SIA Wealth Management, said he is neutral on gold in the near term. Relevance up to 10:00 2023-01-19 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332376
The Results Of The March Meeting Of The Bank Of Japan Are Rather Symbolic

Japan Is Looking To Boost Its 2023 Defence Budget, Copper Fell As Signs Of Weak Demand Persist

Saxo Bank Saxo Bank 17.01.2023 08:19
Summary:  US equity and bond markets were closed on Monday for a holiday. Mainland China stocks surged 1.6% as northbound flows reached over RMB15 billion and were in net buying for the 9th day in a row. Ryan Cohen is building a stake in Alibaba. USD saw a rebound but will likely be driven by the Japanese yen in the next few days as the Bank of Japan meeting kicks off today. While China’s Q4 GDP scheduled to release today was expected to slip to 1.6% Y/Y, more than half of Chinese provinces are setting 2023 GDP growth targets at above 5.5%. The rally in industrial metals paused amid profit-taking ahead of the Lunar New Year.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) Closed for U.S. holiday US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) Closed for U.S. holiday China’s CSI300 (03188:xhkg) gained 1.6%; Northbound net buying for the 9th day CSI300 rose 1.6%, led by brokerage, household appliances, pharmaceuticals, and semiconductor names. Northbound net buying through Stock Connect was RMB15.8 billion on Monday, the 9th day in a row of net buying for a total of around RMB80 billion. Coal miners, autos, and media stocks retraced. Hong Kong’s Hang Seng Index had a choppy session, rising initially to make a new recent high but failing to hold and sliding to losses in the afternoon before closing nearly flat. The news that the Chinese regulators allowed Didi to resume registration of new users failed to boost the sentiment for internet stocks. On the other hand, Meituan (03690:xhkg) slipped 3.3% as investors feared that the company’s ride-hailing business might lose market share as Didi returns. Hardware names, AAC (02018:xhkg) up 11.4%, Techtronic (00669:xhkg) up 6.2%, and Sunny Optical (02382:xhkg) up 4.0%, stood out as top performers. The automaker, Brilliance (01114:xhkg) tumbled 8.2% after announcing a special dividend of HKD0.96 per share from the disposal of its stake in Brilliance BMW below the street estimate of HK$1.5 per share. FX: USDJPY seeing a barrier at 129 USDJPY was seen fluctuating around 128.50 in the Asian morning session as Bank of Japan meeting kicks off with speculations of a further policy tweak continuing to build. GBPUSD also failed at another attempt on 1.2300 while AUDUSD returned below 0.7000 ahead of the key China activity data due today, despite January consumer confidence coming in higher at 84.3 from 80.3 previously. A break above 0.7000 could bring the tough resistance of 0.7125 in focus. NZDUSD testing a break above 0.6400. Crude oil (CLG3 & LCOH3) prices soften Crude oil prices eased on Monday with WTI falling below $79/barrel and Brent back towards $84/barrel as profit-taking emerged after the 8% rally last week. The World Economic Forum’s annual meeting began with warnings of global recession. This was aided by signs of stronger Russian supply. Seaborne crude exports soared by 30% to 3.8mb/d last week, the highest level since April. India was the biggest buyer, snapping up 33 times more crude than a year earlier. There is a lot to digest in the oil markets, with demand concerns and sanctions on Russian supply and risks of OPEC production cuts. Meanwhile, volatility in gas prices also underpins, suggesting crude oil prices can continue to see two-way price action in this quarter. US natural gas higher but European gas prices fall US natural gas settled back above $3.50, higher about 7% on Monday with risks of cold weather at the end of the month. European gas however fell sharply on a strong supply outlook. Dutch front month futures were down more than 15% as full stockpiles in China eased concerns of supply tightness in the LNG market. Chinese importers are trying to divert February and March shipments to Europe amid weak prices at home and high inventories. This is despite a cold snap expected this week. Iron ore selling eases; and respective equities hold record highs shaking off China’s accusations The key steel making ingredient, iron ore (SCOA) has fallen 5.3% from its high, including Tuesday’s 0.4% slide, which takes the price to $118.90. Still the iron ore price holds six months highs and is up 56% from its low. The pullback was triggered by China’s top economic planner, the NDRC accusing market participants of hoarding and price gouging after the iron ore price strongly rallied from October’s low in anticipation of demand picking up from China easing restrictions. Iron ore inventory levels are still lower than they were a year ago, which fundamentally supports iron ore price. And the technical indicators indicate the longer term rally could continue. The 50 day moving average is approaching the 200 day moving average. Historically when the 50DMA cross the 200 DMA buying has picked up. Also consider iron ore majors shares, BHP, Rio Tinto Fortescue are holding in record high territory, as investors remember China has made such accusations in the past of price gouging, and the iron ore price previously recovered over the medium to longer term. Brakes on Copper rally; Aluminium continues to surge higher A slight recovery in the US dollar on Monday paused the strong rally that has been seen in industrial metals so far this year. Copper fell as signs of weak demand persist. The Yangshan copper cathode premium over LME has declined to USD31.50/t, compared with the 10y average of USD72/t. Stockpiles of copper in Shanghai Futures Exchange warehouses are also higher. HG copper dipped back to $4.14 from highs of over $4.20 last week. Aluminium bucked the trend to push higher as inventories continue to fall. Expectations of stronger demand as China reopens also boosted sentiment. Rio Tinto (RIO) reported 4Q iron ore shipments of 87.3mt, +3.8% YoY vs est 86.2mt and still sees 2023 shipments of 320-335mt while mined copper output guidance raised to 650-710kt from 500-575kt previously.   What to consider? China GDP and activity data While the reopening of China from Covid containment is a highly positive development for the Chinese economy, the initial shockwave of infections could be significantly disruptive to economic activities in the near term. The median forecast of economists surveyed by Bloomberg on China’s Q4 GDP growth is 1.6% Y/Y decelerated from 3.9% Y/Y in Q3. Disruption in production activities resulting from infection-induced absence from work is expected to drag the growth of industrial production to 0.1% Y/Y in December from 2.2% in November. Retail sales are expected to shrink 9% Y/Y in December, decelerating further from -5.9% Y/Y in November as dining, retailing, and deliveries were slowed by inflection. Full-year fixed asset investment is expected to come at 5%, down from 5.3% in the first 11 months of the year. More than half of provinces and municipalities in China are targeting above 5.5% GDP growth for 2023 According to China’s Securities Daily, the 28 provinces and municipalities that have released their 2023 GDP targets set them at 6% on average. Hainan is the most aggressive with a 9.5% target. According to data from the Shanghai Securities News, more than half of the 31 provinces and municipalities that have released 2023 work reports, are setting their GDP growth targets above 5.5% for 2023. Economically important provinces of Zhejiang, Jiangsu, Guangdong, and Shandong set their targets at above 5%. BOE’s Bailey comments hint at relief from energy and inflation but worries about labor market The rally in cable has cooled off recently even as the decline in USD has continued. The pair is looking for direction and there may be some key catalysts to watch this week. Bank of England Governor Andrew Bailey spoke on Monday at the Treasury Select Committee hearing, saying that the risk premium on UK assets after the Truss government’s policy shock in September has gone. Still, confidence remains fragile, and risks also remain from China’s chaotic exit from Zero Covid, the continued fallout from the war in Ukraine and the shrinking of Britain’s labor force. Focus will now turn to economic data, with labor market data due today, CPI on Wednesday and retail sales on Friday. Any signs that labor market is cooling or CPI has topped out could mean the BOE could start to consider a slower pace of rate hikes going forward, and that could see the 200DMA in GBPUSD at 1.2000 get threatened. Japan’s military focus supports our optimistic view on the Defence equity basket Japan is looking to overhaul its security policy as geopolitical threats in the region and globally grow. PM Kishida’s G7 tour last week saw multiple deals not just with the US, but focus was also seen on enhancing military ties with Germany, Canada and France, including mutual troop access with the UK and upgrading of defence ties with Italy. The plan to build more nuclear reactors is also a step in that direction. Japan and India also held their first joint air drills as they step up military exercises with other countries amid concerns about China's assertiveness. Japan is looking to boost its 2023 defence budget substantially to a record 6.8 trillion yen, an increase of 20%. This further supports our optimistic view on our Defence equity theme basket as further deglobalization continues to suggest defence spending will remain a key focus. Activist investor Ryan Cohen built a stake in Alibaba According to the Wall Street Journal, Ryan Cohen has built a stake in Alibaba. Cohen is a Canadian investor who is know for investing and attracting a large crowd of retail investors to invest in meme-stocks such as GameStop. His buying into Alibaba may attract retail investors from North America to follow. For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: - China A shares see large Northbound buying, Ryan Cohen building a stake in Alibaba - 17 January 2023 | Saxo Group (home.saxo)
OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

WTI Crude Oil Remains On The Buyer’s Radar

TeleTrade Comments TeleTrade Comments 17.01.2023 08:44
WTI picks up bids to reverse the week-start pullback from fortnight high. Confirmation of bullish chart pattern, looming bull cross on MACD favor buyers. Convergence of 100-EMA, flag’s lower line restricts immediate downside. WTI crude oil grinds higher around the intraday top of $79.68 during early Tuesday morning in Europe. In doing so, the black gold prints mild gains while reversing the previous day’s pullback from a two-week top. That said, the quote’s latest gains could be linked to the confirmation of a bullish chart pattern, namely the “bull flag” on the hourly play. Also underpinning the run-up could be the impending bull cross on the MACD indicator. As a result, the WTI is on the way to the theoretical target surrounding $85.50. However, the monthly peak of $81.55 and the previous month’s high of $83.30 could probe the Oil buyers. It’s worth noting that the energy benchmark’s latest run-up also takes clues from the firmer prints of the RSI (14). Meanwhile, WTI pullback remains elusive unless the quote remains beyond the $78.45 resistance confluence, including the 100-bar Exponential Moving Average (EMA) and lower line of the two-day-old bull flag. In a case where the energy benchmark stays weaker past $78.45, the odds of witnessing a slump toward the monthly low of $72.65 can’t be ruled out. Overall, WTI crude oil remains on the buyer’s radar unless it drops below $78.45. WTI: Hourly chart Trend: Further upside expected
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

The Market Is Convinced That Further Tightening Of The Policy Will Take Place At The Latest With The Appearance Of The New President Of The Bank Of Japan

Saxo Bank Saxo Bank 17.01.2023 09:18
Summary:  The US equity market is back on-line today after trading into the pivotal 4,000 area for the S&P 500 Index, as traders wonder whether the recent rally can extend on hopes for a soft landing scenario or whether the bear market will return on downbeat news from the incoming earnings season. But the big event risk of the week is the Bank of Japan meeting up tomorrow, as markets brace for possible further policy tweaks from the Bank of Japan.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities are back on-line today after closing Friday into the key resistance/pivot area around 4,000 in the S&P 500 index (the cash index closed 1 point shy of 4,000 on Friday, the future has traded well above that level), which is also just above the 200-day moving average and near other technical levels. Through next week’s heavy calendar of megacap earnings reports, traders will watch whether the market can clear this key resistance area and make a bid to surpass the December pivot highs near 4,100 for the cash index. The Nasdaq 100 index has more work to do, still trading almost 600 points below its 200-day moving average and the December pivot highs above 12,100. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) The Hang Seng Index pulled back 1.2% and the CSI300 Index retreated by 0.4% as of writing despite China’s Q4 GDP, industrial production, retail sales, and fixed asset investment coming in better than feared. Q4 GDP grew 2.9% Y/Y (consensus 1.9%; Q3: 3.9%). Separately, according to data from the Shanghai Securities News, more than half of the 31 provinces and municipalities that have released 2023 work reports, are setting their GDP growth targets above 5.5% for 2023. Economically important provinces of Zhejiang, Jiangsu, Guangdong, and Shandong set their targets at above 5%. The recent rallies are looking exhausted facing profit-taking pressure. FX: JPY takes centre stage this week as BoJ to meet Wednesday The FX market is bracing for the Bank of Japan meeting up in Asia’s Wednesday session (see preview below) with JPY crosses generally backing up, led by USDJPY pulling all the way above 129.00 at one point overnight after its Friday low just below 127.50. Worth remembering that a BoJ surprise that brings JPY volatility is more of a broad JPY story than a USDJPY story and aggravated volatility that triggers a generalized risk off could support both the yen and the US dollar. Action has generally been sluggish elsewhere, with AUDNZD rolling over a bit and the US dollar finding a some support as the US is back online today. Crude oil (CLG3 & LCOH3) take stock following last week's 8% rally Crude oil trades steady near the top of its current range, after data showed China growing by more than expected in the fourth quarter. Overall, the market has seen a bid this month on China’s reopening optimism. Exports of deeply discounted Russian crude oil soared last week as it continues to circumvent sanctions Later today OPEC will publish its monthly oil market report with the IEA to follow on Wednesday. For now, further upside seems limited with China and parts of Asias about to go dark next week as the Lunar New Year holiday begins. EU gas slumps to 16-month low as supply keeps coming Natural gas prices in Europe slumped on Monday to levels not seen since 2021 as already elevated stock levels look set to get a boost from the resale of LNG previously destined for China. Just like Europe, China has seen mild winter weather and together with increased consumption of coal stockpiles of gas are elevated forcing buyers to send LNG cargoes to Europe instead. The Dutch TTF benchmark future (TTFMc1) closed at €55.5 on Monday, down more than 60% during the past month. EU gas stocks are currently 81.5% compared with a long term average around 62%. Copper rally pauses while aluminum continues higher A slight recovery in the dollar on Monday was all it took to trigger an overdue correction in copper which has surged higher during the past couple of weeks on raised expectations for a pickup in demand as China reopens. However, as we have warned recently, the recovery in demand is unlikely to be felt until well after the Lunar New Year holiday, and following a recent surge in speculative buying, the contract has increasingly been left exposed to profit taking, potentially taking it lower to test key support in the $4 area. Aluminium meanwhile hit its highest since June, up 9% on the month, and with visible inventories being at their lowest since 2002 Goldman Sachs warns about further strong gains in the months ahead. Gold consolidating with the dollar finding a bid Gold trades softer ahead of Wednesday’s BoJ meeting which may trigger an outsizes reaction in the dollar. Following weeks of mostly short covering speculators have now moved to mostly long accumulation, and it's during the early stages of this phase the market remains most vulnerable to a setback as recently established longs are less sticky than long held ones. Given the length gold has travelled in recent weeks a correction all the way back down to $1852 would not alter the overall bullish technical picture. US Treasury yields rebounded slightly Friday (TLT:xnas, IEF:xnas, SHY:xnas) After trading near the cycle lows of late last year into 3.40% for the 10-year benchmark on benign inflation data last week and a series of very strong auctions for especially longer-dated US Treasuries, the 10-year yield rebounded toward 3.50% on Friday and traded slightly higher overnight after coming back from the long holiday weekend. The next US macro data point of note is perhaps tomorrow’s December Retail Sales release. What is going on? Nationwide strike in France on 19 January France is going into a nationwide strike on 19 January as trade unions are protesting the government’s plan to push back the minimum retirement age to 64 and to accelerate a previous reform, called the Touraine reform, which provides for the extension of the required contribution period to 43 years by 2035. Before Covid, the government also tried to implement a pension reform which caused a massive wave of demonstrations across the countries – there was basically almost no public transport in main cities for weeks. This is still uncertain how long the strike will last. But the trade unions are planning to keep fighting as long as needed. Expect a blockage in several sectors (refineries, metro, rail transport, education). At the moment, we don’t think the strike will have a noticeable negative impact on GDP growth this quarter. However, should the strike go beyond Thursday, this could reduce GDP growth by 0.1 or maximum 0.2 point in Q1, in our view. BOE’s Bailey comments hint at relief from energy and inflation but worries about labour market The rally in cable has cooled off recently even as the decline in USD has continued. The pair is looking for direction and there may be some key catalysts to watch this week. Bank of England Governor Andrew Bailey spoke on Monday at the Treasury Select Committee hearing, saying that the risk premium on UK assets after the Truss government’s policy shock in September has gone. Still, confidence remains fragile, and risks also remain from China’s chaotic exit from Zero Covid, the continued fallout from the war in Ukraine and the shrinking of Britain’s labour force. Focus will now turn to economic data, with labour market data due today, CPI on Wednesday and retail sales on Friday. Any signs that labour market is cooling or that CPI has topped out could mean the BOE could start to consider a slower pace of rate hikes going forward, and that could see the 200DMA in GBPUSD at 1.2000 get threatened. China’s population officially shrinking Official Chinese data released today showed an 850,000 drop in the Chinese population to 1.41 billion at the end of last year, the first official population drop since 1961. Births numbered 9.56 million in 2022, down just over a million from the prior year and at the lowest level since 1950, while deaths totalled 10.41 million. UK December claims data improves, November earnings data rises again The UK reported November Employment and earnings data today, with the Unemployment Rate steady for the month at 3.7%, while Employment Change rose 27k vs. 0k expected. Average Weekly Earnings rose more sharply than expected at 6.4% YoY ex Bonus vs. 6.3% expected and 6.1% in Oct. Alsot out this morning were December Jobless Claims data, which rose 19.7k vs. 16.1k in November (revised down from 30.5k, while the Payrolled Employees Monthly Change rose +28k vs. +60k expected and the November number was revised down to +70k from +107k. What are we watching next? Bank of Japan meeting tomorrow shaping up as major event risk The JPY has traded cautiously this week, ahead of the Bank of Japan meeting that has traders bracing for new policy tweaks after the Bank of Japan surprised in December with a widening of its trading “band” (de facto a “cap”) to 0.50% from 0.25%. The market has violated the band several times in recent days, requiring a heroic scale of intervention from the BoJ to enforce it. In question is whether the BoJ is willing to signal a further widening of the band and even an end to the last negative policy rate in the world of –0.10% before Governor Kuroda exits the scene in April after 10 years at the helm of the BoJ. Even if the BoJ fails to unveil new measures, the market may remain convinced that a further tightening shift is slowly under way and will arrive at latest with the arrival of a new BoJ Governor. The market is pricing a policy rate of more than +0.25% by the end of this year. Earnings to watch The Q4 earnings season continues this week, with a relatively light schedule before next week’s mother lode of mega-cap earnings reports. The key uncertainty is credit quality in 2023 as it is linked to the degree of a recession, or even whether there will be a recession at all in the US economy. Overall, the Q4 earnings season is likely going to see an extension of value and tangible companies performing better than intangible-driven companies. The two large US investment banks Morgan Stanley and Goldman Sachs are up today, not particularly good bellwethers for the US economy. On the other hand, Procter & Gamble, the consumer products giant, releases its earnings on Thursday and may offer interesting colour on the US consumer. The fast-growing French biotech lab equipment maker Sartorius Stedim reports today as well. Today: Sartorius Stedim, Morgan Stanley, Goldman Sachs, Interactive Brokers Wednesday: EQT, Charles Schwab, PNC Financial Services, Kinder Morgan Thursday: Procter & Gamble, Netflix Friday: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) During the day: OPEC’s Monthly Oil Market Report 1000 – Germany Jan. ZEW Survey 1315 – Canada Dec. Housing Starts 1330 – US Jan. Empire Manufacturing 1330 – Canada Dec. CPI 2000 – New Zealand Dec. REINZ House Sales   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 17, 2023 | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The Updated Forecasts Of OPEC And The IEA Can Provide Support To The Bulls For Brent

Marek Petkovich Marek Petkovich 17.01.2023 12:14
If the first week of January upset oil fans, the second, on the contrary, pleased them. Brent jumped 10% on expectations that the rapid recovery of China's economy after the lifting of COVID-19-related restrictions will strengthen global demand for oil and contribute to the recovery of prices. ING believes that thanks to China, the average cost of the North Sea variety in 2023 will be $100 per barrel, and Goldman Sachs expects a rally in futures quotes to $120. However, not everyone agrees with them. In fact, the roller coaster ride in oil at the start of the year shows how divided the market is. Pessimists believe that economic growth outside of China leaves much to be desired and still count on a global recession. Wall Street Journal experts estimate a 61% chance of a downturn in the U.S. economy over the next 12 months. This is slightly lower than in the fall forecasts, but both are close to record high levels, except for real recessions. Dynamics of the likelihood of a recession in the United States Bears on Brent nod to Russia's rise in offshore oil supplies to 3.8 million bpd in the week to January 13, the highest since April. If Moscow has adapted so quickly to Western sanctions, can we talk about the lack of supply cited by Goldman Sachs? The American investment bank notes that all investors are currently fixated on a global recession that will not actually happen. The Chinese economy will accelerate from 3% to 5.5% in 2023, the eurozone will avoid an energy crisis, and the U.S. will have a soft landing thanks to strong household balance sheets and a robust labor market. As a result, demand for oil will exceed forecasts, which, coupled with problems with supply, will allow Brent to rise to $120 per barrel. Dynamics of Russia's offshore oil supply Goldman Sachs compares the current time period with 2007–2008, when the Fed took its foot off the brake, China hit the gas all the way, and Europe began to rise rapidly. Then oil prices skyrocketed. Why don't they do it now, when the situation is very similar? Read next:Alibaba And Its Share Buyback Program Which Is Supported By Ryan Cohen, Microsoft Corp. Plans To Incorporate AI Tools| FXMAG.COM In the short term, the updated forecasts of OPEC and the IEA can provide support to the bulls for Brent. There has been a lot of pessimism in them lately, but the opening of China can add positivity. In my opinion, the North Sea variety will grow. Markets are tired of Fear and ready for Greed to arrive. However, due to the Lunar New Year and some weakening of the U.S. economy, the oil rally will not be strong in the near future. At least for now. Nevertheless, it makes sense to use the pullbacks for buying. Technically, due to the implementation of the 1-2-3 pattern, risks of a serious correction that can turn into a break in the long-term downward trend increase. Emphasis should be placed on the formation of long positions in the direction of $91.75 and $97.25 per barrel. We prefer holding and periodically increasing longs opened from the $83.4 level. Relevance up to 09:00 2023-01-22 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/332492
Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

Saxo Bank Podcast: The Upcoming Bank Of Japan Meeting, A Look At Crude Oil, Copper And More

Saxo Bank Saxo Bank 17.01.2023 13:06
Summary:  Today, we look at the upcoming Bank of Japan meeting, noting the extreme anticipation around the event, together with the likelihood of considerable intraday volatility in the wake of the event, even if the Bank of Japan tries to deliver as little as possible, as we all know that new leadership and a likely further tightening of policy is in the pipeline with Kuroda's replacement after April. A look at crude oil, copper, upcoming earnings and macro data and more on today's pod, which features macro strategist Charu Chanana on the BoJ, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it. Read next: Alibaba And Its Share Buyback Program Which Is Supported By Ryan Cohen, Microsoft Corp. Plans To Incorporate AI Tools| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Bank of Japan in a corner, can’t avoid volatility | Saxo Group (home.saxo)
The Commodities Feed: Oil maintains positive momentum

The Mood Of Oil Appears To Have Become A Little Bit More Bullish

Craig Erlam Craig Erlam 17.01.2023 16:34
Buoyed by China data Oil prices are a little higher today after paring gains at the start of the week to remain near the highs of the last month, or so. Brent crude has mostly traded between $76 and $86 since early December but the mood appears to have become a little bit more bullish thanks to some promising economic data. The prospect of a soft landing in the US and a shallower economic hit in China from the Covid transition, not to mention a strong rebound, has driven the latest rebound in crude prices and the narrative on both of these doesn’t appear to be shifting. The China data overnight was a real positive, enabling Brent to reverse yesterday’s declines. Now it’s over to Davos and earnings season to get a look at how policymakers and business leaders perceive the latest developments, and whether companies are planning for tough conditions ahead. Paring gains Gold is paring gains for a second day as the dollar rebounds slightly and yields creep higher. Perhaps we’re just seeing some broader market profit-taking ahead of what could be another eventful week. Gold briefly surpassed the upper end of what in recent years has been a tough trading zone between $1,880 and $1,920. That may be contributing to some profit-taking, with the next major test being $2,000, where gold briefly traded above last March. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Commodities: The Expected Recovery In Oil Demand Following China’s Reopening, Inventories At Major Chinese Steel Mills Rose

ING Economics ING Economics 18.01.2023 09:26
Large parts of the commodities complex were well supported following stronger-than-expected economic data from China. Yesterday’s OPEC monthly report was a non-event, but today’s IEA oil market report could be more interesting in light of the China reopening story Energy - OPEC sees a tighter market over 2H23 ICE Brent managed to push higher yesterday, settling more than 1.7% up on the day and leaving it within striking distance of US$86/bbl. This is the strongest settlement we have seen in Brent since early December. Stronger-than-expected Chinese economic data yesterday would have provided some support to the market, boosting confidence that we could see a strong recovery in Chinese oil demand this year. The latest output data from China shows that oil refiners processed around 14.17MMbbls/d of crude oil in December, slightly down from the 14.69MMbbls/d processed in November, but up 2% YoY. However, full-year 2022 numbers averaged 13.57MMbbls/d, which is down almost 4% YoY. Weaker domestic demand and low refined product export quotas would have weighed on refinery runs through 2022. Activity should recover this year, given the expected recovery in oil demand following China’s reopening, along with the government releasing larger volumes of refined product export quotas more recently.   OPEC released its latest monthly market report yesterday, which saw few changes to the 2023 numbers. OPEC still expects global oil demand to grow by 2.22MMbbls/d this year to average 101.77MMbbls/d. Non-OPEC supply growth was left unchanged at 1.54MMbbls/d, leaving total non-OPEC supply at 67.16MMbbls/d in 2023. OPEC numbers suggest that the global market will be in balance to a small surplus over the first half of 2023 (if we assume OPEC output remains at similar levels to those seen in December). However, the group does see a tighter market over the second half of 2023 if OPEC production policy remains unchanged. The IEA will also be releasing its monthly oil market report today. We believe the market will be closely watching to see whether the agency makes any upward demand revisions following the China re-opening story. If so, the IEA report could provide some further support to the market. Metals - Chinese aluminium output hits record levels China produced a total of 3.43mt of primary aluminium in December according to the National Bureau of Statistics (NBS), up slightly from the November output of 3.41mt (+0.6%) and up as much as 10.2% YoY. Overall, for 2022, China produced 40.21mt of primary aluminium – up 4.5% from 2021, and a new all-time record, NBS reported. The latest data from China Iron and Steel Association (CISA) showed steel inventories at major Chinese steel mills rose to 14.9mt in early January, up 14% compared to late December. Crude steel production at major mills also edged higher to 1.93mt/d during the period. An Indonesian nickel smelter, run by PT Gunbuster Nickel Industry, resumed operations after protests in the Sulawesi facility led to violent clashes that killed two people. The smelter produces nickel pig iron (NPI) using an electric furnace with an annual capacity of 1.8mt of NPI. Agriculture – Indian sugar output rises The latest data from the Indian Sugar Mills Association (ISMA) shows that 2022/23 Indian sugar production rose 4% YoY to 15.7mt through until 15th January, compared to 15.08mt during the same period last year. The group said that by the middle of January, 515 mills were crushing cane, compared to 507 mills at the same time last year. ISMA expects domestic sugar production this season to total 36.5mt, up from 35.8mt in the previous season. Weekly data from the European Commission shows that soft wheat shipments from the EU rose 6.3% YoY and reached 17.7mt as of 15th January, up from 16.6mt for the same period last year. Morocco, Algeria and Egypt were the top destinations for these shipments. Meanwhile, EU corn imports continued to rise and stood at 15.7mt, compared to 8.3mt last year due to lower domestic output. Read this article on THINK TagsSugar Steel OPEC+ Nickel IEA China economy Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Sharp Drop In Natural Gas Prices Suggest That Eurozone Can Continue To Expect Lower Inflation, The Bank Of Japan Policy Decision Ahead

Saxo Bank Saxo Bank 18.01.2023 10:13
Summary:  The focus is squarely on the Bank of Japan decision today and significant volatility may be on the cards. Mixed earnings, ranging from a weaker Goldman Sachs report but better-than-expected Morgan Stanley results, kept the US equity markets broadly range-bound. China’s activity data surprised to the upside, but population decline is a concern. Stage is being set for a dovish turn in the ECB, and UK’s CPI will be on the radar today. Industrial metals regained momentum, while Gold continues to face correction risk.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished nearly unchanged while the Dow Jones Industrial slipped 1.1% on Goldman’s miss in earnings Nasdaq 100, up 0.1% and S&P 500, down 0.2% were little changed in a choppy session, supported by a 7.4% gain in Tesla (TSLA:xnas) and an increase of 4.8% in Nvidia (NVDA:xnas).  The Dow Jones Industrial however fell 1.1%, dragged by the declines of 6.4% in Goldman Sachs (GS:xnys) and 4.6% in Travellers (TRV:xnys). Goldman Sachs reported a 66% Y/Y fall in Q4 earnings to USD3.32 per share, much below the USD5.56 consensus estimate. On the other hand, Morgan Stanley (MS:xnys) rose 5.9%, after reporting a 40% fall in earnings to USD1.26 per share, beating the USD1.25 expected by street analysts. Among sectors in the S&P, the material sector, falling 1.1%, was the biggest laggard. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) ended mixed as curve steepened A much weaker-than-expected print of the Empire Manufacturing Index, shrinking to -32.9 vs consensus of -8.7, and a Bloomberg report suggesting that the ECB may slow its next rate hike to 25bps in March from 50bps, saw the yields on the Treasury front ends lower. Yields on the 2-year fell 3bps to 4.20%. Yields on the longer ends however rose. The 10-year notes finished 4bps cheaper at 3.55%. On Wednesday, traders are eyeing the outcome from the Bank of Japan. Hong Kong’s Hang Seng (HIF3) retreated and China’s CSI300 (03188:xhkg) was flat despite Q4 GDP better than feared The Hang Seng Index pulled back 0.8% and the CSI300 Index was flat despite China’s Q4 GDP, industrial production, retail sales, and fixed asset investment coming in better than feared. Q4 GDP grew 2.9% Y/Y (consensus 1.6%; Q3: 3.9%). Healthcare names were the biggest drag to the Hang Seng Index as Wuxi Biologics (02269:xhkg) tumbled 6.1% on placement by its majority shareholder. XPeng (09868:xhkg) slipped 2.3% after cutting the prices of its EVs by around 12% and dragged down the share prices of other EV makers. Chinese property names finished the session mixed in a tug-of-war between optimism from supportive policies and continuously sluggish sales data. China’s residential property sales fell 26.7% Y/Y in December. Infant and toddler product stocks fell on the record low 0.677% birth rate released in China. In A-shares, baijiu (Chinese white liquor), food and beverage, bank, media, and pharmaceutical names retreated while electronics, defense, and machinery stocks gained. FX: All eyes on JPY GBPUSD was the best performer in the G10 FX space on Tuesday, rising to test the 1.23 handle, as labor market data came in better than expected. Focus shifts to the UK CPI release today where a further deceleration in price pressures remains likely. NZD and AUD also gained further, bumped higher more so in the US session rather than China’s better-than-expected activity data in the Asian hours. AUDUSD may be looking at another break above 0.7000. EURUSD plummeted from 1.0869 to 1.0775 on dovish ECB expectations (read below). The key focus today however will be on USDJPY and yen crosses with BOJ decision due today. Crude oil (CLG3 & LCOH3) pushes higher Crude oil edged higher as OPEC set a more optimistic tone on demand. Secretary General Haitham Al Ghais said he’s optimistic about the outlook for the global economy. The oil producer group said that a potential slowdown in advanced economies is countered by accelerating growth in Asia. The market is expected to tighten as Russia’s supply suffers from G7 price caps and China’s demand recovery underpins. Meanwhile, the growing case of a soft-landing this year has cooled off global demand slowdown concerns, while reports of ECB’s slowing the path of its rate hikes (read below) also underpinned. WTI futures rose to $81/barrel while Brent was at $86. IEA’s monthly market outlook will be released today. Metals boosted by upbeat China data Better than expected economic data from China helped boost sentiment in the base metal sector. China’s December activity data came in better-than-expected, while protests in Peru continued to cloud the supply outlook for Copper. HG Copper was back above $4.20. Prices for Iron ore also rose in Singapore to back above $120, locking in gains of over 1%. Gold, however, continues to face correction risk as ETF flows and risk reversals have remained flat for weeks with no sign of demand despite the recent rally. We believe the direction in gold is correct but the timing is wrong, raising the risk of a short-term correction driven by recently established speculative longs.  Read next:GBP/USD Is Strengthening And Trading Above 1.2260, Investors Took A Breather Ahead Of The Bank Of Japan Meeting| FXMAG.COM What to consider? Bank of Japan meeting playbook – bracing for volatility The highly-watched Bank of Japan policy decision due Wednesday has spooked tremendous volatility and warrants a cautious stance. But whether we see further policy tweaks this week or not, speculation for BOJ to remove its yield curve control will likely to build into BOJ chief nominations due February 10, spring wage negotiation in March and a change of hands at the helm in April. Read our full preview here or listen to yesterday’s podcast. China GDP and activity data came in better than expected At 2.9% Y/Y, China’s Q4 GDP print was well above the consensus forecast of 1.6% while decelerating from 3.9% Y/Y in Q3. Full-year GDP growth came in at 3% in 2022, higher than the consensus forecast of 2.7%. Retail sales, shrinking 1.8% Y/Y in December (vs consensus: -9.0%, Nov: -5.9%), were better than feared. Nonetheless, the positive surprise largely came from a surge of 39.8% Y/Y in medicine sales and a rise of 10.5% Y/Y in food sales on stockpiling in December when China abandoned Covid-19 containment measures. Industrial production growth slowed to 1.3% in December, above the median forecast of 0.1%, from 2.2% in November. Fixed asset investment growth picked up to 3.1% Y/Y in December from 0.8% Y/Y in November, with infrastructure investment slower to 10.4% Y/Y in December from 13.9% Y/Y in November and manufacturing investment improved to 7.4% Y/Y in December from 6.2% in November. China’s population declined for the first time in six decades According to the National Bureau of Statistics, China’s population fell to 1.4118 billion in 2022, a decline of 0.85 million, from 1.4126 billion in 2021. The birth rate slipped to 0.677%, the lowest since records began in 1949. China is planning new restrictions on live streaming According to the Wall Street Journal, Chinese regulators are planning to impose new regulations to cap internet users’ digital tipping as well as tighter censorship of the content. ECB’s dovish surprise likely as inflation slows The ECB is considering a slower pace of rate hikes than Christine Lagarde indicated in December. While a 50bps increase next month remains the most likely outcome, a 25bps move in March is gaining support. Inflation in the Eurozone is slowing, and a sharp drop in natural gas prices suggest that we can continue to expect lower inflation in the months to come atleast until the 2023 winter risks emerge. The final CPI print for December for the Euro-are will be released today and ECB’s minutes of the December meeting are due tomorrow. Gloomy US survey data – NY Fed manufacturing The NY Fed's Empire manufacturing survey tumbled to -32.9 in January from -11.2 in December, well beneath the consensus -9 and marking the lowest level since mid-2020 and the fifth worst reading in the survey’s history. Both new orders and shipments plummeted sharply, and moderation in input and selling price growth was seen. Fed member Barkin (non-voter) repeated that median CPI is still too high, saying that he needs to see inflation convincingly back to target before Fed pauses rate hikes and that he is not in favour of backing off too soon. UK December claims data improves, November earnings data rises again, CPI up next The UK reported November Employment and earnings data yesterday, with the Unemployment Rate steady for the month at 3.7%, while Employment Change rose 27k vs. 0k expected. Average Weekly Earnings rose more sharply than expected at 6.4% YoY ex Bonus vs. 6.3% expected and 6.1% in Oct. Also out this morning were December Jobless Claims data, which rose 19.7k vs. 16.1k in November (revised down from 30.5k, while the Payrolled Employees Monthly Change rose +28k vs. +60k expected and the November number was revised down to +70k from +107k. UK CPI is due to be released today. Vietnam’s political shakeup The latest political shakeup in Vietnam highlights the stability risks that emerging markets generally face. President Nguyen Xuan Phuc has announced he is stepping down, sparking a potential power shift among the communist-ruled country's leaders. The news that he is quitting comes during an anti-corruption drive led by hard-liners. The shift in power could potentially have repercussions on the ability of Vietnam to continue to capture manufacturing moving out of China.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: D-day for Bank of Japan; ECB’s dovishness; China’s growth is a positive surprise but population falls - 18 January 2023 | Saxo Group (home.saxo)
Gold Traded Softer In Response To Dollar Strength, The Bank Of Japan Left Its Policy Levers Unchanged

Gold Traded Softer In Response To Dollar Strength, The Bank Of Japan Left Its Policy Levers Unchanged

Saxo Bank Saxo Bank 18.01.2023 10:22
Summary:  The Bank of Japan was going to surprise overnight no matter what it decided, and with the market leaning for some kind of further tweak in policy after a December move, Governor Kuroda and company surprised by indicating no change at all in the initial statement, sending the JPY sharply lower. Elsewhere yesterday, the euro was marked lower on a story that the ECB is set to slow the pace of hikes already after the February ECB meeting. US December Retail Sales on tap today.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities continue to trade in a pivotal area ahead of the heart of earnings season set for the coming couple of weeks, with the 200-day moving average and 4,000 area in focus for the S&P 500. Financial conditions remain very easy as corporate credit spreads and the VIX continue to poke into the low range of the last year as the market hopes for a soft landing for the economy and as the Fed is seen as easing away from its tightening regime after another two 25 basis point hikes at coming meetings.  Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index ticked up by 0.3% and CSI300 edged down by 0.1%. Online and mobile gaming names led in both the Hong Kong and mainland bourses. China released 88 new licenses of online/mobile games, including one title from Tencent (00700:xhkg), up 1.2%. and one title from NetEase (09999:xhkg), up 4.6%. The other internet names, however, traded weak, with around 1% to 3% losses. Vice-Premier Liu He’s speech at Davos attempted to assure the audience about a 2023 recovery in the Chinese economy and stability in the real estate sector. He also sang from the same recent hymn book of other Chinese leaders to try to assure the world about China’s openness and not resorting to equalitarianism in its drive for common prosperity. FX: JPY weakens as BoJ refuses to tweak policy, ECB surprises with dovish shift. The market was leaning for further policy tightening from the Bank of Japan after December’s surprise widening of the yield-curve-control “band”, but the Bank of Japan failed to deliver, leading to the yen getting shocked back lower, in part on the unwinding of the largest spike in implied volatility for over-night options over the event in years. More below on the BoJ. Elsewhere, officials from the ECB were quoted late yesterday afternoon, indicating a that, while the expected 50 basis point hike is likely for February, there is increasing support for a deceleration to 25-basis point hikes at subsequent meetings. This development took the euro sharply lower yesterday as, for example, German 2-year yields dropped over 10 basis points on the news. Crude oil (CLG3 & LCOH3) pushes higher Crude oil edged higher, thereby erasing early January losses, after OPEC’s Secretary General Haitham Al Ghais said he’s optimistic about the outlook for the global economy and with that demand for crude oil. The oil producer group said that a potential slowdown in advanced economies is countered by accelerating growth in Asia. The market is expected to tighten as Russia’s supply suffers from G7 price caps and China’s demand recovery underpins. Russia said it expects Western sanctions to have a significant impact on its oil product exports, likely leaving it with more oil to sell. Focus today the dollar following the BOJ meeting and not least IEA’s Oil Market Report for January. EIA’s weekly stock report delayed until Thursday.  Gold correction risk with dollar the key focus Gold traded softer overnight in response to dollar strength after the Bank of Japan failed to deliver another tweak to its interest rate policies (see above).  While industrial metals such as copper continues higher on China demand hopes, the yellow metal continues to get most of its directional input from the dollar. ETF flows and risk reversals in the options market have remained flat for weeks with no sign of demand despite the recent rally, potentially signalling increased risk of a short-term correction driven by recently established speculative longs. US Treasury yields rebounded slightly Friday (TLT:xnas, IEF:xnas, SHY:xnas) The Bank of Japan stood pat on its current policy mix even as the market was leaning for some further policy tweak, sending JGB’s sharply lower and taking US yields down a few notches as well overnight, with the 10-year benchmark Treasury yield poking back below 3.50%. The focus remains on incoming data and the shape of the US yield curve, with December US Retail Sales data up today. Read next: GBP/USD Is Strengthening And Trading Above 1.2260, Investors Took A Breather Ahead Of The Bank Of Japan Meeting| FXMAG.COM What is going on? BOJ maintains policy unchanged, launches new tool to support bond market The Bank of Japan left its policy levers unchanged at the January meeting, defying heavy market speculation of another tweak after the surprise in December. The announcement saw the yen plunge by over 2%, as the central bank said it would continue large-scale purchases of government bonds and increase it on a flexible basis as needed. The central bank, in a new measure to maintain yield control policy, also extended a loan offer to banks for funds of up to 10 years against collateral for both fixed- and variable-rate loans. Meanwhile, the BOJ still sees inflation getting back to sub-2% range this year. Core CPI estimate for FY2022 was only slightly raised to 3.0% for 2.9% previously, while the FY2023 estimate of 1.6% was maintained. In the press conference, BoJ Governor Kuroda said that the sustainable inflation goal is not yet in sight, suggesting low odds that he will declare victory on bringing back inflation before his exit in April. Goldman Sachs plunges, Morgan Stanley soars after both banks report earnings Goldman Sachs plunged yesterday after its earnings report, dropping more than 6% on rising expenses and on rising compensation costs for employees. Revenues dropped on reduced M&A activity and its foray into retail banking continues to drag on results. Morgan Stanley, meanwhile, was the S&P 500’s second best performer on the day, jumping over 5% after reporting Q4 earnings, with strong results in its wealth management division noted Industrial metals boosted by upbeat China data Better than expected economic data from China helped boost sentiment in the base metal sector. China’s December activity data came in better-than-expected, while protests in Peru continued to cloud the supply outlook for copper. HG Copper trades above $4.25 after surging to the highest since June, and up 11.6% this month after recording nine consecutive daily gains. Prices for Iron ore also rose in Singapore to back above $120, locking in gains of over 1%. Gloomy US survey data – NY Fed manufacturing The NY Fed's Empire manufacturing survey tumbled to -32.9 in January from -11.2 in December, well beneath the consensus -9 and marking the lowest level since mid-2020 and the fifth worst reading in the survey’s history. Both new orders and shipments plummeted sharply, and moderation in input and selling price growth was seen. Fed member Barkin (non-voter) repeated that median CPI is still too high, saying that he needs to see inflation convincingly back to target before Fed pauses rate hikes and that he is not in favour of backing off too soon UK Dec. CPI out this morning and slightly hotter than expectations as the headline rose +0.4% MoM and +10.5% year-on-year vs. +0.3%/+10.5% expected, respectively while the core CPI level rose +6.3% YoY vs. +6.2% expected and +6.3% in November. Sterling traded slightly firmer after the data. What are we watching next? ECB’s dovish surprise likely as inflation slows The ECB is considering a slower pace of rate hikes than Christine Lagarde indicated in December. While a 50bps increase next month remains the most likely outcome, a 25bps move in March is gaining support. Inflation in the Eurozone is slowing, and a sharp drop in natural gas prices suggest that we can continue to expect lower inflation in the months to come at least until the 2023 winter risks emerge. The final CPI print for December for the Euro-are will be released today and ECB’s minutes of the December meeting are due tomorrow. Earnings to watch The Q4 earnings season continues today with more US financial services companies reporting, including the retail-focused PNC Financial Services and Charles Schwab. Kinder Morgan is a company operating an extensive pipeling transportation and energy storage network, while EQT is a US-based natural gas producer and the second largest producer in the largest US shale gas production area in Appalachia (the Marcellus shale). Guidance on the future productivity of its reserves could be a focus there after the wild ride for natural gas this year on Russia’s invasion of Ukraine. Today: EQT, Charles Schwab, PNC Financial Services, Kinder Morgan Thursday: Procter & Gamble, Netflix Friday: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) 0900 – IEA's Oil Market Report for January1000 – Eurozone Final December CPI1330 – US Dec. Retail Sales1330 – US Dec. PPI1400 – US Fed’s Bostic (non-voter) to speak1415 – US Dec. Industrial Production and Capacity Utilization1500 – US Jan. NAHB Housing Market Index1900 – US Fed Beige Book1900 – US Fed’s Harker (voter 2023) to speak0001 – UK Dec. RICS House Price Balance0030 – Australia Dec. Employment Change / Unemployment Rate   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 18, 2023 | Saxo Group (home.saxo)
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Oil And Gold Prices Are A Little Higher Again

Craig Erlam Craig Erlam 18.01.2023 14:40
Continuing higher Oil prices are a little higher again on Wednesday trading around the peak we saw earlier this month. The optimism that’s driving equity markets higher is filtering through to commodity markets as well, with the prospect of stronger growth in the world’s two largest economies boosting demand expectations. A move back towards $90 in Brent would take us to levels not seen since early November and suggest traders are feeling much better about the global economic outlook. Of course, that’s probably going to be subject to frequent change unless we get a steady stream of good data, while earnings season could put a dampener on sentiment. Another run at resistance Gold is pushing higher once more after stalling just above $1,920. The zone between $1,880 and $1,920 has been a major zone of support and resistance in recent years and it appears to have slowed its ascent on this occasion too. That said, momentum has remained strong with the rally so the pause may only be brief. Should it fail to hold that momentum during this latest move higher, it could trigger further profit-taking and potentially a correction. ​ ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Metal Market Insights: Global Aluminium Output Holds Steady, Nickel Spreads Surge, and Indonesia's Copper Exports to Cease

Commodities: China’s Imports Of Unwrought Aluminium And Products Rose

ING Economics ING Economics 19.01.2023 09:09
IEA numbers released yesterday suggest a tighter oil market over the latter part of the year, while oil demand is expected to hit record levels this year. However, the supportive release from the IEA was overshadowed by weaker-than-expected macro data out of the US Source: Shutterstock Energy - Oil demand forecasts edge higher The oil market spent a large part of yesterday trading stronger, however, weaker-than-expected retail sales and manufacturing data from the US appear to have hit sentiment. And oil was unable to escape the broader downward pressure seen in markets. API numbers released overnight show that US crude oil inventories increased by 7.6MMbbls last week, which was a bit different to the draw the market was expecting. As for refined products, gasoline stocks increased by 2.8MMbbls, whilst distillate inventories fell by 1.8MMbbls. The IEA released its latest monthly oil market report yesterday, where oil demand growth forecasts for 2023 were increased from 1.7MMbbls/d to 1.9MMbbls/d, which would leave global oil demand at a record 101.7MMbbls/d in 2023. Some upward revisions were made to Chinese oil demand following the reopening and this should leave China making up almost 50% of global demand growth. A large share of demand growth this year is also expected to be driven by jet fuel.  As for supply, non-OPEC+ supply is expected to grow by 1.9MMbbls/d, but this will be partially offset by expectations of an 870Mbbls/d decline in OPEC+ supply, largely as a result of Russia. The IEA expects that the oil market will be in surplus over 1Q23, however, will start to tighten from 2Q23 onwards and with more pronounced deficits over 2H23. The latest trade data from China shows that LNG imports in December totalled 6.6mt, which is the strongest since January 2022, however, still down around 13% YoY. This leaves total LNG imports for 2022 at 63.81mt, a decline of 20% YoY and the weakest annual imports since 2019. China should see a recovery in LNG demand this year given the change in Covid policy. Metals - prices push higher Base metals pushed higher on Wednesday amid continued optimism around China’s reopening. Vice Premier Liu He told the World Economic Forum’s annual meeting in Davos that China's pandemic prevention and control optimization was smooth, and the economy will likely recover to its pre-Covid growth trend this year. The Antofagasta copper mine in Chile reported a decline of 10.4% YoY in its copper production last year as lower ore grades and drought in the country continued to disrupt mine operations. The company produced 646.2kt of copper last year, which is at the low end of its 640-660kt production guidance for the year. For 2023, output guidance was left unchanged at 670kt-710kt. China’s imports of unwrought aluminium and products rose 6.3% YoY to 258.7kt in December, the latest data from China customs shows. However, full-year 2022 imports reported a decline of 25.6% YoY to 2.4mt. On the exports side, alumina exports jumped 1,345% YoY to 60kt last month, while full-year exports rose 742.3% YoY to 1.01mt in 2022. Agriculture – Chinese corn imports decline The latest trade data from China customs shows that corn imports dropped 35% YoY (for an eighth consecutive month) to 870kt in December, while full-year imports fell 27.3% YoY to 20.6mt in 2022. Among other grains, wheat imports rose 14.5% YoY to 1.08mt last month, which leaves total wheat imports for last year at 9.96mt, up 1.9% YoY. Reports of extreme drought conditions in Argentina have fueled supply worries. The rains that were forecast for the end of January are now expected to arrive weeks later, further dampening hopes for a revival of the current crop. Read this article on THINK TagsSoybeans Oil LNG IEA Copper China trade Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
US Retail Sales Boost Prospects for 3% GDP Growth, but Challenges Loom Ahead

Results From Procter & Gamble And Netflix Will Shed Some Light On Global Consumer Strength

Saxo Bank Saxo Bank 19.01.2023 09:28
Summary:  The deteriorating US retail sales and industrial production data hurt risk sentiment, and US equity markets tumbled despite lower yields. The US dollar was choppy after BOJ’s pushback on market speculation and the announcement to keep policy unchanged, but hotter core CPI in UK supported the sterling. Weaker Australia employment data sent AUDUSD lower to test 0.6900. Crude oil prices plummeted on deteriorating economic outlook and a weaker API inventory build. Focus turns to earnings today with Proctor & Gamble and Netflix due to report.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) reversed and fell over 1% on recession fears U.S. equities opened higher initially as bond yields tumbled on a dovish Bank of Japan and much weaker than expected prints on U.S. retail sales, industrial production, and producer prices. Comments from the Fed’s Bullard in a Wall Street Journal interview about his preference of keeping the pace of rate hike at 50bps at the February FOMC triggered a reversal around mid-day and saw U.S. stocks plunge in the New York afternoon session. The weak economic data and the risk of the Fed overdoing it in rate hikes troubled equity investors. At the close of Wednesday, Nasdaq 100 fell 1.3% and S&P 500 slipped 1.6%. All 11 sectors of the S&P 500 declined, with the consumer staples sector falling the most to finish the session 2.7% lower. In the Fed’s Beige Book released on Wednesday, U.S. retailers said they were having difficulties in passing through costs increases to consumers. On individual stocks, PNC Financial Services (PNC:xnys) fell 6% on a larger-than-expected credit losses provision. Moderna (MRNA:xnas) gained 3.3% following release of positive trial results for a RSV virus vaccine. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) surged on dovish BoJ and weak economic data; the 10-year yield slid to 3.37% Treasuries surged in price and yields collapsed on dovish outcomes from the Bank of Japan’s monetary policy meeting. The BoJ doubled down on monetary easing with an adjustment to its Funds-Supplying Operations against Pooled Collateral which enables it to lend cheaply to banks up to 10 years in maturity from only up to two years previously. Apparently, the BoJ aims at bringing down the elevated swap rates closer to the yields of JGBs. Treasury yields took a further dive in New York morning hours following the release of larger-than-expected declines in retail sales and industrial production as well as a bigger-than-expected 0.5% month-on-month fall in the Producer Price Index in December. The hawkish comments from Fed’s Bullard about keeping the February hike at 50bps did not have much of an impact on Treasuries despite being picked up as a reason to fade the rally in equities by traders. The result from the USD12 billion 20-year Treasury bond auction was strong. Treasury yields finished the Wednesday session with the 2-year 12bps richer at 4.08% and the 10-year 18bps richer at 3.37%, bringing the 2-10 curve more invested to -71bps. Hong Kong’s Hang Seng (HIF3) ticked up and China’s CSI300 (03188:xhkg) traded sideways Hang Seng Index ticked up by 0.5% and CSI300 edged down by 0.2%. Online and mobile gaming names led in both the Hong Kong and mainland bourses. China released 88 new licenses of online/mobile games, including one title from Tencent (00700:xhkg), up 1.7%. and one title from NetEase (09999:xhkg), up 6.5%. Trading in other internet names, however, was mixed. Auto dealers were led lower by an 8.3% decline in Zhongseng (00881:xhkg). EV makers traded weakly, XPeng (09868”:xhkg) down 2.9%. In A-shares, food and beverage, beauty care, and construction materials led the decline while online gaming, computing, media, communication, and non-ferrous metal gained. Northbound net buying was over RMB4 billion, bringing the net buying in January to over RMB90 billion. FX: Choppy dollar after BOJ ECB’s Villeroy dismissed dovish ECB talks and says Lagarde guidance still valid, bumping up EUR higher but the gains were reversed later and EURUSD ended below 1.0800 again. EURGBP meanwhile testing a break below 0.8740 to near 1-month lows as UK core CPI came in hotter-than-expected. AUD and NZD were divergent with AUDNZD falling from highs of 1.0873 to lows of 1.0783. AUDUSD was slightly lower on weaker-than-expected employment data which saw unemployment rate rising to 3.5% while overall employment fell 14.6k compared to expectations of +25k, while last month’s employment gains were revised lower to 58.3k. NZDUSD however saw little reaction to reports of PM Arden’s resignation. USDJPY back below 129 after the BOJ-related volatility yesterday. Crude oil (CLG3 & LCOH3) tumbled on sluggish US data and weak API build Crude oil prices rose to fresh highs earlier on Wednesday before sliding in the NY hours. US data flow turned out to be grim with both retail sales and industrial production disappointing, sending recession concerns soaring. The International Energy Agency was also circumspect. It said the market faces immediate headwinds, with supply exceeding demand by about 1mb/d in Q1. Meanwhile, API reported that US crude stockpiles rose 7.6mn barrels for last week. WTI futures retreated from highs of $82+ to $79, while Brent was back below $85/barrel from highs of ~$88.  Read next: The Japanese Yen (JPY) Weakened, The Aussie Pair Is Trading Above 0.70$| FXMAG.COM What to consider? BOJ maintains policy unchanged, launches new tool to support bond market The Bank of Japan left its policy levers unchanged at the January meeting, defying heavy market speculation of another tweak after the surprise in December. The announcement saw the yen plunge by over 2%, as the central bank said it would continue large-scale purchases of government bonds and increase it on a flexible basis as needed. The central bank, in a new measure to maintain yield control policy, also extended a loan offer to banks for funds of up to 10 years against collateral for both fixed- and variable-rate loans. Meanwhile, the BOJ still sees inflation getting back to sub-2% range this year. Core CPI estimate for FY2022 was only slightly raised to 3.0% for 2.9% previously, while the FY2023 estimate of 1.6% was maintained. In the press conference, BoJ Governor Kuroda said that the sustainable inflation goal is not yet in sight, suggesting low odds that he will declare victory on bringing back inflation before his exit in April. Bad economic news is now bad news for the markets US PPI fell 0.5% M/M in December, a deeper fall than the expected 0.1% decline, while the prior was downwardly revised to +0.2%; PPI Y/Y rose 6.2%, a big fall from the prior (downwardly revised) +7.3%, beneath the expected +6.8%. While slowing inflation continues to be a positive for the markets, concerns around slowing economic growth have started to bite as well. December US retail sales fell 1.1% M/M, deeper than the consensus 0.8% decline with a sizable downward revision for the prior to -1.0% from -0.6%. Industrial production fell 0.7% M/M in December, deeper than the consensus -0.1%, with the prior downwardly revised to -0.6% from -0.2%. Manufacturing output also declined by a larger 1.3%, deeper than expected -0.3% and the prior revised to -1.1% from -0.6%. Fed speakers continue to be mixed, with the non-voters staying hawkish Fed’s Bullard (non-voter) said his dot plot forecast for 2023 is just above the Fed's median of 5.1% at 5.25-5.50% and that Fed policy is not quite in restrictive territory, reiterating it needs to be over 5% at least. Bullard added the Fed should move as rapidly as it can to get over 5% and then react to data, noting his preference is for a 50bps hike at the next meeting (against the consensus 25bps). Loretta Mester (non-voter) said further rate hikes are still needed to decisively crush inflation and we are not at 5% yet, nor above it, which she thinks is going to be needed given her economic projections. She believes the Fed's key rate should rise a "little bit" above the 5.00-5.25% range that the Fed median implies. Harker (voter) said Fed needs to get FFR above 5%, but its good to approach the terminal rate slowly. Dallas President Lorie Logan (voter) spoke later as well, and also hinted at a slower pace of rate hikes. She said she wants a 25bp rate hike, not 50, at the February 1 FOMC meeting. She said if slower rate hike pace eases financial conditions, then the Fed can offset that by gradually raising rates to a higher level than previously expected. UK CPI softens for a second straight month UK Dec. CPI out this morning and slightly hotter than expectations as the headline rose +0.4% MoM and +10.5% year-on-year vs. +0.3%/+10.5% expected, respectively while the core CPI level rose +6.3% YoY vs. +6.2% expected and +6.3% in November. Sterling traded slightly firmer after the data. P&G and Netflix report earnings today On the earnings front, results from Procter & Gamble (PG:xnys) and Netflix (NFLX:xnas) will shed some light on global consumer strength. P&G reports Q4 earnings on Thursday before the market opens with analysts expecting revenue growth of -1.1% y/y and EPS of $1.59 down 4% y/y suggesting that volumes are being hit by inflation and that analysts expect P&G to see their operating margin decline q/q. The potential upside for P&G on its outlook is the reopening of China. Netflix reports Q4 earnings on Thursday after the market close with analysts expecting revenue growth of 1.7% y/y as streaming services are still facing headwinds post the pandemic. EPS is expected at $0.51 down 67% y/y. The things to focus on for investors are user growth, updates on its advertising business, and user engagement figures relative to recent content launches.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Sluggish US economic data; P&G and Netflix earnings ahead - 19 January 2023 | Saxo Group (home.saxo)
Reserve Bank of New Zealand: Kenny Fisher says he expects a 25bp rate hike on May 24th

Jacinda Ardern Has Resigned As Prime Minister Of New Zealand, Crude Oil Extended Wednesday's Steep Decline

Saxo Bank Saxo Bank 19.01.2023 09:43
Summary:  Yesterday saw a sharp reversal in risk sentiment across the board, with US equities in a steep slide and the USD higher, even as treasury yields dipped. The slide in sentiment came after weak US Retail Sales and other data - is bad news finally bad news again? The selling came in at a key technical area after the recent rally, making for a compelling bearish reversal. Elsewhere, the Japanese yen bounced back across the board overnight, just after BoJ-inspired weakness.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) fall over 1% on recession fears U.S. equities opened higher initially as bond yields tumbled on a dovish Bank of Japan and much weaker than expected prints on U.S. retail sales, industrial production, and producer prices. Comments from the Fed’s Bullard in a Wall Street Journal interview about his preference of keeping the pace of rate hike at 50bps at the February FOMC triggered a reversal around mid-day and saw U.S. stocks plunge during the afternoon session. The weak economic data and the risk of the Fed overdoing it on rate hikes troubled equity investors. On the close the Nasdaq 100 was down 1.3% while the S&P 500 slipped 1.6%. All 11 sectors of the S&P 500 declined, with the consumer staples sector falling the most to finish the session 2.7% lower. In the Fed’s Beige Book released on Wednesday, U.S. retailers said they were having difficulties in passing through cost increases to consumers. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Following the decline in U.S. stocks overnight, Hong Kong and mainland Chinese stocks opened lower but managed to pare losses and more. Hang Seng Index and CSI300 edged up modestly in the early afternoon local time. Chinese property developer stocks outperformed while technology names were among the laggards. Hang Seng TECH Index dropped more than 1% on profit taking ahead of the 3-day Lunar New Year holiday next week. Chinese social platform, Kuaishou (01024:xhkg) plunged nearly 6% after a co-founder sold shares. FX: US dollar posts strong rally on weak US data; JPY roars stronger still overnight The weak US data yesterday (more below) took US treasury yields sharply lower all along the curve, but with risk sentiment sliding badly on the news, the USD rallied sharply rather than selling off on the implications for less Fed tightening at coming meetings. This suggests investors may finally be fretting the risk of an incoming recession. The USD strength eased overnight as the Japanese yen, already beginning to reverse to the strong side by late US hours despite the dovish BoJ earlier in the day (the JPY traditionally thrives most on falling global yields and weak sentiment/recession fears) rallied hard, handily outpacing the US dollar and ripping stronger across the board, particularly against the hapless AUD, which was hit by weak December employment data overnight. Crude oil (CLG3 & LCOH3) tumbles badly on sluggish US data Crude oil extended Wednesday’s sharp losses which occurred after poor US economic data triggered fresh growth concerns. The move lower was strengthened by technical and momentum traders getting wrong-footed after having bought an upside break earlier in the day. A reopening of China has been the main supporting focus in recent weeks but with activity there now slowing ahead of the Lunar New Year holiday, traders turned their attention elsewhere and did not like what they saw. Also, the API reported another chunky inventory rise of 7.6 million barrels, well above the 2-million-barrel rise expected by the EIA later today. Finally, IEA delivered a bullish outlook for 2023 demand as China recovers and air travel rebounds. Gold ended lower for a third day, but bids keep coming Gold’s newfound strength continues to be tested but so far, the metal has shown resilience and found fresh bids on any pullback. Yesterday it ended lower for a third day, but still above $1900 with traders (many of which are algorithmic, and machine based) taking their directional input from the US bonds market and not least the dollar. Traders have built positions in the belief we will see peak rates soon in the US, a development that triggered very strong rallies on three previous occasions during the past 20 years. However, as long the market trusts the FOMC will deliver lower inflation, major institutional investors are likely side lined, something that shows up in ETF holdings which remain near a two-year low. Support at $1896 followed by $1855, the 21-day moving average. US Treasury yields lower on weak US data, BoJ standing pat (TLT:xnas, IEF:xnas, SHY:xnas) Treasuries surged in price and yields collapsed on dovish outcomes from the Bank of Japan’s monetary policy meeting. Treasury yields then took a further dive following the release of larger-than-expected declines in US retail sales and industrial production as well as a bigger-than-expected 0.5% month-on-month fall in the Producer Price Index in December. The hawkish comments from Fed’s Bullard about keeping the February hike at 50bps was ignored by Treasuries despite being picked up by traders as a reason to fade the rally in equities. The result from the USD12 billion 20-year Treasury bond auction was strong. The 2-year trades this morning at 4.04% while the 10-year yield has dropped to a four-month low at 3.32%, with the 2-10 curve still very inverted at -72.5 bps. What is going on? US December Retail Sales and other US data disappoint The December US Retail Sales report for December was the second consecutive monthly report to disappoint expectations, with the headline falling –1.1% MoM vs. -0.9% expected and despite the negative November revision to –1.0% (vs. -0.6% originally). The ex Auto and Gas number was also disappointing at –0.7% vs. 0.0% expected and also with a negative revision for November to –0.5% (from –0.2%). These are particularly negative numbers given still high inflation in the US as they are not inflation-adjusted. Elsewhere, the US PPI data was softer than expected at –0.5% MoM and ex Food and Energy at +0.1%, with the YoY dropping to +6.2%/5.5% vs. 6.8%/5,6% expected. Finally, December US Industrial Production fell 0.7% MoM vs. 0.1% expected, with a negative revision of November data to –0.6% from -0.2%. New Zealand Prime Minister Jacinda Ardern shocks with resignation announcement Her resignation was announced after five and a half years in power and came in the context of announcing an October 14 election this year. She will step down no later than February 7. Her Labour Party is trailing the opposition National Party slightly in the polls. Ardern said she hadn’t the energy to continue as PM. Microsoft to lay off 10,000 employees ... as a part of it what it considers a set of cost-cutting measures outlined in a securities filing yesterday. CEO Satya Nadella cited a downward shift in demand for digital services and fears of  a recession. “...we saw customers accelerate their digital spend during the pandemic, we’re no seeing them optimize their digital spend to do more with less.” The layoff are just under 5% of the company’s global workforce. Rising volume of trades on Euronext Paris In recent sessions, we have noticed a strong rise in the volume of trades and a sharp increase of volatility for several small and medium companies listed on Euronext Paris. Target Spot (which connect brands to their audience through a premium portfolio of publishers across digital audio) has experienced a huge rebound in recent sessions (+28 % on a weekly basis) driven by an increase in the volume of trades. This company can be considered as a penny stock (the stock was exchanged at 50 cents two weeks ago). There is also a jump in speculation for companies using dilutive financing in the form of OCABSAs ((bonds convertible into shares with share subscription warrants). In October 2022, the French stock market authorities, the AMF warned against the risks associated to this financing, especially for retail investors. There are several listed companies in that case at the Paris stock market, such as Avenir Telecom (manufacture of mobile phones) and Spineway (implants and surgical instruments). Usually, stay away from any kind of ultra-dilutive funding. Fed speakers continue to be mixed, with the non-voters staying hawkish Fed’s Bullard (non-voter) said his dot plot forecast for 2023 is just above the Fed's median of 5.1% at 5.25-5.50% and that Fed policy is not quite in restrictive territory, reiterating it needs to be over 5% at least. Bullard added the Fed should move as rapidly as it can to get over 5% and then react to data, noting his preference is for a 50bps hike at the next meeting (against the consensus 25bps). Loretta Mester (non-voter) said further rate hikes are still needed to decisively crush inflation and we are not at 5% yet, nor above it, which she thinks is going to be needed given her economic projections. She believes the Fed's key rate should rise a "little bit" above the 5.00-5.25% range that the Fed median implies. Harker (voter) said Fed needs to get FFR above 5%, but its good to approach the terminal rate slowly. Dallas President Lorie Logan (voter) spoke later as well, and also hinted at a slower pace of rate hikes. She said she wants a 25bp rate hike, not 50, at the February 1 FOMC meeting. She said if slower rate hike pace eases financial conditions, then the Fed can offset that by gradually raising rates to a higher level than previously expected. What are we watching next? Norway Central Bank the latest to indicate end-of-cycle hike today? The Norwegian central bank was the first G10 central bank to hike rates back in 2021, but maintained a curiously slow pace of hikes relative to other central banks. The market is divided on whether the Norges Bank is set to hike by 25 basis points today, with most believing that even if it doesn’t, the following meeting in late March will see a hike, probably the last of the cycle for now. Earnings to watch The Q4 earnings season continues today with two big earnings reports from two very different companies: the huge US consumer products company Procter and Gamble (Market Cap $350B) and streaming services provider Netflix, which has enjoyed a more than 100% rally off the lows by rejuvenating subscriber growth and rolling out plans to launch advertising on its platform for the first time. Still, that stock is down more than 50% from the bubble peak in 2021. Today: Procter & Gamble, Netflix Friday: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) 0900 – Norway Rate decision 1330 – US Dec Housing Starts and Building Permits 1330 – US Initial Jobless Claims 1330 – Philadelphia Fed Business Outlook 1330 – Canada Dec. Terante/National Bank Home Price Index 1530 – EIA Natural Gas Storage Change 1600 – EIA's Weekly Crude and Fuel Stock Report (delayed) 1815 – US Fed Vice Chair Brainard to speak on economic outlook 2330 – Japan Dec. National CPI 0001 – UK Jan. GfK Consumer Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 19, 2023 | Saxo Group (home.saxo)
Bank of England Faces Rate Decision: Uncertainty Surrounds Magnitude of Hike

Gold Looks Appetizing On Weaker Dollar, Soft Economic Data From The US Revives The Fed Doves

Swissquote Bank Swissquote Bank 19.01.2023 10:59
The latest PPI data showed that the producer price inflation in the US fell way faster than expected, while retail sales fell 1.1% in December – marking the biggest monthly drop of last year. S&P500 The S&P500 didn’t like the mix of slowing economic data, and hawkish comments from Fed officials, and dived more than 1.50% yesterday. But the dovish expectations – despite the hawkish comments from the Fed, feed well into the bond markets: the US 2-year yield is diving toward the 4% mark, while the 10-year yield hit 3.30%, the lowest level since September. This means that the positive divergence in the sovereign space, compared with the stocks, is happening. Netflix and P&G And the divergence could be even more visible if the stocks fall further on soft earnings. Netflix and P&G will announce their Q4 results today. Read next: Un Secretary General Antonio Guterres Encouraged The Transition To Green Energy At The World Economic Forum In Davos, The Chinese Economy May Surprise You Positively| FXMAG.COM Energy In energy, US crude advanced past the $82 mark on Chinese reopening optimism and IEA predicting that the oil demand will hit a record in 2023, before falling back below the $80 on recession pessimism. Precious metals In precious metals, gold is bid above the $1900 level, supported by lower US yields and the softer US dollar. Watch the full episode to find out more! 0:00 Intro 0:42 Soft economic data from the US revives the Fed doves 2:09 But the Fed doves aren’t enough for cheering up the stock bulls 3:36 Netflix & P&G to reveal Q4 earnings today 6:00 USD is unloved 8:20 Crude oil swings up and down 9:05 Gold looks appetizing on softer yields & weaker dollar Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #PPI #retailsales #data #Netflix #P&G #earnings #USD #EUR #GBP #JPY #crude #oil #gold #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Ipek Ozkardeskaya Ipek Ozkardeskaya 19.01.2023 13:41
There was good, and less good news for investors on the wire yesterday.   The latest PPI data showed that the producer price inflation in the US fell way faster than expected. The expectation was a slowdown in factory gate inflation from 7.3% to 6.8%. And the data printed a sexy 6.2% for December – which meant a 0.5% retreat instead of a 0.1% decline. Core PPI also slowed. That's the good news.   The bad news is the US retail sales fell 1.1% in December – marking the biggest monthly drop of last year.   On the jobs front, Microsoft said that it will cut 10'000 jobs while Amazon started cutting jobs in the context of 18'000 job cuts announced a couple of weeks earlier. Exactly what the Fed wants.  The bad news would normally be good news for the stocks, if the Federal Reserve (Fed) members weren't there to spoil the dovish Fed expectations by saying that the US rates should go higher. Loretta Mester said more hikes are needed, and James Bullard reminded that the rates would have to stay 'on the tighter side this year' to help the Fed reach its 2% inflation goal.  S&P500 is an easy short at the current levels  The S&P500 didn't like the mix of slowing economic data, and still a hawkish Fed, and dived more than 1.50% yesterday.   And traders didn't hesitate much sending the index below the 200-DMA, and below the bearish trend building since the start of 2022, given that there is nothing encouraging for stock investors out there, other than the softening Fed expectations – which don't help filling the company's coffers.  Stock/bond divergence is happening!  The dovish expectations are, however, feeding well into the bond markets: the US 2-year yield is diving toward the 4% mark, while the 10-year yield hit 3.30%, the lowest level since September.   This means that the positive divergence in the sovereign space, compared with the stocks, is happening. Investors return to US sovereign bonds on expectation that the Fed would soften its policy due to recession jitters, while stock markets don't benefit from the expectation of softer financial conditions, as slowing economic activity is bad for profits.   And speaking of profits, Procter & Gamble and Netflix are due to release their Q4 earnings today!   Crude oil swings between gains and losses  US crude advanced past the $82 mark on Chinese reopening optimism and IEA predicting that the oil demand will hit a record in 2023, before falling back below the $80 on recession pessimism, and the news that the US crude inventories jumped by 7.6 million barrels last week, while the expectation was a drop in inventories.   The more official EIA data is due today, and the expectation of a 2.1 million barrel fall will likely disappoint the bulls. But I continue believing that the bulls will take the upper hand and carry the rally higher, though on a bumpy road.   Falling stocks + falling yields: a boon for gold diggers  Gold is bid above the $1900 level, and the positive pressure is supported by lower US yields – which decrease the opportunity cost of holding the non-interest-bearing yellow metal, and the softer US dollar.   The overbought conditions hint that we could see a minor downside correction in the short run, but levels between $1855 and 1900 are interesting for amassing gold.   There is potential for a further rise in gold, especially if the stocks fall, while the US yields continue easing. 
The Commodities Feed: Oil maintains positive momentum

WTI Crude Oil Price May Pare Some Of Its Recent Gains

TeleTrade Comments TeleTrade Comments 20.01.2023 08:52
WTI retreats from intraday high, consolidates gains during two-week uptrend. Hawkish Fedspeak, downbeat US data underpin economic slowdown fears even as China demand puts a floor under the prices. Higher inventory build, recent pause in US Dollar’s downside also challenge Oil buyers. Risk catalysts are the key to fresh impulse amid a light calendar. WTI remains firmer for the second consecutive week even if the intraday buyers retreat during early Friday morning in Europe. That said, the black gold slides to $80.95 while paring the daily gains by the press time. In doing so, the energy benchmark takes clues from the recent stabilization of the US Dollar, as well as hawkish comments from the Federal Reserve (Fed) officials. On the same line could be the headlines suggesting the US recession and higher crude oil inventory build in the US. That said, the US Dollar Index (DXY) picks up bids to 102.15 as it consolidates the previous day’s losses, the biggest in over a week, as Fed policymakers favor higher rates during their last public appearances before the 15-day silence period ahead of the February Federal Open Market Committee (FOMC) meeting. Even so, downbeat US data and looming fears of inflation keep the recession risk on the table and weigh on the Oil prices. On Thursday, the US Unemployment Claims dropped to the lowest levels since late April 2022 and the Philadelphia Fed Manufacturing Survey Index also improved However, US Building and Housing Starts joined the previously release downbeat US Retail Sales and Producer Price Index (PPI) to propel fears of a recession in the world’s largest economy, earlier backed by the softer wage growth and activity data from the US. Elsewhere, the US Energy Information Administration (EIA) reported an increase in weekly Crude Oil Stocks Change with 8.408M versus -1.75M expected and 18.962M prior, which in turn weighed on the WTI crude oil prices. Alternatively, the increase in China demand and the People’s Bank of China (PBOC) status quo, as well as the latest tension surrounding Taiwan, seem to put a floor under the Oil prices. Chinese November oil demand climbed to the highest level since February, data from the Joint Organisations Data Initiative showed on Thursday, reported Reuters. Looking forward, WTI crude oil price may pare some of its recent gains as the US Dollar is gradually justifying hawkish Fed talks. However, a lack of major data/events could challenge the greenback’s upside. Technical analysis A horizontal area comprising multiple levels marked since October 2022, near $81.30 by the press time, appears a tough nut to crack for Oil buyers. On the contrary, a fortnight-long ascending trend line, near $79.00, as well as a firmer RSI (14), not overbought, keeps the WTI bulls hopeful.
Rates Spark: Central banks vs economic data

The ECB Will Stay The Course With Rate Hikes, Netflix Reported Q4 2022 EPS Below Market Expectations

Saxo Bank Saxo Bank 20.01.2023 09:28
Summary:  The US equity markets ended lower again on Thursday as strong US jobless claims data underpinned, despite Fed speakers largely supporting the case of a downshift in February. Meanwhile, ECB speakers surprised hawkish, supporting EURUSD, and the post-BOJ strength in Japanese yen also sustained. Mixed earnings results with P&G down but Netflix rising despite missing EPS estimates as subscriber numbers grew. Gold returned to gains after three days of pullback, and crude oil prices also edged higher on China optimism.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) slid on concerns about earnings Nasdaq 100 moved down by 1% and S&P500 slid 0.8% in a relatively quiet day. Energy and communication services bucked the decline and managed to each gain around 1%. Microsoft added to its previous day’s decline, falling 1.7% on Thursday. Consumer product giant, Procter & Gamble (PG:xnys) dropped 2.7% on a small earnings miss but disappointing organic sales growth due to a weaker-than-expected volume trend. Netflix (NFLX:xnas) jumped 6.9% in the extended hours after reporting a 7.7 million subscriber increase in Q4. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) consolidated on hawkish ECB comments and a strong Philly Fed survey Treasuries erased their gains in Asian hours as yields followed German bunds higher in London hours on pushbacks from ECB’s Lagarde and Knot to speculation on a downshift of ECB rate hikes from 50bps to 25bps. Yields, especially in the short-end of the curve, climbed further following a smaller-than-expected 190K rise in initial jobless claims and an increase of the Philly Fed Business Outlook Index by 4.8 points to -8.9, better than the consensus estimate of -11.0. The 6-month ahead conditions sub-index improved nearly 6 points to 4.9. The Fed’s Vice Chair Brainard said she was supportive of slowing the rate hike to 25bps at the February FOMC while reiterated “the need for further rate increases, likely to just above 5 percent”. According to Nick Timiraos at the Wall Street Journal, Brainard raised the possibility that the Fed might not need to see as much evidence of a slowdown in labor markets to be confident of inflation improving. The USD17 billion TIPS auction went very strong with bid-to-cover at 2.79, well above the average of 2.25. As the federal government reached its debt limit, Treasury Secretary Yellen wrote a letter to Congress about measures that the Treasury Department is taking to keep meeting obligations until at least early June to allow time for Congress to work on raising the debt limit. Yields on the 2-year rose 4bps to 4.13% and those on the 10-year climbed 2bps to 3.39%, bringing the 2-10-year curve 2bps more inverted at -74. Hong Kong’s Hang Seng (HIF3) unchanged; China’s CSI300 (03188:xhkg) higher Hang Seng Index opened lower on Thursday but managed to pare losses and finished the day nearly unchanged. Techtronic (00669:xhkg), falling 5.4% on analyst downgrades, was the biggest loser with the Hang Seng Index. Chinese developer stocks and consumer names outperformed while China internet stocks, except Tencent, dragged. Country Garden (02007:xhkg) gained 4.9% and Longfor (00960:xhkg) climbed 3.5%. Leading sportswear name, Li Ning (02331:xhkg) rose 3.9%. BYD (01211:xhkg) rose 2.3% while other EV markers edged down. The speculation that a new “Strong Nation Transportation” ride-hailing app is backed by the government to compete with the incumbent platform companies, though later clarified being not the case, weighed on internet stocks, seeing Meituan (03690:xhkg) down 2.1% and Alibaba (09988:xhkg) down 1.7%. Chinese social platform, Kuashou (01024:xhkg) plunged nearly 6% after a co-founder sold shares. The Hang Seng TECH Index slid 1.7%. Overseas buying into A-shares through Stock Connect continued for 12 days in a row with a net buying of RMB9 billion on Thursday, bringing the net buying in January so far to over RMB100 billion. On Thursday, semiconductors, computing, ride-hailing, electronics, pharmaceuticals, brokerage, and defence stocks outperformed. CSI100 gained 0.6%. FX: Dollar slightly lower as Yen and Euro continue to gain The USD was slightly lower on Thursday as the ECB hawkishness continued to outpace that of the Fed and the post-BOJ recovery in the Japanese yen continued. USDJPY traded at sub-129 levels after a trip higher to 131.50 on the BOJ-day. EURUSD has returned above 1.0800 amid ECB member Knot and President Lagarde staying hawkish (read below). NZD and AUD were the underperformers. NZDUSD slid below 0.6400 before a slight recovery as news of NZ PM Ardern’s resignation weighed. AUDNZD’s drop below 1.0800 was also reversed. Crude oil (CLG3 & LCOH3) rebounds Crude oil prices gained as China optimism continued to reign. Reports that China’s covid caseload has peaked further boosted optimism that demand will start to recover more sustainably. Markets shrugged off rising inventories in the US. Commercial stockpiles rose 8,408kbbls last week, according to EIA data. Global demand expectations also got a boost as US jobless claims data supported the view that the labor market is still tight. WTI futures touched $81/barrel again after a drop towards $78 while Brent was back above $86. Gold (XAUUSD) climbed higher after three days of decline Gold continues to show resilience and found fresh bids on Thursday after three days of pullback. Support at $1900 continued to hold, and the yellow metal rose back above $1930 as US yields remained near new cycle lows despite some gains last night. However, demand from ETFs is yet to pick up with expectations that inflation will eventually come back to Fed’s target levels. Some correction may also be seen as Gold’s demand eases after China’s Lunar New Year festival, but the long-term view holds that 2023 will be friendlier towards investment metals, as last year’s headwinds – most notably dollar and yield strength – begin to reverse. For investors, what’s the big picture in markets right now with bond yields down 94bps and gold up nearly 20%? Despite bond yields rising on Thursday, to 3.4% the US 10-year Treasury yield broke below key support two days ago. As our head of technical analysis points out the closely watch yield could drop to 3.22%. As you may recall, our view at Saxo has been that peak hawkishness came in Q4 2022, which supports the retreat in bond yields since November last year. Bond yields are now down 94 basis points from their October peak. At the same time, the gold price rose 19% during the same period, given it typically tends to have an inverse relationship to bond yields, in particular real yields. If we see the Fed pauses later in the year, as Ole points out on yesterday’s podcast, the gold price could rally further in 2023.  Read next: Elon Musk Is Facing Trial In Fraud Trial Over 2018 Tweets| FXMAG.COM What to consider? More Fed members, including Brainard, hinting at a 25bps rate hike Lael Brainard (voter) said the recent downshift in the pace of rate hikes allows the Fed to assess more data as it moves policy to a "sufficiently restrictive" level, noting we are now in "restrictive" territory and are probing for a sufficiently restrictive level. She didn’t clearly confirm a 25bps rate hike for February, but hinted at that saying Fed downshifted the rate hike pace in December to absorb more data, and that logic is applicable today. Another voter Williams is speaking in the Asian morning hours, and signalling that the Fed has more work to do but labor demand far exceeds supply. Non-voter Collins reaffirmed her view that rates need to rise to likely just above 5%, and then the Fed needs to hold rates there for some time, also saying that it is appropriate to slow the pace of hikes particularly with risks now more two-sided. US initial jobless claims a good reminder that labor market is still tight While the focus somewhat shifted towards growth concerns yesterday after the disappointment from US retail sales and industrial production data. US jobless claims unexpectedly fell last week by 15k to 190k vs. expected 214k. Pre-covid monthly average was 345k per week while the 5Yr trend was 245k. So the data is still strong and a good reminder that inflation may continue to stay much higher than expected levels. The Philly Fed regional manufacturing index was also released yesterday, and it wasn’t as bad as the Empire State manufacturing survey stressing our view that survey results can be volatile. That index came in at -8.9 which was better than the -11.0 expected and marginally better than the -13.9 last month. Hawkish ECB speakers pushback against reports of slowing rate hikes ECB's Knot said that market developments of late are not entirely welcome and that the ECB won't stop after a single 50bps hike, planning to hike by 50bps multiple times. Despite a softer CPI print lately, Knot said that there are no signs of underlying inflation pressures abating, and said that the ECB will be in "tightening mode" until at least mid-year. ECB President Lagarde was also on the wires, saying economic news has become much more positive as the contraction in Eurozone 2023 GDP may be smaller than previously expected, so the ECB will stay the course with rate hikes. It's the demography, stupid! Earlier this week, we have learnt that China reached its demographic peak with 10-year ahead of projections. This will serve a as wake-up call for other countries, certainly. The world population growth is now below 1 % for the first time since the first half of the 20th century. About 61 countries in the world are expected to see their population decrease by at least 1% by 2050 (the population of Japan has been decreasing since 2010 while that of Italy since 2014, for instance). Expect massive consequences for the labor market. In Germany, about 500,000 people will leave the labor market each year between 2025 and 2035. This is massive! We are entering into a world of human capital shortage. Japan’s December CPI touches 4%, eyes on BOJ nominations due in February Japan’s December CPI came in at 4.0% YoY from 3.8% YoY previously, with core CPI also at 4.0% YoY while the core-core measure was a notch softer-then-expectations but still above the 2% target, coming in at 3.0% YoY. Despite the Bank of Japan’s pushback on expectations to tweak policy this week, speculations are likely to continue as inflation breadth is spreading. A contender to succeed Bank of Japan Governor Kuroda, Takatoshi Ito, said that the BOJ's next step may be to widen 10y band, could raise it to 0.75% or 1.00% by mid-year, likely won't tweak yield curve control at least until April, and may abandon negative rates this year depending on inflation and wage developments. Procter & Gamble disappointed on weaker organic growth and volume trend Procter & Gamble, the consumer product giant, reported FYQ2 2023 EPS of USD1.59, slightly below the USD1.60 street estimate. The bigger disappointment came from weaker organic growth as a result of a softer than expected volume trend. The management raise sales outlook for FY23 sales outlook but had its FY23 EPS outlook at the low end of its initial range. Netflix reported a gain of 7.7 million subscribers in Q4 Netflix reported Q4 2022 EPS at USD0.12 below market expectations. However, share prices jumped on a better-than-expected gain of 7.7 million subscribers in Q4. Guidance for Q1 2023 revenue at USD8.17 billion was stronger than market expectations.     For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: US jobs data confirms labor market strength; ECB’s surprise hawkishness – 20 January 2023 | Saxo Group (home.saxo)
US Retail Sales Boost Prospects for 3% GDP Growth, but Challenges Loom Ahead

Netflix Added 7.66 Million Subscribers, Gold Continues To Show Resilience

Saxo Bank Saxo Bank 20.01.2023 09:45
Summary:  Somewhat muddled action across markets, as yields rebounded on hawkish ECB talk and strong US jobless claims data, halting the latest advance in the US dollar and Japanese yen. Equities traded on the weak side again, with Netflix reporting stronger than expected subscriber growth after hours, while its CEO is set to leave after twenty years in the position. Asian stocks advanced ahead of the week-long holiday for greater China to mark the Lunar New Year.   What is our trading focus? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) slid on concerns about earnings Nasdaq 100 moved down by 1% and S&P500 slid 0.8% in a relatively quiet day. Energy and communication services bucked the decline and managed to each gain around 1%. Microsoft added to its previous day’s decline, falling 1.7% on Thursday. Consumer product giant, Procter & Gamble dropped 2.7% on a small earnings miss and more importantly a disappointing organic sales growth dragged by a 6% decline in volume. The management raise sales outlook for FY23 sales outlook but had its FY23 EPS outlook at the low end of its initial range. Netflix reported Q4 2022 EPS at USD0.12, below market expectations. However, share prices jumped nearly 7% on a better-than-expected gain of 7.7 million subscribers in Q4. Guidance for Q1 2023 revenue at USD 8.17 billion was stronger than market expectations. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) advanced ahead of long holiday Next week is the Lunar New Year holiday, during which Shanghai and Shenzhen’s stock exchanges will be closed for the whole week next week and the Hong Kong bourse will be closed from Monday to Wednesday. Ahead of the long holiday, investors were better buyers on Friday to position for potentially a strong recovery in the Chinese economy in the Year of the Rabbit. Hang Seng Index advanced more than 1% and the CSI300 climbed around half a percent. Oil and gas, China internet, and educational services stocks led the charge higher in the Hong Kong bourse. CNOOC (00883:xhkg), surging 5.2%, was the top gainer within the Hang Seng Index, followed by Meituan (03690:xhkg), up 4.6%. In A-shares, non-ferrous metal, coal mining, rare earth, and educational services outperformed.   FX: US dollar and JPY advance halted by turnaround in US treasuries, hawkish ECB The ECB’s Klaas Knot (well known to lean hawkish) talking “multiple 50 basis point” hikes saw European yields righting themselves yesterday and helped put a floor under the euro yesterday as EURUSD has refused to drop below 1.0800, stuck in a very narrow range. Strong US jobless claims data helped US yields pop back higher above the key levels taken out on the weak Retail Sales release the prior day, but this did very little to revive the US dollar’s fortunes, as it slumped back against most currencies, save for the even weaker JPY, which didn’t appreciate the fresh jump in bond yields. Crude oil (CLG3 & LCOH3) rebound led by gasoline Crude oil prices are heading for a second weekly advance after recovering from a midweek wobble. Supported by continued China demand optimism and strength in the product market with gasoline and diesel both trading at a two-month high ahead of the embargo on Russian products from next month. Reports that China’s covid caseload has peaked further boosted optimism that demand will start to recover more sustainably following the Lunar New Year holiday. Global demand expectations got a boost as US jobless claims data supported the view that the labor market is still tight. In the US, an 81% jump in exports and the first week without injections from SPR nevertheless saw inventories jump 8.4m barrels as refinery demand struggled to recover following the late December cold blast and outages. Having bounced from support at the 50-day moving at $83.77 in Brent, a weekly close above $87 may signal further strength in the week ahead. In WTI that level is at $81. Gold rebounds Gold continues to show resilience and following a three-day pullback during which it found support at $1896 it jumped to an eight-month high overnight at $1835, supported by US yields and the dollar remaining near new cycle lows. As long these two key sources of inspiration for momentum and machine-driven strategies continue to support, gold is likely to remain supported. This despite a continued lack of interest from ETF investors as total holdings remains near a two-year low, having seen no pickup during the past two months rally. Copper supported by supply concerns Copper is heading for a fifth weekly gain with optimism about a pickup in demand as China reopens being supported by supply concerns. Protests in Peru are threatening supply from two mines accounting for nearly 2% of the world’s copper output, this at a time when visible inventories held at exchanges are low and demand is expected to rise as China recovers and the energy transition continues to gain traction. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) consolidated on hawkish ECB comments and a strong Philly Fed survey Treasuries erased their gains in Asian hours as yields followed German bunds higher in London hours on pushbacks from ECB’s Lagarde and Knot to speculation on a downshift of ECB rate hikes from 50bps to 25bps. Yields on the short end climbed further following a smaller-than-expected 190K rise in initial jobless claims and an increase of the Philly Fed Business Outlook Index by 4.8 points to -8.9, better than the consensus estimate of -11.0. The 6-month ahead conditions sub-index improved nearly 6 points to 4.9. While Fed’s Vice Chair Brainard reiterated “the need for further rate increases, likely to just above 5 percent”, she suggested that it is possible that inflation can come down “without a significant loss of employment”. The USD17 billion TIPS auction went very strong with bid-to-cover at 2.79, well above the average of 2.25. As the federal government reached its debt limit, Treasury Secretary Yellen wrote a letter to Congress about measures that the Treasury Department is taking to keep meeting obligations until at least early June to allow time for Congress to work on raising the debt limit. Yields on the 2-year rose 4bps to 4.13% and those on the 10-year climbed 2bps to 3.39%, bringing the 2-10-year curve 2bps more inverted at -74. What is going on? Hawkish ECB speaker's pushback against reports of slowing rate hikes ECB's Knot said that market developments of late are not entirely welcome and that the ECB won't stop after a single 50bps hike, planning to hike by 50bps multiple times. Despite a softer CPI print lately, Knot said that there are no signs of underlying inflation pressures abating and said that the ECB will be in "tightening mode" until at least mid-year. ECB President Lagarde was also on the wires, saying economic news has become much more positive as the contraction in Eurozone 2023 GDP may be smaller than previously expected, so the ECB will stay the course with rate hikes. Netflix jumps after hours on stronger than expected subscriber growth The jump of 7.1% came, however, after a worse than 3% slide in yesterday’s session. Netflix added 7.66 million subscribers versus estimates of +4.5 million, though the number is still down –7.5% year-on-year. Company guidance for Q1 was somewhat lower than expected for EPS and operating margin, but the full year guidance was above consensus estimates for free cash flow. Procter and Gamble drops on first revenue decline since mid-2017 The US consumer products giant registered its first year-on-year quarterly decline in revenue in more than five years. Revenue dropped –0.9% as it noted some consumers are cutting back on purchases due to price hikes, and volume trends worsened by some 6% versus last year, half due to lower final sales, half due to inventory reductions. Earnings beat expectations slightly at $1.59 per share versus $1.66 last year. The stock was down some 2.7% on the day. Guidance was for sale to –1% to 0%, better than the prior estimates of –1 to –3%. Strong US data a day after weak data The data refuses to all swim in the same direction from the US, as the latest initially weekly claims data matched an 8-month low at 190k, far lower than the 214k expected. The January Philadelphia Fed survey came out at –8.9, still a very negative number, but better than the –11.0 expected and the dire Empire Manufacturing survey reading from a few days before. US Housing starts came in a touch stronger than expected at an annualized 1382k than expected and Building Permits a bit weaker. For perspective, the housing starts number, while down from the peak of 1805k in April of last year, is still just above the range from 2008-2019. More Fed members, including Brainard, hinting at a 25bps rate hike Lael Brainard (voter) said the recent downshift in the pace of rate hikes allows the Fed to assess more data as it moves policy to a "sufficiently restrictive" level, noting we are now in "restrictive" territory and are probing for a sufficiently restrictive level. She didn’t clearly confirm a 25bps rate hike for February, but hinted at that saying Fed downshifted the rate hike pace in December to absorb more data, and that logic is applicable today. Another voter Williams is speaking in the Asian morning hours and signalling that the Fed has more work to do but labor demand far exceeds supply. Non-voter Collins reaffirmed her view that rates need to rise to likely just above 5%, and then the Fed needs to hold rates there for some time, also saying that it is appropriate to slow the pace of hikes particularly with risks now more two-sided. It's the demography, stupid! Earlier this week, we have learnt that China reached its demographic peak with 10-year ahead of projections. This will serve a as wake-up call for other countries, certainly. The world population growth is now below 1 % for the first time since the first half of the 20th century. About 61 countries in the world are expected to see their population decrease by at least 1% by 2050 (the population of Japan has been declining since 2010 while that of Italy since 2014, for instance). Expect massive consequences for the labor market. In Germany, about 500,000 people will leave the labor market each year between 2025 and 2035. This is massive! We are entering into a world of human capital shortage. UK Retail Sales still in steep decline (in volume terms)   The December report out this morning showed volumes declined –1.0% MoM and –5.8% YoY including Auto fuel and ex Auto fuel were –1.1% MoM –6.1% YoY. What are we watching next? Japan’s December CPI touches 4%, eyes on BOJ nominations due in February Japan’s December CPI came in at 4.0% YoY from 3.8% YoY previously, with core CPI also at 4.0% YoY while the core-core measure was a notch softer-then-expectations but still above the 2% target, coming in at 3.0% YoY. Despite the Bank of Japan’s pushback on expectations to tweak policy this week, speculations are likely to continue as inflation breadth is spreading. A contender to succeed Bank of Japan Governor Kuroda, Takatoshi Ito, said that the BOJ's next step may be to widen 10y band, could raise it to 0.75% or 1.00% by mid-year, likely won't tweak yield curve control at least until April, and may abandon negative rates this year depending on inflation and wage developments. Commodities companies reporting earnings next week In energy, Haliburton will announce its result while the five western super-majors are expected to deliver record annual profits, starting with Chevron next Friday. US Steel and Freeport McMoRan will be watched on metals while the agriculture sector will be watching the result from ADM, one of a quartet of agriculture trading power houses, known as the ABCD’s, the others being Bunge, Cargill and Louis Dreyfus. Earnings to watch The Q4 earnings season continues today with two Swedish companies: mobile network equipment maker Ericsson, with its share price down some 50% from the peak and trading a few percent above the lows since 2018, and Sandvik, a company specializing in tools, machinery and applications related to metalworking and rock excavation. Its share price has seen a strong revival off late 2022 lows of some 30+%. Schlumberger also reports today and is the US’ largest oilfield services company. Today: Investor, Sandvik, Ericsson, Schlumberger Economic calendar highlights for today (times GMT) 1330 – Canada Nov. Retail Sales 1400 – US Fed’s Harker (voter 2023) to speak 1500 – US Dec. Existing Home Sales 1800 – US Fed’s Waller (Voter) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 20, 2023 | Saxo Group (home.saxo)
Bank Of England Will Probably Be Unable To Avoid A Significant Easing Of Policy

P&G Sales Fell 6% In Q4, In UK Bailey Thinks That They Turned A Corner In Inflation

Swissquote Bank Swissquote Bank 20.01.2023 10:55
Netflix added nearly 7.7 million new subscribers last quarter versus only around 4.5 mio expected by the market. The share popped almost 10% higher in the afterhours trading. Netflix The results have been a relief for Netflix, but it will hardly reverse the fading optimism, as the S&P500 traded lower for the third straight day, having failed to clear a very critical resistance zone, above 4000 level, where the 200-DMA, and the ceiling of the 2022 bearish trend prevented investors from extending the rally into a new, bullish era, with no major justification on the company, or macroeconomic level. P&G hasn’t been as lucky as Netflix.  In this sense, P&G hasn’t been as lucky as Netflix. Their sales fell 6% in Q4, after they raised prices 10%. Price increases for P&G products may have hit a critical point where customers are no longer willing to pay for them.Elsewhere, US jobless claims fell below 200’000 for the first time since last September, and the US reached its debt ceiling yesterday, and began using special measures to avoid a payments default. Forex In the FX, the US dollar index remains under pressure. The dollar-yen is better bid despite the data showing that inflation in Japan hit 4% in December, as expected. The EURUSD remains bid below the 1.08 level, while Cable continues flirting with the 1.24 mark. Oil, gold and Bitcoin Oil is stuck between 50 and 100-DMA, gold ticks higher despite overbought market conditions, while Bitcoin rally slows near $21.5K. Watch the full episode to find out more! 0:00 Intro 0:54 Netflix beats 2:59 P&G deceives 3:50 Early-year optimism fades 5:18 US hits debt ceiling 6:22 Where does Bailey finds so much optimism? 7:40 ECB and SNB hint at further rate hikes 8:23 Crude oil between 50, 100-dma 8:35 Gold pushes deeper into overbought market 8:54 Bitcoin rally stalls Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Netflix #P&G #earnings #us #debt #ceiling #Japan #inflation #English #Breakfast #index #USD #EUR #GBP #JPY #crude #oil #gold #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH  
The ECB Has Made It Clear That Rates Will Remain High Until There Is Evidence That Inflation Is Falling Toward The Target

Saxo Bank Podcast: Rebounding Yields On Hawkish ECB Talk, US Jobless Claims Report, Results From Procter And Gamble And More

Saxo Bank Saxo Bank 20.01.2023 11:10
Summary:  Today we note that rebounding yields on hawkish ECB talk and another very strong weekly jobless claims report out of the US have the JPY weakening again, but not supporting the US dollar outside of USDJPY. Elsewhere, we look at stronger than expected results from Netflix and weaker than expected results from Procter and Gamble as volumes drop due to price hikes. A look at crude oil dynamics now that the EU is attempting its embargo on Russian crude, gold maintaining remarkable strength and avoiding notable consolidation, the macro calendar for the week ahead and more. Today's pod features Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: US jobless claims, hawkish ECB halt the slide in yields | Saxo Group (home.saxo)
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

Technical Outlook: The Commodity ETF Could Benefit From A Bull Market

Saxo Bank Saxo Bank 20.01.2023 14:47
Summary:  A technical look at some of the Commodity ETF's both US and London listed that could benefit from a bull market developing in the Base and Precious metals market Today's Saxo Market Call podcast.Today's Market Quick Take from the Saxo Strategy Team  The Bloomberg Commodities Index which tracks futures prices on physical commodities such as Energy, Soft Commodities and Base Metals and Precious metals has been in a corrective phase for the best part of a year now after a strong uptrend starting in 2020.Illustrated here by the Invesco DB Commodity Index Tracker Fund DBC (further below its London listed Commodity ETF) it has formed a Descending triangle like corrective pattern. It is not yet confirmed and could also be a falling Wedge like pattern ( a falling wedge the price must touch the trendlines a total of 5 times)Break out will confirm which one it is.If breaking below 23.42 it is likely to be a falling wedge.Currently the DBC is trying to break above its upper falling trendline and if closing above the correction could be over and DBC set to resume uptrend.Medium-to longer-term uptrend will be confirmed by a close above 26.70.The corrective pattern currently being formed seems to be the 4th corrective wave ABC. If the correction is over and bull trend resumes we can estimate how high the DBC can potentially move.5th wave often moves 1.618 projection of wave 4 i.e., to around 35.10 or 0.618 of wave 1+3 i.e., to around 35.92. If moving 0.618 of Wave 3 alone target is at 34.64. However, 5 wave in commodities can become the longest one i.e., longer than wave 3. If that is the case here then DBC can move to 43.65. But let’s if we get above the above mentioned potential targets.Monthly RSI is bullish with no divergence which indicates likely new highs i.e., supporting the bullish outlook.If DBC closes below 23.42 the correction could be extended down to around 22-21.85 (dashed line on weekly chart) thereby potentially forming a falling wedge.Weekly RSI is still positive (hasn’t closed below 40) with no divergence support the bullish trend to resume   Source all charts and data: Saxo Group European listed Commodity ETF If you cannot trade the US based ETF it is also listed in London:  Invesco Bloomberg UCITS EFT (CMOD:xlon) traded in USD. Strong support at 23 . A close above the falling trendline is like to resume uptrend. An uptrend that will be confirmed by a close above 25.41. CMOD has the same technical picture and will have same upside potential as the DBC i.e., approx. +40%.  A pureplay Metals ETF is Invesco DB Base Metals DBB:arcx  (US Listed) or WisdomTree Industrial Metals AIGI:xlon (London listed)They are both in an uptrend on medium-term. AIGI:xlon if closing above 17.20 today Friday would be in a confirmed uptrend supported by RSI above 60. A double bottom pattern ahs been confirmed with potential target to around 18.76. However, there could be more upside potential. 0.618 retracement of the Q2 collapse at around 22.85 is not unlikely.To demolish this picture a close below 15.65 is needed.  DBB:arcx has also formed a double bottom pattern and in a confirmed uptrend with RSI above 60 threshold. 200% of the double bottom pattern is at 23.90 and 0.618 retracement of the downtrend since Q2 2022 at 23.37.However, there could be more upside. DBB has corrected 0.618 of the 2020-2022 bull market (Monthly chart) and seems set for higher levels. RSI showing positive sentiment with no divergence which indicates likely new highs. Possibly reaching 1.382 projection of the correction to around 30.35.For DBB to demolish this bullish scenario a close below 17.48 is needed. RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend Source: Technical Update - Commodities lead by metals are drawing the picture of a bull market. Commodity ETF's to trade | Saxo Group (home.saxo)
Central Banks' Rates Outlook: Fed Treads Cautiously, ECB Prepares for Hike

Gas And Oil Prices Are Higher Too Ahead Of The EU Embargo On Russian Products

Saxo Bank Saxo Bank 23.01.2023 09:08
Summary:  Risk on tone supported by lower bond yields and US dollar. Saxo’s equity baskets show the best gains are in sectors benefiting from China’s reopening. If NZ's CPI slows more than expected, the NZDUSD may see profit taking. Chinese New Year brings limited market hours. Australia’s ASX200 to take out a new all-time high, but CPI is in the way. Gold and copper continue to rally up. Oil prices are higher ahead of the EU embargo on Russia. Tech profits expected to dive, but there is room for disappointment. Saxo Spotlight: What’s on investors & traders radars this week, January 23-27: US GDP, AU NZ CPI, Microsoft & Tesla earnings Risk on tone supported for now as bond yields hold near lows, along with US dollar index US Treasury bond yields trading at some of the lowest levels down about 0.8% from the October peak, but yields are up slightly at 3.48%. Yields look set for lower levels and could even head back down and could drop below the 200-day SMA. The next level we’re watching is if yields fall to 3.22%.  If that level is reached, it would theoretically support US equities. We’d also need to see the US dollar remain lower. The US dollar index is now down 10% from its September high, but rose slightly on Friday after hotter than expected US prouder inflation for November, which bolsters the case for the Fed to keep hiking, even if it’s at a slower pace. Most gains in Saxo's equity baskets are in sectors benefiting from China’s reopening The Travel, E-commerce basket of stocks are up the most this month, followed by Energy Storage and China Consumer and Technology basket. However year-on Year, the most growth is from Defence which is up 21%. Economic news brings FX into focus US fourth-quarter GDP data, European PMIs and the Bank of Canada rate decision, as well as CPI for Australia and NZ will all be watched. NZ Consumer prices are expected broadly to have climbed 7.1% in the fourth quarter from a year earlier, which could mark CPI is slowing from the prior 7.2% and, more importantly, less than the 7.5% predicted by the Reserve Bank in its most recent forecasts. Given the NZ dollar was one of the strongest currencies last week, it could face profit taking if the data is weaker than expected. Market hours are limited this week, for Chinese New Year This also means light volume is expected and thus moves could perhaps be amplified on thin trade. China’s market is shut all week (Monday to Friday), Hong Kong’s market is shut for Monday to Wednesday, Singapore’s market is shut for Monday and Tuesday. Australia’s market shut Thursday for Australia Day. Australia’s ASX200 could likely to take out a new all-time high..... this is supported by the rally in commodities and expected higher earnings from mining companies, which make up 25% of the market. However CPI is a focus this week. Our technical analyst backs up this thinking, that the ASX200 is likely to hit a new all high- for more click here. But the danger this week is if Q4 CPI is hotter than expected on Wednesday, then equities could see profit taking. However overall sentiment is bullish for the ASX as demand for copper and iron ore is likely to pick up after CNY. CPI is expected to rise to 5.8% YoY from 5.6% (trimmed Mean CPI). And CPI YoY is expected to rise to 7.7% YoY, from 7.3%. Hotter data could further fuel the AUD and a likely fuel a sell-off in tech stocks and real estate. In company news to watch, iron ore company Champion Iron (CIA) reports quarterly earnings. Given the iron ore price is up 66% from its low, its outlook is expected to be optimistic. In commodities Gold and copper are gaining momentum and oil rallies The precious metal, gold, has been supported by lower yields and the US dollar falling, which has supported gold up 19% from its September low. As Ole Hansen points out we might need to see ETF holdings pick up in Gold, to see longer term investors getting involved, which could support gold higher, or potentially we may see some profit taking. However, gold momentum remains as long as the USD and yields behave. Recall that if the Fed pauses rates and rates peak, we think there is a case for our outrageous prediction of gold hitting $3,000 coming true. Copper trades up 0.5% to $4.25, its highest level since June last year, continuing its 32% rally off its low on expectations that China will increase buying after the Luna New Year holiday. Plus there are also disruptions on copper output in Peru, which could impact 2% of global copper output. So given inventory levels are already lower and demand expectations are picking up, copper prices are underpinned. Gas and oil prices are also higher too ahead of the EU embargo on Russian products which starts on February 5th. Oil (WTI) is up 1.3% to $82.64, at this level since early November, after two weeks of gains. Refinery demand is supporting prices. Tech companies' profits are expected to dive, but earnings estimates could be too optimistic & disappoint In the S&P500(US500.I) tech companies, which make up 26% of the market, are expected to report a quarterly profit drop of 9.2% on average, according to Bloomberg. This could be the biggest tech profit drop since 2016. Forward 12-month earnings of 39% is also expected according to Bloomberg. The danger is that estimates are still too bullish, and markets will likely be disappointed, which would trigger a fall. Overall aggregate S&P500 earnings are expected to have grown 2.12% in the quarter and miners are expected to deliver the most growth, real estate with the least. So far, only 55 companies have reported in the S&P500 and earnings have fallen over 4% on average. So, the bear case is still a factor for some investors, especially in tech. More job cuts are expected with margins being squeezed. EV companies are also facing pressure with higher metal prices. On Tuesday Microsoft kicks off earning season. Defence giants Raytheon and Lockheed Martin report on Tuesday. Tesla reports Wednesday. On Thursday Intel and Mastercard report, and steel giant Nucor. On Friday Chevron. These could be industry proxies to watch with a major focus on their outlooks.   Key economic releases & central bank meetings this week to watch  Monday 23 January China, Hong Kong, Taiwan, South Korea, Indonesia, Malaysia, Singapore Market Holiday Japan BOJ Meeting Minutes (Dec) Tuesday 24 January China, Hong Kong, Taiwan South Korea, Malaysia, Singapore Market Holiday Australia Judo Bank Flash PMI, Manufacturing & Services Japan au Jibun Bank Flash Manufacturing PMI UK S&P Global/CIPS Flash PMI, Manufacturing & Services Germany S&P Global Flash PMI, Manufacturing & Services France S&P Global Flash PMI, Manufacturing & Services Eurozone S&P Global Flash PMI, Manufacturing & Services US S&P Global Flash PMI, Manufacturing & Services Thailand Customs-Based Trade Data (Dec) Germany GfK Consumer Sentiment (Feb) United Kingdom CBI Trends (Jan) Wednesday 25 January China, Hong Kong, Taiwan Market Holiday New Zealand CPI (Q4) Australia Composite Leading Index (Dec Australia CPI (Q4) Japan Leading Indicator (Nov, revised) Singapore Consumer Price Index (Dec) United Kingdom PPI (Dec) Thailand 1-Day Repo Rate (25 Jan) Germany Ifo Business Climate New (Jan) Canada BoC Rate Decision (25 Jan) Thursday 26 January Australia, China, Taiwan, India Market Holiday Japan BOJ Summary of Opinions (Jan) South Korea GDP (Q4) Japan Services PPI (Dec) Philippines GDP (Q4) Singapore Manufacturing Output (Dec) Norway Labour Force Survey (Dec) United Kingdom CBI Distributive Trades (Jan) Canada Business Barometer (Jan) United States Durable Goods (Dec) United States GDP (Q4, advance) United States Initial Jobless Claims United States New Home Sales (Dec) Friday 27 January China, Taiwan Market Holiday Japan CPI, Overall Tokyo (Jan) Australia PPI (Q4) Australia Export and Import Prices (Q4) United States Personal Income and Consumption (Dec) United States Core PCE (Dec) United States UoM Sentiment (Jan, final) United States Pending Home Sales (Dec) Source:Saxo Spotlight: What’s on investors & traders radars this week? | Saxo Group (home.saxo)
Preparation Of A Common Currency For South America, Gold Trades Softer

Preparation Of A Common Currency For South America, Gold Trades Softer

Saxo Bank Saxo Bank 23.01.2023 09:32
Summary:  Equities rebounded strongly on Friday, keeping the pivotal 4,000 area in the S&P 500 index in play ahead of the blast of earnings reports this week from many of the largest US companies. Treasury yields have also rebounded as housing and jobless claims data late last week were stronger than expected. Tomorrow, we get a look at Eurozone flash January PMI figures, with some signs pointing to a resilient Eurozone economy. Much of Asia is off-line at the start of this week for holiday celebrations.   What is our trading focus? Equities: Can the technology rally continue this week amid Q4 earnings? US equities regained some of their lost territory on Friday as US technology stocks rallied with Nasdaq 100 futures gaining 2.8% as the market is betting on an improving outlook. US technology companies have aggressively been pursuing layoffs which so far, the market has rewarded with a positive change in sentiment. The Q4 earnings releases this week from Microsoft, Tesla, and Intel will dictate the price action and sentiment in the overall market and in particularly technology stocks. FX: JPY wilts as Bank of Japan announces loans to banks, crushing Japanese yields as yields elsewhere rise The Bank of Japan announced a large extension of JPY 1 trillion of 5-year loans to banks on Tuesday as part of its operation to control the yield curve. The loan auction was three times oversubscribed. This is part of an extension of a lending facility announced at its meeting last week and is a kind of de facto quantitative easing (and helps lower yields in the part of the curve between the BoJ’s -0.10% policy rate and its cap on 10-year yields at +0.50%) at a time when other central banks like the US Fed are doing the opposite or actively rolling out plans to shrink their balance sheets. The JPY fell sharply across the board late last week and extended weaker still overnight, even against a weak USD as much of Asia is out on holiday for the start of the week. Elsewhere, the US dollar was also weak on strong risk sentiment Friday, with EURUSD trading to new cycle highs and hitting 1.0900 overnight, while cycle lows are nearby in other USD pairs. Crude oil (CLG3 & LCOH3) trades steady Crude oil prices traded steady near a six-week high overnight with focus on China’s reopening, a softer dollar and the introduction of curbs on Russian fuel sales from February 5 impacting availability. In its latest outlook, the International Energy Agency said Russia will shut in about 1.6 million barrels a day of production by the end of this quarter compared with pre-invasion levels. National holidays across Asia, especially in China and Singapore kept trading to a minimum. The strong rebound in recent weeks triggered the strongest buying response from hedge funds since April 2020. A combined 81k lots of WTI and Brent were bought in the week to January 17, in Brent most of that below $85. Above $87.85 traders will be looking for $90 next while support is in the $84 area. Gold finding resistance at $1935 Gold trades softer in early trading after failing for a third time in three days to break resistance around $1935 as continued and supportive dollar weakness being are being offset by a strong rebound in US treasury yields (see below). Since the November low point, gold has rallied by around 320 dollars with corrections during these times becoming smaller and smaller, with buyers taking any setback as an opportunity to accumulate or get involved. Sooner or later the metal will be facing a bigger pullback, but for the now the trend remains firm with key support below at $1895 followed by the 21-day moving average, currently at $1866. While ETF holdings remain flat near a two-year low, speculators have been strong futures buyers for the past seven weeks, most recently in the week to January 17 when the net long rose by 11k contracts to 93.3k contracts, a nine-month high. Copper and iron ore maintains momentum Copper trades near the highest level since last June, having rallied by more than 12% this month on expectations China will increase buying after the Luna New Year holiday. The rally received additional support last week on supply concerns related to protests in Peru threatened nearly 2% of the global supply. During a two-week period to January 17 hedge funds bought copper at the strongest pace since October 2021 lifting the net long to a nine-month high at 35.2 contracts. In thin overnight trading the iron ore futures (SCOA) price hit a new six-month high at $129,45 after gaining 9% so far this month, also on expectations that China will increase buying of steel-making ingredient next week after Lunar New Year holidays end US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields rebound after stronger data late last week Treasuries jumped back higher on Friday, rebounding after having dropped to a new cycle low below 3.40% in the case of the 10-year yield benchmark and closing the weak closer to 3.50%, setting an important low water mark. Significantly stronger than expected jobless claims data last Thursday and stronger than expected housing-activity related data on Thursday and Friday didn’t fit with the weak retail sales and other data that recently helped drive the drop in yields. The US economic calendar is rather thin this week in the US until the Friday release of December PCE inflation data. What is going on? Strong fund buying of crude oil and copper The weekly Commitment of Traders reports from the CFTC and ICE Exchange Europe covering hedge funds positioning and changes made in the week to January 17 showed strong demand for crude oil and fuel products as well as copper on continued optimism demand from China, the world’s biggest consumer of raw materials, will increase as focus switch from lockdowns to recovery. In crude oil, the buying of 81k contracts in WTI and Brent was the biggest weekly jump since April 2020. In addition, dollar and yield softness added continued support to investment metals led by gold, while a recent WASDE report provided fresh support and demand for corn and soybeans. Selling was primarily concentrated in natural gas on mild weather, platinum, coffee and cotton. More in our weekly update which will be published later. Brazil and Argentina discussing preparations for a common currency The Financial Times reports that the two countries will announce preparations for a common currency that other South American countries may eventually join to boost trade and reduce the use of the US dollar in the region. The currency may be called “sur”, which means south in Spanish. Orpea failed to reach an agreement with investors and creditors Orpea used to be one of French investors’ favorite stocks. But it was before that the retirement homegroup, which operates nearly 1,200 homes worldwide, was accused of systematic mistreatment and patient abuse in early 2022. Last week, the group failed to reach an agreement with investors and creditors to renegotiate its huge load of debt (around €9.5bn). Immediately after the announcement, the share dropped more than 7 % on Euronext – which is not that much. Negotiations continue however with the Caisse des Dépôts – a French public sector financial institution which is often described as the « investment arm » of the French state. The Caisse des Dépôts proposes restructuring Orpea’s debt for 700 million euros and taking over control of the company. But this offer is seen as too low by the current management. Activist investor Elliott takes stake in Salesforce The activist investor has bought a considerable stake in the enterprise software company which recently laid off 10% of its global workforce. Elliott is pushing for strategic changes and board seats. Salesforce trades below its pre-pandemic share price. What are we watching next? Key technical areas still in play in US markets ahead of the heart of earnings season The 4,000 area in the S&P 500 Index seemed to get a stern rejection last week, possibly on some of the weak US data last week, including a very disappointing retail sales report for December. But Friday’s strong rebound suggests that the market direction is still an open question. As well, US treasury yields reversed sharply on Friday after dipping to a new cycle low, a possible sign that the bid for bonds is drying up. This week’s hefty batch of earnings reports from the US may see a clearer technical picture for the equity market by Friday, while there is little macro data besides the Friday PCE inflation report out of the US, with a heavier calendar in the US next week. Earnings to watch The Q4 earnings season accelerates this week with key earnings from Microsoft, ASML, Tesla, Visa, and Chevron. The aggregate earnings surprise for the S&P 500 companies that have reported earnings is currently 4.1% and the market has generally responded positively to the Q4 earnings reported so far with Netflix’s 8.5% jump on its strong outlook for its advertising business being the clearest evidence. Baker Hughes reports earnings today before the market opens with analysts expecting revenue growth to accelerate to 11% y/y and a significant jump in operating income. Today: Baker Hughes Tuesday: Nidec, Microsoft, J&J, Danaher, Verizon, Texas Instruments, Raytheon Technologies, Union Pacific, Lockheed Martin, Intuitive Surgical, GE, 3M, Halliburton, DR Horton Wednesday: ASML, Lonza Group, Tesla, Abbott Laboratories, NextEra Energy, IBM, Boeing, ServiceNow, CSX, Freeport-McMoRan, Lam Research, Norfolk Southern Thursday: Tryg, Novozymes, Kone, Nokia, LVMH, Christian Dior, STMicroelectronics, SAP, Diageo, Atlas Copco, Volvo, SEB, Visa, Mastercard, Comcast, Intel, Blackstone, Valero Energy, Archer-Daniels-Midland, Dow, Nucor, L3Harris Technologies, Southwest Airlines, American Airlines Friday: Fanuc, Chevron, American Express, Colgate-Palmolive Economic calendar highlights for today (times GMT) 1500 – US Dec. Leading Index 1500 – Eurozone Consumer Confidence 1745 – ECB President Lagarde to speak 0030 – Australia Dec. NAB Business Conditions/Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher
Bitcoin Extends Rally, Microsoft & Tesla Will Report Earnings This Week

Bitcoin Extends Rally, Microsoft & Tesla Will Report Earnings This Week

Swissquote Bank Swissquote Bank 23.01.2023 10:29
US stocks, and Bitcoin rallied on Friday, boosted by gains in tech stocks on surprisingly strong Netflix results, Google’s job cut announcement and dovish hints from Federal Reserve (Fed) members. Earnings This week, the quiet period for Federal Reserve (Fed) officials will help us digest what has been said over the past weeks and focus on earnings!Microsoft, Johnson&Johnson, General Electric,Texas Instruments, Intel, Tesla Mastercard, Visa, Chevron and American Express are among companies that will go to the earnings confessional this week. Big Tech earnings projections are down by about 5% since October. Yet, expectations went sufficiently low that there is plenty of room for a positive surprise, as has been the case with Netflix. Forex In the FX, the US dollar kicked off the week under pressure. The EURUSD already hit the 1.09 mark early in the session. Cable advanced to 1.2450. The barrel of American crude posted its second straight week of advance, though the 100-DMA hasn’t been cleared… just yet! Watch the full episode to find out more! 0:00 Intro 0:45 US stocks reverse losses 2:29 Bitcoin extends rally 3:14 Digesting Fed expectations into the FOMC meeting 4:40 Microsoft & Tesla will report earnings this week 6:07 EURUSD hits 1.09; sterling, Loonie are also better bid against USD 8:13 Crude oil eyes $82pb resistance Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Microsoft #Tesla #earnings #Fed #expectations #USD #EUR #GBP #CAD #crude #oil #Bitcoin #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Share of Russian metal grows in LME warehouses

Commodities: Copper Was Trading Near A Seven-Month High, The Global Primary Aluminium Increased,

ING Economics ING Economics 23.01.2023 11:23
Copper was trading near a seven-month high amid continued optimism that China’s reopening from Covid lockdowns will boost demand for the red metal Energy – Price cap on Russian oil products ICE Brent has been trading steady at around US$87.5/bbl in the morning trade today after making gains over the last week on the prospects of improving demand from China. For products, ICE gasoil crack spread increased to a one-month high of US$42.3/bbl as the European ban on Russian diesel cargoes approaches, while the US also announced plans to put a price cap on Russian oil products. The US and its European allies have agreed to institute a price cap on Russian oil products along with an existing cap on Russian crude oil prices to curb Russian oil revenues. The price cap levels on refined products have not been announced yet; the details could be finalised before March 2023 when the group is set to review the existing price cap on Russian crude oil prices. Currently, the price cap on Russian crude oil is set at US$60/bbl, which is significantly below the current market price of Brent oil with some European countries pushing for an even lower price cap. Crude oil flows at TC Energy’s Keystone crude oil pipeline system have recovered to around 559Mbbls/d after falling to less than 200Mbbls/d earlier last week due to power outages. The company had declared a force majeure for crude oil deliveries for the rest of the month due to supply disruptions. The pipeline carries more than 600Mbbls/d of oil and is a major transport channel for oil fields in Canada to refiners in the Midwest including Cushing, Oklahoma. The latest positioning data from CFTC shows that speculators increased their net long position in NYMEX WTI after two consecutive weeks of decline by 25,867 lots (the biggest daily addition since August) over the last week, leaving them with net longs of 182,052 lots as of 17 January. Meanwhile, money managers also boosted their net longs in ICE Brent by 55,340 lots over the last week, leaving them with a net long position of 212,452 lots as of last Tuesday. Metals – Global aluminium output remains strong The latest numbers from the International Aluminium Association (IAI) show that the global primary aluminium increased to 189kt/day in December, compared to 188.6kt a month earlier. Total monthly output for the metal rose 6% year-on-year (+3.6% month-on-month) to 5.86mt last month. Cumulatively, production rose 2% YoY to a total of 68.4mt in 2022. Similarly, Chinese output rose 11.6% YoY (+3.3% MoM) to 3.47mt last month with full-year output rising 4% YoY to 40.4mt in 2022. Meanwhile, aluminium production in Western and Central Europe also posted recovery on a monthly basis with output rising by 3.6% YoY to 232kt in December. However, it continued to remain suppressed on a yearly basis with production declining by 16.5% YoY last month as domestic smelting activities were impacted by higher power prices. Aluminium production in Asia (ex-China) increased by 2.9% MoM last month, while year-to-date output gained 2% YoY last year. With copper, Glencore said that operations at its Antapaccay copper mine in Peru were halted on Friday as protesters in the country entered and damaged a worker camp. Meanwhile, the transportation of copper concentrates continues to remain temporarily suspended. The company also mentioned that before the incident, mine was operating with only 38% of its workforce due to the ongoing protests in the nation. The mine accounts for 8% of Peru’s total copper exports. However, despite the ongoing mine supply disruptions and exchange inventories standing at historically low levels, the LME cash/3m spread moved in a contango last week. As per the recent LME data, the cash/3m spread for copper widened to a contango of US$16.2/t as of Friday, when compared to a contango of US$4.5/t a day earlier. Copper was trading near a seven-month high amid continued optimism that China’s reopening from Covid lockdowns will boost demand for the red metal while supply concerns in Peru linger.  For lead, the latest LME data shows that exchange inventories for the metal declined by 725 tonnes (-3.5% DoD) to 20,250 tonnes (the lowest since March 1990) as of Friday. The majority of the declines were reported from Singapore and Trieste warehouses. Lastly, the latest CFTC data show that speculators increased their bullish bets in COMEX copper by 6,452 lots for a second consecutive week over the last reporting week, leaving them with a net long position of 35,248 lots as of last Tuesday. In precious metals, speculators increased their bullish bets in COMEX gold by 10,783 for a seventh consecutive week, to leave them with a net long of 93,357 lots as of last reporting week. Agriculture – Speculative net bearish bets for CBOT wheat increase The latest CFTC data show that money managers increased their net short position in CBOT wheat by 1,955 lots to 65,089 lots (most bearish in almost four years) as of 17 January, amid expectations of easing supply worries. The move was dominated by rising shorts positions with gross shorts increasing by 1,657 lots to 118,818 lots. For soybean, speculators increased their net longs by 36,594 lots over the last week, leaving them with a net long position of 168,298 lots. The move was predominantly driven by rising long positions with gross longs increasing by 29,027 lots to 186,794 lots. Similarly, speculative net longs in CBOT corn increased by 42,532 lots to 192,137 lots. The USDA’s weekly export inspection data shows the demand for US grains remained strong over the last week. US weekly inspection of soybean for exports rose to 986kt over the last week, higher when compared to 783kt in the previous week and the average market expectation of 865kt. Similarly, corn shipment inspections rose to 1.13mt over the last week, significantly higher when compared to 278kt from a week ago and the average market expectation of 475kt. Meanwhile, wheat export inspections rose last week from 92kt to 473kt, while also remaining higher when compared to the market expectation of 258kt. Read this article on THINK TagsCopper Commodities Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Saxo Bank Saxo Bank 23.01.2023 11:41
Summary:  Today we look at Friday's strong resurgence in US equities, which came after a seeming strong rejection of the rally into pivotal levels in the US S&P 500 index. This leaves market technicals in limbo ahead of the blast of earnings reports from large US companies this week and next. We also discuss confusing macro signals as financial conditions continue to ease, although treasury yields have pulled back from their recent slide. Also on the pod: the latest positioning data in commodities markets, natural gas on colder weather, wheat and coffee under pressure, JPY weaker, a look ahead at this week's busy earnings and less busy macro calendar and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: There Have Been Concerns That Tesla Price Cut Could Trigger A Price War| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Mixed signals ahead of US earnings blast | Saxo Group (home.saxo)
Brent hits one-month high! Saudi and Russian cuts supporting recent moves

On The New York Stock Exchange More Securities Rose In Prices

InstaForex Analysis InstaForex Analysis 24.01.2023 08:10
At the close of the New York Stock Exchange, the Dow Jones rose 0.76%, the S&P 500 rose 1.19%, and the NASDAQ Composite rose 2.01%. Dow Jones Shares of Intel Corporation led the way among the components of the Dow Jones index today, up 1.05 points or 3.59% to close at 30.27. Salesforce Inc rose 4.62 points or 3.05% to close at 155.87. Apple Inc rose 2.35% or 3.24 points to close at 141.11. The least gainers were Procter & Gamble Company, which shed 1.92 points or 1.34% to end the session at 141.05. Verizon Communications Inc was up 0.93% or 0.37 points to close at 39.63 while Amgen Inc was down 0.86% or 2.27 points to close at 260. 97. S&P 500 Leading gainers among the components of the S&P 500 in today's trading were Advanced Micro Devices Inc, which rose 9.22% to hit 76.53, Western Digital Corporation, which gained 8.66% to close at 41.79. as well as shares of Tesla Inc, which rose 7.74% to end the session at 143.75. The least gainers were Xylem Inc, which shed 7.95% to close at 101.42. Shares of SBA Communications Corp shed 3.55% to end the session at 286.27. Schlumberger NV fell 2.60% to 55.86. NASDAQ Leading gainers among the components of the NASDAQ Composite in today's trading were Gbs, which rose 293.13% to hit 1.03, Helbiz Inc, which gained 109.13% to close at 0.43, and VERB TECHNOLOGY COMPANY INC, which rose 69.65% to end the session at 0.39. The least gainers were Catalyst Pharmaceuticals Inc, which shed 29.04% to close at 14.76. Shares of Atlis Motor Vehicles Inc shed 25.11% to end the session at 3.40. Quotes of Ontrak Inc decreased in price by 21.23% to 0.83. Numbers On the New York Stock Exchange, the number of securities that rose in price (2196) exceeded the number of those that closed in the red (841), while quotes of 122 shares remained virtually unchanged. On the NASDAQ stock exchange, 2362 companies rose in price, 1346 fell, and 201 remained at the level of the previous close. The CBOE Volatility Index, which is based on S&P 500 options trading, fell 0.20% to 19.81. Commodities Gold futures for February delivery added 0.23%, or 4.35, to hit $1.00 a troy ounce. In other commodities, WTI crude for March delivery rose 0.01%, or 0.01, to $81.65 a barrel. Futures for Brent crude for March delivery rose 0.57%, or 0.50, to $88.13 a barrel. Forex Meanwhile, in the Forex market, the EUR/USD pair remained unchanged 0.15% to 1.09, while USD/JPY rose 0.84% to hit 130.65. Futures on the USD index rose by 0.01% to 101.79. Relevance up to 04:00 2023-01-25 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more: https://www.instaforex.eu/forex_analysis/309717
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

The Crude Oil Price Is Struggling To Find Direction

TeleTrade Comments TeleTrade Comments 24.01.2023 09:14
WTI oscillates in a limited territory around $81.50 amid the absence of a potential trigger. The upside in the oil price is capped amid rising worries about the US recession. While better prospects for the Chinese economy after the lifting of pandemic controls are supporting the oil price. West Texas Intermediate (WTI), futures on NYMEX, is displaying back-and-forth moves in a narrow range around $81.50 in the early European session. The oil price is struggling to find direction as the upside is capped due to escalating recession worries in the United States while the downside is restricted amid optimism over economic recovery in China. The Chinese economy has lifted pandemic controls and the street is expecting a sheer recovery in the oil demand in CY2023. Optimism for China’s recovery is supporting firmer bets for price extensions in oil and other commodities. Chinese administration and the People’s Bank of China (PBoC) are expected to favor fiscal stimulus and expansionary monetary policy to spurt the scale of economic activities. Meanwhile, rising worries about the US recession are capping the upside of the oil price. Economic activities in the United States have shrunk dramatically as the Federal Reserve (Fed) has hiked interest rates at a sheer pace. Fed chair Jerome Powell and other policymakers have been advocating the consistency of higher interest rates at peak for a longer period to contain the sticky inflation. This might restrict firms from borrowing funds to avoid higher interest obligations. Read next: The Japanese Yen Fell And USD/JPY Reached Level Of 130, The EUR/USD Pair Lost Its 1.09 Level And Agian Is Around 1.0880 | FXMAG.COM On the supply front, fresh headlines that the United States administration is considering the cancellation of the planned sale of oil from its Strategic Petroleum Reserve (SPR) in CY2023 are supporting oil bulls. US President Joe Biden is looking to refill the oil reserve as one was eased firmly to tame soaring oil prices in CY2022 as reported by Energy Intelligence.  
US CPI Surprises on the Upside, but Fed Expectations Unchanged Amid Rising Recession Risks

Layoff In Spotify, AUD/USD Pair Has Traded Back Above 0.7000

Saxo Bank Saxo Bank 24.01.2023 09:43
Summary:  US equities sprinted to new local highs yesterday, with the S&P 500 crossing back above the 200-day moving average ahead of the heart of earnings season set to swing in motion today on Microsoft and other large companies reporting, with the earnings calendar heavy through next week. The US dollar trades weaker across the board as the Fed enters its quiet period ahead of next week’s FOMC meeting.   What is our trading focus? Equities: Momentum is building with breakout in technology stocks US equities rose yesterday with S&P 500 futures reaching their highest close since mid-December and Nasdaq 100 futures rallied all the way to 12,000 before closing a bit lower. Sentiment is improving on technology stocks due to the significant layoff announcements improving the outlook for profitability. The US leading indicators were weaker than estimated and the level observed fits with a high degree of certainty of a recession, so it feels like the equity market is balancing on a knife-edge. Today is an important earnings session with the key focus being Microsoft after the market close, but ahead of the market open earnings from industrials such as GE and 3M will set the tone on the opening. FX: USD falters again as risk sentiment bulls higher The greenback has traded weaker since yesterday, although yesterday’s high water mark in EURUSD above 1.0900 yesterday has not yet been surpassed as the USD weakness was more pronounced against more pro-cyclical currencies like AUD and SEK within the G10 on the strong surge in risk sentiment, even as the anticipation of Fed rate cuts for late this year and through next year has eased significantly (about 30 basis points for the policy rate priced by end of 2024 from the trough of late last week). The Fed has entered a quiet period ahead of next Wednesday’s FOMC meeting, with little data in the interim save for the December PCE inflation data this Friday. Elsewhere, New Zealand and Australia report Q4 CPI tonight in the Asian session and a Bank of Canada decision is up tomorrow (see preview below). Crude oil (CLH3 & LCOH3) supported by firm diesel prices ahead of sanctions Europe’s diesel market reached a two-month high on Monday with the ICE gasoil (FPc1) contract trading above $1000 per ton. A development being driven by EU’s ban on seaborne imports of Russian fuel products from February 5, and increased demand for jet fuel as travel continues to recover. Overall, the focus stays with China amid hopes of a recovery in fuel demand more than offsetting potential weakness in the US as economic data points to slowdown. National holidays across Asia, especially in China and Singapore kept trading to a minimum. In Brent, traders will now be looking for $90 next while support is in the $84 area. Gold trades higher on US recession concerns Gold reached a fresh nine-month high overnight after US leading indicators saw another sharp fall in December, and together with weak company earnings and layoffs and last week's weak retails sales it raises the risk of a US recession in the near term. A senior director at The Conference Board said: “Overall economic activity is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023”. Developments that raises the potential for just one more US rate hike before the FOMC decides to pause. ETF holdings, which has been drifting lower this month finally saw a small pickup in demand while silver’s plunge remains a concern. At one point on Monday, it dropped 5% on technical selling and long liquidation below $23.20 before recovering to trade $23.60 this am. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields continue to edge higher US treasuries continue to soften, taking yields modestly higher after the 10-year benchmark’s move below the prior significant 3.40% low was rejected. This morning sees the 10-year benchmark trading back above 3.50% with company earnings and guidance in focus as the heart of earnings season swings into motion today. Yields at the front of the US yield curve have also rebounded from new lows posted last week in the wake of weak US Retail Sales and a dovish BoJ meeting, with the 2-year rising from a low of 4.03% last Thursday to 4.23% currently. The US treasury will hold a 2-year auction today. What is going on? Biden administration confronts China, accusing Chinese companies of supporting Russia’s war effort Citing “people familiar with the matter”, a Bloomberg article claims that the Biden administration has confronted China with evidence that state-owned Chinese companies are supplying “non-lethal” military and other assistance that amounts to a support of Russia’s war effort in Ukraine, while stopping short of “wholesale evasion” of US sanctions. More positive signs the travel sector is roaring back in Asia; on land and in the air Chinese road traffic congestion increased 22% from a year ago, as measured across 15 key cities. This is a positive sign that Chinese residents are striving to return to normalcy. Moving to air traffic, we believe the broader Asian-Pacific regional will likely report stronger numbers for Q4 of 2022 and Q1 of 2023, supporting higher revenue in the travel and tourism sector. Despite airlines travel returning, airlines costs are also rising with fuel costs higher after the oil price has bounced up 17% off its December low. Growth has a high ceiling for domestic Chinese air travel, with passenger traffic in November (the most recent available data point) at some 75% below late 2019 levels. The Aussie dollar above 0.7000. Australia CPI next test AUDUSD has traded back above 0.7000, nearly matching the highest levels since last August. The Aussie initially jumped to 0.7045 today in Asia after Australia’s service sector data improved, even though the Services PMI print remained in contractionary phase. The Q4 Australian CPI report is out tomorrow and is expected to rise to 5.8% YoY from 5.6% (for the important trimmed mean CPI), amid tighter energy markets, and higher metal prices. Spotify to cut 6% of workforce Like the rest of the technology sector Spotify announced yesterday that it is cutting 6% of its workforce to offset the top line weakness and improve profitability. The initial reaction in Spotify shares was strong but was faded during the session. The US Leading Indicator (LEI) fell sharply again in December It continues to signal recession for the US economy in the near term said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labor markets, manufacturing, housing construction, and financial markets in the months ahead. Meanwhile, the coincident economic index (CEI) has not weakened in the same fashion as the LEI because labor market related indicators (employment and personal income) remain robust. Nonetheless, industrial production— also a component of the CEI—fell for the third straight month. Overall economic activity is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023.” What are we watching next? Bank of Canada meets tomorrow – most see a 25-basis point hike tomorrow followed by a pause Most observers are looking for the Bank of Canada to hike one last time for this cycle tomorrow to take the policy rate to 4.50% and to indicate a pause to assess inflationary and labor market conditions before deciding on next steps. The Bank of Canada hiked rapidly in 2022 in an attempt to catch up with galloping inflation but has contrasted with the Fed in signalling a pause in the hike cycle before the Fed, which has been slow to signal that peak rates may be nearing. USDCAD trades near the lows since last November at 1.3350 this morning, with the 200-day moving average creeping higher and near 1.3200. Earnings to watch The Q4 earnings season accelerates this week with key earnings from Microsoft, ASML, Tesla, Visa, and Chevron. The aggregate earnings surprise for the S&P 500 companies that have reported earnings is currently 4.1% and the market has responded positively to the Q4 earnings reported so far with Netflix’s 8.5% jump on its strong outlook for its advertising business being the clearest evidence. Today’s key earnings focus is Microsoft (read our earnings preview here) with expectations of lower revenue growth and lower operating margin. Other important earnings today are from J&J, Texas Instruments, GE, and 3M. Today: Nidec, Microsoft, J&J, Danaher, Verizon, Texas Instruments, Raytheon Technologies, Union Pacific, Lockheed Martin, Intuitive Surgical, GE, 3M, Halliburton, DR Horton Wednesday: ASML, Lonza Group, Tesla, Abbott Laboratories, NextEra Energy, IBM, Boeing, ServiceNow, CSX, Freeport-McMoRan, Lam Research, Norfolk Southern Thursday: Tryg, Novozymes, Kone, Nokia, LVMH, Christian Dior, STMicroelectronics, SAP, Diageo, Atlas Copco, Volvo, SEB, Visa, Mastercard, Comcast, Intel, Blackstone, Valero Energy, Archer-Daniels-Midland, Dow, Nucor, L3Harris Technologies, Southwest Airlines, American Airlines Friday: Fanuc, Chevron, American Express, Colgate-Palmolive Economic calendar highlights for today (times GMT) 0810 – ECB’s Klaas Knot to speak 0815-0900 – Eurozone Jan. Flash Manufacturing and Services PMI 0930 – UK Jan. Flash Manufacturing and Services PMI 0945 – ECB President Lagarde to speak 1100 – UK Jan. CBI Business Optimism and Trends in Total Orders/Selling Prices 1300 – Hungary Central Bank Rate Decision 1330 – Philadelphia Fed Non-manufacturing Survey 1445 – US Jan. Flash Manufacturing and Services PMI 1500 – US Jan. Richmond Fed Business Conditions 1800 – US Treasury auctions 2-year notes 2130 – API's weekly report on US oil inventories 2145 – New Zealand Q4 CPI 0030 – Australia Q4 CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – January 24, 2023 | Saxo Group (home.saxo)
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

Marek Petkovich Marek Petkovich 24.01.2023 09:56
All roads in the oil market now lead to Beijing. According to the IEA, China will be the main reason for the growth of global demand to a record level of 101.7 million bpd. China will continue to dictate the rules of the game after the entry into force of the EU embargo on Russian diesel fuel and the price ceiling for petroleum products in early February. Will it want to increase its own exports or limit them to protect the domestic market? The fate of Brent will depend on the answers to these questions. Hedge funds do not doubt the support from the reopening of China's economy and the eurozone economy, which presents pleasant surprises. In the week to January 17, they increased net longs for six key oil futures contracts by 89 million barrels in equivalent. We are talking about the fastest dynamics of the indicator since November 2020. The most popular was the North Sea variety, which accounted for 55 million barrels. Read next: There Have Been Concerns That Tesla Price Cut Could Trigger A Price War| FXMAG.COM The increased activity of bull speculators is based on a solid foundation. On the one hand, leading indicators on the growth of passenger and freight traffic in China convince us that the IEA's increase in the forecast for oil demand from China by 100,000 bpd, to 15.9 million bpd, in 2023 is quite justified. On the other hand, the mixed dynamics of offshore deliveries of Russian oil signals that supply problems are not an empty phrase. Dynamics of offshore exports of Russian oil Meanwhile, the market is preparing for new shocks due to the introduction of the EU embargo on Russian diesel fuel. On paper, the EU's refusal to work with the largest supplier will lead to a sharp rise in prices, which could push oil futures even higher. Moreover, the eurozone will need to look for new partners, and logistical problems will further increase the tension. In fact, information about the next sanctions has been known for a long time, and whoever is warned is armed. Over the last three months of 2022, Russian diesel exports to the EU increased by 25% QoQ, with inventories at a key hub in the Netherlands rising to their highest level since October 2021. Now Europe will focus on supplies from the Middle East, India and China. And the first cargoes from China have already arrived in Latvia. If Beijing continues to increase exports, its demand for oil will increase even more, which will affect Brent. At the same time, there are risks that an increase in the price of oil in the world may provoke China to limit the export of diesel fuel in order to protect its own economy from a blow. I don't think these fears are justified. China buys Russian oil, which costs almost half the market value. Technically, the breakout of the upper boundary of the downward long-term trading channel, coupled with the implementation of the 1-2-3 reversal pattern, are the first signs of a break in the bearish trend. We continue to increase the longs formed from the level of $83.4 per barrel. The initial targets are still $91.75 and $97.25   Relevance up to 08:00 2023-01-29 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333071
US Inflation Rises but Core Inflation Falls to Two-Year Low, All Eyes on ECB Rate Decision on Thursday

Saxo Bank Podcast: Earnings Season Kicks Off In Earnest, Silver's Ugly Dip Relative To Still-Strong Gold

Saxo Bank Saxo Bank 24.01.2023 12:05
Summary:  Today we discuss the US equity market melting up technically at an awkward moment, as leading indicators suggest we are barreling into a recession. In any case, a big test ahead as earnings season kicks off in earnest with today's batch of companies reporting, including beaten down mega-cap Microsoft after hours. In commodities, a check-in with crude oil, silver's ugly dip relative to still-strong gold, and one of the most shorted commodities, coffee. Stocks to watch today, the macro calendar picking up and more also on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it. Read next: South African Petrochemical Company Sasol Is Moving Away From Fossil Fuels, Germany Again Refused To Send Tanks To Ukraine| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Uncomfortable squeeze as earnings season rush kicks off | Saxo Group (home.saxo)
Analysis Of Price Movements Of Natural Gas Commodity Assets

Commodities: European Gas Prices Came Under Significant Pressure

ING Economics ING Economics 25.01.2023 09:09
Noise ahead of next week’s OPEC+ meeting has begun and given the level of uncertainty in the market, the group is likely to keep output targets unchanged. European natural gas prices have come under renewed pressure with forecasts for milder weather and expectations of an imminent restart of the Freeport LNG export facility in the US Source: Shutterstock Energy- European gas falls The upward move in oil prices seen at the end of last week and at the start of this week has run out of momentum with ICE Brent falling more than 2.3% yesterday. This is the largest daily decline since the first week of this year. There is little in the way of clear fundamental drivers behind the recent weakness. Overnight, the API released US inventory numbers, which showed that US crude oil inventories increased by 3.38MMbbls over the last week. Market expectations were for an increase of around 1.5MMbbls. Cushing crude oil stocks also saw further increases over the week, growing by 3.9MMbbls. The increase in Cushing inventories continues to put downward pressure on the prompt WTI spread. On the refined product side, gasoline stocks increased by 620Mbbls, whilst distillate inventories fell by 1.9MMbbls. The more widely followed EIA report will be released later today. Market chatter about next week’s OPEC+ meeting has started and unsurprisingly, suggestions are that the group will keep output targets unchanged. There are still plenty of uncertainties for the oil market. These are centred around the Chinese demand outlook and Russian supply. For the latter, we should get more clarity in the coming weeks, with the EU ban on refined products coming into force in early February. There could be further disruptions to refined product flows in France this week as workers are scheduled to go on a 48-hour strike from 26 January. Earlier strikes disrupted the delivery of fuel from refiners. This week's strike is the latest in a series of strikes from the CGT union, and action will get progressively more severe with a 72-hour strike already planned for 6 February. European gas prices came under significant pressure yesterday with TTF falling by 11.7%. This is on the back of forecasts of a return of milder weather next week, following the current cold spell. European gas inventories have fallen at a quicker pace in recent days with storage now around 77% full, down from 81% a week ago. That still leaves storage at the top end of its 5-year range.  Also adding to yesterday’s weakness were reports that Freeport LNG in the US has finally completed repairs at its plant following a fire last summer. Freeport is looking to partially restart operations, although the company will still need to obtain approvals before it resumes activity. We may still need to wait a bit longer for the resumption of LNG exports. Metals - Nornickel cuts output of nickel, cobalt Nornickel plans to cut nickel and cobalt output due to delayed plant repairs and a fire at a refinery. The producer will likely lower nickel output in the region of 4% to 5% from 2022 levels of 219,000 tonnes as it carries out maintenance that has been delayed since last year. Cobalt production will be less than half what it was before September’s Kola site fire. For copper, Las Bambas copper mine in Peru, controlled by China Minmetals Corp., is operating at a reduced rate due to blockade-related supply challenges. Despite lower mining rates, production of copper concentrate continues at full capacity, the company said. Read this article on THINK TagsOPEC+ Nickel Natural gas LNG Cobalt API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Analysts Are Still Very Bullish On Tesla Revenue Growth For 2023

Saxo Bank Saxo Bank 25.01.2023 09:49
Summary:  US equities struggled to find a direction on Tuesday following a technical glitch on the NYSE at the open. US and EU PMIs were better than expected although the UK print was weaker than expected. Earnings results continued to disappoint especially with gloomy guidance from Verizon, 3M and Lockheed Martin, while Microsoft posted solid cloud sales. Tesla is up next on the investors’ radar, leading into the full set of tech earnings next week. Australia CPI came in stronger than expected, boosting AUD. Bank of Canada decision due today and the last rate hike of the cycle appears to be on the cards.   What’s happening in markets? Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge US equity markets were a bit dull on Tuesday investors weighing up mostly stronger than expected Microsoft earnings results, vs a weaker than expected earnings from chipmaker giant, Texas Instruments. The S&P500 (US500.I) fell 0.1% but closed above it 200-day average for the second day (a sign there are more bulls in the market than bear), while the Nasdaq 100 (NAS100.I) lost 0.2%. Still markets are waiting for the next major catalysts; Tesla’s results on Wednesday, then later in the week, the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) price index for December; to also gauge if the Nasdaq’s rally of 11% from its low can be sustained, especially as the PE for the Nasdaq is about 54.6 times earnings; meaning tech stocks are still quite expensive compared to their averages. The risk is if Core PCE doesn’t fall as expected from 4.7% QoQ to 3.9%, then we could see a selloff in equity markets, while the US dollar would be bought. However, the S&P500 is seemingly bullish for now, until the next tests (some of which we mentioned), click for an in depth Technical Analysis on what the next levels could be for the S&P500. Mixed Microsoft (MSFT) result has shareholders a relieved as cloud sales rise more than forecast; a sign the business could stand tall amid the murky year ahead After hours Microsoft (MSFT) shares gained 4.3% with investors relieved its revenue in constant currency rose 7% in the quarter, versus the 6.59% estimate. Microsoft’s closely watched Azure cloud-computing business, sales gained 38%, compared with predictions for a 37% increase, excluding the impact of currency fluctuations. This underscores Azure’s ability to help drive the company, even as sales of Windows software to PC makers plummeted amid a slumping market. Adjusted earnings per share came in at $2.32, slightly better than the $2.30  estimate, thanks to the cost cutting. Capital expenditure was $6.27 billion, less than Bloomberg estimated ($6.63 billion), while revenue slightly missed expectations hitting $52.75 billion vs the $52.93 billion estimate. FX: AUDUSD boosted by hotter-than-expected CPI A mixed day for the US dollar on Tuesday as it broadly ended the day unchanged after the tech issues with the US equity open and broadly firmer US PMIs. The move lower in yields however dragged on the USD, and Japanese yen was the biggest gainer on the G10 board. USDJPY reversed from 131 back to 130 levels at US close but seeing upward pressure again this morning in Asia. NZDUSD hovers around key resistance level of 0.65 as NZ 4Q CPI came in stronger than expected at 7.2% vs estimate of 7.1%, while Chris Hipkins was sworn in as the 41st prime minister. AUDUSD hit fresh highs of 0.7080 after the Australia CPI release came in above expectations at 7.8% YoY and 1.9% QoQ (exp 7.6% YoY and 1.6% QoQ). Meanwhile, EURUSD stays close to 1.0900 with stronger than expected Eurozone PMIs and mixed ECB speakers underpinning. Villeroy suggested the ECB will reach peak rates by the summer, although Simkus said this may be unlikely but the ECB should continue with 50bp hikes. Nagel said the ECB is not done on inflation that remains far too high, and Panetta said the ECB should not commit to any specific policy move beyond February. Crude oil (CLG3 & LCOH3) prices drop Oil prices dropped on Tuesday amid risk off tone broadly across markets amid a mixed set of earnings results. WTI prices fell 1.8% below $81/barrel while Brent was down 2.3% to sub-$86.50. OPEC+ are expected to keep oil production unchanged when they meet next week as they await clarity on Chinese demand and the impact of EU’s ban on Russian supply (from Feb 5). Meanwhile, API inventories suggested a still-tight oil market with US crude inventories rising 3.38mm barrels last week and focus will be on the official data due today. Gasoline inventories rose by 620,000 barrels after last week’s API data showed the fuel inventories rising by 2.8 million barrels last week. Distillates fell 1.929 million barrels after falling by 1.8 million bpd in the week prior. Metals see red on profit taking, while gold nudges up on the cusp of a bull market Copper declined 0.2% with investors booking profits after the copper prices have gained 32% from its low. Traders bought into Wheat, lifting Wheat up 2% as its trades at year-lows. While Gold nudged up 0.3% taking its rally off its low to 19.5%, meaning that gold is on the cusp of a bull market.  Read next: The Aussie Pair Is Above 0.70$, GBP/USD Pair Lost Its Level Of 1.24$| FXMAG.COM What to consider? US PMIs held up stronger than expected US flash PMIs for January surpassed expectations, as services rose to 46.6, above the expected 45.0 and the prior 44.7, while manufacturing lifted to 46.8 from 46.2 (exp. 46.0), which comes ahead of ISM on February 1st. The composite rose to 46.6 from 45.0, and this will probably further boost the calls in favor of a soft landing rather than a deep recession as has been the case since the start of the year due to faster-than-expected China reopening and stronger Eurozone outlook. Still, activity is in contraction and job growth is cooling, but the January print also pointed to a re-acceleration in the input cost inflation. Eurozone composite PMI returns to expansion Eurozone PMI rose to 50.2 in January from 49.3 in December and 49.8 expected, suggesting that the region may be able to skirt a recession due to a less harsh winter this season which has given room to the ECB to continue to focus on fighting underlying inflationary pressures. Manufacturing PMI was just below the key 50-mark at 48.8 but better than last month’s 47.8, while the rise of services PMI to 50.7 drove most of the gains. UK services PMI, on the other hand, fell to 48 from 49.9 in December, while manufacturing gained slightly to 46.7 in January from 45.3 previously but still remained in contraction. This suggests further signs of UK being in a recession in early 2023 and possibly a sooner pause for the BOE than the ECB. Bank of Canada decision due today, most see a 25-basis point hike tomorrow followed by a pause Most observers are looking for the Bank of Canada to hike one last time for this cycle today to take the policy rate to 4.50% and to indicate a pause to assess inflationary and labor market conditions before deciding on next steps. The Bank of Canada hiked rapidly in 2022 in an attempt to catch up with galloping inflation but has contrasted with the Fed in signalling a pause in the hike cycle before the Fed, which has been slow to signal that peak rates may be nearing. Tesla earnings on watch for margin pressure from price cuts Analysts expect revenue growth of 36% y/y and EPS of $1.12 up 64% y/y. Analysts are still very bullish on revenue growth for 2023 with expectations at 30% growth despite the recent slip in deliveries and three quarters of growing difference between production and deliveries. This is also reflected in the consensus price target at $190 vs the current price of $144. Traders and investors are also expressing a bullish take on Tesla with the put-call ratio on volume being 0.79 and the put-call open interest ratio at 0.65. The key thing to watch will be the comments on recent price cuts for several models, and how that impacts the bottom line, and whether the demand response is big enough to offset the price reduction to see the bottom line grow this year.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Positive surprise from US and EU PMIs; Tesla earnings ahead – 25 January 2023 | Saxo Group (home.saxo)
OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

Saxo Bank Saxo Bank 25.01.2023 09:54
Summary:  Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge. The S&P500 closes above it 200-day average for the second day - a sign there are more bulls in the market than bears, but Tesla's results could rock the boat. Australian and NZ CPI blow hotter than expected. Gold is on the cusp of a bull market. Oil slides, investors buy the dip ahead of the EU ban on Russian oil. Oil prices make their biggest drop in 3 weeks; some investors see this as opportunity Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge   US equity markets were a bit dull on Tuesday with investors weighing up mostly stronger than expected Microsoft earnings results, vs a weaker than expected earnings from chipmaker giant, Texas Instruments. The S&P500(US500.I) fell 0.1% but closed above it 200-day average for the second day (a sign there are more bulls in the market than bears), while the Nasdaq 100 (NAS100.I) lost 0.2%. Still markets are waiting for the next major catalysts; Tesla’s results on Wednesday, then later in the week the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) price index for December to gauge if the Nasdaq’s rally of 11% from its low can be sustained, especially as the PE for the Nasdaq is about 54.6 times earnings; meaning tech stocks are still quite expensive compared to their averages. The risk is if Core PCE doesn’t fall as expected from 4.7% QoQ to 3.9%, then we could see a selloff in equity markets, while the US dollar would be bought as hotter inflation supports the Fed keeping rates higher for longer. However, the S&P500 is seemingly bullish for now, until the next tests (some of which we mentioned), click for an in depth Technical Analysis on what the next levels could be for the S&P500. Mixed Microsoft (MSFT) result has shareholders relived as cloud sales rise more than forecast; a sign the business could stand tall amid the murky year ahead After hours Microsoft (MSFT) shares gained 4.3% with investors relieved its revenue in constant currency rose 7% in the quarter, versus the 6.59% estimate. Microsoft’s closely watched Azure cloud-computing business, sales gained 38%, compared with predictions for a 37% increase, excluding the impact of currency fluctuations. This underscores Azure’s ability to help drive the company forth, even as sales of Windows software to PC makers plummeted amid a slumping market. Adjusted earnings per share came in at $2.32, slightly better than the $2.30 estimate, thanks to the cost cutting. Capital expenditure was $6.27 billion, less than Bloomberg estimated ($6.63 billion), while revenue slightly missed expectations hitting $52.75 billion vs the $52.93 billion estimate. Commodities see red on profit taking, while gold nudges up on the cusp of a bull market   Oil dropped, with WTI falling $1.8% below $81 after as OPEC+ are expected to keeping oil production unchanged when they meet next week as they await clarity on Chinese demand and the impact of EU’s ban on Russian supply (from Feb 5). Copper declined 0.2% with investors booking profits after the copper prices gained 32% from their low. Traders bought into Wheat, lifting the Wheat price up 2% as its trades at year lows. While Gold nudged up 0.4%, taking its total rally off its low to 19.5%, meaning gold is on the cusp of a bull market. Be mindful that we also think gold could also face profit taking, or a consolidation. Ole Hansen, head of commodity strategy discusses that here.  Australia CPI came out hotter than expected. Focus is on oil’s biggest drop in 3 weeks with some investors buying the dip  After Australia’s ASX200(ASXSP200.I) rallied for five straight days, the market fell like a knife on Wednesday after CPI came out hotter than expected supporting the notion that the RBA can keep rates higher for longer, despite the services sector remaining in contractionary phase. You have to remember Australian CPI has now on numerous occasions been hotter than expected. So given the market is up 16% from its low, we are seeing traders and investors book in profits ahead of the public holiday tomorrow and ahead of next week's RBA decision. Oil stocks such as Santos, Woodside, WorleyParsons, Ampol trade lower but some longer term investors would be seeing this pull back as an opportunity to buy the dip. Why? Oil prices remain supported ahead of EU’s ban on Russian oil coming up (Feb 5), which will restrict oil supply, plus we’re seeing APAC air travel rev up and this is expected to continue over the medium term; which is also driving demand for diesel and underpinning oil demand. In FX the Aussie dollar is on the cusp of a key event   The Aussie dollar vs the US (AUDUSD) trades at its highest levels since August, 70.64 US, after AU CPI came out showing prices are up 7.8% YoY, vs 7.6% expected. Core mean CPI rose 6.9% YoY, also hotter than the 6.5% expected. This means the RBA has more fire power to keep rising rates, despite the services sector remaining in a contraction (with a reading of under 50). If the AUDUSD's 50 day simple moving average crosses above the 200 day, marking a ‘golden cross’, we could see a quick run up to 0.7137, the August peak. It’s also worth watching the AUDEUR as bullish momentum could see the pair on the weekly chart cross over its 100-day moving average. - Stay tuned to Saxo's inspiration page for trading and investing ideas, as news breaks.  For a global look at markets – tune into our Podcast. Source: Video: Oil prices drop, some investors buy the oil dip. AU & NZ CPI hotter than expected | Saxo Group (home.saxo)  
Earnings, Soft PMIs, and Market Dynamics: Impact on Yields, Dollar, and Key Developments

Microsoft Forecasts A Continuous Slowdown, Eurozone PMI Rose

Saxo Bank Saxo Bank 25.01.2023 10:13
Summary:  US equities posted an uninspiring session yesterday and the mood soured slightly after the close on Microsoft reporting earnings and issuing weak guidance for its cloud business. Today, the hotly anticipated Tesla earnings report is up after hours. Elsewhere, US Treasury yields dipped and the Australian dollar jumped to new cycle highs in many AUD pairs, including versus the US dollar, on hotter than expected Australian Q4 CPI data.   What is our trading focus? Equities: Momentum faded in US equities mixed earnings The Q4 earnings releases yesterday weighed on sentiment yesterday with the biggest negative surprise coming from 3M expecting -3% to 0% organic revenue growth in 2023 which indicates a sharp decline in volume which 3M confirmed is taking place in consumer electronics and retail related businesses. After the cash close Microsoft reported a worse than expected outlook sending S&P 500 futures lower trading around the 4,020 level early European trading hours. We expect sentiment to remain in a negative mood as the market awaits Tesla’s Q4 result after the market close. FX: USD generally weaker together with sterling, AUD surges The USD was sold again yesterday after a minor rebound, with EURUSD trading back above 1.0900 by this morning and near the cycle highs, while the weaker USD signal was not particularly pure or broad. USDJPY remains above 130.00 as the price action there has lost energy, for example. Some of the euro strength may be on EURJPY flows as the ECB jawboning remains on the hawkish side of late, and on EURGBP flows as sterling stumbled badly yesterday on a very weak preliminary January UK Services PMI yesterday, with EURGBP well back up into the range above 0.8800. The recent cycle top there was just south of 0.8900. Overnight, AUD jumped broadly to the strong side overnight on hot CPI data (more below). Crude oil (CLH3 & LCOH3) sits between two chairs Following Tuesday’s sharp fall, as investors turned more risk adverse following disappointing earnings, crude oil prices are slightly higher into today’s session with recession fears continuing to be offset by an expected increase in Chinese demand and supply concerns related to next month's EU embargo on Russian seaborne sales of fuel products. In Brent the approach to $90 and the December high at $89.40 is likely to prove a tough nut to crack until more supporting news reaches the market. API data showed another build in US crude stocks, but at 3.4mn barrels if was less than the huge builds seen recently. The EIA data is out later today. Gold at new cycle high Gold reached a new cycle high on Tuesday of $1942.5 before profit taking emerged following the better-than-expected PMIs before bouncing back after the weak Richmond Fed index. Bullion trades up close to 6% this month and more than 300 dollars above the early November low on growing recession fears and expected slowing of Fed tightening. The remainder of the week is littered with US economic data, including US Q4 GDP and PCE, the Fed’s favoured inflation metric. Gold remains in a steep uptrend with support at $1900 followed by $1880 where the 21-day moving average and trendline from the November low meet. Silver has stabilised following Monday’s short-lived sell off below $23.15 but a couple of closes above the 21-day moving average, last at $23.76 will be needed to turn the sentiment more supportive. Chicago wheat futures advance Chicago wheat, one of the three most shorted commodities by the hedge fund industry trades near a one-week high after crop conditions worsened in Texas, the second biggest US producing state of winter wheat, a reminder that dry soil conditions remain following last year's massive drought. In the week to January 17, data from the CFTC showed hedge funds held the biggest short position in Chicago wheat since May 2019. Together with Arabica coffee, another heavily shorted contract, these contracts remain exposed to short covering should the technical and/or fundamental outlook turn more favourably. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields fall. Very strong 2-year Treasury auction US treasuries found support and rallied yesterday, taking the 10-year treasury yield benchmark back below 3.50% and the 2-year was back below 4.20% this morning, in part after a very strong 2-year auction that saw the strongest bidding metrics since the early 2020 pandemic outbreak timeframe. The US treasury will auction 5-year T-notes today. Grumbles around a protracted US debt ceiling showdown in Congress and the risk of default by the US government not wearing on trust in US sovereign paper yet, with “crunch time” for the issue seen as early as early summer if the situation not resolved before then. What is going on? Microsoft’s outlook sent shares lower The world’s largest software company missed revenue estimates in Q2 (ending 31 December) by a small margin but hit the EPS consensus estimate with EPS at $2.32 for the quarter. The initial reaction was positive in the extended trading session but as the outlook became clearer to investors shares sold off. Microsoft forecasts a continuous slowdown in the commercial business in the next two quarters leaving room for a growth acceleration later in 2023. ASML confirms strong demand for chips Europe’s largest technology company reports Q4 sales of €6.4bn in line with estimates and a gross margin of 51.5% vs est. 49.3%. Investors will be pleased to see the confidence in the outlook with Q1 sales guidance at €6.1-6.5bn vs est. €6.1bn and FY23 revenue growth of 25% compared to consensus at 20% y/y. The company also sees a slight improvement in the gross margin. The Aussie dollar rallied up to 0.8% to 0.7100+, a new 5-month high on hot Q4 CPI print The Australian dollar popped to 0.7108 US, its highest level since early August after another Australian inflation print came out hotter than expected after electricity prices surged, rents also remained stubbornly high, along with furnishings, and household equipment price. Core Trimmed Mean CPI rose 6.9% YoY, above the 6.5% consensus expected. Headline inflation came in at 7.8%, slightly below consensus expectations. Recall the RBA expects inflation to remain high in early in 2023, particularly amid higher energy costs. This is also in line with several other government bodies’ thinking. The stronger inflation data saw odds of an RBA hiking pause for February falling, with a majority now looking for a hike at the Feb. 8 RBA meeting, with about 65 basis points of total additional tightening priced for the RBA, with a peak policy rate priced near 3.75%. Eurozone Flash Jan. Composite PMI edges into expansion Eurozone PMI rose to 50.2 in January from 49.3 in December and 49.8 expected, suggesting that the region may be able to skirt a recession due to a less harsh winter this season which has given room to the ECB to continue to focus on fighting underlying inflationary pressures. Manufacturing PMI was just below the key 50-mark at 48.8 but better than last month’s 47.8, while the rise of services PMI to 50.7 drove most of the gains. UK services PMI, on the other hand, fell to 48 from 49.9 in December, while manufacturing gained slightly to 46.7 in January from 45.3 previously but still remained in contraction. This suggests further signs of UK being in a recession in early 2023 and possibly a sooner pause for the BOE than the ECB. US Flash Jan. PMIs hold up better than expected US flash PMIs for January surpassed expectations, as services rose to 46.6, above the expected 45.0 and the prior 44.7, while manufacturing lifted to 46.8 from 46.2 (exp. 46.0), which comes ahead of ISM on February 1st. The composite rose to 46.6 from 45.0, and this will probably further boost the calls in favour of a soft landing rather than a deep recession as has been the case since the start of the year due to faster-than-expected China reopening and stronger Eurozone outlook. Still, activity is in contraction and job growth is cooling, but the January print also pointed to a re-acceleration in the input cost inflation. US and Germany to send tanks to Ukraine The Biden administration is reportedly expected to announce the intent to send 30 M1 Abrams tanks to Ukraine, with Germany’s Chancellor Scholz also reportedly deciding to send at least 14 of its Leopard 2 tanks to Ukraine after a long hesitation. Reports suggest Germany would only agree to send its best tanks if the US did likewise. It is unknown how rapidly the tanks could be deployed at the front. The US Justice Department and eight US states sue Alphabet Inc.’s Google (GOOGL:xnas) ... charging the company with a monopoly in its digital advertising market place and calling for a break-up of the company’s business in this area. Google retorted that the case “largely duplicates an unfounded lawsuit by the Texas Attorney General, much of which was recently dismissed by a federal court. DoJ is doubling down on a flawed argument....” Alphabet, Inc.’s share price fell 2% yesterday. Codelco produced 10% less copper than planned last year Production at Codelco, the Chilean state-owned miner said on Tuesday it produced 10% less copper than planned last year. Driven by mishaps at existing operations, such as rockfall, equipment malfunctions and dam freeze. In addition, some projects were delayed as the industry is seeing cost blowouts. Chile, the world's biggest supplier has increasingly been challenged by steadily falling ore quality, water shortages and projects becoming pricier. Developments that together with social unrest in Peru and the expected pickup in demand from China and the green transformation point to underlying support for copper. Freeport-McMoRan (FCX) report production and earnings later today and it may overtake Codelco as the world’s top producer. What are we watching next?  Bank of Canada meets today – most see a 25-basis point hike tomorrow followed by a pause Most observers are looking for the Bank of Canada to hike one last time for this cycle today to take the policy rate to 4.50% and to indicate a pause to assess inflation- and labour market conditions before deciding on next steps. The Bank of Canada hiked rapidly in 2022 in an attempt to catch up with galloping inflation but has contrasted with the Fed in signalling a pause in the hike cycle well before the Fed, which has been slower to signal that peak rates may be nearing. USDCAD trades near the lows since last November at 1.3350 this morning (2023 low is 1.3322), with the 200-day moving average creeping higher and near 1.3200. Tesla earnings on watch for margin pressure from price cuts Analysts expect revenue growth of 36% y/y and EPS of $1.12 up 64% y/y. Analysts are still very bullish on revenue growth for 2023 with expectations at 30% growth despite the recent slip in deliveries and three quarters of growing difference between production and deliveries. This is also reflected in the consensus price target at $190 vs the current price of $144. Traders and investors are also expressing a bullish take on Tesla with the put-call ratio on volume being 0.79 and the put-call open interest ratio at 0.65. The key thing to watch will be the comments on recent price cuts for several models, and how that impacts the bottom line, and whether the demand response is big enough to offset the price reduction to see the bottom line grow this year. Earnings to watch Today’s key earnings focus is ASML and Tesla as both earnings will set the direction for sentiment in the market. Read our earnings preview from yesterday here.  Today: ASML, Lonza Group, Tesla, Abbott Laboratories, NextEra Energy, IBM, Boeing, ServiceNow, CSX, Freeport-McMoRan, Lam Research, Norfolk Southern  Thursday: Tryg, Novozymes, Kone, Nokia, LVMH, Christian Dior, STMicroelectronics, SAP, Diageo, Atlas Copco, Volvo, SEB, Visa, Mastercard, Comcast, Intel, Blackstone, Valero Energy, Archer-Daniels-Midland, Dow, Nucor, L3Harris Technologies, Southwest Airlines, American Airlines  Friday: Fanuc, Chevron, American Express, Colgate-Palmolive  Economic calendar highlights for today (times GMT) 0900 – Germany Jan. IFO Business Climate survey  1500 – Canada Bank of Canada Rate Decision  1530 – US Weekly DoE Oil and Product Inventories  1600 – Canada Bank of Canada Statement and Press Conference  1800 – US 5-year Treasury Auction  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – January 25, 2023 | Saxo Group (home.saxo)
Weaker Crude Oil Prices Undermine The Loonie Pair (USD/CAD)

A Hawkish Interest Rate Decision By The Bank Of Canada Might Strengthen The Canadian Dollar

TeleTrade Comments TeleTrade Comments 25.01.2023 10:24
USD/CAD is set to extend the downside to near the weekly low around 1.3320. Bank of Canada is expected to hike the interest rate further by 25 bps to 4.5%. The expectation of a smaller interest rate hike by the Federal Reserve is backed by escalating recession fears. USD/CAD is expected to deliver a breakdown of the Inverted Flag chart pattern that might expand volatility ahead. USD/CAD is hovering near the critical support above 1.3340 in the early European session. The Loonie asset has dropped after failing to sustain above 1.3400 and is expected to decline further to near the weekly lows around 1.3320. The major is following the footprints of the US Dollar Index (DXY), which is displaying a subdued performance. Weakness in the S&P500 futures led by a dip in Microsoft earnings due to missed estimates in the cloud business and technical glitches in the NYSE has turned investors’ risk-averse. Also, investors are restricting themselves from building full-capacity positions ahead of the United States Gross Domestic Product (GDP) data. The US Dollar Index (DXY) is struggling to sustain above the 101.50 resistance. The alpha created by the US government bonds has rebounded firmly. The 10-year US Treasury yields have scaled to near 3.47%. Bank of Canada to tighten policy further To tame stubborn inflation, the Bank of Canada (BoC) might continue to tighten its monetary policy further. Canada’s inflation has been recorded at 6.3% from its December Consumer Price Index (CPI) report, which is three times more than the 2% inflation target. According to a poll from Reuters, Bank of Canada Governor Tiff Macklem’s aggressive policy tightening campaign is expected to calm down as the street sees a further interest rate hike by 25 basis points (bps) to 4.50%. Also, it conveys that the Bank of Canada will keep interest rates at 4.5% for the rest of the year, which indicates that this might be the end of further policy tightening. Canada’s headline inflation stood at 6.3% for December and is expected to remain above 2% inflation target till Q3CY2024. Factors that have kept Canada’s inflation at the rooftop are the tight labor market and supply chain bottlenecks. Upbeat employment opportunities have not provided a significant reason to producers to trim the prices of goods and services at factory gates. A higher-than-projected hawkish interest rate decision by the Bank of Canada might strengthen the Canadian Dollar. Oil price attempts a recovery from $80.00 Sheer weakness in the oil prices witnessed on Tuesday has met with demand in Wednesday morning around the critical support of $80.00. The black gold witnessed immense pressure as oil demand is expected to witness short-term pain due to extended holidays in Chinese markets for Lunar New Year celebrations. Also, the absence of chatters about supply cuts in the report from OPEC impacted the oil price. Meanwhile, the oil price has attempted a recovery amid headlines that the United States is considering refilling the Strategic Petroleum Reserve (SPR). US President Joe Biden exploited the oil reserves to fight rising oil prices in CY2022. It is worth noting that Canada is a leading exporter of oil to the United States and a recovery in the oil price might support the Canadian Dollar. Read next: The Aussie Pair Is Above 0.70$, GBP/USD Pair Lost Its Level Of 1.24$| FXMAG.COM Contraction in US GDP might accelerate recession fears After a better-than-projected preliminary United States S&P PMI data, investors are shifting their focus toward the release of Thursday’s Gross Domestic Product (GDP). The street is expecting the fourth quarter GDP at 2.8% vs. the prior release of 3.2%. Investors should be aware of the fact that the US Bureau of Economic Analysis reported negative growth in the first two quarters of CY2022. And further contraction in the fourth quarter might accelerate recession fears. The rationale behind softening of economic activities is the higher interest rates by the Federal Reserve (Fed), which has trimmed the leakage of borrowings due to higher interest obligations. Apart from that, chatters about interest rate policy by the Federal Reserve are impacting the US Dollar. The street is expecting a further deceleration in the pace of policy tightening by the Federal Reserve as inflation has been softened significantly. USD/CAD technical outlook USD/CAD is forming an Inverted Flag chart pattern on an hourly scale that indicates a sheer consolidation, which is followed by a breakdown in the same. Usually, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants initiate shorts, which prefer to enter an auction after the establishment of a bearish bias. Downward-sloping 20-and 50-period Exponential Moving Average (EMA) at 1.3365 and 1.3375 respectively are acting as a major barricade for the US Dollar. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates volatility contraction
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

WTI Crude Oil Is Expected Further Downside Movement

TeleTrade Comments TeleTrade Comments 26.01.2023 08:54
WTI braces for first weekly loss in three on breaking 50-SMA, fortnight-long trend line. U-turn from two-month-old resistance, bearish MACD signals also keeps sellers hopeful. Ascending trend line from early January challenges immediate downside. WTI crude oil remains on the back foot as it braces for the first weekly loss, after a fortnight of an uptrend, amid early Thursday in Europe. The black gold’s latest weakness could be linked to its failure to cross the horizontal resistance area comprising multiple hurdles marked since early December 2022. Also, a clear downside break of the two-week-old ascending trend line and the 50-SMA joins the bearish MACD signals to bolster the downside bias. However, an upward-sloping support line from January 06, close to $79.80 by the press time, restricts the nearby downside of the black gold. Following that, the previous weekly low near $78.50 could act as an additional downside filter, a break of which may recall the Oil bears targeting the $70.00 round figure. During the fall, the monthly low and December’s bottom could probe the sellers around $72.60 and $70.25 in that order. Alternatively, 50-SMA restricts WTI’s immediate upside near $80.70 ahead of the support-turned-resistance line from mid-January, close to $81.70 at the latest. It’s worth noting, however, that the WTI bulls need to offer a successful break of the two-month-old horizontal hurdle surrounding $82.80, to retake control. WTI: Four-hour chart Trend: Further downside expected
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

The Bank Of Canada Raised Interest Rates By 25bps, The EIA Data Showed An Unexpected Rise In US Crude Inventories

Saxo Bank Saxo Bank 26.01.2023 09:11
Summary:  Risk sentiment was boosted in the US afternoon session after Bank of Canada’s pause signal sparked hopes of the Fed taking a similar turn next week. This saw dollar dipping and Gold surging to fresh cycle highs. Earnings results continue to be mixed with cost cutting efforts in the limelight, but some optimism came from buyback announcements from companies like Chevron and Blackrock. Meanwhile, Tesla beat on the EPS but missed on margin and free cash flow. HK stocks return today after Lunar New Year holiday while China markets are still closed.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) pared early losses to finish little changed On the back of the weakness in the outlook, especially a 7%-8% sequential decline in its Azure cloud computing in the current quarter, from Microsoft (MSFT:xnas), at one point in the New York morning Nasdaq 100 fell as much as 2.5% and S&P 500 slide nearly 1.7%. Stocks then spent the rest of the day climbing to recover from the morning losses. Nasdaq 100 finished the Wednesday session down only 0.3% and S&P 500 nearly unchanged. Microsoft pared early loss to close 0.6% lower. AT&T (T:xnys) jumped 6.6% on solid wireless subscription growth. Boeing (BA:xnys) plunged as much as 4.2%, following reporting a Q4 loss due to margin weakness, but pared all the loss and more, closing 0.3% higher. After the close, Tesla (TSLA:xnas) reported EPS of USD1.19, beating expectations slightly but EBITDA margin of 22.2% missing expectations. The EV giant expects to deliver about 1.8 million vehicles in 2023, in line with expectations. Tesla shares surged over 5% in extended hour trading. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) richer by 1-3bps on lower UK & European yields Treasuries got a bid across the pond from stronger U.K. gilts and European government bonds which were helped by safe-haven buying on concerns of a potential escalation of the war in Ukraine as Germany and the U.S. are supplying tanks to Ukraine. Traders also took note of the Bank of Canada’s indication of a plan to pause rate hikes to assess the impact on the economy after raising its policy rate by 25bps to 4.5% on Wednesday. The 5-year auction went well with strong demand. Treasury yields fell 1 to 3 bps across the curve, with the 2-year finishing the session at 4.13% and the 10-year at 3.44% Hong Kong’s stock market back from the Lunar New Year holiday; Shanghai and Shenzhen closed Hong Kong’s stock market is resuming trading today after a 3-day long Lunar New Year Holiday while the mainland bourses remain closed for the holiday. During the first four days of the Lunar New Year holiday from Saturday to Tuesday, China’s passenger trips by road, rail, air, and water waterways reached nearly 96 million in China, about 29% higher from the same period last year. Chinese ADRs were in general firmer from their pre-holdiday closes in Hong Kong, with Alibaba (BABA:xnys; 09988:xhkg) up 1.2%, Tencent (TCEHY:xnas; 00700:xhkg) up 2.1%). JD.COM (JD:xnas; 09618:xhkg) up 0.6%, Li Auto (LI:xnas; 02015:xhkg) +6.5%, and NIO (NIO:xnys; 09866:xhkg) +7.1%. FX: Dollar downturn resumes amid expectations of a dovish Fed While a downshift in the Fed rate hike trajectory has been broadly signalled by the members of the board before the quiet period kicked off, the Bank of Canada’s pause signal has left the markets hoping for a similar turn from the Fed next week. This brought a fresh weakness in the US dollar overnight, with G10 gains led by AUD after a firmer-than-expected Q4 CPI print yesterday which would likely drive the RBA to continue to hike for now. AUDUSD hold above 0.71 with AUDNZD marching above 1.0950. GBPUSD returned back above 1.2400 as well while EURUSD is hovering near the YTD high of 1.0927 with a strong German Ifo report (read below) and hawkish rhetoric from the ECB continuing. USDJPY also back below 129.50 in the Asian morning. Crude oil (CLG3 & LCOH3) prices range-bound Crude oil prices remained firm on Wednesday after the EIA data showed an unexpected rise in US crude inventories. EIA reported a 0.5mln bbl build for US crude stocks in the latest week, marking the fifth straight build, albeit considerably less after the 8.4mln bbl build for the prior week, and on the lighter side of analyst expectations for a 1mln bbl build. Meanwhile, a weaker dollar and sustained positive signals from China reopening underpinned as well. WTI continued to find bids at $79.50 while Brent was supported around $85.50 with eyes on the December high of $89.40. Gold (XAUUSD) pushes to fresh 9-month highs; eyes on 1950 The weakness in the dollar amid expectations of a Fed downshift to a smaller rate hike next week continues to push Gold prices higher. The yellow metal surged to 1949.20 overnight, the highest levels since April 2022. A dovish hike by the Bank of Canada last night has set up the markets for a similar shift from the Fed next week. The US GDP release today will be of key interest to gauge whether the market expectations shifting in favor of a soft landing rather than a recession can continue to hold. The focus will then turn to the PCE data on Friday before we head into the Fed meeting week. Support at $1900.  Read next:Despite The Challenges Starbucks Is Developing In Italy, Bank BNP Paribas In Frankfurt Have Been Raided| FXMAG.COM What to consider? Bank of Canada’s dovish hike The Bank of Canada raised interest rates by 25bps to 4.50%, the highest level in 15 years. It plans to hold going forward, but Governor Tiff Macklem said he's "prepared" to hike again if needed. The decision was slightly dovish with a clear pause being signalled, despite the caveat to hike again. The MPR saw the bank lower its 2022 and 2023 inflation forecast but sees 2024 inflation at 2.3% (prev. 2.2%), the same year it expects it to reach its target. Growth forecasts were raised in 2022 and 2023, but lowered in 2024. Markets are taking this as a positive signal in the hope that the Fed could take a similar turn next week. Improving German business outlook further lowers recession risk Germany business confidence survey signalled that the worst may be over for the economy and a slowdown may be ahead, but a deep recession appears to be unlikely at this point. The threat of an immediate energy crunch has receded due to the less harsh winter, and supply-chain constraints are also easing with China’s reopening. The expectation index of the Ifo survey rose for the fourth successive month to 86.4 in January from 83.2 previously, but remained historically subdued amid elevated inflation curbing purchasing power. The current assessment slightly deteriorated. US GDP on the radar today, along with jobless claims An advance print of the Q4 GDP will be released in the US today, and some deceleration is expected from last quarter’s 3.2% YoY. But consensus still expects a strong growth of 2.7% YoY as spending on services sustained. The big concern will be if we see consumers pulling back, as was signalled by a slump in retail sales this month. That could raise concerns on whether a soft landing is really possible. However, judging from the recent labor market strength, it may be too soon to count the consumer out. Initial jobless claims for last week will also be on watch after the previous figure dipped to sub-200k levels signalling a still-tight labor market. Tesla earnings beat Tesla reported Q4 revenue of USD24.32 billion, 1% above the consensus estimate of USD24.07 billion as per Bloomberg’s survey, and a growth of 13% Q/Q and 37% Y/Y. Adjusted net income grew nearly 60% to USD 3.69 billion from a year ago. Adjusted earnings per share came in at USD1.19, beating the consensus estimate of USD1.12 by 6%. The gross margin of 25.1% was below the 26.6% expected by the street and the EBITDA margin of 22.2% was lower than the 22.6% forecasted by analysts. The EV giant said it is accelerating cost-cutting actions. Tesla commented that its factory in China has been running near full capacity and it is not expecting meaningful volume increases in the near term. Chevron boosts buyback on record profits Chevron (CVX) announced $75 billion buyback (22% of marketcap and tripling the current program) that will start in Apr 1 and raised dividend by 6.3% to $1.51/share a quarter implying yield of 3.4%. 4Q earnings are due tomorrow. Other companies like Blackrock and Netflix have also announced buybacks for 2023, sending some optimism on a soft landing scenario as companies are not hoarding cash with fears of an incoming recession.   Source: Market Insights Today: Bank of Canada’s dovish hike; Step up in share buybacks – 26 January 2023 | Saxo Group (home.saxo)
The German Purchasing Managers' Index, ZEW Economic Sentiment  And More Ahead

Two Small Caps Listed On Euronext Paris Have Faced Severe Financial Difficulties, The Q4 GDP Will Be Released In The US Today

Saxo Bank Saxo Bank 26.01.2023 09:16
Summary:  A whipsaw session in the US for equity traders, as a steep sell-off intraday, in part on Microsoft shares gapping lower at the open on its after-hours earnings report of the prior day was fully reversed by the close. Tesla’s strong guidance after hours kept the mood elevated, as did sideways to lower US treasury yields and a weak US dollar. Another long list of US and European companies are set to report earnings today, including Europe’s largest company by market cap, luxury goods maker LVMH.   What is our trading focus? Equities: US equity market holds up after a stumble The market suffered a significant intraday drawdown yesterday, in part on mega-cap Microsoft gapping lower on the open after its earnings report after the close on Tuesday. But that stock and the broader market recovered to approximately unchanged by the close of the session, keeping the sense of suspense alive around the direction of this market, with a long-standing descending trend-line from the all-time top in play for the S&P 500 near recent highs above 4,000 and the price action criss-crossing the 200-day moving average. Today sees a further flurry of earnings reports, including from the two credit card giants Mastercard (to report before market open) and Visa (after market close). Hong Kong’s Hang Seng (HIF3) surged on return from the Lunar New Year holiday On the first trading day of returning from the Lunar New Year holiday while the mainland bourses remain closed, Hang Seng Index surged 2% and Hang Seng TECH Index jumped 3.6%. During the first four days of the Lunar New Year holiday from Saturday to Tuesday, China’s passenger trips by road, rail, air, and water waterways reached nearly 96 million in China, about 29% higher than in the same 4-day period in the Lunar New Year holiday last year. It added to the optimism that the initial Covid outbreak when pandemic containment measures were lifted has not stalled the rebound in mobility and economic activities. Xiaomi (01810:xhkg), surging 12%, was the best performer within the benchmark Hang Seng Index, following the leak of an EV blueprint design being considered as an indication of the mobile phone and electronic device maker is on track to launch its first EV in 2024. FX: USD drops with resilient risk sentiment and as yields ease lower, perhaps in part on dovish Bank of Canada The USD remains on the weak side, falling again after a brief rally yesterday as sentiment rebounded in equity markets. Another strong treasury auction (see more below) kept US yields under pressure, with the Bank of Canada’s signalling of a pause after yesterday’s hike reminding the market of the US Fed’s trajectory as it is seen pausing rate hikes soon. AUD was especially firm, rallying hard yesterday after a firmer-than-expected Q4 CPI print which is seen likely to drive the RBA to continue to hike for now. AUDUSD has held above 0.71, while AUDNZD rallied hard to 1.0950+, closing in on its 200-day moving average just above 1.1000. GBPUSD recoverd back toward 1.2400 as well while EURUSD is hovering near the YTD high of 1.0927 after a strong German Ifo report yesterday (read below) and hawkish rhetoric from the ECB continuing. USDJPY also back below 129.50 overnight in Asia. Crude oil (CLG3 & LCOH3) prices range-bound Crude oil trades near unchanged after holding tight ranges overnight the Asia session amid low liquidity as the Lunar New Year holiday continues.  EIA reported a 0.5mn barrel build in US crude stocks in the latest week, while Cushing inventories jumped by more than 4 mn barrels, the biggest since April 2020, to 35.6mn barrels, thereby supporting the current spread widening between WTI and Brent to near $6/bbl. Export was firm while total products demand to its lowest for this time of year since 2014. Meanwhile, a weaker dollar and sustained positive signals from China reopening underpinned prices. WTI continued to find bids at $79.50 while Brent was supported around $85.50 with eyes on the December high of $89.40. Gold (XAUUSD) pushes to fresh cycle high near $1950 The weakness in the dollar amid expectations of a Fed downshift to a smaller rate hike next week continues to push gold prices higher. The yellow metal reached 1949.20 overnight, the highest levels since April 2022. A dovish hike by the Bank of Canada last night has set up the markets for a similar shift from the Fed next week. The US GDP release today will be of key interest to gauge whether the market expectations shifting in favor of a soft landing rather than a recession can continue to hold. The focus will then turn to the PCE data on Friday before we head into the Fed meeting week. Additional price momentum being provided by ETF’s where total holdings this week has jumped by 13 tons. Support at $1900 with resistance at 1963$, a Fibonacci level. US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) yields fall, 5-year auction another strong one US treasuries continued to rally and yields edged lower, keeping the 10-year US treasury benchmark yield below 3.50%. A 5-year auction saw very strong bidding metrics, if not quite as dramatic as those of the 2-year auction of the prior day. More impactful US macro data is up today, including the first Q4 GDP estimate and weekly jobless claims number, with December PCE inflation data up tomorrow. What is going on? Tesla reports strong profits, forecasts 37% jump in sales this year The company beat consensus estimates in reporting $1.19 of earnings per share and said that it would increase its output “as quickly as possible” after having previously forecasted that it would average 50% annual growth in coming years. The coming year’s forecast production increase was for a rise of about 37%, and questions loom about the company’s margins after it cut prices sharply earlier this month. The company warned on economic uncertainty and claimed to be accelerating its “cost reduction roadmap.” Tesla stock has rallied over 40% from the cycle lows of a few weeks ago and was up marginally in late trading yesterday after the earnings release. Bank of Canada’s dovish hike The Bank of Canada raised interest rates by 25bps to 4.50%, the highest level in 15 years. It plans to hold going forward, but Governor Tiff Macklem said he's "prepared" to hike again if needed. The decision was slightly dovish with a clear pause being signalled, despite the caveat to hike again. The MPR saw the bank lower its 2022 and 2023 inflation forecast but sees 2024 inflation at 2.3% (prev. 2.2%), the same year it expects it to reach its target. Growth forecasts were raised in 2022 and 2023, but lowered in 2024. Markets are taking this as a positive signal in the hope that the Fed could take a similar turn next week. Improving German business outlook further lowers recession risk Germany business confidence survey signalled that the worst may be over for the economy and a slowdown may be ahead, but a deep recession appears to be unlikely at this point. The threat of an immediate energy crunch has receded due to the less harsh winter, and supply-chain constraints are also easing with China’s reopening. The expectation index of the Ifo survey rose for the fourth successive month to 86.4 in January from 83.2 previously but remained historically subdued amid elevated inflation curbing purchasing power. The current assessment slightly deteriorated. Bad time for small caps on Euronext Paris With tightened financial conditions, it is getting increasingly complicated for several small companies to get access to affordable financing. In less than two days, two small caps listed on Euronext Paris have faced severe financial difficulties. A court ordered the liquidation of Deinove – a French biotechnology company pioneering the exploration of a new domain of life, unexplored at 99.9 %: the microbial dark matter. The company, based in the South of France, failed to secure a new round of financing. Yesterday, Lysogène went into receivership. This is another French biotechnology company focusing on lead programs in neurodegenerative lysosomal. The stock is down 85 % on a yearly basis. Expect other small listed companies to experience the same fate as access to financing is getting much more complicated in a high-interest environment. The biotechnological sector is certainly one of the most vulnerable, along with other high-tech segments (such as artificial intelligence). What are we watching next? US GDP on the radar today, along with jobless claims An advance print of the Q4 GDP will be released in the US today, and some deceleration is expected from last quarter’s 3.2% YoY. But consensus still expects a strong growth of 2.7% YoY as spending on services was sustained. The big concern will be if we see consumers pulling back, as was signalled by a slump in retail sales this month. That could raise concerns on whether a soft landing is possible. However, judging from the recent labour market strength, it may be too soon to count the consumer out. Initial jobless claims for last week will also be on watch after the previous figure dipped to sub-200k levels signalling a still-tight labour market. Earnings to watch Today’s key earnings focus in Europe is on the largest company on the continent by market value, LVMH, which continues to ride high on strong sales, and with special focus on how the company guides on the anticipation of a reopening China. It reports after the European market close today. A number of other prominent European names are reporting, including SAP (results already out this morning, with upbeat revenue guidance relative to forecast). In the US, the focus is on the two credit card giants Mastercard, which will report before the open and Visa, which reports after the market close. US chip giant Intel will also report after the market close, as that beleaguered company continues to try righting the ship after touching eight-year lows last year, and with slumping PC demand a prominent concern. Today: Tryg, Novozymes, Kone, Nokia, LVMH, Christian Dior, STMicroelectronics, SAP, Diageo, Atlas Copco, Volvo, SEB, Visa, Mastercard, Comcast, Intel, Blackstone, Valero Energy, Archer-Daniels-Midland, Dow, Nucor, L3Harris Technologies, Southwest Airlines, American Airlines Friday: Fanuc, Chevron, American Express, Colgate-Palmolive Economic calendar highlights for today (times GMT) 1330 – US Dec. Chicago Fed National Activity Index 1330 – US Q4 GDP Estimate 1330 – US Weekly Initial Jobless Claims 1500 – US Dec. New Home Sales 1530 – US Weekly Natural Gas Inventory report 1600 – US Jan. Kansas City Fed Manufacturing Activity 2330 – Japan Jan. Tokyo CPI 0000 – New Zealand ANZ Business Confidence/Activity Outlook 0030 – Australia Q4 PPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 26, 2023 | Saxo Group (home.saxo)
Saxo Bank Quarterly Outlook: Bullish View On Industrial Metals

Commodities: Copper Continued To Trade Around Its Highest Level

ING Economics ING Economics 26.01.2023 10:00
While European gas prices continue to edge lower, US natural gas prices have also come under pressure, falling to their lowest levels since May 2021 Energy - US natural gas falls below $3/MMBtu ICE Brent settled almost unchanged yesterday with little in the way of fresh developments. The EIA released its latest inventory report, which showed that US crude oil inventories increased by 533Mbbls over the last week. This was less than the 3.38MMbbls build the API reported the previous day. However, crude oil stocks increased by 4.27MMbbls at Cushing, leaving total inventories at the WTI delivery hub at 35.69MMbbls - the highest since December 2021. The build in Cushing has coincided with weakness in the prompt WTI spread, which is trading in contango at the moment. Changes in refined product stocks over the last week were relatively minor. Gasoline inventories increased by 1.76MMbbls, while distillate fuel oil stocks fell by 507Mbbls. US natural gas prices have come under further pressure with Henry Hub falling below US$3/MMBtu this morning for the first time since May 2021. Milder weather has meant that the drawdown of gas storage has been much more modest than usually seen at this time of year. Metals - Codelco copper output declines Codelco, the world’s largest copper producer, produced 172,000 fewer tonnes of copper in 2022, a 10% drop from 2021, chairman Maximo Pacheco said on Tuesday. Codelco produced an estimated 1.446 million tonnes of copper in 2022, compared to 1.618 million tonnes in 2021. Pacheco said 77% of the reduction was due to problems with operations while 23% was due to project delays. Copper continued to trade around its highest level in more than seven months amid supply risks in South America and continued optimism over China reopening. Read this article on THINK TagsOil Natural gas Henry Hub EIA Cushing Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Pound Slides as Market Reacts Dovishly to Wage Developments

In Europe Investors Reacted Positively To Reports

Jakub Novak Jakub Novak 26.01.2023 14:10
The sharp growth of US tech stocks boosted market sentiment amid optimistic earnings forecasts from electric car maker Tesla Inc. Futures contracts on the Nasdaq 100 index rose by about 0.5%. Tesla jumped more than 8% during premarket trading in New York after beating earnings and sales estimates. Futures on the S&P 500 index added 0.3%, and the industrial Dow Jones gained 0.2%. Europe stocks In Europe, investors reacted positively to reports from Nokia Oyj Telecommunications Group and chipmaker STMicroelectronics NV, which helped the Stoxx 600 index gain more than 0.5%. Although companies are not boasting of high figures they are not disastrous either, which keeps the demand for risky assets, including stocks. The January growth is exaggerated given the recession risks. However, next week's Federal Reserve meeting may confirm that the market and investors were right. China The buoyant market sentiment was also linked to China, where data on holiday and tourism spending showed that the country's recovery is gaining momentum. On the first trading day after the Lunar New Year, the Hang Seng Index jumped by 2.4% and closed at its highest level since March 1, 2022. US GBP Expectations of a soft landing of the US economy and that the Federal Reserve is nearing the end of its rate hike cycle are also pushing investors to buy cheaper assets. US GDP reports for Q4 this year are expected today, as well as employment data, which will help determine the Fed's future policy course. Euro The euro is down slightly, but it is getting continued support from statements by European Central Bank officials, who continue to argue in favor of further significant policy tightening in the coming months. Bond yields in the Eurozone rose by several points. Oil and Bitcoin Oil prices continued to rise amid expectations of a rebound in demand in China. Bitcoin fell by more than 2%, wiping out much of Wednesday's gains. S&P 500 index As for the S&P 500 index, the situation remains on the side of bulls. The index may continue to grow but bulls need to protect the support level of $4,010 as well as take control over $4,038. After that, we may expect a more confident spurt to $4,064. At the same time, it would be difficult to reach above $4,091. If the pair declines and we see weak activity from bulls at $4,010, they will have to protect $3,980 and $3,960. Breaking through this level, the index may be pushed to $3,923.   Relevance up to 12:00 2023-01-27 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/333364
Bank of Canada keeps the rates unchanged. After the release of the US inflation, Fed's Barkin drew attention to cooling demand, but still strong labour market and inflation

The Canadian Dollar (CAD) Was The Clear Outperformer Across The G10 Board

Saxo Bank Saxo Bank 27.01.2023 10:16
Summary:  U.S. equities gained and Treasuries sold off on stronger-than-expected U.S. data headlines, including a 2.9% growth in Q4 GDP, a decline in the initial claims to 186K, a 5.6% increase in durable goods orders, and a rise in new home sales. The Nasdaq 100 closed above its 200-day moving average for the first time since March last year. Hong Kong came back from the Lunar New Year holiday rising 2.4% on high-frequency data that pointed to a strong recovery in traffic and consumption during the Lunar New Year holiday in mainland China. Today all eyes are on the PCE data as it may set the direction of the next move of equities and bonds.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) rallied on slower but better-than-expected economic growth The major US indices had a choppy day of trade, with the S&P 500 rebounding and ending up 1.1%, and the Nasdaq 100 finishing the session 2% higher. Investors digested slower US economic GDP growth data but better-than-expected from the fourth quarter, as it tends to suggest that the US economy could make a soft landing. Nasdaq 100 closed above its 200-day moving average for the first time since March last year. 10 of the 11 S&P 500 sectors gained with energy, up 3.3%, and consumer discretionary, up 2%, leading the charge higher. Tesla shares charge, investors look past falling auto margins Tesla’s shares jumped 11% on Thursday, extending its rally from its January 6 intra-day low to over 57%, with earnings and revenue beat expectations, while investors looked past automotive gross margins grinding to its lowest figure in five quarters, 25.1%. Also, despite a streak of quarterly sales (deliveries) coming up short of expectations, Musk teased the potential to produce 2 million vehicles this year, and minimise the effects of drastic price cuts to its EVs. Other company news American Airlines Group expects profit this year to exceed estimates following a slow start, as steady demand for air travel keeps an industry recovery going into 2023. Mastercard warned revenue growth would slow even faster than expected this quarter, stoking fears that inflation has put a damper on consumer spending. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rose on stronger-than-expected economic data U.S. Treasures sold off after the stronger-than-expected economic headlines. Real GDP grew at 2.9% annualized in Q4, faster than the 2.6% median forecast, though more than half of the increase came from a rise in inventories. Initial jobless claims fell to 186K instead of rising as in the consensus forecasts. New home sales rose 2.3% sequentially against expectations for a decline. Durable goods orders grew 5.6% M/M while the median forecast expecting for a decline. The 7-year auction had strong demand with a strong bid-to-cover ratio of 2.69 times and was awarded 2bps richer than the market level at the time of the auction. Yields on the 2-year notes settled 6bps higher at 4.18% and the 10-year finished the session cheaper at 3.49%. Hong Kong’s Hang Seng Index surged 2.4% as mobility and consumption picked up in the mainland On the first trading day of returning from the Lunar New Year holiday while the mainland bourses remain closed, Hang Seng Index surged 2.4% and Hang Seng TECH Index jumped 4.3%. According to Xinhua News, the State Council estimates that passenger trips over the whole Lunar New Year peak transportation period are reaching 2.1 billion, almost doubled the number from last year. Separately, data from the Ministry of Transport showed that daily passenger trips between 7 and 25 January averaged nearly 37 million, a 50.8% growth from last year. Tourism consumption data from Ctrip and cinema box offices have also been encouraging. It added to the optimism that the initial Covid outbreak when pandemic containment measures were lifted has not stalled the rebound in mobility and economic activities. Xiaomi (01810:xhkg), surging 12.5%, was the best performer within the benchmark Hang Seng Index, following the leak of an EV blueprint design being considered as an indication of the mobile phone and electronic device maker is on track to launch its first EV in 2024. FX: CAD boosted by higher oil prices; JPY stronger on Tokyo CPI The US dollar was modestly higher on Thursday with upbeat US GDP and claims data supporting the case for a soft landing. Focus now turns to PCE and the earnings season ahead of the Fed meeting next week where the broad consensus is still for a step down to a 25bps rate hike. CAD was the clear outperformer across the G10 board, despite Bank of Canada’s dovish tilt this week as higher oil prices supported. USDCAD now testing a break below 1.33. EURUSD still getting rejected close to YTD highs of 1.0930, but JPY was one of the underperformers as USDJPY traded back above 130 amid somewhat higher US yields but a dip back below 129.70 was seen in early Asia as Tokyo CPI for January came in above expectations. AUDUSD holds higher despite Australian producer prices slowing. US PCE today & RBA decision Tuesday next test Australian producer inflation (as measured by the Producer Price Index), has been trending higher, however today’s data from Q4 suggests producer prices are easing. However we believe that this is not an accurate reflection of reality. Not only is the data quarterly, but raw material prices (oil, electricity, fuel, copper, rent) are trending higher. As such the Australian dollar holds at 0.7127, after rising up 0.2%. The next test for the Aussie dollar will be Friday’s PCE data from the US and Tuesday’s RBA commentary with an expected 0.25% (25bps) hike on the cards. All in all, we believe the AUD is supported higher over the medium term, following a series of hotter than expected CPI prints, while China’s reopening is supporting the AUD with commodity demand rising. Still we continue to watch if the 50 day simple moving average crosses above the 200 day, marking a ‘golden cross’, which could lead to another quick run up. Crude oil (CLG3 & LCOH3) prices jump higher The demand outlook for commodities got another boost on Thursday with upbeat US GDP report for Q4 and a still-low initial claims weekly print highlighting the tight jobs market. Th30e recovering demand outlook in the short run also saw Brent structure flipping to backwardation from contango. Brent futures were up 1.7% to $87.50 but our Head of Commodity Strategy, Ole Hansen, writes that Brent is likely to find resistance at $100 in the short-term, with recession risks offsetting an expected rebound in Chinese demand and supply concerns related to the February 5 introduction of an EU embargo on Russian seaborne sales of fuel products. WTI futures inched back above $81/barrel. Gold (XAUUSD) rejected at 1950 With the upbeat US economic data releases on Thursday, there was increasing conviction that the Fed could still deliver a soft landing vs. a deep recession that some had started to forecast at the end of 2022. This prompted some profit-taking in Gold which closed at a nine-month high and very close to the key resistance of $1950 a day before. Spot prices slumped close to 0.9% to close near $1930, with support seen at $1900 with resistance at $1963, a Fibonacci level. Copper shorter term correction risk Copper prices lift 0.5% to $4.27, and are now up 32% from their lows. The wiring and industry metal outlook remains bright amid the clean energy transition, while mines will need to produce more than needed over the next two years to meet demand. However there is a risk Latin America will ramp up output, which could see prices correct.  Read next: Trump Returns To Social Media, Meta Will Restore The Former President's Account| FXMAG.COM  What to consider? US economic data continues to point to soft landing, eyes on PCE The advance print of US GDP came in at a stronger-than-expected +2.9% YoY (vs. 2.6% YoY exp) for the fourth quarter from 3.2% YoY in Q3. While the strong headline, together with another sub-200k print for the weekly jobless claims, coming in at 186k vs. 205k expected, suggested that the US economy was holding up strongly in the wake of rapid Fed tightening, the details were still patchy. Importantly, personal consumption, key to gauge how the consumers are holding up, climbed at a weaker-than-expected pace of 2.1% YoY. Focus now turns to Fed’s preferred inflation gauge, the PCE data, due to be released today. The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25bps rate hike by the Fed next week. IMF urges the Bank of Japan to consider policy flexibility The BOJ should consider increasing flexibility in long-term yields, the IMF said, highlighting that the risks to inflation are tilted to the upside with exceptionally high uncertainty. Options include raising its 10-year yield target, widening the trading band, switching back to a quantity goal for bond buying and aiming at a shorter-maturity yield. Japan needs to see a 3% across-the-board rise in nominal wages to anchor CPI above the BOJ's 2% target, fund Deputy MD Gita Gopinath said. EU considering $100 cap on Russian diesel The European Union is floating a plan to cap the price of Russian diesel at $100 a barrel from February 5 (the same date as the EU will ban almost all imports of refined Russian products). For reference, diesel futures are currently trading at $130/barrel, as they usually trade at a premium to crude. A lower $45 threshold would be set for discounted fuels like fuel oil, but member states will need to unanimously agree to the final figures. The objective remains to keep the Russian flows coming but cut Moscow’s revenues. Japan’s Tokyo CPI beats expectations Tokyo CPI for January came in above expectations, with the headline rising to 4.4% YoY from a revised 3.9% YoY previously and estimate of 4.0% YoY. The core measure rose to 4.3% YoY from 3.9% YoY while the core-core measure was also higher at 3.0% YoY from 2.7% YoY in December. This makes way from another beat in the overall CPI for January as well, and saw USDJPY down by about 50pips in response to 129.70 after a modest rise in the US session as US yields rose. Asia’s inflation surge from Australia to New Zealand to Japan is raising concerns on how China’s reopening could potentially fuel another leg of price pressures globally as commodity prices surge. In Australia, the ASX200(ASXSP200.I) seems supported by China reopening Consider Australia is often considered an investment proxy for China and Aussie exchange-traded funds (ETFs) could draw flows as China's economy reopens from Covid. The Australian equity market is frequently a dividend and commodity play, tilting heavily to financial and materials sectors. Mining company BHP Group expects dividend growth of 17% while the top iron ore miners are expected to ramp up shipments, underpinning higher earnings. Insurers, banks and financials could benefit most from RBA rate hikes with QBE and Westpac most sensitive to rising interest rates, with 60% and 40% profit boosts expected for them this year amid higher earnings on assets. The ASX200 is up 16% from its low and total aggregate earnings growth of over 30% is likely to unpin further growth for the market.   For a look ahead at markets this week – Read/listen to our Saxo Spotlight.   For a global look at markets – tune into our Podcast. Source: Market Insights Today: Tesla leads; US GDP beats estimates – 27 January 2023 | Saxo Group (home.saxo)
The ECB to Hike, But Euro Rally May Be Short-Lived as Dollar Strength Persists

Visa Earnings Beat Expectations And Mastercard Report Was Still Below Expectations

Saxo Bank Saxo Bank 27.01.2023 10:31
Summary:  The market mood remained upbeat yesterday, with US equities posting their highest close since early December, although an ugly earnings report after hours took chip giant Intel down nearly 10%. Treasury yields rebounded in the US after the lowest weekly jobless claims number since last May and a firmer than expected first estimate of Q4 GDP. The good mood was not shared by India, where equities tumbled after an attack by a short-shelling outfit on Adani’s network of companies.   What is our trading focus? Equities: US equity hits new highs since early December, but weak Intel weighs after hours The market rallied again yesterday, closing at new high since early December, with a broad advance across most sectors. The rally took the S&P to within hailing distance of the next key resistance area, the range highs into 4100, while the tech-heavy Nasdaq 100 closed just a hair above its 200-day moving average on the cash index and north of 12,000, the highest close since last September. A weak earnings report from Intel (more below) marred sentiment in late trading as the chip giant’s shares were marked sharply lower. Hong Kong’s Hang Seng (HIF3) consolidated, holding onto weekly gainsy Hang Seng Index fluctuated between modest gains and losses after yesterday’s strong post-holiday rally and ahead of the resumption of trading in the mainland bourses on Monday. High-frequency data on multi-mode traveling activity and holiday consumption continued from various sources continued to be positive and pointed to a solid recovery. Chinese developers and Macao casino operators were among the top gainers. Country Garden (02007), rising nearly 6%, was the best performer within the benchmark Hang Seng Index after the developer secured a 3-year bank loan. FX: USD avoids further drop on strong US data The latest weekly US jobless claims posted a new low for the cycle at 186k and since May of last year, with the first Q4 GDP estimate marginally stronger than expected. This helped US treasury yields rebound slightly and generally helped the USD avoid a further drop, although volatility in US yields has eased. EURUSD can’t seem to decide whether to take out 1.0900 after having criss-crossed the level for several days running, just as GBPUSD has been unable to take 1.2400 and the pivot high of 1.2446 from December after several over the last seven trading days, and USDJPY has meandered without conviction in the 130.00 area, with new lows in US long yields or some further indication of policy action from the Bank of Japan or both likely needed to post new lows. A dip back below 129.70 was seen in early Asia as Tokyo CPI for January came in above expectations. The next event risk for USD traders is today’s December PCE inflation data release ahead of the Fed meeting next week where the broad consensus is still for a step down to a 25bps rate hike.  Crude oil (CLG3 & LCOH3) prices range-bound Crude oil trades near unchanged on the week with an underlying positive sentiment, as China demand optimism offsetting slowdown and recession risks elsewhere. Trafigura Group sees “a lot of upside” for oil markets as pent-up demand is unleashed, especially as Chinese consumption rebounds after the nation dismantled its strict Covid Zero policy. The market is also focusing on a potential risk to supply from EU sanctions on Russian fuel shipments from February 5, and a plan under consideration to introduce a price cap on diesel at $100 a barrel against a current market price of $130. Brent is currently trading within nine-dollar wide up trending channel within a medium-term downtrend, both offering firm resistance in the $89-$90 area. Ahead of channel support at $80.35 some support is likely to be provided by the 21- and 50-day moving averages, currently around $83.50.  Gold (XAUUSD) rejected at $1950  Gold is heading for its first, albeit small, weekly loss in six weeks and following Thursday’s rejection at $1950 an upbeat US GDP report for Q4 and a still-low initial claims weekly print helped send yields and the dollar a tad higher, thereby reducing the appeal. Given gold’s steep ascent during the past two months a period of consolidation is long overdue and whether it’s consolidation or correction will depend on the yellow metals ability to hold trendline and the 21-day moving average both currently around $1890. Watching ETF holdings which reached an 11-week high following a modest increase, and US breakeven and inflation swaps which have started to move higher, thereby challenging the markets outlook for sub-2.5% inflation. Focus now turns to next week's FOMC and in the meantime the dollar remains the key source of short-term trading strategies. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rose on stronger-than-expected economic data  U.S. Treasures sold off after the release of overall stronger-than-expected economic headlines. Real GDP grew at 2.9% annualized in Q4, faster than the 2.6% median forecast though more than half of the increase came from a rise in inventories. Initial jobless claims surprisingly fell further to 186K the lowest print since last May. New home sales rose 2.3% sequentially against expectations for a decline. Durable goods orders grew 5.6% M/M while the median forecast expected a decline. The 7-year auction had strong demand with a strong bid-to-cover ratio of 2.69 times and was awarded 2bps richer than the market level at the time of the auction. Yields on the 2-year notes settled 6bps higher at 4.18% and the 10-year bounced back to 3.49% on the close and rose to 3.52% into early European hours What is going on? IMF urges the Bank of Japan to consider policy flexibility  The BOJ should consider increasing flexibility in long-term yields, the IMF said, highlighting that the risks to inflation are tilted to the upside with exceptionally high uncertainty. Options include raising its 10-year yield target, widening the trading band, switching back to a quantity goal for bond buying and aiming at a shorter-maturity yield. Japan needs to see a 3% across-the-board rise in nominal wages to anchor CPI above the BOJ's 2% target, fund Deputy MD Gita Gopinath said. Intel sent nearly 10% lower after hours on revenue miss, dire forecast The chip giant reported weaker than expected results for Q4, as it continues to deal with the post-pandemic slump in demand after the work-from-home and IT infrastructure upgrade wave boosted sales the prior two years. Even worse, the company posted a revenue forecast for the current quarter at $10.5 to $11.5 billion, far short of consensus estimates of $14 billion (the year ago quarter was north of $18 billion). In part, the weak estimate is due to customers having stockpiled significant inventories that must be worked through before demand for components rises again. The company predicted an earnings loss of 15 cents/share for the upcoming quarter as well, the first such prediction in decades. Indian stocks crater further on Hindenburg short-seller report on Adani. The network of Adani companies saw their prices fall steeply again, after Indian markets were closed yesterday, with Adani Enterprises down over 8% in late trading overnight. Adani is said to be preparing a detailed response to the short-selling outfit’s allegations. Visa and Mastercard report slower rise in card spending than expected Visa earnings beat expectations, but the company only reported a +1.7% rise for the quarter in card spending, some 5% below expectations. Mastercard reported a growth of 11% on the quarter, but that was still below expectations. The companies report that customers are shifting to cheaper brands for some of their spending. Mastercard closed 0.4% higher, having reported before the market open, while Visa reported after hours. EU considering $100 cap on Russian diesel The European Union is floating a plan to cap the price of Russian diesel at $100 a barrel from February 5 (the same date as the EU will ban almost all imports of refined Russian products). For reference, diesel futures are currently trading at $130/barrel, as they usually trade at a premium to crude. A lower $45 threshold would be set for discounted fuels like fuel oil, but member states will need to unanimously agree to the final figures. The objective remains to keep the Russian flows coming but cut Moscow’s revenues.   Japan's Tokyo CPI beats expectations Tokyo CPI for January came in above expectations, with the headline rising to 4.4% YoY from a revised 3.9% YoY previously and estimate of 4.0% YoY. The core measure rose to 4.3% YoY from 3.9% YoY while the core-core measure was also higher at 3.0% YoY from 2.7% YoY in December. This makes way from another beat in the overall CPI for January as well and saw USDJPY down by about 50pips in response to 129.70 after a modest rise in the US session as US yields rose. Asia’s inflation surge from Australia to New Zealand to Japan is raising concerns on how China’s reopening could potentially fuel another leg of price pressures globally as commodity prices surge. Iron ore price hits new 2022 high, on Fortescue seeing China demand pick up in 1H2023 In thin trade with China’s market still on public holidays, iron ore (SCOA), the key steel making ingredient, hit a new six month high price today, $126.20 a ton, not only driven by expectations China will increase buying after the Lunar new year holiday, but also as Australia’s large pure play iron ore company, Fortescue sees stronger sales in the first half of 2023. Fortescue reported China increased buying of port side iron ore in the prior quarter to 4.0mt, and it sees sales in the first half increasing to 9.3mt. All in all, iron ore supply is still lower than it was a year ago, and demand is increasing which underpins price supports. The iron ore price is now up 67% from its low, which has boosted optimism that iron ore companies will guide for stronger outlooks. Australia, an investment proxy for China reopening sees biggest monthly rally since 2020 Australia’s ASX200 (ASXSP200.I) has recorded its biggest monthly rally since November 2020, up 6.5% so far with Australia being considered an investment proxy for China's reopening. We see Australian investment instruments and exchange-traded funds drawing flows in 2023 as China’s economy emerges from covid19. Australia’s equity market, considered a dividend and commodity play, is heavily made up of financial and materials companies. Mining giant BHP Group expects 17% dividend growth, with iron ore miners forecasting higher demand for high-grade iron ore from China, which supports higher earnings. Australian insurers, banks and financials will likely benefit from the RBA’s rate hikes with QBE and Westpac as examples, see 60% and 40% profit boosts amid higher earnings on assets. What are we watching next? Lower output in the Black Sea region reducing world supplies key crops Ukraine’s corn and wheat production is set to fall for a second year in 2023, with corn output not expected to exceed 18 million tons and wheat production 16 million tons as farmers reduce planting due to the war, a grain sector group said on Thursday. Ukraine’s agriculture minister said last month that 2022 corn production could fall to 22-23 million tons from 41.9 million tons in 2021. Wheat production is estimated to have fallen to about 20 million tons last year. In addition, the USDA said on Thursday it saw Russia’s official wheat crop estimate as “not feasible”. Because of disrupted wheat supplies and strong demand, Thai rice, a benchmark for Asia, has soared to the highest in almost two years. Rice is a staple for half the world, and while wheat soared to a record in March last year, rice was relatively subdued for most of 2022, constraining food inflation in Asia. US December PCE Inflation is up today While focus has pulled away from inflation a bit recently on the significant deceleration in its trajectory, the market may be somewhat poorly prepared for a hotter than expected number today. The headline figure is expected at 0.0% MoM and +5.0% YoY vs. +5.5% YoY in November. The core is expected in at +0.3% MoM and +4.4% YoY vs. +4.7% YoY in November. Earnings to watch Earnings reports are few and far between on a Friday, but a couple of interesting names are on the docket today, including Chevron, which has declared it will buy back $75 billion of its own stock and increase its dividend, and major US consumer products company Colgate Palmolive.  Next week’s sports an ongoing big blast of earnings reports, which will include most of the remaining mega-caps after Microsoft this week (Apple, Alphabet and Amazon reporting next Thursday). Today: Fanuc, Chevron, American Express, Colgate-Palmolive Economic calendar highlights for today (times GMT) 1330 – US Dec. PCE Inflation1500 – US Dec. Pending Home Sales1500 – US Jan. Final University of Michigan Confidence1600 – US Jan. Kansas City Fed Services Survey Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher     Source: Financial Markets Today: Quick Take – January 27, 2023 | Saxo Group (home.saxo)
Oz Minerals’ Quarterly Copper Output Hit A Record High, Brent Futures Rose

Oz Minerals’ Quarterly Copper Output Hit A Record High, Brent Futures Rose

Saxo Bank Saxo Bank 30.01.2023 09:20
Summary:  Megacaps drove NASDAQ higher to outperform on Friday, and will be in focus this week as Apple, Amazon and Google report results. US PCE data was broadly as expected, but details sounded an alarm on the weakening consumer again. Still, range-bound trading in yields and dollar continued, but that may come into question as we enter a pivotal event-driven week. China returns from Lunar New Year holiday and focus on consumption and imports drives gains in commodities. Geopolitical tensions on watch with explosions in Iran.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) finished higher; Tesla, American Express surged Nasdaq 100 climbed 1% and S&P 500 edged up 0.3% on Friday, bringing the benchmarks to advance 4.7% and 2.5% respectively over the week. Tesla (TSLA:xnas) led the charge higher with an 11% gain on Friday, extending its post-Q4-result rally. American Express (AXP:xnys) reported Q4 EPS of USD2.07, missing the consensus estimate by 6.6% and falling 5% Y/Y but raising its dividend by about 15% and providing upbeat guidance for 2023 and aspirations for 2024. The shares of the card payment and travel company surged 10.6%, making it the second biggest gainer within the S&P 500, behind Tesla on Friday. On the other hand, Intel (INTC:xnas) tumbled 6.4% after an earnings miss and downbeat guidance. Toy maker Hasbro (HAS:xnas) plunged 8.1% on lower revenue and layoffs. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) finished mixed on Friday Treasuries got cheaper by 4bps to 6bps across the curve during Asian hours on a stronger-than-expected Tokyo-area CPI before paring losses throughout New York hours. The much anticipated PCE deflators were in-line with expectations and did not create much fanfare. Yields on the 2-year and 5-year finished the Friday session 2bps cheaper and those on the 10-year were 1bp cheaper. However, the 30-year outperformed with a strong rally in the New York afternoon to finish 2bps richer. Hong Kong’s Hang Seng Index gained 2.9% in a holiday shortened week Hang Seng Index gained 2.9% in a shortened week to start the Year of the Rabbit while the mainland bourses remained closed for the Lunar New Year holiday. Hang Seng China Enterprises Index rose 3.9% and Hang Seng TECH Index surged 5.4% for the week. Most of the gain was registered on Thursday as investors reacted on their return to the encouraging high-frequency data on a strong recovery in traveler traffic and holiday consumption in mainland China during the Lunar New Year holiday. On Friday, Hang Seng Index traded sideways and managed to add 0.5% to the weekly gain. Chinese developers and Macao casino operators were among the top gainers on Friday. Country Garden (02007), rising 6.2%, was the best performer within the benchmark Hang Seng Index after the developer secured a 3-year bank loan. Another leading developer Longfor (00960:xhkg) surged 4.3%. Sands China (01928:xhkg) climbed 4.1%. The China reopening drives the biggest monthly jump in Australian stocks since 2020 Australia’s share market, the ASX200(ASXSP200.I) is outperforming the S&P500 and Nasdaq, with a gain of 16% from its low - while also recording its biggest monthly gain since November 2020, (up 6.4%). Australia’s market - a dividend and commodity play, as well as being an investment proxy for China's reopening could also continue to outperform the US this year, given its heavy in materials such as iron ore, copper and aluminium, as well as financial companies - benefiting from higher interest rates. Mining giant BHP Group expects 17% dividend growth, Fortescue Metals sees higher sales in the first half of 2023 to China. Also consider, the iron ore price hit a new 2023 on the notion demand will rise. However, the iron ore (SCOA) price could be at risk of short-term correction, given it has rallied up almost 70%. So consider potentially taking profits given BHP shares are up 46% from their July low, Rio Tinto’s up 43%, Fortescue is up 53%. Although there is a risk of a short-term correction, as supply is lower than a year ago, the price over the longer term seems underpinned. Also consider sales to China have been increasing with Fortescue reporting greater buying of port side iron ore to 4.0mt (in the prior quarter), while guiding for H1 sales to rise to 9.3mt. Lastly, consider Australian insurers, banks and financials will likely benefit from the RBA’s rate hikes - QBE and WBC are expected to report profit jumps of over 30%. FX: Dollar at risk of a breakout this week The USD has been range-bound over the last two weeks, but mega week ahead with a slew of key data (ISM, jobs) and events (Fed, BOE and ECB) to be key catalysts. USDJPY testing a break above 130 again, with JGB yields hitting the new 0.5% yield cap again. USDCAD testing November lows of 1.3300 as oil prices gained traction again. EURUSD and GBPUSD will be watching not just the Fed meeting, but also the ECB and BOE meetings this week. EURUSD is struggling to take out 1.0920 but the scope for a hawkish surprise remains limited. GBPUSD keeps 1.2450 on the line. The AUDUSD is down 0.2% to 0.7100 US. We continue to watch if the 50 day simple moving average crosses above the 200 day, marking a ‘golden cross’, which could lead to another quick run up. However should the Fed be more hawkish on Wednesday (in US time) the rally in the AUDUSD could be reversed. As for Australian economic news to watch; Australia retail sales are out for December on Tuesday, building approval for December are out on Thursday. Crude oil (CLG3 & LCOH3) prices recover as China reopens WTI crude prices jumped back over the $80/barrel mark early in Asia after slumping lower on Friday and closing the week with its first loss for the year amid technical factors. However, focus has moved back to China’s return today, with reports of consumption and import recovery taking the headlines. Pivotal week ahead with a slew of data and central bank meetings, which will continue the argument between recession and soft landing, driving energy markets. Meanwhile, OPEC+ meeting will also be on watch although no material changes are expected. The recent surge in geopolitical tensions may be at play as well with the explosions in Iran. Brent futures rose back above $87/barrel.  Read next: Inflation Is Falling, But Does It Mean That The Fed's February Decision Will Be Dovish?| FXMAG.COM What to consider? Pivotal week for equities; Fed meets, Apple, Amazon and Alphabet report earnings It’s a critical and hugely pivotal week for markets with Fed meets, the ECB, and BOE to decide on interest rates. Thinking about US equites, for the bullish narrative to continue we firstly need to see a 0.25% hike as expected (taking rates to 4.75%) and we need the FOMC to indicate they are at the end of their tightening and avoid the words “we have more work to do”. Secondly, major tech company earnings are out from Apple, Amazon and Alphabet which could set the tone and direction for equities. We need to see optimistic outlooks. However if we see a margin squeeze and damper outlooks like Microsoft last week, we could see equities change direction. So when it comes to trading and investing, you may like to consider taking profits and buying downside optionality (puts). Considering for example Apple is up 12%, Amazon is up 21%,  while the S&P500(US500.I) and the Nasdaq 100 (NAS100.I) are up 13%. And consider tight stops. Fed’s inflation gauge, PCE, rises as expected but keeps services in focus The Core PCE Price index rose 0.3% MoM, in line with expectations and up from the prior pace of 0.2%, while YoY cooled to 4.4% from 4.7% previously, also in line with expectations. While this confirmed that the Fed could continue to take comfort in the inflation trajectory, the breakdown showed that services inflation remains sticky. The prices for goods showed a continued decline, falling 0.7%, accelerating from the prior decline of 0.4% in November. However, the services prices, accelerated to +0.5% from +0.4%. The other key concern was the miss in personal consumption, highlighting that the consumer may be starting to pull off after a similar signal from the breakdown of the GDP data last week. December Personal consumption fell 0.2% (exp. -0.1%), with the prior revised lower to -0.1% from +0.1%. Lunar New Year consumption in China rose 12.2% from last year According to the VAT data released by the State Taxation Administration, sales in consumption-related industries grew by 12.2% during the Lunar New Year holiday from the same lunar calendar period last year. Sales of goods grew 10% and services consumption climbed 13.5% Y/Y. Dining-in spending surged 53% Y/Y. Tourist agency sales soared 130% Y/Y, and tourist hotel lodging was up 16.4% Y/Y. Budget hotel sales increased by 30.6%. Movies’ box office exceeded RMB6.7 billion. China reiterated its push for domestic consumption; extended stimulus measures from its monetary toolbox China’s State Council, in a meeting chaired by the outgoing Premier Li Keqiang, pledged to boost domestic consumption as a key driver to support economic growth in 2023. Separately, the People’s Bank of China extended some lending facilities to support investments that reduce carbon emissions, develop clean use of coal, and the transport and logistics industries. The Netherland and Japan agreed to join the U.S. to restrict advanced chip-making technology export to China After months of discussion since the U.S. imposed export controls over advanced chip-making machinery to China, the Netherlands and Japan agreed to join the U.S. on such restrictions. The Netherlands’ ASML and Japan’s Nikon Corp and Tokyo Electron are dominant players in advanced chip-making machinery. Surge in rice prices threatens food inflation in Asia Due to disrupted wheat supplies from Ukraine and strong demand, Thai rice, a benchmark for Asia, has soared to its highest in almost two years. Rice is a staple for half the world, and while wheat soared to a record in March last year, rice was subdued for most of 2022, constraining food inflation in Asia. Meanwhile, the Rough Rice contract traded in Chicago is up 21% year-on-year and, apart from a brief covid outbreak spike in 2020, trades near a 14-year high. Explosions in Iran could raise geopolitical tensions There are reports of multiple drone strike targeting factories in Iran. Reports state that the drones came from an Israeli airbase in Azerbaijan. Many of the reports are centered around Isfahan, which is a central city that's reportedly home to some military plants, perhaps the ones supplying drones to Russia for the war in Ukraine. Intel (INTC:xnas) earnings missed and gave downbeat guidance Intel reported an 8% Q/Q and 28% Y/Y decline in Q4 revenue and non-GAAP EPS of USD0.10, 47% below the street consensus of USD 0.19. Inventory overhang in servers and CPU in PCs adversely affected Intel’s results.  The chip-making giant guided revenue to fall 22% Q/Q and 40% Y/Y and a non-GAAP loss of USD0.15 per share in Q1 2023. The management did not provide full-year guidance, citing a lack of visibility. Australia’s biggest pure play Copper company reported quarterly output hit a record Oz Minerals’ (OZL) quarterly copper output hit a record high and it sees higher production over 2023, while slightly less gold production compared to 2022 while also guiding for slightly higher costs. However, raw materials price strength in copper and gold could likely underpin its revenue and earnings growth. Also consider the company is recommending it is taken over by BHP.   For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Mega week of data, central bank meetings & earnings; China returns – 30 January 2023 | Saxo Group (home.saxo)
Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

Oil Could Be Ready To Pop, The Bank Of England Market Pricing Is More Mixed

Saxo Bank Saxo Bank 30.01.2023 09:33
Summary:  Critical week for markets with the Fed, the ECB, and the BOE deciding on policy interest rates. The market has priced in a downshift by the Fed to a 25bp hike, bringing the Fed Fund target to 4.50%-4.75%, while the ECB sticking to its gun of a 50bp hike. The expectation for the BOE action is mixed with a slightly higher odd assigned to a 50bp increase. US ISM and job data will be pivotal for the direction of the next market movement, in conjunction with earnings announcements from the mega-caps Apple, Alphabet, Amazon, and Meta. Investors also have their eyes on China as it returns from a week-long holiday on the back of solid traffic and consumption data during the Lunar New Year. The Fed is expected to downshift again The expectations of a soft landing have picked up since the start of the year, relative to the rising recession bets seen in H2 of last year. Meanwhile, inflation has been on a steady downtrend in the last six months, which has allowed the Fed to downshift to a 50bps rate hike in December after a spate of rate hikes in 75bps increments before that. The consensus expects the FOMC will downshift again to lift its Federal Funds Rate target by 25bps to 4.50-4.75% on February 1, although some still expect the central bank to hike rates by a larger 50bps increment. Fed speakers have also broadly guided for a smaller hike at the next meeting. With economic data remaining volatile, there is some reason to believe that Powell and team may be aiming to lengthen the hiking cycle in order to buy more time to assess both the incoming data and the impact of their previous aggressive rate hikes. This warrants a smaller rate hike of 25bps at the February 1 decision. The key risk factor, favouring another 50bps rate hike, could be the financial conditions which are the easiest since April 2022 or the risks of another shoot higher in inflation due to China’s reopening and the resulting rise in commodity prices. US ISM surveys and the jobs report to provide further input for the soft landing vs. recession fight The ISM surveys are key to watch not just for activity data but also to understand if input and output price pressures are trending in the desired direction. For the manufacturing survey, the headline is expected to soften again and slip further below the 50-mark, while the ISM services survey is expected to return above 50. The jobs data can mean significant volatility for the markets as wage pressures likely soften further but the headline nonfarm payrolls still remain pretty robust and unemployment rate remains near record lows despite unending news of layoffs in tech and other sectors. All these data points will be keenly assessed by the markets which are now pricing in a soft landing. Stronger-than-expected data on growth with sustained slowing inflationary pressures will further boost the markets, while weaker-than-expected data can ignite some caution and profit taking. China returns from buoyant Lunar New Year holiday, expecting pickups in PMIs China returns from a week-long Lunar New Year holiday, during which, sales in consumption-related industries grew by 12.2% from the same lunar calendar period last year. Estimates of passenger traffic from various sources all pointed to a strong recovery of activities. The official NBS Manufacturing PMI and Non-manufacturing PMI, scheduled to release on Tuesday, are expected to bounce back strongly to the expansionary territory. The median forecasts from Bloomberg’s survey of economists call for the Manufacturing PMI to rise to 50.1 in January from 47.0 in December and the Non-manufacturing PMI to bounce sharply to 52.0 in January from 41.6 in December. Caixin China Manufacturing PMI, which has a bigger representation of SMEs in the eastern coastal regions, is however expected to improve only moderately to 49.8 in January from 49.0 in December. Caixin China Services PMI is forecasted to bounce to 51.6, back to expansion, from 48.0 in December. The in-person service sector, which had been hard hit during the pandemic, recovered strongly as the mobility and consumption data during the Lunar New Year holiday indicated. ECB and BOE meetings likely to be pivotal this week for EUR and GBP direction The European Central Bank (ECB) is expected to hike rates by 50bps to 2.50%, with the markets pricing in a 50bps rate hike at 86% with a 14% chance of a 75bps move. ECB speakers have been broadly hawkish, but even the most hawkish ones have hinted at multiple 50bps moves rather than another 75bps. Overall, about 140bps of rate hikes are priced in from the ECB until around mid-year, keeping ECB as the most hawkish G20 central bank. That reduces the scope of a potential hawkish surprise from this week’s meeting and means that EURUSD may have risks tilted to the downside. The Bank of England market pricing is more mixed, with a 70% probability for a 50bps rate hike and 30% for a 25bps, and the potential for a split vote is also high. Therefore the bar for a surprise is higher, and will likely come from a revision in inflation forecasts. A steeper than expected cut in inflation forecasts could mean a sooner-than-expected end to the BOE’s tightening cycle, likely weighing on the GBP which seems to be ignoring the economic headwinds facing the UK economy for now. Oil supply to shrink, will oil pop or see profit taking ahead of OPEC meeting, with oil equites to follow Oil could be ready to pop with Chinese demand expected to rise, while supply concerns pick up, with the EU embargo on Russian seaborne fuel exports kicking in on February 5. However, traders may book in profits and play it safe ahead of the OPEC+ committee meeting on February 1 and ahead of the FOMC outlook on interest rates in the US on Wednesday. It is expected that the OPEC+ countries won’t boost production which could underpin prices at a time when diesel demand is rising amid travel picking up in the Asian pacific region (with aircraft travel almost back at 2019 levels). Traders have also been watching energy names such as Chevron- its share are up 27% from the September low, Occidental Petrolum is up 15%, Marathon Oil is up 35% from its September low. For more on oil’s fundamental, and other commodities, click here. The China reopening drives the biggest monthly jump in Australian stocks since 2020 Australia’s share market, the ASX200(ASXSP200.I) is outperforming the S&P500 and Nasdaq, with a gain of 16% from its low - while also recording its biggest monthly gain since November 2020, (up 6.4%). Australia’s market - a dividend and commodity play, as well as being an investment proxy for China's reopening could also continue to outperform the US this year, given its heavy in materials such as iron ore, copper and aluminium, as well as financial companies - benefiting from higher interest rates. Mining giant BHP Group expects 17% dividend growth, Fortescue Metals sees higher sales in the first half of 2023 to China. Also consider, the iron ore price hit a new 2023 on the notion demand will rise. However, the iron ore (SCOA) price could be at risk of short-term correction, given it has rallied up almost 70%. So consider potentially taking profits given BHP shares are up 46% from their July low, Rio Tinto’s up 43%, Fortescue is up 53%. Although there is a risk of a short-term correction, as supply is lower than a year ago, the price over the longer term seems underpinned. Also consider sales to China have been increasing with Fortescue reporting greater buying of port side iron ore to 4.0mt (in the prior quarter), while guiding for H1 sales to rise to 9.3mt. Lastly, consider Australian insurers, banks and financials will likely benefit from the RBA’s rate hikes - QBE and WBC are expected to report profit jumps of over 30%. Read next: A Loss Of $48 Billion In Shares Of The Indian Group Adani As A Result Of The Hindenburg Research Report| FXMAG.COM Key U.S. corporate earnings As of 27 January, 143 or 29% of the S&P 500 companies have reported Q4 earnings. Overall, 41% of those who reported results beat street estimates and 41% were in line with estimates. The information technology, healthcare, and materials sectors had the highest percentage of companies reporting positive surprises. This week, Whirlpool (WHR) on Monday, General Motors (GM) and McDonald’s (MCD) on Tuesday, Amazon (AMZN), Ford Motor (F), and Starbucks (SBUX) on Wednesday will inform us of the latest state of U.S. consumers. Among them, the focus will be on Amazon, for which, the street consensus forecasts an 88% Y/Y decline in Q4 EPS to USD0.172. The business outlook from United Parcel Service (UPS), reporting on Tuesday, will be closely monitored for a glimpse of the health of global economic activities. Also reporting on Tuesday, Advanced Micro Devices (AMD) is expected to register a 27% Y/Y decline in EPS, reflecting the headwinds faced by the semiconductor industry as indicated in the poor results and downbeat guidance from Intel (INTC) reported last week. Investors will also watch Qualcomm’s results on Thursday closely for additional insight into the semiconductor and telecommunication equipment industries. The most-watched results this week will be mega-cap names Meta Platforms (META) on Wednesday, and Alphabet (GOOGL) and Apple (AAPL) on Thursday. The median forecasts from street analysts are expecting the latest quarterly EPS to decline by 40% to USD2.22 at Meta, by 22% to USD1.20 at Alphabet, and by 7% to USD1.95 at Apple. Monday: Whirlpool (WHR), GE Healthcare Technologies (GEHC) Tuesday: Electronic Arts (EA), General Motors (GM), McDonald’s (MCD), NVR Inc (NVR), PulteGroup (PHM), Exxon Mobil (XOM), Marathon Petroleum (MPC), Phillips 66 (PSX), Amgen (AMGN), Pfizer (PFE), Caterpillar (CAT), United Parcel Service (UPS), Advanced Micro Devices (AMD), Corning (GLW) Wednesday: Meta Platforms (META), T-Mobile (TMUS), Altria (MO), Metlife (MET), Boston Scientific (BSX), Thermo fisher scientific (TMO) Thursday: Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Qualcomm (QCOM), Ford Motor (F), Starbucks (SBUX), ConocoPhillips (COP), Intercontinental Exchange (ICE), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Gilead sciences (GILD), Merck (MRK), Honeywell (HON), Friday: Cigna (CI) Key economic releases & central bank meetings this week Monday 30 January Eurozone         Economic, industrial & services confidence (Jan) Tuesday 31 January U.S.     Employment cost index (Q4) U.S.      Chicago PMI (Jan) Eurozone GDP (Q4) Germany GDP (Q4) France GDP (Q4) JapanIndustrial production (Dec) Japan  Retail sales (Dec) Wednesday 1 February U.S.     FOMC decision U.S.      ADP private employment (Jan) U.S.      ISM manufacturing (Jan) Eurozone EU harmonized CPI (Jan) Hong Kong GDP (Q4) Thursday 2 February U.S. Unit labor costs (Q4) Eurozone ECB meeting U.K.Bank of England rate decision Friday 3 February U.S.      Non-farm payroll, unemployment rate, average hourly earnings (Jan) Singapore Retail sales (Dec)     Source: Saxo Spotlight: What’s on investors' & traders' radars this week? Fed/ECB/BOE meetings, US ISM and jobs report, China back from holiday and reports PMI, Megacap earnings | Saxo Group (home.saxo)
Italy Eases Windfall Tax Impact Amid China's Deflation, Focus on US Inflation Report

Philips In The Netherlands Is Reporting Layoffs, Multiple Drone Strike Targeting Factories In Iran

Saxo Bank Saxo Bank 30.01.2023 09:40
Summary:  The Asian session saw a significant swoon in risk sentiment for the first time in weeks as Chinese mainland markets sold off steeply after a gap opening higher in their first session after the long holiday closure. This contrasts with US equity markets, which squeezed sharply higher once again Friday as financial conditions continue to ease aggressively ahead of this Wednesday’s FOMC meeting. Will the Fed want to spring a hawkish surprise to make this market take it seriously?   What is our trading focus? Equities: It is all about technology earnings this week Friday’s price action in S&P 500 futures ended on a high note with the index futures closing at their highest level since mid-September. US financial conditions remain in a negative trend and long-term bond yields are still well in the range and well-behaved leaving little macro headwinds for US equities, except for the warning signals flashing out of the leading indicators. The Q4 earnings season has so far been mixed with big names such as Intel and Microsoft reporting a deteriorating outlook. This week it is all about earnings with the most important to watch being those from Apple, Alphabet, and Amazon reporting late Thursday after the market close. This morning the S&P 500 futures are rolling over from Friday’s highs trading around the 4,063 level which is just above the intraday low from Friday’s session. Hong Kong’s Hang Seng (HIG3) retreated; China’s CSI300 (03188:xhkg) pared gains After advancing 2.9% in a holiday-shortened trading week, the Hang Seng Index gave back most of the gain from last week on profit-taking as well as disappointing property sales during the Lunar New Year. As of writing, Hang Seng Index lost 2.2%, with Chinese developers and mega-cap internet names leading the decline. Leader developer Country Garden (02007:xhkg) plunging 7.4% was the top loser within the Hang Seng Index, followed by Alibaba (09988:xhkg) which tumbled 7.1. CSI300 gapped higher by over 2% at the open when the Chinese market returned from a week-long holiday but pared most of it and was up only 0.5% as of writing. Auto, defence, electric equipment, and electronics were among the outperformers. FX: Dollar eyes a bounce this week The USD has been range-bound over the last two weeks, but a huge week ahead looms with a slew of key data (ISMs on Wednesday and Friday, the jobs report Friday) and central bank meetings (Fed, BoE and ECB) key catalysts. Any of three scenarios might support a USD comeback this week, at least consolidating some of its weakness over the past couple of months. The primary risk might be a Fed that is in the mood to challenge the market’s complacency and easing financial conditions as the market has priced a deceleration in rate tightening and eventual rate cuts later this year. Secondarily, stronger than expected US data would be a surprise and could boosts the US dollar by driving US yields higher. Finally, significantly weak US data could reverse the wild squeeze higher in equity markets, offering safe-haven support for the greenback. Elsewhere, the ECB may find it impossible to surprise hawkish, while the BoE may be happy to err on the side of dovishness as sterling has bounced back comfortably and energy prices have eased. Crude oil (CLH3 & LCOH3) lower despite Iran strikes Crude oil prices trade softer following Friday’s big drop which left the sector down on the week. An Israeli drone strike against a target in Iran only had a temporary positive price impact with the market instead focusing on signs of increased Chinese demand as the country reopens after the LNY break. Friday’s correction was primarily driven by profit taking from recently established longs after another failed attempt to break key resistance in the $89-$90 area in Brent. Pivotal week ahead with a slew of data and central bank meetings, which will continue the argument between recession and soft landing, driving energy markets. Also focus on the impact of fresh sanctions on Russian esports from February 4 and this week's OPEC+ meeting although no material changes are expected. Gold (XAUUSD) focus turns to FOMC Gold ended last week unchanged and has so far traded close to flat during the APAC session. Overall, it remains in a steep bullish trend with local support at $1920 being followed by trendline and 21-day moving average support around $1900. The Israeli strike on targets in Iran had limited positive impact with the market instead focusing on Wednesday’s FOMC meeting for confirmation of a less hawkish 25 bp rate hike as well as Friday’s US job report. Eight consecutive weeks of buying has lifted the hedge fund long in Comex gold futures to a nine-month high of 107k lots (10.7m oz) while total ETF holdings remain flat, the latter a worry as it raises the risk of a correction from non-sticky speculative and technical driven longs. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rose on stronger-than-expected economic data U.S. yields are rangebound ahead of important event risks this week, including the first week of the month economic data noted above in the USD section, but also over the FOMC meeting this Wednesday. The 10-year yield benchmark continues to coil in the 3.50% area as the yield curve remains steeply inverted and the market predicts a soft landing for the economy and Fed easing beginning later this year. What is going on? Explosions in Iran could raise geopolitical tensions There are reports of multiple drone strike targeting factories in Iran. Reports state that the drones came from an Israeli airbase in Azerbaijan. Many of the reports are centred around Isfahan, which is a central city that's reportedly home to some military plants, perhaps the ones supplying drones to Russia for the war in Ukraine. Australia’s biggest pure-play Copper company reports production record, but flags risk of higher electricity costs Oz Minerals’ (OZL) quarterly copper output hit a record high in Q4, while it sees higher production over the year again, with slightly less gold production compared to 2022. The miner noted inflation risks in forward guidance, forecasting higher costs in 2023 amid rising power prices, and a higher Australian dollar. This sets the tone for what we can potentially expect from some of Australia’s and the world’s largest miners when they report 2022 results next month. That said, raw material price strength in copper and gold could underpin Oz Minerals’ revenue and earnings, with consensus expecting 19% revenue growth in 2023, and 45% earnings growth. The company recommended shareholders approve its $9.6 billion takeover by BHP. Philips reports cut of 6,000 employees The wave of layoffs is continuing among technology companies and this morning Philips in the Netherlands is reporting layoffs corresponding to 8% of the workforce in a drive to cut costs to offset weakness across the business and costly recalls in its consumer medical device business. Copper’s supply disrupted rally Copper’s 20% rally since early November has primarily been driven by speculation that the reopening of China will support an overall increase in demand despite recession risks weighing elsewhere. But while that pickup has yet to materialise, thereby exposing copper and other recent highflying industrial metals to a correction, the risk to supply has increasingly become a stickier source of support for copper. Morgan Stanley estimates that close to 7% of global copper production is currently disrupted or at risk, while Chile’s output continues to disappoint. Lunar New Year consumption in China rose 12.2% from last year According to the VAT data released by the State Taxation Administration, sales in consumption-related industries grew by 12.2% during the Lunar New Year holiday from the same lunar calendar period last year. Sales of goods grew 10% and services consumption climbed 13.5% Y/Y. Dining-in spending surged 53% Y/Y. Tourist agency sales soared 130% Y/Y, and tourist hotel lodging was up 16.4% Y/Y. Budget hotel sales increased by 30.6%. Movies’ box office exceeded RMB6.7 billion. China reiterated its push for domestic consumption; extended stimulus measures from its monetary toolbox China’s State Council, in a meeting chaired by the outgoing Premier Li Keqiang, pledged to boost domestic consumption as a key driver to support economic growth in 2023. Separately, the People’s Bank of China extended some lending facilities to support investments that reduce carbon emissions, develop clean use of coal, and the transport and logistics industries. Read next: Inflation Is Falling, But Does It Mean That The Fed's February Decision Will Be Dovish?| FXMAG.COM What are we watching next? Market conditions thickening the plot for this week’s FOMC meeting The FOMC meeting this week was meant to confirm the Fed’s further downshift in the pace of its rate hikes with a 25-basis point rate hike and offer few surprises. But the market has lurched into an aggressive back-up in risk sentiment, with easing financial conditions as the market prices the Fed to likely have reached its peak interest rate for the cycle after only another 25 basis points of further hiking after this week’s presumed hike, which would take the Fed Funds policy rate to 4.75-5.00%. The Fed continues to object to the market’s expectation of an eventual rate cutting campaign set to begin by later this year, and it may attempt to surprise somehow on the hawkish side after especially the latter part of the “higher for longer” message from the Fed has been ignored. What does that look like? Difficult to say: a 50 basis point move would be bold but would come as a profound shock to markets. Perhaps the most hawkish message the Fed can deliver on rates would be a refusal to guide for an end of the rate-hike cycle just yet, somehow noting that financial conditions are too easy for it to consider that its policy is sufficiently tight. BP seeing an accelerated energy transition Russia's war in Ukraine will accelerate the shift away from oil and gas, with a much sharper decline in demand for fossil fuels seen in 2035, according to BP's annual energy outlook out today. Nations are prioritizing domestic renewable energy sources as a way to boost supply security while also cutting carbon emissions. Still in BP’s most conservative scenario in terms of climate goals, global oil demand would still be around 73 million barrels a day by 2050, only down 25% from 2019. OPEC will continue to gain market shares over the coming years because it has lower costs. The war will also cause global GDP to be at least 2% lower by 2025, compared with the expectation a year ago (from Bloomberg). Earnings to watch The Q4 earnings season kicks into gear this week around 218 companies among those we track during the earnings reporting. The three most important earnings are Apple, Alphabet, and Amazon due to their size in the equity indices and the economy. The first earnings to move markets will be Snap and Caterpillar tomorrow with both reflecting cyclical components in the economy. Today: Ryanair, UniCredit, Sumitomo Mitsui Financial Group, Canon, Philips, NXP Semiconductors, GE HealthCare Technologies Tuesday: Canadian Pacific Railway, Daiichi Sankyo, Fujitsu, UBS Group, Exxon Mobil, Pfizer, McDonald’s, UPS, Caterpillar, Amgen, AMD, Mondelez, Marathon Petroleum, Electronic Arts, Spotify, Snap Wednesday: Novo Nordisk, Orsted, Keyence, Hitachi, GSK, BBVA, Novartis, Meta, Thermo Fisher Scientific, Southern Copper Thursday: DSV, Dassault Systemes, Siemens Healthineers, Infineon Technologies, Deutsche Bank, Sony, Takeda Pharmaceutical, Shell, ING Groep, Banco Santander, Siemens Gamesa Renewable Energy, Nordea, Roche, ABB, Apple, Alphabet, Amazon, Eli Lilly, ConocoPhillips, Qualcomm, Honeywell, Starbucks, Gilead Sciences, JD.com, Ford Motor, Ferrari Friday: Coloplast, Sanofi, Intesa Sanpaolo, Denso, CaixaBank, Naturgy Energy, Assa Abloy, Regeneron Pharmaceuticals Economic calendar highlights for today (times GMT) 0800 – Spain Flash January CPI 1000 – Eurozone Jan. Confidence Surveys 1530 – US Jan. Dallas Fed Manufacturing Activity 2330 – Japan Dec. Jobless Rate 0030 – Australia Dec. Retail Sales 0130 – China Jan. Manufacturing and Non-manufacturing Survey Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 30, 2023 | Saxo Group (home.saxo)
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

The Commodities Feed: Middle East tensions

ING Economics ING Economics 30.01.2023 11:18
Oil prices are receiving support this morning after reports of a drone attack in Iran, while the return of China from the Lunar New Year holidays will also help. OPEC+ will meet on Wednesday to discuss output policy. However, no change is expected from the group Energy - specs boost buying Price action in oil over the last week was rangebound with the market awaiting this week’s  OPEC+ meeting and the return of China from the Lunar New Year holidays. As for Wednesday’s OPEC+ meeting, we do not expect any change in output policy from the group, given the lingering uncertainty that overshadows the market, both from a supply and demand perspective. However, the market has started this week on a firmer footing, trading close to 1% higher in early morning trading in Asia today. The return of China from holidays and rising tensions in the Middle East appear to have provided some support. There were reports over the weekend of an Israeli drone attack on certain targets within Iran. It is still unclear whether a fire at a refinery was also connected to the attack. Iran is pumping a little more than 2.5MMbbls/d and there have been reports of increased exports in recent months. The latest positioning data show a large increase in speculative buying in oil. Speculators increased their net long positions in ICE Brent by 39,690 lots over the last reporting week to 252,142 lots as of last Tuesday. This is the largest net long seen since March last year and the buying appears to reflect the more bullish outlook for the market. The expectation is that the market will tighten as we move through the year due to lower Russian supply and a recovery in Chinese demand. Meanwhile, for ICE gasoil, speculators also boosted their net long position over the last week, buying 9,924 lots and leaving them with a net long of 80,266 lots - the largest position held since May 2022. This increased speculative buying in gasoil comes ahead of the EU’s ban on Russian refined product imports. Metals – Cochilco expects copper surplus Chile’s copper commission, Cochilco, expects copper supply to expand 5% this year and 4% next year, compared with demand increases of 2.3% and 2.9%, respectively.  In Chile, which accounts for more than a quarter of global supply, 2023 production is estimated at 5.7 million metric tonnes, a 7.5% increase on 2022. Cochilco sees Chilean mine supply expanding a further 3.3% in 2024. In zinc, the cash/3m spread tightened to a backwardation of US$25.25/t on Friday, up a little over US$10/t over the course of the week. The strength in the spread comes as LME zinc inventories continue to stand at historically low levels, falling by 950 tonnes on Friday to 17,675 tonnes - the lowest since 1986.   Agriculture – Ivory Coast to boost domestic cocoa processing The latest reports suggest that the Ivory Coast will increase the amount of domestic cocoa processing to 49% starting from October, in line with the local government’s objective to process a minimum of 50% of cocoa domestically. As per the current numbers, only 35%-40% of cocoa is processed within the West African country, while the rest is being exported. The latest survey from the International Cocoa Organization (ICCO) shows that global cocoa inventories stood at 1.78mt at the end of the 2021/22 season, higher than the previous projection of 1.62mt, but lower than the 1.8mt at the end of the 2020/21 season. The group said that it may revise down last season’s supply deficit estimate of 306kt, considering the recent data set. Recent comments from the Ukrainian Grain Association (UGA) highlighted concern over a smaller grain harvest in 2023 as a result of the ongoing war. Officials expect planting acreage to shrink, while the total harvest is forecast at 53mt for 2023 compared to 65mt in 2022. The latest CFTC data shows that money managers decreased their net longs in CBOT soybeans by 22,037 lots to 146,261 lots as of 24 January. The move was predominantly driven by longs liquidating with gross longs decreasing by 13,988 lots to 172,806 lots. For wheat, speculators increased their net short position in CBOT wheat (for the third consecutive week) by 8,844 lots to 73,933 lots. Read this article on THINK TagsZinc Russian oil ban OPEC+ Oil Iran Copper Cocoa Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: OPEC+ meeting ahead

The Commodities Feed: OPEC+ meeting ahead

ING Economics ING Economics 31.01.2023 09:11
Commodity markets will be eagerly watching what the Fed decides at its FOMC meeting this week. For oil markets, no change in output policy is expected from OPEC+ when they meet on Wednesday Energy- market awaits Fed decision The oil market sold off yesterday, with a lack of fresh catalysts in the market. ICE Brent fell more than 2% on the day to settle at US$84.90/bbl, after the market failed to successfully break above the 100 day moving average. There are several key events that participants will focus on this week. Firstly, the OPEC+ meeting on Wednesday, where there is no change in output policy expected given the current uncertainty in the market. This will be followed by the FOMC meeting later that day, where our US economist expects the Fed to hike by 25bps. Finally, on 5 February the EU ban on Russian refined products comes into force. The full effect will likely take some time to be seen although, according to Bloomberg, Russia is planning to boost diesel exports from Baltic and Black Sea ports to 2.74mt - the highest levels in three years. It will be interesting to see where this ends up if shipped, given that historically the EU has been the key market. The European gas market continues to see TTF prices consolidating in the EUR55-60/MWh region, with current storage remaining comfortable. The latest data indicates that storage in Europe is 73% full, compared to the 5-year average of 53% full. This should allow the EU to get through this winter in a comfortable manner. Prospects for the region also look better for the 2023/24 winter. Metals - Philippines considers taxing nickel exports Nickel prices settled 1.1% higher yesterday, after the Philippines said it is considering taxing nickel ore exports amid a push for miners in the country to invest in processing capacity rather than shipping raw materials. The Philippines, the world’s second-biggest supplier of nickel, plans to follow Indonesia’s strategy. Indonesia banned exports of nickel ores in 2020 and limited shipments to refined products. The Philippines government is considering whether to impose an export tax on raw nickel exports or ban ore shipments completely. In copper, the latest LME data shows that total on-warrant stocks for copper reported inflows of 3,800 tonnes (the biggest daily addition since 29 December) to 54,375 tonnes as of Monday. The inflows were driven by an increase in German warehouses. MMG’s Las Bambas, one of Peru’s biggest copper mines, will stop production on Wednesday if transport disruptions due to nationwide political unrest don’t stop. The copper mine will be unable to keep producing copper from Wednesday amid a “shortage of critical supplies” caused by road blockages in the area, MMG said in a statement on Monday. In aluminium, Glencore delivered 40,000 tonnes of the Russian metal into LME warehouses in the South Korean port of Gwangyang, according to a report from Reuters. This could raise concerns in the aluminium market that LME prices will weaken as stocks build up. After an industry consultation last November, the LME decided to take no action on Russian metal. The exchange said at the time that a significant portion of the market still planned to buy Russian metal in 2023. Agriculture – Sugar rallies Sugar prices continued to rally yesterday with No.11 raw sugar up almost 1.2% yesterday to settle at USc21.21/lb - the strongest close we have seen in the sugar market since 2016. The strength in the market comes as there are concerns that India may not approve further exports with worries over the domestic crop. Late last year, the Indian government approved a little over 6mt of sugar exports in the 2022/23 season, with the potential for further exports if the domestic balance allowed. The latest data from Ukraine’s Agriculture Ministry shows that the nation exported 26.3mt of grains as of 30 January so far in the 2022/23 season, a decline of 31% YoY. Total corn shipments stood at 15mt (+1.7% YoY), while wheat exports fell 44% YoY to 9.4mt. Read this article on THINK TagsUS Fed TTF Sugar OPEC+ Nickel Natural gas Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
EUR/USD Movement Analysis: False Breakthrough and Volatility Ahead of Powell's Speech

Growing Fears Of Tech War, The USD Was Broadly Higher Against The Entire G10 Pack

Saxo Bank Saxo Bank 31.01.2023 09:29
Summary:  U.S. equities retreated on profit-taking in a risk-off session ahead of central bank policy rate decisions and a heavy corporate earnings calendar. Ford Motor slashed prices of its EV model in response to the price cut from Tesla recently triggered fear of a price war. Chinese technology and internet stocks as well as U.S. semiconductor names dropped on worries of an escalation of the US-China tech war.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) declined in a risk-off session Markets see red on concern FAANG’s will bite into markets, while caution is around that markets mispriced the Fed will cut rates later this year, plus end-of-month rebalancing hits. The risk is the Fed says it has “more work to do”, which could send equities into a tailspin. Ahead of the Fed, ECB, and BOE meeting this week, for the first time in 2023, with the central banks potentially setting the course of interest rates for the year, risk management resulted in traders and investors booking profits, which dragged the S&P500 down 1.3% and the Nasdaq 100 2.1%.  Tesla (TSLA:xnas) dropped 6.3% after Ford Motor (F:xnys) cut prices of its electric vehicles in response to Tesla’s recent price cuts. Nvdia (NVDA:xnas) plunged 5.9% alongside with other chip makers on the risk of an escalation of the U.S.’ ban on exporting chips to China. We think there the short-term correction may last for a while though we are bullish equities in Q1 overall, so potentially consider taking profits and buying downside optionality (puts), and consider tight stops. Secondly, the worry is that major tech company earnings will continue to slump. This is probably why profit-taking in Meta, Apple, Amazon and Google parent Alphabet is occurring ahead of reporting results. Ultimately, we think their outlooks could set the tone for equities this year. Click here for more on US earnings. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) higher on Spanish inflation upside surprise U.S. Treasuries sold off in price with yields 3bps to 5bps higher across the curve following the rise in European bond yields triggered by an increase in Spain’s EU harmonized CPI to 5.8%, a full percentage point above market expectations. The Treasury Department announced a Q1 borrowing plan of USD 932 billion, larger than its previous estimate of USD 576 billion released in last October. The yield on the 2-year rose 4bps to 4.23% and that on the 10-year climbed 3bps to 3.54%. Hang Seng Index retreated; CSI300 pared opening gains Falling 2.7% on Monday, the Hang Seng Index gave back almost all its gain from last week. The Politico story on the Biden administration’s plan to ban U.S. investments from investing in certain high-tech areas in China, such as AI, quantum, cyber, 5G, and advanced semiconductors triggered profit-taking in mega-cap China internet stocks. Alibaba (09988:xhkg), tumbling 7.1% and Tencent (00700:xhkg) sliding 6.7% were among the biggest losers within the Hang Seng Index. Hang Seng TECH Index plunged 4.8%. The Bloomberg story that reported the Netherlands and Japan had agreed to join the U.S. to restrict exports of advanced chip-making machinery to China added to the woes, in particular shares of Semiconductor Manufacturing International Corp (SMIC, 00981:xhkg), down 5%, and Hua Hong Semiconductor (01347:xhkg) falling 5.1%. Home sales in the 40 major cities during the Lunar New Year holiday shrank 14% from last year. Leading Chinese developer Country Garden (02007:xhkg) plunging 8.3% was the top loser within the Hang Seng Index, followed by Alibaba (09988:xhkg) which tumbled 7.1. Macao casino stocks slid on disappointing traffic that reached just 38% of the pre-pandemic level. CSI300 gapped higher by over 2% at the open when the Chinese market returned from a week-long holiday but pared most of it to finish the first post-holiday trading day only 0.5%. Auto, defense, electric equipment, and electronics were among the outperformers in A shares. Australian shares hold steady, defying negative leads from Wall Street. Australian retail sales fall off a cliff, borrowing falls Australia’s share market, as measured by the ASX200(ASXSP200.I) opened 0.3% higher today at 7,501 defying the futures and US markets negative lead. Not only are Australia shares outperforming US shares this year, but also UK’s FTSE . However, given materials prices could be at risk of a shorter term pull-back as mentioned above, it’s worth pointing out the technical indicators suggest the ASX200’s uptrend is weakening. Our Technical Analyst suggests a possible short term correction down to 7,167 should be ruled out. However, over the longer term, we think upside in the ASX200 is intact with mining companies to report some of the strongest earnings on record, and guide for their strongest outlooks in several years amid China reopening. For stocks, ETFs and baskets to watch, click here.  In company news today, Gold Road Resources (GOR) reported a drop in production in the prior quarter and higher costs due to inflationary pressure, but guided for higher grades in 2023. This follows Oz Minerals (OZL) also guiding for higher costs, which paints a picture of what we can expect for full year earnings season next month. In economic news, retail sales fell 3.9% in December, shocking the market, which expected sales to only decline 0.3%. On top of that, borrowing data also missed expectations. Borrowing rose 0.3% in December, vs Bloomberg’s consensus expecting lending to rise 0.5%. Today’s data is telling as it shows interest rates have taken effect on the consumer, and supports the market thinking that the RBA could potentially pause and then cut rates later this year.  FX: Dollar recovers as risk sentiment deteriorates ahead of Fed The USD was broadly higher against the entire G10 pack on Monday as risk sentiment was hurt by higher-than-expected Spanish inflation fuelling concerns on global inflation remaining higher-for-longer. Lower commodity prices also fuelled some profit taking in AUDUSD which is now testing the support at 0.7050. NZDUSD was also marginally lower but AUDNZD remained above 1.09. EURUSD made another attempt at breaking above 1.09 as ECB rate hike bets picked up, but retreated back to 1.0840 at the US close. GBPUSD also slid to 1.2350. Higher yields saw USDJPY back above 130.50. In FX the US dollar picks up, pushing most currencies off course. The US dollar index has bounced up off it lower and risen 0.5% and pressured most currencies lower, with the Aussie dollar (AUDUSD) falling 0.8% from its high, with the Aussie buying 0.7061 US. The Aussie against the US has fallen under its 200-day moving average after commodity prices rolled over, while there is caution the Fed’s Wednesday’s decision could cause the US dollar to rise. Should we see the Fed only hike by 0.25% as excepted and guide for only one more hike, or if the Fed mentions it’s hikes have been effective, or that its sees interest rates having a lag effect, then the AUDUSD could potentially rally back up. Supporting longer term upside in the AUD is the rise of China’s economy and commodity buying picking up. From a technical perspective, the bull may like to hear the 50 day moving crossed above the 200, indicating the longer term rally could remain intact, despite the RSI indicating, there are currently more sellers right now, than buyers.  Commodity short term pull back risk – with prices already down from fresh peaks; oil down 5.6%, iron ore, copper and aluminium lose 2% ahead of the Fed On Monday oil dropped 2.4%, while most commodities lost almost 1%, with the markets awaiting further evidence China is picking up demand - just as BHP, Rio and FMG alluded to. It seems traders are torn between real demand physical materially rising, but awaiting the Fed’s decision this week, which could result in the US dollar spiking, that would ultimately pressure commodity prices down further. So these factors raise the risk of a short-term correction across the board. That said, resources prices have been really strong up 17-70% from their lows. In 2023 alone iron ore and copper are up 9%, Aluminium up 11%, spot gold up 5%. However, with the commodity prices falling - it also raises the alarm that Aussie dollar and the Aussie share market could be at risk of a short term correction or consolidation as well. The key is to watch the US dollar index. Also keep in mind, over the longer term, commodity prices appear underpinned by rising demand amid lower physical supply. For more on commodities, see Saxo’s Commitments of Traders report, that highlights broad buying slowed in recent weeks. Crude oil (CLG3 & LCOH3) prices slumped as dollar gathered steam Oil prices dropped to three-week lows as the new week kicked off, with another interest rate hike on the table by the Fed this week boosting the US dollar. Higher-than-expected Spanish inflation also served as a reminder that rate hikes can continue.. Meanwhile, China returned from a week-long Lunar New Year holiday and all the gains that were built up in anticipation are now being put to test. The market is also cautious ahead of this week’s OPEC+ meeting. President Putin and Prince Mohammed bin Salman discussed cooperation within the group to maintain the stability of the global market. Russia also formalised its ban on sales to nations adhering to the G7 price cap on its fuel. WTI futures fell below $78/barrel while Brent was down to $85.  Read next: Major Currency Pairs Are Waiting For Central Banks Decisions, USD/JPY Pair Rose Above 130.00, | FXMAG.COM What to consider? Spanish inflation fuels concerns on EU inflation surge Spain’s HICP rose 5.8% YoY for January from 5.5% YoY in December, and came in a whole 100bps above expectations of a softer print at 4.8% YoY. This casted concerns on the pace of slowdown in the Eurozone inflation, and marginally increased ECB rate hike bets as well through the middle of the year. There was a resulting sell-off in bonds and European equity futures in the morning hours, and the risk appetite remained weak in the rest of the session as big earnings data and events in the week were eyed. Meanwhile, German GDP contracted for the first time on a QoQ basis since December 2021, down 2% vs expectations of remaining unchanged. The Adani saga poses some key questions on India for foreign investors India’s corporate governance has come back in focus with the Adani rout, alarming foreign investors who had been looking at India as a potential long-term opportunity especially with a shift away from China. While the extent of collateral damage can be contained and Modi’s popularity will be protected by a lack of coherent opposition, the key concern is how deeply the investor confidence gets dented and whether markets start to question India’s premium valuation. Read our Market Strategist Charu Chanana’s full report here. Expecting pickups in China’s PMIs China returns from a week-long Lunar New Year holiday, during which, sales in consumption-related industries grew by 12.2% from the same lunar calendar period last year. Estimates of passenger traffic from various sources all pointed to a strong recovery of activities. The official NBS Manufacturing PMI and Non-manufacturing PMI, scheduled to release this morning, are expected to bounce back strongly to the expansionary territory. The median forecasts from Bloomberg’s survey of economists call for the Manufacturing PMI to rise to 50.1 in January from 47.0 in December and the Non-manufacturing PMI to bounce sharply to 52.0 in January from 41.6 in December. Japan Productivity Center panel hints at policy tweak Several comments from a panel at Japan Productivity Center hinted at making the inflation target of 2% a long-term goal, suggesting that flexibility around inflation targeting may be considered by the new Chief. USDJPY slid below 130 on the report, before recovering later in the session. The panel also suggested that BOJ and the Japanese government should make a new joint statement so as to make responsibilities of the government clearer. FinMin Suzuki responded to the panel this morning saying that it is too early for a joint statement to consider revising the inflation goal. But speculation of a policy tweak will likely continue as the bOJ leadership changes get closer.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: – Profit-taking in a risk-off session, higher inflation in Spain, central bank decisions and corporate earnings ahead, US-China tech war - 31 January 2023 | Saxo Group (home.saxo)
EXMO.COM analyst: Currently, Tesla is still trying to conquer the market by prioritising revenue over profit

Tesla Triggers EV Price War, The IMF Raised Its Growth Forecast

Swissquote Bank Swissquote Bank 31.01.2023 10:21
Stock investors kicked off the week on a cautious note, as the Federal Reserve (Fed) is expected to kill joy when it announced its latest decision tomorrow, and earnings announcements may not save the day. S&P500 The S&P500 gave back 1.30% on Monday. US crude fell 2% yesterday and slipped below the 50-DMA this morning. Interestingly, however, the latest news on the macro front is not bad. The Chinese reopening is now well reflected through the first set of economic data. Released today, both the manufacturing and services PMI jumped into the expansion zone. IMF And the cherry on top, the IMF raised its growth forecast for this year by 0.2% to 2.9% citing the resilience of US spending and the Chinese reopening. This is the kind of news that the energy markets normally cheer. But not this time, apparently. Forex In the FX, the US dollar is gaining some positive momentum into the Fed meeting, as investors know that the Fed won’t declare victory over inflation despite the falling inflation, and position accordingly. Fed The Fed will certainly hike by 25bp, but there is little chance it will announce the end of the tightening. But more importantly, Jerome Powell will likely reveal whether we have one more rate hike, or two more rate hikes to go before pause. And that simple ‘s’ could make all the difference. Read next: Glovo Is Planning To Layoff 250 Workers Worldwide, The Middle East Is Already Suffering From A Water Shortage| FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:21 Market update 2:39 Apple did good in China in Q4 3:47 Tesla triggers EV price war 4:45 Good news from China and IMF (don’t bring oil bulls back…) 7:34 Why Powell will have to pluck some doves’ wings? Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #meeting #Apple #Amazon #Google #Meta #Snap #Exxon #earnings #China #PMI #EUR #inflation #IMF #growth #GBP #crude #oil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
NOK (Norwegian Krone): Norges Bank Hiked The Interest Rate!

The Government Pension Fund Global Suffers Losses

Kamila Szypuła Kamila Szypuła 31.01.2023 12:53
War in Europe, high inflation and rising interest rates were behind the poor performance of The Government Pension Fund Global. In contrast, the quick service restaurant industry in India has enjoyed a strong track record. In this article: Building a budget Westlife Foodworld Ltd reported good after-tax net profit A record loss Building a budget The year 2022 brought major changes in the main macroeconomic indicators. Overall, inflation has become a sore spot and in an attempt to combat it, the central bank has tightened monetary policy by raising interest rates and restricting liquidity. Entering another fiscal year, many economies face challenges as to how best to allocate their finances. Building a budget is not easy, you should consider whether saving or spending/investing is more important. Countries face an even greater challenge as growing fears of a global recession make it difficult to assess the situation. "In this year’s India budget, government faces a delicate balancing act between expenditure priorities and fiscal prudence.” Read an article by Santanu Sengupta, our India Economist, to know more: https://t.co/YJZvmAoOeN — Goldman Sachs (@GoldmanSachs) January 31, 2023 Read next: Samsung Demand For Semiconductors And Smartphones Remains Weak| FXMAG.COM Westlife Foodworld Ltd reported good after-tax net profit Fast food restaurants as well as the entire service market have been suffering in recent times as a result of growing economic problems, inflation and interest rates, and fears of recession. The fear of low profits was justified. But despite the current economic environment, demand for fast food restaurants has remained solid, especially in India. Westlife Foodworld Ltd- The company, which franchises McDonald's Corp (MCD.N) in West and South India, reported a consolidated after-tax net profit for the December quarter of INR 363.5 million (US$4.43 million) vs. 208.2 million rupees a year earlier. According to analysts, fast food restaurants saw an increase in demand in brick-and-mortar stores and takeaways during the holiday season, especially in October and December. Such positive results are a good signal for this industry. McDonald's India franchisee Westlife's profit soars on dine-in demand https://t.co/4tx7ER9C8O pic.twitter.com/TiqExbSgPN — Reuters Business (@ReutersBiz) January 31, 2023 A record loss The Government Pension Fund Global, one of the world's largest investors, reported a record loss of NOK 1.64 trillion ($164 billion) for the entire 2022 on Tuesday. According to the general director of Norges Bank Investment Management, this situation was influenced by the economic situation, as well as by the Ukrainian state. The $1.3 trillion fund was created in the 1990s to invest excess revenues from the Norwegian oil and gas sector. To date, the fund has invested in over 9,300 companies in 70 countries around the world. The foundation of the fund's wealth is the huge reserves of oil and natural gas in the North Sea. Interestingly, the fund's previous biggest loss was 633 billion crowns in 2008 due to the global financial crisis. Norway's gigantic sovereign wealth fund loses a record $164 billion, citing 'very unusual' year https://t.co/ZotXXO9NXp — CNBC (@CNBC) January 31, 2023
Jerome Powell Will Certainly Try To Calm Down Market Joy

Jerome Powell Will Certainly Try To Calm Down Market Joy

Ipek Ozkardeskaya Ipek Ozkardeskaya 31.01.2023 13:18
Stock investors kicked off the week on a cautious note, as the Federal Reserve (Fed) is expected to kill joy when it announced its latest decision tomorrow, and earnings announcements may not save the day.   Some profit taking  US equities kicked off the week on a negative note, as many investors preferred booking profits before the deluge of earnings announcements and the Fed decision.    And they are certainly not wrong to be scared, because the Fed expectations became increasingly dovish in January, as investors saw the easing inflation figures combined with softening economic activity.   The S&P500 gave back 1.30% on Monday. The  index is still above the 2022 bearish trend and above the 200-DMA, but we can't rely on Jerome Powell to keep the party going; only stronger-than-expected earnings, and ideally sufficiently good profit guidance from companies could do it – and spitting out a good guidance won't be a piece of cake for a good amount of them.   Crude oil down despite strong China PMI, encouraging IMF growth forecast   US crude fell 2% yesterday and slipped below the 50-DMA this morning.   Interestingly, however, the latest news on the macro front is not bad, at all. The Chinese reopening is now well reflected through the first set of economic data. Released today, both the manufacturing and services PMI jumped into the expansion zone.   And the cherry on top, the IMF raised its growth forecast for this year by 0.2% to 2.9% citing the resilience of US spending and the Chinese reopening.   This is the kind of news that the energy markets normally cheer. But not this time, apparently.    Read next: The Government Pension Fund Global Suffers Losses| FXMAG.COM Won't call victory over inflation...  The US dollar is gaining some positive momentum into the Fed meeting, as investors know that the Fed won't declare victory over inflation despite the falling inflation, and position accordingly.  Why? Because the trend could reverse suddenly.   The Spanish inflation came as a punch to the Europeans' face yesterday as it advanced to 5.8% in January instead of falling to 4.7% as expected. French and German readings could reveal similar surprises.  And nothing guarantees that the same U-turn won't happen in the US. Gasoline prices surged 12.5% over the past month on the back of winter storms and a rising global demand – partly thanks to the ban on Russian oil and the Chinese reopening, and food price inflation remains high.   So, the Fed will certainly hike by 25bp, but there is little chance it will announce the end of the tightening.   And Jerome Powell will certainly try to calm down market joy – given that the actual market environment suggests that the financial conditions in the US have become as loose as last February, before the Fed started tightening its purse's strings.   And the more the market fights the Fed, the more aggressive the Fed should become to achieve what they need to achieve.   In summary, the Fed will likely reveal that there will be at least one more rate hike, or two more rate hikes to go before pause.  And that simply 's' could make all the difference.   
Bearish WASDE Report Impacting Corn, Soybeans, and Wheat

The Commodities Feed: FOMC day

ING Economics ING Economics 01.02.2023 09:13
OPEC+ meet today, which is expected to be a non-event. However, today’s FOMC meeting will likely be of more interest to market participants Energy - OPEC+ to meet The oil market had a choppy trading session over the last day of January. Brent initially came under pressure, although a broader risk-on move saw oil still manage to settle higher on the day. API numbers released overnight were relatively bearish. The numbers show that US crude oil inventories increased by 6.3MMbbls over the last week. In addition, crude inventories at the WTI delivery hub, Cushing, are reported to have increased by 2.7MMbbls and justify the contango that we are seeing at the front end of the WTI forward curve. The bearishness did not stop at crude with both gasoline and distillate stocks increasing by 2.7MMbbls and 1.5MMbbls respectively. The EIA will release its weekly inventory report later today. Today will also see a handful of OPEC+ members gather for the Joint Ministerial Monitoring Committee meeting. Given that this meeting will not consist of all OPEC+ members, we will not see the group agree to any changes in output policy. The meeting could shed some more light on how the group sees the outlook evolving in the months ahead and also whether the sub-group has any recommendations on output policy. We believe any recommendation will be to keep output targets unchanged, given the level of uncertainty in the market.   Metals – Gold demand jumps to a decade high Gold demand in 2022 climbed to its highest level since 2011, driven by a surge in buying from central banks, according to the World Gold Council. Annual gold demand increased 18% last year to 4,741 tonnes. Purchases by central banks more than doubled to 1,136 tonnes, with most of this buying occurring over the second half of the year. Central bank purchases of the precious metal hit 417 tonnes in the last quarter of the year, about 12 times higher than the same quarter a year ago. Only about a quarter of the Q4 central bank purchases were reported to the IMF. Reported purchases in 2022 were led by Turkey, which took in almost 400 tonnes, China, which reported buying 62 tonnes in November and December, and Middle Eastern nations. During times of economic and geopolitical uncertainty and high inflation, banks appear to be turning to gold as a store of value. Given that the current unsettled geopolitical environment is likely to persist, we believe central banks will continue to add to their gold holdings in the coming months. Refined copper output in China rose 3.6% YoY to 961kt in December, according to the latest data from the National Bureau of Statistics. Cumulative copper output rose 4.5% YoY to 11.1mt for the full-year 2022. Among other metals, zinc output rose 4% YoY to 620kt, while lead production increased by a marginal 0.8% YoY to 756kt last month. The latest data from China Iron and Steel Association (CISA) shows that steel inventories at major Chinese steel mills rose to 16.1mt in mid-January, up 7.9% compared to early January. Crude steel production at major mills also edged higher to 1.94mt/d during the above-mentioned period. Agriculture – ISMA lowers Indian sugar production estimates The Indian Sugar Mills Association (ISMA) revised its estimate for domestic sugar production down from 36.5mt to 34mt for the 2022/23 season. This latest estimate is also below the 35.8mt produced last season. There have been concerns expressed over the Indian crop in recent weeks as heavy rainfall in some growing regions cut cane availability, which will likely force some mills to end the current season earlier than expected. Expectations of a lower crop also raise concern over whether the Indian government will allow further sugar exports this season. Late last year, the government approved the export of a little over 6mt of sugar and depending on how the crop developed, said further exports could be allowed. Obviously, it is looking less likely that we will see a further tranche of exports approved. This means a tighter global sugar market, particularly during the Center-South Brazilian off-crop. No.11 raw sugar prices rallied by more than 2.5% yesterday on the news and traded to their highest levels since November 2016. Read this article on THINK TagsSugar Steel OPEC+ JMMC Gold Federal Reseve Copper API Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Asia week ahead: Policy meetings in China and the Philippines

China’s Manufacturing PMI Bounced Back To 50.1, The Australian Dollar Continued Its 3-Day Pull Back

Saxo Bank Saxo Bank 01.02.2023 09:29
Summary:  Equities ended January on a positive note, jumping higher yesterday as easing Q4 employment cost index and consumer confidence further supporting the case for a smaller rate hike of 25bps from the Fed later today. Earnings remained a mixed bag with GM and Exxon delivering a beat, but most other signaling margin pressures and dampening consumer growth. Gold and most industrial metals reversed the recent downtrend, helping AUDUSD to rebound from post-retail sales slump lows. Today’s focus will be on Eurozone CPI, US ISM manufacturing and the Fed announcement.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) rallied on cooler worker compensation trend After consolidating for one day, U.S. stocks resumed their charge higher, being aided by a softer print of the Employment Cost Index that increased the odds of a pause by the Fed in March or May this year. Nasdaq 100 rose 1.6% and the S&P500 gained 1.5%. The rally was broad-based as all 11 sectors within the S&P500 advanced. Materials, consumer discretionary, real estate, and industrials outperformed. General Motors (GM:xnys) jumped 8.3% on earnings and revenue beats. Exxon Mobil (XOM:xnys) gained 2.2% as the oil major reported record profits. Leading home builder PuteGroup (PHM:xnys) surged 9.5% following reporting Q4 earnings beating estimates. United Parcel Service (UPS:xnys) rose 4.6% on a 2023 business outlook largely in-line with expectations. Caterpillar (CAT:xnys) slid 3.5% after the construction and mining machine maker’s Q4 earnings missed expectations and said that sales in China will be softer in 2023. McDonald’s (MCD:xnys) declined 1.3% on weaknesses in Q4 as well as the 2023 operating margin outlook dragged by inflation pressure. Snap (SNAP:xnys) tumbled 14.4% in extended-hour trading following reporting Q4 revenue in-line with expectations and earnings beat but expecting a decline in revenues in Q1 this year, citing significant headwinds. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) 2bps to 4bps richer as the Employment Cost Index softened Bids came into the front end to the belly of the Treasury curve following the growth in the U.S. employment cost index, a preferred wage and benefit barometer of the Fed came in at 1% in Q4, below the 1.1% expected, and decelerated from 1.2% in Q3. The 5-year notes outperformed with a 5bp drop in yield to 3.62%. Yields on the 2-year and the 10-year were 3bps lower to 4.20% ad 3.51% respectively. Gabriel Rubin and Nick Timiraos of the Wall Street Journal suggested that the cooler worker compensation gains increased “the possibility of a pause in rate rises this spring”. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) extended decline Stocks in the Hong Kong and mainland bourses extended the decline from their recent highs on a risk-off day. After the strong gains in January on the positive development in the potential peaking of the exit wave of inflection in China, traders booked their profits ahead of the U.S. Fed’s rate decision as well as in response to fear about the risk of escalation of tension between the U.S. and China on the technology front.  In addition to the recent Politico story on the Biden administration’s plan to ban U.S. investments from investing in certain high-tech areas in China, Financial Times reported on Tuesday that the U.S. Commerce Department has stopped issuing licenses to companies seeking to export to China’s Huawei. Hang Seng Index and CSI 300 Index each fell by around 1%. Hang Seng Index was partly dragged down by Hang Lung Properties (00101:xhkg), which tumbled 5.3% following reporting underlying profit falling 3.8% Y/Y and below expectations. EV stocks advanced. BYD rose 2.3% after reporting a preliminary 2022 profit of RMB 6.7 – 7.7 billion which represents a 425% to 458% growth from a year earlier. Li Auto (02015:xhkg) climbed 1.5% following confirmation that its new EV model L5 would not be a SUV, implying less cannibalization of existing models. In A-shares, Chinese white liquor, food and beverage, semiconductors, pharmaceuticals, and electronics were the major laggards while property developers, petrochemicals, farming and fishery, and machinery stocks gained. FX: Dollar reversed gears to drop as Fed decision nears The dollar index made a further recovery to 102.60 on plunging German retail sales data, but the index slumped lower as US data including Fed’s preferred wage measure came in softer than expected. USDCAD hit a low of 1.3300 amid a rebound in WTI prices. EURUSD continues to struggle to break above 1.0900 ahead of EZ CPI and ECB decision due today. AUDUSD reversed the drop below 0.7000 after the plunge in AU retail sales, with metals gaining traction again. Crude oil (CLG3 & LCOH3) recovers ahead of Fed and OPEC Crude oil reversed the early drop from Tuesday as sentiment shifted amid signs of cooling inflation and wage pressures emerging from the US economic data (details below) ahead of the key Fed decision due today, and the US dollar slipped. Further, Exxon CEO post-earnings said he sees potential for continued tight global oil markets and tight supplies as some producers pull back. WTI rebounded back above $79 while Brent was above $85. Meanwhile, API inventory data for crude oil suggested another built of 6.3 million barrels, as stockpiles of gasoline and diesel also increased. Reports also suggested that OPEC is likely to maintain a cautious path on oil policy as it awaits clarity on China’s reopening. Gold (XAUUSD) finds support at $1900 Gold snapped a three-day downtrend with US employment cost index and consumer confidence data suggested that there remains scope for the Fed to slow its rate hikes. Lower US yields prompted interest in the yellow metal, reversing it from key support level of $1900 and it reached close to $1930, bringing the recent high of 1949 in focus again. The World Gold Council reported that gold demand reached a decade high in 2022 amid strong buying from central banks.  Read next: AUD/USD Pair Remains Under Strong Selling Pressure, The EUR/USD Pair Has Been Falling But Remains Above 1.08$| FXMAG.COM What to consider? Where has the most momentum been in markets and can it continue? It’s vital to reflect on the global equity markets rally in January  - and where momentum has been. In the US the Nasdaq gained 10%, the S&P500 5.6%, with EV names, Lucid and Tesla up 40-70% off their lows. In Europe the biggest 50 stocks (Stoxx 50) gained 10% with designers such as Hermes and LVMH providing the most heat, up 18% on expectations of higher earnings as China reopens. Australia’s ASX200 lifted 6.2% with lithium miners Sayona Mining and Pilbara Minerals up the most, 37-27%. Ultimately the Fed's decision in interest rates and it outcome this week, along with the ECB's put some of these companies on notice.  The Fed is expected to downshift again The expectations of a soft landing have picked up since the start of the year, relative to the rising recession bets seen in H2 of last year. Meanwhile, inflation has been on a steady downtrend in the last six months, which has allowed the Fed to downshift to a 50bps rate hike in December after a spate of rate hikes in 75bps increments before that. The consensus expects the FOMC will downshift again to lift its Federal Funds Rate target by 25bps to 4.50-4.75% on February 1, although some still expect the central bank to hike rates by a larger 50bps increment. Fed speakers have also broadly guided for a smaller hike at the next meeting. With economic data remaining volatile, there is some reason to believe that Powell and team may be aiming to lengthen the hiking cycle in order to buy more time to assess both the incoming data and the impact of their previous aggressive rate hikes. This warrants a smaller rate hike of 25bps at the February 1 decision. The key risk factor, favouring another 50bps rate hike, could be the financial conditions which are the easiest since April 2022 or the risks of another shoot higher in inflation due to China’s reopening and the resulting rise in commodity prices. Read our full preview here. US economic data still supporting a smaller rate hike The Fed’s preferred measure of wage gains, the employment cost index, slowed to 1% last quarter from +1.2% in Q3, coming in a notch softer than the expected at 1.1%. The fall was led by wages and salaries falling to +1.0% from +1.3%, while benefit costs fell to +0.8% from +1.0%. While the report signals that wage pressures may be easing and could mean that the Fed’s against inflation is working, more data will be needed to confirm the trend. Meanwhile, US consumer confidence in January dipped to 107.1, short of the expected 109.0 and the prior, revised higher, 109.0. The present situation index encouragingly rose to 150.9 (prev. 147.2), but the forward-looking expectations index declined to 77.8 (prev. 82.4). Chicago PMI slightly declined in January to 44.3 from 45.1, beneath the expected 45.0. Eurozone CPI on the radar today as the ECB meets With Spain and France’s inflation getting another bump higher in January, and Germany’s inflation release postponed to next week due to technical issues, jitters are running high for the Eurozone inflation print due today. More so, it comes a day ahead of ECB’s policy decision, where a 50bps rate hike in baked in with a small chance of a 75bps. Slowing energy and electricity prices mean that headline inflation can come in softer, but the focus will be on the core measure which is likely to remain firm. Bloomberg consensus expects the Eurozone headline inflation to slow to 8.9% in January from 9.2% in December, but the core measure at 5.1% from 5.2% previously. China’s PMI data bounced back to the expansionary territory; strong recovery in services China’s manufacturing PMI bounced back to 50.1 in January from 47.0 in December as economic activities have picked up as expected. The new orders sub-index jumped to 50.9 in January from 43.9 in December while the new export orders sub-index was below 50 for 21 consecutive months at 46.1, rising modestly from December’s 44.2. The improvement in employment was also lackluster, with the employment sub-index coming in at 47.4, staying in the contraction territory for 22 consecutive months.  Non-manufacturing PMI rose more strongly than expected to 54.4 in January from 41.6 in December. The brightest spot was the services sub-index which jumped to 54.0 in January from 39.4 in December, driven by the release of strong pent-up demand for in-person services, particularly dining, tourism, and entertainment. The construction sub-index improved to 56.4 from 54.4. Caixin China Manufacturing PMI is scheduled to release today Unlike the official NBS manufacturing PMI, the private Caixin China Manufacturing PMI which has a bigger representation of SMEs in the eastern coastal regions is however expected, according to the survey by Bloomberg, to improve only moderately to 49.8 and stay in the contractionary territory in January from 49.0 in December. IMF upgrades global growth; expects China to grow at 5.2% in 2023 and 4.5% in 2024 In its World Economic Outlook Update released yesterday, the IMF has marginally increased its global growth forecast for 2023 to 2.9% from 2.7% previously. Meanwhile, the IMF expects China’s real GDP growth to be at 5.2% in 2023 and then to fall to 4.5% in 2024. The medium-term growth rate in China is expected to settle at below 4% due to “declining business dynamism and slow progress on structural reform”. Australian full year earnings season kicks off; will mining companies deliver triple digit growth   February is an important time of year with full earnings season kicking off. ASX200 companies will report their 2022 profits and earnings, and guide for 2023, which could set the course for equites for the next few months. A company’s shares will generally do well if the company reports a better than expected outlook and results, and inversely their shares will typically sink if they disappoint. That said, the most earnings growth is expected to come from the Mining sector with well over 100% earnings growth (consensus); with gold and lithium companies are expected to outperform. BHP as an example, could report 17% dividend growth and it could give a rosy outlook after kicking off coal exports to China for the first time in two years. Energy companies are expected to report a 30% earnings jump and 300% revenue growth. For a list of stocks and inspiration refer to the Australia Resources basket. Today, Credit Corp reports results, Pinnacle on Thursday, NewsCorp Friday. In the third week of February the season ramps up with CBA and Fortescue reporting Feb 15, on Feb 21, BHP reports, with Rio the next day, followed by Qantas. Mixed messages for the Australian dollar; Coal cargoes head to China, but retail sales slump and borrowing disappoints With commodity prices falling across the board from their highs, the Australian dollar continued its 3-day pull back, falling below the 200-day moving average. Adding to the bearish short-term picture, weaker than expected Australian retail trade was released for December (with sales down 3.9%), while weaker than forecast borrowing data also added to Aussie woes. On the positive side, Australia sent two cargos of metallurgical coal to China’s steel production centre, officially marking the end of China’s two-year Australian coal ban. Earlier this month BHP struck the deal with China Baowu Steel. So although the RBA could potentially pause rate hikes sooner, longer term upside could be underpinned by Aussie commodity demand. We continue to monitor short term risks, for the Aussie, especially if the USD thunders up ahead and after the Fed meeting, while further commodity price weakness could also pull the Aussie down. Meta’s Q4 may help investors gauge the health of digital advertising While the importance of Meta Platforms (META:xnas) to the market has declined substantially over the past year, investors and traders have their eyes on the social platform’s Q4 results and outlook for 2023, to be released on Wednesday, to provide an early glimpse to the state of health of the digital adverting before the Q4 results from the heavy-weight Alphabet (GOOGL:xnas) on Thursday. The weakness in the guidance from Snap on Tuesday added to investors’ concerns about softening digital advertising amid macro headwinds. For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Easing US wage pressures; Fed decision eyed – 1 February 2023 | Saxo Group (home.saxo)
Demand For Gold Rose Around 20% In 2022, Coffee Prices Jumped

Demand For Gold Rose Around 20% In 2022, Coffee Prices Jumped

Saxo Bank Saxo Bank 01.02.2023 09:45
Summary:  Another day brought another sharp direction change as markets rallied steeply from the prior day’s funk, with the Nasdaq 100 index crossing back above the 200-day moving average, which has been in play in recent days. Heavy anticipation ahead of tonight’s FOMC meeting and whether the Powell Fed will confirm the market’s view of imminent peak rates at the next meetings or two after today’s. Key US economic data also up through Friday’s US jobs report. What is our trading focus? Equities: Earnings breathed new life into momentum The earnings releses yesterday helped aggregate earnings q/q to improve for Q4 easing some of the concerns around earnings recession, but despite better than feared Q4 figures many companies are still cautious on their Q1 outlook. Indicators suggesting wage costs are easing in the US also helped drive sentiment back into positive mood on top of the market betting the Fed might blink after all tonight on its monetary policy trajectory. S&P 500 futures rallied 1.9% from the intraday lows yesterday into the close around the 4,085 level. US equity futures are stabilising this morning around yesterday’s close and we expect little action ahead of tonight’s FOMC rate decision. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) pause during lackluster session The Hang Seng Index took a pause in its retreat and consolidated with a modest 0.6% gain. CSI 300 traded sideways and was up 0.3% as of writing. Caixin China Manufacturing PMI came in weaker than expected at 49.2 in January (vs consensus: 49.8; Dec: 49.0), the sixth month in the contraction territory. According to the chief economist at Caixin, optimism has improved in the manufacturing sector but both domestic and external demand, and logistics were yet to fully recover. Baidu (09888:xhkg) and BYD (01211:xhkg) each surged 5.8% and were the biggest winners within the Hang Seng Index. Shares in Baidu, the Chinese search engine, were boosted by chatters that Baidu was developing an AI-powered chatbot similar to ChatGPT. BYD extended yesterday’s gain after reporting a preliminary 2022 profit of RMB 6.7 – 7.7 billion which represents a 425% to 458% growth from a year earlier. ChatGPT concept stocks also advanced in the mainland’s A-share market. FX: Dollar pounded back lower on broad sentiment recovery Yesterday brought another sharp direction change in sentiment, with a souring mood suddenly gathered up by the beginning of the US session yesterday after the US dollar had rallied sharply, seemingly in recognition of the blitz of event risks in coming days, starting of course with tonight’s FOMC meeting. EURUSD found support ahead of 1.0800 and rallied back toward 1.0875 into this morning. AUDUSD found support just below 0.7000 and bounced back, etc. A key test for central bank guidance and how much the market buys into that guidance in coming days, as the market continues to price for imminent peak Fed policy rate, with perhaps one more 25 basis point hike after tonight’s presumed 25 basis point hike before a pause. The ECB, meanwhile, is seen hiking 50 basis points tomorrow and then tacking on at least another 100 basis points of hiking at coming meetings. Will markets listen to central bank guidance, or will incoming data rule the day in coming days and weeks? The market has persistently ignored Fed guidance for policy beyond the next few meetings. Crude oil (CLH3 & LCOJ3) recovers as long liquidation pressures ease ahead of OPEC and Fed Crude oil prices found support on Tuesday as technical, not fundamental, selling pressure from funds started to ease. Money managers added 95 million barrels during a two-week period to January and but the failure to break higher last week triggered a period long liquidation. With that pressure reduced the market may once again focus on current fundamentals which on balance remains supportive as China recover while the supply outlook remains uncertain with the upcoming threat to supply from the next round of sanctions against Russian sales of fuel products. Focus on FOMC meeting, OPEC+ JMMC recommendations, and EIA’s weekly stock report after the API reported a 6.3-million-barrel increase. Gold (XAUUSD) holds its line of support Gold passed its first proper correction attempt since mid-December with flying colours on Tuesday, when a slump to key support in $1900 area was followed by a 30-dollar bounce back, supported by a weaker dollar after it also failed in its correction attempt to move higher. The US employment costs eased last quarter (see below), thereby supporting an expected 25bp rate hike from the FOMC today, action that is expected to be followed up by hawkish comments in order to send strong a message that cuts are not on the table anytime soon. The World Gold Council reported that demand for gold rose around 20% in 2022 to its highest since 2011, driven by “colossal” central bank demand, at 1,136 tons the highest in 50 years. It highlights the reason why gold did so well last year despite surging real yields and the much stronger dollar. Support at $1900 & $1865. Copper’s shallow correction points to more strength Copper, just like gold, managed to find support after an end of month selloff was halted before the technical picture managed to turn negative. HG Copper bounced before reaching its 21-day moving average, today at $4.13/lb (LME at $9100), and its 38.2 fibo retracement at $4.11/lb (LME at $9030). The bounce back being supported by a weaker dollar following the weaker-than-expected US employment cost index. Focus on the FOMC and its impact on the dollar as well as ongoing supply disruptions in Peru underpinning prices while awaiting an expected pickup in demand from China. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) dip as the Employment Cost Index softened. Bids came into the front end to the belly of the Treasury curve following the growth in the U.S. employment cost index, a preferred wage and benefit barometer of the Fed came in at 1% in Q4, below the 1.1% expected, and decelerated from 1.2% in Q3. The 5-year notes outperformed with a 5bp drop in yield to 3.62%. Yields on the 2-year and the 10-year were 3bps lower to 4.20% and 3.51% respectively. Gabriel Rubin and Nick Timiraos of the Wall Street Journal suggested that the cooler worker compensation gains increased “the possibility of a pause in rate rises this spring”. Read next: AUD/USD Pair Remains Under Strong Selling Pressure, The EUR/USD Pair Has Been Falling But Remains Above 1.08$| FXMAG.COM What is going on? US earnings recap: Caterpillar, UPS, and Snap Q4 earnings have been mixed relative to expectations so far but yesterday’s earnings releases lifted the mood. But not all earnings were positive. Caterpillar delivered Q4 revenue of $16.6bn vs est. $15.9bn while EPS missed slightly against estimates. Despite putting out a positive outlook for 2023 due to favourable prices, shares were down 4% during the trading session. Caterpillar said on the conference call that prices in 2023 will offset manufacturing costs and North America construction is seeing good momentum while China is still slow and will be below 2022 levels. UPS misses on revenue but EPS beats despite average revenue per package coming in lower than estimated most likely due to cost cutting exercises. The logistics company is authorizing a new share buyback programme of $5bn. UPS 2023 outlook on revenue came in lower than expected and management said on the conference call that Europe is likely in a recession in the first half of 2023 and China should recover after Q1; it also said that Amazon’s share of volume declined to 11.3% in 2022 from 11.7% in 2021. Snap reported after the market call Q4 revenue of $1.3bn in line with estimates and EPS was $0.14 vs est. $0.11. Snap said revenue was down 7% year-to-date vs their own internal forecast of -10% to -2%. Shares were down 15%. Strong earnings from Novo Nordisk driven by obesity drug Novo Nordisk has reported Q4 earnings this morning in Europe with Wegony (obesity drug) revenue at DKK 2.5bn vs est. DKK 1.7bn helping overall revenue to beat estimates. The company is additionally putting out a very optimistic 2023 outlook on revenue and operating income of 13-19% on top of a big share buyback programme of DKK 28bn. US economic data still supporting a smaller rate hike The Fed’s preferred measure of wage gains, the employment cost index, slowed to 1% last quarter from +1.2% in Q3, coming in a notch softer than the expected at 1.1%. The fall was led by wages and salaries falling to +1.0% from +1.3%, while benefit costs fell to +0.8% from +1.0%. While the report signals that wage pressures may be easing and could mean that the Fed’s against inflation is working, more data will be needed to confirm the trend. Meanwhile, US consumer confidence in January dipped to 107.1, short of the expected 109.0 and the prior, revised higher, 109.0. The present situation index encouragingly rose to 150.9 (prev. 147.2), but the forward-looking expectations index declined to 77.8 (prev. 82.4). Chicago PMI slightly declined in January to 44.3 from 45.1, beneath the expected 45.0. The coffee short squeeze gathers momentum Coffee jumped 6.7% on Tuesday, thereby adding momentum to the strong recovery that has seen the quality bean surge 29% during the past two weeks to reach a three-month high at $1.82/lb. The fundamental driver being a deteriorating outlook for coming season in Brazil forcing a major turnaround from hedge funds who in recent weeks had amassed the biggest net short in more than three years. It highlights the importance of watching the weekly COT update as a change in the technical and/or fundamental outlook can have an outsized impact on elevated positions. What are we watching next? Test of central bank messaging and whether market is listening. The FOMC meeting is up tonight, with the general narrative that the FOMC and Chair Powell will continue to push back against expectations for the Fed to reach peak policy rates after perhaps one more 25 basis point hike after today’s and then begin cutting rates by year-end. But as the market has ignored Chair Powell’s protestations on the market’s forward expectations before, it is tough to see how he makes a strong impression unless taking drastic (and unlikely) measures like hiking the policy rate 50 basis points. Incoming data, starting with the upcoming ISM’s (today and Friday) and the Friday jobs and earnings data, may weigh more in the pricing of the Fed policy rate from here. The ECB is up tomorrow and is expected to confirm the markets view of significant further tightening in the pipeline after another 50 basis point hike. The Bank of England tomorrow is less certain, as the BoE may try to sneak in more cautious guidance, given the weak performance of the UK economy. Earnings to watch Our US earnings focus today is Meta and Southern Copper with Meta likely to reflect the weakness in online advertising that Snap communicated last night in their Q4 earnings release. Meta is expected to report Q4 revenue growth of –6% y/y and guide Q1 revenue growth of –2% y/y which could prove to be too positive given Snap’s indications on year-to-date revenue growth of –7%. Southern Copper is expected to report Q4 revenue growth of –13% y/y and EPS of $0.81 down 31% y/y. Today: Novo Nordisk, Orsted, Keyence, Hitachi, GSK, BBVA, Novartis, Meta, Thermo Fisher Scientific, Southern Copper Thursday: DSV, Dassault Systemes, Siemens Healthineers, Infineon Technologies, Deutsche Bank, Sony, Takeda Pharmaceutical, Shell, ING Groep, Banco Santander, Siemens Gamesa Renewable Energy, Nordea, Roche, ABB, Apple, Alphabet, Amazon, Eli Lilly, ConocoPhillips, Qualcomm, Honeywell, Starbucks, Gilead Sciences, JD.com, Ford Motor, Ferrari Friday: Coloplast, Sanofi, Intesa Sanpaolo, Denso, CaixaBank, Naturgy Energy, Assa Abloy, Regeneron Pharmaceuticals Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final Jan. Manufacturing PMI 1000 – Eurozone Jan. CPI estimate 1315 – US Jan. ADP Private Payrolls change 1500 – US Jan. ISM Manufacturing 1530 – EIA's Weekly Crude and Fuel Stocks Report 1900 – FOMC Meeting 1930 – US Fed Chair Powell press conference      2130 – Brazil Selic Rate 0030 – Australia Dec. Building Approvals 0030 – Australia NAB Business Confidence Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – February 1, 2023 | Saxo Group (home.saxo)
Weaker Crude Oil Prices Undermine The Loonie Pair (USD/CAD)

The USD/CAD Pair Is On The Way To Late 2022 Low

TeleTrade Comments TeleTrade Comments 01.02.2023 09:47
USD/CAD licks its wounds after falling the most in a week. Oil price struggles despite softer US Dollar as markets brace for OPEC+ verdict. Softer US data, yields join bearish bias for the Fed to lure Loonie pair sellers. Canada GDP appeared unimpressive but PMIs may offer intermediate moves. USD/CAD remains defensive around 1.3310 amid sluggish markets on early Wednesday, treading water after reversing from a one-week high the previous day. The Loonie pair’s latest inaction portrays the cautious mood ahead of the Federal Open Market Committee (FOMC) monetary policy meeting. Also challenging the quote is the Oil traders' anxiety before the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+. That said, the WTI crude oil, Canada’s main export earner, grinds higher past $79.00 following a strong reversal from the three-week on Tuesday. It should be noted that Reuters has already turned down the odds of any change in the OPEC+ JMMC’s previous verdict favoring the supply cuts from major producers. On the other hand, the US Dollar Index (DXY) remains indecisive after reversing from a one-week high as an early signal for the US inflation printed downbeat figures. That said, US Employment Cost Index (ECI) for the fourth quarter (Q4) eased to 1.0% versus 1.1% market forecasts and 1.2% prior readings. Further, the Conference Board (CB) Consumer Confidence eased to 107.10 in January versus 108.3 prior. It should be noted that no major attention could be given to the US Chicago Purchasing Managers’ Index (PMI) for January which rose to 44.3 versus 41 expected and 44.9 previous readings. At home, Canadian Gross Domestic Product (GDP) for November grew by 0.1% MoM, matching October's expansion of 0.1% but rose past the market expectation of 0%. It should be observed that the pre-event cautiousness joins China’s Consecutive sixth below 50.0 print of the Caixin Manufacturing PMI, which in turn probes the Oil price and put a floor under the USD/CAD. Additionally, mildly offered S&P 500 Futures act as an additional challenge for the Loonie pair sellers. On the contrary, downbeat yields challenge the US Dollar bulls ahead of the key event. The benchmark US 10-year Treasury bond yields remain sluggish near 3.51% and defend the previous day’s pullback. Looking forward, dovish bias over the Fed joins the likely unimpressive OPEC+ meeting to keep USD/CAD bears hopeful. Also important will be the monthly PMI data for the US and Canada. Technical analysis Unless providing a daily close beyond the one-month-old descending resistance line, close to 1.3380 by the press time, USD/CAD is on the way to late 2022 low surrounding 1.3225.
Saxo Bank Podcast: A Massive Collapse In Yields, Fed's Tightening Cycle And More

Euro Rebounds On Stronger GDP Read, All Eyes On Fed Decision

Swissquote Bank Swissquote Bank 01.02.2023 10:29
Weak economic data ran to the rescue of the equity bulls on Tuesday. The S&P500 rallied almost 1.50%, while Nasdaq jumped more than 1.50%. The Federal Reserve (Fed) President Jerome Powell will be thrown to the spotlight today, to potentially shoot a couple of doves down to the ground. But there is always a hope that the falling price and wages inflation will get the Fed to the pivot point. US  The US dollar failed to consolidate and extend gains as the weaker economic data keeps strengthening the Fed doves’ hands. EUR/USD The EURUSD eased as low as 1.08 yesterday, but the pair found buyers on the back of a strong looking GDP data from the Eurozone. China Elsewhere, today’s PMI data from China, released by Caixin, were not as rosy as the one compiled by China Federation and released yesterday. Crude Oil And the barrel of American crude tipped a toe below the 50-DMA yesterday, as the API data revealed another big build in US inventories last week. The more official EIA data is due today, and the expectation is a 1 mio barrel decline, leaving room for further weakness in oil prices. Watch the full episode to find out more! 0:00 Intro 0:36 Equities extend gains on weak US data 2:01 GM, Spotify, Exxon Mobil & Snap posted mixed earnings 5:05 What does Powell think of weak data?! 8:04 Euro rebounds on stronger GDP read, but how strong was the read? 9:25 US crude tips a toe below 50-DMA on large inventory build Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #meeting #Spotify #Snap #GM #Exxon #earnings #China #PMI #EUR #GDP #ECB #crude #oil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

Eurozone inflation looks encouraging, but be careful interpreting the data

ING Economics ING Economics 01.02.2023 12:24
Headline inflation continues its fast decline and dropped to 8.5% in January, while core inflation remains stubbornly high at 5.2%. Lacking German inputs, these numbers are tricky to interpret, but for the ECB high core inflation will be enough to hike by another 50bp tomorrow January's eurozone inflation data does not include Germany's numbers   Tread carefully with these January inflation figures. A day ahead of a crucial ECB rate decision, January inflation data have been released but are hard to interpret as German inputs have been postponed. A model has been used to infer German data, making it more prone to revision than in other months. Besides that, we have the annual item weights revision influencing the data, already making it a difficult month to interpret. It's also a month the ECB has put a lot of emphasis on as President Christine Lagarde mentioned in the Q&A of the December press conference that she expected January to have higher inflation as it is a traditional month for passthrough of energy to reach retail prices. If we take the data at face value – and we’ll see on 23 February when final data are released if we were right to do so – we see that core inflation did not show the feared increase. The core inflation rate was flat at 5.2%, but monthly seasonally-adjusted data show another cautious decline to 0.4% growth compared to December. While this is still far too high – annualised this makes 5.3% core inflation – it does mark the fourth month of consecutive declines. While it’s all about core from here on, we do of course see an encouraging trend in headline inflation. The drop from 9.2% to 8.5% is faster than expected. Food inflation remains stubbornly at 14.1%, but energy drives the rate down at the start of the year. A decline from 25.5% to 17.2% reflects lower market prices and significant negative base effects. Read next: India's Adani Group May Have Passed A Key Test, Positive EU CPI Report| FXMAG.COM In recent days, both the Brent oil price in euros and natural gas market prices have declined year-on-year, which will put more downward pressure on consumer prices in the coming months. Price ceilings for energy also have their effect of course, which does work both ways in January. From here on, energy contributions are set to decline substantially given the relatively low market prices we are currently seeing. All in all, the data looks decent as a jump in core inflation has been avoided but uncertainty remains without final German figures. For the ECB, the muddied picture of inflation is annoying, but don’t expect it to throw it off course for tomorrow. The jump in core inflation in some key countries will be enough for the central bank to confirm its current hawkish stance and add another 50 basis points to policy rates. Read this article on THINK TagsInflation Eurozone Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

OPEC+ Recommended Keeping Crude Production Unchanged, The Fed Delivered A 25bp Rate Hike

Saxo Bank Saxo Bank 02.02.2023 09:41
Summary:  The Fed delivered a 25bp rate hike and a basically unchanged policy statement as widely expected. The remarks by Fed Chair Powell at the press conference saying that the disinflationary process had started saw stocks swing from losses to a 1.1% gain in the S&P 500 and a 2.2% advance in the Nasdaq 100. The interest rate futures market is pricing in 50 bps of rate cuts in the second half of 2023. The yield on the 10-year Treasury dropped to 3.42%.   What’s happening in markets? Positive reaction to Fed: Risk-on rally in Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) The Nasdaq 100 reversed its weakness after an ISM manufacturing index print a full point lower to 47.4 during early trading and advanced to finish the session 2.2% higher after the dovish remarks from Fed Chair Powel at the post-FOMC press conference. The S&P500 climbed 1.1% to close at its highest level since August 26, 2022. Powell’s comments raised the market’s hope for rate cuts in the 2nd half of 2023. 10 of the 11 sectors within the S&P 500 gained, led by information technology which advanced by 2.3%.  Energy, falling 1.9%, was the laggard. Advanced Micro Devices (AMD:xnas) jumped 12.7% on a revenue beat and upbeat sales forecasts. Electronic Art tumbled 9.3% on a disappointing business outlook. Meta Platforms (META:xnas) kicked off major tech earnings with a bang. Perhaps a good sign of what we can expect from Apple, Amazon and Google Meta shares surged more than 19% in extended hour trading, after announcing a $40 billion boost to its share buyback, as it’s guiding for stronger revenue for Q1 this year, seeing revenue hit $26 to $28.5 billion. Q4 revenue beat expectations, falling to $32.2 billion, vs $31.7 billion expected. The business sees outgoing expenses dropping more than expected to $89-95 billion and lower capital expenditure. Also on the positive, FB’s daily users improved more than the market expected. From a technical perspective Meta shares closed above their 200-day simple moving average. It also appears, a golden cross is forming which could trigger quant trader buying. That’s something to watch, which could trigger more upside. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) dropped as hopes for rate cuts in H2 heightened The Fed delivered a 25bp rate hike, bringing the Fed Fund target to 4.50%-4.75% as widely anticipated and a statement largely unchanged from the previous one, reiterating that “ongoing increases” in the policy Fed Fund target “ will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,”  The strong market reactions came from the response to Powell’s dovish comments in the post-meeting press conference. Powell said the Fed “can now say, I think for the first time, that the disinflationary process has started” though he cautioned that “the job is not fully done.”  Powell’s remarks saw the June-Dec 2023 SOFR spread widen to 54.5 bps, fully pricing in 50bps of rate cuts in the 2nd half of 2023 after only one more 25bp hike in March. The yield on the 2-year and the 10-year tumbled 9bps each to 4.11% and 3.42% respectively. The weaker ISM manufacturing and ADP private payrolls but stronger JOLTS job openings data released during the day took a backseat to the FOMC drama. The Australian share market, the first to the react to the Fed, sees a strong risk on rally Risk on assets such as tech stock are charging today, with the sector up 2.8% while gold equities are being bid after the gold price rallied 1%. Long-term investors will be watching the tech index, given it’s down 30% from its high. Also consider the overall market, the ASX200 has a PE at 15.2 times. Cheaper than Nasdaq’s 57 times earnings. And S&P500’s earnings multiple of over 19 times.  Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) rallied around 1% The Hang Seng Index rallied 1.1% and the Hang Seng TECH Index surged 3.4%. Baidu (09888:xhkg) soared 9% on market chatters that the search engine platform was developing an AI-powered chatbot similar to ChatGPT. EV makers outperformed. The largest Chinese EV maker, BYD (01211:xhkg) surged 6.1%, extending gains after Tuesday’s preannouncement of the preliminary Q4 profit range. XPeng (09868:xhkg) surged 10.3% after its subsidiary received license approval for its flying cars. Geely (00175:xhkg) climbed 5.1% as the EV maker is launching its 3rd model and its Lotus unit went public via SPAC at a USD5.4 billion valuation. Macao casino stocks gained 2% to 5% on a much stronger-than-expected 82.5% growth in gambling revenues to MOP 11.6 billion (USD1.4 billion). In the mainland’s A-share market, ChatGPT concept stocks and EV names also rallied strongly. Non-ferrous metal, computing, and non-bank financials were other outperformers. CSI 300 finished the Wednesday session 0.9% higher. FX: USD bears back in action The USD was weaker across the board after the Fed Chair Powell stayed away from pushing back aggressively on the easing priced in by the markets for this year or the loosening of financial conditions. EURUSD broke above the 1.0930 resistance and was trading above 1.1000 in the Asian morning. If ECB maintains its hawkishness today, we could see these gains sustaining. USDJPY slumped back below 128.50 with focus turning to BOJ chief nominees. AUDUSD rose to 0.7150 but USDCAD was choppier as lower oil prices weighed on loonie. Crude oil (CLG3 & LCOH3) supported after the overnight slump Oil prices slid over 2% overnight with EIA inventories climbing 4.1 million barrels in the week ended Jan 27, its sixth consecutive weekly build. However, Fed’s dovish outcome came back in focus later, and expectations that demand will continue to run higher as Fed nears an end of its tightening cycle underpinned. OPEC+ recommended keeping crude production unchanged as expected, amid the volatility of Chinese demand and Russian sanctions. WTI futures were back above $77 after touching lows of $75 in the NY session. Gold (XAUUSD) broke above $1950 on dovish Fed Gold broke above the resistance at 1950, reaching fresh cycle highs, as the lack of a committal Powell at the FOMC press conference continued to allow market to price in rate cuts for this year. Next on watch will be $1963, the 76.4% retracement of the 2022 correction, following which there is no major level of resistance before the psychologically important $2000 level.  Read next: India's Adani Group May Have Passed A Key Test, Positive EU CPI Report| FXMAG.COM What to consider? Fed hikes rates by 25bps, hints at a ‘couple more’ rate hikes to come The Fed hiked rates by 25bps to 4.5-4.75% as expected, with Chair Powell giving mixed and non-committal signals at the press conference. The statement continued to use the phrase "ongoing increases" in the Fed rate being appropriate to signal more rate hikes, and there was also a hint of a “couple” more rate hikes suggesting both March and May meetings could see 25bps rate hikes again. But Powell hinted at disinflationary pressures, and did not push back enough on the easing financial conditions. US ISM manufacturing shifting the narrative to low growth/high inflation ISM manufacturing declined for a fifth consecutive month to 47.7 from 48.4, short of the consensus of 48.0. While prices paid lifted to 44.5 (exp. 39.5, prev. 39.4), suggesting upside pressures in inflation sustaining, production and new orders fell to 48.0 (prev. 48.6) and 42.5 (prev. 45.1), respectively. Employment was also softer but still remained above the 50-mark at 50.6 from 50.8 previously. JOLTS job openings in December ramped back up to 11.012mln from the prior 10.44mln, surprising expectations for a fall to 10.25mln and now at their highest level since July. Overall, inflation risks are not going away yet, while growth concerns seems to be settling as well. Eurozone inflation softens marginally January headline inflation data in the Eurozone came in softer at 8.5% YoY from 9.2% YoY mostly underpinned by softer energy inflation, which still remains high at 17.2% YoY (vs. 25.5% YoY in December). While the trend seems encouraging, inflation still remains elevated and unlikely to deter the ECB from being any less hawkish at their announcement due today. German inflation print due next week also remains on watch. Caixin China Manufacturing PMI remained in the contraction territory Caixin China Manufacturing PMI came in weaker than expected at 49.2 in January (vs consensus: 49.8; Dec: 49.0), the sixth month in the contraction territory. According to the chief economist at Caixin, optimism has improved in the manufacturing sector but both domestic and external demand, and logistics were yet to fully recover. The Caixin reading was weaker that the official National Bureau of Statistics Manufacturing PMI, which bounced back to the expansion territory. The softer Caixin survey may be a result of its larger representation of small and medium-sized private enterprises in the coastal regions, as opposed to the NBS Manufacturing PMI’s higher weight in large state-owned enterprises as well as the difference in the timing of the survey. The Caixin survey was conducted in mid-January, about a week earlier than the NBS survey conducted between January 20 to 25, and therefore the former was likely to be more severely affected by the initial “exit wave” of infection. President Xi called for moving faster to establish the new development pattern In the second study session of the Chinese Communist Party’s new Politburo, China’s President Xi called for the country to move faster toward establishing a new development pattern, a concept that he first introduced in April 2020. He emphasized the importance of boosting domestic demand and deepening supply-side structural reform. President Xi also pledged to bring forward the construction of more new infrastructure projects and focus on the real economy and new industrialization. He also called for strengthening the measures against monopoly and unfair competition, as well as guiding and supervising the healthy development of private capital according to the law. The readout from the Politburo meeting mentioned neither “preventing disorderly expansion of private capital” nor “common prosperity”. Hong Kong Q4 GDP shrank 4.2% from a year ago The decline of 4.2% in Hong Kong’s Q4 GDP improved on the downward revised -4.6% in Q3 but was much softer than the -2.9% forecasted by economists surveyed by Bloomberg. On a sequential and seasonally adjusted basis, Hong Kong’s GDP growth bounced to flat Q/Q in Q3 from a 2.6% decline in Q3. The growth in goods export plunged to -24.8% Y/Y while goods import slid to 22.8% Y/Y. Gross domestic fixed capital registered a smaller 11.2% Y/Y in Q4, against 14.4% in Q3. Private consumption picked up to +1.7% Y/Y. Earnings from Apple, Alphabet, and Amazon eyed   The most-watched U.S. corporate earnings this week are from Amazon (AMZN:xnas), Alphabet (GOOGL:xnas), and Apple (AAPL:xnas) which are scheduled to be released today. Amazon has been hard hit by its overinvestment during the pandemic. Things improved in Q3 with accelerating revenue growth but analysts remain skeptical for Q4 expecting only 6% revenue growth Y/Y and adjusted EPS of $0.53 up 10% Y/Y. With the weak outlooks from Intel and Microsoft, there is nervousness in the air ahead of these giant earnings releases. Analysts expect Apple to report the first negative revenue growth rate in three years down 2% Y/Y and a 7% decline Y/Y in EPS. The indications from memory chip manufacturers all indicate a significant slowdown in consumer electronics and it would be weird if Apple could escape those headwinds. Analysts expect Alphabet to report its second straight quarter of negative earnings growth with EPS at $1.32 down 6% Y/Y. Alphabet is the talk of the town due to Microsoft’s $10bn investment in OpenAI and its ChatGPT technology and many are saying is a threat to Google’s search business; in an equity note here, Saxo’s Head of Equity Strategy, Peter Garnry, dives into this discussion and provides our views on the matter. ECB and Bank of England meetings on the horizon After the Fed’s tone being interpreted as dovish by the markets, focus turns to ECB and BOE meetings today. The European Central Bank has surpassed its peers in the hawkishness quotient recently, and will likely repeat that this week. A 50bps rate hike is expected, along with the guidance for another 50bps in March which still has the scope to bump up front-end pricing with markets looking at 93bps of rate hikes over the next two meetings. The Bank of England will likely be the trickiest given the indecisive market pricing as well as the scope for a split vote. Read our full preview here.     For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Stocks rallied and bond yields dropped after Powell declared the disinflationary process had started – 2 February 2023 | Saxo Group (home.saxo)
AUD: RBA Maintains Rates as New Governor Upholds Continuity

Meta Announced A Lower-Than-Expected Operating Expense, Gold Reached A Fresh Cycle High

Saxo Bank Saxo Bank 02.02.2023 09:53
Summary:  Traders felt that the FOMC failed to push back sufficiently against market expectations for the Fed to reach peak rates soon and begin cutting rates by year end, which drove a fresh rally in equities and took the US dollar to new cycle lows almost across the board. Let’s see if the key US data up on Friday further encourages the USD bears. In the meantime, the Bank of England and ECB are on tap today. What is our trading focus? Equities: Momentum continues on Powell declaring part victory over inflation While the Fed is still cautious and wants to send hawkish signals including a goal of moving the policy rate to 5% or slightly more, Powell’s comments about inflation is beginning to ease was extrapolated in the equity market. S&P 500 futures rallied another 1% in yesterday’s session and this morning they have opened just below the 4,150 level suggesting traders are eyeing the 4,200 level which was the approximate air pocket area last time S&P 500 futures visited this area back in August of last year. The truth is that Powell did say anything new but as long as the message was not too hawkish the equity market had the excuse it needed for continuing higher. Adding to positive sentiment was Meta’s better than expected outlook announced after the US cash equity market closed. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) little changed in lackluster trading The Hang Seng Index advanced modestly on the back of a strong rally in U.S. equities overnight and less upward pressure on domestic interest rates. Baidu (09888:xhkg), rising 7.3%, extended its strong recent gains on the ChatGPT concept and following BlackRock raised its stake to 6.6% from 5.4% in the Chinese search engine giant. Baidu was the best-performing stock on the Hang Seng Index for the second day in a row. Li Auto (02015:xhkg) climbed 2.4% after reporting delivery of 15,141 units of EV in January,  up 23% Y/Y. On the other hand, NIO (09866:xhkg) slid 4.3% following a 12% Y/Y decline in delivery to 9,652 units in January and on reports that the Chinese EV maker is cutting prices. Chinese mobile gaming stocks traded in the Hong Kong bourse soared with Forgame (00484:xhkg) leading the charge and jumping over 80%.  CSI 300 traded sideways and was flat to yesterday’s close as of writing. ChatGPT concept, eCommerce, Chinese white liquor, machinery, and semiconductor stocks outperformed. FX: USD bears back in action after dovish read of FOMC The USD was weaker across the board after the Fed Chair Powell stayed away from pushing back aggressively on the easing priced in by the markets for this year or the loosening of financial conditions. EURUSD broke above the 1.0930 resistance and was trading above 1.1000 in the Asian session. The ECB may need to match market pricing for further hawkishness today to sustain this level. An interesting test for EURGBP as it trades into the upper reaches of its range near 0.8900, by the way, on possible relative surprises from the ECB and Bank of England meetings today. USDJPY slumped back below 128.50 with focus turning to BOJ Governor nominees to replace Kuroda, who leaves in early April. AUDUSD rose to 0.7150 but USDCAD was choppier as lower oil prices weighed on the loonie. Crude oil (CLH3 & LCOJ3) starting February on the backfoot Crude oil started February by sliding more than 2.5% on Wednesday after US data showed a further inventory built. Crude stocks rose 4.1 million barrels, its sixth consecutive weekly build, to the highest since June 2021. OPEC+ meanwhile reaffirmed their commitment to current output quotas after meeting on Wednesday. It is monitoring the impact of China’s reopening on demand. On February 5, the EU will ban almost all seaborne imports of Russian refined products, and just like Russian crude, diesel is already selling at a heavy discount of more than 25 dollars a barrel. Oil staged a partial, but weak post-FOMC rebound as the dollar weakened. The Brent prompt spread remains in a bullish backwardation structure which points to some underlying strength. Gold (XAUUSD) breaks higher on dovish Fed Gold reached a fresh cycle high after the Fed announced a 25bp hike and Chairman Powell said the committee had concluded the disinflationary process had started, and despite using the phrase “ongoing increases” he failed to push back enough on easing financial conditions. As a result, the market concluded the end of the rate hike cycle is near, and this focus helped weaken the dollar to a fresh cycle low while supporting a rally in gold to $1957, its highest since mid-April 2022. Next on watch will be $1963, the 76.4% retracement of the 2022 correction, following which there is no major level of resistance before the psychologically important $2000 level. Minor support at $1935, $1920 ahead of $1912. Silver (XAGUSD) meanwhile managed, for a change, to keep up with gold resulting in the XAUXAG ratio declining to 81 from above 82.5. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) dropped as hopes for rate cuts in H2 heightened See more on last night’s FOMC dovish meeting below, but the general read is that Fed Chair Powell failed to push back against sufficiently hard against market expectations that the policy rate will soon peak and economic developments will see the Fed in easing mode in the second half of this year.  AFter a soft ISM Manufacturing data point and weak ADP payrolls growth, he yield on the 2-year and the 10-year tumbled 9bps each to 4.11% and 3.42% respectively. A stronger JOLTS job openings data (note: for December) failed to garner much attention. What is going on? Market reads FOMC monetary policy statement and presser as dovish. The Fed delivered a 25bp rate hike, bringing the Fed Fund target to 4.50%-4.75% as widely anticipated and a statement largely unchanged from the previous one, reiterating that “ongoing increases” in the policy Fed Fund target “will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive,” The strong market reactions came from the response to Powell’s dovish statement in the post-meeting press conference. Powell said the Fed “can now say, I think for the first time, that the disinflationary process has started” though he cautioned that “the job is not fully done.”  Powell’s remarks saw the June-Dec 2023 SOFR spread widen to 54.5 bps, fully pricing in 50 bps of rate cuts in the 2nd half of 2023, following another 25bp increase in March. The SOFR futures curve implies further 143 bps of rate cuts in 2024. These implied rates bring the Fed Fund target to 4.25%-4.50% by Dec 2023 versus the Fed’s December dot plot of 5%-5.25%, and to 2.75%-3.00% by December 2024, that is 125bps below the Fed’s projection of 4%-4.25% Meta earnings: greed triumph idealism Mark Zuckerberg did listen to investors after all acknowledging that the idealism of the Metaverse and the huge capital expenditures it requires were too much given the environment. Meta announced a lower-than-expected operating expense and capital expenditures level for FY23 and that was exactly what the market wanted to hear. The shares rallied 20% in extended trading on this aggressive cut in expected expenses. In Q4, the company lost another $4.3bn on its Reality Labs segment (Metaverse bet), but revenue was higher in this segment and overall, in the entire advertising business. On the Q1 outlook revenue guidance was $26-28.5bn vs est. $27.3bn indicating a slightly better performance than Snap indicated yesterday for Q1. Meta also authorized the share buyback programme to be increased to $40bn. US ISM manufacturing was weaker than expected, but Prices Paid above expectations. ISM manufacturing declined for a fifth consecutive month to 47.7 from 48.4, short of the consensus of 48.0. While prices paid lifted to 44.5 (exp. 39.5, prev. 39.4), suggesting upside pressures in inflation sustaining, production and new orders fell to 48.0 (prev. 48.6) and 42.5 (prev. 45.1), respectively. Employment was also softer but still remained above the 50-mark at 50.6 from 50.8 previously. JOLTS job openings in December ramped back up to 11.012mln from the prior 10.44mln, surprising expectations for a fall to 10.25mln and now at their highest level since July. Overall, inflation risks are not going away yet, while growth concerns seems to be settling as well. Eurozone headline inflation softens more than expected, but core inflation fails to drop. January headline inflation data in the Eurozone came in softer at –0.4% MoM and 8.5% YoY from 9.2% YoY mostly underpinned by softer energy inflation, which remains high at 17.2% YoY (vs. 25.5% YoY in December). While the trend seems encouraging, inflation remains elevated at the core at +5.2% YoY versus the small drop to 5.1% expected. This data is unlikely to deter the ECB from staying on course with further tightening. A delayed German inflation print for January is due next week. Read next: USD/JPY Pair Drop Below 130.00, GBP/USD Is Trading Below 1.2330, The Australian Dollar Remains Generally Up| FXMAG.COM China’s President Xi called for moving faster to establish the new development pattern In the second study session of the Chinese Communist Party’s new Politburo, China’s President Xi called for the country to move faster toward establishing a new development pattern, a concept that he first introduced in April 2020. He emphasized the importance of boosting domestic demand and deepening supply-side structural reform. President Xi also pledged to bring forward the construction of more new infrastructure projects and focus on the real economy and new industrialization. He also called for strengthening the measures against monopoly and unfair competition, as well as guiding and supervising the healthy development of private capital according to the law. The readout from the Politburo meeting mentioned neither “preventing disorderly expansion of private capital” nor “common prosperity”. Shell beats on Q4 earnings One of Europe’s largest oil and gas majors reported Q4 adjusted profit of $9.8bn vs est. $8.3bn driven by higher-than-expected oil and gas output for the quarter. Q4 dividends are lifted to $0.2875 per share vs est. $0.285. What are we watching next? ECB and Bank of England up today. The market read on the Fed was dovish after fearing that Powell might be on the warpath against market expectations. Expectations for today’s ECB meeting are rather different as hotter core CPI reads in Europe have the market fearing considerable further ECB tightening – but can the ECB deliver beyond market expectations, with more than 100 basis points after today’s 50 bps hike expected at coming meetings?. After last night’s reaction to the FOMC meeting, the 2-year yield in 2-year's time for the EU and US is virtually at parity coming into today’s ECB meeting. The Bank of England meeting today is less certain, as the BoE may try to sneak in more cautious guidance, given the weak outlook for the UK economy, even if that outlook has improved. Besides today’s expected 50 basis points hike, watch for a potential downshift in guidance to less pre-commitment to further tightening, backed up by possible adjustments to inflation forecasts that are also due for a refresh today. The EURGBP in an interesting pair to watch today for relative central bank surprises as it pushes towards the top of its range into 0.8900. Earnings to watch Today is the week’s big earnings day with key earnings from Apple, Alphabet, and Amazon all being released after the US market close. With the animal spirits unleashed this year and helped by Powell’s comments yesterday better than expected results from these three technology giants could unleash a rally into the weekend. Today: DSV, Dassault Systemes, Siemens Healthineers, Infineon Technologies, Deutsche Bank, Sony, Takeda Pharmaceutical, Shell, ING Groep, Banco Santander, Siemens Gamesa Renewable Energy, Nordea, Roche, ABB, Apple, Alphabet, Amazon, Eli Lilly, ConocoPhillips, Qualcomm, Honeywell, Starbucks, Gilead Sciences, JD.com, Ford Motor, Ferrari Friday: Coloplast, Sanofi, Intesa Sanpaolo, Denso, CaixaBank, Naturgy Energy, Assa Abloy, Regeneron Pharmaceuticals Economic calendar highlights for today (times GMT) 1200 – UK Bank of England Rate Announcement1230 – UK Bank of England Governor Bailey press conference1230 – US Jan. Challenger Job Cuts1315 – ECB Rate Announcement1330 – Q4 Unit Labor Costs / Nonfarm Productivity1330 – Czech National Bank Rate Announcement1330 – US Weekly Initial Jobless Claims1345 – ECB President Lagarde Press Conference1500 – US Dec. Factory Orders1530 – EIA's Weekly Natural Gas Storage Change1730 – Swiss National Bank’s Thomas Jordan to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – February 2, 2023 | Saxo Group (home.saxo)
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

The Commodities Feed: Russian products ban imminent

ING Economics ING Economics 03.02.2023 08:54
This weekend will see the EU ban on Russian refined products come into force. The market has had time to prepare for the ban, which is reflected in the large increase in ARA gasoil inventories over the last two months Source: Shutterstock Energy - EU ban on Russian refined products set to start The EU’s ban on Russian refined products is finally set to start this Sunday, which will have a significant impact on Russian flows of gasoil and naphtha to Europe. However, despite this imminent disruption to flows, the market appears relatively calm - the gasoil crack has been trending lower since the end of January. A likely reason for this is that the market has had a significant amount of time to prepare for the ban. We have seen strong inflows of middle distillates into Europe ahead of 5 February. The latest inventory data from Insights Global shows that gasoil stocks in the ARA region increased by 132kt over the last week to 2.32mt. This is a trend seen since early December, which has allowed inventories to edge back towards the 5-year average and leaves them at their highest levels since July 2021. However, we would expect to see tightening once the ban is in place. Preliminary OPEC output data for January are starting to come out. Numbers from the latest OPEC survey show that production averaged 29.12MMbbls/d in January, down 60Mbbls/d MoM. Saudi production is estimated to have fallen by 100Mbbls/d to 10.38MMbbls/d, while Iranian output fell by 40Mbbls/d. Partially offsetting these declines were increases from Angola and Nigeria. The US Department of Energy wants to cancel a 26MMbbls mandated oil release from the strategic petroleum reserve (SPR) for the 2023 fiscal year. There had been suggestions last month that the DoE wanted to make this move. However, cancelling the mandated release would need approval from Congress. This volume is separate to the emergency release of 180MMbbls announced last year. Having tapped heavily into the SPR last year, the US administration wants to refill it. At the end of last year, the DoE announced plans to buy up to 3MMbbls for the SPR, although offers were rejected. The latest numbers from the EIA show that US natural gas storage fell by 151Bcf over the last week, which was slightly more than the roughly 145Bcf the market was expecting. However, given the milder weather seen in recent weeks, total US storage is back above the 5-year average. Comfortable storage levels and forecasts for milder weather across parts of the US continue to weigh on Henry Hub, with prices trading below US$2.5/MMBtu - the lowest level since early 2021. Metals – Gold climbs to a nine-month high Spot gold prices reached the highest level since April yesterday after comments from the Fed suggested that the rate hiking cycle might be nearing an end. In copper, LME stocks fell 2.6% yesterday to 72,450 tonnes - the lowest level since March last year. This was mostly driven by withdrawals from warehouses in Rotterdam, extending the declines for a third consecutive session. Supply-side disruptions continue to support copper prices. MMG’s Las Bambas has halted operations amid protests in Peru with the mine now going into maintenance. First Quantum Minerals said that operations at its Sentinel open-pit copper mine in Zambia have been suspended following a traffic accident on Thursday. The mine produced 64kt of copper in 3Q22 and has an annual copper production capacity of 270kt-330kt. Meanwhile, Freeport said that its new copper smelter development in Indonesia is expected to be completed by the end of the year. The smelter will have a processing capacity of 1.7m tonnes/year of copper concentrate. Agriculture – Concern over Indian sugar output linger No.11 raw sugar settled almost 1.4% higher yesterday. The market remains concerned over the Indian crop and the growing expectation that the Indian government will not approve any further sugar exports for the current marketing year. However, while a smaller harvest is expected by the end of this season, so far, domestic sugar production is up 3.4% YoY to stand at 19.4mt. Recent estimates from the Thai Sugar Millers Corp. show that domestic sugar production will reach 11.55mt this season, 14% higher than the previous year. The group expects higher production to result in increased shipments. Domestic sugar consumption stands roughly at 2.5mt, which leaves ample supplies available for export. The latest government data show that millers have crushed 49.4mt of cane as of 30th January, resulting in a sugar output of 5.4mt so far this season. Last season, the country produced a total of 10.14mt of sugar from crushing 92mt of cane. Read this article on THINK TagsSugar SPR Russian oil ban OPEC Natural gas Gold Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Nvidia Is Rolling Out Its Own Cloud Service Together With Oracle

Australia’s Tech Sector Is Starting To Pick Up Momentum, The ECB And The BoE Took Dovish Turns

Saxo Bank Saxo Bank 03.02.2023 09:20
Summary:  The US equity markets extended their gains, underpinned by 23% surge in Meta as it announced a leaner and more decisive vision; while German and UK yields slumped after dovish tilts from ECB and the Bank of England. The NFP jobs report in focus as the next test of the US labor market strength. USD was back in gains while commodities reversed the post-FOMC rally as clear signals on China’s reopening demand are also awaited. The tech rally may start to get some jitters with Apple, Amazon and Alphabet missing their earnings forecasts in post-market.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) surged on Thursday, paring gains in Asia Friday morning following Apple, Google, and Amazon misses S&P500 closed at a new five-month high on Thursday, rising 1.5%, taking its move up to 19% from its October low and its 50-day moving average above the 200-day moving average, in what is usually referred as a “golden cross” in technical analysis. The Nasdaq 100 gained 3.6% after Meta shares jumped 23% on cost-cutting which paves the road for a return to profitability. Refer to Peter Garnry’s  article here for more on Meta. On the back of the dovish comments from Fed’s Powell on the previous day about disinflation having started and the optimism boosted by the surge in Meta’s share prices, Alphabet (GOOGL:xnas) and Amazon (AMZN:xnas) jumped more than 7% in the regular session and Apple (AAPL:xnas) climbed more than 3%, driving the benchmark indices higher before they reversed in the extended hour trading following reporting results missing expectations. Post results, Apple and Alphabet fell more than 3% and Amazon plunged more than 4% in after-hours trading, bringing Nasdaq 100 futures by around 1.3% lower in early Asian hours from its Thursday close. Apple, Amazon, Google, and Ford paint a bumpy picture ahead for equities Apple's profit and revenue missed, but it guided for a pickup in revenue from its iPhone this quarter, as well as its services revenues. Amazon's 4th quarter sales beat, but its outlook was on the weaker side. Google-owner Alphabet’s sales were lighter, suggesting lower demand for its core search advertising which is coming under threat. The US Department of Justice called for a breakup of the search giant’s ad-technology business over alleged illegal monopolization of the market. The company’s flagship search business, which drives most of its ad revenue, may also be under attack from new entrants, with Google declaring “code red” last year after in response to Open AI’s popular chatbot, entering the market. Ford guided for the potential of higher earnings in 2023, but missed fourth quarter earnings expectations. That said, its automotive revenue was higher than expected and it will pay a supplemental dividend of $0.65 per share reflecting the cashflow from taking a stake in Rivian. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) edged down, Bund and Gilt yields tumbled on dovish hikes from the ECB and BOE The yield on the 10-year Treasury dropped as much as 9bps following the massive declines in yields on German Bunds and UK Gilts before paring most of the gain (in prices, fall in yields) in the New York afternoon to finish 2bps richer at 3.39%.  Relative to European and UK bonds, the movements in the U.S. Treasuries were relatively muted ahead of the U.S. employment report today. Yields on the 10-year German Bunds dropped 21bps to 2.07%. The ECB raised policy rates by 50bps as expected and signaled another 50bps in March but indicated that the path of interest rate increases would become data-dependent afterward. Likewise, the Bank of England raised its policy rate by 50bps but commented that it had “seen a turning of the corner” and signaled that future rate hikes would be data-dependent. Yields on the 10-year Gilts tumbled a staggering 30bps to 3.01%. U.S. non-farm production improved to 3% (vs consensus 2.4%) in Q4 from 0.8% in Q3 and unit labor costs growth decelerated to 1.1% in Q4 (vs consensus 1.5%) from 2.4% in Q3. Both were good news to the Fed’s disinflation narrative. Interest rate futures are pricing in 60 bps of rate cuts by the Fed in the second half of 2023 after a 25bp hike in March. The Australian share market rallies to its highest level since April last year Australia’s tech sector is starting to pick up momentum, and the technical indicators are looking interesting, suggesting upside on the weekly and monthly charts. Today the market hit new cycle highs, and its highest leveis also reacting to PMIs rising, a sign Australia’s economy is beginning to strengthen. Next week we will receive financial results from one of Australia’s top 10 banks, Suncorp, as well as real estate tech business, REA. In the following week (the third week of February) earnings season ramps up with CBA and Fortescue reporting Feb 15, BHP on Feb 21, followed by Rio the next day, followed by Qantas. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) were mixed The Hang Seng Index pared early gains to finish the Thursday session 0.5% lower on the back of a strong rally in U.S. equities overnight and less upward pressure on domestic interest rates and currencies spilled over from higher U.S. interest rates down the road. Baidu (09888:xhkg), rising 5%, extended its strong recent gains on the ChatGPT concept and following BlackRock raised its stake to 6.6% from 5.4% in the Chinese search engine giant. Baidu was the best-performing stock on the Hang Seng Index for the second day in a row. Li Auto (02015:xhkg) climbed 1.9% after reporting delivery of 15,141 units of EV in January,  up 23% Y/Y. On the other hand, NIO (09866:xhkg) slid 5.3% following a 12% Y/Y decline in delivery to 9,652 units in January and on reports that the Chinese EV maker is cutting prices. Geely (00175:xhkg) dropped 3.3% after its high-end Zeekr brand delivered 12% fewer EVs from the year-ago period. Chinese mobile gaming stocks traded in the Hong Kong bourse soared with Forgame (00484:xhkg) leading the charge and jumping over 75%.  CSI 300 slid 0.4%. Pharmaceuticals, biotech, retailing, beverage, and coal mining advanced while defense, electric equipment, household appliances, and non-bank financials retreated. FX: USD returns to strength as global yields plunge The 30bps plunge in UK yields after the Bank of England kind of hinting at a pause saw GBPUSD back off from 1.24 to 1.2222. ECB also surprised dovish despite some very hawkish expectations being priced in by the markets, taking EURUSD back from 1.10+ to the 1.09 handle. EURGBP however still above 0.89 with ECB still guiding for another 50bps rate hike in March. Australian bonds also joined the global rally, and AUDUSD reversed back below 0.71. JPY was the clear outlier, ignoring the global bond yields plunge, and USDJPY continued to trade steady around 128.50. Crude oil (CLG3 & LCOH3) prices soften Oil prices saw a modest decline as jitters about Chinese demand and Russian sanction continued to underpin. OPEC output also saw a decline of 60kb/d amid reductions in Saudi Arabia and Libya. Meanwhile, a stronger dollar after the dovish tilts from the ECB and Bank of England weighed on the commodity complex in general. The US jobs report becomes the next test for the markets today, and for the US dollar, after Chair Powell’s comments were paid little heed. WTI futures were below $76/barrel while Brent was below $83. Gold (XAUUSD) reversed from $1960 barrier; Largest global gold ETFs sees strong fund flows Gold broke higher to fresh cycle highs in the post-FOMC euphoria, breaking past $1950, but a stronger dollar returned after ECB and BOE also took dovish turns resulting in steep drops in global bond yields. This made the yellow metal lose some of its shine, and it reversed before the test of the 76.4% retracement of the 2022 correction at $1963 to near-1910 levels. Immediate support at $1900, and the US NFP data along with the ISM surveys will continue to be the next key market movers to watch. Meanwhile also consider, the largest gold ETF fund globally GLD, has seen over $2 billion in inflows since the start of the year, suggesting retail buying is starting to ramp up.  Read next: Santander Bank Polska Shareholders Can Expect A Solid Dividend, The ETH Liquid Staking Narrative Is Already Going Strong| FXMAG.COM What to consider? Bank of England hikes 50bps, but further rate hikes see a high bar As expected, the Bank of England raised rates by 50bps to 4%, with a vote of 7-2 as two of the usual doves opted to keep the rates unchanged. The Bank eased up on its forward guidance, saying that further policy tightening “would be required”, but only “if there were to be evidence of more persistent [inflationary] pressures” and preceding all of that language touting “considerable uncertainties” in the outlook. The previous language was more direct on the need to continue hiking. The latest message with the pre-conditions set for another rate hike suggested that the bank may pause. Accordingly, market pricing moved in a more dovish manner with odds of a 25bps March falling to around 60% from 80% pre-announcement with the chance of a May 25bps move around 12% vs. around 50% pre-announcement. Inflation and growth forecasts also hinted at a dovish turn. The accompanying MPR saw a downgrade to the 2023 inflation forecast to 4.0% from 5.25% with inflation of just 1.5% next year. BoE was less pessimistic on the economy, as peak unemployment was revised down to 5.3% from 6.0% and the peak to trough GDP dip was revised up to -1% from -2.9%. UK 10-year yields saw a massive 30bps drop and the 2-year was also down ~25bps. Dovish ECB despite confirming another 50bps rate hike; German 10-year yields plunge 30bps With very hawkish expectations set in, the ECB had a high bar to surprise hawkish. And it failed to do so. While the European Central Bank raised rates by 50bps to 2.50% and committed to another 50bps rate hike in March; but the statement said that at the March meeting, the ECB will evaluate the subsequent path of its monetary policy. This sent out a message that the most hawkish G10 central bank currently may also be looking at stepping down its pace of rate hikes. Lagarde attempted to stress the longevity of reaching terminal by stating that when the level is reached, rates will need to stay there. However, there was a clear scaling back of hawkish market pricing for 2023 with around 25bps of tightening taken out. Reuters sources later noted that ECB policymakers see at least two more rate hikes, with an increase of 25bps or 50bps in May, which may thrash hopes of a May pause for now. German 10-year yields slumped by 30bps, posting its biggest decline since 2011. Today’s NFP data to be the next big test for US labor market The weekly jobless claims nudged lower again to 183k from 186k for the week ending 28 January, a surprise against the expected rise to 200k. This suggest that the labor market is still tight, as the focus shifts to nonfarm payrolls release later today. Bloomberg consensus expects a modest cooling in the headline NFP gains to 189k from 223k in December. The unemployment rate is also expected to come in a notch higher at 3.6% from 3.5% previously while wage gains may soften slightly to 4.3% YoY from 4.6% YoY previously. A larger-than-expected softness in labor market can further send dovish signals to the market that is still dealing with the post-Powell and ECB/BOE dovishness. Challenges for India’s Adani Group continue to mount The market loss for the Adani Group mounted over $100bn, once again sending concerns of a possible contagion skyrocketing. Challenges for the group continue to mount since the Hindenburg report, with a shock withdrawal of share sales, some banks refusing to take Adani securities as collaterals and then the Reserve Bank of India asking Indian banks for details of the exposure to Adani Group. Furthermore, S&P Dow Jones Indices said that it will remove Adani Enterprises from its sustainability indices effective February 7, which would make shares less appealing to sustainability-focused mutual funds as well and cause foreign outflows. Contagion concerns are widening, but still limited to the banking sector. Focus remains on further risks of index exclusions, while a coherent response on the fraud allegations from the Adani Group is still awaited. Shell beats on Q4 earnings One of Europe’s largest oil and gas majors reported Q4 adjusted profit of $9.8bn vs est. $8.3bn driven by higher-than-expected oil and gas output for the quarter. Q4 dividends are lifted to $0.2875 per share vs est. $0.285.     For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Dovish tilts from ECB and BOE and Meta gains push equities higher; Post-market earnings miss from Apple, Alphabet and Amazon – 3 February 2023 | Saxo Group (home.saxo)
The Commodities Feed: Further oil supply disruptions

After An Inventory Distribution Breakdown The Oil Price Witnessed A Sell-Off

TeleTrade Comments TeleTrade Comments 03.02.2023 09:30
The oil price has printed a fresh intraday low at $75.80 amid a risk-off market mood ahead of US NFP data. West Texas is auctioning in a markdown phase after Wyckoff’s Inventory Distribution breakdown. The 50-period EMA is acting as a major barrier for the oil bulls. West Texas Intermediate (WTI), futures on NYMEX, has refreshed its day’s low at $75.80 in the early European session. The oil price is facing the heat as western central banks have hiked their interest rates further to tame soaring inflation. The asset is expected to test Thursday’s low around $75.30. The US Dollar Index (DXY) is displaying a lackluster performance after reaching to near 101.55 and is awaiting the release of the United States Nonfarm Payrolls (NFP) data for fresh impetus. On a four-hour scale, the oil price witnessed a sell-off after an Inventory Distribution breakdown. The inventory distribution in a minor range of $79.50-82.67 indicates a shift of inventory from institutional investors to retail participants. After an inventory distribution breakdown, the asset is in Wyckoff’s markdown phase post a throwback move to near $80.00. The 50-period Exponential Moving Average (EMA) at $78.65 has acted as a major barricade for the oil price. The Relative Strength Index (RSI) (14) is oscillating in the bearish range of 20.00-40.00 and is indicating more weakness. Read next: USD/JPY Pair Is Trading At 128.48 The Aussie Pair Is Above 0.71$| FXMAG.COM After a sheer decline, a pullback move to near the 10-period EMA around $76.65 will be an optimal selling opportunity, which will drag the asset toward February 2 low at $75.15 followed by the horizontal support placed around January 5 low at $73.00. Alternatively, a rebound move above February 1 high at $79.87 will drive the asset toward January 23 low at $81.19. A breach above the latter will expose the asset for more upside toward January 18 high at $82.67. WTI four-hour chart  
The Commodities Feed: Specs continue to cut oil longs

The Commodities Feed: EU refined products ban starts

ING Economics ING Economics 06.02.2023 08:39
The commodity complex came under pressure along with other risk assets following the stronger-than-expected US jobs report, which increases uncertainty over the path the US Fed will take. For oil markets, the EU ban on Russian refined products finally came into force over the weekend Energy - EU products ban The oil market came under further pressure on Friday, along with the broader commodity complex and risk assets. Friday’s US jobs report came in well above expectations, which left the market rethinking the path the US Fed could take in the months ahead. ICE Brent fell by more than 2.7% on the day and settled below US$80/bbl. This left it down almost 7.8% over the course of last week. Sunday saw the EU finally implement its ban on Russian refined products. The ban arrives a couple of months after the region imposed a similar ban on Russian seaborne crude oil. The ban will have the largest impact on Russian diesel and naphtha flows to the EU. However, EU buyers have had time to prepare for the ban. In the period leading to the cut-off, there were increased flows of middle distillates to the EU and this has helped to push gasoil inventories in the ARA region back up towards the 5-year average. The G-7 price cap on Russian refined products also came into effect yesterday. This will allow G-7 shipping and insurance services to be used for the trade of Russian refined products as long as it is at or below the price cap. The group has agreed on a price cap for premium refined products (gasoline, diesel and jet fuel) of US$100/bbl, whilst refined products such as fuel oil and naphtha (which are trading at a discount to crude oil) have had their cap set at US$45/bbl.   Markets will have to wait a bit longer for positioning data in commodity markets following a cyber incident at a third-party provider of derivatives order management. The incident has meant that some clearing members have been unable to provide accurate and timely data to the CFTC. It is not clear when the CFTC will publish the next Commitments of Traders report. For gas and LNG markets, Freeport LNG at the end of last week requested permission to restart ship loading, although the plant will still require further approval in order to restart commercial operations. However, despite the progress with Freeport, along with the cold weather in the US Northeast, Henry Hub continues to trade below US$2.50/MMBtu.   Metals – Zinc stocks jump in China Base metal inventories in Chinese warehouses have started to recover following the Lunar New Year holidays. The latest data from the Shanghai Futures Exchange (ShFE) shows that weekly inventories for zinc increased by 46,735 tonnes (the biggest weekly addition on record) to 90,983 tonnes (the highest since August) as of Friday. Other base metals also reported inflows with copper inventories reaching their highest since May 2021. In mine supply, Southern Copper Corp. said that operations at its mines were running normally despite the ongoing political unrest in Peru that has already forced some major mines to halt their mining activities. The company reported that copper output rose 1.6% YoY to 241.3kt in 4Q22, slightly higher than an estimate of 240.5kt. As for aluminium, the latest LME data shows that total on-warrant stocks for aluminium reported outflows of 5,225 tonnes (the biggest daily decline since 29th December) to 225,900 tonnes as of Friday. The entire outflows were reported from warehouses in Singapore. Cancelled warrants for aluminium rose by 875 tonnes (after declining for six consecutive sessions) to 169,350 tonnes, signalling potential further outflows. Meanwhile, total exchange inventories declined for the sixth straight session by 4,350 tonnes to 395,250 tonnes as of the end of last week. Agriculture – coffee remains volatile Arabica coffee prices softened on Friday and dropped almost 2.9% to settle at US¢172.80/lb on Friday after gaining around 25% over the past 3-4 weeks. Reports of slower exports from South America and weather-related concerns, combined with lower inventory have been supportive of coffee prices over the past few weeks. Current estimates of the market balance for 2022/23 and 2023/24 fall in a wide range which brings additional volatility for coffee prices. Earlier, the International Coffee Organization reported that global coffee exports dropped by around 8.5% YoY to 10.9m bags in December 2022 on slower exports of Arabica coffee, especially from Brazil and Colombia. Arabica coffee exports were down 13.7% YoY to 6.1m bags, whilst Robusta exports were largely flat and fell only 0.9% YoY to 4.8m bags. Cumulatively, global coffee exports dropped by 2.8% YoY to 30.3m bags since the season started in October 2022, with Arabica exports falling 4.5% YoY to 18.3m bags and Robusta exports largely flat at around 12m bags. Read this article on THINK Zinc Russian oil price cap Russian oil ban Natural gas LNG Coffee Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Equities Slide 1.5% as Bond Yields Soar Amid Consumer Confidence Drop

Commodities: Milder winter offers some comfort to energy markets

ING Economics ING Economics 06.02.2023 08:54
A mild European winter has seen gas prices continue to collapse in January and Europe is likely to get through this winter in a comfortable state. However, there are still clear upside risks. Oil prices have been more rangebound, but we see prices moving higher later in the year as the market tightens In this article Drastic change in the natural gas outlook Oil market set to tighten A mild winter has allowed Europe to build up its gas storage levels Drastic change in the natural gas outlook A late start to the 2022/23 heating season saw Europe building gas storage almost until mid-November. At a little more than 95% full, storage was essentially maxed out. This was far above the target of 80% by 1 November 2022 set by the European Commission. While there have been some cold spells in the current heating season, it has been largely mild, which has meant storage levels have held up well. In fact, there have been days this winter when storage has seen net increases. Storage at the moment is around 72% full, well above the five-year average of around 53% for this time of year.  Assuming Europe does not experience a prolonged cold spell in the current heating season, the region should exit the 2022/23 winter with storage above 50% full. This is significantly higher than the 26% seen at the end of the last heating season and above the five-year average of 34%. Ending this winter with very comfortable inventories makes the job of refilling storage over the injection season and hitting EU inventory targets of 90% by 1 November 2023 easier. Between 1 April and the end of October last year, the EU added in the region of 67 billion cubic metres (bcm) to storage. If we were to see similar storage levels at the start of the next heating season, the EU would only need to add around 43bcm of gas this year. A more comfortable European balance suggests that prices do not need to trade as high as initially expected, although prices will still remain historically high in order to ensure adequate demand destruction and liquefied natural gas (LNG) supply. We expect TTF to average EUR70/MWh over 2023 with prices peaking over the fourth quarter of 2023 to average EUR80/MWh. The assumption to these forecasts is that we do not see a further decline in remaining Russian pipeline flows to Europe, and that Europe sees a marginal increase in LNG imports in 2023 (this would mean not seeing a return to 2021 LNG import volumes for China) and that we see demand destruction in the region of 10% from April 2023 onwards. These factors should ensure that the EU hits its target of having storage at least 90% full by 1 November 2023.  Clearly, an upside risk to our view is if we see Russian flows fall further and/or stronger-than-expected Chinese LNG imports in 2023. EU storage to exit this winter comfortably (% full) GIE, ENTSOG, Eurostat, ING Research Oil market set to tighten Oil prices have been trading in a largely rangebound manner so far this year, although there is still plenty of uncertainty over the demand outlook (which will really depend on how strong a recovery we see from China this year) and Russian oil supply. Global oil demand is expected to grow in the region of 1.7MMbbls/d this year, which would take global oil demand above pre-Covid levels and to a record 101.3MMbbls/d. Around 50% of global demand growth is expected to come from China this year, following the reversal of its zero-Covid policy. As for Russian supply, the EU ban on Russian seaborne crude oil imports came into force in December and whilst there was an initial drop in Russian seaborne export volumes, we have seen a recovery. On 5 February, the ban will include Russian refined products, which could prove more disruptive for oil markets, given the challenge of rerouting refined products that would have gone to the EU to other destinations. We expect that the Russian oil supply will fall in the region of 1.3MMbbls/d year-on-year in 2023 due to the EU ban on Russian crude and refined products. Clearly, the risk to this view is if Russia manages to find new homes for its refined products, much like it has done with increased crude oil flows to India and China. The oil market is comfortably supplied over the first quarter of the year with Russian supply holding up better than expected, whilst a milder winter will also mean reduced fuel demand for heating purposes. This leaves the oil market in surplus over the first quarter, which suggests that the upside for prices is limited in the short term. However, in the medium to long term, the market is expected to tighten which should see prices moving higher from the second quarter onwards. We expect ICE Brent to average US$100/bbl over 2023, with the bulk of strength coming in the second half of the year, when we see prices averaging US$108/bbl. TagsRussian oil ban Oil Natural gas LNG Energy China demand Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US-China Tensions Continue To Ramp Up, Dollar Off Its Highs

The Shooting Down Of The Observation Balloon Has Increased Tensions Between The US And China

Saxo Bank Saxo Bank 06.02.2023 09:00
Summary:  Nasdaq 100 plunged 1.8% and S&P 500 shed 1% in a hectic session weighed on by earnings disappointments and higher bond yields following the smashing January non-farm payrolls and the lowest unemployment rate since 1969. Yields on the 2-year Treasury surged 18bps and those on the 10-year climbed over 10bps. USD strength is back in focus, also aided by reports of Bank of Japan’s Deputy Governor Amamiya (who is seen as dovish) being tipped to be the front-runner for the top job at the BOJ.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) suffered from the double whammy of earnings disappointments and a surge in bond yields Index futures traded south on Friday during Asian hours as Apple (AAPL:xnas), Alphabet (GOOGL:xnas), and Amazon (AMZN:xnas) reported disappointing results. The losses widened when New York came in following the staggeringly hot job data. The benchmark indices managed to pare all losses through New York mid-day but failed to hold onto gains towards the close. Nasdaq 100 and S&P 500 slid back down to finish the choppy Friday session 1.8% and 1% lower respectively. The sell-off in the afternoon was broad-based, seeing all 11 sectors within the S&P500 falling, led by weaknesses in consumer discretionary, communication services, utilities, and real estate. Apple recovered from an early loss to settle at 2.4% higher while Alphabet lost 2.8% and Amazon tumbled 8.5%. Nordstrom soared 24.8% following a report of activist investor Ryan Cohen having built a stake in the fashion retailer. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jumped across the front end, paring rate cut expectations Following the strong job data and a much better-than-expected ISM Services print, yields across the front end from the 2-year to 5-year Treasuries jumped around 18bps, bringing the 2-year to 4.29% and the 5-year to 3.66%. SOFR futures fully priced back a 25bp rate hike for the March FOMC and shed the rate cuts priced in for the 2nd half of 2023 to 45.5bps from 56bps. In addition to the hot 517K headline for the January payrolls, non-farm payrolls were revised up by 51K on average from July through December 2022. The Household Survey showed employment growth of 894K in January, bringing the unemployment rate down to 3.4%, the lowest since 1969. While the deceleration in average hourly earnings growth to 0.3% M/M and 4.4% Y/Y, supports the Fed’s disinflation narrative and the likelihood of a pause after one more hike in March, the job data poured cold water on the market’s expectations of rate cuts this year. The reaction in the longer end was relatively less volatile. Yields on the 10-year rose 10bps and those on the 30-year finished the session 7bps cheaper. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) in consolidation mood The Hang Seng Index declined 1.4% on Friday, extending the weekly loss to 4.5%. HSBC (00005:xhkg) slid 3% and Ping An Insurance (02318:xhkg) plunged 4.1%. Baidu (09888:xhkg), falling 4.6%, pulled back and pared some of its strong recent gains. Chinese real estate names declined, led by Country Garden Services (06098:xhkg) down 7.25%, while local Hong Kong developers gained following Hong Kong scrapped Covid-test requirements for mainland visitors. China internet and EV names were notable laggards. Southbound money was net outflow every day, for a total net outflow of USD 2.2 billion over the week. CSI300 was down nearly 1% on Friday with real estate, solar, electric equipment, non-ferrous metals, and construction materials leading the fall. Friday was the first time that there was a daily net outflow in Northbound money via Stock Connect since January 3 this year. Over the week, CSI300 inched down 1% and northbound inflows into A-shares amounted to USD 5.1 billion in total. On Friday, economic data were better than expected but they took a backseat to the risk-off sentiment and exhaustion after the Hang Seng Index advanced 10.4% and CSI300 climbed 7.4% in January. Mainland China’s Caixin Service PMI returned to the expansion territory at 52.9, well above the consensus of 51.0 and 48.0 in December 2022. Hong Kong’s PMI bounced to 51.2 in January from 49.6 in December and retail sales grew 1.1% in January while the street consensus and the prior month were expecting a decline. FX: All eyes on JPY again; dollar bid on jobs, geopolitics and BOJ new governor chatter The Japanese yen weakened on Friday after the US jobs report, along with the upside surprise in ISM services, brought the US 10yr yields up over 13bps and 2yr up 18bps. The weakness in the yen was further aggravated this morning in Asia after reports of BOJ deputy governor Amamiya being approached to be the new chief (read below). USD traders will have their eyes on Chair Powell’s speech and a host of other Fed speakers due in the week to assess if last week’s dovish stance is maintained even after the strong jobs and ISM services reports. NZDUSD testing support at 0.6300 after being the weakest on the G10 board on Friday, and AUDUSD testing 0.6900. GBPUSD broke below 1.2100 after being rejected at 1.2400 last week, and the GDP report this week could cause jitters as expectations of a delayed recession have kicked in. EURUSD below 1.0800 while USDCAD tests 1.3400. Crude oil (CLG3 & LCOH3) prices weighed down by risk-off tone A strong US jobs report on Friday sparked a risk-off tone after prospects of rate cuts this year continued to gain traction following the Fed meeting last week. This was exacerbated by concerns of rising inventories and weaker than expected demand in China. EU’s caps on Russian oil products kicked in over the weekend; 100/bbl for premium products, such as diesel, and USD 45/bbl for cheaper products, including fuel oil. Russian Energy Minister stated that there is no reason to sharply reduce output of Russian petroleum products because of the EU embargo, so little disruption to supplies can be expected. But OPEC’s supply cuts still keeps the market tight. WTI futures were slightly higher at $73.50 after slipping from $78 on Friday; while Brent found support at $80 for now. Commodities; metals head south; breakfast commodities charge The most strength is coming in breakfast plate commodities; orange juice, coffee, sugar, and soybeans, with prices mostly being supported by limited supply following the hurricanes last year. While wheat and lean hogs are lower. In metals, we’re seeing price weakness in commodities that have been benefiting from Chinese demand picking up. Iron ore, copper, and aluminium appear to be facing selling pressure, with investors and traders taking profits, awaiting more evidence of a pickup in activity in China. The higher US dollar is also acting as a catalyst to take profits. That said, longer term fundamentals in metal commodities supports higher prices over the longer term. Gold is also seeing a sharp pullback from its fresh cycle highs after the US dollar picked up strength (following that very strong US jobs report). That said, gold ETFs like GLD, have seen increased buying throughout the year. Click here for Ole Hansen’s commodity report. Gold (XAUUSD) broke below $1900 Gold broke back below USD1,900/oz as the prospect of monetary loosening shrank following the strong jobs data. Further strength in the US dollar could continue to weigh on the yellow metal, but rising US-China tensions could provide a leg of support to the safe haven metal. With $1872 support also broken, traders could be watching the next support level at $1845. Read next: Elon Musk Was Found Not Guilty In The Tweets Case| FXMAG.COM What to consider? US January jobs data to question the peak rates narrative   A shocking +517k gain in the US nonfarm payrolls on Friday vs. expectations of +188k, along with a net revision of +71k to the prior two months’ data, continued to suggest that labor market in the US remains far too tight despite abundant news of layoffs in January. Other aspects of the report were also robust. Unemployment rate saw a surprise fall again to 3.4% from 3.5% (exp. 3.6%), the lowest since 1969. Average hourly wage growth was unchanged at the 0.3% M/M pace, while the Y/Y fell to 4.4%, still less than the expected 4.3%, and the prior was upwardly revised to 4.8% from 4.6%. With market focusing on data more that what Fed Chair Powell said last week, this is likely to send some jitters as it questions the peak rates narrative for the Fed and took the 10year Treasury yields over 10bps higher on Friday. Goldilocks US ISM services report for January After the jobs report, ISM services also surprised on the upside on Friday. The index rose to 55.2 for January (vs. expected 50.4) from 49.2, in what was the biggest monthly gain since June 2020. Business activity accelerated to 60.4 (prev. 53.5, exp. 54.5). Employment lifted back into expansionary territory at 50.0 (prev. 49.4), and new orders surged higher to 60.4 (prev. 45.2). Moreover, the inflationary gauge of prices paid dipped a notch to 67.8 from 68.1, but still remained elevated by historical standards. Caixin China PMI in expansion, the first time since September 2022 Caixin China PMI Services came in at 52.9 in January, 4.9 points higher than the December reading beating the median forecast of 51.0. It was back to the expansion territory for the first time since September last year. The output and new orders sub-indices were back into the expansion territory for the first time in five months. The new export orders subindex rose to the highest level since April 2021 and was back in the expansion territory. The employment sub-index, however, stayed in the contraction territory for the third month in a row. Reports of Amamiya being approached to be the next BOJ Governor Japan’s Nikkei reported that the government has approached Bank of Japan Deputy Gov. Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda. The week was supposed to bring possible BOJ chief nominations, as the nominees list has to be presented to parliament on February 10. However, FM Suzuki refused to confirm Amamiya’s nomination. Amamiya has helped Kuroda since 2013 on monetary policies, and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief. US-China tensions heightened over the Chinese surveillance balloon incident The Chinese surveillance balloon floating over the U.S. soil for multiple days was finally brought down by an American fighter jet on Saturday. Both sides exchanged accusations over the incident. Before that, the U.S. Secretary of State Anthony Blinken announced on Friday that he was postponing his trip to China. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Hot U.S. jobs data; New BOJ governor chatter – 6 February 2023 | Saxo Group (home.saxo)
USD/CAD - Canadian economy added 41,400 jobs beating expectations

The Downside Of The USD/CAD Pair Remains Limited

TeleTrade Comments TeleTrade Comments 06.02.2023 09:57
USD/CAD struggles to capitalize on a modest bullish gap opening on Monday. An uptick in crude oil prices underpins the Loonie and acts as a headwind. A combination of factors continues to benefit the USD and lends support. The USD/CAD pair fills the modest bullish gap opening on Monday and retreats to the 1.3400 mark during the early part of the European session. Crude oil prices edge higher and recover a part of Friday's slide to over a one-month low, which, in turn, is seen underpinning the commodity-linked Loonie and acting as a headwind for the USD/CAD pair. The downside, however, remains cushioned amid strong follow-through US Dollar buying interest. In fact, the USD Index, which tracks the greenback against a basket of currencies, builds on Friday's solid recovery from a nine-month low and continues to draw support from a combination of factors. The upbeat US jobs data could allow the Fed to stick to its hawkish stance and keep raising rates. The expectations push the US Treasury bond yields higher, which, along with the risk-off environment, is seen benefitting the safe-haven greenback. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the upside and any meaningful slide is likely to get bought into. There isn't any major market-moving economic data due for release from the US on Monday, leaving the USD at the mercy of the US bond yields and the broader market risk sentiment. Apart from this, traders will take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair.
The Commodities Feed: US announces SPR purchase

US Crude Oil Is Back Into Last Year’s Bearish Trend, The Latest US Jobs Data Will Likely Support The USD Bulls

Swissquote Bank Swissquote Bank 06.02.2023 11:52
Very strong US jobs data released last Friday hit the Federal Reserve (Fed) doves, sent equities lower, the US yields and the US dollar higher.And the latest US jobs data will likely support the US dollar bulls this week, as we don’t have much on the economic calendar that could temper Friday’s monstrously strong NFP read, and remind us that the US economy is still slowing. Japan Plus, the fresh selling pressure on the Japanese yen will likely give an extra hand to the Fed hawks, on weekend news that the potential new Bank of Japan (BoJ) Governor, Masayoshi Amamiya will be dovish. In the light of the latest macroeconomic developments, a revision to medium term outlook is necessary. Forex • The dollar-yen’s latest jump above the 130 mark could be sustainable in the short to medium run.• The EURUSD traders may be happy to call it a good trade and retreat to the sidelines. • Cable could sink into bearish consolidation zone. Adani Elsewhere, the Adani selloff enters the third week, and things go from bad to worse as in increasing number of banks don’t accept Adani holdings as collateral anymore. US vs China The Chinese spy balloon that was flying over some strategic points in the US renewed tensions between US and China, and that could throw a floor under the gold’s selloff. Curde Oil And US crude is back into last year’s bearish trend, with however risks of tight supply, and Chinese reopening hanging in the air. Read next: The US Judge Denied The FTC's Request, Giving The Meta An Important Victory| FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:31 That monstrously strong US jobs data shakes market dynamics 2:39 Next thing to watch! 3:48 Equities dive 5:33 USDJPY to extend gains above 130 6:59 EURUSD to pause rally 8:30 GBPUSD to slip below 1.20 9:43 XAU boosted by US-China’s ballooned tensions 10:14 US crude slips into last year’s bearish trend Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #US #NFP #wages #jobs #data #Fed #FOMC #inflation #expectations #Powell #USD #EUR #GBP #JPY #XAU #US #China #spy #balloon #Adani #selloff #crude #oil #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Commodities Feed: Aluminium production cuts

The Commodities Feed: Potential US aluminium tariffs

ING Economics ING Economics 07.02.2023 08:56
The aluminium market had a limited reaction to reports that the US is looking to impose prohibitively high tariffs on Russian aluminium. Meanwhile, there are supply concerns in the oil market after a devastating earthquake hit Turkey and Syria Energy- oil supply concerns after quake ICE Brent managed to break back above US$80/bbl yesterday, settling more than 1.3% higher on the day. Supply concerns appear to have driven the strength after a deadly earthquake hit Turkey and Syria. Pipeline infrastructure which carries both Iraqi and Azerbaijani crude oil to the Ceyhan terminal in Turkey passes through the region hit by the earthquake. The Ceyhan oil terminal has reportedly been shut as a result, and whilst there has been no damage reported to pipelines, flows from at least Iraq appear to have been halted as a precaution. Exports of Azerbaijani and Iraqi crude oil via the Ceyhan oil terminal have been in the region of 1MMbbls/d.  It is not clear when the terminal will resume operations. Saudi Arabia increased its official selling price (OSP) for most crude grades and regions for March loadings. The market had been expecting that OSPs would be cut for the month. Arab Light into Asia was increased by US$0.20/bbl to US$2/bbl over the benchmark, which is the first increase since September. All grades into Europe and the US saw increases for the month. The ICE gasoil crack came under significant pressure yesterday, falling to its lowest level since March last year. This weakness comes despite the EU ban on Russian refined products coming into force over the weekend. The market has had plenty of time to prepare for the ban with strong middle distillate flows in the lead-up to 5 February. As a result, gasoil stocks in the ARA region have trended back towards the 5-year average more recently. Metals - US plans 200% tariff on Russian aluminium The US is reportedly preparing to impose a 200% tariff on Russian-made aluminium as soon as this week, according to Bloomberg. Russia is the world’s second-largest producer of the metal after China, accounting for about 6% of global output (estimated at 70 million tonnes last year). LME aluminium prices initially gained as much as 0.6% following the announcement, although still managed to settle lower on the day. If the US goes ahead and imposes the tariff on Russian aluminium, it will likely have a limited impact on the global market. The US is not a significant buyer of Russian aluminium, which usually accounts for about 10% of total US imports, though this share has been even smaller recently. These reports shouldn’t come as too much of a surprise given that last year there were reports that the White House was considering either an outright ban of the metal, sanctions on Russian aluminium producer, Rusal, or imposing prohibitively high tariffs. If the US were to go the sanctions route, it would have a more severe impact on the market. China’s Yunnan province could increase aluminium capacity cuts due to power shortages, according to reports from SMM. The capacity cuts could add up to around 700kt in the province. Yunnan is a major aluminium-producing province, accounting for around 13% of national capacity and any supply disruption from the province could tighten the physical market in the short term. However, aluminium inventories in China are relatively high this year and will likely help in mitigating any temporary supply shortages. For copper, First Quantum said loading operations at the Cobre Panama port have been suspended after the miner and the government failed to reach an agreement over tax payments. The mine produced around 92kt of copper in 3Q22. Mining operations at the Cobre Panama mine remain unaffected for now. However, a prolonged disruption to shipping activity could impact mining operations due to limited storage capacity. First Quantum reported that mining operations may need to be curtailed in mid-February if concentrate exports don’t resume by then. Agriculture – Ukrainian grain exports Grain exports from Ukraine under the Black Sea Grain Initiative dropped to 3.1mt in January compared to 3.6mt in December 2022 due to a slowdown in inspections – seaborne exports continue to be significantly below Ukraine’s target of around 5mt per month. Cumulatively, the country has exported around 18mt of grains under the initiative since it started in August 2022. Total grain exports (including by rail and other modes) have dropped by 29% YoY to 27.7mt in the ongoing season (from 1st July to date), with wheat exports down 42% YoY to 9.9mt and corn exports down 1.5% YoY to 15.9mt. Read this article on THINK TagsUkraine Russian oil price cap Oil Gasoil Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more  
Asia Morning Bites - 04.05.2023

The RBA Meeting Ahead, Crude Oil Prices Are Choppy

Saxo Bank Saxo Bank 07.02.2023 09:35
Summary:  US equities extended their losses while the USD continued to run higher on Monday as markets repriced the Fed’s path higher following Friday’s hot jobs report and Fed member Bostic’s hawkish comments bringing 50bps of rate hikes over the next two meetings back on the table. Eyes turn to Fed Chair Powell up later today if similar hawkish rhetoric will be maintained. RBA meeting ahead and key to watch if the door for further rate hikes is kept open. Oil prices are choppy but Gold strength is seen holding up despite a recent correction.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) extended losses, waiting for Powell’s interview and corporate earnings After the retreat triggered by a staggering employment report last Friday, US equities extended losses in a relatively uneventful day on data and news. Bond yields soared further on Monday and put pressure on stocks. Investors are also cautious about what Fed Chair Powell will say in an interview on Tuesday after the strong job data. Disney, PepsiCo, Uber, and DuPont are reporting this week. Nasdaq 100 dropped 0.9% and S&P 500 slipped 0.6%. Nine of the 11 S&P 500 sectors retreated, led by communication service, information technology, and materials. Tesla (TLSA:xnas) outperformed with a 2.5% gain after the EV giant raised the prices of its Model Y SUV. Dell (DELL:xnys) fell 3% following the computer maker shedding 5% of its workforce citing eroding market conditions. Newmont (NEM:xnys) plunged 4.5% after the gold mining giant make a USD17 billion offer for Australia’s Newcrest Mining (NCM:xasx). Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jumped further to reprice the Fed’s rate path Treasuries extended the post-job report sell-off, seeing yields on the 2-year soaring 18bps to 4.47% and those on the 10-year rising 12bps to 3.64%. Hawkish comments from the Fed’s Bostic, ECB officials, and Bank of England officials added additional pressure to the market which was already in motion to decline in price and rise in yields. Atlanta Fed President Bostic said the strong job report would probably mean that the Fed have to raise rates more than he had projected. Earlier in the day, the weakness in Treasuries started from spill over selling pressure on U.K gilts on hawkish comments from Catherine Mann, external member of the BOE’s Monetary Policy Committee and Huw Phill, chief economist of the BOE, suggest more rate hikes. ECB Governing Council member Robert Holzmann added to the hawkish pushback from central banks, saying “the risk of over-tightening seems dwarfed by the risk of doing too little”. Treasury and corporate supply are weighing on markets as well. About USD 13 billion corporate new issues came to the market on Monday and the Treasury is auctioning USD40 billion 3-years on Tuesday, followed by USD35 billion 10 years and USD21 billion 30 years on subsequent days. For today, all eyes are on Powell’s scheduled interview. The market is pricing in a 25-bp hike in March, followed by an about 80% chance for another 25bp hike in May, bring the terminal Fed Fund rate to above 5%. The rate cut expectation was shed further to 38.5bps as implied by the SOFR June-Dec spread. Australia’s share market earnings are beating US earnings growth, supporting the ASX200  Amid Australia’s reporting season kicking off, so far average earnings growth from the ASX200 companies are outperforming those in the S&P500. But also, stronger than expected earnings from the ASX200 companies so far have moved the market closer to its record all-time high. The market is under 1% away from trading at its highest level in history, and this is despite commodity prices falling this week amid a higher US dollar.  Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) deeper into consolidation The Hang Seng Index declined 2% on Monday, extending the benchmark’s retreat from the January 27 high to over 6%. Digital health platforms, mega-cap internet, tech hardware, EV, and Chinese developer names were among the biggest laggards. Alibaba Health (00241:xhkg), plunging 7.2%, was the biggest losers among blue chips, followed by Sunny Optical’s (02382:xhkg) 6.9%. Another i-Phones supplier, AAC (02018) also slipped 4% on signs of weakening demand for iPhones in China. Aluminum product maker China Hongqiao (01278:xhkg) dropped 4.5% after preannouncing a 40% decline in profits in 2022. EV names headed south, falling 2%-5%. HKEX (00388:xhkg) plunged 4.2% despite the Special Administrative Region’s Chief Executive in Saudi Arabia pitching Saudi Aramco to have a second listing in Hong Kong. Renewed geopolitical tension over the Chinese surveillance balloon incident, overall risk-off sentiment spilled over from pricing out some of the rate cut expectations in the U.S., and profit-taking after the sharp rises in the Hong Kong and mainland Chinese stocks weighed on the market. In A-shares, CSI300 dropped 1.3%, with Chinese white liquor one of the worst-performing industries, following reports of PICC Property and Casualty (02328:xhkg) limiting staff liquor consumption at business events. Mainland media speculated it as a sign that the Chinese authorities might do likewise at other large state-owned enterprises. Food and beverage, household appliance, construction materials, and non-bank financials were also laggards. Northbound flows registered a small net selling. FX: Dollar’s post-NFP strength extends further with focus turning to Powell After a hotter-than-expected US jobs report on Friday, Fed member Bostic’s comments on a potentially higher peak in the Fed Funds rate supported the US dollar overnight. Market pricing has seen an upward revision to terminal rate to 5-5.25% and Treasury yields continued to surge higher. The Japanese yen, being the most yield sensitive, suffered a double-whammy of higher US yields and chatter of a dovish new Governor at the Bank of Japan. USDJPY stayed close to 132.50 after jumping higher from sub-129 levels on Friday. AUDUSD pushed below 0.69 ahead of the RBA meeting (read preview below) while NZDUSD is still testing the 0.6300 handle. EURUSD plunged further to sub-1.0750 but GBP supported at 1.2000 as BOE’s Mann noted that the next step in the Bank Rate is still more likely to be another hike than a cut or hold. Crude oil (CLG3 & LCOH3) prices whipsawed A risk-off tone in the market following Friday’s US jobs report and hawkish comments from Fed’s Bostic saw oil prices slump lower earlier in the US session. Prices turned around later however as risks of supply disruptions rose after a catastrophic earthquake in Turkey has halted oil flow to the Ceyhan export terminal, which ships more than 1mb/d. Meanwhile, Saudi Aramco increased most prices for its flagship Arab Light grade against expectations of a cut, suggesting confidence in the demand outlook. WTI prices dipped towards $72 before a recovery to $74.50/barrel while Brent was up to $81/barrel, still far from resistance at $84.30. Gold (XAUUSD) strength continues to hold up despite a stronger dollar Gold prices saw a correction to drop back below $1900 after the hot US jobs report on Friday after the speedy run higher in the last several weeks. Stronger dollar and higher yields overnight again with hawkish comments from Fed’s Bostic continue to suggest there could be more downside for Gold in the near-term, but the $1870 support has continued to hold. This morning again, Gold is still testing that level, and if it continues to hold, it would send a signal about a weak correction within a strong uptrend. Next level of support at $1845 followed by $1828. Fed Chair Powell’s comments in the day ahead will be on watch. Copper awaiting Chinese demand recovery Copper led the base metals sector lower as the impact of the strong US jobs report last week lingered. However supply disruptions in Peru have helped to hold the key $4 support for now, and all eyes are on the pickup in activity in China. Aluminium briefly spiked after the reports suggesting the US was preparing to slap a 200% tariff on Russian aluminium. Russia is the world’s second largest producer of the metal and traditionally has accounted for 10% of US imports. However, imports fell to virtually zero in October last year. As a result, the tariff is expected to have limited impact on supply.  Read next: Adani Group Company's Crisis Is Gaining Momentum, Finland Is The Happiest Country| FXMAG.COM What to consider? Hawkish remarks from Fed’s Bostic; Chair Powell due to speak today Atlanta Fed president Bostic (non-voter) spoke on Bloomberg, noting that jobs data from Friday raises the possibility of a higher peak rate, and his base case is still for two more hikes. Bostic also said the Fed could consider moving back to a 50bps hike if it needed to. Chair Powell will be speaking in Washington on Tuesday (1am SGT on Wednesday for Asia), followed by Barr, Williams, Cook, Kashkari, Waller and Harker over the course of the week. Japan’s nominal wage growth records highest growth in 26 years Japan reported a stronger-than-expected wage growth for December, with labor cash earnings of 4.8% YoY coming in above 2.5% YoY expected and prior revised higher to 1.9% YoY as well. This was the highest since 1997, and could potentially fuel speculation again that the Bank of Japan could consider shifting policy after the new Governor is appointed in April. Real cash earnings growth also turned positive, coming in at 0.1% YoY from -2.5% YoY previously and -1.5% YoY expected. RBA meeting ahead; a 25bps hike is likely to 3.35%, while some economists predict a 40bps hike The latest RBA indicators have been hot; surging Australian inflation, hotter than expected retail sales numbers, slowing employment (although unemployment is near five decade lows, at 3.5%), yet other metrics such as building approvals are soaring - seeing one of their biggest jumps in a decade. Meanwhile the RBA is contending with signs of a slowing economy; with the services sector in contractionary phase and retail spending falling. Still the RBA is likely to continue to hike rates to the highest in over a decade. A 25-bp hike is expected by most today. However guidance is key, as the market is now pricing the RBA for another ~37 bps of tightening, into a peak in either June or July, and then cutting in September. We’re watching AUDUSD and EURAUD with the AUD having nose-dived as commodity prices fell from their highs, while the USD gathers strength, with the dollar index breaking above 103 for the first time since early January. If the RBA hikes more than expected, a knee-jerk rally up the Aussie dollar is likely. US plans a 200% tariff on Russian Aluminium; yet prices continue to fall on a higher US dollar President Biden has yet to give the go-ahead, however it’s being reported the White House was mulling an outright ban. The 200% tariff is expected to have a limited impact on prices given Russia accounts for 6% of global aluminium. Aluminum prices held losses, largely pressured by a higher US dollar. In the US, Alcoa and Century Aluminum shares fell. In Australia keep an eye on Rio Tinto and Alumina. Investors may like to consider prices are paring back from their highs amid a higher US dollar, yet concerns linger that supply cannot keep up with demand for high purity aluminium. The same applies to most metals. There are risks of a further pull back in commodity pricing should the US dollar continue to run up, however, the market will likely once again focus back on fundamentals. So keep an eye on the US dollar. Outlook from European industrial giant Siemens to watch Siemens, one of Europe’s largest industrial companies, is expected to show revenue growth of 11% y/y and unchanged operating income compared to a year ago as cost pressures remain a key challenge for Siemens. Last quarter the order book and net new orders looked healthy, so the question is whether this will flow through into the outlook for 2023. Gold companies are in focus. World’s two largest gold miners are in talks to combine In case you missed it, the US-listed gold miner Newmont is attempting to acquire Australia’s gold mining giant, Newcrest in a bid that values the gold miner at $17bn. If the deal goes through it will reunite the two gold miners after being separated for over quarter of a century. It will also be the world’s biggest takeover of 2023. Overnight the Canadian listed Newcrest jumped 14%, ASX listed Newcrest shares jumped 9% yesterday. Importantly, the takeover offer reflects the world’s increasing appetitive for gold, given gold generally outperforms equites when the Fed pauses rate hikes. Among retail investors, many have been increasing their exposure to gold companies ahead of central banks easing. Nationwide strike in France today After a successful demonstration all over France on 19 January, trade unions are calling for new nationwide strike today against the government’s plan to push back the minimum retirement age to 64 and to accelerate a previous reform, called the Touraine reform, which provides for the extension of the required contribution period to 43 years by 2035. Before Covid, the government also tried to implement a pension reform which caused a massive wave of demonstrations across the countries – there was basically almost no public transport in main cities for weeks. This is still uncertain how long the strike will last. But the trade unions are planning to keep fighting as long as needed. Expect a blockage in several sectors (refineries, metro, rail transport, education). At the moment, we don’t think the strike will have a noticeable negative impact on GDP growth this quarter. We are confident France will avoid a recession this year – with a GDP growth forecast around 0.6-0.7%. This is not high but it is better than in many other eurozone countries.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Hawkish Bostic puts the focus on Powell – 7 February 2023 | Saxo Group (home.saxo)
Saxo Bank Quarterly Outlook: Bullish View On Industrial Metals

Copper Together With Aluminium Has Already Led A Strong Start To 2023 For Industrial Metals

Saxo Bank Saxo Bank 07.02.2023 09:49
Summary:  Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics. Cautious and defensive trading – with a few exceptions – best describes the early 2023 price action across the commodity sector, a year that hopefully will provide less drama and volatility than last year, when the Bloomberg Commodity Total Return index surged higher to record a first quarter gain of 38 percent before spending the rest of the year drifting lower before closing with a 16 percent gain. This was a very respectable return considering the stronger dollar and market participants spending the second half increasingly worrying about a recession.  This focus helped drive financial deleveraging across the commodity sector and physical destocking to the point that some markets have ended up being ill prepared for a strong recovery in China and even less so should the most widely anticipated recession in history turn out to be a shallow one. Tight market conditions across most commodities in 2022 saw forward curves swing into backwardation, a structure that rewards long positions through the positive carry from rolling (selling) an expiring contract at a higher price than where the next is bought. Backwardation helped drive the mentioned 16 percent return on a passive long investment in the Bloomberg Commodity Total Return index, almost 9 percent above the return signalled through changes in spot prices.  Source: Bloomberg and Saxo The key macroeconomic event that will drive developments in 2023 has, in our opinion, already occurred. The abrupt change in direction from the Chinese government away from its failed zero-Covid tolerance towards reopening and kick-starting its economy will have a major impact on commodity demand at a time where supply of several key commodities from energy to metals and agriculture remains tight. In addition, risk sentiment will likely also be supported by a continued and broad drop in the dollar as US inflation continues to ease, thereby supporting a further downshift in the Fed’s rate hike trajectory. Furthermore, an increased likelihood of an incoming recession either not materialising or becoming weaker than anticipated may also trigger a response from financial and physical traders as positions and stock levels are being rebuilt in anticipation of stronger demand. In such a scenario, the structural underinvestment thesis, mostly impacting energy and mining, will likely attract fresh attention and support prices. The strong gains seen at the start of the year – especially in gold and copper – have in our opinion showed the correct direction for 2023. However, while the direction is correct, we believe the timing could be slightly off, thereby raising the risk of correction before eventually moving higher. With activity in China and parts of Asia unlikely to pick up in earnest until after the Lunar New Year holiday, the prospect of a lull in activity could be the trigger for a pause in the current rally, before gathering fresh momentum and strength from the second quarter and onwards.  Adding these together we conclude the commodity sector remains on a journey towards higher prices, and while the speed of the ascent will slow we project several years ahead where supply of key commodities may struggle to meet demand. With that in mind, we forecast another positive year for commodities resulting in a +10 percent rise in the Bloomberg Total Return Index. Copper Inside our positive view on commodities we are significantly bullish on industrial metals, led by copper, aluminium and lithium due to the green transformation and the enormous political capital being invested in achieving this transition. In addition, the new geopolitical environment will mean a massive boost for the European defence industry which should see double-digit growth rates close to 20 percent per year over the next economic cycle as the European continent doubles its military spending in percentage of GDP. Copper, together with aluminium, has already led a strong start to 2023 for industrial metals on speculation China, the world’s top consumer, will step up its economic support similar to what it did in 2003 (post-WTO entry), 2009 (post-GFC crisis) and 2016 (currency devaluation). This is in order to fuel an economic recovery to offset the economic fallout from President Xi’s failed and now abruptly abandoned zero-Covid policies. This optimism has been mixing with a weaker dollar on speculation that the Federal Reserve is slowing down the pace of future rate hikes as the inflation outlook continues to moderate.  Source: Bloomberg and Saxo The initial and strong rally in copper, however, has primarily been driven by technical and speculative traders frontrunning an expected pickup in demand from China in the coming months. Once the initial rally is over, the hard work begins to support those gains, with an underlying rise in physical demand needed to sustain the rally, not least considering the prospect of increased supply in 2023 as several projects go live. Overall we see copper settle into a USD3.75 to USD4.75 range during the coming months before eventually breaking higher to reach a new record sometime during the second half.  Gold and silver Gold jumped out of the gate to kick off 2023 with strong gains as the positive momentum, supported by a weaker dollar, carried over into the new year. Silver initially struggled to keep up but given our bullish view on copper we see the potential for silver outperforming gold during a year that will signal a turnaround from 2022 as previous headwinds, the stronger dollar and rising yields reverse to add support.  In addition, we see continued strong demand from central banks providing a soft floor in the market. While last year’s record buying of 673 tons during the first three quarters alone (Source: World Gold Council) is unlikely to be repeated, the activity nevertheless is likely to create a soft floor under the market, similar to the one OPEC+ through actively managing supply has established under the crude oil market. Part of that demand is being driven by a handful of central banks wanting to reduce their dollar exposure. This de-dollarisation and general appetite for gold should ensure another strong year of official sector gold buying. Source: Bloomberg and Saxo Adding to this, we expect a friendlier investment environment for gold to reverse last year’s 120 tons reduction via ETFs to a renewed increase. However so far, and despite the strong gains since November, we have yet to see demand for ETFs – often used by long-term focused investors – spring back to life, with total holdings still hovering near a two-year low. ETF demand struggles when investors trust central banks will deliver what they promise, and with inflation coming down that that trust is currently not being challenged.  However, it is our belief that inflation, following a slump during the next six months, will start to revert higher, primarily driven by rising wage pressures and China stimulus raising demand and prices for key commodities, including energy and metals. Until such time we will likely see gold spend most of the first quarter consolidating within a USD1,800 to USD1,950 range, before eventually moving higher to reach a fresh record above USD2,100. If achieved we could see silver return to USD30 per ounce, a level that was briefly challenged in early 2021.  Crude oil Crude oil demand will, according to the International Energy Agency, rise by 1.9 million barrels per day in 2023, bringing the total to the highest ever. The main engine behind that price supportive call is a strong recovery in China as the country moves away from lockdowns towards a growth-focused recovery, driven not only by increased mobility on the ground but also supported by a post-pandemic recovery in jet fuel consumption as pent-up travelling demand is unleashed.  What it will do to prices very much depends on producers’ ability and willingness to bump up supply to meet that increase in demand. We expect multiple challenges will emerge on that front to support higher crude oil prices later in the year once demand in China increases, sanctions on Russian crude and fuel products continue to bite, and OPEC shows limited willingness to increase production.   The theme for our quarterly outlook, ie the model is broken, has very much been felt and seen across the energy sector this past year. Russia’s attempt to stifle a sovereign nation and the Western world's push back against Putin’s aggressions in Ukraine remains a sad and unresolved situation that continues to upset the normal flow and prices of key commodities from industrial metals and key crops to gas, fuel products and not least crude oil. EU and G7 sanctions against Russian oil from December last year has created several new price tiers of oil where quality differences and distance to the end user no longer are the only drivers of price differentials between different crude grades. Seaborne crude oil flows from Russia has held up but will increasingly be challenged in the coming months as EU’s product embargo is introduced in February.  These developments have forced Russia to accept a deep discount on its crude sales to customers not involved in sanctions, especially China and India. The second-wave reaction to these developments has been strong refinery margins in China, a country with capacity beyond what is required for the domestic market. Depending on the strength of the economic rebound in China, we are likely to see an increase in product flows from China to the rest of the world. Together with the US, the Middle East, an emerging refining powerhouse, these flows will likely make up the shortfall in Europe from the removal of supply from Russia.  Crude oil’s trajectory during the first quarter primarily depends on the speed with which demand looks set to recover in China. We believe the recovery will be felt stronger later in the year, and not during the first quarter which seasonally tends to be a weak period for demand. With that in mind we see Brent continue to trade near the lower end of the established range this quarter, mostly in the USD80s before recovering later in the year once recession risks begin to fade, China picks up speed and Russian sanctions bite even harder.  OPEC meanwhile has increasingly managed to rein back some price control, not least considering the level of market share it controls together with members of the OPEC+ group. Through their actions they have been able to create a soft floor under the market and the question remains how they will respond to a renewed pickup in demand. Not least considering their frustrations with Western energy companies and what they see as political interference in global oil flows and not least last year’s decision by the White House to release crude oil from its Strategic Reserves.  Overall we see another year where multiple developments will continue to impact both supply and demand, thereby raising the risk of another volatile year which at times may lead to reduced liquidity and with that fundamentally unwarranted peaks and troughs in the market. Following a relatively weak first quarter where Brent should trade predominately in the USD80s, a demand recovery thereafter combined with supply uncertainties should see Brent recover to trade in the USD90s with the risk of temporary spikes taking it above USD100.   Source: China reopening will drive another strong year for commodities | Saxo Group (home.saxo)
Asia Morning Bites - 23.05.2023

The RBA Sees GDP Slowing To Around 1.5% This And Next Year

Saxo Bank Saxo Bank 07.02.2023 11:05
Summary:  The S&P 500 index toyed with pivotal support yesterday around 4,100 without breaking down through it as the market absorbs the fresh surge in treasury yields in the wake of Friday’s strong US jobs report. The US dollar remains well bid, although the JPY came in stronger overnight on hotter than expected wage growth data, while a far more hawkish than expected RBA boosted the Aussie. Fed Chair Powell will sit for an interview late today. Copper and gold meanwhile have seen no follow-through selling following Friday's breakdown. What is our trading focus? Equities (US500.I and USNAS100.I): Short-term strength is still intact S&P 500 futures continued to roll over from their weak Friday performance with the 4,100 level almost coming into play, but instead of extending downside momentum the index futures turned around from the lows. This morning S&P 500 futures are trading around the 4,130 level, and if they can close above yesterday’s close it will signal the short-term strength in equities, and if not the 4,100 level is in play again opening the range from the 4,000 level. The VIX Index is well behaved these days and the US 10-year yield is already retreating a bit from the recent surge suggesting a quiet day ahead. FX: USD firm, but Japan’s wage data boosts JPY, RBA hawkishness powers AUD overnight The US dollar remained firm on Fed member Bostic’s comments on a potentially higher peak in the Fed Funds rate supported the US dollar overnight. Market pricing has seen an upward revision to terminal rate to 5-5.25% and Treasury yields continued to surge higher. The Japanese yen, being the most yield sensitive, was weak yesterday on the double-whammy of higher US yields and chatter of a dovish new Governor at the Bank of Japan, but the JPY rose overnight on December wage data showing the strongest rise in wage growth in 25 years.  AUDUSD pushed well below 0.6900 but then bounced hard on a far more “hawkish” (less dovish) RBA than expected – see below. EURUSD is stil mired below 1.0750 this morning and GBPUSD avoided a move below 1.2000 as BOE’s Mann noted that the next step in the Bank Rate is still more likely to be another hike than a cut or hold. Crude oil (CLH3 & LCOJ3) supported by supply concerns and Saudi price hike Crude oil trades higher for a second day following last week's long-liquidation-driven slump. The turnaround was given further support after Turkey halted around 1m b/d of flows from Northern Iraq to the Ceyhan export terminal following a major earthquake in the region. In addition, Saudi Aramco instead of a cut increased its official selling price for its flagship Arab Light grade to Asia in March, suggesting confidence in the demand outlook. Focus turning to the US where the EIA will publish its monthly Short-term Energy Outlook and later the API its weekly inventory report. Weeks of bigger-than-expected inventory rises in the US has been one of the reasons, together with a slow pickup in demand from China, have been the main reasons why speculators were forced to exit recently established longs. The Brent prompt spread meanwhile has risen to 33 cents, signalling increased tightness. Brent support at $79 and resistance at $84.30. Gold (XAUUSD) sees no follow-through selling ahead of Powell comments Gold’s long overdue correction which accelerated on Friday below support-turned-resistance at $1900, did not see any follow-through selling on Monday despite continued dollar and yield strength. The yellow metal remains up 16% from the November low and even a further drop to $1829 would still be categorised as a weak correction within a strong uptrend. So far, it has managed to find support around $1860 as the market awaits comments from Fed chair Powell today at the Economic Club of Washington. Atlanta Fed’s Bostic - a non-voting member this year - meanwhile said the FOMC may have to raise rates by more than expected, thereby supporting the hawkish narrative the bank is trying to convey. Copper awaiting Chinese demand recovery Copper led the base metals sector lower as the impact of the strong US jobs report last week lingered. Spot copper currently trades at a discount in China as stockpiles have continued to rise while a price measuring demand for imports has dropped to a nine-month low. However, while the market awaits the expected pickup in China, supply disruptions in Peru have so far prevented the price from challenging key support in the $3.95 to $4 area. Aluminum briefly spiked after the reports suggesting the US was preparing to slap a 200% tariff on Russian aluminum imports. Russia is the world’s second largest producer of the metal and traditionally has accounted for 10% of US imports. However, imports fell to virtually zero in October last year. As a result, the tariff is expected to have limited impact on supply. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jumped further to reprice the Fed’s rate path Treasuries extended the post-job report sell-off, seeing yields on the 2-year soaring 18bps to 4.47% and those on the 10-year rising 12bps to 3.64% before easing back slightly. Peak Fed rate expectations for this summer reached as high as 5.15% yesterday, a new high. Hawkish comments from the Fed’s Bostic, ECB officials, and Bank of England officials added additional pressure to the market which was already in motion to decline in price and rise in yields. Atlanta Fed President Bostic (voter 2024) said the strong job report would probably mean that the Fed have to raise rates more than he had projected. Earlier in the day, the weakness in Treasuries started from spill over selling pressure on U.K gilts on hawkish comments from Catherine Mann, external member of the BOE’s Monetary Policy Committee and Huw Phill, chief economist of the BOE, suggest more rate hikes. ECB Governing Council member Robert Holzmann added to the hawkish pushback from central banks, saying “the risk of over-tightening seems dwarfed by the risk of doing too little”. For today, all eyes are on Powell’s scheduled interview. Read next: Adani Group Company's Crisis Is Gaining Momentum, Finland Is The Happiest Country| FXMAG.COM What is going on? Japan’s wage growth strongest in 25 years The December wage growth data released overnight blew past estimates, posting a 4.8% gain versus expectations of a rise of 2.5%. This was the strongest rise in wages since 1997 and could allow the Bank of Japan to move more rapidly toward some semblance of normalization after soon outgoing Governor Kuroda long touted wage growth as the key to reviving sustained inflation in the Japanese economy. Nationwide strike in France today After a successful demonstration all over France on 19 January, trade unions are calling for new nationwide strike today against the government’s plan to push back the minimum retirement age to 64 and to accelerate a previous reform, called the Touraine reform, which provides for the extension of the required contribution period to 43 years by 2035. Before Covid, the government also tried to implement a pension reform which caused a massive wave of demonstrations across the countries – there was basically almost no public transport in main cities for weeks. This is still uncertain how long the strike will last. But the trade unions are planning to keep fighting as long as needed. Expect a blockage in several sectors (refineries, metro, rail transport, education). Now, we don’t think the strike will have a noticeable negative impact on GDP growth this quarter. We are confident France will avoid a recession this year – with a GDP growth forecast around 0.6-0.7%. This is not high, but it is better than in many other eurozone countries. RBA hikes by 25 bps to 3.35% as expected, guiding for further hikes in the “months ahead” The RBA forecasts slowing spending and economic growth, with unemployment set to rise even as it acknowledged inflation picking up more than expected. Australian 2-year yields jumped 13 basis points from the prior day’s close as the decision was read as hawkish and the peak policy rate this year was revised sharply higher to 3.90% by mid-summer. Still, the RBA sees price rises falling from 6.9% in underlying terms, to 4.75% this year, before ending near the top of its 2-3% target by mid-2025. It sees the jobless rate rising from 3.5% to 3.75% by year-end, and rising to 4.5% by mid-2025, reflecting the lag effect of tightening on corporations. All in all, with the services sector already in contraction, the RBA sees GDP slowing to around 1.5% this and next year as it sees household spending pulling back amid tightening financial conditions, with the post-pandemic spending rush easing. BP misses on Q4 earnings; increases CAPEX in FY23 The European oil and gas major missed on Q4 earnings but remains confident about the near-term future increasing dividends by 10% and planning a further share buyback of $2.75bn. BP is also saying it will grow investments into the energy transition. BP is targeting $16-18bn in capital expenditures for FY23 which is a significant increase from the $12bn in FY22. Nintendo outlook misses Switch estimates The Japanese game console developer announced total Switch unit outlook of 18mn missing estimates of 19mn, but the outlook still reflects a strong underlying growth in the game console. The FY net income outlook is JPY 480bn vs est. JPY 500bn. Hawkish remarks from Fed’s Bostic; Chair Powell due to speak today Atlanta Fed president Bostic (non-voter) spoke on Bloomberg, noting that jobs data from Friday raises the possibility of a higher peak rate, and his base case is still for two more hikes. Bostic also said the Fed could consider moving back to a 50bps hike if it needed to. Chair Powell will be speaking in Washington on Tuesday (1am SGT on Wednesday for Asia), followed by Barr, Williams, Cook, Kashkari, Waller and Harker over the course of the week. What are we watching next? Swedish Riksbank the next G10 in the spotlight Thursday after krona’s recent weakness The Riksbank will meet this Thursday and is expected to hike 50 basis points to bring its policy rate to 3.00%, but is then expected to guide for a more cautious approach of smaller hikes or even a pause on further tightening after the new Riksbank governor Erik Thedeen recently spoke on high inflation and rising interest rates testing the resilience of the Swedish financial system. Yesterday, EURSEK posted its highest level since the heart of the financial crisis back in 2009, making the Riksbank’s task of bringing down inflation a difficult one due to krona weakness, but 2-year EU-Sweden yield spreads have risen to their highest in years on the anticipation that the Riksbank is set to take a relatively more cautious path from here. The Riksbank may add active quantitative tightening (selling holdings rather than merely allowing maturing assets to roll off) to its policy arsenal on Thursday. It looks to be key test for the new Governor and the Swedish krona. Earnings to watch Today’s US earnings focus is Fortinet which is expected to continue its high growth in the cyber security industry with revenue growth expected at 34% y/y and EBITDA margin expected to expand. With higher interest rates there is also a lot of focus on the private equity industry and thus KKR’s outlook is a must watch for understanding the dynamics in risk capital. Tuesday: Carlsberg, BNP Paribas, Siemens Energy, SoftBank Group, Nintendo, BP, Linde, Vertex Pharmaceuticals, KKR & Co, Fortinet, DuPont, Illumina, Enphase Energy Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare Friday: Enbridge, Constellation Software Economic calendar highlights for today (times GMT) 0810 – ECB's Klaas Knot to speak0900 – UK Bank of England’s Ramsden to speak1000 – ECB's Villeroy to speak1015 – UK Bank of England’s Pill to speak1330 – Canada Dec. International Merchandise Trade1330 – US Dec. Trade Balance1700 – ECB’s Schnabel to Speak1700 – US Fed Chair Powell interview1700 – EIA's Short-term Energy Outlook (STEO)1730 – Canada Bank of Canada Governor Macklem to speak2000 – US Dec. Consumer Credit2130 – API's Weekly Crude and Fuel Stock Report     Source: Financial Markets Today: Quick Take – February 7, 2023 | Saxo Group (home.saxo)
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Pare Some Losses, Oil Prices Are Bouncing Back

Craig Erlam Craig Erlam 07.02.2023 15:35
Still rangebound Oil prices are bouncing back again today, continuing their better start to the week. The apparent success of China’s transition from zero-Covid to living with it owes a lot to the rebound we’re seeing as a strong recovery will naturally drive much higher demand and competition. That said, markets have been basically range-bound since early December – albeit in a wide range – and the latest recovery simply takes the price back into the middle of that range. The temporary suspension at the Ceyhan terminal following the earthquake in the region may have also lifted prices a little on Monday but with that likely to be lifted soon after no damage was discovered, it’s unlikely to have been a significant factor in the price moves. Read next: EUR/USD Drop Below 1.0700$ And GBP/USD Drop To 1.967$, The Aussie Pair Holds Above 0.69| FXMAG.COM Correction may have further to run The gold sell-off appears to have stalled around $1,860, where it has seen some support over the last couple of sessions. This was a notable level on the way up as well last month but I suspect it may not represent the end of the correction, given how considerable the rally was from the start of November until last week. We could see gold pare some losses, at which point $1,900 would obviously be interesting, being such a significant area of support in recent weeks. A move lower could draw interest to $1,820-$1,830 which stands out as a big initial test. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Are crude oil prices rebounding on the back of a possible debt ceiling deal?

The Commodities Feed: Ceyhan flows ordered to restart

ING Economics ING Economics 08.02.2023 09:02
The oil market rallied yesterday partly driven by supply concerns related to the halting of operations at the Ceyhan export terminal. However, these worries should subside with Turkey ordering the restart of flows to the terminal Source: Shutterstock Energy- Ceyhan terminal restart Turkey yesterday ordered the restart of oil flows to the Ceyhan export terminal after flows were suspended as a precaution following the devastating earthquake which hit Turkey and Syria. The terminal ships around 1MMbbls/d of Azerbaijani and Iraqi crude oil from the Mediterranean. The suspension had raised supply concerns, however, the quick restart should ease those worries. The latest numbers from the API show that US crude oil inventories fell by 2.2MMbbls last week, while crude stocks at the WTI delivery hub, Cushing, increased by a modest 178Mbbls. The numbers were more bearish for refined products, with gasoline and distillate fuel oil inventories increasing by 5.3MMbbls and 1.1MMbbls respectively. The EIA will release its weekly inventory numbers later today. The EIA released its monthly Short Term Energy Outlook yesterday, in which it increased US crude oil production estimates for 2023 marginally from 12.41MMbbls/d to 12.49MMbbls/d, while output was expected to grow by a little more than 590Mbbls/d YoY. For 2024, crude oil production estimates were lowered from 12.81MMbbls/d to 12.65MMbbls/d, which leaves YoY growth at a fairly modest 160Mbbls/d. Metals - China continues to boost gold reserves The People’s Bank of China increased its gold reserves by about 15 tonnes in January, a third consecutive month of increases, to a total of 2,025 tonnes. In November and December, China added a combined 62 tonnes of gold. Before reporting gold reserves for November, China hadn’t reported any increases since September 2019. For nickel, the preliminary estimates from the US Geological Survey (USGS) show that global nickel mine production rose 21% YoY to 3.3mt in 2022, compared to 2.73mt in 2021. Most of the additions came from Indonesia (+54% YoY, 1.6mt) followed by the Philippines (330kt) and Russia (220kt). For Indonesia, the significant rise in production was mainly due to the ongoing commissioning of NPI and stainless steel projects. For lead, the Shanghai Metals Market (SMM) reported that a primary lead smelter in Hunan province had closed for maintenance for the week with operations set to resume next week. An estimated 2,000 tonnes of primary lead output is expected to be impacted in February due to the ongoing maintenance of the smelter. Agriculture – Brazil's soybean harvest slows There are reports that regular rains in Brazil will continue to weigh on the pace of the domestic soybean harvest. According to CONAB, so far, Brazil has harvested 9% of its 2022/23 soybean crop, down from 17% in the same period a year ago. Brazil is expected to harvest a record soybean crop of 153mt this season, up from 126mt last season. The issue with the slow pace of soybean harvesting is that it could delay safrinha corn plantings. Read this article on THINK TagsUS oil production Soybeans Oil Nickel Gold EIA Corn Ceyhan   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Navigating Inflation and Central Bank Meetings: Assessing Rate Hike Odds

Disney Is Expected To Report Revenue Growth Of 7%, Crude Oil Pirces Was Up

Saxo Bank Saxo Bank 08.02.2023 09:25
Summary:  Bumpy ride for the markets as Fed Chair Powell repeated his disinflationary remark but later added that the Fed will need to do more rate increases. NASDAQ led the gains, supported by Microsoft and Alphabet, despite another day higher in US 10-year yields. USD was broadly softer with JPY leading the gains, while EUR lagged. RBA’s hawkish guidance supported AUDUSD as China demand upturn is still awaited. Gold steady and oil prices jumped higher on improving demand outlook.   What’s happening in markets? US equities (US500.I and USNAS100.I): Short-term strength is still intact On Tuesday the S&P 500 rallied 1.3% in a choppy session to close at 4,164, regaining some short-term strength. Traders absorbed Powell's remarks (for details of his comments, please read below) and took stocks to rebound and close near the day high. So, we’re seeing the technical indicators (the MACD and RSI) behaving - supporting short-term strength, as the VIX Index is too. The advance in the S&P500 was led by energy, communication services, and information technology. Nasdaq rose 2.1% to 12,728, driven by strong gains in mega-cap names such as Microsoft (MSFT:xnas) up 4.2% and Alphabet (GOOGL:xnas) up 4.6%. Take-Twe Interactive (TTWO:xnas) jumped 7.9% after the game software company announced cost-cutting. Du Pont (DD:xnys) surged 7.5% following earnings and margins beat analyst estimates. Royal Caribbean Cruises (RCL:xnys) rose 7.2% on upbeat guidance, citing “a record-breaking Wave season”. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) edged up on Powell’s comments and a weak auction Fed Chair Powell’s comments made at the much anticipated moderated discussion before the Economic Club of Washington, D.C. were less hawkish than feared. He started by repeating that the disinflation process had begun and his remarks saw yields on the front end tumbling 10bps with the 2-year down to as low as 4.38 and the curve bull steepened. The fall in yields quickly reversed after Powell said that last Friday’s payroll report was “certainly strong-stronger than anyone I know expected” and that inflation “will go away quickly and painlessly” is not the Fed’s base case and the Fed has to “do more rate increases”.  More selling came after a weak 3-year action that was awarded 4bps cheaper than the market at the time of the auction, and the bid-to-cover ratio dropped to 2.33 from 2.84 last time. The corporate supply of around USD15 billion of new issues, including USD11 billion from Intel also weighed on the market. The 2-year pared almost all its early gains to settle 1bp richer at 4.46% while yields on the 10-year rose 3bps to 3.67%. Australian equites (ASXSP200.I); short term pressure as RBA hikes by 25bps to 3.35% guiding for more hikes in “months ahead”   ASX200 futures suggest the market will rally 0.46%, and likely erase yesterday’s 0.5% fall. But short-term pressure has built up by the RBA indicating more hikes are needed. Coal prices are down 36% and picked up this week almost 7% after the Australia Energy Market Operator said coal supply and gas supply in Australia is short and will stay short till 2026, so we think the RBA could make upward revisions to underlying inflation forecasts on Friday, despite the Bank keeping its headline CPI, unemployment and activity forecasts broadly unchanged. For investors, this means volatility in the ASX200 could pick up on Friday - financials and insurers could be supported with the RBA seeing more hikes ahead. The services sector is already in contraction, yet the RBA sees GDP slowing to around 1.5% this and next year, expecting household spending to pull back amid tightening financial conditions, as the post-pandemic spending rush has eased. This means, consumer discretionary stocks likely face headwinds. On the flip side, the energy sector is being supported. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) in thin trading; ChatGPT names soared After climbing as much as 1.4% in the morning, Hang Seng Index retraced to close near the day low, inching up 0.4% from Monday. The trading volume was light. The Hang Seng TECH index outperformed and closed 1.2% higher, led by a 15.3% jump in Baidu (09888”xhkg) on confirmation from the company that it is working on a ChatGPT-like product. The three Chinese state-owned oil giants advanced, led by CNOOC (00883:xhkg) up 2.2%. In A-shares, ChatGPT names continued to outperform. Household appliances, media, environmental, and real estate names gained. CSI300 registered a modest 0.2% gain in a choppy and low-volume session. Northbound flows were net selling of RMB3 billion, being outflow for the third day in a row. FX: Yen strength returned as Powell adds little new information Dollar was choppy as Powell initially reiterated his remarks from last week but later made a comment that the Fed could more if the data stays hot. Still, market pricing of the Fed’s path was little changed, and dollar ended the day broadly lower against all G10 currencies. The Japanese yen recouped come strength despite somewhat higher Treasury yields, with USDJPY falling as low as 130.49 before bouncing back higher to 131.50. AUDUSD, although still waiting for the upturn is Chinese demand, was supported by the RBA’s guidance to hike more. AUDUSD above 0.6960 in early Asian hours, with AUDNZD moving above 1.1000 to near 3-month highs. EURUSD was a laggard as it took a look below 1.07 before bouncing back to 1.0720+ levels subsequently. Crude oil (CLH3 & LCOJ3) prices rise on demand outlook and supply concerns WTI prices jumped 4% and Brent was up 3% after Powell stayed away from turning significantly more hawkish after the bumper jobs report last Friday. Meanwhile, demand outlook continues to improve as signaled by Saudi Aramco’s price increases, and API also suggested a draw in US crude stocks. API reported US crude stockpiles declined by 2.2mm barrels last week, compared to expectations of a 2.5mm barrels increase. Both OPEC and EIA have been upbeat on China’s demand recovery as well. The market shrugged off reports that flows through the 1mb/d Ceyhan oil terminal in Turkey will resume shortly, and supply side issues remained in focus as well. The Energy Information Administration lowered its forecast for US crude oil production in 2024. Gold (XAUUSD) strength continues to hold up despite a stronger dollar Gold continues to remain supported around the $1860 level despite another increase in US yields overnight. Buying by central banks remains buoyant, with China raising its gold reserves for a third straight month in January, up 6.9% MoM. The momentum below $1900 appears to be lacking, suggesting the move remains a correction in the larger bullish trend. Eyes on next supports at $1845 and $1828.  Read next: The Court In Munich Decided In Favor Of BMW| FXMAG.COM What to consider? Powell’s balanced narrative unable to spur market caution; Kashkari sees terminal rate at 5.4% Fed Chair Powell’s message last night was only marginally more hawkish compared to last week’s Fed meeting, giving markets enough reasons to continue to give more emphasis to data. Powell qualified his ‘disinflationary’ remark from last week’s Fed meeting by saying it is at a very early stage, and only in the goods sector. He was surprised by the strength of the jobs report, and said that the Fed probably needs to hike rates further and they have still not reached a sufficiently restrictive level. Powell expects 2023 to be a year of a significant decline in inflation, but it will certainly take into next year to get down close to 2% - in fitting with the December SEP's. Market’s pricing of the Fed rate path saw no material change following Powell’s comments. Meanwhile, Fed member Kashkari (voter) was more hawkish saying if he had to pick a rate forecast, would not lower it from his Dec SEP forecast of 5.4% but rates may have to be held at a higher level for longer. He added that markets are more confident than he is about inflation falling. Weak German industrial production, CPI due today Germany’s industrial production for December saw a steeper fall than expected, coming in at -3.1% MoM (vs. est -0.8%) while the November print was revised higher to +0.4%. After a technical delay last week, Germany’s inflation prints for January will be released today. Spain and France printed higher-than-expected CPI for the month, while the region-wide printed was softer last week. This suggests Germany’s inflation likely eased due to energy price increases being more subdued than previously expected. Meanwhile, adjustments in the CPI basket could also likely result in a softer print. Bloomberg consensus expects 10.0% YoY from 9.6% YoY in December, with the MoM print also turning positive at 1.3% from -1.2% previously. Walt Disney to report earnings The entertainment giant Disney is expected to report revenue growth of 7% Y/Y and EPS of $0.76 up 21% Y/Y and a lot of focus will be on Nelson Peltz, the activist investor that has gone into the company, and his quest for higher streaming profitability and potentially changing the asset portfolio of Disney.  Saxo launches in Q1 2023 quarterly outlook: The Models are Broken Saxo’s quarterly outlook released argues that the economic models and assumptions of how market cycles are supposed to work are broken. We explore how this may affect both equities and commodities, as well inflation being higher-for-longer and how could it impact forex and crypto. Read the outlook here.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Powell adds little new information – 8 February 2023 | Saxo Group (home.saxo)
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

Powell’s Interview Yesterday Was Interpreted By The Equity Market As A Positive Thing

Saxo Bank Saxo Bank 08.02.2023 09:35
Summary:  Equity markets rushed back higher despite treasury yields maintaining altitude, with much of the activity on the day around Fed Chair Powell’s interview, which sparked considerable two-way volatility before the market decided that he wasn’t sending too hawkish a message. With strong risk sentiment, the USD was mixed and commodity currencies are trying to stage a comeback from their recent sell-off. Oil posted its strongest rally in weeks yesterday. What is our trading focus? US equities (US500.I and USNAS100.I): growth vs policy rate Powell’s interview yesterday saying the US jobs market is so strong that more rate hikes are needed was interpreted by the equity market as a positive thing. Investors are clearly weighing growth above the discount rate for now, but that is only until rates hit a level in which it slows down the economy. The downside risk to Powell’s comments is that while inflationary pressures are easing in the goods economy, the services sector, which has more sticky inflation components, could underpin high inflation for much longer than anticipated. If S&P 500 futures can break above the 4,200 level again and close above then the cyclical top around 4,300 from back in August is the next major level to watch out for. Chinese equities: Hang Seng (HIG3) and CSI300: (03188:xhkg) tread water Hang Seng Index and CSI300 tread water and are nearly flat as investors wait for signs of recovery in China after the initial month-long rally that has repriced equities higher to reflect the change in policy directions in China. The benchmark Hang Seng Index was dragged by Meituan (03690:xhkg) which tumbled 6.5% on news that Douyin is launching food delivery service in March. In A-shares, northbound flows returned to net buying after three days of net selling. Real estate names outperformed and solid-state battery concept stocks were among the top gainers. FX: Yen steadies, USD choppy to lower as Powell adds little new information The US dollar was choppy as Powell initially reiterated his remarks from last week but later made a comment that the Fed could do more if the data stays hot (see more blow on Powell’s interview). Still, market pricing of the Fed’s path was little changed, and dollar ended the day broadly lower against all G10 currencies. The Japanese yen recouped come strength despite somewhat higher Treasury yields, with USDJPY falling as low as 130.49 before bouncing back higher to as high as 131.50 overnight. AUDUSD, although still waiting for the upturn is Chinese demand, was supported by RBA’s Tuesday guidance to hike more. AUDUSD above 0.6960 in early Asian hours, with AUDNZD moving above 1.1000 to near 3-month highs. EURUSD was a laggard as it took a look below 1.07 before bouncing back to 1.0720+ levels subsequently. GBPUSD tested its 200-day moving average near 1.1950 but managed a rebound back well above 1.2000 yesterday. Crude oil (CLH3 & LCOJ3) prices rise on demand outlook and supply concerns WTI prices jumped 4% and Brent was up 3% after Powell stayed away from turning significantly more hawkish after the bumper jobs report last Friday. Meanwhile, demand outlook continues to improve as signalled by Saudi Aramco’s price increases, and API also suggested a draw in US crude stocks. API reported US crude stockpiles declined by 2.2mm barrels last week, compared to expectations of a 2.5mm barrels increase. Both OPEC and EIA have been upbeat on China’s demand recovery as well. The market shrugged off reports that flows through the 1mb/d Ceyhan oil terminal in Turkey will resume shortly, and supply side issues remained in focus as well. The Energy Information Administration lowered its forecast for US crude oil production in 2024. Gold (XAUUSD) strength sustains Gold remains supported around the $1860 level despite another increase in US yields overnight. Buying by central banks remains buoyant, with China raising its gold reserves for a third straight month in January, up 6.9% MoM. The downside momentum below $1900 has failed to follow through, so far suggesting the move remains a correction in the larger bullish trend. Eyes on next supports at $1845 and $1828 if selling resumes. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) edged up on Powell’s comments and a weak 3-year auction Fed Chair Powell’s comments made at the much-anticipated moderated discussion before the Economic Club of Washington, D.C. were less hawkish than feared as noted below. Yields and markets swung wildly after he started by repeating that the disinflation process had begun, which saw yields on the front end tumbling 10bps before quickly reversing after Powell said that last Friday’s payroll report was “certainly strong-stronger than anyone I know expected” and that inflation going away “quickly and painlessly” is not the Fed’s base case and the Fed has to “do more rate increases”.  More treasury selling came after a weak 3-year action that was awarded 4bps cheaper than the market at the time of the auction, and the bid-to-cover ratio dropped to 2.33 from 2.84 last time. The corporate supply of around USD15 billion of new issues, including USD11 billion from Intel (discussed below) also weighed on the market. The 2-year pared almost all its early gains to settle 1bp richer at 4.46% while yields on the 10-year rose 3bps to 3.67%. Read next: The Court In Munich Decided In Favor Of BMW| FXMAG.COM What is going on? Powell’s balanced narrative unable to spur market caution; Kashkari sees terminal rate at 5.4% Fed Chair Powell’s message last night was only marginally more hawkish compared to last week’s Fed meeting, giving markets enough reasons to continue to give more emphasis to data on the sense that Powell was not pushing back against the market reaction last Wednesday. Powell qualified his ‘disinflationary’ remark from last week’s Fed meeting by saying it is at a very early stage, and only in the goods sector. He was surprised by the strength of the jobs report, and said that the Fed probably needs to hike rates further and they have still not reached a sufficiently restrictive level. Powell expects 2023 to be a year of a significant decline in inflation, but it will certainly take into next year to get down close to 2% - in fitting with the December SEP's. Market’s pricing of the Fed rate path saw no material change following Powell’s comments. Meanwhile, Fed member Kashkari (voter) was more hawkish saying if he had to pick a rate forecast, would not lower it from his Dec SEP forecast of 5.4% but rates may have to be held at a higher level for longer. He added that markets are more confident than he is about inflation falling. Earnings: Fortinet, Maersk, and Vestas Fortinet, one of the largest cyber security companies on revenue, reported Q4 revenue and EPS that beat estimates and the FY23 outlook on operating margins and revenue were in line with analyst estimates. It was clear that investors had lowered their expectations below that of analysts as the FY23 outlook hitting estimates led to a 16% rally in extended trading. Maersk is reporting lower than estimates Q4 revenue and EBITDA in line, but the FY23 outlook on EBITDA of $8-11bn vs est. $13.5bn is a big miss and maybe a bit too conservative if the cyclical upturn gathers steam. Vestas is reporting a FY23 outlook that signals further challenges and weakness in the wind turbine business with FY23 revenue outlook at €14-15.5bn vs est. €14.8bn and adjusted EBIT margin of –2% to +3%. Shares are indicated down 5% in pre-market trading. Weak German industrial production, delayed Jan. preliminary CPI due today Germany’s industrial production for December saw a steeper fall than expected, coming in at -3.1% MoM (vs. estimated -0.8%) while the November print was revised higher to +0.4%. After a technical delay last week, Germany’s inflation prints for January will be released today. Spain and France printed higher-than-expected CPI for the month, while the region-wide printed was softer last week. This suggests Germany’s inflation likely eased due to energy price increases being more subdued than previously expected. Meanwhile, adjustments in the CPI basket could also likely result in a softer print. Bloomberg consensus expects 10.0% YoY from 9.6% YoY in December, with the MoM print also turning positive at 1.3% from -1.2% previously. Biden State of the Union address includes tough rhetoric on China In Biden’s State of the Union address last night, the US President claimed autocratic regimes were growing weaker and suggested that China and its leadership are in a challenged position, shouting at one point “Name me a world leader who’d change places with Xi Jinping. Name me one, name me one.” and later saying that “I am committed to work with China where it can advance American interest and benefit the world....but make no mistake: as we made clear last week [in shooting down purported Chinese spy balloon] if China threatens our sovereignty, we will act to protect our country, and we did.” Intel places $11bn in bonds in a seven-part deal. To fund its expansion of production facilities, funding working capital and refinancing existing debt, Intel has placed some $11 billion in funds via corporate bond issuance yesterday, a series of 7 bonds with maturities of 3-, 5-, 7-, 10-,20-,30- and 40 years. The last of these features a yield that is 2.15% higher than US 30-year T-bonds, some 20 basis points tighter than anticipated (The US 30-year T-bond yield is currently near 3.70%). By comparison, the current dividend yield on Intel stock is near 5.00%. What are we watching next? String of Fed speakers today, 10-year Treasury auction Incoming data may have more primacy for moving US treasury yields than Fed speakers, but we do have a rather heavy schedule of FOMC voters on tap for today, including the NY Fed’s Williams, who will be interviewed at a live WSJ event. Board of Govern’s members Lisa Cook and Michael Barr are also out speaking as noted in the calendar highlights below. The hawkish Minneapolis Fed president Kashkari and Board of Governors member Waller are out speaking later in the day, the latter of these discussing the economic outlook. After the recent resurgence in treasury yields and yesterday’s weak 3-year treasury auction, plenty of attention as well on today’s 10-year treasury auction. Earnings to watch Today’s US earnings focus is Uber Technologies and Walt Disney. The on-demand ride hailing service Uber will report before the market opens with analysts expecting revenue growth of 47% y/y in Q4 with the EBITDA margin expending further into positive territory as the company prepares to become fully profitable in FY23. Disney reporting after the market close is expected to see revenue growth of 7% y/y in Q4 and EBITDA margin bouncing back from the low point in Q3. Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare Friday: Enbridge, Constellation Software Economic calendar highlights for today (times GMT) Poland Base Rate Announcement 1415 – US Fed’s Williams (voter) to speak 1500 – US Fed’s Barr (Voter) and Bostic to speak 1530 – US EIA Weekly Crude Oil and Product Inventories 1730 – US Fed’s Kashkari (Voter 2023) to speak 1800 – US 10-year Treasury auction 1830 – Canada Bank of Canada publishes summary of deliberations 1845 – US Fed’s Waller (Voter) to speak 0001 – UK Jan. RICS House Price Balance Source: Financial Markets Today: Quick Take – February 8, 2023 | Saxo Group (home.saxo)
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Gold’s Upside Is Likely Limited, Yesterday’s Speech From The Fed Chair Powell Was Hawkish

Swissquote Bank Swissquote Bank 08.02.2023 11:09
Another hawkish speech from the Federal Reserve (Fed) Chair Jerome Powell turned into a risk rally yesterday. Equities gained, and the bond yields fell. Fed Yet, yesterday’s speech from the Fed Chair Powell was hawkish. He said that the Fed may hike the rates more than what’s priced in if the jobs market remains unexpectedly strong. Stocks market The S&P500 still eased when Powell said they need ‘substantial evidence’ that inflation slowed, but finally, the index erased gains and ended the session by 1.30% higher. Nasdaq jumped more than 2%. The US 2-year yield eased and the US dollar first jumped, then eased. Zoom and Microsoft In individual stock news, Zoom jumped 10% on news that it will lay off 15% of its workforce, while Microsoft jumped 4% after the company unveiled its new ChatGPT-powered Bing! Forex The EURUSD tipped a toe below its latest bullish trend base, and below its 50-DMA yesterday, and the pair is just at the edge of bullish trend again this morning, with no guarantee that it won’t slide further. Cable rebounded before hitting its 200-DMA, at 1.1950, and is back above the 1.20 mark this morning. Read next: The Decline In Tech Valuations Continues To Hit SoftBank| FXMAG.COM Curde Oil BP shares price jumped nearly 8% to above our mid-term 500p target, after reporting report profit, dividend raise and share buyback, while crude oil jumped more than 4% as API revealed a 2-mio-barrel decline in US stockpiles. Watch the full episode to find out more! 0:00 Intro 0:28 Jerome says one thing, investors hear another thing 1:36 Market update 3:30 One bad, two good news 5:02 Zoom jumps 10% 5:37 Why Microsoft’s AI could be longer-lived than metaverse craze? 7.27 FX update 8:28 BP rallies on profits, oil jumps on US inventories 9:37 Gold’s upside is likely limited Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Powell #speech #inflation #jobs #USD #EUR #GBP #XAU #crude #oil #earnings #Dell #Zoom #layoffs #Microsoft #ChatGPT #Bing #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Commodities Feed: Specs continue to cut oil longs

Oil Prices Have Been Trending Higher In Recent Days

Craig Erlam Craig Erlam 08.02.2023 12:39
China to drive stronger demand China may well be the outlier in all of this as there has been no need for excessive monetary tightening and rather, the slowdown in growth is almost certainly behind it. In fact, the transition from zero-Covid to living with it is reportedly going very smoothly which could boost the economy earlier and by more than expected, leading to higher growth forecasts for 2023. While that could support the global economy through a difficult period, it may also worsen the inflation problem due to much higher demand for commodities including crude oil. Oil prices have been trending higher in recent days on these improved forecasts, although they still remain around the middle of the range they’ve traded within since early December. Read next: Douyin Wants To Enter The Food Delivery Industry| FXMAG.COM Gold only mildly buoyed Fed Chair Powell’s soothing words generated some relief in gold as well overnight, although compared to the declines late last week, it was quite mild. The yellow metal has been on a phenomenal run since early December and a correction was growing ever more likely. While traders have welcomed Powell’s consistent stance, it may not be enough to save gold and a deeper correction could well be on the cards. It’s seeing some support now around $1,860 but more substantial support may be found around $1,820-$1,830. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: US announces SPR purchase

The Commodities Feed: US oil and product stocks grow

ING Economics ING Economics 09.02.2023 08:43
Oil prices moved higher yesterday despite builds in both US oil and product inventories. Meanwhile, LME aluminium inventories surged higher yesterday, which put pressure on prices Source: Shutterstock Energy - US crude oil inventories edge higher Oil prices continued to move higher yesterday despite EIA weekly inventory numbers showing that US oil and product inventories increased over the last week. Crude oil inventories grew by 2.42MMbbls, which takes total US commercial inventories to a little more than 455MMbbls - a level last seen in June 2021. Similarly, crude oil inventories at Cushing increased by 1.04MMbbls, which leaves stocks at the WTI delivery hub at their highest level since July 2021. Strong refinery runs over the week may have provided support to the market. Refinery utilisation increased by 2.2pp to 87.9%, the strongest level so far this year. However, stronger refinery runs mean that there were large builds in product inventories. Gasoline and distillate fuel oil stocks increased by 5.01MMbbls and 2.93MMbbls respectively. Metals – LME aluminium stocks surge LME aluminium prices fell by more than 1.7% yesterday following a surge in LME exchange inventories in South Korean warehouses (viewed as the preferred storage hub for Russian metal), raising concerns over unwanted material being offloaded to the exchange. As per the latest LME data, exchange inventories for aluminium rose by 105,500 tonnes (highest since 10th February 2022) to 495,750 tonnes as of yesterday. Meanwhile, LME zinc stocks increased by 3,825 tonnes to 19,425 tonnes, rising from their lowest level since 1975. Data released by the Energy and Mines Ministry of Peru show that total copper output in Peru rose by 19.8% YoY to 251.7kt in December. Looking at individual mine supply gains, output at Cerro Verde and Southern Peru rose 8.1% and 2.6% respectively, while production at Las Bambas rose by 84.8%. Among other metals, Peru’s zinc production contracted 2.7% YoY in December. In its latest statement,  Glencore said that operations at its Antapaccay copper mine in Peru have resumed. The mine halted its mining activities last month when protesters damaged a work camp at the site. Alcoa confirmed that most workers voted in support of a phased restart of its closed aluminium smelter in Spain, according to a report from SMM. The reopening is planned to start in January 2024 and is expected to be completed by October 2025. By the end of 2026, the smelter will be able to reach a production capacity of at least 228kt/year. Read this article on THINK TagsZinc Refined product Oil EIA Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Vestas Wind System FY23 Outlook Signaled Further Challenges And Weakness, The Adani Group Plans To Prepay a $500mn Bridge Loan

Vestas Wind System FY23 Outlook Signaled Further Challenges And Weakness, The Adani Group Plans To Prepay a $500mn Bridge Loan

Saxo Bank Saxo Bank 09.02.2023 09:06
Summary:  U.S. equities pulled back by over 1%, led by a selloff in the tech space. Google’s parent Alphabet tumbled 7.7% after Google's newly introduced Chatbot Bard’s reportedly underwhelming performance. The decline in bond yields following a strong Treasury auction failed to boost the stock market. Investors are excited about the prospect of AI generative content and bid up shares related to ChatGPT-like products and on the other hand, have concerns about the potential disruption to the mega-cap technology companies.   What’s happening in markets? US equities (US500.I and USNAS100.I) lower, dragged by tech selloff US stocks retreated led by a selloff in the technology space on concerns about the disruption caused by the technological advancements in AI-generated content. Alphabet (GOOGL:xnas) tumbled 7.7% after reports of the underwhelming performance and erroneous responses from the company’s newly introduced Chatbot Bard. Meta (META) dropped 4.3%. Lumen Technologies (LUMN), tumbling 20.8% on well-below-expected earnings guidance for 2023, was the biggest lower within the S&P500. S&P 500 drifted down 1.1% and Nasdaq 100 plunged 1.7%. Despite the retracement, the S&P500 and Nasdaq are still in their technical uptrends for now. All 11 sectors of the S&P 500 declined, led by communication services, utilities, and information services. Hawkish comments from several Fed officials also weighed on the market sentiment. Fortinet (FINT:xnas) jumped 10.9% after the cyber security company beat revenue and earnings estimates. Uber (UBER:xnys) gained 5% continuing its uptrend since January, with Uber reporting stronger-than-expected quarterly results. Disney (DIS:xnys) rose 5.5% in extended-hour trading, after reporting earnings beating estimates and planning to cut 7,000 jobs for cost saving. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) pulled back on a strong 10-year auction The reaction in the Treasury market was muted to the chorus of hawkish comments calling for higher for longer from Fed’s Williams, Waller, Kashkari, and Cook.  The action came in after a strong 10-year auction which awarded the notes 3bps richer than the market level at the time of auction and a strong bid-to-offer-cover at 2.66 times, increasing from 2.53 times in the previous auction. Yields on the 10-year fell 6bps to finish Friday at 3.61%. Australian equites (ASXSP200.I): This quarter, focus will be on energy companies and companies benefiting from Chinese students returning ASX200 futures suggest a 0.4% fall on Thursday. However, focus will be on energy companies again with oil markets moving up. In company news, Nine Entertainment (NEC): won the rights to the 2024-2032 Olympic Games so that will excite some. Fortescue Metals (FMG) is hoping its iron project in Gabon will one day rival the giant mines of Australia’s Pilbara, with the West African nation giving the go-ahead for digging to start this year. Also keep an eye on travel businesses and educational firms in the quarter ahead with at least 50,000 students from China expected to return to Australia before the start of semester  - with Beijing’s government ruling that degrees earned online will no longer be accredited. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) lacked of direction Hang Seng Index was nearly flat in directionless trading as investors were waiting for more evidence of recovery in China after the initial month-long rally that had repriced equities higher to reflect the radical change in policy directions in China. The benchmark Hang Seng Index was dragged by Meituan (03690:xhkg) which tumbled 6.5% on reports that Douyin was launching a food delivery service in March. Tech stocks overall were laggards. Hang Seng TECH Index dropped 1.9%. Kuaishou (01024:xhkg) plunged 6.2% following the content-sharing and social platform company banned 500,000 accounts for breaching the company’s policies. SenseTime (00020:xhkg) dropped 6.6% as Softbank trimmed its stake in the AI and vision software maker. Baidu (09888:xhkg) retraced 3.1% to pare some recent strong gains despite southbound flow registering a net buying of HKD 671 million on Wednesday. Online knowledge-sharing platform, Zhihu (02390:xhkg) soared 39.6% on the potential of being benefited by ChatGPT application. NetEase (09999:xhkg) climbed 1.1% as the company is planning to roll out a demo online educational product similar to Chat GPT. Ganfeng Lithium (01772:xhkg) gained 5% following the EV battery maker making breakthrough in manufacturing solid-state power batteries. An EV SUV using Ganfeng’s solid-liquid hybrid lithium-ion batter is expected to come to the market in 2023.  In A-shares, northbound flows registered net selling for the fourth day in a row. CSI300 drifted 0.4%. Media, communication, and defense stocks led the decline. Real estate, transportation, and pharmaceutical names outperformed. FX: Aussie gains stall; sterling outperforms After a strong run higher post-RBA, AUDUSD turned lower overnight on hawkish Fed speak. Pair reversed from 0.6996 highs to 0.6920 and will need either a turn in sentiment or another leg higher in commodity prices to sustain this week’s rally. USDCAD also returned back above 1.3400 despite the surge in oil prices. Sterling bounced off 1.2000 support and bounced back to 1.2100 but still staying below the 38.2% Fibo retracement at 1.2120. UK GDP for Q4 will be released tomorrow. Crude oil (CLH3 & LCOJ3) jumps again despite hawkish Fed and inventory build Oil prices rose 1.7% with WTI to $78.50 and Brent above $85 despite a hawkish rhetoric from Fed members as well as higher inventory levels as demand outlook remains upbeat. The EIA reported US crude stocks building 2.4mln bbls in the latest week, contrasting the private data that indicated a draw of a similar magnitude. On the demand side, TotalEnergies sees oil demand will rise to a record this year, in line with the IEA’s messaging. The International Energy Agency expects oil processing will rise to a record 14.4mb/d over the course of the year. That compares with 13.6mb/d in 2022.  Read next: The GBP/USD Pair Climbed To Around 1.2100, The EUR/USD Pair Is Above 1.0700| FXMAG.COM What to consider? Fed speakers call for higher rates A slew of Fed speakers were on the wires yesterday. While a broad chorus on higher rates was maintained, much of which has been the Fed’s message throughout, markets perceived the messages as hawkish primarily as the January jobs report is still keeping investors concerned. Importantly, all the four speakers last night are voting this year. Christopher Waller said rates may have to stay higher for longer. John Williams called the December dot plot a good guide, adding that rates are "barely into restrictive" territory. He also hinted at a slightly higher terminal rate of 5.0-5.5%. Lisa Cook said "we are not done yet." Neel Kashkari expects the peak to rise above 5% this year as services side of the economy is still hot. Market pricing of the Fed path still pretty much unchanged, with terminal rate priced in at just over 5.1%. European companies outperformed in earnings growth Saxo’s Head of Equity, Peter Garnry, mentioned in his latest notes that European companies are the big winner in the Q4 earnings season with 4.8% earnings growth Q/Q and the highest growth rate in revenue Q/Q compared to US and Chinese companies. European earnings are actually ahead of S&P 500 earnings since Q3 2019. As Peter writes in Saxo’s Q1 Outlook, the comeback to the physical world is also a comeback to European equities. The Q4 earnings season also show that earnings are holding up better than we expected despite margin pressures are still an ongoing theme and could intensify during the year. Maersk guided a downbeat 2023 outlook A.P. Moller-Maersk (MAERSKb:xcse) reported lower than estimated Q4 revenue and in-line EBITDA, but the FY23 outlook on EBITDA of $8-11bn vs est. $13.5bn is a big miss and maybe a bit too conservative if the cyclical upturn gathers steam. Maersk’s guidance for global container trade in 2023 at -2.5% to +0.5% again is at odds with the market’s cyclical growth bet. Maersk’s CEO says that a significant inventory adjustment is taking place and that the world is generally moving to a more normal world. Vestas signals weakness in the wind turbine business Vestas Wind System (VWS:xcse) reported a FY23 outlook that signaled further challenges and weakness in the wind turbine business with FY23 revenue outlook at €14-15.5bn vs est. €14.8bn and adjusted EBIT margin of –2% to +3%. If the cyclical upturn continues, it will most likely put more pressure on industrial metals making it difficult for Vestas to expand its operating margin in 2023. The outlook is at odds with the narrative that Europe is undergoing a boom in green energy as the revenue in 2023 is expected to be the same as in 2020. Judging from analyst estimates, it seems that growth is expected to pick up in 2024 with revenue growing to €17.9bn. One thing is for sure, the lack of great headlines coming out of wind turbine makers will add steam to the movement and support for nuclear power which seems inevitable as part of the solution toward net zero carbon in 2050. Cybersecurity company Fortinet beat estimates Fortinet (FINT:xnas), one of the largest cyber security companies on revenue, reported Q4 revenue and EPS that beat estimates and the FY23 outlook on operating margins and revenue were in line with analyst estimates. It was clear that investors had lowered their expectations below that of analysts as the FY23 outlook hitting estimates led to a rally in extended trading. The outlook on operating margin also confirms that cyber security companies are experiencing little margin pressure. Auto companies Toyota, Honda and Volvo report earnings A bevy of EV and motor companies report today including Toyota Motor, Honda Motor and Volvo Car. We think there could be a risk they report weaker than expected results, similar to Ford; which sent Ford shares 8% lower on Friday. Ford is struggling to make money on its EV business and blamed supply shortages. Metal commodities are a large contributor to car manufacturers costs. And we’ve seen components of EVs rise significantly in price, amid limited supply vs the expectation China will increase demand.  For example consider the average EV needs about 83 kilos of copper- and its price is up 26%, 250 kilos of aluminium are needed - and its price is up 20% from its low. These are some headwinds EV makers are facing, in a market where consumer demand is restricted amid rising interest rates.   Adani prepays bridge loans, earnings support sentiment The Adani Group plans to prepay a $500mn bridge loan due next month, in order to avoid a refinancing at higher rate after the recent sell-off. The effort to deleverage also appears to be a response to banks that had started to step away from lending against Adani debt or a measure to avoid a potential rating downgrade. Recent earnings from Adani companies have also hinted at slower inorganic growth to avoid the need for fresh borrowing, and this is helping to rebuild investor confidence. Markets will wait to see some more such confidence-boosting measures from Adani before we can comfortably put a floor to the allegation-driven declines. MSCI’s quarterly review today will be key for any risks of exclusion.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Market Insights Today: Alphabet tumbled on underwhelming Chatbot performance – 9 February 2023 | Saxo Group (home.saxo)
Sweden: How the Riksbank has made the krona’s path to recovery even narrower

Unusual Scale Of The Swedish Krona Weakness, Crude Oil Trades Higher

Saxo Bank Saxo Bank 09.02.2023 09:56
Summary:  Choppy markets yesterday as the US market erased the prior day’s sharp rally in the ongoing struggle between bulls and bears after the S&P 500 recently cleared important resistance but has stalled out. Treasury yields also dipped after a very strong US 10-year treasury auction as the US yield curve is near its most severe inversion for the cycle. Elsewhere, oil prices have jumped sharply off recent lows over the last three days. What is our trading focus? US equities (US500.I and USNAS100.I): tight trading range Yesterday’s trading session did not confirm the cyclical growth bets in equities with S&P 500 futures erasing the prior gains on Powell’s tight labour market comments and the need for higher policy rates. It feels like the market is transitioning into a tighter range before getting new information on which to decide whether to continue to uptrend or reverse lower. The signs are leaning towards a cyclical uptrend, but the signal-to-noise level remains low across many macro indicators. Yesterday’s open price in S&P 500 futures at 4,167 is the key level to watch on the upside. Chinese equities: Hang Seng (HIG3) and CSI300 (03188:xhkg) lacked of direction Hang Seng Index and CSI300 bounced over 1% after a week-long consolidation. Xiaomi (01810:xhkg), surging 9.5%, was the biggest winner within the Hang Seng Index. Lei Jun, Chairman and founder of the mobile phone and electronic device maker, announced on Twitter in the form of Q & A with a Chatbot that the company is launching its Xiaomi 13 Series mobile phone on 26 Feb. Mobile phone hardware suppliers Sunny Optical (02382:xhkg) and AAC (02018:xhkg) surged 5.3% and 4.1% respectively. The technology space outperformed overall, with the Hang Seng Tech Index climbing 2.5%. In A-shares, food and beverage, communication, defense, and internet-of-things stocks led the advance. FX: Aussie gains stall; sterling outperforms After a strong run higher post-RBA, AUDUSD turned lower yesterday after taking a stab at 0.7000, but was choppy overnight in the Asian session, perhaps buoyed into early European hours by a bounce in metals prices. The key levels for that pair to the downside are the recent 0.6856 low and the 200-day moving average another 50 pips lower currently. USDCAD also returned back above 1.3400 despite the surge in oil prices, with the line of resistance for that pair near 1.3475. Sterling bounced off 1.2000 support in GBPUSD and managed a poke through 1.2100 but has found resistance in that area. The 38.2% Fibo retracement at 1.2120. UK GDP for Q4 will be released tomorrow. The EURGBP rally, meanwhile, has partially deflated after the pair broke well above the key 0.8900 area, trading near 0.8875 this morning and threatening a full reversal if it closes much lower in coming sessions. Crude oil (CLH3 & LCOJ3) prices rise on demand outlook Crude oil trades higher for a fourth day as last week’s long-liquidation-driven sell-off continues to be reversed as the dollar softens and on renewed optimism about the demand outlook for oil, especially in China and other parts of the world that may narrowly avoid a recession. The EIA reported US crude stocks building 2.4mln bbls in the latest week, contrasting the private data that indicated a draw of a similar magnitude. On the demand side, TotalEnergies sees oil demand will rise to a record this year, in line with the IEA’s messaging. Brent is currently trading above its 21-day moving average, currently at $84.95 - in WTI at $78.25 - with a close above likely to provide additional positive momentum. Gold (XAUUSD) trades steady but risk of further weakness lingers Gold remains supported around the $1860 level but so far the failure to break decisively higher to challenge support-turned-resistance in the $1900 area is raising concerns that a correction floor has yet to be found. The yellow metal erased earlier gains on Wednesday after Fed members reaffirmed the view that interest rates will need to keep rising to contain inflation. Since hitting a $1861 low last Friday, gold has been trading within an 18-dollar rising channel, currently between $1870 and $1888, and a break to the downside carry the risk of an extension towards $1828, the 38.2% retracement of the run up from early November. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) pulled back on a strong 10-year auction The reaction in the Treasury market was muted to the chorus of hawkish comments calling for higher for longer from Fed’s Williams, Waller, Kashkari, and Cook.  The action came in after a strong 10-year auction which awarded the notes 3bps richer than the market level at the time of auction and a strong bid-to-offer-cover at 2.66 times, increasing from 2.53 times in the previous auction. Yields on the 10-year fell 6bps to finish Friday at 3.61%. What is going on? Credit Suisse sees weak 2023 on significant outflows The Swiss bank reports this morning Q4 net income loss of CHF 1.4bn vs est. loss of CHF 1.1bn, but even worse the bank is expecting a substantial loss before taxes in 2023, but also expect to bounce back to profitability in 2024. Outflows in Q4 totalled CHF 111bn but deposits looked positive in January according to Credit Suisse. Walt Disney announces job cuts and $5.5bn cost-cutting plan The Walt Disney Company reported quarterly earnings after hours yesterday, with profits of 99 cents per share well north of consensus estimates of 74 cents and revenue growing 7.8% y/y to $23.5bn, also above estimates. Disney+ streaming service subscribers fell 1% in the quarter, mostly due to their Indian streaming service loosing streaming rights to cricket games. CEO Bob Iger announced a $5.5bn cost saving plan that will include a $3bn reduction in movie-production budgets and the axing of 7,000 jobs. Shares were up over 5% in late trading last night, near $117.80 per share. Uber shares gained 5% yesterday after reporting earnings. The rise in Uber accelerated yesterday, posting a new 10-month high after Uber reporting stronger than expected quarterly results. Uber expects its first ever year of profits, including for its ride and Uber Eats businesses. Uber reported its highest ever number of trips for the quarter at more than 2 billion and nearly 1mn trips per hour. Meanwhile Uber is also receiving more advertising dollars, and on track to achieve its $1bn ad revenue in 2024. A fourth activist investor joins the move to shake up Salesforce Three activist investors, Elliott Investment Management, Starboard Value LP, and ValueAct Capital Partners, have already put pressure on Salesforce’s management to cut costs and improve profitability. Wall Street Journal writes that a new activist investor Third Point LLC has now also taken a stake in the software maker. This group of investors will put enormous pressure on the software maker to improve results over the coming year. UK House Prices continue to drop sharply, according to RICS Survey. The UK RICS Price Balance survey registered a new low for the cycle at –47%, suggesting that nearly 50% more of surveyed estate agents are seeing falling prices than rising prices, the lowest number since 2009, during the financial crisis. This was slightly worse than expected and a drop from –42%, although estate expectations are improving with only 20% believing in a worsening outlook for the next 12 months versus 42% a month ago. European gas settles at 17-month low on mild weather outlook. The Dutch TTF gas futures, Europe’s natural gas benchmark, settled at €53.69 on Wednesday, its lowest close since September 2021, and around 25 euros above the five-year average for this time of year. A cold spell across Europe this past week have had no major impact on prices with ample supplies to meet demand, and forecasters are now looking for milder than expected weather for the rest of the month than previously expected. EU gas in storage remains 69% full and we may enter the injection season in late March near 60% and unprecedented high level, even compared with the recession hit 2020 when the level was 54%. Fed speakers call for higher rates A slew of Fed speakers were on the wires yesterday. While a broad chorus on higher rates was maintained, much of which has been the Fed’s message throughout, markets perceived the messages as hawkish primarily as the January jobs report is still keeping investors concerned. Importantly, all the four speakers last night are voting this year. Christopher Waller said rates may have to stay higher for longer. John Williams called the December dot plot a good guide, adding that rates are "barely into restrictive" territory. He also hinted at a slightly higher terminal rate of 5.0-5.5%. Lisa Cook said "we are not done yet." Neel Kashkari expects the peak to rise above 5% this year as services side of the economy is still hot. Market pricing of the Fed path still pretty much unchanged, with terminal rate priced in at just over 5.1%.  Read next: The GBP/USD Pair Climbed To Around 1.2100, The EUR/USD Pair Is Above 1.0700| FXMAG.COM What are we watching next? Sweden’s Riksbank to hike today – watching guidance after krona’s woeful weakness. EURSEK recently touched its highest level since the global financial crisis back in 2009, a rather unusual scale of SEK weakness, given strong global risk sentiment and an improved outlook for Europe. The new Riksbank governor Erik Thedeen warned on the concerns that rate rises and high inflation (which hit over 12% YoY a the headline and 10.2% for core inflation in December) are risks for Sweden’s financial system, suggesting that the central bank may be reluctant to continue hiking much more beyond today’s 50 basis point rate rise, which would take the policy rate to 3.00%. With 10-year Swedish government bonds trading with a yield south of 2.00%, the Swedish yield curve is even more steeply inverted than Germany’s, suggesting strong concerns for economic growth. RBA inflation forecasts due tomorrow as Chinese students set to return to AU The AUDUSD has had a volatile week, sentiment was lifted a bit overnight in Australia as the iron ore (SCOA) and copper prices moved up over 1% each. China recently docked its first Australian coal import shipment in two years. In what can only prove a boost to the Australian economy, almost 50,000 Chinese students are expected to arrive in Australia this month- ahead of the start of semester. This is due to Beijing’s government ruling that degrees earned online will no longer be recognized. Tomorrow, the RBA will issue its quarterly economic forecasts and policy outlook in Australia on Friday. Earnings to watch Today’s US earnings focus is PepsiCo and PayPal with analysts expecting PepsiCo to report revenue growth of 7% y/y and EPS of $1.64 up 7% y/y as the beverage and snacks business is resilient during inflation. PayPal earnings will an interesting to watch as Adyen in Europe yesterday spooked markets with a significant decline in the EBITDA margin on more hiring and investments in infrastructure. Analysts expect PayPal to report revenue growth of 7% y/y and EPS of $1.20 up 41% y/y. Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare Friday: Enbridge, Constellation Software Economic calendar highlights for today (times GMT) 0830 – Sweden Riksbank Policy Rate 0945 – Bank of England Governor Andrew Bailey to testify 1330 – US Weekly Initial Jobless Claims 1400 – Poland National Bank Governor Glapinski press conference 1530 – US Weekly Natural Gas Storage Change 1900 – Mexico Rate Announcement 0030 – Australia RBA Monetary Policy Statement 0130 – China Jan. CPI/PPI   Source: Financial Markets Today: Quick Take – February 9, 2023 | Saxo Group (home.saxo)
BRICS Summit's Expansion Discussion: Impact on De-dollarisation Speed

Equities Fall On Hawkish Fed Comments, Uber, Disney Jump

Swissquote Bank Swissquote Bank 09.02.2023 12:58
US equities fell yesterday on the back of two important factors: hawkish comments from the Federal Reserve (Fed) members, and the unexpected surge in the American used car prices. Stocks market The S&P500 fell more than 1%, while Nasdaq slid around 1.80%. Inside Nasdaq, Google had a particularly rough day, to say the least. The company posted a Tweet showing Bard in action, and the tweet went wrong, as Bard gave the wrong answer! The stock price slumped by more than 9% at some point. Microsoft Microsoft on the other hand was upbeat on the news, and its valuation shortly surpassed the $2 trillion mark. Uber, Disney Elsewhere, Uber jumped more than 5.5% on stronger than expected results. Disney also jumped by more than 5% in the afterhours, after reporting better than expected results, and the promise to slash $5.5 billion in costs, along with 7000 jobs. The US futures are in the positive at the time I am talking here, but the bears are not far away. Read next: Credit Suisse Reported Its Biggest Annual Loss Since The 2008, Ukrainian President Is Asking For Help And More Weapons In Brussels| FXMAG.COM Forex In the FX, the US dollar remains upbeat, but the 50-DMA offers remain a solid resistance to a bullish breakout. Likewise, the EURUSD remains bid at around the 50-DMA, and the dollar-yen remains offered into the 50-DMA. So that 50-DMA mark is the key resistance that must be cleared to set the dollar bulls free for further appreciation, and de-block the situation in the FX space. Energy In energy, US crude extended gains above its own 50-DMA yesterday. Could it extend gains higher, and by how much? Watch the full episode to find out more! 0:00 Intro 0:50 Equities fall on hawkish Fed comments… 3:45 … and sudden jump in used-car prices 5:54 Bard’s gaffe costs Google more than $100bn in market cap 7:22 Uber, Disney jump after earnings 8:29 USD must clear 50-dma for further appreciation 9:00 Crude’s next challenge Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Google #Bard #AI #gaffe #Microsoft #ChatGPT #Fed #hawkish #comments #inflation #jobs #USD #EUR #JPY #XAU #crude #oil #earnings #Uber #Disney #layoffs #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
The Commodities Feed: First US crude draw this year

The Commodities Feed: Azeri flows still disrupted

ING Economics ING Economics 10.02.2023 08:31
Azeri crude oil exports via Turkey are still halted following this week’s earthquake and we may have to wait a while longer for these to resume. Meanwhile, the LME published its first report breaking down exchange inventories by country of origin. The data shows a large increase in the proportion of Russian metal in LME warehouses Source: Flickr Energy- Azerbaijan crude flows still halted The oil market continues to trade in a fairly rangebound manner. ICE Brent has traded for much of the year in a tight $80-90/bbl range. There has been little in the way of fresh catalysts to push the market out of this range, whilst there is also still plenty of uncertainty over Chinese demand and Russian supply. There are reports that exports of Azeri crude oil via the Ceyhan export terminal in Turkey are still halted and might only resume late next week. This is apparently due to damage to the control room at the port, following the recent earthquake. Exports of Azeri crude through the port are usually in the region of 600Mbbls/d, whilst Iraqi flows are more than 400Mbbls/d. The latest data from Insights Global shows that gasoil inventories in the ARA region continue to grow. Over the last week, gasoil stocks increased by 169kt to leave them at 2.49mt. This takes inventories in the region back above the 5-year average and helps to explain why we have seen a lot of weakness in middle distillate cracks recently. We had been seeing increased Russian middle distillate flows into the EU ahead of the ban on Russian refined products, which came into force on 5 February. US natural gas prices rallied yesterday by 1.4%, and this strength has continued in early morning trading today. This follows a larger-than-expected drawdown in US natural gas storage. EIA data show that natural gas storage fell by 217Bcf, compared to market expectations of around 200Bcf. It was also larger than the 5-year average draw of 171Bcf seen for this time of year. However, given the milder weather seen over parts of this winter, total US gas storage is still 5.2% above the 5-year average. Further progress with the restart of the Freeport LNG plant also appears to have offered some support to US natural gas prices. There are reports that Freeport could resume some shipments as soon as 11 February, however, further approvals are still needed for a full restart. Metals – Growing share of Russian metal in LME warehouses Most base metals edged higher yesterday amid optimism over China’s economic recovery and declining exchange inventories. A weakening US dollar added a further boost to the metals complex. Copper prices rose more than 1%, while the gains for aluminium were more limited as the market gauges the impact of a large delivery of the metal into exchange warehouses on Wednesday. The LME published its first report breaking down inventories in their warehouses by country of origin. Unsurprisingly, given the self-sanctioning that we have seen when it comes to Russian metals, the proportion of Russian metal in LME warehouses has increased significantly. As of 31 January, Russian copper made up 94.2% of total LME copper inventories. This is up from 63% in early October 2022, and just shy of a historical high of 95% seen in September 2021. For nickel, Russian material made up 15.8% of total inventories,  up from 1.4% in early October, but still well below the highs of 64.8% seen in January 2013. Finally, Russian aluminium accounted for 40.6% of total LME aluminium inventories, up from 14.9% in early October, but still some distance from the highs of 73.7% seen back in November 2014. However, given the increase in aluminium inventories this week, it is likely that the proportion of Russian material is currently higher than the report suggests. There have been concerns that LME warehouses could be used as a dumping ground for unwanted Russian metals, leading to a disconnect between LME and actual traded prices. Read next: USD/JPY Is Below 131.00 Again, The Aussie Is Close To 0.70$| FXMAG.COM Agriculture – Indian wheat export ban The latest reports suggest that the Indian government is considering extending its wheat export ban to increase reserves and lower domestic prices. Officials are apparently not in favour of resuming wheat exports until mid-2024 and are likely to announce a decision by the end of next month or early April. Read this article on THINK TagsWheat Russian metals Oil Natural gas LME metals Gasoil Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Uncertain Waters: Saudi's Oil Production Commitment and Global Economic Jitters

Adidas Released A Shockingly Bad Outlook, The US Dollar Traded Weaker

Saxo Bank Saxo Bank 10.02.2023 08:51
Summary:  A downbeat session in the US yesterday took the S&P 500 Index back below the pivotal levels that provided resistance on the way up recently. Long US treasury yields rose again on one of the weakest a weak 30-year T-bond auctions in a year. This helped boost the US dollar again and take gold prices to nearly 1,850 overnight, representing a more than 100-dollar consolidation of the rally since last November. What is our trading focus? US equities (US500.I and USNAS100.I): Failing to hold the line  S&P 500 futures failed yesterday to push higher above that important 4,200 level and lost instead altitude closing below the 4,100 level erasing the gains for February. The US 10-year yield also bounced but the moves are not dramatic, and it feels like the market is waiting for the bond market to make up its mind about long-term yields and inflation. Earnings after the close from PayPal and Lyft that both disappointed also helped lower risk sentiment in US equity futures overnight. FX: USD rolls back higher on weak sentiment. Historic day for SEK The US dollar traded weaker yesterday before firming late in the session as US equities rolled over and posted a weak session, with EURUSD never making a serious challenge of 1.0800  and trading below 1.0725 this morning, while a USDJPY sell-off yesterday quickly aborted on a weak US T-bond auction that sparked a rise in long US yields. This will have USD traders on watch for a follow through higher, which could suggest a proper trending move rathre than a mere consolidation of prior weakness. Elsewhere, an historic day for the Swedish krona yesterday on a powerful broadside to SEK speculators in yesterday’s guidance, but also technical moves to increase liquidity in Sweden’s banking system as noted below. Crude oil (CLH3 & LCOJ3) slides again on US growth concerns Crude oil trades lower for a second day after sentiment across markets received a fresh set back on worries about the US economy's ability to withstand additional Fed rate hikes. Overall, it highlights a market that remains rangebound (since November) with current soft fundamentals likely to remain until the second quarter when, despite concerns about further US rate hikes, improved activity in China should brighten the macro-outlook. Brent trades back below its 21-day moving average, currently at $84.90 - in WTI at $78.40 - with a close above needed to attract fresh buying momentum. Next week, apart from US CPI on Tuesday, the market will look out for monthly oil market reports from OPEC and the IEA. Gold (XAUUSD) weakness resumes with focus on US rates and next week’s CPI print Gold’s attempt this past week to recover from last Friday’s sell-off below support-turned-resistance in the $1900 area received a setback on Thursday when weakness resumed, driving the price down to a $1853 during the Asian trading session. The market had been left vulnerable to further weakness after only managing a small bounce earlier in the week, and with the attention now fully on the prospect for even higher Fed rates to tame inflation, the dollar and Treasury yields have risen to provide some formidable headwind. Furthe weakness carry the risk of an extension towards $1828, the 38.2% retracement of the run up from early November. The main event next week being the US January CPI report on Tuesday. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) back higher on weak 30-year T-bond auction It has been a confusing week for treasury traders this week, as we saw a very weak 3-year auction on Tuesday followed by a robust 10-year auction Wednesday, only to see one of the weakest 30-year T-bond auctions over the last 12 months yesterday, which saw 30-year benchmark yields reversing back higher and posting a new local high close just shy of 3.75%. The 2-10 portion of the yield curve remains near the extreme of its inversion for the cycle, just below –80 basis points, and near the highest since the early 1980s. What is going on? SEK blasts higher on watershed Riksbank meeting The Riksbank met yesterday and impressed the market with its guidance on further rate hikes and additional plans to accelerate the pace of quantitative tightening from April onwards, with additional offerings of “Riksbank certificates” to encourage a rise in rates and foreign investment in Swedish paper. Two-year Swedish rates jumped 10 basis points on the news, and the QT The new Riksbank Governor, Erik Thedeen, also took aim at currency speculators in the press conference yesterday. Ahead of the meeting, EURSEK had risen above 11.40 at one point, its highest level since 2009, in part on concerns that the Riksbank feared the impact of higher rates on Sweden’s housing market, the bottom dropped out yesterday on the Riksbank developments, taking EURSEK all the way back down to range support near 11.10, one of the most powerful strengthening moves in the krona’s history. This was a watershed moment and likely puts a floor under the krona for now. Natural gas lower despite larger-than-expected US draw US natural gas futures (NGH3) only managed a temporary rise on Thursday after the EIA said inventories had declined by 217 billion cubic feet (bcf) last week. This the first above average weekly storage draw this year left total stocks some 5.2% above the long-term average, and despite trading near a two-year low the upside potential remains limited amid robust production, up 6% y/y, and gas demand down y/y by the same percentage. In addition, forecasts are now pointing to much warmer-than-normal weather through February 18 across Central and Eastern states. Adidas reports a disastrous 2023 outlook The German sports clothing maker released yesterday after the market close a shockingly bad outlook. The decision to not sell Yeezy inventory will have an adverse impact on the underlying operating profit which could hit €700mn loss in 2023 with €500mn impact coming from Yeezy items. Adidas also sees €200mn in one-off costs in 2023. Revenue in constant currency terms is expected to decline up to high-single-digit. The shocking revelation is that the majority of Adidas operating profit came from one partnership and design series. PayPal misses Q4 volume estimates but steady Q1 expected The US-based payment company missed on volume in Q4 against estimates but delivered EPS $1.24 vs est. $1.20 in addition to announcing that the CEO Dan Schulman is stepping down by year-end. The Q1 outlook on EPS was $1.08-1.10 vs est. $1.06 and Q1 revenue growth of 7.5% y/y at current spot rates in the currencies. The RBA raised its underlying inflationary forecasts In the RBA’s quarterly economic forecasts and policy outlook (known as the Statement of Monetary Policy) released today in Australia, the Bank increased its “trimmed mean” CPI forecast from 3.8% to 4.3%. The increase was largely driven by sticky consumer durable goods inflation and services inflation. The RBA also upgraded labour costs projections, forecasting wages to rise 4.25% this year versus 3.9% previously. RBA continues to forecast that longer term inflation will ease to within the Bank’s target. Market pricing now suggests the RBA will hike another 75 basis points through the July meeting before a likely pause. US jobless claims rose but still sub-200k Initial jobless claims rose to 196k from 183k, and above the expected 190k. Continued claims also surpassed expectations and printed 1.688mln (exp. 1.68mln), above the prior 1.650mln. While there is a pick-up in claims, it must be noted that it comes from a low level and continues to signal a tight labour market. Hawkish 50 bp hike from Mexico’s central bank Banxico surprised markets with a 50-bp rate hike once again, taking the policy rate to 11.00% and signalled another, smaller hike at the next meeting. Expectations were for a smaller 25-bp hike, followed by a pause. This appears to be in line with what we have seen from RBA and Reserve Bank of India this month, suggesting broad inflation pressures continue to challenge central banks that were hoping to signal a pause.  Read next: USD/JPY Is Below 131.00 Again, The Aussie Is Close To 0.70$| FXMAG.COM What are we watching next? “New” USD CPI next Tuesday as risk sentiment on watch with the break of US S&P 500 Index support. As noted above, the S&P 500 Index broke below the pivotal 4,100 area that was an important resistance line on the way up, suggesting the risk of further consolidation lower from a technical perspective. A more significant level to the downside could be the 200-day moving average coming in near 3,945 on the cash Index, considerably lower, while the Nasdaq 100 Index eyes the important 12,300-12,100 area. What could turn sentiment lower? The most likely source of immediate concern would be any further rise in Treasury yields, but an interesting test awaits the market with next Tuesday’s CPI release, which will be the first release after an overhaul of the calculation methodology, which some argue could engineer a sharper than expected drop. Breaking: Government nominates Kazuo Ueda as new Bank of Japan Governor The name of Kazuo Ueda, an economist and former member of the Bank of Japan’s deliberation committee, was not among the names considered most likely to replace current governor Kuroda on his exit in early April. The first move in the JPY was higher on the announcement. Earnings to watch The earnings calendar is light today with Enbridge, Canada-based energy distributor, being the most interesting to watch. Analysts expect Enbridge to report revenue growth of 3% y/y and EPS of $0.73 down 5% y/y. Next week, the earnings calendar will provide plenty of interesting releases with the three most important releases being Deere, Schneider Electric, and Airbnb. Friday: Enbridge, Constellation Software Next week’s earnings: Monday: Recruit Holdings, DBS Group, Cadence Design Systems, SolarEdge, Palantir Tuesday: CSL, TC Energy, First Quantum Minerals, Toshiba, Norsk Hydro, Boliden, Coca-Cola, Zoetis, Airbnb, Marriott International, Globalfoundries, NU Holdings, Akamai Technologies Wednesday: Commonwealth Bank of Australia, Fortesque Metals Group, Wesfarmers, Shopify, Suncor Energy, Nutrien, Barrick Gold, Kering, EDF, Tenaris, Glencore, Barclays, Heineken, Nibe Industrier, Cisco Systems, Kraft Heinz, AIG, Biogen, Trade Desk Thursday: Newcrest Mining, South 32, Airbus, Schneider Electric, Air Liquide, Pernod Ricard, Bridgestone, Standard Chartered, Repsol, Nestle, Applied Materials, Datadog, DoorDash Friday: Hermes International, Safran, Allianz, Mercedes-Benz, Uniper, Sika, Deere Economic calendar highlights for today (times GMT) 1300 – Poland National Bank releases meeting minutes 1330 – Canada Jan. Net Change in Employment / Unemployment Rate 1400 – UK Bank of England Chief Economist Huw Pill to speak 1400 – ECB’s Schabel in live Q&A on Twitter 1500 – US Feb. Preliminary University of Michigan Sentiment 1730 – US Fed’s Waller (Voter) to speak at Crypto conference 2100 – US Fed’s Harker (Voter 2023) to speak   Source: Financial Markets Today: Quick Take – February 10, 2023 | Saxo Group (home.saxo)
Mexico’s Central Bank Surprised Markets With A 50bps Rate Hike Once Again

Mexico’s Central Bank Surprised Markets With A 50bps Rate Hike Once Again

Saxo Bank Saxo Bank 10.02.2023 08:43
Summary:  Equities erased early gains with S&P500 falling below 4100 as short-end Treasury yields jumped higher and yield curve inversion deepened to a fresh record. Riksbank’s hawkish surprise, along with Banxico’s, is raising concerns that central banks will have to continue to hike rates. Dollar was off its lows, and Gold pulled back to test the $1860 support again. Crude oil prices slid despite risks of lingering supply disruptions, as demand concerns weighed. China’s inflation data due today ahead of more Fed speakers and University of Michigan survey.   What’s happening in markets? US equities (US500.I and USNAS100.I) slide lower on Thursday; Tesla hits a new cycle high The S&P 500 wiped an earlier 1% jump, ending 0.9% lower on Thursday and 1.3% down on the week. It’s the first time in three weeks the benchmark index is in negative territory. That said, the S&P500 hold a gain of about 16% from its October low. On Thursday, options traders piled into bets the Federal Reserve is targeting a peak rate of 6%, nearly a whole percentage point above consensus. The two-year yield traded near 4.5%, and earlier pushed above the 10-year yield rate, by the widest margin since the early 1980s — This is a sign of fading confidence in the US economy’s ability to withstand additional tightening, and weighed on bank stocks. Alphabet (GOOGL) was also a key laggard as the underwhelming chatbot event continued to drag. Walt Disney (DIS) also reversed its gains after reporting earnings and announcing layoffs. Tesla (TSLA) shares were a top performer rising 3% on Thursday, taking its rally to 100% from its January low, bolstered by signs that demand for its EVs are rebounding - particularly with China out of lockdown. Still, Tesla share are down 50% from their record high. The technical indicators on the weekly and monthly charts look interesting – suggesting buying could potentially pick up over the longer term, as reflected in the MACD and RSI.  Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jump higher The 2-year note Treasury yield rose 6bps to top 4.5% for the first time since November 30th, which means the bond market is beginning to take the Fed more seriously again. The surprise hawkish announcement from Riksbank likely added to concerns that central banks will continue to hike rates. The 10-year yield was up 5bps taking the Treasury yield curve inversion to 86bps, the widest since the 1980s. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) gained as optimism returned Hang Seng Index rallied 1.6% and CSI300 bounced over 1.3% after a week-long consolidation. Xiaomi (01810:xhkg), surging 8.5%, was the biggest winner within the Hang Seng Index. Lei Jun, Chairman and founder of the mobile phone and electronic device maker, announced on Twitter in the form of Q&A with a Chatbot that the company is launching its Xiaomi 13 Series mobile phone on 26 Feb. Alibaba (09988:xhkg) climbed 4% following its announcement of a plan to develop a ChatGPT-like chatbot. The hype on AI-generated content and chatbot spilled over to chip makers with Hua Hong (01347:xhkg) and SMIC (00981:xhkg) each rising over 3%. Mobile phone hardware suppliers Sunny Optical (02382:xhkg) and AAC (02018:xhkg) surged 5.7% and 5.9% respectively. The technology space outperformed overall, with the Hang Seng Tech Index climbing 3.2%. Macao casino operators advanced with MGM, surging 9.2% and other operators gaining 3% to 5%. In A-shares, semiconductors, food and beverage, communication, defense, and internet-of-things stocks led the advance. Northbound flows registered a net buying of over RMB 12 billon. Australian equites (ASXSP200.I) likely to end the week lower, with rate sensitive stocks down the most, while banks and insurers lift ahead of RBA saying more hikes ahead The Energy sector is up the most this week, followed by Materials – with activity in China picking up after Luna New Year holidays. The best ASX200 returns this week so far are from Gold mining giant, Newcrest, up 11%, followed by insurance group Medibank up 5%, while regional bank Suncorp is up 4%. On the downside, Block, also known as Square (SQ, SQ2) fell over 9% this week, after rising for the last 6 weeks. ASX tech logistics giant WiseTech (WTC) fell about 10% so far this week, knock it off its record all time high and ending its four-week strong rally with the logistics industry improving. WiseTech has contracts with global logistics giants including UPS, DHL etc.  FX: SEK outperforms on hawkish Riksbank; JPY awaits new governor The big drag on the USD came from the outperformance of the Swedish krona after Riksbank surprised hawkish (read below). However, the dollar bounced back as Treasury yields picked up in wake of a dismal 30yr auction. Even as EURSEK plunged below 11.20, EURUSD rushed back above 1.0750 and came in close sight of 1.0800, although reversing most of these gains in the wake of dollar strength subsequently. GBPUSD also pushed higher to test the 50DMA at 1.2187 but reversed towards 1.21 later. USDJPY finding it difficult to go below 130 with PM Kishida saying he doesn’t want to surprise the markets with his Governor choice, which is shifting the consensus towards safer bets. AUDUSD failed another attempt at 0.70, awaiting RBA’s quarterly outlook. Crude oil (CLH3 & LCOJ3) dips as investors clip profits WTI oil traded 0.5% lower at $78.06, ending its best three-day rally since December. Some investors moved into profit taking mode, worried about a sagging US economy and that it could drag on oil demand. As the Fed has turned marginally hawkish recently, a large draw in inventories recently is also sending caution about oil demand. This comes despite supply disruptions with exports of Azeri oil from Turkey unlikely to resume until late next week. This has wiped out about 600kb/d of shipments. Meanwhile, Kazakh crude production has been reduced by about 200kb/d due to unplanned maintenance work. Gold (XAUUSD) back lower to test $1860 Gold turned lower again as the surge higher in 2-year yields and the US dollar strengthened, and was testing the $1860 support in early Asian trading hours. A marginally hawkish stance by the Fed members over the last week, coupled with fears from a very strong job market report, continues to bolster the view that interest rates will need to keep rising to contain inflation. Still, if gold manages to stay above the 38.2% retracement of the run up from early November at $1828, the broader uptrend can remain intact.  Read next: Credit Suisse Reported Its Biggest Annual Loss Since The 2008, Ukrainian President Is Asking For Help And More Weapons In Brussels| FXMAG.COM What to consider? Riksbank’s 50bps rate hike boosts krona The Riksbank hiked the 50 basis points to 3% and guided for “probably” more tightening to come, but importantly also announced an acceleration of bond sales to reduce the balance sheet (QT) in April, which helped boost 10-year Swedish Government bond yields a chunky 20 basis points today, bringing them suddenly close to par against German yields. New Govenror Thedeen’s u-turn on the krona policy helped to bring EURSEK below 11.15, with the 11-handle and 200DMA at 10.81 now in focus. US jobless claims rose but still sub-200k Initial jobless claims rose to 196k from 183k, and above the expected 190k. Continued claims also surpassed expectations and printed 1.688mln (exp. 1.68mln), above the prior 1.650mln. While there is a pick-up in claims, it must be noted that it comes from a low level and still continues to signal a tight labor market. German inflation slows to five-month lows A delayed preliminary inflation print for January was released in Germany yesterday and it retreated to 9.2% YoY from 9.6% in December as government aid to ease the burden on households from soaring energy costs helped ease price pressures. Still, the disinflationary pressure appears to be slower than expected, and the ECB will have to keep its foot on the pedal. Hawkish outcome from Mexico’s central bank Banxico surprised markets with a 50bps rate hike once again and signalled another, smaller hike at the next meeting. Expectations were for a final 25bps rate hike. This appears to be in trend with what we have seen from RBA thins month, as also from the Reserve Bank of India, suggesting broad inflation pressures are still continuing to challenge central banks from considering a pause. China inflation is expected to inch up China’s Inflation may have accelerated as the headline CPI is forecasted to bounce to 2.2% Y/Y in January from 1.8% in December. A surge in in-person service consumption after the reopening may have underpinned some price increases but the upward pressure on the general level of inflation has remained moderate. Rises in vegetable and fruit prices were likely damped by a decline in pork prices. The decline in producer prices is expected to narrow to -0.4% in January from -0.7% in December as industrial metal prices bounced offsetting a decline in coal prices. Australian trade update: Commodity optimism picks up after Lunar New Year, Chinese students to return to AU, RBA inflationary forecasts due today. Could Australian wine tariffs from China be dropped? AUDUSD on watch. Aussie dollar volatility continued this week, with the AUDUSD losing 2% over the last 5 sessions, mirroring commodity prices pulling back. But optimism has started to pick up. The Copper (HG1) price fell 0.6% over the last five sessions, moving up yesterday, while the Iron ore (SCOA) price is 0.6% down on the week, but picked up over the few sessions, with construction kicking off in China - after the Luna New Year break. Plus, a top China economist said interest rates could be cut next quarter. This supports further commodity buying, on top of Fortescue Metals, BHP and Rio Tinto’s quarterly outlooks, hinting China demand will pick up in 2023. China also docked its first Australian coal import shipment in two years yesterday, which supports the Aussie dollar over the medium to long-term, with the market to perhaps see more coal orders. Regardless, the coal export to China will add to quarterly GPD. Supporting Australian GDP this quarter as well - will be the 50,000 influx of Chinese students expected to arrive in Australia this month - ahead of the start of semester. Beijing’s government ruled that degrees earnt online would not be accredited any more. The next catalysts for the AUDUSD might come from the RBA’s quarterly economic forecasts and policy outlook released today. We think the RBA can afford to make upward revisions to its underlying inflation forecasts, given energy prices are expected to pick up later this year - as the AEMO alluded to. Lasty, consider China’s commerce ministry is willing discuss tariffs imposed on Australian wine that began in 2020. Should the tariffs be dropped or reduce, it may encourage China to buy Australian wine again – and add to AU GDP.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Market Insights Today: Yield curve inversion unnerves investors – 10 February 2023 | Saxo Group (home.saxo)
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Gold Has Moved Into A Correction, Situation Of Chinese Economy Should Stimulate Demand For Oil

Craig Erlam Craig Erlam 10.02.2023 14:17
Stronger China buoys oil Oil is heading for a strong week of gains, wiping out last week’s losses, as analysts continue to be encouraged by China’s transition to living with Covid. While the buzzword for large parts of the global economy this year is “resilience”, when it comes to China it’s more a question of just how strongly it will bounce back. The assumption, once they began removing restrictions, was that the first quarter or two would be tough but the second half of the year would see growth unleashed backed by fiscal and monetary measures. Now it would appear those expectations are being brought forward which should stimulate demand for oil and other commodities. While oil has been somewhat rangebound over recent months, a stronger Chinese recovery could well strongly test those upper limits. Deeper correction on the cards? Gold may be in the green on Friday but I’m not convinced its near-term prospects are particularly bullish. The yellow metal has moved into a correction phase over the last week or so and while the back end of last week saw it fall quite sharply, there may be further to go. It’s been a week of consolidation and clawing back some losses but it’s struggled to gather any real momentum in that and for a fourth day yesterday it ended the session well off its highs. While $1,820-$1,830 is the next technical support area below, it’s $1,780-$1,800 that really intrigues me, should it get that far. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: US announces SPR purchase

Crude Oil Prices Surged On Friday After Russia Announced A Production Cut

Saxo Bank Saxo Bank 13.02.2023 08:22
Summary:  U.S. stock markets finished Friday mixed with a small gain in the S&P and weakness in the Nasdaq 100 weighed by higher bond yields. Hang Seng Index and CSI300 Index declined as investors waited for fresh evidence of a recovery in the Chinese economy. Growth in outstanding loans in China picked up to 11.3% YoY in January as banks had been encouraged to lend. The nomination of Kazuo Ueda as the next Bank of Japan governor was a surprise to the market. Crude oil prices surged on Friday after Russia announced a production cut.   What’s happening in markets? US equities (US500.I and USNAS100.I) may be on wobble town this week, with CPI out Tuesday S&P 500 edged up 0.2% in a lackluster session while the tech-heavy Nasdaq 100 slid 0.6% on higher bond yields. Energy was the best-performing sector on Friday, rising nearly 4% as crude oil rose more than 2% on the Russian production cut. Markets seem defensive coming into this week after a 1.1% decline in the S&P last week - worried firstly, the Fed can keep rates higher for longer, triggered by the hot employment report the week before followed by hawkish Fed speaker comments last week. This week, the focus will be on the CPI data on Tuesday. In individual stocks, Lyft (LYFT:xnas) tumbled 36.5% after the ride-hailing company guided Q1 EBITDA at USD5 to USD15 million, far below the consensus of USD83.6 million, noting price cuts to keep customers against completion from Uber (UBER:xnys). Paypal (PYPL:xnas) rose 3% on Q4 results and earnings guidance beating analyst estimates. Spotify (SPOT:xnys) gained 3.5% following activist investment company ValueAct Capital Management took a stake in the music-streaming company. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) bear steepened The long end of the curve led the sell-off in Treasuries, with yields on the 10-year jumping 7bps to 3.73% and those on the 2-year climbed 4bps to 4.52%. The University of Michigan consumer sentiment index came at 66.4, above the 65.0 expected and the highest level in 11 months. One-year inflation expectations edged up to 4.2% from 4.0% while the 5-10-year inflation expectations remained unchanged at 2.9% Y/Y. Traders were cautious ahead of the CPI report on Tuesday and the upcoming supply from a 20-year auction this Wednesday. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) declined for the second week Hang Seng Index dropped 2% on Friday to finish the week with a second weekly loss in a row. Technology stocks, consumer discretionary, and healthcare names led the decline. Hang Seng Tech Index tumbled 4.6%. Baidu (09888:xhkg), plunging 7.4%, was the biggest loser within the Hang Seng Index. JD.Com (09618:xhkg) dropped 6.3% despite the e-commerce giant announcing plans to launch its ChatJD and jump on the ChatGPT-like AI-generated content bandwagon. Sportswear stocks were laggards. Shenzhou ( 02313:xhkg ), Anta ( 02020:xhkg ), and Li Ning (02331:xhkg) slid between 4% and 5.6%. Shares of EV makers tumbled, XPeng (09868:xhkg) down 7.9%, Li Auto (02015:xhkg) down 7.6%, Nio (09866:xhkg) down 6.6%. SMIC declined 4.3% after the chipmaker warned of a gloomy 2023 and guided full-year revenue down 10%-13%. Standard Chartered Bank (02888:xhkg) rose 4.2% in Hong Kong trading but its London-listed shares fell 5% after First Abu Dhabi Bank said it is not evaluating an offer. In A-shares, CSI300 slid 0.6% on Friday and was down 0.8% for the week. Solar, lithium, coal mining, non-ferrous metal, auto, and semiconductors were laggards. Investors are waiting for more evidence of a recovery in the Chinese economy. The stronger-than-expected growth in corporate loans in China was released after the market close. Australian equites (ASXSP200.I) could also wobble street, if employment data is hotter than expected and commodities pair back with a higher US dollar This week investors and traders will be focused firstly – Australian employment data out for January, due on Thursday, expected to show employment rose by 20,000 from the prior drop, with the unemployment rate expected to remain unchanged at 3.5%. Also importantly, consider the Aussie share market, may be potentially vulnerable for a pair back as the Australian 10 year bond yield has moved up aggressive to 3.81%- its highest level since January. The reason for this, is that the market is expecting the RBA to make ~78.6bps of hikes before pausing in August. So this means unprofitable tech companies and those businesses that don’t pay a dividend yield are vulnerable. FX: SEK reverses gains, CAD boosted by strong jobs and oil The US dollar continued to gain amid renewed risk aversion on Friday, but gains were somewhat capped by gains in CAD as oil prices soared after the Russian supply cuts and Canadian jobs report smashed consensus expectations ten times over. USDCAD reversed from 1.3450+ levels to 1.3350. Meanwhile, USDJPY ended the week nearly unchanged and may be looking at further volatility with higher yields, rising oil prices and the new BOJ Governor. Meanwhile, SEK reversed from the highs after a hawkish surprise from the Riksbank last week. EURSEK back above 11.15 and EURUSD down to 1.0670 from 1.087 levels last week. Crude oil (CLH3 & LCOJ3) moves higher on Russian supply falling Oil prices jumped higher on Friday, closing the week with over 8% gains, as Russia said it would lower production in response to western sanctions (read below). The OPEC+ alliance, which Russia is key member, signalled they won’t be increasing output to fill in for the reductions, signalling a tight market may be ahead. WTI rose to $80/barrel and Brent touched close to $87, although some profit taking emerged in early Asian hours on Monday. Oil prices still continue to trade within a range that has prevailed since November. Meanwhile, other supply returned to the market with Tanker loadings of Azeri crude docking at Turkey's Ceyhan terminal. Gold (XAUUSD) has its eyes on US CPI this week Gold continues to consolidate near $1860, despite pressure from rising US yields. This week’s US CPI release continues to be on watch to assess if the disinflationary narrative can continue even with a new methodology of calculating. A rhetoric shift in global central banks has been seen last week with more hawkish surprises, and the CPI will be the latest test if that narrative can continue to build. Gold however still getting support from rising US-China tensions. Further weakness carries the risk of an extension towards $1828, the 38.2% retracement of the run up from early November.  Read next: UK Economy Suggest That Inflation Will Drop| FXMAG.COM What to consider? Bank of Japan picks a dark horse for Governor post Japan PM Kishida in a shocking announcement on Friday nominated a dark horse candidate Kazuo Ueda as the next governor for the Bank of Japan after Kuroda steps down in April. BOJ executive director (in charge of monetary policy) Shinichi Uchida and former Financial Services Agency commissioner Ryozo Himino were also nominated as deputy governors. Ueda is an academic and a former member of the BOJ policy board, and digging his prior speeches has revealed that he has more of a neutral stance, compared to the dovish Amamiya who was reportedly offered the role but rejected it. His appointment suggests we could see some tweaks in BOJ’s ultra-easy monetary policy, but expecting an outright removal of yield curve control policy appears aggressive now. Fed’s Harker highlights higher-for-longer rates Philly Fed President Patrick Harker (voter) said the likelihood of the Fed being able to control inflation without triggering a recession is growing, but stressed that the key rate must get above 5% and stay there to ensure price pressures ease. He also hinted at a “couple” more 25-bps rate hikes being in the pipeline, but said that how far the Fed will need to go above 5% will be determined by the data. He also talked about rate cuts, but dismissed the possibility in 2023. Focus turns to Michelle Bowman who speaks at a banking conference today. Russia’s production cut to further tighten the oil market On Friday, Russia announced a unilateral cut in its March crude oil output by 500,000 barrels a day, apparently without consulting with its OPEC+ partners first. Since the introduction of EU and G7 sanctions on crude oil from December and fuel products from early February, Russia has increasingly been forced to cut its selling price as its client base continued to dwindle. If oil prices continue to charge higher, OPEC may need to fill the gap by ramping up production, especially in light of an expected pickup in Chinese demand this year. China’s CPI rose to 2.1% in January China’s CPI rose to +2.1% Y/Y in January from 1.8% in December, in line with expectations. The increase was largely due to the fact that the Lunar New Year fell into January this year while it was in February last year and a larger than expected 6.2% Y/Y food price inflation in January versus 4.8% in December. Excluding food and energy, core CPI came in at 1.0% Y/Y, edging up from 0.7% in December. In January, services inflation picked up to 0.8% M/M but was still benign on a year-on-year basis, coming at 1.0% Y/Y in January, rising moderately from 0.6% Y/Y. Producer price deflation deepened, with PPI falling 0.8% Y/Y, versus -0.5% Y/Y expected and -0.7% Y/Y in December. The larger decline in CPI was driven by falling crude oil and coal prices. Growth of outstanding RMB loans in China accelerated to 11.3% Y/Y New aggregate financing increased to RMB5,980 billion from RMB1,306 billion (revised down from RMB1,310 billion) in December, above RMB5,400 forecasted in Bloomberg’s survey. However, due to a high base last year, the growth in total outstanding aggregate financing slowed to 9.4% Y/Y in January from 9.6% in December. The strength in credit expansion came from a larger-than-expected increase in new RMB loans to RMB4,900 billion versus RMB4,200 billion expected and RMB1,400 billion in December, as regulators instructed banks to provide more credits to support key industries and the economy. RMB4,680 billion of these new loans were extended to the corporate sector while only RMB257 billion went to households. The RMB257 new loans to households were much below the RMB843 billion a year ago. The growth in M2 accelerated to 12.6% Y/Y in January from 11.8% in December, above the 11.7% expected. Geopolitical tensions rising U.S. officials said an “unidentified object” has been shot down by its military over Lake Huron. This is the third time in as many days, after earlier downings in Alaska and Canada, and it is the fourth this month to be shot down over North America by a US missile. As debris from these is being evaluated, now the Chinese government says it has spotted a mystery object over waters near northern port city Qingdao and it is preparing to shoot it down. Singapore’s DBS Bank announces special dividend Singapore’s largest bank DBS Group (D05:xses) reported Q4 earnings this morning, with net income up 69% at S$ 2.34bn vs. estimate of S$2.17bn. Higher interest rates continued to boost its income and more than offset other declines due to volatility in financial markets. The board has declared a final dividend of 42 cents a share for the fourth quarter, up from 36 cents a year ago, and a special dividend of 50 cents a share. This brings the total payout for the full year to $2 a share. Other banks including Oversea-Chinese Banking Corp (O39:xses) and United Overseas Bank (U11:xses) are due to report results next week.   For a global look at markets – tune into our Podcast.   Source: Market Insights Today: New BOJ chief; Russian crude production cut; Strong loan growth in China – 13 February 2023 | Saxo Group (home.saxo)
Lithium Imports To China And USA Are Surging This Year

Lithium Imports To China And USA Are Surging This Year

Saxo Bank Saxo Bank 13.02.2023 08:28
Summary:  WATCH video or read text. US inflation volatility risk picks up amid uncertain of the new methodology. Fed speakers and retail sales also key. Japanese yen may have trouble finding direction. UK data is key for the next BOE meeting. Oil markets look wobbly with Russia’s cut, monthly oil reports from OPEC and EIA due. Eyes on lithium companies with Ford and CATL to build a mega battery plant, while Albemarle reports results. 60 S&P500 companies report quarterly earnings this week, across most sectors, while some of the ASX200’s biggest companies declare full year results. US inflation volatility risks with uncertain impact of new methodology, Fed speakers and retail sales also key While investors firmly believe inflation is on a downward trajectory, month-on-month variations still remain on watch. More importantly, this month brings a change in methodology, which adds further uncertainty to the release. If we take the last few month’s revisions for core CPI into account based on the new methodology, there is reason to believe that the new weights could mean an upward push to inflation. Average core CPI for the last three months of 2022 has gone up from 3.1% to 4.3% with the new seasonal factors released by the BLS. Moreover, milder weather in January compared to December, as well as an upward swing in jobs, could mean demand pressures picked up further traction. Bloomberg consensus expects headline CPI to soften to 6.2% YoY from 6.5% YoY in December, while the MoM picks up to 0.5% from a revised +0.1% previously. Retail sales is also expected to pick up momentum again in January amid sustained consumer strength. This will be an important input for market watchers that continue to weigh up the recession vs. soft landing scenarios. Several Fed officials are due to make appearances during the week and will be key to watch after central bank rhetoric took a hawkish shift again last week. New York Fed President John Williams, St. Louis Fed head James Bullard, Philadelphia Fed President Patrick Harker and Cleveland Fed head Loretta Mester will be on the wires this week. Japanese yen may have trouble finding direction this week Japan PM Kishida in a shocking announcement on Friday nominated a dark horse candidate Kazuo Ueda as the next governor for the Bank of Japan after Kuroda steps down in April. BOJ executive director (in charge of monetary policy) Shinichi Uchida and former Financial Services Agency commissioner Ryozo Himino were also nominated as deputy governors. Ueda is an academic and a former member of the BOJ policy board, and digging his prior speeches has revealed that he has more of a neutral stance, compared to the dovish Amamiya who was reportedly offered the role but rejected it. In July 2022, Ueda wrote an article for the Nikkei entitled "Japan, Avoid Hasty Tightening", but in August 2022, he also questioned if the Fed was too late to raise rates. His appointment suggests we could see some tweaks in BOJ’s ultra-easy monetary policy, but expecting an outright removal of yield curve control policy appears aggressive now. Other reasons to expect potential volatility in the Japanese yen include the surge in global yields again and US CPI due in the week, along with a sharp increase in oil prices after Russia’s decision to announce a cut in production by a half million barrels per day. Read next: Campbell Bought A $100,000 Plane To Live In It| FXMAG.COM UK data key for next Bank of England meeting The Bank of England hinted at the February meeting that the 50bps rate hike may have been their last. This week’s inflation, jobs and retail sales data will however be key to determine if another hike may be seen in March. Labor data is out on Tuesday, and expected to continue to show a tight labor market. January CPI comes out on Wednesday, and it is expected to remain in double digits. Bloomberg consensus expects headline CPI to only cool marginally to 10.3% YoY from 10.5% YoY in December. Finally, retail sales data on Friday is expected to show that consumer spending remains under pressure. But with the GDP data out last week showing a likely delay in the start of recession, the BOE may have room to look past the weakening economic momentum for now and keep its focus on price pressures. However, market pricing already suggests a near certain case for another 25bps rate hike in March, so scope for GBP appreciation remains minimal. Oil market wobbly with Russia’s cut, monthly oil reports from OPEC and EIA due In its latest move to use energy as a weapon in the war, Russia announced a unilateral cut in its March crude oil output by 500,000 barrels a day on Friday, apparently without consulting with its OPEC+ partners first. Since the introduction of EU and G7 sanctions on crude oil from December and fuel products from early February, Russia has increasingly been forced to cut its selling price, given its client base continues to dwindle. And now Russia plans to limit its discount on Urals oil to Brent at $34 a barrel in April, $31 in May, $28 in June and $25 in July. That said, some oil supply returned to the market with Tanker loadings of Azeri crude docking at Turkey's Ceyhan terminal. All in all, if oil prices continue to move higher, OPEC may need to fill the gap by ramping up production, especially in light of the expected pickup in Chinese demand this year. So far, OPEC+ are signalling that they won’t boost production to offset Russia’s supply shortages. Monthly reports from EIA and OPEC are due in the week ahead, and will likely keep the energy markets bumpy. As mentioned in the Quarterly Outlook, we expect Brent Oil to remain around the $80 levels this quarter and move to the $90s in the second quarter, and beyond.   Lithium companies on watch with the battery market heating up. Ford and CATL building a battery plant Lithium imports to China and USA are surging this year, ahead of car makers ramping up production with some of the IEA countries planning to end the sale of fuel engines in seven years. The world's biggest lithium company Albemarle reports earnings this week - and will be a lithium proxy to watch - for what we may expect from lithium companies this year. In other news, Ford and CATL are reportedly planning to build a $3.5 billion mega battery plant in Michigan, across 1,900 acres - and employ 2,500 workers. Meaning, they will need to buy industrial metals to produce batteries. This narrative illustrates demand is likely to continue to grow, while supply remains limited. This supports Saxo’s bullish view on battery metals; copper, aluminium and lithium. Click the link, for a look at stocks to watch this week across these sectors. Alternatively refer to Saxo's Equity baskets under Research, Stocks.  Big stakes this week for earnings with 60 S&P500 companies reporting and ASX reporting season ramping up So far, this quarterly US earnings season, 346 S&P500 (US500.I) companies reported results and average earnings growth for the quarter is down 2.3%. Although quarterly earnings growth is in the red again, it’s slightly better than expected. That’s one of the major themes again this US earnings season - margin/profit squeezes are continuing, while the most earnings growth is continuing to come from the Energy sector  - which is benefiting from rising free cash flow growth. Meanwhile, for the first time since covid, we’ve seen the biggest earnings declines in Materials – with mining companies reporting falling earnings amid production slipping amid weather issues. That said, Australian commodity companies are reporting that production has started to turn around in the industry, with mining employment improving. For companies to watch this week who are reporting quarterly or full year earnings  - see our calendar below. Highlights include results from Glencore (GLEN:xlon) that will provide insights about global commodity markets. Sales trends and management’s comments on the business outlook from Coco-Cola (KO:xnys), Kraft Heinz (KNC:xnas) will inform investors about the state of consumers and margin trends in consumer staples. Australian equites (ASXSP200.I) could wobble, if employment data is hotter than expected and commodities pair back with a higher US dollar This week investors and traders will be focused firstly – on Australian employment data out for January, due on Thursday, expected to show employment improved, with 20,000 jobs gained last month, which will market a recovery from the prior drop - while the unemployment rate is expected to remain unchanged at 3.5%. Also importantly, consider the Aussie share market may be potentially vulnerable of pairing back - as the Australian 10 year bond yield has moved up aggressively to 3.81%- its highest level since January. This is because the market is still playing defensive - following hawkish RBA comments and the RBA increasing its inflationary forecast. Plus the market expects the RBA to make ~78.6bps of hikes before pausing in August. Meaning, unprofitable tech companies and businesses that don’t pay a dividend yield are vulnerable here. From a technical perspective, it also looks like the ASX200 is running out of steam. Click here for our technical analyst's views    Macro data on watch this week   Monday 13 February Singapore Q4 (F) GDP India Jan CPI Fed’s Bowman speaks Tuesday 14 February Singapore Budget Australia Feb Westpac Consumer Confidence Japan Q4 (P) GDP Australia Jan NAB Business Conditions/Confidence NZ Q1 2yr Inflation Expectations UK Dec Labor Market US Jan CPI Fed’s Barkin, Harker, Logan, Williams speak US Jan NFIB Small Business Optimism Index Wednesday 15 February Australia RBA’s Lowe Senate Hearing China 1yr Medium-Term Lending Facility Rate UK Jan CPI India Jan Trade US Feb Empire State Manufacturing US Jan Retail SalesUS Jan Industrial Production Thursday 16 February Japan Jan Trade Australia Jan Employment US Jan Building Permits/Housing Starts US Weekly Initial Claims US Jan PPI Fed’s Mester, Bullard, Cook speak ECB’s Lane, Panetta and Nagel speak UK BOE’s Huw Pill speaks Friday 17 February Australia RBA’s Lowe Testimony Singapore Jan Non-oil Domestic Exports UK Jan Retail Sales ECB’s Villeroy speaks Fed Bowman, Barkin speak US Jan Leading IndicatorCompany earnings to watch Company earnings to watch Tuesday 14 February Consumer: Coca-Cola Blood therapy and vaccines; CSL Travel: AirBNB, Marriott International Wednesday 15 February  Oil: Devon Energy Iron ore: Fortescue Therapeutics: Biogen Banking: Commonwealth Bank of Australia Consumer: Kraft-Heinz, Shopify Travel: Corporate Travel Thursday 16 February Lithium:Albemarle Aluminium: South32 Copper: South Tech: Cisco Fertilizers: CF Industries Coal: Whitehaven Coal Gold: Newcrest Mining, Evolution Mining Healthcare: Sonic Healthcare Stock exchanges: ASX Nuclear: NRG Energy Electricity: Southern Co, Origin Energy Friday  17 February Luxury spending: Hermes International Auto and EV maker: Mercedes-Benz Agriculture: Deere   Source: Saxo Spotlight: What’s on investors & traders radars this week? New CPI method, Oil to wobble, Lithium on watch, FX & earnings | Saxo Group (home.saxo)
The Commodities Feed: Specs continue to cut oil longs

Crude Oil Falls Short Of Cheering The Price-Positive News From Russia

TeleTrade Comments TeleTrade Comments 13.02.2023 08:45
WTI extends pullback from two-week high amid sour sentiment. Tensions surrounding unidentified objects, hawkish Fed weigh on commodity prices. OPEC expects upbeat energy demand, Russia braces for Oil production cut. US inflation data will be crucial for clear directions. WTI crude oil pares the previous day’s gains around $79.00, down 1.22% intraday during early Monday, as energy buyers fail to ignore the broad risk-off mood. In doing so, the black gold also falls short of cheering the price-positive news from Russia and the Organization of the Petroleum Exporting Countries (OPEC). Russia will cut crude oil production by half a million barrels per day starting in March, mentioned CNN Business. The news also cites the Western sanctions on Moscow’s energy supply curbs as the catalyst behind the move that propelled Oil prices on Friday. On the same line, OPEC Secretary-General Haitham Al Ghais said over the weekend at an energy conference in Cairo that the cartel “expects global oil demand to exceed pre-pandemic levels in 2023,” reported Reuters. While the hopes of higher demand and lesser supplies put a floor under the Oil price, the market’s risk-aversion joins the firmer US Dollar to weigh on the commodity prices. Among the key catalysts fueling the US Dollar Index (DXY), up 0.20% near 103.80 by the press time, are the fears about the mystery objects flying over the US and China. The US shot down nearly four such objects while China prepares to hit one such unidentified object while weighing on the market sentiment and fueling the DXY. The market’s risk-off joins the mildly positive Fedspeak, especially after Friday’s strong US Consumer Sentiment and inflation expectations, to also weigh on the WTI crude oil. During the weekend, Philadelphia Federal Reserve President Patrick Harker pushed back the chatters of a Fed rate cut during 2023. However, the policymaker did mention, “Fed not likely to cut this year but may be able to in 2024 if inflation starts ebbing.”  His comments were mostly in line with Fed Chair Jerome Powell’s cautious optimism and hence challenge the US Dollar buyers. Read next: UK Economy Suggest That Inflation Will Drop| FXMAG.COM Looking forward, WTI crude oil may await more clues for clear directions amid a light calendar. Hence, it may extend the latest pullback ahead of Tuesday’s US Consumer Price Index (CPI) for January. Should the US inflation data arrive as firmer, the fears of hawkish Fed actions and economic slowdown weigh on the energy benchmark. Technical analysis WTI crude oil remains sidelined between the one-week-old support line and the 100-DMA, respectively near $78.80 and $80.90.  
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

The Commodities Feed: Russian supply cut

ING Economics ING Economics 13.02.2023 09:08
At the end of last week, Russia announced that it would cut oil supply by 500Mbbls/d from next month. This does not change our view on the market, as we had already assumed that Russian supply would edge lower following the EU ban on Russian oil and refined products Tank farm for storage of petroleum products in Volgograd, Russia Energy- Russia announces oil supply cut The oil market finished last week strongly, rallying by more than 2.2% on Friday. This move higher came as  Russia announced that it would cut oil supply by 500Mbbls/d from March as a response to sanctions against it. While there is an element within the market that believes that this is Russia weaponizing energy, we feel that it is more likely that Russia is simply struggling to find buyers for its oil, particularly after the EU ban on Russian refined products came into force earlier this month. These cuts do not change our view on the market, given that we were already assuming that Russia would have to reduce supply as a result of the EU ban on oil and refined products. The weakness that we are seeing in prices in early morning trading today likely reflects the market coming to the realisation that these cuts are already largely priced in. Having rallied towards the end of last week, US natural gas prices have continued their move higher in early morning trading today. There are reports that Freeport LNG exported its first cargo over the weekend since June last year. The ship was reportedly loaded with supply from storage, while production is expected to restart soon. Markets are eagerly awaiting the restart of the 15mtpa Freeport plant. Firstly, it will improve supply prospects for the global LNG market, which is expected to remain fairly tight this year. And secondly, it will increase demand for feed gas, which should support domestic US natural gas prices. For the week ahead, OPEC will release its monthly oil market report on Tuesday. This report will include their latest outlook on the market as well as OPEC production numbers for January. The IEA monthly oil market report on Wednesday will follow it. Metals – Exchange inventories continue to rise in China The latest data from Shanghai Futures Exchange (ShFE) shows that weekly inventories for metals continued to grow over the last week. Copper stocks rose for a sixth consecutive week, increasing by 15,500 tonnes to 242,009 tonnes (highest since April 2020). Among other metals, zinc stocks rose 16% WoW to 105,669 tonnes, while aluminium inventories increased 9.6% WoW to 268,984. Both these metals saw inventories at their highest levels since mid-2022. MMG said that the Las Bambas copper mine would continue to operate at a reduced rate as the mine was able to secure critical supplies despite road blockades. However, the company said that it is monitoring the situation and if the operating conditions don’t improve, the mine would be forced to announce a period of care and maintenance.  The latest data from China Iron and Steel Association (CISA) shows that steel inventories at major Chinese steel mills rose to 16.5mt in late January, up 2.6% compared to mid-January. Crude steel production at major mills also edged higher to 1.99mt/d during the period. Read next: Campbell Bought A $100,000 Plane To Live In It| FXMAG.COM Agriculture – Lower coffee shipments The latest data from the General Department of Vietnam Customs shows that coffee exports fell 27.7% MoM to 142.5kt in January. Similarly, the Brazilian Coffee Exporters Council reported that Brazilian coffee exports declined 16.8% YoY to 2.8m bags in January, following lower supplies and producers’ resistance to selling stocks at current prices. The agency reported that Arabica coffee shipments fell 18.7% YoY to 2.4m bags, whilst Robusta exports declined 12.3% YoY to 87.6k bags. The latest fortnightly report from the UNICA shows that sugar cane crushing in Centre-South Brazil stood at 307kt over the second half of January compared to no crushing a year ago as the processing had already been halted by this time. Meanwhile, sugar production stood at just 17kt over the 2nd half of January, with around 43.1% of cane allocated to sugar production. UNICA reported just 3 sugar mills were still operating as of late January. Data from Ukraine’s Agriculture Ministry shows that farmers harvested 53.7mt of grain from 97% of the expected area as the harvest nears completion. The ministry added that the 2022 wheat harvest totalled 20.2mt, much lower than the 32.2mt harvested last season. As for corn, farmers harvested 26.4mt of the grain from 93% of the expected area. The USDA’s weekly export inspection data shows the demand for US grains remained soft over the last week. US weekly inspection of soybeans for export fell to 644kt, compared to 928kt in the previous week. Similarly, corn shipment inspections declined from 1.76mt a week ago to 1.17mt. Read this article on THINK TagsRussian oil ban OPEC Oil Natural gas LNG IEA Copper Coffee Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Crude Prices Are Rallying After A Mixed Jobs Report Sent The Dollar Lower

Russia Has Announced To Cut Its Production By 500 000 Barrels Per Day, Equities Are Under Selling Presure

Swissquote Bank Swissquote Bank 13.02.2023 10:45
US equities recorded their worst week since the year started. Hawkish comments from many Federal Reserve (Fed) members hammers sentiment, as stress mounts before the much-important US CPI data due Tuesday. US CPI If US inflation hasn’t eased, or eased enough, or God forbid, ticked unexpectedly higher on yearly basis, we could rapidly see the post-NFP optimism, and the pricing on the goldilocks scenario to leave its place to fear and chaos. Fed At the start of the week, the activity on Fed fund futures hints at around 91% chance for a 25bp in the next FOMC meeting, and around 9% chance for a 50bp hike. Forex In the FX, the US dollar index finally cleared the 50-DMA offers on Friday - which I think could be premature if tomorrow’s US inflation number is sufficiently soft. A a wave of fresh buying in the Japanese yen also marked the latest mood in the currency markets, but didn’t last long. The EURUSD, on the other hand, slipped below its own 50-DMA. What’s next depends on the US dollar, as the US dollar is what leads the dance right now. Read next: Amazon Is Slowly Dismantling Tony Hsieh’s Version Of Zappos, Louisa Vuitton Doubled Sales| FXMAG.COM Energy market In energy, US crude oil jumped past the $80pb on Friday, as Russia announced to cut its production by 500’000 barrels per day, which is roughly 5% of its daily production. But gains remain limited by an overall bearish mood and recession fears, and offers remain strong into the 100-DMA, which currently stands near $81pb level. Watch the full episode to find out more! 0:00 Intro 0:27 Investors are tense before US inflation data due Tue 3:30 S&P500, Nasdaq: key technical levels to watch this week 5:27 FX update: USD up, euro, yen down 7:47 UK avoids recession, FTSE at record, BP tops £100bn valuation 9:09 Crude jumps on Russia, but 100-DMA still intact Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #USD #inflation #data #Fed #expectations #EUR #JPY #GBP #FTSE #BP #crude #oil #Russia #output #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

The Commodities Feed: US CPI in focus

ING Economics ING Economics 14.02.2023 08:30
Commodity markets will be eagerly awaiting today’s US CPI data, which will shed some light on how much more work the US Fed has to do to bring down inflation Energy- US SPR release to go ahead Oil prices are under pressure in early morning trading today with NYMEX WTI down more than 1% at the time of writing. This weakness follows the US Department of Energy's announcement that it will sell 26MMbbls of crude oil from the Strategic Petroleum Reserve (SPR) for the period April to June. This release will be part of mandated sales agreed under 2015 legislation. However, there had been suggestions in recent weeks that the US administration would cancel or at least delay this release, after large emergency releases last year. These have left SPR stocks at a little less than 372MMbbls - the lowest level since 1983. As for today, there are two releases the oil market will be focusing on. Firstly, OPEC will release its monthly oil market report, which will provide the group’s latest outlook on the market. However, more important for markets will be US CPI data. The consensus is for a MoM increase of 0.5% and a YoY increase of 6.2%. Anything too far away from these numbers could lead to some volatility in markets by adding further uncertainty over the path the US Fed takes in the months ahead. Freeport LNG has asked the Federal Energy Regulatory Commission to approve an initial commercial restart of its LNG export facility. The request includes bringing back online all three liquefaction trains (a total of 15mtpa), two storage tanks and one loading dock. This follows reports that over the weekend the plant loaded its first cargo since a fire in June last year, after receiving limited approvals from FERC to do so. Metals – Mine supply woes continue for copper Freeport-McMoRan has temporarily suspended mining and processing activities at its Grasberg mine in Indonesia as heavy rains over the weekend flooded part of its concentrate mill and damaged parts of a road. The company said the situation is now under control and expects operations to resume by the end of February. Meanwhile, the company expects to miss its 1Q23 sales target of 900 million pounds of copper following the recent disruptions. MMC Norilsk Nickel revised down its estimates for a 2023 deficit in the palladium market from 800koz to 300koz as recycling and non-Russian production increase. Among other metals, Nornickel expects the global nickel market to be in a surplus of 122kt (versus previous estimates of 110kt) in 2023, mainly due to the ramping-up of new NPI and NPI-to-matte capacity in Indonesia. LME aluminium traded to its lowest level in five weeks following a surge in LME exchange inventories. The latest LME data show that exchange inventories for aluminium rose by 89,850 tonnes to 576,775 tonnes yesterday. This increase follows strong inflows into LME warehouses last week. The increase in stocks will ease fears over supply shortages, at least in the near term. Read next: Poland’s President Andrzej Duda Said The Decision To Send Fighter Jets To Ukraine Was “Not Easy To Take”| FXMAG.COM Agriculture – Ukraine's grain shipments remain low The latest data from Ukraine’s Agriculture Ministry shows that grain exports so far in the 2022/23 season total 29.2mt, down 28.6% YoY. Total corn shipments stood at 16.7mt (-3.8% YoY), while wheat exports fell 41% YoY to 10.4mt. Read this article on THINK TagsSPR OPEC Nickel LNG Grains CPI Copper Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US Inflation Slows as Spending Stalls: Glimmers of Hope for Economic Outlook

Tesla Believes That Revenue Will Grow 28% To A New Record, The Bank Of England Hinted That The 50bps Rate Hike May Have Been Their Last

Saxo Bank Saxo Bank 14.02.2023 08:48
Summary:  Today is the U.S. CPI day which may set the near-term directions of the stock, bond, and forex market. Investors are cautious about the additional uncertainties from the impact of the new CPI compilation methodology and seasonality. U.S. equities rallied and bond yields slipped modestly. Oil prices were lower as US announced plans to sell more crude from its strategic reserves. Japanese Yen extends weakness awaiting the official announcement of the nomination of Ueda as the new BOJ governor. Hong Kong’s Hang Seng was dragged by rights offering from Link REIT.   What’s happening in markets? US equities (US500.I and USNAS100.I) rallied as inflation expectations dropped After S&P500 made its biggest weekly drop in 2023 last week, US stocks started the week in positive territory, with the S&P500 gaining 1.1% and Nasdaq 100 advancing 1.6%, supported by the New York Fed Survey of Consumer Expectations that showed expectations for household income expectations falling from 4.6% to 3.3%. That’s the largest one-month drop in the nearly 10-year history of the series. We’ve seen investors cautious ahead of US inflation data being released on Tuesday and that may be hotter than expected, with a new CPI weighting being used. All but energy within the 11 S&P 500 sectors gained on Monday, led by information technology, consumer discretionary, and consumer staple. Microsoft was one of the best performers, up 3% on Monday as analysts were upbeat on the tech giant’s growth potential. Twilio gained 2.1% following the announcement to cut 17% of its workforce. Tesla flashes red signals after a record rally; meaning some of its gains could be unwound Tesla was one of the weakest in mega caps on Monday, while suffering its biggest two-day fall since January, losing 6.1%. Tesla shares have been bouncing off their lows and were up as much as 100% from their January 2023 lows, but now investors are trimming gains and Tesla is trading 93% above its low. The market believes the Fed will pause rate hikes in Q2 which supported buying in Tesla, while the company pledged to roll-ahead with scaling up production targets. Consensus believes in 2023 Tesla’s revenue will grow 28% to a new record, with EBITDA expected to swell 20% also to a new record, with 12.5% EPS growth. But, from a technical perspective, Tesla’s relative strength index (RSI) is showing the stock is now in the overbought territory - that could signal a potential reversal. The last time Tesla was this overbought was in November 2021 amid tech enthusiasm. The long end of US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) was well bid In a quiet and choppy session, yields on the 2-year finished unchanged while yields on the 10-year were 3bps richer. The terminal Fed Fund rate, as being priced in by the market, edged up to 5.23%. Fed Governor Michelle Bowman said the Fed is “still far from achieving price stability” and she expects that “it will be necessary to further tighten monetary policy”.  Traders are cautiously waiting for the much-anticipated CPI report today. Hong Kong’s Hang Seng (HIG3) pared losses and China’s CSI300 (03188:xhkg) gained on consumer stock strength Hang Seng Index slipped 0.1%, as shares of Hong Kong local property developers tumbled across the board dragged by a 12.8% collapse in Link REIT (00823:xhkg). The largest REIT in Hong Kong that operates shopping centers and real estate retail spaces announced a rights offering for HKD19.3 billion at a 30% discount to its previous close. New World Development (00017:xhkg) plunged 6.7%; Henderson Land Development (00012:xhkg) declined 4.8%; Wharf Real Estate (01997:xhkg) lost 2.9%. The benchmark index clawed back most losses as Chinese consumer names rallied, with China Resources Beer (00291:xhkg) up 4.9%, Haidilao (06862:xhkg) up 4.7%, Budweiser Brewing ( 01876:xhkg) up 3%, and Li Ning (02331:xhkg) up 2.4%, China Mengniu (02319:xhkg) up 2.2%. Chinese hotpot restaurant chain, Xiabuxiabu (00520:xhkg) surged 8.6%. In A-shares, CSI300 advanced by 0.9% led by Chinese white liquor, beverage, beauty care, marine equipment, and construction materials. Kweichow Moutai (600519:xssc) gained 2.6%. FX: Yen weakness extends despite yields cooling off, commodity currencies gain Dollar gains cooled off slightly on Monday as traders positioned for US CPI release due today, and risk assets rallied with gains in US yields cooling off after the recent run higher. Michelle Bowman added to the Fed chorus insisting on more rate increases to rein in inflation, saying "we are still far from achieving price stability. But the Japanese yen was still pressured lower, and USDJPY took a look above 132.50 as expectations of BOJ governor candidate Ueda altering the policy stance retreated. Upbeat risk sentiment lifted NZDUSD to 0.6360 from sub-0.63 levels earlier in the day, while AUDUSD drifted towards the key 0.70 level as well but calls for RBA governor Lowe’s resignation may keep the gains in check. GBPUSD back higher to 1.2150 and labor market data is on tap today. EURUSD back above 1.0720. Aussie dollar moves back toward 0.70 with commodities moving up The Aussie moved up 0.7% after the US dollar fell back, while commodity prices rose - also supporting the Aussie dollar. Notably, metal prices have been declining for week but moved up overnight, with Copper up 1%. The next catalyst for the AUDUSD pair will be if business confidence out today, is strong expected - it could trigger more upside. Plus the market would want to see stronger than expected Australian employment data for January- on Thursday, to also support the risk-on rally. But there is a risk, AU jobs data won’t be as strong as expected by the market, given the lag interest rates effects in Australia. 20,000 jobs are forecast to have been added, with steady unemployment rate. The Australian bond market suggest less caution is in the air, with the Australian 10-year bond yield down to 3.74% (highest levels since January). But the major catalyst will be the strength of the USD - that could change direction for the AUDUSD pair. Crude oil (CLH3 & LCOJ3) prices choppy as supply fears ease Crude oil prices started the day trying to move higher as traders assessed the impact of Russia’s supply cuts. However, the importance of Russia’s energy supplies has gone down over the last year as Europe has diversified its energy sources and Russia’s oil and gas has continued to flow around the world at discounts of well over 30%. This helped ease fears of a supply shock, also helped by US planning to sell 26mn barrels of oil from its strategic reserves. WTI prices dropped from over $80/barrel to ~$79 while Brent was below $87. The UAE said markets remain balanced and OPEC+ producers don't need to intervene. Elsewhere, the US shale industry remains reluctant to ramp up drilling activity despite strong cash flows.  Read next: GBP/USD Started The New Week In A Calm Way, EUR/USD Is Waiting For US CPI Report| FXMAG.COM What to consider? Japan’s Q4 GDP comes in below expectations Japan's economy grew an annualised 0.6% in the final three months of 2022, bouncing back from the previous quarter's revised contraction of -1.0% but still coming in below expectations of a 2% gain. The return of inbound tourists offset a slowdown in capital expenditure and exports. With economic momentum still weak, new BoJ governor Ueda will continue to face a challenging task in shifting away from the ultra-loose monetary policy. US CPI on the radar - volatility risks higher with uncertain impact of new methodology While investors firmly believe that inflation is on a downward trajectory, month-on-month variations still remain on watch. More importantly, this month brings a change in methodology, which adds further uncertainty to the release. If we take the last few month’s revisions for core CPI into account based on the new methodology, there is reason to believe that the new weights could mean an upward push to inflation. Average core CPI for the last three months of 2022 has gone up from 3.1% to 4.3% with the new seasonal factors released by the BLS. Fed whisperer Nick Timiraos, a WSJ reporter, is warning of a potential upside surprise in January US CPI data due to seasonality. Moreover, milder weather in January compared to December, as well as an upward swing in jobs, could mean demand pressures picked up further traction. Bloomberg consensus expects headline CPI to soften to 6.2% YoY from 6.5% YoY in December, while the MoM picks up to 0.5% from a revised +0.1% previously. January CPI data will be out today at 2130 SGT. UK labor market data due today The Bank of England hinted at the February meeting that the 50bps rate hike may have been their last. This week’s inflation, jobs and retail sales data will however be key to determine if another hike may be seen in March. Labor data is out on Tuesday, and expected to continue to show a tight labor market. The unemployment rate over the last quarter is likely to remain unchanged at 3.7% as per Bloomberg consensus while the employment gains are expected to pick up to 43k from 27k previously. Wage pressures are also expected to sustain with average weekly earnings up 6.2% YoY in the December quarter from 6.4% before. Singapore’s budget today may look at post-Covid fiscal strategy Singapore’s annual budget will be presented today and measures may be taken to phase out Covid-era stimulus as the economy looks to re-balance spending towards longer-term goals. Still, inflation remains high and the low-income groups will likely continue to get support. Still, long-term focus on green transition and digitization is likely to be a key theme. This could bring companies like Sembcorp and Keppel Corp into favor due to their push to reduce carbon emissions. EV adoption push is also likely, helping ComfortDelGrow due to their increasing fleet of EVs. Lithium giant Albemarle earnings ahead This week, the world's biggest lithium company, Albemarle reports earnings. Given its size and scale - with it selling to most EV makers including - Toyota, Ford, Mercedes, GM, Hyundai, Kia, Nissan, Tesla and Renault – we think Albemarle will be a proxy for what we can expect from lithium companies' earnings. Consensus expects operating profits to have improved and rise to $1.05 billion. EBITDA is expected to grow to $1.22 billion, while net debt is expected to drop, with adjusted EPS forecast to grow to 8.19. Coco-Cola reports today Investors can get more information about the state of U.S. consumers and margin trends in consumer staples from the results and management’s comments on the business outlook from Coco-Cola (KO:xnys) today.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.       Source: Market Insights Today: All eyes on US CPI today – 14 February 2023 | Saxo Group (home.saxo)
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

Marek Petkovich Marek Petkovich 14.02.2023 11:51
Russia announces a 5% cut in production, the U.S. responds by saying it is ready to resume oil sales from the strategic reserve, and OPEC reassures investors by saying that the market is stable and there are no grounds for an emergency meeting of the cartel. The actions of major participants show different goals. If some of them have a need for foreign currency proceeds to finance military expenditures, others are thinking about the sustainability of the commodity market. 5% of Russia's oil production is about 500,000 bpd. A very decent figure that can worsen the Brent rally, which is happening now. Another thing is that such a decision by Moscow may be a forced measure. It redirects its oil flows from the West to the East, and recently more and more cracks have appeared in this process. In particular, for seven days to February 10, the total oil supply from the Russian Federation decreased by 16%, or by 562,000 bpd. Dynamics of offshore oil supplies from Russia However, the U.S., unlike the EU, did not stress that the sanctions are working. Washington decided to resume sales of oil from the strategic reserves, which reached 180 million barrels in 2022. This time 26 million barrels are at stake. The figure may not seem that big, but the effect of surprise is important. Many traders thought that reserves would remain at 371 million barrels by the end of 2023. In fact, they will shrink to 345 million. We are talking about the lowest level since 1983. If we add to this the forecast of the U.S. Energy Information Administration that shale oil production will reach a record 9.36 million bpd this year, it becomes clear that there will be no problem with supply. On paper, this should clip the wings of Brent buyers. Dynamics of U.S. strategic reserves In reality, the market is more concerned about the growth of demand for oil than temporary supply difficulties. In particular, the fall in the number of deaths from COVID-19 in China increases optimism about the rapid recovery of Asia's largest economy. The increase in the European Commission's forecasts for the Eurozone GDP for 2023 to 0.9% instead of the previous 0.3% suggests that there will be no recession. And hopes for a slowdown in the U.S. inflation fuel risk appetite. If this happens, the Fed will not need to raise the federal funds rate too high and will provide the U.S. economy with a soft landing. Read next: Brazil’s Bank Allows To Pay Taxes Using Cryopto, Ford Will Cut Jobs In Europe| FXMAG.COM Thus, the assurances of the UAE, an OPEC member, that the market situation is stable despite Russia's production cuts are true. Technically, after partial profit taking on long positions on Brent, formed due to the three-touch reversal pattern, at the level of $86.3 per barrel, a pullback followed. Currently, the bulls are trying to get back into the game and storm the $86.4 fair value resistance. If they succeed, the probability of implementing the target of $89 per barrel will increase. We will have the opportunity to increase the longs.   Relevance up to 08:00 2023-02-19 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/335023
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Gold Remains Choppy In The Lead-Up To The Inflation Report

Craig Erlam Craig Erlam 14.02.2023 15:02
Paring gains Oil prices are falling again on Tuesday after initially recouping losses at the start of the week. While traders remain very optimistic about China and to a lesser extent, the resilience of the global economy this year, the fact remains that it won’t be a smooth process, and that has already been evident in the economic data in the opening weeks of 2023. It will be interesting to see how oil prices respond to today’s US inflation data as interest rates are now at a point where every 25 basis points matter and could be the difference between a soft landing and a recession. Equity markets don’t appear to be fully capturing that at the moment but oil appears to reflect that much more. Read next: GBP/USD Pair Rose Sharply Above $1.22, EUR/USD Pair Also Rose| FXMAG.COM Awaiting the inflation release Gold remains choppy in the lead-up to the inflation report. It was starting to drift lower again late last week but that appears to have slowed, probably with an eye on today’s release. A strong inflation reading could weigh heavily on the yellow metal and intensify the second wave of the correction. While it has seen some support around $1,850 this past couple of sessions, the interesting levels remain $1,820-$1,830 and $1,780-$1,800. Another weak inflation print could draw an abrupt end to the correction and see gold rally once more, at which point $1,890-$1,900 may provide the initial test. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: Specs continue to cut oil longs

The Commodities Feed: Inventory pressure

ING Economics ING Economics 15.02.2023 08:30
Oil prices have come under pressure, driven by a stronger-than-expected US CPI print, further SPR releases and a bearish API inventory report released overnight. Today, the focus will be on the IEA’s latest outlook for the oil market Source: Shutterstock Energy - Higher demand for OPEC oil Oil prices settled lower yesterday as the market digested the US SPR release announcement, while the YoY US CPI print also came in above expectations, which will have weighed further on prices. The market has continued to trade weaker this morning after some bearish API data was released overnight with US inventories increasing across the board last week. US crude oil inventories grew by 10.51MMbbls, while Cushing crude oil inventories increased by 1.95MMbbls. For refined products, gasoline and distillate fuel oil stocks increased by 846Mbbls and 1.73MMbbls respectively. OPEC released its latest monthly oil market report yesterday. This showed that OPEC production over January averaged 28.88MMbbls/d, down 49Mbbls/d MoM. Saudi Arabia saw the largest decline over the month with output falling by 156Mbbls/d.  For 2023 the group revised lower its non-OPEC supply growth estimate by 100Mbbls/d to 1.44MMbbls/d YoY, while global oil demand growth forecasts were increased by 100Mbbls/d to 2.32MMbbls/d YoY. As a result, the call on OPEC production over 2023 is 29.42MMbbls/d, above January production of 28.88MMbbls/d. The call on OPEC supply is strongest in 4Q23, standing at 30.43MMbbls/d. The IEA will release its monthly oil market report today, which will also give the agency’s latest outlook for the market. Bloomberg reports that the European Commission is set to have talks on whether voluntary demand cuts in the European gas market need to be extended beyond March. Previously EU members agreed on voluntary demand cuts of 15% below the 5-year average for the period August 2022 to March 2023. We believe that Europe will need to continue to see demand destruction through the course of the year in order to ensure the market is kept in balance. However, we believe demand cuts needed beyond March can be more modest at around 10%. This assumes we see no further declines in Russian pipeline gas flows to the region. Metals – Aluminium smelters in Europe still facing challenges Despite the recent drop in energy prices, aluminium smelters in Europe still face challenges, Norsk Hydro has said. The company’s CFO said a further 600,000 tonnes of aluminium capacity is still at risk if we see another spike in energy prices.  Mitsui Mining & Smelting Co., Japan’s largest zinc smelter, will raise premiums for Asian ex-Japan buyers for the second year in a row by more than 10% over LME prices for 2023. The company expects zinc supply to remain tight and sees a supply deficit of 150kt in 2023, the third annual deficit in a row. It expects zinc prices to range between $3,000 and $3,400/t in the first half of the year. Agriculture – France raises winter-grain planting estimates France’s agriculture ministry said that French winter-grain plantings for the 2023 harvest are now projected at 6.76m hectares, slightly higher than initial estimates of 6.71m hectares. The latest estimates are up 1.8% YoY, while also remaining 1.7% above the five-year average. Soft wheat area estimates were increased to 4.76m hectares (+2% YoY), marginally higher than the December estimate of 4.75m hectares. Read this article on THINK TagsZinc OPEC Natural gas IEA Grains CPI API Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: US announces SPR purchase

Crude Oil Bears The Burden Of The Broad US Dollar Recovery

TeleTrade Comments TeleTrade Comments 15.02.2023 08:51
WTI crude oil drops for the third consecutive day as risk-aversion joins fears of more supplies. US SPR release, UAE Energy Minister’s comments join surprise inventory build to underpin higher supply hopes. Expectations of more energy demand, Russia-linked output cut challenge bears. US Dollar’s run-up amid hawkish Fed concerns exerts additional downside pressure on Oil price. WTI crude oil holds onto the week-start bearish bias as it renews its intraday low near $78.40 during early Wednesday morning in Europe. In doing so, the black gold bears the burden of the broad US Dollar recovery and downbeat sentiment amid expectations of more Oil supplies. That said, UAE Energy Minister Suhail Mohamed Al Mazrouei mentioned on Tuesday that UAE is committed to the OPEC deal lasting until the end of 2023. The diplomat, however, stated that he is more worried about supply than demand for next year. While saying the same, UAE Energy Minister said, “The US Strategic Petroleum Reserve (SPR) release won't shock the market.” Although comments from the Arab official should have ideally put a floor under the prices, hawkish statements from the Federal Reserve (Fed) policymakers, despite unimpressive US inflation, joined a surprise build in US Oil inventories to weigh on prices. On Tuesday, US Consumer Price Index (CPI) rose past market expectations to 6.4% YoY but posted the slowest increase since 2021 while easing below 6.5% prior. More importantly, CPI ex Food & Energy, better known as the Core CPI, grew 5.6% YoY compared to 5.5% market forecasts and the 5.7% previous readings. Following the data, Dallas Fed President Lorie Logan stated that they must remain prepared to continue rate increases for a longer period than previously anticipated. On the same line was New York Fed President John Williams who noted that the work to control too high inflation is not yet done. Additionally, Philadelphia Fed President Patrick Harker signaled that they are not done (with lifting rates), but they are likely close. Elsewhere, the American Petroleum Institute (API) released its Weekly Crude Oil Stock until February 10 while noting an increase of 10.507 million barrels versus the previous draw of 2.184 million barrels. It should be noted that the fears surrounding the global economic slowdown and the US readiness to keep using the SPR balance to battle the Russia-linked Oil shortage seem to have favored the black gold sellers. Alternatively, geopolitical fears and the OPEC+ output cut puts a floor under the energy benchmark’s price. While portraying the mood, US 10-year Treasury bond yields retreat to around 3.74%, after rising three basis points (bps) to refresh a six-week high the previous day whereas the two-year counterpart jumped to the highest level since early November 2022 by poking 4.62%, near 4.61% at the latest. Further, S&P 500 Futures trace Wall Street’s downbeat closing to highlight the mildly offbeat mood and help the US Dollar Index (DXY) to extend the post-US CPI run-up to 103.45 by the press time. Technical analysis Although failure to cross the 100-DMA recalled the WTI bears on Monday, the quote’s further downside appears elusive as it approaches the 50-DMA support, close to $77.70 by the press time.
The Challenge to the Dollar: De-dollarisation and Geopolitical Shifts

A Chorus Of Fed Speakers Have Suggested The Fed Isn't Yet Taking Comfort In The Inflation Trends

Saxo Bank Saxo Bank 15.02.2023 09:09
Summary:  US equities ended mixed but bonds were lower after a hot US CPI raised concerns on the pace of disinflation and the Fed comments that followed pushed the market pricing of terminal Fed funds rate higher. Dollar ended the day mostly flat but higher yields saw the yen plummeting. A bumper UK jobs report for January sent the GBP higher but the wait is now on for the January inflation print. US retail sales will also be on tap today.   What’s happening in markets? US equities supported by strong price performance in Tesla and Nvidia U.S. equities had a choppy session as stocks oscillated between gains and losses following a slower-than-expected deceleration in the CPI prints and hawkish-leaning Fedspeak before the broad benchmark S&P500 settled at nearly flat and the tech-heavy Nasdaq 100 gained 0.7%. Most of the strength in the Nasdaq came from Tesla’s (TSLA:xnas) 7.5% jump and NVIDIA’s (NVDA:xnas) 5.4% rise in share price. Tesla gained following rival Ford (F:xnys), down 0.9%, halted production and shipments of its F-150 Lightning electric pickup trucks due to an unidentified problem with the battery. Tesla also raised the price of its Model Y by USD1,000 to USD58,990. Consumer discretionary, up 1.2%, was the best-performing sector in the S&P500 and Tesla was the top winner. Palantir Technologies (PLTR:xnys) soared 21.3% after the data analysis software company reported better-than-expected Q4 earnings and expects to turn profitable for the whole year in 2023. Airbnb (ABNB:xnas) surged 9.2% in extended-hour trading following reported adjusted EPS at USD0.475, beating the USD0.31 consensus estimate and an upbeat outlook on strong travel demand. Coca-cola (KO:xnys) slid 1.7% despite reporting stronger-than-expected revenue growth and inline earnings. The management gave upbeat guidance for revenue growth of 7-8% and EPS growth of 7-9% in spite of continued cost pressure. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) bear-flattened as yields on the 2-year jumped 10bps Growth in the U.S. CPI came at a slower pace but slowed less than what the consensus forecast expected. After choppy initial reactions, selling emerged in the front end, seeing the 2-year yield finish 10bps cheaper at 4.61%. The SOFR June-Dec 2023 spread narrowed by 10bps to -24bps from -33bps, signaling a further reduction in the bet of rate cuts in the second half of 2023. Hawkish-leaning comments from Fed’s Logan and Barkin, plus the departure of Fed Vice-chair Lael Brainard to join the Biden Administration as head of the National Economic Council added fuel to the higher-for-longer narrative. Brainard is perceived to be the “most persuasive policy dove” at the Fed, as the Wall Street Journal’s Nick Timiraos puts it. Yields on the 10-year rose 4bps to 3.74%, paring some of the rises in yield after a large block buying of nearly 20,000 contracts in the 10-year futures. Across the pond, yields on 2-year Gilts jumped 19bps on a hot employment report. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) traded sideways In a choppy but uneventful session, Hang Seng Index slipped 0.2%. Hong Kong developers recovered from yesterday’s sell-off and bounced by 1%-2%. Sun Hung Kai Properties (00016:xhkg) gained 2.4%; Wharf Real Estate (01997:xhkg) climbed 1.8%. Healthcare names were laggards, with Wuxi Biologics (02269:xhkg) plunging 4% after forecasting 2022 revenues rising 48.4% and profits growing 30%, which failed to meet the high bar of analyst estimates. Alibaba Health Information (00241:xhkg) dropped 2.8%. Tencent (00700:xhkg), down 2.1%, led the internet space lower. Oriental Overseas (00316:xhkg) slipped 2.6% on analyst downgrades citing falling container freight rates. In A-shares, CSI300 was little changed. Non-ferrous metal stocks outperformed, with North Copper (000737:xsec) up 8.7%, Yunnan Copper (000878:xsec) up 5%, and CMOC (603993:xssc) up 3.3%, leading the charge higher. Household appliances names were among the winners with Zhejiang Meida (002677:xsec) advancing by 10%, hitting the upper price limit. Australia equities (ASXSP200.I) fall back to January 16 levels, dragged down by Commonwealth Bank’s cautious outlook Shares in the biggest bank in Australia, the Commonwealth Bank (CBA) sank 5.2% pulling away from record high territory, after reporting half-year results today that paint a cautious tone for banks for the year ahead. CBA’s share price drop pulled back the broad market. CBA's profit results mostly disappointed, although its net interest margin- the main metric analysts look at for banking profitability - came in at 2.1% - on par with expectations. CBA’s cash profit missed expectations with profit up 8.6% YoY to $5.15 billion (vs $5.17 billion Bloomberg consensus), while CBA’s return on equity improved – but also missed market targets. That spooked the market, along with CBA putting aside more capital for bad debts, as higher price pressures continue to hurt consumers, along with falling home prices.  Even though CBA’s results missed, it announced a $1 billion share buy-back as its headline profit after tax moved to a record, which was supported by a surge in business banking profits. The share buy back should theatrically support CBA's shares over the medium to longer term, coupled with the market expecting 2023 profits to hit another record, with margins to improve.  CBA shares gapped down, wiping out a month of gains - with CBA shares moving into oversold territory.  FX: Wobbly dollar as yen slips but AUD, GBP gain A hot inflation data along with Fed officials starting to float the idea of a higher terminal rate saw the dollar being volatile on the day but ended unchanged. Higher yields underpinned as market pricing of the Fed path shifted higher, and that made the yen as the underperformer for the day. USDJPY surged above 133, after Kazuo Ueda being formally nominated as the BOJ chief yesterday and expectations that he won’t be quick with any policy normalization. Meanwhile, AUDUSD was choppy but could not sustain a move above 0.70. GBPUSD also gave up 1.22 despite the strong labor market data questioning the Bank of England’s pause signal, eyes on inflation due today. EURUSD still above 1.0700 with the preliminary readings of the Eurozone Q4 GDP matching 0.1% QoQ and 1.9% YoY forecasts. Lagarde will be on the wires today, and also keep a watch on US retail sales data. Aussie dollar's 50-day moving average continues to limit downside ahead of AU employment The Aussie dollar has continued to track sideways for the last 7 trading sessions, with the Aussie dollar against the US - the AUDUSD pair - being supported by its 50-day moving average ahead of Australian employment on Thursday. Despite hotter than expected US CPI, the pair is steady - also supported by the fundaments - metal prices have moved higher, with Copper and Iron Ore prices back at June 2022 levels. The next catalyst will be Thursday’s Australian employment data, if we see more than 20,000 jobs added, then we will be watching the resistance levels, at perhaps 0.7114 for the Aussie. On the downside, if Australian employment is weaker than expected, we will be watching for a potential pullback. Support for the AUDUSD is perhaps at 0.6879. But, over the medium-to-long term, should the USD continue to track lower, commodity prices stay higher and AU exports continue to grow to China, we see the Aussie dollar doing well. Crude oil (CLH3 & LCOJ3) prices remain pressured While reports of the US release of crude oil from its strategic reserves continued to nudge oil prices lower, a large stockpile built and inflation concerns also added to a weak demand outlook. WTI dropped below $79/barrel while Brent got close to $85. US private inventories, as reported by API, were up by 10.5 million barrels last week. A hot US CPI printed also raised concerns on the disinflation narrative taking hold, suggesting Fed may have to go for a higher terminal rate and pause there for sometime, which raises concerns on the demand outlook. The slide in oil prices however got some support from the OPEC report, which hinted at a tigher oil market as it nudged up the demand estimate and trimmed its supply outlook. IEA monthly report will be on tap today. Read next: Walmart Plans To Close Offices, Ford Invests In Battery Factories | FXMAG.COM What to consider? US CPI sent confusing signals to the markets, but the cooling isn’t enough The US January CPI came in at 0.5% MoM, in-line with estimates, while the core CPI was at 0.4% MoM also as expected. December prints were however revised higher with headline up to +0.1% MoM from -0.1% previously, and core up to 0.4% MoM from 0.3% previously. Markets were wobbly on the release, as the YoY prints came in higher-than-expected at 6.4% for the headline (vs. 6.2% exp) and 5.6% for the core (vs. 5.5% exp). However, a key measure that Powell has highlighted earlier – core services ex shelter – cooled to 0.3% in the month from 0.4% previously. Housing contributed the most to the monthly increase in the CPI, but it is a lagged measure. Meanwhile, disinflation in goods slowed as core goods prices rose +0.1% MoM vs. -0.1% MoM prior. Overall, there wasn’t enough evidence that core inflationary pressures are cooling enough to support calls for the Fed to pivot. Fed speakers send market pricing for Fed path higher A chorus of Fed speakers last night talked about the slow pace of disinflation, suggesting the Fed isn’t yet taking comfort in the inflation trends. NY Fed President Williams repeated there is "still a ways to go" to control inflation and the current levels of inflation are far too high. His views on the terminal rate also differed slightly, in December he suggested rates between 5.00-5.50% is reasonable before last week changing the view to 5.00-5.25%. However, he has now seemingly switched back his views of the higher upper bound for the FFR to 5.50% in wake of the January inflation data. Philly Fed’s Patrick Harker noted that how far above 5% the Fed needs to go depends on incoming data, and Tuesday's inflation report shows inflation is not moving down quickly. Dallas President Logan stressed that tightening policy too little is the top risk. All three are voters this year. Thomas Barkin, a non-voter said it was about as expected and there's going to be a lot more inertia and persistence to inflation than the Fed thought. However he was slightly more dovish saying that if inflation settles, they may not go as far on the terminal but he stressed data dependence. Markets are now pricing in a higher terminal rate of 5.26% in July, and one rate cut has also been driven out of this year’s pricing. Takeaways and quick reflections from hotter-than-expected CPI  Shelter costs were a large contributor to US monthly prices moving up - with rent prices up 8.6%, while large price jumps were seen in airfares costs, up 26%. Airlines are not only seeing more passengers, but also increasing their fares - and this is translating to higher earnings expectations and thus stronger share price performance in airline industry stocks. American Airlines shares are up 40% from their lows, while aircraft maker Boeing is up 80% off its lows. Across other inflation categories, other significant price moves were seen in eggs, butter, fuel, gas, lettuce, cereals, and pet food. This reinforces Saxo’s bullish and overweight view on Commodities as we see higher prices for longer. Companies such as Shell trade 32% up from their lows, while agricultural company Deere is up 40% from its lows. UK employment data points to much firmer than expected labour market The UK saw a strong surge in Monthly Payrolled Employees of +102k, well north of the +15k expected, while the January Jobless Claims dropped -12.9k and the December claims were revised down to -3.2k vs. +19.7k originally reported. The December employment change registered a gain of 74k vs. 43k expected and the Unemployment rate in December was steady at 3.7%. Weekly earnings ex Bonus were +6.7% YoY in December Vs. 6.5% expected and 6.5% in November. Focus shifts to CPI report due today and another double digit print is expected. Hong Kong Monetary Authority bought HKD to defend the peg The Hong Kong Monetary Authority bought HKD14.87 billion (USD1.9 billion) to cap the USDHKD at 7.85, in defence of the SAR’s link-exchange-rate regime for the first time since last November. For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Markets Today: Choppy markets with a hot US CPI and Fed speak – 15 February 2023 | Saxo Group (home.saxo)
Airbnb's Revenue Exceeded Estimates, Growing 24% y/y

Airbnb's Revenue Exceeded Estimates, Growing 24% y/y

Saxo Bank Saxo Bank 15.02.2023 09:29
Summary:  Markets gyrated wildly on yesterday’s US January CPI release, which showed higher than expected inflation on a year-on-year basis, which kept US treasury yields firm as a number of Fed members chimed in with hawkish comments. Elsewhere, has the consumption led Chinese recovery been oversold as many new consumer credit loans are being funnelled to pay down mortgages and on stock speculation rather than on consumption. What is our trading focus? US equities (US500.I and USNAS100.I): the dilemma in equities As we wrote in yesterday’s equity note in a response to the US January CPI report, the initial positive reaction in S&P 500 futures seemed weird and most likely reflected clearing of hedges and other derivatives positions. The market eventually settled on the interpretation that inflation remains stubbornly high, and the trajectory lower might take longer than expected. The dilemma for investors is that if the economy does not slip into a recession hen high inflation will remain and eventually push on bond yields and likely increase the equity risk premium leading to lower equity valuations. In the case the economy slips into a recession, equity valuations will come down to reflect lower growth and hit to margins. In any case, equities could have seen the best for now and investors might consider reducing equity exposure at these levels. S&P 500 futures bounced back during the session from the lows after the inflation report, but this morning the index futures trade lower again around the 4,127 level with the 4,100 level naturally being the key level to watch on the downside. Hong Kong’s Hang Seng (HIG3) slid and pared its 2023 gain to only 5% Hang Seng dropped 1.6% on Wednesday to levels last seen on 4 January and pared its 2023 gain to only 5%. The Hong Kong Monetary Authority intervened in the forex market for the first time since last November to sell USD1.9 billion against buying the Hong Kong dollar to cap the USDHKD from going about 7.85 the upper limit of the special administrative region’s link-exchange-rate regime. Selling was across the board. Baidu (09888) bucked the market decline and rallied over 5% supported by the somewhat return of the hype on the AI-generated content concept. In A-shares, CSI300 fell 0.6%. AI-generated content concept stocks advanced while domestic consumption, financial, healthcare, and non-ferrous metal names retreated. FX: Choppy dollar on CPI release, eventually settles higher as yen slips on yields rising The USD ended largely unchanged after gyrating wildly in the wake of the January CPI release and Fed comments (more below). After US treasury yields ended the day firmer all along the curve, the JPY was the weakest of USDJPY rallied and took out local resistance, trading above 133.00 into this morning. ay but ended unchanged. Elsewhere, AUDUSD was choppy but could not sustain a move above 0.70 yesterday and stumbled badly in late Asian trading. GBPUSD also gave up 1.22 despite the strong labour market data questioning the Bank of England’s pause signal, eyes on inflation due this morning (breaking news below on that). EURUSD has edged lower toward 1. 0700 overnight with the preliminary readings of the Eurozone Q4 GDP matching 0.1% QoQ and 1.9% YoY forecasts. Lagarde will be on the wires today. Crude oil (CLH3 & LCOJ3) prices remain pressured While reports of the US release of crude oil from its strategic reserves continued to nudge oil prices lower, a large stockpile build and inflation concerns also added to a weak demand outlook. WTI dropped below $79/barrel while Brent slid below $85. US private inventories, as reported by API, were up by 10.5 million barrels last week. A hot US CPI printed also raised concerns on the disinflation narrative taking hold, suggesting Fed may have to go for a higher terminal rate and pause there for some time, which raises concerns on the demand outlook. The slide in oil prices however got some support from the OPEC report, which hinted at a tighter oil market as it nudged up the demand estimate and trimmed its supply outlook. IEA monthly report will be on tap today. Gold (XAUUSD) pummelled further by yield rise post-US CPI release Gold dropped further yesterday, taking out the 1,850 level as US treasury yields closed the day firmer after wild gyrations across markets in the wake of the US CPI release and hawkish talk from Fed speakers (more below). The next important levels include the 1,829 level, which is the 38.2% retracement of the rally off the November lows, the 1,809 area which was broken on the way up, and then the 200-day moving average, currently coming in just above 1,775. Treasuries bear-flattened as yields on the 2-year jumped 10bps Growth in the U.S. CPI came at a slower pace but slowed less than what the consensus forecast expected. After choppy initial reactions, selling emerged in the front end, seeing the 2-year yield finish 10bps cheaper at 4.61%. The SOFR June-Dec 2023 spread narrowed by 9bps to -24bps from -33bps, signalling a further reduction in the bet of rate cuts in the second half of 2023. Hawkish-leaning comments from Fed’s Logan and Barkin, plus the departure of Fed Vice-chair Lael Brainard to join the Biden Administration as head of the National Economic Council added fuel to the higher-for-longer narrative. Brainard is perceived to be the “most persuasive policy dove” at the Fed, as the Wall Street Journal’s Nick Timiraos puts it. Yields on the 10-year rose 4bps to 3.74%, paring some of the rises in yield after a large block buying of nearly 20,000 contracts in the 10-year futures. Across the pond, yields on 2-year Gilts jumped 19bps on a hot employment report. What is going on? Worries that China’s consumer rebound will underwhelm as consumers not spending Bloomberg reports that China’s attempt to engineer a consumer-led recovery may be hindered as funds issued by banks for consumer credit are in many cases funnelled to unintended destinations, especially for mortgage prepayments, but also for speculation in stocks. The rates on the new bank lending are often lower than those for mortgages. UK Jan. CPI out this morning undershoots expectations UK headline CPI out this morning at –0.6% MoM and +10.1% YoY vs. -0.4%/+10.3% expected and 10.5% YoY in December. The core figure was 5.8% YoY vs. 6.2% expected and 6.3% in Dec. US CPI sent confusing signals to the markets The US January CPI came in at 0.5% MoM, in-line with estimates, while the core CPI was at 0.4% MoM also as expected. December prints were however revised higher with headline up to +0.1% MoM from -0.1% previously, and core up to 0.4% MoM from 0.3% previously. Markets were wobbly on the release, as the YoY prints came in higher-than-expected at 6.4% for the headline (vs. 6.2% exp) and 5.6% for the core (vs. 5.5% exp). However, a key measure that Powell has highlighted earlier – core services ex shelter – cooled to 0.3% in the month from 0.4% previously. Housing contributed the most to the monthly increase in the CPI, but it is a lagged measure. Meanwhile, disinflation in goods slowed as core goods prices rose +0.1% MoM vs. -0.1% MoM prior. Overall, there wasn’t enough evidence that core inflationary pressures are cooling enough to support calls for the Fed to pivot. Fed speakers send market pricing for Fed path higher A chorus of Fed speakers last night talked about the slow pace of disinflation, suggesting the Fed isn’t yet taking comfort in the inflation trends. NY Fed President Williams repeated there is "still a ways to go" to control inflation and the current levels of inflation are far too high. His views on the terminal rate also differed slightly, in December he suggested rates between 5.00-5.50% is reasonable before last week changing the view to 5.00-5.25%. However, he has now seemingly switched back his views of the higher upper bound for the FFR to 5.50% in wake of the January inflation data. Philly Fed’s Patrick Harker noted that how far above 5% the Fed needs to go depends on incoming data, and Tuesday's inflation report shows inflation is not moving down quickly. Dallas President Logan stressed that tightening policy too little is the top risk. All three are voters this year. Thomas Barkin, a non-voter said it was about as expected and there's going to be a lot more inertia and persistence to inflation than the Fed thought. However he was slightly more dovish saying that if inflation settles, they may not go as far on the terminal but he stressed data dependence. Markets are now pricing in a higher terminal rate of 5.26% in July, and one rate cut has also been driven out of this year’s pricing. Berkshire Hathaway cuts stake at TSMC Warren Buffett’s investment company cut 86% of its stake in TSMC in the previous quarter in a quick reversal that is unusual for the investor. As the rivalry in chips is heating up between the US and China, Berkshire Hathaway is likely finding it uncomfortable to hold exposure to physical manufacturing in a conflict area. Earnings recap: Airbnb, GlobalFoundries, NU Holdings Airbnb delivered Q4 revenue that beat estimates growing 24% y/y and Q4 adj. EBITDA was $506mn vs est. $435mn, but the Q1 outlook took the market by surprise with Q1 revenue guidance at $1.75-1.82bn vs est. $1.68bn as travel demand remains strong. GlobalFoundries beat slightly on revenue and earnings with Q1 revenue guidance also coming out higher than estimated suggesting strong demand for computer chips. NU Holdings, the parent company behind Nubank, reports Q4 total revenue of $1.45bn vs est. $1.28bn and the second straight quarter of positive net income as the Brazilian bank continues to navigate the credit turmoil in Latin America due to the recent interest rate shock. Commonwealth Bank, Australia’s largest lender, issues cautious outlook as its customers feel ‘significant strain’ CBA’s shares sank almost 6%, falling from their record highs to $103, while also dragging down the broader Australian share market (ASXSP200.I). Australia’s biggest bank and lender reported disappointing profit results and guided for a challenging year ahead - putting aside more capital for bad debts, as higher price pressures continue to hurt consumers, along with falling home prices. Its net interest margin came in at 2.1%, which was on par with expectations, but its cash profit missed expectations, despite rising 8.6% YoY to $5.15 billion (vs $5.17 billion Bloomberg consensus). The big Bank announced a $1 billion share buy-back and consensus also expects 2023 profits to hit another record, and for margins to improve. CBA shares gapped down, wiping out a month of gains. Read next: Walmart Plans To Close Offices, Ford Invests In Battery Factories | FXMAG.COM What are we watching next? US January Retail Sales, Housing Survey set for release today -With the January CPI data leaving observers none the wiser on the future course of inflation, the market may remain sensitive to incoming data that offers signs of whether economic activity remains robust. Today’s focus is the January US Retail Sales data, which is expected to rebound sharply from the weak December numbers, possibly in part on out-of-date seasonal weightings. Consensus expectations are for headline Retail Sales to have risen a chunky +2.2% month-on-month, with the core, ex Auto and Gas figure to show +0.9%. Elsewhere, the February NAHB Housing Market Index, one of the more leading indicators on the US housing market, is also up today, expected to show further marginal improvement after bottoming in December at 31 and surprisingly rebounding to 35 in January. Earnings to watch Today’s US earnings focus is Kraft Heinz and Biogen with analysts expecting revenue growth of 8% y/y in Q4 for Kraft Heinz as the consumer staples company’s revenue track inflation. Kraft Heinz is also expected to expand its EBITDA margin in Q4. The biotechnology sector is still under pressure from higher interest rates and slower pipeline of drugs, so the industry is relying on the old guard to delivering results. However, Biogen is expected to report a –11% y/y revenue growth in Q4 and lower EBITDA compared to a year ago. Wednesday: Commonwealth Bank of Australia, Fortesque Metals Group, Wesfarmers, Shopify, Suncor Energy, Nutrien, Barrick Gold, Kering, EDF, Tenaris, Glencore, Barclays, Heineken, Nibe Industrier, Cisco Systems, Kraft Heinz, AIG, Biogen, Trade Desk Thursday: Newcrest Mining, South 32, Airbus, Schneider Electric, Air Liquide, Pernod Ricard, Bridgestone, Standard Chartered, Repsol, Nestle, Applied Materials, Datadog, DoorDash Friday: Hermes International, Safran, Allianz, Mercedes-Benz, Uniper, Sika, Deere Economic calendar highlights for today (times GMT) 0900 – Poland Jan. CPI 1000 – Eurozone Dec. Industrial Production 1330 – US Feb. Empire Manufacturing 1330 – US Jan. Retail Sales 1330 – Canada Dec. Manufacturing Sales 1400 – ECB President Lagarde to speak 1415 – US Jan. Industrial Production & Capacity Utilization 1500 – US Feb. NAHB Housing Market Index 1530 – US DoE Weekly Crude Oil and Product Inventories 0030 – Australia Jan. Employment Change / Unemployment Rate Source: Financial Markets Today: Quick Take – February 14, 2023 | Saxo Group (home.saxo)
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

UK Inflation Must Please Bank Of England, Crude Oil Down

Swissquote Bank Swissquote Bank 15.02.2023 10:29
Looking at the market pricing, you could’ve hardly guessed, but yesterday’s US inflation report was not brilliant. US stocks But US stocks gave a mixed reaction. Why?! Why did people buy equities on strong inflation data yesterday, is the main topic of today’s Market Talk.Still, treasury markets seemed more down to earth, as the US 2-year yield ticked to the highest levels since last November, activity on Fed funds futures gave a little more than 12% probability for a 50bp hike at the next FOMC meeting, versus around 9% at the start of the week. USD index But the dollar index remained stuck below its 50-DMA. Gold Gold extended losses to $1843 on the back of stronger yields and firmer US dollar. EUR/USD The EURUSD found support above the 50-DMA, which stands around the 1.0715 mark. USD/JPY The dollar-yen cleared resistance near its own 50-DMA level, but the risks are still tilted to the downside in USDJPY. Read next: Airbnb Posted A Profit Of $1.9. Billion, Air India And Largest Commercial Aircraft Deal In Aviation History| FXMAG.COM UK CPI and Crude Oil In the UK, inflation in January still eased more than expected to 10.1%. Crude oil remains offered into the 100-DMA, on a massive 10 mio barrel build in US oil inventories last week, while Biden Administration announced there would be further releases from the strategic petroleum reserves of 26 million barrels earlier this week.  Warren Buffett In individual stocks, Warren Buffett sold 86% stake in TSM. Shares plunged more than 4% in Taipei. Watch the full episode to find out more! 0:00 Intro 0:28 US inflation eased less than expected in January 2:55 But who cares? 5:35 FX & yields update 7:05 UK inflation must please BoE, but not sterling 7:36 Crude oil down on massive US inventory build 8:27 Buffett sells TSM. Ouch. Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #USD #GBP #inflation #data #Fed #BoE #BoJ #expectations #EUR #JPY #XAU #US #crude #oil #F13 #TSM #Ford #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

A Shockingly Large Inventory Build Reported By API On Tuesday Is Contributing To The Decline Of Crude Oil

Craig Erlam Craig Erlam 15.02.2023 14:01
Large inventory build weighs Oil prices are a little lower again today but remain broadly within the same range they’ve traded in over the last couple of months. China has been a very bullish development for crude oil but the global economy as a whole is much more uncertain. In addition, the US decision to release oil from the SPR has come as a surprise given previous commitments to refill the reserve. What’s more, a shockingly large inventory build reported by API on Tuesday is contributing to the decline ahead of today’s widely followed EIA report. If that’s backed up later today, we could continue to see oil drift away from its range highs. Gold correction continues The corrective move in gold is continuing today after the yellow metal did not get the lift from the US inflation report that some were hoping for. It’s now broken back below $1,850 and could continue lower from here, with the next support potentially coming around $1,820-$1,830, although a bigger test may come around $1,780-$1,800. Ultimately the recent data has not been particularly favourable and that’s been evident in the shift in interest rate expectations this year. A higher terminal rate and potentially no rate cuts this year is not a good near-term development for the yellow metal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
InstaForex's Irina Manzenko talks British pound amid latest events

British Pound (GBP) Took A Hit With Cooler Inflation, Crude Oil Prices Still Depressed

Saxo Bank Saxo Bank 16.02.2023 08:15
Summary:  In yet another sign of likely re-acceleration in cyclical growth, US retail sales surprised on the upside. Although Fed rate pricing was unchanged with terminal rate above 5.25%, US equities reversed early losses to close in some gains after a strong European session. Dollar rose to fresh highs before softening later, as AUD was troubled by tumbling metal prices and GBP took a hit with cooler inflation print. Crude oil prices still depressed despite IEA raising the demand outlook, and Gold is close to testing key support levels.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) advanced despite rate fear U.S. equities declined initially following a strong retail sales report that further reduced the probability of any rate cut in 2023 and to the contrary, increased the odds that the Fed may need to hold rates higher for longer. Nonetheless, the stock market was able to walk away from the good-news-is-bad-news script and spent the rest of the day clawing back the early losses and finishing the session higher.  The S&P500 gained 0.3% and Nasdaq 100 advanced 0.8%. Communication services and consumer discretionary, each rising 1.2%, led the advance in the S&P 500. Airbnb (ABNB:xnas) jumped 13.3% after reporting an earnings beat. Devon Energy (DVN:xnys) was the worst performer within the S&P500. The oil and gas producer plunged 10% after reporting a decline in Q4 earnings. The ADR of Taiwan Semiconductor Manufacturing (TSM:xnys) lost 5.3% following filings showing that Warren Buffett’s Berkshire Hathaway reduced its stake in the chip maker. Cisco (CSCO:xnas) gained 3.5% in the extended-hour trading after reporting quarterly revenues and earnings beating estimates and raising guidance for the rest of the year. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rose further on solid retail sales Yields on the 10-year Treasury notes jumped 6bps to 3.8% following a stronger-than-expected retail sales report and a rebound in the Empire State Manufacturing Index. Headline retail sales jumped by the most in almost two years. While the 20-year Treasury bond auction received decent demand with bid/cover ratio at 2.54, new issuance of around USD30 billion from corporate, including USD24 billion from Amgen weighed on the market. Yields on the 2-year climbed 2bps to 4.63%. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) dragged by property stocks Hang Seng dropped 1.4% on Wednesday to levels last seen on January 4 and pared its 2023 gain to only 5.2%. The aggregate balance held by banks at the Hong Kong Monetary Authority, a proxy of interbank liquidity, fell to HK80 billion, following HKMA’s intervention to sell USD against HKD to cap the USDHKD from going above 7.85 the upper limit of the special administrative region’s link-exchange-rate regime. State-owned Economic Daily in the mainland warns about the re-emergence of speculative activities in properties in some cities and calls for more targeted approaches in support of genuine household demand for housing. Chinese developers retreated, with Country Garden (02007:xhkg) falling 5.6%, China Overseas Land & Investment (00688:xhkg) losing 4.6%, and Longfor (00960:xhkg) down 3.5%. Sportswear company Anta (02020:xhkg) dropped 3.6% on speculation of majority shareholders moving shares to the CCASS clearing system to get ready for a sale. Baidu (09888:xhkg) bucked the market decline and rallied over 3.8% supported by the somewhat return of the hype on the AI-generated content concept. In A-shares, CSI300 fell 0.5%. AI-generated content concept stocks advanced while real estate, domestic consumption, financial, healthcare, and non-ferrous metal names retreated. Australia equities (ASXSP200.I) moved lower to one-month lows, weighted by CBA. Gold miners and coal companies' results ahead Yesterday Commonwealth Bank, Australia’s largest lender, issued a cautious outlook as its customers are feeling ‘significant strain’. Its shares sank about 6%, falling from their record highs to $103, while also dragging down the broader Australian share market (ASXSP200.I). Australia’s biggest bank and lender reported disappointing profit results and guided for a challenging year ahead - putting aside more capital for bad debts, as higher price pressures continue to hurt consumers, along with falling home prices. Its net interest margin came in at 2.1%, which was on par with expectations, but its cash profit missed expectations, despite rising 8.6% YoY to $5.15 billion (vs $5.17 billion Bloomberg consensus). The big Bank announced a $1 billion share buy-back and consensus expects 2023 profits to hit another record, and for margins to improve – that’s good to know for long term investors. However, for potential traders, it’s worthwhile noting, yesterday CBA shares gapped down, meaning the market may fill that gap and buy the dip today or in coming days. Today we will be watching NAB’s quarterly results as well as results from miners, coal giant Whitehaven Coal and gold company Evolution Mining with the market expecting strong results. FX: AUD and GBP lagged, JPY rallies at Asia open Further gains in the dollar were seen last night as yields continued to surge, albeit at a softer pace, after US retail sales also surprised to the upside. AUDUSD was the biggest loser on the G10 board amid tumbling metal prices and RBA governor Lowe refusing to step down. AUDUSD dropped 40bps as January employment data disappointed with a fall of 11.5k vs. expectations of +20k. GBPUSD plunged below 1.2100 on the cooler-than-expected inflation data. EURUSD also touched lows of 1.0660 despite Lagarde reiterating that the ECB intends to hike by another 50bps next month. JPY gains returned in Asia after USDJPY rose to 134+ levels overnight, with Japan export data surprising to the upside with a rise of 3.5% YoY vs. -1.7% expected. Aussie dollar falls as AU jobs data misses. Watching AUDUSD and AUDGBP The Aussie dollar stumbled again, falling 0.4% after Australian employment data came out weaker than expected, with the unemployment rate surprisingly rising to 3.7% (vs the market expecting a steady rate), while jobs surprisingly fell 11,500 when the market expected 20,000 jobs to be added. We saw the AUD lose its footing yesterday after CBA guided for a cautious outlook, setting to the tone for a pull back on spending in Australia. Also consider watching the AUDGBP after the UK received slightly softer than expected UK CPI, which allows the bank of England to sit on their hands for a little longer, while the RBA can keep hiking following hotter than expected CPI.  Crude oil (CLH3 & LCOJ3) lower on inventory build despite IEA’s bullish demand outlook A series of signals from US CPI reported on Tuesday to retail sales print out last night suggest more ammunition for the Fed to raise rates. This has boosted the market pricing of the Fed terminal rate, and dollar strength is back in focus, weighing on commodity prices. Crude oil prices extended their losses after US oil inventories rose 16.3mn barrels to 471mn barrels against expectations of 1.17mn. WTI prices were still below $79/barrel while Brent stayed close to $85. The International Energy Agency (IEA) raised its demand growth estimates by 0.1mb/d to 2mb/d for 2023, but this was overshadowed by swelling US oil inventories. Gold (XAUUSD) close to testing key support Gold prices fell further to $1830/oz as US yields surged higher after the January CPI print, and a hawkish tilt was also seen in Fed commentaries. Last night, US retail sales was also hot suggesting more room for the Fed to hike rates, which boosted the USD. The next important levels include the 1,829 level, which is the 38.2% retracement of the rally off the November lows, the 1,809 area which was broken on the way up, and then the 200-day moving average, currently coming in just above 1,775. Pressure on gold miners to do more deals is rising, despite Newcrest’s rejection of the takeover bid from the world’s biggest gold miner Newmont (more below).  Read next: USD/JPY Is Above 133.30, GBP/USD Droped Form $1.21 to $1.20, The Aussie Pair Is Trading Below $0.69| FXMAG.COM What to consider? US retail sales jump higher January retail sales in the US jumped higher by the most in almost two years, in another signal that the US consumer demand is holding up strongly despite high inflation and interest rate pressures. Retail sales were by 3.0% from a decline of 1.1% in December and above the 1.8% expected. Strength was broad-based, with ex-gas/autos rising 2.6% from the prior -0.7%. The control group, which is a useful gauge of consumer spending data, rose 1.7%, also beating expectations of 0.8% and above the prior -0.7%. Factory output also beat estimates, rising 1.0%, although industrial production was flat vs. +0.5% gains expected, mostly weighed by reduced heating demand in January. Geopolitics on watch keeps Saxo’s Defense basket in focus Russia said its troops had broken through two fortified lines of Ukrainian defenses on the eastern front, as the one-year mark of the invasion approaches. The advances come as Western allies announced more military aid for Kyiv including artillery rounds. The situation may continue to become more tense as Ukraine forces take the time to get trained with the new US equipment. Meanwhile, China is warnings retaliation against US entities involved in the shooting of the balloon. Biden is considering a public address on the downing of an alleged Chinese spy balloon and other unidentified objects. With geopolitical tensions continuing to be on a rise, Saxo’s equity theme basket on Defense remains worth a consideration. Teher were also reports that Germany is poised to increase its defense budget by as much as €10 billion next year, which continues to suggest strong defense focus in the coming years. Newcrest rejects Newmont's takeover bid  Newcrest Mining (NCM) rejected the takeover by Newmont saying it undervalues the company, but kept the door open to a revised offer. Australia’s biggest gold miner reported broadly stronger than expected results – given the rise of the gold price. Half year earnings (EBITDA) hit US$919m, that was 4% above consensus. And the gold giant declared stronger than expected dividends of $0.15 per share for the half-year and a $0.20 special dividend. However, net debt rose far more than expected. NCM retained expectations for a strong 2H operational performance. For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Markets Today: US retail sales soar in another sign of a hot economy – 16 February 2023 | Saxo Group (home.saxo)
USD/CAD - Canadian economy added 41,400 jobs beating expectations

A Modest US Dollar Weakness Weighs On The USD/CAD Pair

TeleTrade Comments TeleTrade Comments 16.02.2023 08:31
USD/CAD meets with some supply and extends the overnight pullback from the weekly high. An uptick in oil prices underpins the Loonie and exerts pressure amid modest USD weakness. Hawkish Fed expectations should help limit deeper USD losses and lend support to the major. The USD/CAD pair comes under some selling during the Asian session on Thursday and moves away from the weekly high, around the 1.3440 region touched the previous day. The pair currently trades around the 1.3380-1.3375 region and is pressured by a combination of factors. Crude oil prices gain some positive traction and snap a three-day losing streak amid hopes for a strong recovery in fuel demand. In fact, both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) forecast a rebound in crude demand later this year. This helps offset a substantial rise in the US crude inventories and acts as a tailwind for the black liquid, which, in turn, underpins the commodity-linked Loonie. Apart from this, a modest US Dollar weakness weighs on the USD/CAD pair. In fact, the USD Index, which tracks the Greenback against a basket of currencies, extends the overnight pullback from a six-week high amid retreating US Treasury bond yields. This, along with a generally positive tone around the equity markets, is seen denting demand for the safe-haven buck. That said, the prospects for further policy tightening by the Fed should limit the downside for the US bond yields and the USD. This, in turn, warrants some caution before positioning for any further depreciating move for the USD/CAD pair. Investors seem convinced that the US central bank will continue to hike interest rates in the wake of stubbornly high inflation. The bets were lifted by the US CPI report and hawkish comments by several Fed policymakers on Tuesday. Furthermore, the upbeat US monthly Retail Sales figures released on Wednesday indicated that the economy remains resilient despite rising borrowing costs. This should allow the Fed to stick to its hawkish stance for longer and supports prospects for the emergence of some USD dip-buying. Market participants now look forward to the release of the US Producer Price Index (PPI), due later during the early North American session. This, along with the US bond yields and the broader risk sentiment, will influence the Greenback. Apart from this, traders will take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair.
Riksbank's Potential Rate Hike Amid Economic Challenges: Analysis and Outlook

The Aussie Unemployment Rate Rose, China Is Warning Of Retaliation Against US Entities Involved In The Shooting Of The Balloon

Saxo Bank Saxo Bank 16.02.2023 09:18
Summary:  The US equity market put in a solid advance yesterday even as treasury yields remain near recent highs. Sentiment in Asia recovered smartly overnight after a stumble yesterday. In FX, yesterday's sharp USD advance paused, while in commodities, oil is pushing back higher near important resistance levels and gold is nearing major support after a drop of more than a hundred dollars per ounce in just two weeks. What is our trading focus? US equities (US500.I and USNAS100.I): animal spirits remain strong Strong US retail sales figures for January and the NAHB Housing Market Index both showed yesterday that the US economy is humming along despite the interest rate shock. Equities shrugged off the implications for further rate hikes and potentially higher long-term interest rates and rallied with S&P 500 futures closed the session at the highest close price in six sessions above the 4,150 level. The uptrend remains intact at this point with the 4,200 level still in play. The US 10-year yield hit 3.8% on the close yesterday. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) in choppy session Early in China’s equity session, the Hang Seng Index and CSI300 gained sharply after a strong US session, but sentiment rolled over badly into late trading, with the Hange Seng approximately flat and CSI 300 down about 1% as of this writing. Qiushi Magazine, a mouthpiece of the Chinese Communist Party, published an excerpt of President Xi’s speech delivered in December, in which the Chinese leader highlighted insufficient aggregate demand as the paramount challenge so expanding consumption is a top policy priority. FX: GBP weakest after soft CPI, JPY sharply lower on yield rise yesterday, DXY on backfoot overnight AUDUSD fell sharply yesterday and stumbled again overnight on the release of weak Australian jobs numbers, but bounced on a recovery in sentiment in China and bounce in metals prices, also keeping away from the pivot low of 0.6856 of earlier this month. Elsewhere, sterling weakness from yesterday’s soft UK CPI release lingered. EURGBP jumped back higher yesterday and GBPUSD even tested below 1.2000 briefly before recovering very slightly. The focus there is on the 1.1941 low and 200-day moving average just above that level. USDJPY surged further yesterday on a fresh rise in global yields and as the Bank of Japan’s rear-guard actions to defend its yield curve control policy mean the bank is effectively doing aggressive QE even as markets anticipated a coming shift away from this policy. Focus today on US housing-related data after the Feb. Crude oil (CLH3 & LCOJ3) rebounds amid China optimism and IEA’s bullish demand outlook A series of signals from US CPI reported on Tuesday to retail sales print yesterday suggest more ammunition for the Fed to raise rates. This has boosted the market pricing of the Fed terminal rate, and dollar strength is back in focus, weighing on commodity prices. Crude oil prices extended their losses after US oil inventories rose 16.3mn barrels to 471mn barrels against expectations of 1.17mn suggesting demand concerns. But reports of passenger loads picking up at China’s top three airlines added optimism overnight. WTI prices rose back above $79/barrel while Brent was above $85. The International Energy Agency (IEA) also raised its demand growth estimates by 0.1mb/d to 2mb/d for 2023. Gold (XAUUSD) close to testing key support Gold prices fell further to $1830/oz as US yields surged higher after the January CPI print, and a hawkish tilt was also seen in Fed commentaries. Last night, US retail sales was also hot suggesting more room for the Fed to hike rates, which boosted the USD. The next important levels include the 1,829 level, which is the 38.2% retracement of the rally off the November lows, the 1,809 area which was broken on the way up, and then the 200-day moving average, currently coming in just above 1,775. Pressure on gold miners to do more deals is rising, despite Newcrest’s rejection of the takeover bid from the world’s biggest gold miner Newmont. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rose further on solid retail sales Yields on the 10-year Treasury notes jumped 6bps to 3.8% following stronger-than-expected 3% headline retail sales and 1.7% control group (ex-autos, gasoline, and building materials) prints and a rebound in the Empire State Manufacturing Index to -5.8 from -32.9. While the 20-year Treasury bond auction received decent demand with a bid/cover ratio at 2.54, new issuance of around USD 30 billion from corporate, including USD 24 billion from Amgen weighed on the market. Yields on the 2-year climbed 2bps to 4.63%, bringing the 2-10 curve 5bps less inverted to -83bps. Read next: USD/JPY Is Above 133.30, GBP/USD Droped Form $1.21 to $1.20, The Aussie Pair Is Trading Below $0.69| FXMAG.COM What is going on? US retail sales jump far more than expected January retail sales in the US jumped higher by the most in almost two years, in another signal that the US consumer demand is holding up strongly despite high inflation and interest rate pressures. Retail sales expanded 3.0% month-on-month after a decline of 1.1% in December and above the 1.8% expected. Strength was broad-based, with ex-gas/autos rising 2.6% from the prior -0.7%. The control group, which is a useful gauge of consumer spending data, rose 1.7%, also beating expectations of 0.8% and above the prior -0.7%. Factory output also beat estimates, rising 1.0%, although industrial production was flat vs. +0.5% gains expected, mostly weighed by reduced heating demand in January. European earnings: Airbus and Schneider Electric Airbus has had a relatively good year as aviation demand is coming back after the pandemic with fiscal year free cash flow beating estimates and dividends per share set to €1.80 vs est. €1.73. Q4 revenue is €20.6bn vs est. €20bn. Airbus is disappointing a but on its FY23 adjusted EBIT outlook relative to estimates and delays its A320 output target of 75/month to 2026. Schneider Electric reports Q4 revenue that beats estimates driven by strong organic revenue growth and it reports FY23 revenue growth of 9-11% y/y and adjusted EBITA margin up 50-80 basis points. Shopify outlook misses estimates The e-commerce platform reported Q4 revenue of €1.73bn vs est. €1.65bn with gross merchandise volume also beating estimates. The company expects the gross margin to expand in Q1 but the Q1 revenue outlook of high-teen growth rate compared to 20% expected by analysts sent shares lower in extended trading. Geopolitics keeps Saxo’s Defense basket in focus Russia said its troops had broken through two fortified lines of Ukrainian defenses on the eastern front, as the one-year mark of the invasion approaches. The advances come as Western allies announced more military aid for Kyiv including artillery rounds. Meanwhile, China is warning of retaliation against US entities involved in the shooting of the balloon. Biden is considering a public address on the downing of an alleged Chinese spy balloon and other unidentified objects. With geopolitical tensions on the rise, Saxo’s equity theme basket on Defense remains worth a consideration. There were also reports that Germany is poised to increase its defense budget by as much as €10 billion next years. Weak Australian jobs report The Aussie unemployment rate rose to 3.7% in January (vs the market expecting a steady rate of 3.6%), while Australian jobs surprisingly fell 11,5k versus market expectations for +20k, and full-time employment actually fell –43k. Yesterday Australia’s biggest bank Commonwealth Bank also warned that its customers are experiencing ‘significant strain’, amid higher price pressures. What are we watching next? US data, including US Housing Related Data after strong NAHB Housing Market Survey. Yesterday, the US February NAHB Housing Market survey surged 7 points from its January reading, suggesting a fading impact from the mortgage interest rate shock last year. The reading was a 5-month high. Today we get further US housing-related data, including the January Housing Starts and Building Permits figures. We’ll also see the latest weekly jobless claims after a string of four readings below 200k. Earnings to watch Today’s US earnings focus is Applied Materials and DoorDash with analysts expecting Applied Materials to deliver revenue growth of 7% y/y and EPS of $1.94 down 1% y/y. DoorDash, which has been part of our bubble basket, is expected to revenue Q4 revenue growth of 36% and EBITDA of $109mn which seems quite unrealistic given EBITDA was $-147mn a quarter ago. Thursday: Newcrest Mining, South 32, Airbus, Schneider Electric, Air Liquide, Pernod Ricard, Bridgestone, Standard Chartered, Repsol, Nestle, Applied Materials, Datadog, DoorDash Friday: Hermes International, Safran, Allianz, Mercedes-Benz, Uniper, Sika, Deere Economic calendar highlights for today (times GMT) 1300 – ECB's Nagel to speak 1330 – US Jan. PPI 1330 – US Housing Starts and Building Permits 1330 – US Weekly Initial Jobless Claims 1330 – US Philadelphia Fed Business Outlook 1330 – US New York Fed Services Business Activity 1345 – US Fed’s Mester (non-voter) to speak 1500 – ECB Chief Economist Lane to speak 1530 – US Weekly Natural Gas Storage Change 1600 – Canada Bank of Canada Governor Macklem before Parliament 1700 – UK Bank of England Chief Economist Huw Pill to speak 1700 – Norway Norges Bank Governor Wolden Bach to deliver annual address 1830 – US Fed’s Bullard (non-voter) to speak 2230 – Australia RBA Governor Lowe to testify before House   Source: Financial Markets Today: Quick Take – February 16, 2023 | Saxo Group (home.saxo)
US Inflation Eases, but Fed's Influence Remains Crucial

The US Jobs Data Remains Strong, All Eyes On US PPI Report

Swissquote Bank Swissquote Bank 16.02.2023 10:22
Do you remember we were predicting a recession, that was supposed to hit the US and the global economy at the start of the year? A recession that would hit equities and boost bonds? Well, forget about all that, it’s not happening. US data The US jobs data remains strong, inflation continues coming lower but the downtrend gives signs of slowing. And yesterday’s US retail sales data came as a cherry on top, with an eye-popping 3% rise in retail sales last month; it was the biggest jump in the past two years. Stocks Market The S&P500 ended the session 0.28% higher, while Nasdaq 100 stocks added almost 0.80%. Treasury yields pushed higher, however, on expectation that the Federal Reserve (Fed) will continue its rate hike policy – and quite aggressively, given that the rate hikes don’t seem to do any harm to the economy. Deutsche Bank revised its terminal Fed rate from 5.1% to 5.6%. Citi believes that the Fed will end up pushing the rates all the way up to 6%. Read next: Apple Is Facing Multiple Lawsuits And Enforcement Actions| FXMAG.COM US PPI Today, the US will reveal the latest producer price inflation data. Producer prices are expected to have ticked higher by 0.4% m-o-m in January, versus a 0.4% retreat printed last month. On a yearly basis, the PPI index is expected to have slowed from 6.2% to 5.4%. Normally, I would expect a positive PPI surprise – meaning stronger inflation figures - to impact the market mood negatively, but at this point, I am not even sure that it matters. Watch the full episode to find out more! 0:00 Intro 0:18 What recession?! 2:36 Market update 3:50 US PPI is out today! 4:37 USD up, EUR, JPY and XAU down 7:18 Crude oil rebounds from 50-DMA 8:34 Glencore’s record profit fails to convince but… Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #strong #economic #data #equity #risk #rally #USD #EUR #JPY #XAU #Crude #Oil #inflation #data #Fed #expectations #Glencore #energy #stocks #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH  
The RBA’s aggressive rate tightening cycle will be continued

Markets Are Still Pricing In A Few More 25-Basis Point Hikes From The RBA

Craig Erlam Craig Erlam 16.02.2023 10:28
Equity markets are poised to open in the green once more on Thursday, continuing what has been a rather strange week of trade so far. We’ve seemingly gone from euphoria at the start of the year on the back of some really encouraging economic data to turning a blind eye to it when it suits. It’s all really quite odd, especially when other corners of the market are behaving in a more orthodox manner, which begs the question, what do equity (and crypto) traders know that the rest of us do not? In the last two weeks, we’ve had a red-hot jobs report, a more modest decline in inflation data, and a really strong retail sales release. As you would expect, that’s triggered a retreat in gold and an adjustment in bonds to account for rates likely rising further and maybe no longer falling later this year. That seems perfectly reasonable. While I am of the view that the pendulum has now probably swung too far the other way on rate expectations this year, I’m not quite as willing to ignore these releases as many clearly are. It could come back to bite them if we don’t see a swift cooling next month. Cause for concern for the RBA The Australian dollar has recovered earlier losses that came on the back of weaker employment figures. For a second straight month, the unemployment rate ticked higher and employment fell, alongside a slight downward revision to December on the latter. While this wouldn’t typically be considered good news, investors have been forced to accept the possibility of higher interest rates recently as inflation has stayed stubbornly high. A slightly looser labour market will alleviate some of those fears of inflation becoming entrenched, although more evidence will be required to appease RBA policymakers after the last couple of inflation prints. Markets are still pricing in a few more 25-basis point hikes over the coming months before cuts begin either late this year or early next. A further deterioration in the labour market could see those expectations pared back further. Oil preparing to break higher? Oil prices are very choppy at the moment, with traders having a lot to take in, be that a 500,000 barrel decline in Russian output in March, a strong Chinese economic recovery, and an uncertain global outlook amid ongoing monetary tightening, among other things. It would appear crude has settled into a range, although it continues to trade at the upper end of that recently which may indicate a breakout attempt is developing. A move above $89 could be a very bullish development and suggest a tighter market is being more heavily priced in, aligning with comments from OPEC on Tuesday. First big test Gold traders don’t share the enthusiasm in equity markets and the yellow metal has continued to trend lower in the aftermath of recent data releases. It ran into support around $1,830 on Wednesday, around the upper end of the first barrier to the downside. This sits around the 38.2% retracement of the move from the November lows to February highs and coincides with support and resistance in December and January. The bigger test arguably lies a little lower around $1,780-$1,800, should it get that far. A bright future for bitcoin? It’s been a fantastic 24 hours for bitcoin and one that could generate further enthusiasm for cryptos, with it hitting a new six-month high and breaking above another big moving average only days after a bullish rebound off the 200-day SMA. While regulatory crackdowns continue to drive some unease, there’s clearly a growing sense of relief that the worst is behind it for the industry and 2023 could be a much better year. The next big test falls around $24,500-$25,500, a break of which could convince any remaining doubters that the future is bright. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Earnings season: Tesla stock price slipped after yesterday's news. The best selling car in Q1 was Model Y

Tesla Declined 5.7% Following An Announcement To Recall Over 300,000 Cars

Saxo Bank Saxo Bank 17.02.2023 09:08
Summary:  Equities headed lower after the hot US PPI report and hawkish Fed speakers Mester and Bullard bringing the market’s terminal rate projections up to 5.27%. US 10-year yields surged to a YTD high of 3.9% and the US dollar was broadly higher against all other currencies but the yen recovered some of its losses as the session ended. RBA’s Lowe touted more rate hikes as inflation reigns. Metals saw a rebound with Copper leading, while Gold was still close to $1830.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated on a hot PPI and 50bps hike back on the table U.S. stocks opened sharply lower on a much hotter-than-expected PPI print. The benchmark S&P 500 and Nasdaq 100 managed to claw back all the losses until they reversed following Fed’s Bullard hit the tape at 3 pm New York time with hawkish comments signaling the door to return to a 50bp hike at the March FOMC is open. The Fedspeak hammered stocks across the board with all 11 sectors in the S&P500 declining. At close, the S&P500 was 1.4% lower and the Nasdaq 100 lost 1.9%. Tesla (TSLA:xnas) declined 5.7% following an announcement to recall over 300,000 cars due to a crash risk associated with its Full Self-driving Beta software. Shopify (SHOP:xnys) plunged 15.8% on revenue outlook missing estimates. Toast (TOST:xnys) dropped 22.8% after missing revenue miss. Twilio (TWLO:XNYS) jumped 14.3% on an earnings beat. Cisco (CSCO:xnas) climbed 5.2%. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) climbed on hawkish Fed and producer price inflation Yields on the 10-year surged 6bps to 3.86% on a large jump on the PPI print in January and hawkish comments from Fed’s Mester and Bullard who brought a 50bp hike back to the table at the March FOMC. The selling during the session concentrated in the longer-end of the curve in particular in the 10-year futures contract and 5-year futures vs ultra-long bond contracts steepening trades. The USD9 billion TIPS auction had a bid/cover ratio of 2.38, below 2.69 last time. Traders are cautious ahead of next week’s USD120 billion supply from the 2, 5, and 7-year Treasury note auction. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) failed to sustain an attempt to rally Hang Seng Index rallied as much as 2.4% in the morning before spending the afternoon paring gains and finishing the Thursday session only 0.8% higher from the previous day. Qiushi Magazine, a mouth-piece of the Chinese Communist Party, published an excerpt of President Xi’s speech delivered in December, in which the Chinese leader highlighted insufficient aggregate demand as the paramount challenge so expanding consumption is a top policy priority. Media reports of foreign hedge fund building long positions in Chinese equities added fuel to the positive sentiment. The news that President Xi will be visiting Iran, a foe country with the United States, and China’s Ministry of Commerce imposed fines and sanctions on U.S. defence companies, Lockheed Martin (LMI:xnys) and Raytheon Technologies (RTX:xnys) dented sentiment. Tech stocks outperformed with Hang Seng Tech Index gaining 1.8%. Online pharm platform shares surged on the news that the Chinese healthcare regulator is stepping up insurance coverage for drugs. JD Health surged 5.3%; Alibaba Health climbed 3.5%. Lenovo (00992:xhkg) jumped 6.7% ahead of reporting quarterly results. Chinese developers and property management services names gained. China Resources Mixc Lifestyle (01298:xhkg) rose 4.7%; China Overseas Land & Investment (00688:xhkg) gained 3.1%; Longfor (00960:xhkg) climbed 2.8%. In A-shares, CSI300 advanced as much as 1% in the morning but pared all the gains to close 0.7% lower. Semiconductor, non-ferrous metal, machinery, and defense names led the charge lower. The food and beverage and cloud-computing gaming space bucked the decline and outperformed. Albemarle –the lithium giant beat earnings expectations & gave a sparky outlook – paving a positive course for the lithium sector... ...as per our Quarterly Outlook. Albemarle, the world's biggest lithium company – in size, and scale (selling lithium to most EV makers) rose 4.7% after it delivered a stronger than expected sales outlook – with China’s reopening to provide extra momentum as demand for EVs picks up. It sees net sales growing to $11.3-$12.9 billion, and EBITDA getting as high as $5.1 billion. It expects to maintain positive cashflow even despite increasing capital expenditure. In Q4 - its earnings (EBITDA) swelled to $1.24 billion, beating expectations and marking a mega jump from $229 million (same time last year), as lithium earnings rose more than expected. Adjusted EPS also grew more than consensus expected with EPS, at $8.62. This paves a positive path for what we might expect from Allkem and Pilbara when they report results next week. Click here for Saxo’s lithium equity basket for stock inspiration. Tesla recalls over 362,000 cars for self-driving crash risks; Its shares remain ‘overbought’ Tesla shares fell 5.7% to $202.04, staying around seven-month highs. Although Tesla’s uptrend seems intact  - buying is slowing  - with the relative strength index (RSI) indicating we could see some consolidation here as the stock is in overbought territory. Tesla’s recall affects 362,758 vehicles, including certain Model 3, Model X, Model Y and Model S units manufactured between 2016 and 2023. Although Musk said it’s not a recall, even though Tesla’s full-self driving beta system “may allow the vehicle to act unsafe around intersections”, and increase collision risk if the driver does not intervene, Musk affirmed the issue will be remedies with a software update, by April 15. RBA Governor faces parliamentary grilling after Australian unemployment surprising rose RBA Governor Lowe today hinted that despite Australian unemployment rising to 3.7% in January up from 3.5% - it does not change its hiking guidance. Yesterday, he faced a Senate estimates hearing – saying the cash rate was unlikely at its peak. And today he is back on the podium, saying banks need to do better jobs of passing on rate hikes. Meanwhile Bullock said refinances of mortgages are really high, with consumers shopping around to get better deals. Amid diminishing corporate operational expenditure power  - the unemployment rate will likely pick up this year, in the face of rising inflation and unemployment, meaning Australia faces a staglationary environment. We will continue to watch the AUDUSD and the GBPAUD – as we think the UK BOE could sit on its hands with rate hikes, while the RBA will likley push ahead with hikes in the coming months. FX: Firm king dollar as yields rise; JPY recovers from lows   With US yields maintaining their upward trajectory, the dollar was firmer again on to reach fresh highs since 6 January. Hot PPI, still low jobless claims and Fed speakers opening the door to another potential 50bps rate hike underpinned. Quiet day ahead with no tier 1 data due and only Fed’s Barkin and Bowman speaking. USDCAD rose to 1.3480 amid weakness in oil prices while AUDUSD was flattish as metals prices recovered, despite a weak jobs data yesterday and RBA’s Lowe affirming more rate hikes. USDJPY rose to 134.50 overnight but was back closer to 134 in Asia. EURUSD continues to find support at 1.0650 as ECB speakers continued to highlight another 50bps rate hike at the March meeting. Crude oil (CLH3 & LCOJ3) heads for a weekly loss amid Fed concerns and inventory build Even as some signs of improving Chinese demand started to appear, the broader inflation and interest rate rhetoric nudging higher again this week weighed on crude oil and the commodity complex more broadly this week. A hot PPI overnight, along with Fed members now starting to open the door for another potential 50bps rate hike has further brought the Fed’s terminal rate pricing higher and US yields continue to rise. WTI prices dipped below $78 in Asia, with Brent around $85. Even as OPEC and IEA reports suggested possible uptick in demand as China reopens, US stockpile reports continued to dampen the demand outlook. Saudi Energy Minister Prince Abdulaziz bin Salman also said the current OPEC+ deal on output levels will remain in place until year-end and that he is wary of forecasts of much higher demand from China. Copper prices jump to two-week highs Copper prices rose higher on Thursday as the dollar rally took a bit of a breather before resuming again. Copper stockpiles on the Shanghai Futures Exchange fell for the first time in two months, suggesting that the Chinese demand is picking up. Growth in aluminium inventories also slowed, according to data from Shanghai Metals Market. This comes amid ongoing risks of further supply disruptions. Earlier this week, Freeport-McMoRan Inc suspended operations at its Grasberg copper mine in Indonesia due to landslides. This is adding to disruption to Peru’s output caused by social unrest. Copper prices rose to $4.15 before a retreat to $4.11 in Asia. The key $4 handle support continues to hold up. Read next: USD/JPY Is Trading Close To 134.00, EUR/USD Is Remaining Above $1.07| FXMAG.COM What to consider? Fed speakers boost the market pricing of Fed’s terminal rate Hawkish Fed speak prompted an upward shift in the Fed funds futures pricing for the terminal rate, but there is still more than one full 25bps rate cut priced in for this year. Loretta Mester said she saw a compelling case for a 50bp hike at the January FOMC meeting. A similar message was sent out by James Bullard too. However, both are non-voters although Mester may become a voting member this year if Austin Goolsby is appointed as Fed Vice Chair. Mester also added that she is not ready to say if the Fed requires a bigger rate rise at the March FOMC; said more upside inflation surprises could make Fed policy more aggressive and can accelerate the pace if conditions warrant it. Bullard also reaffirmed his terminal rate projection of 5.25-5.50%. With members still sounding the hawkish alarm despite the market pricing catching up with the December dot plot, it appears to be a signal that the March dot plot may see an upward revision. Hot US PPI further casts doubts on the goods disinflation narrative After the CPI report this week brought back concerns on the pace at which inflation is cooling, January PPI also saw a hotter than expected print. Headline rose 0.7% MoM or 6.0% YoY (vs. 0.4% MoM and 5.4% YoY exp) jumping from the prior month's -0.2% MoM print (revised up from -0.5%) but cooling from 6.5% YoY last month. Both goods and services prices increased, with goods rising 1.2% and services rising 0.4%. This has started to question the goods disinflation narrative and continues to support the thesis that services inflation is sticky. Price pressures were broad with ex food and energy measure also up 0.5% MoM from 0.3% last month and expected. Jobless claims still below 200k Initial jobless claims data was beneath expectations, and still beneath the watched 200k level, printing 194k against an expected 200k – still supporting the case for a tight labor market persisting. Continued claims were in line with expectations at 1.696mln, picking up from the prior 1.68mln. RBA Governor Lowe’s testimony focused on the need for more rate hikes The Reserve Bank of Australia chief Philip Lowe appeared for the second session of his testimony to the economic committee today, and the message emphasized that the RBA still needs to do more to bring inflation under control, despite acknowledging the impact on community. He said that business conditions remain above average and labor market is still strong. He was scrutinized not just on policy but also on transparency, especially after his closed door meetings with private bankers but lack of public address.   For what is ahead at markets this week – Read/listen to our Saxo Spotlight. For a global look at markets – tune into our Podcast.     Source: Markets Today: Hot US PPI and Mester/Bullard boost Fed terminal rate expectations – 17 February 2023 | Saxo Group (home.saxo)
Mercedes Is Planning A €4bn Buyback Programme, Copper Prices Rose

Mercedes Is Planning A €4bn Buyback Programme, Copper Prices Rose

Saxo Bank Saxo Bank 17.02.2023 09:14
Summary:  The US equity market stumbled badly yesterday as US treasury yields continue to rise, with another strong weekly claims number and hotter than expected producer prices print weighting. The US dollar is breaking out higher in most USD pairs. A heavy load of options expiry today could aggravate US equity market volatility as weekly futures and single stock options are set to expire. What is our trading focus? US equities (US500.I and USNAS100.I): an echo from a distant past In yesterday’s equity note we wrote about the key risks in equities arguing that the interest rate sensitivity is no longer the dominant risk factor as equity valuations have fallen and interest rates have already got closer to long-term averages. With the US 10-year yield advancing yesterday after comments from Cleveland Fed President Loretta Mester that more rate hikes are needed to tame inflation S&P 500 futures reacted negatively. Higher long-term bond yields do still impact equities through the discount rate on future cash flows, but initial reaction in S&P 500 futures was muted and they fought back during the session before selling off into the close. Higher than expected US PPI figures reported yesterday are also negative for equities as it could indicate margin pressures will continue for companies. S&P 500 futures are continuing selling off this morning trading around the 4,080 level which is at the lower end of the trading range for February. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) pulled back Hang Seng Index slipped 0.6% as investors lowered expectations for a rapid recovery in Chinese consumer spending. Leading Hong Kong jewellers which have large exposure to Chinese tourists as well as stores all over the mainland declined 2-4%. The Chinese traditional medicine names bucked the decline and rose 3-7%. President Xi’s plan to visit Iran and China’s Ministry of Commerce imposing sanctions on Lockheed Martin (LMT:xnys) and Raytheon Technologies (RTX:xnys) also dented the market sentiment. In A-shares, CSI300 dropped 0.7%, with stocks in the tech space retreating while Chinese traditional medicines and childcare products names advancing. FX: Firm king dollar as yields rise; JPY threatens new lows With US yields grinding higher still, the dollar was firmer again and hit fresh highs since 6 January. A hot PPI, still low jobless claims and Fed speakers, together with weakening risk sentiment all supportive for the greenback. It may be a quiet day ahead for macro data, but market volatility elsewhere after yesterday’s unsettling sell-off in risky assets could yet drive significant moves (note options expiry in the US below). USDCAD is pushing on 1.3500 for the first time since mid-January amid weakness in oil prices while AUDUSD rolled over to new lows since the first days of the year, touching below the recent 0.6856 pivot low and threatening the 200-day moving average just above 0.6800. GBPUSD likewise broke below its prior pivot low of 1.1961 and is trading at its 200-day moving average at 1.1940. USDJPY rose above 134.50 overnight, with the 200-day moving average still some distance higher at 136.93. EURUSD broke down through it’s range low of 1.0656 in late Asian trading as well. Crude oil (CLH3 & LCOJ3) heads for a weekly loss amid Fed concerns and inventory build Even as some signs of improving Chinese demand started to appear, the broader inflation and interest rate rhetoric nudging higher again this week weighed on crude oil and the commodity complex more broadly this week. A hot PPI overnight, along with Fed members now starting to open the door for another potential 50bps rate hike has further brought the Fed’s terminal rate pricing higher and US yields continue to rise. WTI prices dipped below $78 in Asia, with Brent around $85. Even as OPEC and IEA reports suggested possible uptick in demand as China reopens, US stockpile reports continued to dampen the demand outlook. Saudi Energy Minister Prince Abdulaziz bin Salman also said the current OPEC+ deal on output levels will remain in place until year-end and that he is wary of forecasts of much higher demand from China. Copper prices fading after posting two-week highs yesterday Copper prices rose higher on Thursday as the dollar rally took a bit of a breather before resuming later, so the new two-week high was only briefly held before prices rolled back down into the range overnight. Copper stockpiles on the Shanghai Futures Exchange fell for the first time in two months, suggesting that the Chinese demand is picking up. Growth in aluminium inventories also slowed, according to data from Shanghai Metals Market. This comes amid ongoing risks of further supply disruptions. Earlier this week, Freeport-McMoRan Inc suspended operations at its Grasberg copper mine in Indonesia due to landslides. This is adding to disruption to Peru’s output caused by social unrest. Copper prices rose to $4.15 before a retreat to $4.09 in Asia. The key $4 handle support continues to be key. Gold (XAUUSD) testing below first key support Gold prices were only corralled briefly by the 1,828 level this week, which is the major 38.2% retracement of the entire rally off the 1614 lows. Overnight, the stronger US dollar and higher US yields are driving new selling below 1,825, with the next levels looming the 1,809 area that was a critical range break level on the way up, and then perhaps the 200-day moving average coming in at 1,776. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) climbed on hawkish Fedspeak and producer price inflation The US 10-year treasury yield surged 6bps yesterday and followed through higher still to the highest level of the year at 3.89% overnight after a large jump in the US PPI in January and hawkish comments from Fed’s Mester and Bullard (see below). The selling during the session concentrated on the longer end of the curve, with the 2-10 yield curve inversion moderating sharply to –78 bps after as low as –90 bps on Wednesday. The $9 billion 30-year TIPS auction had a bid/cover ratio of 2.38, below 2.69 last time. Traders are cautious ahead of next week’s $120 billion supply from the 2, 5, and 7-year Treasury note auction. What is going on? Albemarle –the lithium giant beat earnings expectations and gave an upbeat outlook. Albemarle, the world's largest lithium company – in size, and scale (selling lithium to most EV makers) rose 4.7% after it delivered a stronger than expected sales outlook. It sees net sales growing to $11.3-$12.9 billion, and EBITDA getting as high as $5.1 billion. It expects to maintain positive cashflow even despite increasing capital expenditure. In Q4 - its earnings (EBITDA) swelled to $1.24 billion, beating expectations and marking a massive jump from $229 million last year, as lithium earnings rose more than expected. Adjusted EPS also grew more than consensus expected with EPS, at $8.62. Other lithium producers such as Allkem and Pilbara Minerals report results next week. Tesla shares dive as company to recall 362,000 cars for self-driving crash risks Tesla’s recall affects 362,758 vehicles, including certain Model 3, Model X, Model Y and Model S units manufactured between 2016 and 2023. Although Musk said it’s not a recall, even though Tesla’s full-self driving beta system “may allow the vehicle to act unsafe around intersections”, and increase collision risk if the driver does not intervene, Musk affirmed the issue will be remedied with a software update, by April 15. Tesla shares fell 5.7% to $202.04 on Thursday after trading 15 dollars higher earlier in the session. European earnings: Allianz, Mercedes, Hermes Allianz reports fiscal year operating profit of €14.2bn vs est. €13.7bn and sets the dividend per share to €11.40 vs est. €11.38. On the conference call this morning the CFO of Allianz said that the company does not expect rates to go significantly higher. Mercedes reports this morning Q4 revenue of €41bn vs est. €37.7bn and adjusted EBIT of €5.1bn vs est. €4.5bn as pricing remains strong in the car industry but the German carmaker sees FY23 operating income below the 2022 level. Mercedes is also planning a €4bn buyback programme. Hermes reports this morning Q4 revenue of €3bn vs est. €2.8bn up 23% in constant currency reflecting strong demand for luxury goods. Hermes raised their global prices in January by 7% compared to a year ago. Fed speakers mention idea of 50-basis point hikes Two hawkish Fed members, the St. Louis Fed’s Bullard and the Cleveland Fed’s Mester, neither of whom are voters this year, argued they were in favour of a 50-basis point hike at the Feb 1 FOMC meeting (only 25-bp hike delivered). The market is pricing 28 basis points for the March 22 meeting and a peak Fed Funds rate this year of 5.29%. China’s US Treasury holdings hit a 12-year low in December Data published this week by the US Treasury show that China’s holdings of US treasuries fell for the fifth month in a row and to a 12-year low – to $867 billion and marking a total fall of $173 billion for the 2022 calendar year. What are we watching next? Significant options expiry today, 0DTE options a risk for driving volatility. The options market in recent months has driven significant intraday volatility as options on US S&P 500 futures are available with expiry on all weekdays. It has become increasingly popular to trade the contracts that expire on the same day as they are traded, so called 0DTE, or Zero Days to Expiry options. Such trading in 0DTE options represents nearly half of all traded S&P options, with some noting that this trading represents a significant risk to accelerating market volatility on any given day. With yesterday’s ugly session in the US and other options also up for expiry, including weekly options on single stocks and ETF’s, it is worth noting the background risk that market volatility can drive a reflexive risk of further volatility as options holders rush to hedge their market exposure, which can swell as options move closer to- or deeper into the money. Earnings to watch Today’s US earnings focus is Deere which is expected to report FY23 Q1 (ending 31 Jan) revenue growth of 17% y/y and EPS of $5.53 up 76% y/y as demand remains robust and margins have room to expand. Friday: Hermes International, Safran, Allianz, Mercedes-Benz, Uniper, Sika, Deere Next week’s earnings releases: Monday: BHP Group, Williams Cos Tuesday: Teck Resources, Gapgemini, Engie, HSBC, Walmart, Home Depot, Medtronic, Palo Alto Networks Wednesday: Rio Tinto, Genmab, Danone, Lloyds Banking Group, Iberdrola, Nvidia, TJX, Stellantis, Baidu, eBay Thursday: EssilorLuxottica, Deutsche Telekom, Munich Re, Kuaishou Technology, Eni, Anglo American, BAE Systems Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) 1130 – ECB's Villeroy to speak 1330 – Canada Jan. Teranet/Nationa Bank Home Price Index 1330 – US Fed’s Barkin (Non-voter) to speak 1330 – US Jan. Import/Export Price Indices 1345 – US Fed’s Bowman (Voter) to speak 1500 – US Jan. Leading Index   Source: Financial Markets Today: Quick Take – February 17, 2023 | Saxo Group (home.saxo)
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Fed and ECB seem poised to take interest rates even further into restrictive territory

Ed Moya Ed Moya 18.02.2023 09:25
Wall Street appears to be closing out the week on a down note as investors become rattled over the prospect of more tightening by the Fed. It isn’t just Fed expectations that are rising, traders are also expecting the ECB to send rates much higher. It looks like global growth will definitely take a harder hit as monetary policy gets even more restrictive over the next few months. More from the Fed Fed’s Bowman reiterated inflation is still too high and that they need to continue hikes until we see more progress. She did note the Fed is seeing a lot of inconsistent data in economic conditions. It doesn’t look there is a chance that the Fed will be holding anytime soon, which should keep sending yields higher at the short-end of the curve. Fed’s Barkin however wants to remain flexible and favors a 25 basis point increase. He acknowledges that he is not ready to declare victory on inflation. FX Friday’s sell everything trade initially sent the dollar higher as risk aversion appears to be running wild as Fed tightening jitters make it more likely the US economy is recession bound. The latest round of hawkish Fed speak from Bullard, Mester, and Bowman have swaps pricing rate hikes at the March and May meetings. The dollar pared earlier gains as yields came in around the European close and after Fed Barkin’s comment that he favors 25bp rate hikes for flexibility. Oil Crude prices are falling as supplies are plentiful and as global growth concerns return as the Fed and ECB seem poised to take interest rates even further into restrictive territory. The belief that OPEC+ can keep prices supported wherever they want is waning as global growth outlooks take a turn for the worse. As long as supplies seem ample, OPEC+ will be playing catchup to keep the market tight. Oil is seeing steady selling pressure and the true test will be if prices can break below the $72.00 a barrel level. Gold Gold prices got crushed this week as the bond bears are fully in control now that the market is pricing in more Fed rate hikes. Gold’s vulnerability to further downside however should be limited as central banks appear poised to increase their bullion holdings. Global recession risks are returning and that should lead to some safe-haven flows for gold. Gold should have major support ahead of the $1800 level, which means we might be stuck in a range until we have clearer signs if inflation is going to continue to accelerate here. Crypto Bitcoin is lower on the day as every risky asset sold off on fears of more aggressive Fed tightening and rising recession risks. After Bitcoin tested the $25,000 level and failed to extend higher, many active traders locked in profits. Appetite for risky assets might struggle over the short-term, which could support a Bitcoin consolidation as long as a regulatory crackdown does not take down a key stablecoin or crypto company. Many crypto traders are paying close attention to the reports that Binance might exit relationships with US companies as pressure from regulators intensifies. Binance CEO Changpeng Zhao (CZ) tweeted, “Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.” Binance is the world’s largest exchange and if it abandons key US relationships, that is a major setback for the cryptoverse. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

The Commodities Feed: Hawkishness weighs on the complex

ING Economics ING Economics 20.02.2023 08:21
The commodity complex has come under pressure in recent days, with more hawkish talk from some US Fed officials. Recent data from the US suggests the Fed may have to hike by more than expected US Federal Reserve building in Washington, DC Energy - Natural gas continues to weaken European natural gas prices continue to come under pressure, with TTF falling below EUR50/MWh on Friday and trading at its lowest levels since August 2021. Forecasts for milder than usual weather for large parts of Europe over the next week have put pressure on prices, whilst the imminent restart of Freeport LNG certainly wouldn’t have helped sentiment. However, we are likely getting to levels where the market should find some form of support. Coal-to-gas switching levels are not too far away and so if we see much more weakness this is likely to stimulate some demand from the power generation sector.  The latest data from GIE shows that European gas storage is a little more than 63% full, above the 5-year average of 44% and well above the 31% seen at this stage last year. US natural gas prices also weakened further, trading down to their lowest levels since September 2020. This weakness comes despite the progress made with the restart of the Freeport LNG export plant. Milder than usual weather over large parts of the US is weighing on heating demand. This has meant that the gap between current US storage and the 5-year average is widening. As for oil, prices came under renewed pressure last week, with ICE Brent falling by almost 4% over the week. A raft of strong data in recent weeks has raised expectations for a more hawkish Fed, which has weighed on the bulk of risk assets. There is very little on the calendar for the oil market this week, apart from the usual weekly EIA inventory data, which will be delayed by a day due to a public holiday in the US on Monday. Metals - Lead exchange stocks in China surge The latest data from Shanghai Futures Exchange (ShFE) shows that weekly inventories for metals posted another week of gains as of Friday. Lead weekly stocks jumped by 52% WoW to 77,216 tonnes (highest since September 2022) over the last week. Among other metals, zinc stocks rose 15% WoW to 121,413 tonnes (highest since June), while aluminium inventories climbed 8% WoW to 291,416 tonnes at the end of last week. The latest data from Zambia’s Finance Ministry shows that copper production reached 763.3kt (its lowest since 2015) in 2022, a decline of 4.7% YoY. The decline came despite the government’s aim to boost mining output for copper to 2mt by 2026. The latest statements from Ukraine’s Justice Ministry suggest that the nation’s top anti-corruption court has ordered the seizure of a key alumina plant linked to United Co. Rusal International and more than 300 assets linked to Deripaska. The Mykolayiv alumina refinery has been offline since early March 2022, following Russia’s invasion. The refinery could produce about 1.76mt of alumina annually. Agriculture – Sugar spread strength There are reports that the Indian government has decided not to allow further sugar exports this season beyond the already approved 6mt. There have been growing concerns for several weeks now that the government would not allow further exports, given worries over the domestic crop. The government will once again evaluate the domestic balance in March, at a time when cane crushing nears its end before deciding on exports. The move does raise concerns over tightness in the global market, which is reflected not only in the strength in the flat price, but also the March/May spread, which is trading in deep backwardation of more than USc1.60/lb. Worries over tightness should ease once the CS Brazil harvest gets underway in the second quarter. The Rosario Grains Exchange expects corn shipments in Argentina to fall by 40% YoY between March and June as severe drought impacted crop plantings this season. The exchange projects corn shipments to total just 8.7mt in these four months, as only 19% of the estimated area (7.3m hectares) was planted in the initial weeks. Previously the exchange trimmed its corn production estimates to 42.4mt for the second time following severe drought conditions, much lower than initial expectations of 55mt. Recent numbers from Ukraine’s Agriculture Ministry show that farmers harvested 53.9mt of grain from 98% of the expected area as grain harvests near completion. The wheat harvest stood at 20.2mt, whilst farmers harvested 26.5mt of corn from 94% of the expected area in 2022. Read this article on THINK TagsSugar Oil Natural gas Corn Copper Aluminium Alumina Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
US-China Tensions Continue To Ramp Up, Dollar Off Its Highs

US-China Tensions Continue To Ramp Up, Dollar Off Its Highs

Saxo Bank Saxo Bank 20.02.2023 09:14
Summary:  Data was light on Friday and US equity indices ended mixed after markets catching up with the Fed’s December dot plot over the week. Fed speakers Barkin and Bowman were however somewhat less hawkish than Bullard and Mester earlier in the week. Dollar off its highs as US yields retreated lower amid short covering, helping metals regain some footing. US markets remain closed today, and key focus this week on geopolitics as US-China tensions continue to ramp up and one-year anniversary of Russia’s invasion of Ukraine approaches.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) mixed, European indices outperformed in the week The S&P500 was down for the second consecutive week as hot inflation data and steady retail sales supported the case for more rate hikes from the Fed, shifting the market expectations for the Fed path higher. The S&P500 was down 0.3% on Friday, with NASDAQ100 down 0.7%, even though the Dow Jones index recovered later to close 0.4% higher. NASDAQ however closed the week higher, with Tesla notching up gains of ~6% in the week. European indices outperformed in the week, led by France’s CAC 40 (FRA40.I) which was up over 3% and EuroStoxx 50 (STOXX50.I) was up 1.8%. Importantly, US markets are shut on Monday for Presidents Day, however yields remain a key focus this week after the US 2-year yield rose to 4.7%+ levels on Friday and 10-year is getting close to the 4% mark again. Key stock movers On Friday, US farm equipment maker Deere (DE:xnys) led market gains being up 7.5%, Moderna Inc (MRNA:xnas) fell 3.3% after its experimental messenger RNA-based influenza vaccine delivered mixed results in a study. Lithium miners Livent Corp (LTHM:xnys), Albemarle Corp (ALB:xnys) and Piedmont Lithium (PLL:xnas) slumped between 9% and 12% due to concerns about weakness in Chinese prices for the EV battery metal. Agricultural spending bellwether - Deere - drives up, putting the spotlight on the tangible world outperforming and food security Deere was the star performer in the S&P500 on Friday, rising 7.5% after raising its forecasts for the year, and reporting better than expected Q4 results. It reported $6.55 earnings per share from sales of $12.7 billion, beating estimates (of $5.56 per share on sales of $11.28 billion). The bottom line is demand from farmers is strong, and producers are prepared to buy more equipment and upgrade their fleets. Its production and precision ag division which includes autonomous crop planting and harvesting – saw the most sales growth – with quarterly sales up 55% in the quarter, from a year prior. The company has not only evolved from selling ag equipment to automation equipment and farm management systems, which helps farmers optimize their operations using crop data analytics. For the year ahead, Deere sees net income rising to $8.75 billion to $9.25 billion, which is higher than its prior estimate ($8 billion to $8.5 billion). This reinforces Saxo’s bullish view of investments in the physical world outperforming the intangibles. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) suffered a third consecutive week of losses amid regulatory concerns Hong Kong's stocks suffered a third consecutive week of losses, with the Hang Seng Index dropping by 1.3%, weighed down by China's tech and internet shares. The Hang Seng Tech Index fell by 2.5%, and turnover was the lowest in 2023 at HK$89.7 billion. Fears of regulatory crackdowns in China were fueled by the disappearance of high-profile investment banker Bao Fan and speculation that Wu Qing, who was known in the securities industry for iron-fisted handling of market irregularity cases, would be the new chief of the China Securities Regulatory Commission. Fan’s majority-owned China Renaissance took a 28.2% hit while internet giants Alibaba (09988:xhkg), Tencent (00700:xhkg), and Meituan (03690:xhkg), registered loses over 2%. Baidu (09888:xhkg) fell 4.6% as ChatGPT concept stocks retraced in both the Hong Kong bourse and mainland exchanges. Lenovo (00992) slid 3.1% following reporting net income, revenue declines, and job cuts. Hong Kong jewellers with large exposure to Chinese tourists declined 2-4%, while Chinese traditional medicines and childcare products gained. The A-share market in China also closed lower, with CSI300 Index down by 1.4%. Computing, electronics, communication, ChatGPT concept, and electric equipment stocks led the charge lower. Digital China (000034:xsec) and Montnets Rongxin Technology (002123:xsec) plunged over 8%. Meanwhile, Chinese traditional medicine names and COVID-19 drug pharmaceutical stocks bucked the decline. Shangdong Xinhua Pharmaceutical (000756:xsec) went limit up by 10% and its H-shares (00719:xhkg) traded in Hong Kong surged 26.4% following positive comments on a generic drug manufactured by the company. FX: Dollar off its highs, NZD in focus as RBNZ meets this week After a run higher this week with the hawkish tilt in Fed expectations, the US dollar was off its highs on Friday with US 10-year yields turning lower after getting close to the key 4% mark. This helped USDJPY retreat from 2-month highs of 135 but Japan’s CPI due this week along with BOJ governor nominee Ueda’s parliamentary hearings will likely keep the yen volatile. NZD was one of the underperformers last week on slowing 2yr NZ inflation expectations, and remains in focus this week as RBNZ is likely to downshift to a 50bps rate hike with some even considering a 25bps hike amid risks from the recent cyclone. GBPUSD touched lows of 1.1915 but was back above 1.2000 handle on Friday. ECB commentary remains mixed (read below) and EURUSD still close to 1.07. Crude oil (CLH3 & LCOJ3) end last week lower on Fed worries Crude oil prices tumbled over 2% last week amid a hawkish tilt returning in the US data and Fed commentaries, which brought up the prospects of more rate hikes in the current cycle. Moreover, data confirming a pickup in real economic activity in China has been meagre so far, and near-term oversupply fears have pushed WTI prices lower to touch $75/barrel on Friday, while Brent took a look below $82. OPEC and IEA however raised the medium-term demand outlook, but this week’s focus will also be on geopolitics (read below) with US-China tensions ramping up and the one-year anniversary of Russia’s invasion of Ukraine. Copper focusing on supply-side issues Despite the hawkish tilt in Fed expectations, copper ended the week only down 0.4% as the key $4 area continued to provide support. Supply issues also remained in focus. Freeport-McMoRan Inc suspended operations at its Grasberg copper mine in Indonesia due to landslides. This is on the heels of disruptions to output in Peru amid social unrest. Zambia also reported that its copper output fell to a seven-year low in 2022. US yield and dollar trends this week will be key for metals and commodities in general. Gold (XAUUSD) approaching key supports Gold fell to a six-week low last week amid hawkish comments from Fed officials after the CPI report last week and Fed commentaries shifting market expectations for the Fed path higher. Gold took a look below the key support at $1828 on Friday but a subsequent recovery to 1840 was seen as dollar was off its highs. Next key support at $1800 level remains a key focus, followed by the 200DMA at 1776.   What to consider? Fed speakers note inflation and jobs data surprises Fed member Bowman (voter) said she wants to see a consistent decline in inflation and she thought the moderation of inflation before the prior meeting meant we could be seeing the beginning of disinflation, but notes the most recent data however has been surprising. Barkin (non-voter) also said that he does feel the US is making slow progress on inflation. Both also emphasized labor shortages, with Barkin stating clearly that he prefers the 25bps rate hike path. ECB’s mixed messages ECB speakers had mixed messages on Friday with the hawkish Isabel Schnabel saying that investors risk underestimating the persistence of inflation. That bolstered rate-hike bets, with money markets pricing a 3.75% peak in the deposit rate. However, later dovish member Francois Villeroy said that rate are now in restrictive territory and that they may raise above 3% but it’s not automatic. Rainy season in Brazil-putting iron ore supply in question Rainfall at Brazil's largest iron ore mines increased in the second week of February, but remained below historical levels since the start of the year. Despite a dry start to 2023, iron ore supply risks are high ahead of seasonal rainy season peaking in month end. Brazilian Iron ore shipments are down this year, while Australian iron ore shipments are up YTD. We need to see Chinese property stimulus pick up to propel further demand in iron ore which could also act as a catalyst for the next move up in iron ore prices. Vale is the biggest iron ore producer in Brazil. Australia’s largest iron ore producers are BHP and Rio Tinto, who report results over the next two days.  Luxury stocks are the key contributors to the French CAC 40 index’s 2023 performance The French CAC 40 index is recording a strong YTD performance with an increase of +14 %. This is quite astonishing. This is partially explained by the weight of luxury stocks in the index. Kering, L’Oréal, LVMH and Hermès represent about a third of the jump. Other major contributors are Schneider Electric (which directly benefits from China’s economic reopening), BNP Paribas, Vinci (a construction company and operator of toll roads), STMicroelectronics (semiconductors) and Air Liquide (which can be considered as a market maker in his business segment). The French index is now valued at less than 13 times the estimated profits. This is below its 10-year average of 14. This could imply the market can go much higher in the short- and medium-term. The French stock market is the largest one in Europe followed by the UK’s. China’s loan prime rate fixing due today China's loan prime rates will likely stay steady at the fixing today, considering the People's Bank of China's decision to keep its medium-term lending facility rate unchanged earlier this month. The one-year and five-year LPR rates are likely to remain unchanged at 3.65% and 4.3%, respectively. Still, the uncertainty around the rate path is increasing given the increasing focus in China to drive up consumption and growth, and rate cuts remain likely in H1. Geopolitics keeps Saxo’s Defense basket in focus In Saxo’s equity theme baskets, the Defense basket was one of the top performers last week despite the news of China sanctions on US defense companies like Lockheed Martin and Raytheon due to balloon shooting incident. Geopolitical tensions, and therefore the Defense stocks, will remain in focus again this week as we approach the one-year anniversary of Russian invasion of Ukraine on 24 February. Biden will be visiting NATO ally Poland to talk about the importance of the international community’s resolve, and unity in supporting Ukraine, adding that the next weeks and months are going to be difficult for Ukraine’s forces, and the US is going to continue to stand by them. Meanwhile, China’s top diplomat Wang Yi kicked off his week-long tour through Europe in Paris on Wednesday. The diplomat is expected to travel to Italy, Germany, and Hungary – with a final stop in Russia. There were also some reports suggesting that the US has information that China may be considering supplying arms to Russia. Putin will also be giving a state of the nation address, and focus will be on any risks of further escalation noting that 500k Russian troops have been mobilised.   For a global look at markets – tune into our Podcast.   Source: Markets Today: US yields at critical levels – 20 February 2023 | Saxo Group (home.saxo)
RBA Governor Announces Major Changes at RBA Board as US Inflation Expected to Decline

Meta Is Announcing A New Monthly Subscription Model, Deere Was The Star Performer In The S&P500

Saxo Bank Saxo Bank 20.02.2023 09:33
Summary:  US equity markets bounced on Friday after teasing new lows, maintaining the sense of indecision after more than two weeks of choppy, directionless trading. Treasury yields and the US dollar rolled over sharply on Friday after posting new highs for the cycle and stern US warnings to China against providing military aid to Russia have upped the geopolitical risks by an order of magnitude as markets will nervously await China’s response in coming days and weeks. What is our trading focus? US equities (US500.I and USNAS100.I): gains for February have evaporated Friday’s session was weak ending with the lowest close print for February as the market reacted to higher interest rates and data suggesting inflation pressures remain high. Last week, was still a strong week for bubble stock despite the rising interest rates while commodity related companies and Chinese stocks were the weakest links in the global equity market. S&P 500 futures have opened up this week below Friday’s close trading around the 4,085 level with the key 4,000 level still in play on the downside if S&P 500 futures make another lower close in today’s session. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) rallied with A-shares leading China’s A-shares rallied strongly on Monday with the benchmark CSI300 rising 2.3%. Although the 1-year and 5-year loan prime rates remained unchanged at the monthly fixing this morning, the average mortgage interest in the largest 100 cities fell 6bps M/M to 4.04% in February, or 143bps Y/Y for first-home mortgages and 84bps for second-home mortgages.  Construction materials, electronic appliances and telco names led the charge higher in A-shares. Hong Kong’s Hang Seng Index opened lower but spent the rest of the day climbing to 1.1% higher as of writing. China Hongqiao (01378:xhkg), a leading aluminium products manufacturer, jumped over 10%. FX: Dollar reverses lower on sentiment shift Friday, NZD in focus as RBNZ meets this week After a run higher last week on rising US treasury yields and Fed rate hike expectations, the US dollar was off its highs on Friday with US 10-year yields turning lower after trading close to the key 4% mark. This helped USDJPY retreat from 2-month highs above 135. Note Japan set to report CPI this Friday and BOJ governor nominee Ueda’s parliamentary hearings will likely keep the yen volatile. NZD was one of the underperformers last week on slowing 2yr NZ inflation expectations, and remains in focus this week as RBNZ is likely to downshift to a 50bps rate hike with some even considering a 25bps hike amid risks from the recent cyclone. GBPUSD touched lows of 1.1915 last week but was back above 1.2000 handle on Friday. ECB commentary remains mixed (read below) and EURUSD still close to 1.07. Crude oil (CLH3 & LCOJ3) remains rangebound Crude oil rebounded during Asian hours following last week’s selloff which once again confirmed the market remains rangebound, in Brent between $80 and $89, with a demand pick up in China at this stage not being strong enough to offset macroeconomic concerns that was strengthened last week following hawkish comments from US Federal Reserve members. OPEC and IEA raised the medium-term demand outlook but so far, data from China shows a meagre pickup in economic activity, and it has instead left the market focusing on US stock levels which have been rising well beyond seasonal expectations. This week’s focus will also be on geopolitics (read below) with US-China tensions ramping up and the one-year anniversary of Russia’s invasion of Ukraine. Copper focusing on supply-side issues Despite the hawkish tilt in Fed expectations, copper ended the week only down 0.4% as the key $4 area continued to provide support. Supply issues also remained in focus. Freeport-McMoRan Inc suspended operations at its Grasberg copper mine in Indonesia due to landslides. This is on the heels of disruptions to output in Peru amid social unrest and Panama. Zambia also reported that its copper output fell to a seven-year low in 2022. Some support also coming through via rising aluminum prices after smelters in China’s Yunnan province cut capacity due to energy shortages following a period of weak hydro generation. Gold (XAUUSD) focus on dollar and interest rate trajectory Gold traded steady in Asia near short-term resistance at $1845, after managing to find a bid on Friday following weak of rising dollar and yields-led selling. An uptick in geopolitical tensions potentially adding a small bid into a market that otherwise seems preoccupied with the scope for further interest-rate hikes from the Federal Reserve. Investor sentiment has once again been challenged with bullion-backed ETF holdings falling to a fresh three-year low on Friday while open interest in COMEX gold futures has fallen by 16% during the past month as traders cut their exposure, both long and short. Further dollar-led weakness could see gold target support in the $1792 to $1776 area with resistance at $1872. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) reverse lower Friday ahead of long weekend After US Treasury yields all along the yield curve posted local highs for the cycle, a late wave of buying reversed the slide and yields closed lower for the session, with the 2-year closing at 4.62% after hitting 4.71% intraday and the 10-year retreating to close at 3.81% after hitting 3.92% earlier in the session. Today, US treasury markets are closed for a holiday. Heavy treasury supply is incoming this week with 2-year, 5-year and 7-year auctions Tuesday through Thursday. The US data highlight this week is Friday’s January PCE inflation data. What is going on? US Secretary of State Blinken warns China on lethal aid to Russia At the sidelines of the Munich Security Conference, US Secretary of State Antony Blinken warned of “serious consequences” if China were to provide military support to Russia. Blinken suggested that the US has information that China may be considering supplying arms to Russia. China’s top diplomat Wang Yi spoke earlier in the day at the same conference on the US’ “hysterical” response to charges of Chinese spy balloons. Yi will travel to Italy, Germany, and Hungary and make a final stop in Russia. Putin will also be giving a state of the nation address, and focus will be on any risks of further escalation noting that 500k Russian troops have been mobilised. US President Biden will be visiting NATO ally Poland to talk about the importance of the international community’s resolve, and unity in supporting Ukraine, adding that the next weeks and months are going to be difficult for Ukraine’s forces, and the US is going to continue to stand by them. Saxo’s Defense equity theme baskets was one of the top performers last week despite the news of China sanctions on US defense companies like Lockheed Martin and Raytheon due to balloon shooting incident. Meta launches monthly subscriptions Snap already has it and Twitter is rolling it out, and now Meta is announcing a new monthly subscription model to create a new revenue stream that is more stable that online advertising. The monthly subscription comes with extended account verification, direct customer support, and more protection against impersonation. Apple’s major data privacy change back in late 2021 has been a major factor as well as targeting has become more difficult putting downward pressure on advertising pricing. Luxury stocks are the key contributors to the French CAC 40 index’s 2023 performance The French CAC 40 index is recording a strong YTD performance with an increase of +14 %. This is partially explained by the weight of luxury stocks in the index. Kering, L’Oréal, LVMH and Hermès represent about a third of the jump. Other major contributors are: Schneider Electric (which directly benefits from China’s economic reopening), BNP Paribas, Vinci (a construction company and operator of toll roads), STMicroelectronics (semiconductors) and Air Liquide (which can be considered as a market maker in his business segment). The French index is now valued at less than 13 times the estimated profits. This is below its 10-year average of 14. This could imply the market can go much higher in the short- and medium-term. The French stock market is the largest one in Europe followed by the UK’s. Key US stocks on the move Friday, including Lithium names On Friday, US farm equipment maker Deere (DE:xnys) led market gainers, posting a 7.5% advance. Moderna Inc (MRNA:xnas) fell 3.3% after its experimental messenger RNA-based influenza vaccine delivered mixed results in a study. Lithium miners Livent Corp (LTHM:xnys), Albemarle Corp (ALB:xnys) and Piedmont Lithium (PLL:xnas) slumped between 9% and 12% due to concerns about weakness in Chinese prices for the EV battery metal. ECB’s mixed messages ECB speakers had mixed messages on Friday with the hawkish Isabel Schnabel saying that investors risk underestimating the persistence of inflation. That bolstered rate-hike bets, with money markets pricing a 3.75% peak in the deposit rate. However, later dovish member Francois Villeroy said that rates are now in restrictive territory and that they may raise above 3% but it’s not automatic. The German 2-year Schatz yield posted a new high since 2008 at 2.95% on Friday before falling back and closing unchanged at 2.88%. Deere lifts outlook on strong outlook for agricultural spending Deere was the star performer in the S&P500 on Friday, rising 7.5% after raising its forecasts for the year - and reporting better than expected Q4 results. It reported EPS of $6.55 vs est. $5.56 and revenue of $12.7bn vs est. $11-3bn. The bottom line is demand from farmers is strong, and producers are prepared to buy more equipment and upgrade their fleets. Its production and precision agricultural division which includes autonomous crop planting and harvesting – saw the most sales growth – with quarterly sales up 55% y/y. Deere raised its net income outlook to $8.75-9.25bn compared to previously $8-8.5bn. This reinforces Saxo’s bullish view of investments in the physical world outperforming the intangibles. Sweden CPI jumps more than expected at core – SEK surges Sweden reported January CPI data this morning, with the headline slightly softer than expected at –1.1% MoM and +11.7% YoY vs. -1.0%/+11.8% expected, but the core inflation data was firmer than expected at +0.4% MoM and +8.7% YoY vs. -0.2%/+8.2% expected and 8.4% in December. SEK is surging on the anticipation that the Riksbank will have to continue firming its message on tightening policy. What are we watching next? Critical week for geopolitics as we await China’s response to US warnings on aiding Russia US Secretary of State Blinken’s warning to China on aiding Russia’s military (see above) sets up a moment of maximum danger for geopolitics depending on the nature of China’s response in coming days and weeks. Should the latter move to aid Russia’s military with lethal weaponry, it will likely accelerate the deglobalization theme and US sanctions against the country, creating significant disruption risks for global supply chains. The CFTC will start publishing delayed CoT reports this week Last Friday the CFTC once again postponed its weekly publications of the Commitments of Traders report (CoT), bringing the number of weekly reports to three that has been delayed due to the January cyber-related incident at ION Cleared Derivatives, a third-party service provider of cleared derivatives order management, order execution, trading, and trade processing. The CFTC in a statement on Friday, however said that staff intends to resume publishing the CoT report this Friday, starting with the report that was due February 3 but also that they do not expect the backlog will be cleared and “live” data resume until mid-March. BHP and Rio Tinto earnings will set the course for copper and aluminium companies  BHP and Rio Tinto report this week and, if Fortescue is something to go by with stronger than expected profits, then BHP and Rio could surprise to the upside. The focus will be on their outlooks with both BHP and Rio expected to give optimistic forecasts for the year amid Chinese demand picking up. They may also shed light inflationary pressures remaining sticky, such as wages picking up. Iron ore, and copper and coal giant BHP is expected report 2022 earnings (EBITDA) of $40.6 billion, with free cashflows of $26 billion and declare a full-year gross dividend yield of 14%. Iron ore, aluminium and copper giant Rio is expected to report earnings (EBITDA) of $27.1 billion in 2022, free cash flow of $11.2 billion and declare a full-year gross dividend yield of about 11%. Saxo’s preferred commodity exposures include aluminium, copper, and lithium. Earnings to watch Today’s earnings focus is later tonight when BHP Group reports FY23 1H results (ending 31 Jan) with analysts expecting revenue of $26.7bn down 13% y/y from the same period last year. EPS is expected at $1.37 down 28% y/y as iron ore prices have come down their recent highs. The commodity markets have been very muted in their reaction to the Chinese reopening and as such BHP Group’s outlook will be of key interest to investors. Later this week our earnings focus is one Walmart, Home Depot, and Nvidia. Monday: BHP Group, Williams Cos Tuesday: Teck Resources, Gapgemini, Engie, HSBC, Walmart, Home Depot, Medtronic, Palo Alto Networks Wednesday: Rio Tinto, Genmab, Danone, Lloyds Banking Group, Iberdrola, Nvidia, TJX, Stellantis, Baidu, eBay Thursday: EssilorLuxottica, Deutsche Telekom, Munich Re, Kuaishou Technology, Eni, Anglo American, BAE Systems Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) US markets closed for Presidents’ Day. 0830 – Sweden Riksbank Meeting Minutes 1500 – Eurozone Feb. Preliminary Consumer Confidence 1900 – UK Bank of England’s Woods to speak 0030 – Australia RBA Meeting Minutes   Source: Financial Markets Today: Quick Take – February 20, 2023 | Saxo Group (home.saxo)
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation And More

Saxo Bank Saxo Bank 20.02.2023 11:42
Summary:  Today we look at the solid bounce in risk sentiment on Friday ahead of a three-day weekend in the US (where markets are closed for Presidents Day today) as US treasury yields rolled over and took the USD lower as well, a bearish reversal for the greenback just as it was trying to break free to the upside. In commodities, we focus on copper and crude and the lack of follow-through in the China re-opening narrative. In FX, we touch on the USD reversal, the JPY this week and NZD and SEK. In stocks to watch, a discussion of Deere and its strong results on Friday as well as the busy week ahead in earnings reports, where a wide variety of companies are reporting. But drowning out everything is the risk of an escalation in the US-China confrontation after the US warned China in stark language against providing lethal aid to Russia. This after VP Harris charged Russia with crimes against humanity in its assault on Ukraine. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: Twitter And Elon Musk Faced A Growing List Of Claims| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.     Source:Podcast: Geopolitical risks crowd out all other considerations for now | Saxo Group (home.saxo)
USD/CAD - Canadian economy added 41,400 jobs beating expectations

The Loonie Pair (USD/CAD) Buyers Cheer Downbeat Prices Of WTI Crude Oil

TeleTrade Comments TeleTrade Comments 21.02.2023 09:04
USD/CAD picks up bids to reverse the week-start losses but previous support line challenges the bulls. Geopolitical fears, return of full markets weigh on sentiment and underpin US Dollar rebound. Oil price bears the burden of firmer USD and fears of slow demand growth, higher inventories. Canada inflation eyed as BoC signaled a pause in rate hikes, US PMIs should be observed too. USD/CAD clings to mild gains near 1.3480 as it reverses the previous day’s losses during early Tuesday in Europe. In doing so, the Loonie pair buyers cheer downbeat prices of Canada’s key export item, WTI crude oil, as well as the full market’s favor to the US Dollar, ahead of the key US and Canadian statistics. WTI crude oil drops nearly 1.0% on a day as it renews its intraday low to near $76.60 by the press time. In doing so, the black gold reverses the previous day’s corrective bounce off a two-week low, the first in six days, amid fears of more supplies from the US and Saudi Arabia as Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said on Monday, “OPEC+ is flexible enough to change decisions whenever required.” Elsewhere, fears emanating from China, North Korea and Russia seemed to have joined the fresh run-up in the US Treasury bond yields, amid hawkish hopes from the US Federal Reserve (Fed), to underpin the US Dollar rebound. That said, the US and China alleged each other over the balloon shooting whereas the US diplomatic ties with Taiwan teased Beijing on Monday. On the same line, the United Nations (UN) Security Council is alarmed by Japan for North Korea’s missile testing and could help the US Dollar to remain firmer due to its safe-haven status. It should be noted that the US Dollar Index (DXY) snaps a two-day losing streak while marking mild gains near 104.00. In doing so, the greenback’s gauge versus the six major currencies traces the US Treasury bond yields, as well as benefits from the traditional haven status. That said, the US 10-year Treasury bond yields pick up bids to near the highest levels marked since early November 2022, mildly bid around 3.86% at the latest. While portraying the mood, S&P 500 Futures declined 0.40% intraday to 4,070 at the latest. Looking forward, the Canadian Consumer Price Index (CPI) for January, as well as the Bank of Canada (BoC) CPI Core for the said month, will be observed closely for immediate directions as the BoC has already teased a pause in the rates. As a result, softer prints of inflation data may allow the BoC to announce the policy pivot and propel the USD/CAD. On the other hand, the preliminary readings of the US Purchasing Managers Index (PMI) data for February will be important for the US Dollar ahead of Wednesday’s Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes. Given the recently hawkish bias for the Fed, versus the BoC’s dovish tone, the USD/CAD is likely to witness further upside unless the Oil prices witness a strong rally. Technical analysis A one-week-old support-turned-resistance line near 1.3490 guards the USD/CAD pair’s immediate upside ahead of the 61.8% Fibonacci retracement level of the pair’s December 2022 to February 2023 downside, near 1.3540 at the latest. Meanwhile, the USD/CAD bears may aim for the 200-Simple Moving Average (SMA), close to 1.3400 by the press time, as an immediate target during the quote’s fresh downside past the latest low of 1.3440. Following that, the monthly bottom surrounding 1.3260 will be in focus.
Technical Market Outlook: EUR/USD Bounces from Resistance, Eyes 100 MA on H4 Chart

About 20% Of Malawi’s Population Is Already Expected To Face Acute Food Insecurity

Saxo Bank Saxo Bank 21.02.2023 09:48
Summary:  US equity futures as well as most European indices retreated on Monday amid a spike in geopolitical concerns with President Biden in a surprise visit to Ukraine and China’s attempts to stand neutral. The backdrop of inflation concerns in the US is still keeping risks of a tighter than expected monetary policy, and yields remain a key focus as US markets return later today. China demand recovery optimism is however back, providing a bid to crude oil and metals. RBA’s minutes guided hawkish, and focus now on RBNZ meeting tomorrow with potential for volatility amid mixed market expectations.   What’s happening in markets? US markets closed, European indices mostly lower as geopolitical concerns weigh Muted trading overnight with US markets closed for President’s Day but geopolitical tensions at a high with President Biden making a surprise visit to Ukraine to pledge support. Futures for S&P 500 and NASDAQ 100 continue to trade in the red with fears of escalating tensions between US and China, as well as the upcoming anniversary of Russia’s invasion of Ukraine. Geopolitical concerns also spilled over to European markets, with most European indices closing in the red on Monday. EuroStoxx 50 (STOXX50.I) was down 0.09% while France’s CAC 40 (FRA40.I) was down 0.16%. Only UK’s FTSE 100 (UK100.I) closed in a positive territory. China markets led the way on Monday with strong gains of over 2% on potential liquidity injection on Friday and expectations of a recovery in momentum as the earnings season focus shifts to Asia. What to watch ahead? When trade resumes in the US today, focus will be on geopolitics as well as the services and manufacturing read outs - PMIs – expected to show the US economy’s recovery is gathering pace – but with the PMIs still in contractionary phase (to show reads of under 50). FOMC minutes due on Wednesday - will have eagle eyes on them - looking for terminal rate expectation comments – given some members hinted of a potential 50bps rate hike again. Later in the week - Friday’s release of January PCE - the Feds preferred inflation gauge - will be a focus - expected to show core inflation rose 0.4% up from 0.3% in December – with the YoY read expected slow to 4.3% (from 4.4%) - according to Bloomberg consensus. BHP’s numbers disappoint, shares slide 2%. Its 50 day simple moving average offers support Softer commodity prices in the half year drove a decline in BHP profits –greater than expected - with underlying attributable profit falling to $6.6 billion in the six months to December 2022, vs the $6.96 billion expected by consensus. The world’s biggest miner declared an interim dividend of $0.90 per share – marking a drop from last year’s record $1.50 per share - meaning its pay-out ratio dropped to 69% from 78%. We think that’s because the board is taking the proposed Oz Minerals takeover into account. As for production - significant wet weather of its coal business impacted production and unit costs - as did challenges in securing enough staff. As BHP’s outlook - it’s aiming to lift iron ore production to 330 mt/yr. Overall it reinforced its positive demand forecast in the second half of FY23 and into FY24 - with strengthening activity in China. BHP sees China and India demand offsetting the slowdown in trade with the US, Japan and Europe. Mining production costs are expected to be markedly higher than before the Covid-19 pandemic – due higher energy, labor and other input costs. Meanwhile we think BHP should benefit from higher-than-expected iron ore, met coal, and copper prices amid supply issues and the green transformation push. Also note, it started the process of divesting its two coal mines- as the business wants to focus on future facing commodities – copper, nickel and potash. Rio Tinto is expected to highlight similar issues  - slimmer profits and higher costs when it reports results tomorrow. For more, refer to Saxo’s Australian Resources equity theme basket. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) rallied with A-shares leading A-shares rallied strongly on Monday with the benchmark CSI300 rising 2.3%. Although the 1-year and 5-year loan prime rates remained unchanged at the monthly fixing this morning, the average mortgage interest in the largest 100 cities fell 6bps M/M to 4.04% in February, or 143bps Y/Y for first-home mortgages and 84bps for second-home mortgages.  China Securities Regulatory Commission (CSRC)’s announcement on Friday of rules to regulate and effectively revive overseas IPOs of mainland companies added fuel to the optimism. Construction materials, electronic appliances, telco, and brokerage names led the charge higher in A-shares. In Hong Kong, the Hang Seng Index opened lower but managed to finish the Monday session 0.9% higher, led by industrials and financials. . Aluminum Corp of China (02600:xhkg) surged 7.6% and China Hongqiao (01378:xhkg) jumped 9.9% following the Yunnan provincial government told local aluminum smelters to cut production due to power shortage. EV makers gained, led by Nio (09866:xhkg) and XPeng (09868:xhkg). The latest rise in tension between the U.S. and China over alleged Chinese support for Russia’s invasion of Ukraine, China’s increasing role in the day-to-day running of Hong Kong, and the issue of Taiwan are taking a backseat for the time being as investors are shifting their eyes to additional policy stimuli being rolled out at the upcoming two-session meetings to be held from March 4, 2023. FX: RBA’s hawkish minutes, RBNZ meeting keeps kiwi in check After extensive speeches last week from RBA Governor Lowe, focus turned back to AUD today with RBA minutes on tap. Th February meeting saw a 25bps rate hike but the statement had tilted more hawkish. AUDUSD took a brief look below 0.69 ahead of the minutes, but reversed higher as the minutes revealed that a pause was not an option at the February meeting. Focus more so on the RBNZ meeting tomorrow morning in Asia (9am SGT/HKT) with some calls for no rate hikes amid the recent flooding damages. NZDUSD slid below 0.6250 in early trading after being somewhat resilient overnight. USDJPY attempting another move to 134.50 with BOJ Governor Kuroda scheduled to appear in the parliament. Crude oil (CLH3 & LCOJ3) gains momentum on China demand and geopolitics Crude oil prices rebounded on sustained hopes of a recovery in China’s activity levels, especially after PBOC’s liquidity injection on Friday. State-owned enterprises have started ramping up purchases, such as Unipec which has purchased about 10mbbl from the UAE for loading in April. WTI futures traded above $77/barrel while Brent was above $84. The geopolitical backdrop added some worries, with fresh risks of sanctions on Russia that could continue to tighten the oil market. Signs of a commodity recovery gather pace: production ramps up in anticipation of demand picking up Fitch Ratings put out a report on China’s reopening driving a modest recovery in oil - this positive sentiment flowed to other commodities. Secondly – as Ole mentioned on Saxo Market Call Podcast, copper inventory has started to roll over in London, Shanghai, and New York - indicating demand for copper and other commodities would theoretically need to pick up. Copper prices (HGA) gained 1.3% on Monday to $4.18 – taking copper back over its 100-day moving average – to its highest levels since January and June last year. Iron ore (SCOA) prices moved up 1.9% to $130.85 – which is its highest level since June last year on supply concerns - with Brazil heading to peak rainy season at month end. Aluminium prices meanwhile are underpinned by a province in China - the Yunnan province – cutting smelter capacity as ordered by the local power grid amid an energy supply shortfall. Lastly - consider keeping an eye on Wheat prices - as the conflict in Ukraine will raise questions about farmers ability to plant wheat int the coming season, meanwhile France - also a key wheat producer – is suffering drought.  Read next: USD/JPY Pair Is Above 134.00, EUR/USD Pair Holds Below 1.07, GBP/USD Pair Managed To Rebound| FXMAG.COM What to consider? President Biden makes a surprise visit to Ukraine – playbook for geopolitical risks Biden made a surprise visit to Ukraine and met with Volodymyr Zelenskiy, declaring "unwavering support" as Russia's invasion nears the one-year mark. These visits come after Blinken’s rhetoric that the US has information that China is supplying arms to Russia, and VP Kamala Harris’ claim to charge Russia with war crimes against humanity. China is however trying to convince that it remains neutral, and State Councilor Wang Yi is set to visit Moscow in the coming days after floating fresh peace proposal to end the conflict. In Saxo’s view, the playbook for the week should be risk-off given the possibility of any ugly turns in geopolitics. That would mean long JPY, long commodities, long Defense stocks and short risky assets. Once we are past this week with hopefully no further escalations, focus will shift back to inflation concerns and driving Fed rate cut expectations further into 2024. Consider watching the US dollar strength, and Saxo’s Défense basket amid geopolitical tensions rising Amid the geopolitical risks rising - consider watching likely US dollar strength play out in key currency pairs. In equities – consider watching Saxo’s Defence basket. Over the last two days we’ve seen geopolitical tensions escalate. Biden made a surprise visit to Ukraine declaring ‘unwavering support’ and pledging $500 million in new aid. Meanwhile, EU diplomats are looking at pooling 4 billion Euros of ammunition purchases for Ukraine as early as next month, with EU states pushing to ramp up their ability to hit back against those helping Russia circumvent sanctions. Also – today Putin is also expected to give a state of the nation address - potentially focusing on escalations - he also may note that 500k Russian troops have been mobilised. Meanwhile China threw cold water on allegations that it is going to help arm Russia. And finally, the White House is reportedly mulling over increasing sanctions on Russia. We continue to watch this closely - and encourage investors and traders to exercise caution. Food security issues pick up; with fertilizers being used as a weapon A Russian cargo ship held back in the Dutch port of Rotterdam for months- has been escorted out by the United Nations’ World Food Program chartered ship. The Russian cargo, bound for Malawi – contains 20,000 metric tons of Russian fertilizer. And the fact that Russia was allegedly holding back fertilizers - meant the nations food security was at risk, with fertilizers essential in growing crops. About 20% of Malawi’s population is already expected to face acute food insecurity during the “lean season” to March. Moreover it’s not just the lack of supply that’s the issue- costs are too. Malawi is one of 48 nations in Africa, Asia and Latin America identified by the IMF as being most at risk of higher food and fertilizer costs after Russia invaded Ukraine. China and Russia have a foothold of the industry - being the world’s largest producers of fertilizers - including nitrogen, phosphates and potash. These issues in Rotterdam highlight that food security can be used as weapon - and we are concerned should geopolitical tensions escalate - which would pressure food prices higher. Large fertilizer companies to watch include CF industries, Mosaic, Nutrien. Refer to Saxo’s Commodity basket for more. Downshift in RBNZ’s rate hike trajectory could signal NZD weakness The Reserve Bank of New Zealand meets on Wednesday, 22 February and consensus expects a return to 50bps rate hikes after a 75bps in November when even the possibility of a 100bps was debated. Economic data has been soft since the last meeting, with 2-year inflation expectations easing and unemployment rate seeing a slight uptick. However, Cyclone Gabrielle has brought fresh risks of inflation pressures in the short-term. Calls for no rate hikes have also picked up although finmin Robertson was out calling for RBNZ having a responsibility to address inflation yesterday. Still, risks of further kiwi weakness loom large after NZD has weakened 1.7% against the USD so far this year. If RBNZ signals that the peak for the current rate hike cycle is near, the 38.2% retracement of NZDUSD uptrend from the October low at 0.6146 could be challenged. The cost of sea freight is back to pre-Covid levels This is positive news on the inflation front. The cost of sea freight is now back to pre-Covid levels. The drop in prices is both explained by cyclical (1) and structural (2) factors. The U.S. consumer is very resilient, as shown by the recent release of the U.S. retail sales. But this is not the case in other countries. The rise in the cost of living is causing a drop in global consumption (1). In addition, the sea freight market is facing a surplus of containers. And this will get worse in the months to come. The number of container ships under construction represents nearly 30 % of the fleet that is currently operational. That’s three times more than normal. Companies in the sector have misjudged the evolution of global demand in the post-Covid period. Wrongly, they anticipated it will remain unchanged or it will even increase. The fall in prices is likely to continue all this year and perhaps partially in 2024. The market consensus expects a drop in transported volumes of around 4 % this year.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Markets Today: Geopolitical risks front and centre – 21 February 2023 | Saxo Group (home.saxo)
Biden Declared Unwavering Support For Ukraine, The Reserve Bank Of New Zealand May Go Back To Raising Rates

Biden Declared Unwavering Support For Ukraine, The Reserve Bank Of New Zealand May Go Back To Raising Rates

Saxo Bank Saxo Bank 21.02.2023 10:10
  Summary:  Markets are quiet as we are now on the other side of a three day weekend in the US and as geopolitical tensions and elevated yields provide a nervous backdrop. Hong Kong’s HSI index is pushing on the lowest levels since the first week of the year. The focus in Europe this morning is on preliminary PMI’s for February as the Eurozone bloc’s economy may show signs of slight expansion in the month. What is our trading focus? US equities (US500.I and USNAS100.I): skating on thin ice US equity futures are picking up from Friday’s weak session after yesterday’s US holiday with S&P 500 futures trading lower at around the 4,066 level putting US equities into negative territory for the month. Today’s key event is naturally the annual speech from Putin as it could ignite fresh geopolitical risks as described in yesterday’s equity note. In the US session earnings from Walmart and Home Depot can also impact sentiment as both companies are expected to show weak revenue growth. Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) The Hang Seng Index slipped 1.3% amid signs that Chinese eCommerce platforms are heating up competition for business. JD.com (09618:xhkg) plunged nearly 8% following launching a subsidy campaign to compete with rivals. Alibaba (09988:xhkg), Tencent (00700:xhkg), and Meituan (03690:xhkg) dropped more than 3%. HSBC (00005:xhgk) pared initial gains from an earnings beat and special dividend and slid 1.6%. Meanwhile, Hang Seng Bank (00011:xhkg) rose 2.9% despite an earnings miss due to a jump in loan loss provision for mainland property loans. In mainland China, the CSI300 is flat. Resource names, such as non-ferrous metal, coal, and steel continued to do well, as did the auto stocks. The consumer and AI generated content space declined. FX: Awaiting USD direction after bearish reversal on Friday and long US weekend As US treasury yields rolled over on Friday, the US dollar did likewise and posted a modest bearish reversal on the same day it was trying to break free of resistance. Given the nervous geopolitical backdrop, headline risk is paramount in coming days as we await further resolution in the USD direction. Overnight, hawkish RBA minutes did little for the Aussie, given downbeat markets in Asia,  while the RBNZ meeting tonight could shake the kiwi in either direction, given the uncertainty of the RBNZ’s stance in the wake of disastrous floods in parts of the country, although NZ yields remain near the highs since early January. Crude oil (CLH3 & LCOJ3) fails to hold onto Monday’s gains Brent crude oil futures dropped back to $83 during Asian hours, thereby reversing Monday’s gain in response to fresh dollar strength and concerns about the near-term direction of US interest rates, and despite sustained hopes of a recovery in China’s activity levels, especially following a fresh liquidity injection by the PBoC last Friday. Geopolitical developments remain a worry but so far, the positive impact on prices have been very limited.  Overall, the oil market remains rangebound, in Brent between $80 and $89 and WTI between $73 and $82, as the market weighs the impact of rising demand in China and India versus a potential slowdown elsewhere. Copper receives a boost from BHP outlook Despite the hawkish tilt in Fed expectations which left other metals on the defensive, copper has managed a strong recovery as the key $4 area continued to provide support. BHP, the world’s biggest miner reported its half-year result today, and according to its CEO the company expects domestic demand in China and India “to provide stabilizing counterweights to the ongoing slowdown in global trade and in the economies of the US, Japan and Europe,”. Also supporting prices are continued threats to supply in Peru, Panama and Zambia. . Some support also coming through via rising aluminum prices after smelters in China’s Yunnan province cut capacity due to energy shortages following a period of weak hydro generation. Gold (XAUUSD) focus on dollar and interest rate trajectory Gold traded softer overnight in response to fresh dollar and yield strength following Monday’s US closed session. The market remains on the defensive after recent US economic data strength and hawkish comments from Fed policymakers led to market to adjust higher the trajectory of US Fed funds rate. Apart from a very uncertain geopolitical situation, the market will be focusing on minutes from the Fed’s last meeting on Wednesday as well as personal spending on Friday. Holdings in ETF’s meanwhile dropped again on Monday with the 3.1 tons reduction to 2882 tons, a three-year low, bringing this year's net sales to 34 tons or 1.1 million ounces. In other words, gold for now needs continued demand from central banks to provide a floor under the market. Support at $1820 followed by $1790. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) after Friday reversal. 2-year auction today US Treasury yields reversed sharply on Friday after posting new local highs. A heavy schedule of auctions lies ahead this week, starting with an auction of 2-year notes today after the benchmark traded within 10 basis points of the 15-year high of 4.80% posted last November. A 5-year auction will follow tomorrow and 7-year on Thursday.  The 10-year benchmark yield tested above the December high of 3.90% on Friday, but trades 3.85% this morning. The US data highlight this week is Friday’s January PCE inflation data. What is going on? The cost of sea freight is back to pre-Covid levels The cost of sea freight is now back to pre-Covid levels, which is positive news on the inflation front. The drop in prices is both explained by cyclical (1) and structural (2) factors. The U.S. consumer is very resilient, as shown by the recent release of the U.S. retail sales. But this is not the case in other countries. The rise in the cost of living is causing a drop in global consumption (1). In addition, the sea freight market is facing a surplus of containers. And this will get worse in the months to come. The number of container ships under construction represents nearly 30 % of the fleet that is currently operational. That’s three times more than normal. Companies in the sector have misjudged the evolution of global demand in the post-Covid period. Wrongly, they anticipated it would remain unchanged or it would even increase. The fall in prices is likely to continue all this year and perhaps partially in 2024. The market consensus expects a drop in transported volumes of around 4 % this year. Downshift in RBNZ’s rate hike trajectory could signal NZD weakness The Reserve Bank of New Zealand meets on Wednesday, 22 February and consensus expects a return to 50bps rate hikes after a 75bps in November when even the possibility of a 100bps was debated. Economic data has been soft since the last meeting, with 2-year inflation expectations easing and unemployment rate seeing a slight uptick. However, Cyclone Gabrielle has brought fresh risks of inflation pressures in the short-term. Calls for no rate hikes have also picked up although Finance Minister Robertson was out calling for the RBNZ to address inflation yesterday. Still, risks of further kiwi weakness loom large after NZD has weakened 1.7% against the USD so far this year. If RBNZ signals that the peak for the current rate hike cycle is near, the 38.2% retracement of NZDUSD uptrend from the October low at 0.6146 could be challenged. AUDNZD broke above 1.1030 and its 200-day moving average yesterday, posting a new 3-month high. BHP guides for a pick up in metals and readies its balance sheet to become a copper giant BHP - the world’s biggest miner saw profits in the six months to December 2022 decline by more than expected but sees the ongoing price recovery extend into the second half year and beyond as it sees demand picking up in China, but also in India - and this offsetting the slowdown in trade with the US, Japan and Europe. All in all, it also guided for mining production costs to be markedly higher than before the Covid-19 pandemic – amid higher energy, labour and other input costs. Its HY results were impacted by lower realised prices in copper, iron ore and coal across the last six months of 2022. Wet weather also impacted on its coal business’ production and pushed up unit costs – and there were difficulties in securing enough staff. This resulted in underlying attributable profit falling to $6.6 billion - vs the $6.96 billion expected by consensus (from continuing operations). BHP’s interim dividend was trimmed to $0.90 per share – down from last year’s record $1.50 per share. Still BHP’s payout ratio is 69% and that’s BHP’s 5th highest dividend on record. We also believe the lower dividend payout reflects that BHP is readying itself for the $9.6 billion takeover of Oz Minerals which, if approved, will occur in May. What are we watching next? Putin speech today. China said to hope broker peace deal over Ukraine after US warns China on lethal aid to Russia Biden made a surprise visit to Ukraine  yesterday and met with President Volodymyr Zelenskiy, declaring "unwavering support" as Russia's invasion nears the one-year mark. China is said to be promoting a peace plan for Ukraine as China’s top diplomat will arrive in Moscow today, but German and US authorities are already declaring themselves sceptical on China’s intentions and accuse it of taking sides. European source familiar with the plan (cited by Bloomberg, the officials asked not to be identified) said it would likely include a call for a cease-fire and the cessation of arms deliveries to Ukraine. Putin is set to make a speech today in Moscow, with added interest given the presence of a top Chinese official. In Saxo’s view, the playbook for the week should be risk-off given the possibility of any ugly turns in geopolitics. That would mean long JPY and USD, long commodities, long defense stocks and lowered exposure or hedging of risky assets. Once we are past this week with hopefully no further escalations, focus will shift back to inflation concerns and driving Fed rate cut expectations further into 2024. Earnings to watch Today’s US earnings focus is Walmart and Home Depot with analysts expecting Walmart to report revenue growth of 4.4% y/y and EPS $1.52 down 1% y/y as volume of goods sold is expected to be under pressure. Analysts expect Home Depot to report revenue growth of 0.6% y/y and EPS of $3.27 up 1.8% y/y reflecting lower volume across US home improvement industry. Tuesday: Teck Resources, Gapgemini, Engie, HSBC, Walmart, Home Depot, Medtronic, Palo Alto Networks Wednesday: Rio Tinto, Genmab, Danone, Lloyds Banking Group, Iberdrola, Nvidia, TJX, Stellantis, Baidu, eBay Thursday: EssilorLuxottica, Deutsche Telekom, Munich Re, Kuaishou Technology, Eni, Anglo American, BAE Systems Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Flash Feb. Manufacturing and Services PMI 0930 – UK Flash Feb. Manufacturing and Services PMI 1000 – Germany Feb. ZEW Survey 1330 – Canada Dec. Retail Sales 1330 – Canada Jan. CPI 1445 – US Flash Feb. Manufacturing and Services PMI 1500 – US Jan. Existing Home Sales 1800 – US 2-year Auction 0030 – Australia Q4 Wage Price Index 0100 – RBNZ Official Cash Rate Source: Financial Markets Today: Quick Take – February 21, 2023 | Saxo Group (home.saxo)
Nasdaq 100 posted a new one year high. S&P 500 ended the day unchanged

Chinese equities rally, Meta announced a plan to roll out paid subscriptions

Swissquote Bank Swissquote Bank 21.02.2023 10:30
Chinese equities were boosted on Monday by a report from Goldman Sachs predicting that the MSCI China index could rally as much as 24% by the end of the year. BHP And mining stocks hope they are right because BHP announced a 32% drop in half-year profit as a result of rising costs and soft commodity prices, mostly hit by subdued activity in China. However, rising commodity prices is a scenario of catastrophe for global inflation, and the central bank expectations. The RBA The latest minutes from the Reserve Bank of Australia (RBA) showed that the Australian policymakers considered a 50bp hike at the latest meeting, before agreeing on a 25bp hike. Oil For now, though, oil bears defy all news of Chinese reopening. Yesterday’s rebound in US crude remained capped into the 50-DMA, a touch below the $78pb mark. Meta In the corporate space, Facebook’s Meta announced a plan to roll out paid subscriptions to compensate for the revenue loss from advertisements – which topped $10 billion last year after Apple changed its security settings. Read next: USD/JPY Pair Is Above 134.00, EUR/USD Pair Holds Below 1.07, GBP/USD Pair Managed To Rebound| FXMAG.COM The latter could give some boost to the revenues in the short run but it’s certainly a sign that Facebook is running out of ideas, and that’s not good for the longer-run perspective! Watch the full episode to find out more! 0:00 Intro 0:42 Chinese equities rally as Goldman predicts 24% rally this year 3:16 BHP hopes Chinese reopening will boost energy, commodity prices 4:02 But higher energy prices is bad news for most stocks 4:22 … and for central bank doves! 5:26 BoFA & JP Morgan bet against European stocks 6:38 Meta is like watching trainwreck in slow motion Ipek Ozkardeskaya  Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Facebook #Instagram #Meta #verified #account #China #stock #rally #commodity #energy #prices #crude #oil #BHP #earnings #inflation #RBA #Fed #expectations #AUD #USD #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Oil remains choppy, gold is edging lower once more

Craig Erlam Craig Erlam 21.02.2023 14:14
Choppy trading continues Oil remains choppy this week with Brent and WTI slipping around 1% in early trade on Tuesday, wiping out similar gains at the start of the week. There is undoubtedly more optimism around the Chinese economy which will stimulate more demand this year but at the same time, sentiment is cooling on the global economy as interest rates are projected to go a little higher than previously anticipated. This was always likely to be a quarter of big swings in sentiment as it was too much to ask for the inflation data to simply retreat back without any setbacks along the way. That naturally has consequences for economic expectations and therefore oil demand which is why we could see the market remain choppy over the rest of this quarter and into next. Correction losing momentum Gold is edging lower once more today following some choppy trade at the start of the week. While bulls may be encouraged by Friday’s rebound, others may take a little more convincing. That it came around notable support, in the $1,820 region, and on weaker momentum could be the biggest sign that the corrective move is seeing pushback. That isn’t to say it’s fully run its course and we could see the yellow metal pare losses before the correction continues but near-term prospects are looking a little more promising. The first test in any recovery may come around $1,860, with $1,890-$1,900 then being a major test of resistance. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Russia will suspend participation with the new START treaty and that they would test nuclear weapons if the US does it first

Russia will suspend participation with the new START treaty and that they would test nuclear weapons if the US does it first

Ed Moya Ed Moya 21.02.2023 14:25
US stocks are declining after retail earnings suggest margin worries are here and it will only get worse as the Fed is likely to deliver more tightening into early summer. Treasury yields are surging here as a tight labor market will force the Fed to do more tightening.  Retailer earnings are suggesting it is going to be a tough year ahead and that should keep the pressure on stocks.  Geopolitics Russia’s Vladimir Putin’s State of the Union speech suspended participation in a key nuclear arms pact with the US.  Putin said, Russia will suspend participation with the new START treaty and that they would test nuclear weapons if the US does it first. Putin’s speech comes three days before the one-year mark of the Russian invasion of Ukraine. He added that Russia will push farther if longer-range arms are supplied. Ukrainian officials have voiced their concerns that they expect the Russians to increase their offensive.  China China is also pushing back against calls that say Taiwan is next.  China Foreign Minister Qin Gang said, “We urge certain countries to immediately stop fueling the fire, stop shifting blame to China and stop touting Ukraine today, Taiwan tomorrow.” China’s economic outlook if fragile right now and they are trying to avoid any major obstacles as their reopening from COVID continues. Home Depot Home Depot shares tumbled after a tight labor market is making them invest an additional ~$1 billion in annualized compensation for frontline, hourly associates. Wall Street initially could only focus on the added expenses and not the mixed earnings and dividend boost.  While most companies are announcing cost-saving measures, Home Depot is in position that will require them to spend more.  The EPS beat of 3 cents and slight revenue miss of $35.83 billion was accompanied by comparable sales of -0.3%, not as bad as the consensus estimate of -0.87%.  The world’s largest home improvement retailer is going to have a margin problem over the couple of quarters and that could get uglier if the housing market does not bottom out soon.  Walmart Walmart shares tumbled despite a top and bottom line beat as their EPS guidance fell short of the analyst estimates.  Walmart’s earnings slides noted that “general merchandise sales reflected softness in discretionary categories including toys, electronics, home, and apparel.” Walmart’s poor outlook after a strong holiday season is having many investors abandon ship here as rough waters are clearly ahead.  Walmart had the largest sales volume in its history in December. Oil Crude prices are struggling as global growth concerns return after soft European manufacturing activity data is accompanied with a surge in global bond yields. Central banks globally are about to take policy into even more restrictive levels and that is countering China’s reopening momentum. WTI crude is finding a home between the mid-$70s and the $80 a barrel level.      Read next: The Pound Gained After The Publication Of PMI Reports, Euro Is Below 1.07, USD/JPY Pair Is Above 134.50| FXMAG.COM Gold/FX Gold prices are weakening as investors await the Fed Minutes that could confirm the bank has more work to do. The dollar is getting a bid here as more traders start to price in 75 basis points in more tightening by the Fed. If the bond market selloff gets uglier, gold might soften more, but it probably won’t drop as much as equities.  Rising geopolitical risks will likely drive some flows towards bullion and Wall Street is getting close to pricing in peak Fed tightening.  Bitcoin Bitcoin traders appear to be ignoring a laundry list of bearish macro drivers that include; a return of the stronger dollar as the bond market rally returns, downward pressure on stocks as investors price in more Fed rate hikes, and on worries that stablecoin regulation could put further pressure on cryptos.  It appears that Bitcoin’s correlation with most risky assets is changing.  The crypto winter that saw prices collapse from $68,911 to $15,485 appears to have priced in enough of the bad news.  Bitcoin is still respecting the key $25,500 level, but a break could open the door for momentum traders to target a bigger move higher. Initial resistance would come from the $28,000 level, but most traders may have their eyes for the psychological $30,000 level.  This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
How the EU's carbon border tax will affect the global metals trade

The Commodities Feed: Carbon strength

ING Economics ING Economics 22.02.2023 08:59
European carbon allowances hit a record high yesterday on the back of expectations of stronger demand. The oil market sold off, with a growing view that the US Fed’s hiking cycle still has some way to go Energy - EU carbon breaks EUR100/t Oil prices came under further pressure yesterday, as part of a broader risk-off move. Markets continue to come to terms with expectations of a more hawkish Fed, following a raft of economic data suggesting the Fed still has quite a bit of work to do. These headwinds, combined with a fairly comfortable oil balance, mean that the oil market will likely remain rangebound. However, we see the market breaking out of this range later in the year as the oil market significantly tightens. Crude oil loadings at the CPC terminal on the Black Sea Coast have reportedly been halted since 19 February due to bad weather, and this suspension still appears to be in place. The longer the halt more likely that we see storage at the terminal full up, which would have an impact on Kazakh flows along the pipeline and ultimately output. The CPC terminal has a capacity in the region of 1.6MMbbls/d. European carbon prices continued their positive run yesterday and rose to a record high of above €100/t following expectations of a tighter market outlook. EU emission prices have increased by around 20% so far this year, after the EU agreed to tighten the rules regarding carbon credit allowances late last year. More recently, the easing of energy prices in the region has bolstered sentiment for a demand rebound from the power and industrial sector, which would lead to increased demand for carbon allowances. Metals - Copper on-warrant stocks decline The latest LME data shows that total on-warrant stocks for copper saw outflows of 4,800 tonnes to stand at 47,000 tonnes as of yesterday. The outflows were reported from warehouses in Germany and the Netherlands. Cancelled warrants for copper rose by 4,525 tonnes for a second consecutive day to 18,225 tonnes as of yesterday, signalling potential further outflows. Teck Resources reported that its copper production stood at 65kt in 4Q22, slightly lower than estimates of 66.15kt. Cumulative output totalled 270kt in 2022, a decline of 5.9% YoY. For 2023, the company maintains its copper production guidance of 390kt-445kt. Among other metals, zinc in concentrate production stood at 120kt in 4Q22, while full-year output stood at 553kt (+9.9% YoY). 2023 production guidance was left unchanged at 645-685kt for the year. Agriculture – India to sell more wheat The Indian Food ministry reports that the government has asked the state-run Food Corporations to unload another 2mt of wheat in the open market to ease the impact of rising grain and flour prices which hit a record high last month. This will be in addition to the sale of 3mt of grains announced by the government last month in an attempt to lower prices. Read this article on THINK TagsWheat Oil EUA Copper Carbon Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Further oil supply disruptions

Further Downside Movement Of WTI Crude Oil Is Expected

TeleTrade Comments TeleTrade Comments 22.02.2023 09:34
WTI takes offers to renew intraday low, extends previous day’s fall. Clear U-turn from 100-SMA, downbeat MACD signals keep Oil bears hopeful. Buyers need validation from a multi-day-old downward-sloping resistance line. WTI crude oil takes offers to extend the previous day’s losses to $76.00, refreshing the intraday low amid early Wednesday in Europe. In doing so, the black gold breaks a two-week-long ascending trend line, currently around $76.10. The commodity’s latest weakness could be linked to its early-week retreat from the 100-bar Simple Moving Average (SMA). Adding strength to the Oil’s pullback moves could be the bearish MACD signals. That said, WTI bears are well-set to poke the $75.00 round figure before approaching the monthly low surrounding $72.50. It should be noted, however, that the Oil’s weakness past $72.50 could make it vulnerable to plunge toward the previous monthly low, also the lowest level since December 2021, near $70.30. In a case where the energy benchmark remains bearish past $70.30, the $70.00 round figure appears crucial for the Oil bears to watch as it holds the key to further downside targeting the late 2021 swing low around $66.10. Meanwhile, recovery moves need validation from the 100-bar SMA, close to $77.50 by the press time. Even so, a convergence of the 61.8% Fibonacci retracement level of the commodity’s late January to early February fall and a downward-sloping resistance line from January 27, around $78.80-90, appears a tough nut to crack for the bulls. Also acting as an upside filter is the $79.00 and multiple stops around the $80.00 psychological magnet. WTI: Four-hour chart Trend: Further downside expected
Hungary's Economic Outlook: Anticipating Positive Second Quarter GDP Growth

Domino’s Pizza shares in gapped down in Australia, Putin vowed to press on with his faltering invasion of Ukraine

Saxo Bank Saxo Bank 22.02.2023 09:56
Summary:  Volatility charged higher as economic data continued to push for an upward repricing of the Fed path. US yields surged to fresh YTD highs, pushing S&P500 to close below 4,000 and NASDAQ 100 approaching 12,000. Fed’s terminal rate is now priced in at 5.37%, and dollar pushed higher with geopolitical concerns also still in play. Consumer stock earnings from Walmart and Home Depot sent margin pressure warnings. FOMC minutes will be dated, but may provide cues on what to expect from the March dot plot.   What’s happening in markets? The major US indices, the Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) fell ~2% while bond yields rose to new 2023 highs The risk off tone was set by geopolitical tensions picking up, as well as economic prints showing the US services and manufacturing PMIs improved more than expected – with swaps now projecting the Fed can keep pushing rates higher — with the market indicating 25-basis-point hikes are coming at the March, May and June meetings.  Sentiment was also weighed by downbeat outlooks from consumer spending bellwethers – Walmart (WMT) and Home Depot (HD). All while investors await Wednesday's Fed minutes release. Also ahead are earnings results from mining giant Rio Tinto (RIO), tourism and casino giant Ceazers Entertainment (CZR) and smartwatch and gadget business Garmin (GRMN). The three major indices shed at least 2%, with the Dow erasing 2023’s gains. On the weekly chart - the S&P500’s fell below its 50-day moving average –indicating there are more sellers than buyers – while also possibly indicating the market is likely to pull back to a cycle low. Pressuring sentiment - bond yields hit new 2023 cycle highs - with the 10-year note up 14 bps, while the dollar strengthened. Hong Kong’s Hang Seng Index (HIG3) fell amid intensifying competition among China’s eCommerce platforms Hong Kong stocks slipped on Tuesday amid signs that Chinese eCommerce platforms are heating up in competition for business. JD.com (09618:xhkg) plunged 8.5% following the eCommerce giant launching an RMB10 billion subsidy campaign to compete with rival Pinduoduo (PDD:xnas). Meituan (03690:xhkg) dropped more than 4.1% after the mainland food delivery giant announced hiring had started in Hong Kong, paying as much as HKD35,000 a month for delivery riders to prepare for an expansion to Hong Kong. Alibaba (09988:xhkg) and Tencent (00700:xhkg) also fell over 4%. HSBC (00005:xhkg) pared initial gains from an earning beat and special dividend as investors sold the shares of the banking giant citing concerns about a softer 2023 profit guidance and saw the shares down nearly 2% during Hong Kong trading hours. Meanwhile, Hang Seng Bank (00011:xhkg) rose 3.3% despite an earnings miss due to a jump in loan loss provision for mainland property loans. In mainland China, the CSI300 edged up 0.3%. Non-ferrous metals, coal, steel, and auto gained while beauty care, media, food and beverage, and retailing declined. Australia equities (ASXSP200.I) also seem pressured by the RBA’s fresh hawkishness The Australian share market has fallen about 3.5% from its new cycle high that it hit on Feb 3. Pressure on the ASX200 comes after the RBA indicated it has more work to do to keep inflation and wage pressure in order. The ASX200 now appears to be pulling back, with Saxo’s Technical Analyst reinforcing the technical indicators suggest the ASX200 could drop further. However, if the ASX200 closes above 7,477, the uptrend can resume. Today, Origin Energy (ORG) is the best performer in large caps, up 13% after receiving a revised takeover offer from the Brookfield Asset Management-led group following months of due diligence. Meanwhile Domino’s (DMP) is the worst performer down 19% on reporting weaker than expected half year results. Meanwhile, BHP (BHP) shares are up slighted after reporting a stronger outlook yesterday. For more on the world’s biggest mining company, and BHP’s expectations for stronger fundamentals this and next year click here – also note BHP remains in a technical uptrend. Ahead are earnings from Rio Tinto (RIO). FX: Yields and risk sentiment in play The US dollar was modestly higher as US 10-year yields reached a YTD high and in close sight of the key 4% mark, closing at 3.95%. Higher-than-expected PMIs in the US further faded recession concerns, bringing the market expectations of Fed terminal rate to a new high of 5.37%. USD gains were more restrained in that view, which also got a push higher from escalating geopolitical tensions as Putin suspended the Nuke deal with the US. GBP was the outperformer after very strong UK Flash PMIs, which suggested falling near-term recession concerns and pushed higher the odds of a 25bps rate hike from the BOE in March. GBPUSD touched highs of 1.2147 from 1.1987. AUDUSD was hurt by falling risk sentiment despite hawkish RBA minutes out yesterday and fell to 0.6848. AUDNZD still held up above 1.10 with the RBNZ expected to take a dovish turn today. USDJPY again testing 135 with FOMC minutes on tap, while EURUSD unable to sustainably break below 1.0650. Crude oil (CLH3 & LCOJ3) still pressured lower Crude oil prices dipped further with dollar strength in play as the expectations of rate hikes from the Fed continued to ramp up. WTI crude traded close to $76/barrel while Brent was below $83. Geopolitical concerns still running high this week, potentially providing a floor to oil prices. Meanwhile, an expected pickup in Chinese demand is also supporting. Overall, the oil market remains rangebound, in Brent between $80 and $89 and WTI between $73 and $82, as the market weighs the impact of rising demand in China and India versus a potential slowdown elsewhere.   What to consider? Putin suspends Nuclear pact with the US, threatens to push war in Ukraine Putin, in his State of the Nation address, announced a suspension of participation in the New START nuclear arms control treaty with the US. This was the last accord limiting their nuclear arsenals. He also vowed to press on with his faltering invasion of Ukraine. This has spurred the next leg of escalation concerns, invoking a response from President Biden in Poland saying that Russia will never win the war and pledging more support to Ukraine. The focus is now on China which needs to back up its peace treaty words with action after being accused of supplying arms to Russia. Senior Chinese diplomat Wang Yi is now visiting Russia and there are reports that President Xi could be visiting Moscow to meet with Putin in April or May. US S&P PMIs topped expectations, fading recession concerns Flash S&P PMIs for the US were better than expected, with services returning to an expansion territory of 50+. Manufacturing PMI also picked up traction coming in higher at 47.8 from 46.9 previously while Services and Composite both rose back into expansionary territory to 50.5 (exp. 47.2, prev. 46.8) and 50.2 (exp. 47.5, prev. 46.8), respectively. The report further pointed to fading recession concerns, while input price pressures also eased despite a shaper rise in output prices. Australian wage growth and construction data to keep the RBA on its hiking path for now With the RBA now being more hawkish and data dependent, today’s wage growth data and construction work done seemingly validate Australia’s central Bank, can keep on its hiking path for now. Australian wage growth grew 3.3% YoY, up from the revised higher read of 3.2% YoY prior. Despite wage growth growing less than 3.5% expected  - construction work done began to roll over  - falling 0.4% in Q4 – marking a slight fall the prior quarter’s revised jump of 3.7%. So despite both reads being softer than expected – we still need more data to validate core inflation could slow – especially as it’s still well above the RBA’s target. Money markets softened to imply a peak cash rate of 4.2% in August 2023 (down from 4.3%). The next data the RBA will look at - will be next week’s release of retail sales, private sector credit and net exports of GPD. More green shoots in the EZ data but… The EZ February PMIs are quite good at first glance. The French PMI composite was out at 51.6 versus prior 49.1 – this is a 7-month high and the first expansion above the 50 threshold since October 2022. The German PMI composite is in the expansion zone too (at 51.1). But if we dig beneath the surface, this is not as good as expected. In France, the PMI report contains a warning about new export orders: “Overall, this marked a twelfth successive monthly decline in new export orders. Notably, manufacturers recorded the steepest slump since the first COVID-19 lockdown period in the first half of 2020”. We see a similar weakness in German data with a stagnation of exports to non EU countries in January. Basically, in both cases, the order book and the manufacturing side look challenged while the services are the main drivers of the PMI composite. We still expect the eurozone will avoid a recession this year. Overall PMI for the bloc was also pushed higher by services sector outperformance which recorded a PMI of 53.0 (vs. 50.8 last month and 51.0 exp) while manufacturing lagged at 48.5 (vs. 48.8 last and 49.3 exp). Baidu (09888:xhkg) announces Q4 results Baidu is scheduled to announce its Q4 results on Wednesday. Investors are prepared for weaker advertising revenues, slower growth in its cloud business, and some margin compression. Analysts surveyed by Bloomberg are expecting adjusted EPS to fall by 22.4%. Walmart and Home Depot send margin pressure warnings Despite an earnings beat, Walmart’s profit forecast for this year fell short of analyst estimates and a cautious outlook suggested a lingering impact from the inventory buildup of last year as well as shifting consumer demand patterns in light of the higher inflation and interest rates. Meanwhile, home improvement retailer Home Depot missed expectations and gave a dull operating margin guidance – expecting FY operating margin at ~14.5% due to the extra wage costs, compared to an estimate of 15.1%. The results send a warning for other retailers like Target and Lowe’s due to report on March 1. Pizza chain Domino’s Pizza reports weaker than expected earnings amid inflationary pressures In the Australia session today, Domino’s reported underlying EBIT fell 21% Y/Y to A$113.9 million in the HY - with sales growth coming in weaker than expected and inflation also affecting earnings. Its European operations faced significant geopolitical disruptions, and the highest inflation levels across its business- while Asian sales were materially stronger than pre-Covid- but EBIT was lower. All in all, Domino’s financial metrics were down Y/Y, except its store count rose 16% Y/Y to 3,736 stores. The company also cut its half year dividend to A$0.674 per share. As for its - outlook that also disappointed - as customer counts have not met expectations since December - especially in Europe and Asia  - which is lowering store profitability. New store openings will continue to grow in FY23 - but could be below Domino’s medium-term outlook for +8-10% growth. This implies there is less franchisee demand to open stores. That said, management is confident it will return to positive same store sales growth once customer demand increases. Domino’s Pizza (DMP) shares in gapped down in Australia , erasing 2023’s gains – taking DMP to A$57.97 – November 2022 levels. We will also be watching Domino’s in the US – DPZ, as well the London listed business – DOM. The Chinese Communist Party’s Central Committee to hold a plenary session next week The Chinese Communist Party’s Politburo held a meeting on Tuesday and announced after the meeting to hold a Central Committee plenary session from Feb 26 to 28 to decide on key issues in preparation for the “two sessions” meeting of the government scheduled t commence on March 4. FOMC minutes on tap today The minutes of the February 1st Fed meeting will be out later today (3am SGT), and will be key for the cues on inflation expectations and terminal rate forecasts as a gauge for what to expect in the dot plot in March. Still, the hotter than expected inflation print for January (both CPI and PPI) were released after the FOMC meeting and that has shifted the narrative to a hawkish. The criteria for a pause may be on the lookout, and whether that is any push to driving the market’s rate cut expectations further out.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Markets Today: US yields at fresh highs; FOMC minutes ahead – 22 February 2023 | Saxo Group (home.saxo)
The RBA’s aggressive rate tightening cycle will be continued

Australian Wage Growth Rose, UK February PMI Reports Suggested Solid Expansion In The UK’s Services Sector

Saxo Bank Saxo Bank 22.02.2023 10:13
Summary:  Equity markets took it on the chin yesterday, dropping to a new 1-month low on the close and below the bottled-up range of the last few weeks as a fresh lift in the entire US yield curve weighed on sentiment. The S&P 500 Index closed just below the psychologically pivotal 4,000 level and the 200-day moving average lies a percent and a half lower. European equity markets have yet to show signs of contagion, but yields are steadily applying pressure there as well. What is our trading focus? US equities (US500.I and USNAS100.I): wage pressures and inflation pressures haunting again US equity futures moved big yesterday as the US 10-year yield hit 3.95%, the highest level since November, with S&P 500 futures declining 2% closing at 4,005 putting the 4,000 level into as play as we have highlighted for week. If S&P 500 futures decline below the 4,000 level, then the 200-day moving average at the 3,981 level will quickly be tested. Home Depot earnings release was received very negatively by the market sending its shares down 7% as the home improvement retailer indicates that the wage pressures are still excessive. This could accelerate the margin compression theme in equities when the Q1 earnings are out in April and May. FX: USD rebounds as US treasury yields lift to new highs The US dollar was modestly higher as US 10-year yields reached a YTD high and in close sight of the key 4% mark, closing at 3.95%. Higher-than-expected preliminary February PMIs in the US further faded recession concerns, bringing the market expectations of Fed terminal rate to a new high of 5.37%. The USD has also perhaps founds support from escalating geopolitical tensions as Putin suspended the Nuke deal with the US. GBP was the outperformer after very strong UK Flash Feb. PMIs (more belowø). GBPUSD touched highs of 1.2147 from 1.1987 before pulling back. AUDUSD was hurt by falling risk sentiment despite hawkish RBA minutes out yesterday and fell toward the range lows in the low 0.6800’s overnight, with the 200-day moving average a bit lower still. AUDNZD reversed sharply lower on the RBNZ’s surprisingly hawkish turn (more below). FOMC Minutes tonight in focus for the US dollar. Crude oil (CLJ3 & LCOJ3) still pressured lower Crude oil prices dipped further with dollar strength in play as the expectations of rate hikes from the Fed continued to ramp up. WTI crude traded close to $76/barrel while Brent was below $83. Geopolitical concerns still running high this week, potentially providing a floor to oil prices. Overall, the oil market remains rangebound, in Brent between $80 and $89 and WTI between $73 and $82, as the market weighs the impact of rising demand in China and India versus a potential slowdown elsewhere. Gold (XAUUSD) soft as maximum pressure applied by USD and yields Gold is slightly softer but holding up reasonably well, given the pressure from the stronger US dollar and US treasury yields rising to new highs for the cycle. The support zone below the recent lows is critical for the status of the trend in gold, as 1,800-1,810 was pivotal on the way up, and the 200-day moving average looms below at 1,776. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) lift to new cycle high US Treasury yields lifted to new cycle highs all along the curve as the Fed is priced to reach a terminal rate near 5.35% this year now (so effectively three further 25 basis point rate hikes expected from the Fed this year. A two-year auction was middle of the range in terms of bidding metrics, but well below the strong prior auction. The 10-year yield nudged higher to 3.95% yesterday, a new high since November of last year. A 5-year T-note auction is up today, and 7-year auction tomorrow. What is going on? Strong UK Services PMI not cooperating with the recession playbook The preliminary UK February PMI’s were released yesterday and suggest solid expansion in the UK’s Services sector, sparking a strong 17 basis-point surge in 2-year UK rates on the implications for further Bank of England tightening. The February reading for the services sector was 53.3 versus 49.2 expected and 48.7 in January, while the Manufacturing PMI reading was 49.2 versus 47.5 expected and 47.0 in January. More green shorts in the EZ data but… The EZ February PMIs are quite good at first glance. The French PMI composite was out at 51.6 versus prior 49.1 – this is a 7-month high and the first expansion above the 50 thresholds since October 2022. The German PMI composite is in the expansion zone too (at 51.1). But if we dig beneath the surface, this is not as good as expected. In France, the PMI report contains a warning about new export orders: “Overall, this marked a twelfth successive monthly decline in new export orders. Notably, manufacturers recorded the steepest slump since the first COVID-19 lockdown period in the first half of 2020”. We see a similar weakness in German data with a stagnation of exports to non-EU countries in January. Basically, in both cases, the order book and the manufacturing side look challenged while the services are the main drivers of the PMI composite. We still expect the eurozone will avoid a recession this year. Earnings recap: Walmart, Home Depot Despite beating against earnings estimates, Walmart’s profit forecast for this year fell short of analyst estimates and a cautious outlook suggested a lingering impact from the inventory build-up of last year as well as shifting consumer demand patterns considering the higher inflation and interest rates. Walmart shares recovered after gapping lower and closed higher for the session. It was a different story for home improvement retailer Home Depot, which missed expectations and gave a dull operating margin guidance – expecting FY operating margin at around 14.5% due to the extra wage costs, compared to an estimate of 15.1%. Home Depot shares plunge to close almost 7% lower and below the 200-day moving average. The results send a warning for other retailers like Target and Lowe’s due to report on March 1. Domino’s Pizza Enterprises crushed 23% in Australia after reporting earnings Dominos Pizza Enterprises is the Australian based franchise owner of Domino’s Pizza in Australia, New Zealand, Japan, Taiwan and several European countries. Its EBIT fell 21% Y/Y to A$113.9 million in the HY, with sales growth coming in weaker than expected as customers turned away from its higher prices. European operations faced significant geopolitical disruptions and were hit by the highest inflation levels across its business. Asian sales were materially stronger than pre-Covid - but its EBIT was lower. Guidance was weak and it cut its half-year dividend to A$0.674 per share. Domino’s Pizza shares fell 23% to A$54.71, which erased 2023’s gains. Australian wage growth comes in below expectations, AUD weaker Australian wage growth rose 3.3% YoY in Q4, slightly below the 3.5% expected and seen raising few new alarm bells at the RBA after evidence of a more precautionary hawkish shift recently. Construction data was weak in the quarter at –0.4% QoQ vs. +1.5% expected, but the Q3 data was revised up to 3.7% from 2.2%. Australian 2-year yields dropped 10 basis points, with money markets pricing a peak rate near 4.2% in August 2023. AUD weakened overnight, reversing back below 1.1000 in AUDNZD terms on a hawkish RBNZ meeting, while AUDUSD is heavy ahead of the range lows near 0.6800, with the 200-day moving average looming slightly lower still.  The next data the RBA will look at - will be next week’s release of retail sales, private sector credit and net exports of GDP.  RBNZ surprises hawkish, reaffirms expected terminal rate of 5.5% The RBNZ hiked the rate 50 basis points to take the policy rate to 4.75% and reaffirmed a forecast for the peak policy rate to reach 5.5%,  if over a longer period than previously. With recent disastrous floods raising expectations that the RBNZ might go with a smaller hike or no hike at all, this decision read hawkish and NZD sjumped versus the AUD and was somewhat resilient against the firmer US dollar. What are we watching next? FOMC minutes on tap today The minutes of the February 1st Fed meeting will be out later today (3am SGT), and will be key for the cues on inflation expectations and terminal rate forecasts as a gauge for what to expect in the dot plot in March. Still, the hotter than expected inflation print for January (both CPI and PPI) were released after the FOMC meeting and that has shifted the narrative to a hawkish. The criteria for a pause may be on the lookout, and whether that is any push to driving the market’s rate cut expectations further out. Earnings to watch Today’s key earnings release is Nvidia reporting FY23 Q4 earnings (ending 31 Jan) after the US market close with analysts expecting revenue of $6bn down 21% y/y and EPS of $0.81 down 32% y/y. With cryptocurrencies rallying lately there might be an upside surprise in the outlook as crypto mining activity might have increased the demand for GPUs. Wednesday: Rio Tinto, Genmab, Danone, Lloyds Banking Group, Iberdrola, Nvidia, TJX, Stellantis, Baidu, eBay Thursday: EssilorLuxottica, Deutsche Telekom, Munich Re, Kuaishou Technology, Eni, Anglo American, BAE Systems Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) 0800 – Sweden Riksbank Governor Thedeen to speak 0900 – Germany Feb. IFO Business Climate Survey 1800 – US 5-year US T-note auction 1900 – US FOMC Minutes 1910 – New Zealand Governor before parliament committee 2130 – API's Weekly Crude and Fuel Stock Report 2230 – US Fed’s Williams (Voter) to speak on inflation   Source: Financial Markets Today: Quick Take – February 22, 2023 | Saxo Group (home.saxo)
WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

The Commodities Feed: Henry Hub weakness

ING Economics ING Economics 23.02.2023 08:20
Oil came under further pressure yesterday, whilst US inventory numbers released overnight were fairly bearish. Meanwhile, US gas prices weakened further despite progress in the restart of Freeport LNG Energy - US crude builds ICE Brent came under pressure yesterday, settling almost 3% lower on the day and leaving it close to US$80/bbl. Fed minutes would have not helped sentiment, while expectations continue to grow for a more hawkish stance from the Fed in the months ahead. Weakness in the oil market is not restricted to the flat price - the prompt ICE Brent timespread has also weakened, although remaining in backwardation. A weaker timespread also ties in with the view of a better-supplied oil market in the short term API numbers released overnight show that US crude oil inventories increased by 9.9MMbbls, whilst Cushing saw a small increase of around 480Mbbls. Builds were also reported in products, with gasoline and distillate fuel oil stocks increasing by around 890Mbbls and 1.37MMbbls respectively. Overall, the report was fairly bearish, given the crude build and increases across the board. In the US gas market, Henry Hub briefly traded below US$2/MMBtu yesterday, but still managed to settle above this level. Earlier this week Freeport LNG received regulatory approval to restart commercial operations at two of its three liquefaction trains. Approval for the restart of the final train is still needed and production at the plant is expected to slowly ramp up in the coming weeks. Metals – Nickel surplus The latest monthly update from the International Copper and Study Group shows that the global copper market remained almost balanced in December compared to a supply deficit of 93kt in the previous month. For 2022, the copper market was in a deficit of 376kt, compared to a deficit of 455kt in 2021. Global mine and refined copper production increased by 3.3% YoY and 3.5% YoY respectively, whilst overall apparent refined demand grew by 3% YoY. In nickel, the latest data from the International Nickel and Study Group shows that the global nickel market remained in a supply surplus of 21.9kt in December. For 2022 as a whole, the global nickel market witnessed a surplus of 112.2kt, compared with a deficit of 166.6kt in 2021. World Steel Association data shows that global steel production fell 3.3% YoY to 145.3mt in January. In the EU27, crude steel output dropped 15.2% YoY to 10.3mt with Germany dominating the declines. In Asia, India’s steel output fell marginally by 0.2% YoY to 10.9mt, while Japan and South Korea saw output declines of 6.9% YoY and 9.8% YoY respectively. Chinese steel production grew 2.3% YoY to 79.5mt last month, as domestic mills ramp up production on expectations of stronger demand in 2Q23. Read this article on THINK TagsSteel Oil Nickel Natural gas Henry Hub Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Specs continue to cut oil longs

WTI Crude Oil Stays On The Bear’s Radar

TeleTrade Comments TeleTrade Comments 23.02.2023 08:44
WTI prints mild gains at a fortnight low, snaps two-day downtrend. Previous support line, 50-DMA guards immediate upside while bearish MACD signals lure sellers. RSI conditions suggest limited downside room and highlight seven-week-long horizontal support. WTI crude oil picks up bids to refresh intraday high near $74.40 during early Thursday. In doing so, the black metal prints the first daily gains in three while bouncing off a two-week low. Even so, the energy benchmark remains on the bear’s radar as it jostles with fortnight-old previous support near $74.45-50. Also supporting the downside bias for the Oil price are the bearish MACD signals and the quote’s sustained trading below the 50-DMA, around the $78.00 round figure at the latest. Even if the WTI crosses the $78.00 hurdle, a downward-sloping resistance line from early November 2022, near $78.50 by the press time, could act as the last defense of the Oil sellers. It’s worth noting that multiple tops marked during late January around $82.50-70 and the last December’s high of $83.30 could also challenge the WTI bulls. Meanwhile, the commodity’s fresh downside may aim for the horizontal area comprising multiple lows marked since early January, around $72.65-50. However, the late 2022 lows of $70.30 and the $70.00 round figure could join the nearly oversold RSI (14) conditions to challenge the Oil bears afterward. Overall, WTI stays on the bear’s radar unless it crosses the $83.30 hurdle on a daily closing basis. WTI: Daily chart Trend: Limited downside expected  
Escalated Geopolitical Tensions Are Here To Stay, China And Russia Confirming Stronger Ties

Escalated Geopolitical Tensions Are Here To Stay, China And Russia Confirming Stronger Ties

Saxo Bank Saxo Bank 23.02.2023 09:04
Summary:  Rate hike worries were kept alive by the FOMC minutes, even though these were from the pre-January economic data prints that have been more hawkish than expected. US equities closed mixed as yields stayed near recent highs, while Chinese equities on the backfoot again amid escalating geopolitical tensions. USD strength pressuring AUD despite hawkish RBA. Crude oil prices slumped about 3% and Gold is back to testing key support at $1820 again.   What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) fall for the second session with bond yields remaining at three-month highs US equity markets remain pressured as the US 10-year yields trades in the neighborhood of three-month highs at ~3.92% with the FOMC meeting minutes showing more tightening is on the horizon. The Nasdaq 100 fell for the second day, closing at its lowest level since February 1. The S&P500 also fell the second session - moving under the key 4,000 level, at 3,991, bringing the 200-day moving average just ~1% away - at the 3,941 mark - which will quickly be tested. Intel shares were a laggard down 2.2% after the computer processor giant cut its dividend 66% - declaring a quarterly payout of 12.5 cents a share. This followed on from Intel reporting one of its weakest quarterly earnings forecasts in its history. All in all, this highlights that companies are trying to preserve capital amid margin compression – and that’s been a major theme of earnings seasons and we think it will continue to play out in Q1 earnings reports.  Yesterday, Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) slid with A-shares leading Hong Kong's Hang Seng Index (HSI) fell by 0.5% on Wednesday, with ongoing tensions between the U.S. and China over the latter’s alleged support to Russia, reports about China instructing state-owned enterprise to phase out the big-4 audit firms as their auditors for national security considerations, and overnight U.S. equity market weaknesses weighing on investor sentiment. Shares of banks outperformed but failed to offset losses in technology and industrial stocks. HSBC (00005) surged 5.3% and Hang Seng Bank (00011:xhkg) climbed 2.7%, being the top two gainers in the benchmark Hang Seng Index. Techtronic (00669:xhkg), plunging 6.9%, was the biggest loser. JD.com (9618:xhkg), down 3% led the decline in the China interest space. Hong Kong released its budget for this fiscal year, including HK$5000 per head in consumption vouchers, stamp duty reduction for first-time homebuyers, and support for airline operators. Hong Kong retail and property developer stocks rallied, with Chow Tai Fook (01929) rising 2.2%, Wharf Real Estate Investment (01997:xhkg) up 2%, and Henderson Land (00012:xhkg) up 1.6%. After Hong Kong market close, Baidu (09888:xhkg) reported revenues and earnings beating market expectations despite weaker advertisements in Q4. The search engine giant announced a share buyback programme of up to USD5 billion.  Baidu’s ADR (BIDU:xnas) fell 3.7%. In mainland China, the CSI300 slid 0.9%. Construction materials, media, brokerage, and non-ferrous metals led the decline.  Australian equities (ASXSP200.I) fall for third day -  but reopening stocks in logistics and car dealing seem supported on stronger earnings.  The Australian share market is being pressured by Australian bond yields rising, with the 10-year yield at its highest levels since January 4 - after the RBA affirmed it will continue to hike rates in the months ahead. The ASX200 fell briefly under its 50-day moving average with mining giants BHP and Rio trading lower after Rio reported weaker than expected numbers after the market close yesterday – but guided for a stronger 2023.  Travel stocks are continuing to gain attention on the revival of the travel sector – with a lack of fleet becoming an issue to keep up with strong demand. Qantas posted a record profit of A$1 billion in the six months to Dec 31, and announced A$500 million share buy back – as its sees relentless flight demand in 2023 - underscoring the surge in travel, post the pandemic. In fact, Qantas’ flagged higher than expected spending being needed to buy an extra aircraft, including nine Airbus A220s to keep up with surging passenger demand. Capital expenditure in the financial year ending June will rise by as much as A$400 million to between A$2.6-A$2.7 billion and will get as high as A$3.2 billion in the following 12 months. Despite guiding for strong demand, shareholders didn’t like hearing costs will need to rise – which send Qantas shares down 6% to $6.02, below its 100-day moving average. Qantas’ outlook underscores the pace and intensify of the travel industry’s recovery. Logistics giant, Qube is trading up 10% after its half year profit rose 41% to $125 million and it also noted it sees stronger growth ahead in 2023 – supported by China’s reopening. Car dealership giant, APE is up by about 7% after its results beat expectations, and it guides for a stronger year ahead with demand for new vehicles continuing to outstrip supply. Today’s earnings highlight the reopening trade is gaining pace and also growing beyond market expectations – this could be a driver of the Australian equity market in the half year, while commodity companies continue to guide for a stronger year ahead – backing our bullish commodity outlook. FX: A stronger US dollar – pressures the Australian dollar lower With ‘a few’ FOMC members supporting a larger hike to curb inflation - with James Bullard still favouring hiking rates to 5.375% as fast of possible, the US dollar gained the upper hand, pressuring most G10 currencies lower including the Aussie dollar. The AUD/USD pair closed below trend support, which opens up for a move lower to 0.6629, being the December low. The AUD/NZD pair however made a cleaner break down lower - with the Aussie against the Kiwi falling below its 50-day moving average. Weight on the pair also came after Australian wage growth data and construction work done were softer than expected, meaning the path of RBA hikes could slow after the RBA makes its tabled hikes in the ‘months’ ahead, versus the RNBZ, that just hiked by 50bps yesterday but gave a hawkish guidance.  Crude oil (CLJ3 & LCOJ3) prices slump ~3% A firmer dollar and expectations of more rate hikes from the Fed gathering pace saw a bearish momentum return in commodities on Wednesday, even ahead of the release of the marginally hawkish FOMC minutes. Crude oil prices slid by close to 3% with WTI below $74/barrel and Brent at $80 despite a Reuters report stating that Russia intends to cut crude exports from its western ports by a quarter in March/February, after prior reports that the country is cutting production in March by 500k BPD. API inventories were however higher, with crude stockpiles increasing by 9.9mn barrels last week suggesting demand weakness. Gold (XAUUSD) slumps to support again Gold gave up its recent gains amid the renewed pressure from USD and higher yields which are now close to their cycle highs despite some softening yesterday. The yellow metal is now close to the $1820 support, which held up last week after inflation concerns escalated. A break below will bring the 200DMA at 1776 in focus.  Read next: The AUD/USD Pair Remains Under Selling Pressure, The GBP/USD Pair Is Below 1.21 Again| FXMAG.COM What to consider? FOMC minutes marginally hawkish Despite the FOMC minutes being pre-January inflation print, they sounded hawkish at the margin suggesting there may be room for further escalation of that rhetoric given how the economic data has fared since the Jan 31-Feb 1 Fed meeting. A few of the participants favoured raising the rates by 50bps, and all agreed more rate hikes are needed thrashing pivot hopes. It also noted that a number of participants observed that financial conditions had eased in recent months, which some noted could necessitate a tighter stance of monetary policy. While this risk of a recession was noted, data since the meeting including the most recent PMI numbers this week have continued to ease recession concerns. US considering release of intel on China’s potential arms transfer to Russia No reports of a peace treaty, and instead Chinese senior diplomat Wang Yi’s visit to Moscow was accompanied with China and Russia confirming stronger ties and President Xi’s visit to Russia in the coming weeks. This is suggesting that these escalated geopolitical tensions are here to stay, and our Defense equity theme basket provides a good way to hedge geopolitical risks. The red line for US and Europe will be if there is evidence that China is supplying weapons to Russia, and that could threaten a potential escalation of the war into a confrontation between Russia and China on the one side and Ukraine and the US-led Nato military alliance on the other. A WSJ article reported that Western nations have picked up on intelligence that Beijing might end its previous self-imposed restraint on weapons supplies to Russia, according to U.S. and European officials, although it appears that China hasn’t yet made a final decision. Rio Tinto’s profits and dividend slide in 2022, but Rio guides for a stronger 2023 - underpinned by ‘climate change scenarios’ Shares of Rio Tinto in NY fell 3.3% overnight and are down 3% on the ASX today after the world’s second largest miner reported underlying profit fell 38% to $13.28 billion in 2022 - vs the expected $13.96 billion consensus forecast. Rio’s profit fell after realised commodity prices fell from their records in the second half of 2022 – while earnings were also impacted by higher energy, raw materials prices and wages. Rio’s free cash flows fell 49% Y/Y in 2022 to $9.01 billion, resulting in Rio cutting its final (HY) dividend to $2.25 a share (down from $4.17), taking its total 2022 dividend to $4.92 - that’s a 60% pay-out ratio. Similar to BHP, Rio’s output looks stronger in 2023 with Rio guiding for higher copper, alumina, aluminium and iron ore production (but lower diamond production). It sees commodity prices being underpinned by ‘climate change scenarios’ which drive demand. Also note - in recent weeks - signs of a recovery in China have fuelled iron ore and copper prices up -with iron ore prices up 15% year to date. Rio is expanding its copper-gold presence, with the purchase of Turquoise Hill Resources- that will see Rio double its stake in the Oyu Tolgoi copper-gold project in Mongolia. Rio is also progressing the Rincon Lithium Project in Argentina – cementing itself in lithium. And despite the Serbian Government quashing its lithium mine Rio is ‘continuing to explore possibilities’. UOB (U11:xses) reports higher Q4 earnings Singapore bank UOB reported 13% increase in Q4 net income on higher net interest income offsetting the drop in fees from wealth management and rising impairment charges. Core net profit, after adjusting for one-off expenses related to the acquisition of Citigroup’s Malaysia and Thailand consumer businesses, rose 37% to S$1.4bn. UOB has recommended a final dividend of 75 cents a share. Together with the interim dividend of 60 cents a share, the total dividend for the full year will be $1.35 a share, representing a payout ratio of 49%. OCBC (O39:xses) reports results on Friday. NVIDIA (NVDA:xnas) jumps on AI chips outlook NVIDIA reported stronger than expected Q4 results with EPS of $0.88 on revenue of $6.05 billion, compared to analyst estimates of $0.81 on revenue of $6.01 billion. After-market gains were however driven by a strong outlook for artificial intelligence processors which is helping to offset the slowdown in PCs. Q1 revenue guidance at $6.50 billion, vs. expectations of $6.35 billion. Alibaba (09988:xhkg/BABA:xnas) and NetEase (09999:xhkg/NTES:xnas) are reporting earnings Reporting results on Thursday after the Hong Kong market close but before the U.S. market opens, Alibaba and NetEase are scheduled to announce earnings. Analysts are expecting Alibaba’s results from last quarter to be soft, with the Adjusted EPS expected to fall slightly to RMB1.999 from RMB2.015 a year ago. Investors’ focus will be on the outlook regarding the current quarter. Analysts are expecting NetEase to achieve growth in both revenues and earnings on strength in the Justice Mobile and Eggy Party games.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source:Markets Today: Pre-CPI FOMC minutes suggest more rate hikes – 23 February 2023 | Saxo Group (home.saxo)
Nvidia Is Rolling Out Its Own Cloud Service Together With Oracle

Nvidia Is Rolling Out Its Own Cloud Service Together With Oracle

Saxo Bank Saxo Bank 23.02.2023 09:17
Summary:  Sentiment remains under significant pressure as higher global yields and a firmer US dollar are pressuring sentiment and financial conditions around the world. Europe remains resilient, but can’t expect to hold out on its own if the negative pressure persists. In currencies, focus will swing to Bank of Japan Governor nominee Kazuo Ueda, who will testify before Japan’s Lower House on Friday in Japan. What is our trading focus? US equities (US500.I and USNAS100.I): watch the bond market for clues on direction US equity futures were wobbly yesterday finishing lower with S&P 500 futures closing at the 3,999 level, the first close below 4,000 since 20 January, after intraday briefly flirting with the 200-day moving average. The equity market has now erased a good portion of this year’s rally and the upcoming inflation figures and the bond market’s reaction will determine where we go from here. As we wrote in our equity note yesterday, the next potential themes getting attention is margin compression during the upcoming Q1 earnings in April and May and the discussion about structural inflation. US equity futures were lifted late last night by a better-than-expected outlook from Nvidia. S&P 500 futures are trading around the 4,015 level in early European trading hours. Hang Seng (HIG3) and CSI300 (03188:xhkg) failed to sustain an attempt to rally The Hang Seng Index and CSI300 bounced in early trading but the attempt to rally failed to sustain itself. Both the Hong Kong and mainland benchmarks slipped by about 0.3%. Techtronic (00669:xhkg) plunged 17% and was the biggest loser within the Hang Seng Index, following a forensic research firm published a report alleging the tool maker inflating profits by capitalizing expenses as assets. Baidu (09888:xhkg) lost 1.1% despite reporting revenues and earnings that beat market expectations and announcing a share buyback programme of up to USD5 billion. The hype of ChatGPT concept cooled down somewhat as AI-generated content names were sold on mainland bourses. FX: USD eases off the pedal ahead of BoJ Governor nominee Kazuo Ueda testimony The US dollar eased back lower as risk sentiment stabilized in the wake of another nervous session yesterday and after EURUSD nearly touched 1.0600, AUDUSD took a stab at its 200-day moving average, and USDJPY rose toward 135.00. Risk sentiment will likely continue to drive USD pairs in coming session, with the Friday PCE inflation data the next more important event risk on the calendar (though a weekly refresh of the US labour market data is up with today’s weekly claims number.) Elsewhere, plenty of attention on the Japanese yen later today, as Japan reports its January CPI figures tonight, but even more importantly as the nominee to replace Kuroda as governor of the BoJ will speak at a confirmation hearing at the Lower House of Japan’s parliament overnight. Crude oil (CLJ3 & LCOJ3) prices steady after slumping around 3% A firmer dollar and expectations of more rate hikes from the Fed gathering pace saw a bearish momentum return in commodities on Wednesday, even ahead of the release of the marginally hawkish FOMC minutes in the US session. Crude oil prices slid by close to 3% with WTI below $74/barrel and Brent at $80 despite a Reuters report stating that Russia intends to cut crude exports from its western ports by a quarter in March/February, after prior reports that the country is cutting production in March by 500k BPD. API inventories were however higher, with crude stockpiles increasing by 9.9mn barrels last week suggesting demand weakness. Prices recovered marginally overnight in Asia. Gold (XAUUSD) slumps to support again Gold gave up its recent gains amid the renewed pressure from USD and higher yields which are now close to their cycle highs despite some softening yesterday. The yellow metal edged closer to the $1820 support again yesterday, but has rebounded above 1,830 overnight. A break below 1,810-1,800 would bring the 200DMA at 1,776 in focus. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) ease back from cycle highs US Treasury yields eased back slightly from new cycle highs yesterday, with a strong 5-year auction showing bidding metrics at the higher end of the longer term range. A 7-year auction is up today and US January PCE inflation data is out Friday. The Japanese government bond market could sway global fixed income if nominee Kazuo Ueda makes any pointed comments in his confirmation hearing tonight. What is going on? FOMC minutes marginally hawkish Despite the FOMC minutes stemming from the FOMC meeting three weeks ago and prior to the January US CPI print, they sounded hawkish at the margin suggesting there may be room for further escalation of that rhetoric, given how the economic data has fared since the Jan 31-Feb 1 Fed meeting. A few of the participants favoured raising the rates by 50bps, and all agreed more rate hikes are needed thrashing pivot hopes. It also noted that a number of participants observed that financial conditions had eased in recent months, which some noted could necessitate a tighter stance of monetary policy. While this risk of a recession was noted, data since the meeting, including the most recent PMI numbers this week have continued to allay recession concerns. Apple announces ability to monitor blood sugar non-invasively Apple’s Exploratory Design Group, a previously secretive outfit within the company, is reporting success in measuring blood glucose levels without needing to break the skin to test via a blood sample, with a method using semiconductor chips and silicon photonics. The project has been ongoing for years. The hope is to integrate the technology longer term into the Apple Watch, helping to boost Apple’s effort to grow its presence in health care. US considering release of intel on China’s potential arms transfer to Russia Chinese senior diplomat Wang Yi’s visit to Moscow was accompanied with China and Russia confirming stronger ties and President Xi’s visit to Russia in the coming weeks. This is suggesting that these escalated geopolitical tensions are here to stay. The red line for US and Europe will be if there is evidence that China is supplying weapons to Russia, and that could threaten a potential escalation of the war into an outright proxy-war style confrontation between Russia and China on the one side and Ukraine and the US-led Nato military alliance on the other. A WSJ article reported that Western nations are considering making public the intelligence they possess that Beijing might end its previous self-imposed restraint on weapons supplies to Russia, according to U.S. and European officials, although it appears that China hasn’t yet made a final decision. Nvidia jumps on AI chips outlook Nvidia reported last night Q4 revenue of $6.05bn in line with estimates with the gaming segment beating estimates while the data center segment disappointed. Q4 EPS came in at $0.88 vs est. $0.81 driven by a higher than estimated Q4 gross margin of 66.1% vs est. 65.8%. Nvidia guides Q1 revenue of $6.5bn +2/-2% vs est. $6.35bn driven by strong demand in gaming and data center segments. The company is also rolling out its own cloud service together with Oracle which will later be offered by Microsoft and Google. Nvidia does not expect more downward pressure on GPU prices and thus the inventory risk is largely behind the company. While Nvidia keeps ignoring the cryptocurrency industry’s impact on demand we guess that the acceleration in speculation in cryptocurrencies and higher mining activity is what is driving Nvidia’s higher demand this quarter. Shares rose 8% in extended trading. BAE Systems sees muted 2023 revenue growth The UK-based defence company reports this morning higher than expected FY22 revenue at £23.3bn and underlying EBIT of £2.5bn. The earnings statement the company states that it expects 3-5% revenue growth in 2023 and 4-6% growth in EBIT suggesting expanding margins on pricing power amid surging demand. In our view, the revenue guidance seems a bit conservative given the signals over the weekend from the Munich Security Conference. Rio Tinto’s profits and dividend slide, guides for a stronger 2023 Rio Tinto shares declined 3.4% after reporting underlying profit fell 38% to $13.3bn in 2022 vs est. $14bn. Rio’s profit fell after realised commodity prices fell from their records in the second half of 2022 while earnings were also impacted by higher energy, raw materials prices and wages. Rio Tinto’s free cash flows fell 49% y/y in 2022 to $9bn, resulting in the miner cutting its final (HY) dividend to $2.25 a share down from $4.17, taking its total 2022 dividend to $4.92. Rio Tinto’s output looks stronger in 2023 with higher copper, alumina, aluminium and iron ore production What are we watching next? Market sentiment is fragile after recent break lower in equities – next moves pivotal Rising global yields and the firmer US dollar have risk sentiment and financial conditions under significant pressure, particularly in the US indices, but also in emerging markets and credit spreads on corporate bonds. European equities have fared better, but have lost their upside momentum. With the break of key supports in the US, the next levels of even more critical support are not far away to the downside (200-day moving average in the US S&P 500 at 3,941 on the cash index, for example). Volatility expansion is a prominent risk on a capitulation in sentiment, with further pressure from rising yields or rising concerns of geopolitical tensions possible triggers. Earnings to watch Today’s key earnings are in the European session, so the impact from earnings in the US session is minimal. Thursday: EssilorLuxottica, Deutsche Telekom, Munich Re, Kuaishou Technology, Eni, Anglo American, BAE Systems Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) 1000 – Eurozone Final Jan. CPI 1100 – Turkey Rate Decision 1330 – US Jan. Chicago Fed National Activity Index 1330 – US Q4 GDP Revision 1330 – US Weekly Initial Jobless Claims 1530 – US Weekly Natural Gas Storage Change 1600 – US Feb. Kansas City Fed Manufacturing Activity 2330 – Japan Jan. National CPI BoJ Governor Nominee Kazuo Ueda confirmation hearing 0001 – UK Feb. GfK Consumer Confidence   Source: Financial Markets Today: Quick Take – February 23, 2023 | Saxo Group (home.saxo)
US GDP Ahead, Energy Prices Push Lower, EUR/USD Pair Struggles

US GDP Ahead, Energy Prices Push Lower, EUR/USD Pair Struggles

Swissquote Bank Swissquote Bank 23.02.2023 13:09
Hawkish were the minutes from the latest FOMC meeting. They confirmed that the Federal Reserve (Fed) officials are indeed not lying when they say that they will continue hiking the interest rates to tame inflation toward the 2% mark. US and China Both the US 2 and 10-year yields bounced lower from early-week highs. A part of it was perhaps explained by the rising tensions between the US and China after China said that their relationship with Russia is ‘rock solid’. Stock market The S&P500 eased another 0.16%, Nasdaq tipped a toe into the bearish consolidation zone, but US equity futures are in the positive this morning, as the tech-heavy index is boosted by an almost 9% jump in Nvidia shares in the afterhours trading, after the company announced soft, but better than expected results. US GDP Due today, the US GDP is expected to have expanded 2.9% in the Q4, which is a fairly strong number. A read above expectations will certainly boost the Fed hawks on the idea that the US economy is resilient enough to withstand more hikes, while a number below expectations could ease the hawkish Fed tensions. But the days when bad news was good news are gone. At this point, we can’t really bet that a soft growth would soften the Fed’s hand. Only soft inflation could do that. Watch the full episode to find out more! 0:00 Intro 0:25 FOMC minutes confirmed hawkish stance 2:50 Nvidia results help Nasdaq shake off post-minutes moodiness 4:12 But could the US stock rally extend?! 6:30 Watch US GDP update today 7:30 USD consolidates gains, EURUSD struggles 8:27 Energy prices push lower Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #FOMC #minutes #Nvidia #earnings #EUR #inflation #natural #gas #crude #oil #EIA #US #GDP #data #USD #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The FOMC Minutes Were Another Setback For Gold, Crude Oil Prices Creep Higher

Craig Erlam Craig Erlam 23.02.2023 13:41
Glacial consolidation Oil markets are continuing to consolidate, albeit at a glacial pace, and today we’re seeing prices creep higher just as they near the lows from earlier this month. While traders remain optimistic about China, they have become less so about the global economy as more and more rate hikes have been priced in. If one of those narratives changes, or we see a significant shift in another driving force in the oil markets – Russia, OPEC+, etc – then we could see prices break out of this range. But they seem rather comfortable within them, mirroring the feeling of consuming countries and producers alike, it seems, both of which have been much less vocal on the price and imbalance in the markets. Gold correction run its course for now? The FOMC minutes were another setback for gold, reaffirming the hawkish messages we’ve heard from policymakers for weeks now. The yellow metal has once again run into some support around $1,820 though, which may reaffirm its position as a temporary barrier to the downside. Of course, if the economic data between now and the next Fed meeting in a month doesn’t play ball, it may not hold for much longer. But the correction does seem to have run its course for now which could lead to further profit-taking and a retracement higher. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: US announces SPR purchase

Crude Oil Prices Rallied, Alibaba Reported Better-Than-Expected Results

Saxo Bank Saxo Bank 24.02.2023 08:23
Summary:  US equity markets erased their losses overnight, aided by a rise in Nvidia shares boosting chip and tech stocks. Fed’s preferred inflation gauge the PCE is up next and may reaffirm sticky inflation again. The Japanese yen volatility is in focus after softer-than-expected January inflation print, and as policy stance of BOJ nominee Ueda is evaluated from the ongoing parliamentary hearings. Crude oil prices reversed higher but Copper back close to the key $4 area.   What’s happening in markets? The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) had a wild session, but ended higher after bond yields fell from three-month highs US equity markets had a bumpy Thursday, awaiting the Fed’s core inflation gauge –the personal consumption index being released. However, after four days of losses, the S&P500 gained 0.5%, although it’s still down 1.6% Monday to Thursday. The S&P500 managed to move back above 4,000 level after the 10-year US bond yield fell from its fresh high - moving back to December levels of 3.871%. While bullish outlooks supported the market higher as well – with Nvidia shares up 14% on its bullish outlook - with Microsoft and Apple following higher. Despite that, US earnings are still muted YoY - highlighting margin compression- while there is still nervousness in the air- as the FOMC meeting minutes pointed to more tightening on the horizon. While there is also risk if the Fed’s inflation gauge (PCE) rises more than expected, the Fed could gain reason to become more hawkish – and that could see the S&P500 quickly test the 200-day moving average.  Hong Kong’s Hang Seng (HIG3) and China’s CSI300 (03188:xhkg) had a mixed day; Techtronic tumbled 19%. Hong Kong's Hang Seng Index and China's CSI300 had a mixed day of trading. The Hang Seng Index slid 0.4%, while the CSI300 was flat. Techtronic (00669:xhkg) shares plunged 19% after a forensic research firm accused the power tool maker of inflating profits by capitalizing expenses as assets. Meanwhile, China internet names, tech hardware, and EV stocks rallied, with Bilibili (09626:xhkg) rising 3.6%, NetEase (0999:xhkg) climbing 4.1%; Lenovo (00992:xhkg) surging 5.5%, and Nio (09866:xhkg) up 4%. Baidu (09888:xhkg) fell 0.5%, despite reporting revenues and earnings that beat market expectations and announcing a share buyback program of up to USD5 billion. According to Nikkei Asia, Chinese regulators have told Tencent Holdings and Ant Group not to offer ChatGPT services to the public as the regulators are increasingly concerned about uncensored replies given to users. Australian equities (ASXSP200.I) moved up after three days of declines The Australian share market moved up 0.3%, up slightly above its 50-day moving average today - after a bevy of better than expected company earnings bolstered sentiment. Global pallet business, Brambles shares rose almost 7% to six month highs after upgrading its profit guidance ~7% to 15-18% growth with pallet demand in the US and UK improving. Australia’s biggest lithium company, Pilbara Minerals shares are up 2.6% after reporting record results- a A$1.24 billion net profit and declared its first ever dividend – of A$0.11. Just like Albemarle, Pilbara sees a strong lithium market ahead. Pilbara also upgraded its production guidance for the year – expecting to produce 600,000 to 620,000 dmt of spodumene concentrate – up from its prior guidance of 540,000 to 580,000 dmt. This reflects what we have been seeing this Australian reporting season – mining companies are upgrading their output guidance to keep up with expectations for strong demand, plus they are also seeing improved labour conditions. Block Inc (SQ and SQ2) rallied 7% to $116.44 on the ASX after 4Q net revenue rose more than expected, up 14% to $4.65 billion, beating estimates of $4.57 billion. It comes as Bitcoin revenue rose more than expected, to $1.83 billion vs $1.79 billion expected, while hardware revenue from its Square in store payments rose slightly more than expected. As for the year ahead  - Block sees 2023 adjusted EBITDA of $1.3 billion - which is more than $1.28b est - and its margin growing by at least 1 percentage point. So far this year, Afterpay sales are up 19% and credit quality is holding up- despite higher interest rates. Afterpay's loss rate is expected to stay 1% in Q1 this year - which is a slight improvement of its Afterpay loss rate in 2019 and 2018 of 1.1% and 1.5%.   Broadly the Aussie market has been pressured by Australian bond yields moving to their highest levels since January- 3.87%. That’s a better yield/ return than the broad Australia share market’s 3.5% yield. This shift has pressured the ASX200 down 3.8% from its record highs. But some stocks are still rising, with a cohort of companies benefiting from the reopening of the Chinese economy  - and on expectations of higher earnings ahead. Such stocks are in the travel sector; shares  FX: JPY volatility in focus The Japanese yen started the Asian session stronger after a weaker-than-expected inflation print for January, but the start of BOJ nominee Ueda’s parliamentary hearings brought a reaffirmation of the loose BOJ monetary policy and that saw USDJPY bidding up to 134.80. Yen volatility will remain in focus today and next week, also parking concerns of volatility in the global bond markets, as Bank of Japan’s renewed policy direction remains in focus. Crude oil (CLJ3 & LCOJ3) prices rebound 2% despite higher inventories Crude oil prices rallied on Thursday despite another higher inventory built. US crude stocks built 7.6mn barrels last week, significantly higher than analyst expectations of 2mn. The supply side concerns may have been in focus after Russia announced this week that it will cut exports to the West in March, in addition the previously announced production cuts. However, focus was also on indications of a pickup in gasoline demand along with a decline in US gasoline inventories. Copper prices decline on higher USD and awaiting China activity improvement Copper prices were down 3% amid rising concerns of further rate hikes by central banks after a marginally hawkish FOMC minutes this week. The market is also becoming increasingly impatient with the recovery in demand in China. There has been little meaningful sign that demand is rebounding. Copper prices fell to $4.05/lb bring the $4 support in focus.  Read next: The Euro Fell Below 1.06, The USD/JPY Pair Is Close To 135.00| FXMAG.COM What to consider? US GDP revised a notch lower, jobless claims fell The second estimate of Q4 GDP was released in the US, and was revised lower to 2.7% from the prelim 2.9%. The Core PCE measure, the Fed’s preferred measure of inflation, was revised to 4.3% from 3.9%, suggesting price pressure in Q4 were higher that previously reported. While slower activity and higher inflation components seem to be making the Fed’s task more difficult, labor market still remained strong which suggests that any slowdown in growth will be likely very slow. Weekly initial jobless claims dropped to the lowest in 4 weeks at 192k from the prior 195k. Japan’s January CPI softer than expected, eyes on Ueda’s hearings January inflation print in Japan came in-line with expectations on the headline at 4.3% YoY from the prior 4.0% YoY but was marginally below expectations on the core measures. Ex fresh food and energy was out at 3.2% YoY, above last month’s 3.0% YoY but below the expected 3.3%. Inflation remains above the Bank of Japan’s 2% target, and price pressures are broad-based. Focus now turns to BOJ nominee Kazuo Ueda’s parliamentary hearings in the lower house today as markets ponder over his policy direction. Worrying signal on the inflation front in the Eurozone Yesterday, inflation was confirmed higher than initially reported in the eurozone in January (headline at 8.6% year-over-year and core at 5.3% - this represents a 0.1 percentage point higher). What is even more worrying is that the EZ CPI basket showed the most broad-based price increase on record. 76 % of the basked experienced a month-over-month increase above 0.2 %. This is up from 52 % in December 2022. There is little doubt that the European Central Bank (ECB) will hike interest rates by 50 basis points in March. But we think the ECB is not done anytime soon with the tightening process. The terminal rate is probably closer to 4% than expected by the market consensus. Booking Holdings (BKNG:xnas) reports record 2022 revenue suggesting travel demand surge Booking Holdings reported higher-than-expected revenue for Q4 at $4.05bn (up 36% YoY), beating analyst forecasts of $3.9bn. Adjusted EPS of $24.74 was also above the expected $21.51. Q1 forecast was also upbeat, suggesting resilient travel demand despite inflation pressures. Booking Holdings is a part of our Asia Pacific Tourism equity theme basket which we launched in anticipation of the recovery in Chinese outbound travel demand. Alibaba (09988:xhkg/BABA:xnas) beats earnings estimates on cost cutting Alibaba reported better-than-expected results for its fourth quarter. Adjusted EPS of 19.26 yuan (on revenue of 247.76bn yuan) was above consensus of 16.63 reflecting deep cost cutting measures. EBITA grew 16% Y/Y on cost cuts and smaller losses from Taocaicai. The cloud computing revenue was only up 3.3% while the core Chinese commerce business slid 1%. The eCommerce giant’s ADRs closed down 2.9% from the level of Hong Kong closing amid management comments on the need to increase investments to stay competitive in the year ahead. OCBC (O39:xses) reports Q4 net income miss Oversea-China Banking Corp. reported an increase of 34% in net profits in the fourth quarter to S$ 1.31bn which fell short of estimates of S$ 1.68bn. Net interest income was up 60% YoY but non-interest income slid 42% due to lower wealth management fee. Final dividend of S$0.40 was up from S$0.12 last year, and the lack of a DBS-like special dividend could mean the stock could be beaten up near-term.     For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Markets Today: BOJ stance in focus, PCE inflation report ahead – 24 February 2023 | Saxo Group (home.saxo)
The Commodities Feed: Further oil supply disruptions

The Commodities Feed: Brent rebounds

ING Economics ING Economics 24.02.2023 08:27
The oil market continues to recover following the weakness seen earlier in the week. US inventory data continues to show large builds, whilst middle distillate inventories in Europe have also edged higher. Next week, energy market participants will converge on London for International Energy Week Energy - ARA gasoil stocks grow Having come under pressure earlier in the week, the oil market appears to be bouncing back from near the bottom of its recent trading range. This is despite an EIA inventory report yesterday which showed that US crude oil inventories edged higher last week. Crude oil inventories increased by 7.65MMbbls, the ninth consecutive week of inventory builds. Since mid-December, US commercial crude inventories have increased by around 61MMbbls. In addition, crude stocks at Cushing grew by 700Mbbls over the week, which takes inventories at the WTI delivery hub above 40MMbbls and to their highest levels since June 2021. For refined products, gasoline inventories fell by 1.86MMbbls over the week, whilst distillate fuel stocks increased by 2.7MMbbls. In Europe, and specifically in the ARA region, gasoil stocks continue to grow. The latest data from Insights Global shows that gasoil inventories in the region increased by 47kt over the week, to 2.58mt. This is the highest level stocks have been since February 2021, following strong inflows of gasoil in the lead up to the EU ban on Russian refined products. In Singapore middle distillate stocks increased by 526Mbbls over the last week to 8.21MMbbls. Middle distillate stocks in Singapore are still some distance below the 5-year average despite stronger refined product exports seen from China in recent months. In the US natural gas market, Henry Hub settled more than 6% higher yesterday, following EIA storage data which saw US gas inventories fall by 71Bcf over the last week, which was more than the market was expecting. After the milder weather seen over much of the US winter, storage is still comfortable, with it more than 15% above the 5-year average. Metals – Panama copper issues First Quantum said it has been forced to stop processing copper at its Cobre Panama mine after it was blocked by the government from loading the metal at a port in the country. This follows failed negotiations between the miner and the government to reach a tax agreement late last year. The mine accounts for 1.5% of the world’s copper production. Data from the International Lead and Zinc Study Group shows that the global zinc market remained in a supply deficit of 306kt in 2022, compared to a deficit of 204kt a year earlier. Total refined production fell 4.1% YoY to 13.3mt due to lower output in Europe, while total consumption declined 3.3% YoY to 13.6mt last year. As for lead, total production reported a marginal decline of 0.7% YoY to 12.3mt, while consumption rose slightly by 0.5% to 12.4mt last year. The lead market reported a supply deficit of 99kt in 2022, compared to a surplus of 44kt in the preceding year. The LME said it plans to restart nickel trading in Asian hours from 20 March. The exchange suspended nickel trading in March last year and cancelled billions of dollars’ worth of nickel trades following a short squeeze, when fears of sanctions on Norilsk Nickel coincided with a large short bet by the world’s largest stainless steel producer, Tsingshan. This caused prices to more than double in a matter of days. LME volumes have declined since then as many traders have reduced activity or cut their exposure due to a loss of confidence in the LME and its nickel contract after its handling of the March short squeeze. These low levels of liquidity have left nickel exposed to sharp price swings – even amid small shifts in supply and demand balances. Agriculture – USDA expects larger 2023/24 crops In the USDA’s first outlook for the 2023/24 season, which coincides with the ongoing Agricultural Outlook Forum, the agency expects looser US balances in the upcoming season on the back of higher acreage. US corn output is forecast to grow by 9.9% YoY to 15,085m bushels, which leaves estimated ending stocks for the 2023/24 season at 1,887m bushels, compared to 1,267m bushels in the 2022/23 season. Similarly for wheat, output is expected to total 1,887m bushels in 2023/24, up from 1,650m bushels in the current marketing year. As a result, 2023/24 wheat ending stocks are expected to total 608m bushels, compared to 568m bushels in 2022/23. For US soybeans, 2023/24 output is forecast to grow 5.5% YoY to 4,510m bushels. This should see 2023/24 ending stocks of 290m bushels, up from 225m bushels in the current marketing year. The latest data from Uganda Coffee Development Authority shows that the nation shipped 492,226 bags of coffee in January, up 18% MoM as exporters unloaded stockpiles sighting high global prices. Robusta accounted for 83% of the total exports. Coffee exports for the season rose 6.9% YoY to 1.82m bags through until January. Read this article on THINK TagsZinc USDA Oil Natural gas Grains EIA Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Analysis Of Situation Of The USD/INR Pair

Strong Oil Prices Recently Weighed On The Indian Rupee (INR)

TeleTrade Comments TeleTrade Comments 24.02.2023 08:36
USD/INR picks up bids to pare the biggest daily loss in a month. Firmer Oil price, hawkish Fed bets weigh on Indian Rupee. US Core PCE Price Index eyed for clear directions on US inflation conditions and Fed’s next move. USD/INR prints mild gains around 82.70 as it consolidates the biggest daily loss in a month during early Friday. In doing so, the Indian Rupee (INR) pair struggles to cheer cautious optimism in the Asia-Pacific region as Oil price extends the previous day’s rebound from the monthly low. Markets in the Asia-Pacific region appear slightly positive, ex-China, as government nominees for the Bank of Japan (BoJ) board appear in no mood to challenge the easy money policies. Alternatively, mixed headlines surrounding China, due to its peace plan for Ukraine and ties with Russia, join the US-China readiness for trade talks despite not sharing the details and criticizing each other on various issues to challenge the market sentiment. Elsewhere, India is yet to recover from the Adani-led equity fiasco and the government’s push for cutting the budget deficit, which in turn raises doubts about one of the top Asian economies’ growth prospects. It’s worth noting that strong Oil prices recently weighed on the INR due to India’s reliance on energy imports. While portraying the mood, Wall Street closed on the positive side but the S&P 500 Futures recently failed to extend the recovery moves from the monthly low by retreating to 4,015, down 0.10% intraday at the latest. Further, the US 10-year Treasury bond yields seesaw around 3.87%, making it less active on the day, whereas the US two-year bond coupons stay inactive near 4.69% by the press time. Moving on, USD/INR traders should pay attention to the risk catalysts for clear directions ahead of the Federal Reserve’s (Fed) favorite inflation gauge, namely the Core Personal Consumption Expenditures (PCE) Price Index. That said, the latest slew of positive US data keeps buyers hopeful. Also read: US PCE Inflation Preview: Can the US Dollar turn bullish for good? Technical analysis Although a four-month-old descending resistance line, around 82.95 by the press time, keeps challenging USD/INR bears, 50-day Exponential Moving Average (EMA) level surrounding 82.25 puts a floor under the price.
WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

WTI Crude Oil Justifies Confirmation Of The Bullish Chart Pattern

TeleTrade Comments TeleTrade Comments 24.02.2023 08:39
WTI picks up bids to extend previous day’s rebound from three-week low. Confirmation of bullish chart pattern, upbeat MACD signals favor Oil buyers. Convergence of 50-SMA, 100-SMA appears short-term key upside hurdle. WTI crude oil bulls attack $76.00 during early Friday, around $76.10 by the press time, while stretching the previous day’s rebound from a three-week low. In doing so, black gold justifies confirmation of the bullish chart pattern, namely the falling wedge, as well as the bullish MACD signals. As a result, the energy benchmark is well-set to extend the latest rebound towards a convergence of 50-SMA and 100-SMA, near $77.00-10. However, multiple hurdles surrounding the $80.00 psychological magnet could challenge the WTI bulls past $77.10. It’s worth noting that the falling wedge confirmation’s theoretical target appears $81.70. Following that, a five-week-long horizontal resistance area surrounding $82.60-70 could restrict the commodity’s further advances. On the flip side, the stated wedge’s top line acts as an immediate support line, close to $75.80 by the press time. Should the quote drops below $75.80, the recent swing low near $73.80 may act as a buffer before highlighting the area comprising the lows marked so far in 2023, close to $72.50-70. Overall, Oil price regains buyer’s confidence even if the road toward the north appears long and bumpy. WTI: Four-hour chart Trend: Limited upside expected
USD/CAD - Canadian economy added 41,400 jobs beating expectations

The USD/CAD Pair Traders May Witness Lackluster Moves Ahead

TeleTrade Comments TeleTrade Comments 24.02.2023 08:51
USD/CAD picks up bids to pare day-start losses, reverses the previous day’s pullback from seven-week high. Oil price cheers hopes of economic recovery, geopolitical tension amid sluggish session. Talks surrounding Fed concerns join mixed moves of bond market to probe Loonie traders. USD/CAD grinds near intraday high as it reverses the day-start losses, as well as dialing back the previous day’s u-turn from a seven-week high, around 1.3545, heading into Friday’s European session. In doing so, the Loonie pair fails to justify the firmer prices of Canada’s main export item, namely WTI crude oil. That said, the black gold rises 0.65% intraday to $76.15 by the press time, extending the previous day’s rebound from the two-week low. While tracing the reasons, the recently firmer statistics from the US and Europe, as well as other major economies, join China’s readiness to infuse the economy towards more output to propel Oil prices. Additionally favoring the WTI bulls are the news suggesting more geopolitical tensions surrounding Russia and Ukraine, as well as the Sino-American tussles. Elsewhere, the US Dollar Index (DXY) snaps a three-day uptrend as it grinds near 104.55 while DXY bulls struggle for clear directions after refreshing a seven-week high the previous day. The US Dollar’s latest weakness could be linked to the dicey markets as the market’s fears that the strong US data and further Federal Reserve (Fed) rate hikes are already priced in. The same seemed to have weighed on the US Treasury bond yields. On the same line could be the mixed headlines surrounding China, due to its peace plan for Ukraine and ties with Russia, as well as due to the US-China readiness for trade talks, despite not sharing the details and criticizing each other on various issues. Against this backdrop, the S&P 500 Futures fade recovery moves from the monthly low by retreating to 4,015, down 0.10% intraday at the latest. Further, the US 10-year Treasury bond yields seesaw around 3.86%, making it less active on the day, whereas the US two-year bond coupons stay inactive near 4.69% by the press time. Given the dicey markets and cautious mood ahead of the key US data, namely the US Personal Consumption Expenditures (PCE) Price Index for January, the USD/CAD pair traders may witness lackluster moves ahead. However, hawkish hopes from the Fed’s preferred inflation gauge may not hesitate from disappointing the Loonie pair buyers if printing downbeat numbers. Also read: US PCE Inflation Preview: Can the US Dollar turn bullish for good? Technical analysis Although Thursday’s bearish spinning top lures the USD/CAD sellers, the nearness to the 100-DMA support of 1.3510 and bullish MACD signals suggest limited downside room for the pair
USD/JPY Pair Has Rebounded Firmly From The Upward-Sloping Trendline

Kazuo Uedy Signaled Little Need To Tighten BoJ Policy Which Weakened The Yen

Saxo Bank Saxo Bank 24.02.2023 09:14
Summary:  Markets remain nervous as new local lows were probed yesterday in the US equities but were rejected just ahead of the 200-day moving average in the S&P 500. A first Chinese peace proposal for the Russian aggression in Ukraine was dismissed by commentators on the first anniversary of the war. Elsewhere, nomination hearings for Kazuo Ueda, who would replace Kuroda as Bank of Japan governor, saw the JPY slightly weaker. What is our trading focus? US equities (US500.I and USNAS100.I): back to wait and see on inflation and rates US equities were bouncing around in yesterday’s session with S&P 500 futures ending the session above the 4,000 level as the US 10-year yield came down despite initial jobless claims suggesting the US labour market remains extremely tight. There are no major earnings releases in today’s session, so we expect a quiet session going into the weekend. The key upside level to watch is yesterday’s close in the S&P 500 futures at the 4,019 level on the downside it is the 4,000 level. Hong Kong’s Hang Seng Index (HIG3) and China’s CSI300 (03188:xhkg) declined around 1% The Hang Seng Index declined 1.2% and the CSI300 slid 0.8% as of writing. Alibaba (09988:xhkg) announced results beating estimates but the shares of the eCommerce giant plunged 4.6% following management comments on the need to increase investments to stay competitive. According to Nikkei Asia, Chinese regulators have told Tencent (0070:xhkg) and Alibaba’s Ant Group not to offer access to ChatGPT services to the public directly or through third party as the regulators are increasingly concerned about uncensored replies given to users. FX: USD bobs up and down with risk sentiment. JPY lower after Ueda testimony. The US dollar posted new highs yesterday, as EURUSD probed below 1.0600 for the first time since early January, AUDUSD took a peek below its 200-day moving average and below 0.6800 and GBPUSD tested the waters below 1.2000, but the USD rally seemed a passive coincident development with the swings in risk sentiment, with a late rally in US equities pushing the greenback back lower. In Japan overnight, the JPY was firm early in the Asian session despite slightly softer CPI data, and then weakened slightly later in the session during Kazuo Ueda’s nomination hearings for the Bank of Japan governorship, as he signalled little urgency on tightening BoJ policy. Crude oil rises despite another US inventory build Crude oil trades higher for a second day but remains on track for a monthly loss within the established range, in Brent between $80 and $89, and WTI between $82 and $73. The technical driven bounce occurred despite another built in US inventories, but soaring exports of 4.6m b/d and a continued rise in US gasoline demand helped underpin prices. Supply side concerns may also be in focus after Russia announced this week that it will cut exports to the West in March, in addition the previously announced production cuts. Gold (XAUUSD) slumps to support again Gold dropped to the lowest level of the year on Thursday amid continued pressure from USD and higher yields which both moved close to their cycle highs earlier in the week before easing a bit on Thursday. The yellow metal has so far managed to find support around $1820 but until macro-economic developments turn more friendly the risk remains of a further weakness towards $1788 followed by the 200DMA at $1,776. Gold has been troubled by a recovering dollar and rising treasury yields after recent US data strength supported the view the Fed will keep rates higher for longer to fight inflation and to cool the economy. US PCE deflator, the Fed’s preferred inflation gauge, will be watched closely today with expectations pointing to a robust print, both in headline and core. Copper retreats as hawkish Fed weighs on sentiment. Copper has retreated from the highest close in three weeks, and yesterday’s drop, the biggest one-day slump this year, has taken it back towards key support in the $4 a pound area. Together with other industrial metals, copper is heading for a monthly loss as the market becomes increasingly impatient with the recovery in demand in China. Instead, the attention has been turning to worries that higher US rates for longer may strengthen the dollar and hurt the outlook for growth and demand. However, with supply potentially struggling to keep up with demand, we view the current weakness as temporary and part of the general loss of confidence that has hit markets this month. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) drop. US Treasury yields fell yesterday after probing the cycle highs in the wake of another strong weekly jobless claims number, with the 2-year little changed, but longer yields falling more sharply, as the 10-year closed at 3.87% after posting a cycle-high 3.97% in early US trading. Read next: The Euro Fell Below 1.06, The USD/JPY Pair Is Close To 135.00| FXMAG.COM What is going on? US GDP revised a notch lower, jobless claims fell The second estimate of US Q4 GDP was revised lower to 2.7% from the prelim 2.9%. The Core PCE measure, the Fed’s preferred measure of inflation, was revised to 4.3% from 3.9%, suggesting price pressure in Q4 was higher than previously reported. While slower activity and higher inflation are making the Fed’s task more difficult, the labor market remained strong, suggesting that any slowdown in growth will likely be very slow. Weekly initial jobless claims dropped to the lowest in 4 weeks at 192k from the prior 195k. Worrying signal on the inflation front in the eurozone Yesterday, inflation was confirmed higher than initially reported in the eurozone in January (headline at 8.6 % year-over-year and core at 5.3 % - this represents a 0.1 percentage point higher). What is even more worrying is that the EZ CPI basket showed the most broad-based price increase on record. 76 % of the basket experienced a month-over-month increase above 0.2 %. This is up from 52 % in December 2022. There is little doubt that the European Central Bank (ECB) will hike interest rates by 50 basis points in March. But we think the ECB is not done anytime soon with the tightening process. The terminal rate is probably closer to 4 % than expected by the market consensus. Block results beat on the back of Bitcoin revenue rising more than expected Block rallied over 7% after Q4 net revenue rose more than expected, up 14% to $4.7bn, beating estimates of $4.6bn. It comes as Bitcoin revenue rose to $1.8bn vs est. $1.8bn, while hardware revenue from its Square terminals and Square registers rose slightly more than expected. Block sees FY23 adjusted EBITDA of $1.3bn vs est. $1.3bn. Japan’s January CPI softer than expected, BOJ gov nominee Ueda’s hearings bring flexibility to dovishness January inflation print in Japan came in-line with expectations on the headline at 4.3% YoY from the prior 4.0% YoY but was marginally below expectations on the core measures. Ex fresh food and energy was out at 3.2% YoY, above last month’s 3.0% YoY but below the expected 3.3%. Inflation remains above the Bank of Japan’s 2% target, and price pressures are broad-based. BOJ nominee Kazuo Ueda’s parliamentary hearings in the lower house today brought some clarity over his policy direction, suggesting he will stick to easing for now while remaining flexible to tweaks as needed. What are we watching next? The week ahead in geopolitics after China peace proposal issues and on macro dataNext week’s macro calendar is not the usually busy one as a new month rolls into view, as the key US labor market data is not up until Friday the 10th of March, although the latest string of strong weekly US jobless claims offer no evidence of a softening labor market. Next Wednesday we’ll get the latest ISM survey data as regional US manufacturing surveys for February thus far suggest little chance of a resurgence in the recessionary ISM Manufacturing survey, with the last three readings in a row below 50 ahead of the survey release next Wednesday. The ISM Services survey, meanwhile, is up on Friday and bears watching after two confusing prior readings – a very weak one in December followed by a resurgent one in January of 55.2. Otherwise, the intense focus on geopolitics will remain as the US considers making public the intelligence it has gathered on China considering supporting Russia’s war effort in Ukraine, as well as how China deals with US warnings against China providing lethal aid to Russia in the conflict. China’s first attempt at wading into the situation as a peace-broker with a cease-fire “position paper” today was dismissed by a US official and is seen as a likely “non-starter with the US and most European countries” according to Neil Thomas, a senior analyst at the Eurasia group. Earnings to watch Today’s key earnings release is from BASF which has already reported which is sour reading for investors. The German chemical company is terminating its share buyback programme on top of reporting revenue and EBIT below estimates. In addition, the company is cutting 2,600 jobs in response to the higher energy costs. There is also good news in the Q4 earnings release that might lift the mood of investors, and that is the FY23 revenue outlook of €84-87bn vs es.t €81.8bn. Friday: BASF, Monster Beverage Economic calendar highlights for today (times GMT) 1330 – US Jan. Personal Income and Spending1330 – US Jan. PCE Inflation1500 – US Jan. New Home Sales1500 – US Feb. Final University of Michigan Sentiment1515 – US Fed’s Mester (Non-voter) to speak1600 – US Feb. Kansas City Fed Services Activity1830 – US Fed’s Collins (Non-voter) to speak1830 – US Fed’s Waller (Voter) to speak   Source: Financial Markets Today: Quick Take – February 24, 2023 | Saxo Group (home.saxo)
The Crude Oil Market Situation Is Stable Despite Russia's Production Cuts

Shipments Of Russian Oil Now Cannot Be Insured At A Price Higher Than US$60 Per Barrel

Franklin Templeton Franklin Templeton 25.02.2023 12:44
Commodities are no longer fungible Investors have traditionally regarded oil as the best example of a fungible commodity. Indeed, as someone who covered the oil and gas sector for 12 years, I was concerned with the API grade of a given field, as a differentiator of valuation of the crude oil produced from that resource. Exhibit 2 on the next page, shows what the curve of different APIs for different oil fields looks like. The positioning of the dots identifies the API and the 10-year average market price of a field’s crude oil. The colors are new—they make clear that crude oil is no longer fungible. The blue fields denote “Good Oil,” i.e., production from friends and allies. The orange fields denote “Bad Oil,” i.e., production from Russia, Iran and Venezuela. Shipments of Russian oil now cannot be insured at a price higher than US$60 per barrel, due to the ceiling imposed by the G7 and the European Union, who dominate shipping insurance in the world. It seems that this change is structural and permanent. Traders, importers and investors now need to consider the geopolitical positioning of producing countries before investing. As a result of these changes, the world flows of crude oil need to be recalibrated, in our analysis. “Blue” oil fields are long-term winners, and those “green” (neutral) oil fields will probably have to decide at some point which color to change to. Meanwhile, the same logic already applies to natural gas and selected metals. Source: Topic Paper_Inst_RuUk_0223_US.indd (widen.net)
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

The Situation In The Eurozone Is Improving, The EU Expects Inflation To Drop

Kamila Szypuła Kamila Szypuła 25.02.2023 19:20
Inflation across Europe has continued its downward movement. Another positive report of this indicator is expected. Previous data The cost of living in the eurozone fell slightly slower than previously thought in early 2023. According to Eurostat, the consumer price index for the common currency bloc fell by 0.2% on a monthly basis. This reduced the annual growth rate from 9.2% in December to 8.6% in January (preliminary: 8.5%). A similar story occurred at the baseline, which excludes food, energy, alcohol and tobacco products, with the core printed CPI year-on-year at 5.3% (preliminary: 5.2%), down from 5.2% a month earlier. Compared to the previous month, processed food, alcohol and tobacco increased the most by 1.5%, while energy prices increased by 0.6%. On the other hand, prices of non-energy industrial goods fell by 1.9% and services by 0.1%. Energy prices the main driver of inflation The record inflation in the euro area was due to a spike in energy prices, which started to increase at the end of 2021. The first spike in energy prices came as countries exited or lifted Covid restrictions and energy demand began to recover. The second jump occurred in 2021 due to the emergence of problems on the supply side. This development was exacerbated in early 2022 by the Russian invasion of Ukraine as the conflict interrupted the supply of Russian oil or natural gas to the rest of Europe. Baltic countries were the worst Most eurozone countries saw a decrease in inflation compared to December, but nine countries saw a rise in the consumer price index. Moreover, 12 countries remained in the double digits territory in January. Hungary is experiencing the highest inflation levels at around 26.2% among these. Latvia, Czechia, Estonia, and Lithuania come next, where inflation remains high at 21.4%, 19.1%, 18.6%, and 18.5%, respectively. The report noted that rising food and energy prices contributed the most to the annual inflation in January. Forecast Inflation in the euro zone is falling and is expected to fall again to 8.2% from 8.6%. Such a reading may mean that the ECB's actions are slowly becoming visible in the economy. Interest rates To tame rising inflation, the European Central Bank (ECB) started to raise interest rates after 11 years of loose monetary policy. In July last year, the central bank raised the three key ECB interest rates by 50 basis points. Last week, European Central Bank chief Christine Lagarde reiterated that the central bank aims to raise its interest rates by a half percentage point in March. “In view of the underlying inflation pressures we intend to raise interest rates by another 50 basis points at our next meeting in March,” Lagarde said. Mood improvement Growth in economic activity in the euro area accelerated to a nine-month high in February, reflecting an improvement in the performance of the services sector and a return to growth in industrial production. Growth was boosted by rising confidence as recession fears subsided and inflation shows signs of peaking, although industry also benefited from a significant improvement in supplier performance. The February recovery was supported by the services sector, where business activity increased for the second month in a row. The seasonally adjusted index rose from 50.8 in January to 53.0, the strongest increase since June last year. In terms of manufacturing, chemicals and plastics and basic resources remained major areas of weakness, while the production of food and beverages, household goods and manufactured goods showed further signs of recovery. Source: investing.com, ec.europa.eu/eurostat
How investors can best position themselves amid unclear Federal Reserve rate outlook?

The PCE Deflator For January Came In Hotter-Than-Expected, Japanese Yen Is The Weakest G10 Currency

Saxo Bank Saxo Bank 27.02.2023 08:16
Summary:  Equities and bonds took a hit on Friday amid another hot inflation data from the US as the January PCE came in higher-than-expected. That saw a hawkish shift in market expectations of the Fed path, bringing the terminal rate pricing to 5.4% and reducing the rate cuts priced in for 2023. US 2yr yields surged to fresh highs with the dollar higher as well, and Japanese yen being the weakest G10 currency amid Ueda’s neutral stance at the testimony. Focus this week on geopolitics amid China’s peace proposal, while more convincing signs of a pickup in Chinese activity are also awaited.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) tumbled as expectations of the Fed rate path shifted The white-hot Personal Consumption Price Indices released on Friday weighed on U.S. equities as investors increased rate hike expectations to 25 basis points each in the March, May, and June FOMC meetings as well as the expectation for rate cuts in the second half of 2023 almost completely vanished. The S&P 500 lost 1.1% and the Nasdaq 100 plunged 1.7%, bringing the weekly losses of the two benchmark indices to 2.9% and 3.8% respectively. Nine of the 11 sectors of the S&P 500 declined on Friday, with the rate-sensitive real estate sector and information technology sector, each down 1.8%, leading the charge lower. Autodesk, a leading computer-assisted design software firm tumbled 12.9% on releasing downbeat Q1 earnings guidance below analyst estimates and was the biggest loser in the S&P500 and Nasdaq 100 on Friday. Boeing (BA:xnys) lost 4.8%, following the aircraft manufacturing giant halted deliveries of the 787 Dreamliner jets due to documentation problems. Live Nation Entertainment (LYV:xnys) plunged 10% amid concerns over the COVID reopening play having peaked and increases in regulatory scrutiny. Farfetch (FTCH:xnys), an online luxury apparel product retailer, jumped 11% following an upbeat outlook for 2023. Farfetch is one of the constituent stocks in Saxo’s newly released Luxury Goods theme basket. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) extended a five-week losing streak Treasuries tumbled in price, rising in yields after the stronger-than-expected PCE reports which registered strong upticks in January (including upward revisions of December data). Powell’s favoured measure, PCE Services less Housing jumped to 4.6% Y/Y in January from 4.3% Y/Y in December. The market has moved to completely price in at least a 25bp hike each at the March, May, and June FOMC meeting plus about a 25% chance that the hike in March is 50bps, bringing the terminal rate to 5.4. SOFR Jun-Dec 2023 spread narrowed 11bps to -11.5bps, eliminating expectations for rate cuts in the second half of 2023. Yields on the 2-year surged 12bps on Friday or 20bps over the week to 4.81%, the highest level since 2007. Yields on the 10-year climbed 7bps on Friday or 13bps over the week to 3.94% Hong Kong’s Hang Seng (HIG3) lost nearly 12% from January highs Hong Kong's Hang Seng Index declined 1.7% bringing the 4th weekly loss in a row to 3.4% or nearly 12% from its intraday high on 27 January. China Internet names reported quarterly results generally in line with market consensus estimates but investors tended to trim positions as sentiment was dampened by resurge of tension between the U.S. and China over Russia and Ukraine and the lack of substantive recovery in the Chinese economy aside from credit expansion and survey data. During the week, JD.com (09618xhkg) was down 15%, Alibaba (09988:xhkg) down 9.5%, and Meituan (03690:xhkg) down 6.8%, as concerns about competition heating up among eCommerce platforms. Alibaba announced results beating estimates but the shares of the eCommerce giant plunged 4.6% on Friday following management comments on the need to increase investments to stay competitive in the year ahead. On Friday, NetEase (09999:xhkg) plunged 11.2%, following an earnings miss dragged down by recognition of royalty fees on expiration of game licence. Techtronic (00669:xhkg) bounced 4.4% but was still down more than 22% over the week on an alleged overstatement of earnings by capitalizing expenses. The auto space was sold, led by a 9.1% decline in Great Wall Motor (02333:xhkg). Baidu (09888:xhkg) slid 6% in the Hong Kong bourse while A-share ChatGPT concept names rallied in mainland bourses. Digital China (000034:xsec) advanced by 6.8%. CSI300 slid 1% on Friday but managed to finish the week 0.7% higher and stay above its 50 and 200-day moving averages. Financial, food and beverage, and new energy vehicle stocks led the charge lower on Friday while defense and computing names bucked the decline. Australian equities (ASXSP200.I) are continuing their short term down trend That said, stocks benefiting from the economic reopening are up the most this year, including Flight Centre, Eagers Automative which are trading up over 20% this year. In terms of the ASX200 sectors- the Consumer Discretionary sector is up the most, up 8%, YTD, followed by the Information Technology sector up 6%. While the Mining (Materials) and Finanical sectors have been pulling back, which is pressuring the market. Some investors were spooked by weaker than expected results from BHP and RIO last year, while big banks such as CBA are allocating more capital for the year ahead - for bad debts provisions, as consumers are felling the pinch of higher interest rates. All in all, the ASX200 is continuing its short term downtrend/correction amid the RBA’s more hawkish tone. For the technical levels to watch, read our Technical Analyst, Kim Cramer Larsson’s note. Australia’s oil and gas giant - Woodside Energy (WDS) reported results today; delivering profits that more than trebled in 2022 - with bottom line profits up 228% - fuelled by the oil and gas price rallies, but also as it acquired BHP’s oil and gas business. Woodside reported a larger final dividend with of US$1.44 a share, up from US$1.05 a share at the same time last year. Its full year pay-out stands at US$4.8 billion thanks to cash flows surging. This sets the tone for energy companies for 2023. Keep in mind at Saxo, we expect the oil price to stay around $80 this quarter and move up to $90 next quarter. FX: Japanese yen at YTD lows, GBP in focus with Brexit talks The dollar strength was back in focus as PCE data on Friday in the US continued to push upwards the repricing of the Fed’s path. With 2year yields surging to their fresh highs, along with BOJ governor nominee Kazuo Ueda’s continued push for a loose monetary policy coming against market’s hawkish expectations, saw the Japanese yen plunge to its lowest levels this year. USDJPY now back top testing 136.50 and Ueda’s testimony in the upper house will be in focus today. Also worth watch will be AUDUSD which plunged in close sights of 0.67 with risk sentiment and commodity prices taking a beating. UK PM Sunak is making headlines with reports saying that he may have won big concessions in the looming Brexit deal, with reports suggesting that an agreement between the UK and European Union on Northern Ireland appears to be very close. UK PM Sunak and EU head Ursula Von Der Leyen will hold talks mid-day on Monday. There are being described as 'final talks'. This will be followed by a news conference and Sunak’s statement to the parliament. GBPUSD dropped below 1.20 with the 200DMA at 1.1928 in focus. Crude oil (CLJ3 & LCOJ3) reversed higher on Friday Crude oil prices jumped back higher recording gains of 1.2% on Friday, and extended gains in the Asian morning hours amid reports of further supply disruptions as Poland’s largest oil company unexpectedly stopped receiving oil via Russia’s Druzhba pipeline. Still, unconvincing signs of a pickup in demand from China so far continues to keep oil prices range-bound, and focus this week will be on geopolitics as well as China’s PMIs. WTI futures are now back above $76/barrel after taking a look below $74 last week, while Brent is above $83. Copper broke the $4 support With the US PCE data further aggravating concerns on Fed’s rate hike path and bringing the 2-year yields to fresh highs, base metals plummeted. Copper prices plunged below the key $4 support to $3.95, closing Friday with a weekly loss of 4%. Incongruent signs of a pickup in Chinese demand also continue to underpin, and the PMI reports this week will be key to signal whether activity levels are picking up. However, with supply potentially struggling to keep up with demand, we view the current weakness as temporary and part of the general loss of confidence that has hit markets this month. Gold (XAUUSD) breaks support but losses still contained Higher US dollar in the aftermath of hot US data and higher yields has weighed on the yellow metal. Gold prices broke below the $1820 support to lows of $1809 bringing the key 1800 level in focus. Risk remains of a further weakness towards $1788 followed by the 200DMA at $1776 amid a tough macro environment. US ISM PMIs in focus this week, along with more Fed speakers, as a guide to high how interest rates could go. Silver (XAGUSD) fell harder, down 2.5% on Friday and closing with a weekly loss of 4.5%, breaking below the 200DMA at $21.   What to consider? Hot US PCE brings terminal rate expectations up to 5.4% The PCE deflator for January came in hotter-than-expected, and together with upward revisions to the previous month’s prints these sent a strong hawkish signal to the markets reinforcing the Fed’s higher-for-longer message. Core PCE rose 4.7% Y/Y, accelerating from the upwardly revised 4.6% and above the expected 4.3%. The M/M rose 0.6%, hotter than the expected and upwardly revised prior of 0.4%. This brought an upward repricing of the Fed path, with increasing calls for 50bps at the March meeting and the terminal rate now priced in at 5.4% and only one rate cut being priced in for this year from three previously. US consumer confidence also rose in February to its highest in a year, with University of Michigan sentiment accelerating to 67 from 66.4 in January. Personal incomes grew 0.6% MoM in January, a notch below expectations but consumer spending was higher-than-expected at 1.8% due to low savings rates and increased use of consumer credit. Resilient spending, along with sustained wage growth, means Fed could continue to find it tough to bring inflation back to its 2% target. Fed members continue to remain cautious on the path of inflation Fed voter Jefferson spoke about labor market strength on Friday, saying that ongoing imbalance between supply/demand for labour suggests high inflation may come down only slowly and said the argument that policymakers should accept that disinflation will be costly is well-reasoned. Bullard (non-voter) was on the wires again as well, and reaffirmed the need to move quickly to shield credibility. Collins, also a non-voter, said that recent US data affirms the case for more rate hikes. Mester (non-voter) said the Fed has to do "a little more" on rate hikes saying the new inflation data affirms the case for more rate hikes to get inflation back to target. BOJ Ueda’s upper house testimony on tap today After Friday’s testimony in the lower house of the parliament, Bank of Japan governor nominee Kazuo Ueda now moves to the upper house today. His initial policy stance appeared to be confirming continuity of the current ultra-easy monetary policy in Japan, coming against market’s hawkish expectations. This saw the yen plunge 1.3% on Friday against the USD and being the weakest currency on the G10 board. Today markets will be looking at more hints on what tweaks may be considered by Ueda and lack of further color could mean more weakness in the yen, especially with global yields surging to new highs. Geopolitics remains in focus with China’s peace proposal talks After threats from US about making public the information on China supplying weapons to Russia, China came up with a 12-point peace proposal on Friday to be a neutral mediator in the Russia-Ukraine conflict. Reports suggested that China’s proposal took a clear anti-West stance, condemning NATO extension and sanctions against Russia, but Ukrainian President Volodymyr Zelensky has signaled he's open to China's new ceasefire plan and meeting President Xi. How these events turn this week will be key to watch, especially US comments and support to Ukraine if it was to accept China as a mediator. China’s Q4 Report on the Execution of Monetary Policy emphasized stability and signalled not to induce excessive investment, debts, and bubbles China’s central bank, the People’s Bank of China, said in its Q4 Report on the Execution of Monetary Policy that the primary objective of countercyclical monetary policy was to smooth the volatility in aggregate demand so as to avoid the destructive effects of excessive fluctuations of aggregate demand on the factors of production and the wealth of the society. The report emphasizes that the force of monetary policy must be stable and not bring about excessive liquidity that induces excessive investment, a surge in debts, and asset bubbles. In support of the real economy, the Q4 Report emphasizes stability and sustainability of credit growth but omits the stronger wording of “more forceful” and “increases of credit support” that were in the Q3 Report. China may be sending a signal to lower the expectations of the market on monetary easing.   For a global look at markets – tune into our Podcast.   Source: Markets Today: Hot US PCE brings 2yr yields to fresh highs – 27 February 2023 | Saxo Group (home.saxo)
The Commodities Feed: US announces SPR purchase

Crude Oil Remains Anchored Near The Lower, US PCE inflation data on Friday spooked the market

Saxo Bank Saxo Bank 27.02.2023 09:42
Summary:  US PCE inflation data on Friday spooked the market as the Fed terminal rate for this year was taken higher still, with discussion of the risk of larger hikes even afoot. Both the US S&P 500 Index and Nasdaq 100 touched their 200-day moving averages intraday on Friday as yields jumped. This week’s focus still on geopolitical developments, faltering confidence in the China re-opening narrative and US Feb. ISM Surveys Wednesday and Friday, with the key US employment figures not up until next week. What is our trading focus? US equities (US500.I and USNAS100.I): bonds will continue to dictate where equities go US equities continued their decline on Friday with S&P 500 futures declined 1.1% to the lowest close since around mid-January as US inflation figures (PCE deflator) surprised to the upside. As we have explained in recent equity notes the equity market will be driven by the talk about structural inflation over the coming months and how that discussion recalibrates long-term US bond yields to higher levels. In late April and May when the Q1 earnings are released the discussion about margin compression will heat up again, so there are plenty of downside risks still in equities in 2023. Hang Seng Index (HSI.I) and CSI300 (000300.I) slid amid economic, policy, and geopolitical uncertainties Hang Seng Index and CSI300 extended their declines with both indices falling around 0.4-0.5%. Investors trimmed positions as sentiment was dampened by resurge of tension between the U.S. and China over Russia and Ukraine and the lack of substantive recovery in the Chinese economy aside from credit expansion and survey data. China’s central bank emphasized in its Q4 Report on the Execution of Monetary Policy that the monetary policy must be stable and not bring about excessive liquidity that induces excessive investment, a surge in debts, and asset bubbles. Investors interpreted that as a signal to lower the expectations of the market on aggressive monetary easing. The CCP’s central committee is holding a meeting from 26-28 February to decide on the recommendation list of candidates for top government posts to be sent to the National People’s Congress to finalize during the latter’s meeting commencing from 5 March. FX: Japanese yen touched YTD lows, GBP in focus with Brexit talks The dollar strength was back in focus as hot core January PCE inflation data on Friday took the repricing of the Fed’s path higher once again. With 2-year yields surging to their fresh highs, along with BOJ governor nominee Kazuo Ueda’s continued push for a loose monetary policy coming against market’s hawkish expectations, the Japanese yen plunged to its lowest levels this year, with USDJPY testing 136.50 overnight. Also worth watch will be AUDUSD which plunged in close sights of 0.67 as risk sentiment and commodity prices are taking a beating. Elsewhere, UK PM Sunak is making headlines with reports saying that he may have won big concessions in the looming Brexit deal, with reports suggesting that an agreement between the UK and European Union on Northern Ireland appears to be very close. UK PM Sunak and EU head Ursula Von Der Leyen will hold talks mid-day on Monday. These are being described as 'final talks'. This will be followed by a news conference and Sunak’s statement to the parliament. GBPUSD dropped below 1.20 with the 200DMA at 1.1928 in focus. Crude oil remains anchored near lower end of range Crude oil remains anchored near the lower end of its the established range that has prevailed since the end of 2022, in Brent between $80 and $89, and WTI between $82 and $73. Overall, the sentiment across markets, including commodities, suffered another blow last week after traders and investors in response to another hot US inflation data increased forecasts for US interest rates. Higher rates may hurt economic growth and with that fuel demand from consumers. China meanwhile remains on a recovery track but for now it has only prevented an even deeper selloff in crude oil. A disruption in oil supply to Poland via the Druzhba pipeline from Russia, a day after Poland delivered its first Leopard tanks to Ukraine, is having a limited impact. Speculators meanwhile hold an elevated long position in Brent according to COT data released on Friday (see below). In focus this week, the annual International Energy Week which kicks off in London on Tuesday. Gold (XAUUSD) slumps towards next area of support The US dollar reached a multi-week peak in the aftermath of hot US data and together with higher yields have weighed on the yellow metal, with gold risking further weakness towards the 200DMA at $1776 amid a tough macro environment. US ISM PMIs in focus this week, along with more Fed speakers, as a guide to high how interest rates could go. Silver (XAGUSD) fell harder, down 2.5% on Friday and closing with a weekly loss of 4.5%, breaking below the 200DMA at $21. The gold-silver ratio meanwhile has spiked to 87.80 high, a 16% underperformance relative to gold since mid-December. Copper trades below $4 support With the US PCE data further aggravating concerns on Fed’s rate hike path and bringing the 2-year yields to fresh highs, base metals plummeted. Copper prices plunged to a seven-week low below the key $4 support with the next key support being the 200DMA at $3.77, the break above which triggered January’s surge. Incongruent signs of a pickup in Chinese demand also continue to underpin, and the PMI reports this week will be key to signal whether activity levels are picking up. However, with supply over time potentially struggling to keep up with demand, we view the current weakness as temporary and part of the general loss of confidence that has hit markets this month. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) jump after hot core PCE inflation data The hot core US January PCE inflation data released on Friday (more below) shocked US yields to new cycle highs, with the 2-year treasury benchmark yield reaching above 4.8% for the first time since 2007 as the market moved to completely price in at least a 25bp hike each at the March, May, and June FOMC meeting plus about a 25% chance that the hike in March is 50bps, bringing the terminal rate to 5.4. The Jun-Dec 2023 spread narrowed 11bps to -11.5bps, almost entirely eliminating expectations for rate cuts in the second half of 2023. Ten-year yields poked toward the recent cycle highs just shy of 4.00% and the 2-10 yield slope closed the week at a new multi-decade inversion record of –89 basis points (an intraday spike on Feb. 15 saw it briefly below –90 bps). What is going on? Hot US PCE brings Fed terminal rate expectations up to 5.4% The PCE deflator for January came in hotter-than-expected, and together with upward revisions to the previous month’s prints these sent a strong hawkish signal to the markets reinforcing the Fed’s higher-for-longer message. The Core PCE rose 4.7% Y/Y, accelerating from the upwardly revised 4.6% and above the expected 4.3%. The M/M rose 0.6%, hotter than the expected and upwardly revised prior of 0.4%. This brought an upward repricing of the Fed path, with increasing calls for 50 bps at the March meeting and the terminal rate now priced in at 5.4% (82+ bps of further hiking from current level) and the end-2023 expectation at –12 bps relative to peak rates, Fed members remain cautious on the path of inflation Fed voter Jefferson spoke about labor market strength on Friday, saying that ongoing imbalance between supply/demand for labour suggests high inflation may come down only slowly and said the argument that policymakers should accept that disinflation will be costly is well-reasoned. Bullard (non-voter) was on the wires again as well, and reaffirmed the need to move quickly to shield credibility. Collins, also a non-voter, said that recent US data affirms the case for more rate hikes. Mester (non-voter) said the Fed has to do "a little more" on rate hikes saying the new inflation data affirms the case for more rate hikes to get inflation back to target. Geopolitics remains in focus with China’s peace proposal talks After threats from US about making public the information on China supplying weapons to Russia, China came up with a 12-point peace proposal on Friday to be a neutral mediator in the Russia-Ukraine conflict. Reports suggested that China’s proposal took a clear anti-West stance, condemning NATO extension and sanctions against Russia, but Ukrainian President Volodymyr Zelensky has signaled he's open to China's new ceasefire plan and meeting President Xi. How these events turn this week will be key to watch, especially US comments and support to Ukraine if it was to accept China as a mediator. COT data shows unwavering support for higher Brent prices The ICE Futures Europe exchange released four weeks' worth of delayed COT data on Friday with reporting now up to date following the January cyber-attack on ION Trading UK, which caused delays in trades being reported. The US CFTC meanwhile released one COT report for the week ending January 31 with data unlikely to be up to date for another three weeks. ICE Brent data showed unwavering support for higher prices with funds holding a net long of 277k lots, a 16-month high and the weakest gross short position at 28k since 2011. The ICE gasoil (diesel) net long meanwhile dropped to 33.7k lots and lowest since November 2020. The futures contract (FPH3) trades near a one-year low with refinery margins under pressure as Middle East and Asian shipments replace supply from Russia. Food price inflation continues to ease One year on from the Russian attack on Ukraine which triggered a surge in wheat, corn and edible oils we a seeing prices continuing to deflate. Global wheat prices remain under pressure from a flood of Russian supplies forcing EU and US sellers to lower prices to stay competitive. In Chicago the soon to expire March wheat contract trades near a 17-month low, down 48% from the March 2022 panic peak while Paris Milling wheat has declined by 38%. The focus is turning to the outlook for global wheat crops this year. According to Bloomberg, US farmers are likely to plant more than analysts expect, and nearly all of France’s soft-wheat crop is in good to very good shape. Traders are also watching talks on the Ukraine grain-export deal, which is up for renewal in March. Berkshire Hathaway Q4 operating earnings miss estimates Warren Buffett’s holding company Berkshire Hathaway announced over the weekend operating earnings of $6.7bn vs est. $7.3bn driven by weaker results in its railroad and insurance businesses due to higher input costs for materials and labour. Berkshire Hathaway is still striking a positive outlook on the US economy. Warren Buffett also talks about the repurchases saying that they are not all bad if they are bought below the fair value. Woodside Energy reported profits triple in 2022 Following the theme of strong energy company earnings reports Woodside’s bottom line profits rose 228% fuelled by the rise of oil and gas prices, but also as Woodside output rose over 70%, after it acquired BHP’s oil and gas business. Woodside reported a larger final dividend of $1.44 per share, up from $1.05 a year ago. Its full year dividends payout stands at $4.8bn. On top of that, Woodside is now seeking opportunities to expand again narrowing in on potential buying assets in the Gulf of Mexico. Woodside’s record profit results follow a set of strong numbers from oil and gas producers including Shell, BP and Santos. This also sets the tone for energy companies in 2023. Woodside Energy shares ended 1.5% higher on Monday in Australia. Keep an eye on US and London listed Woodside.  Read next: Pfizer Is In The Early Stages Of An Acquisition Of Biotech Company Seagen, Twitter's Staff Has Shrunk Since Elon Musk Took Over| FXMAG.COM What are we watching next? China Government Work Report is delivered on 5 March This year’s Government Work Report will be delivered on 5 March. This will provide more details on policy action for urbanization and the property market. There will likely be two main points of interest: affordability (measures to increase accessibility to mortgage loans) and rural construction (focus on rural land transfers and reduction of complexity in regulation). With further stimulus measures in sight, we are confident that China will probably announce a higher GDP target at the upcoming National People’s Congress – meaning 5.5 %. US ISM surveys to be the next test for yields and US dollar The recent data out of the US has shown firm inflation and growth dynamics, prompting an upward repricing of the Fed’s path and bringing yields to critical levels. The ISM surveys this week will be key to watch for further direction, with the manufacturing survey out on Wednesday and services out on Friday. The consensus is for the manufacturing ISM to improve to 48.0 in February from 47.4 in January, but still in contraction (below 50) for a fourth consecutive month. The ISM services index saw a surge to 55.2 in January after a drop to 49.2 in December, partially a reflection of winter weather trends. Gains are likely to moderate, and consensus expects 54.5. EVs in focus – Tesla Investor Day and Li Auto and NIO report earnings China reopening theme is under strain, with the Asian reporting season underway, and this week brings earnings reports from two large EV manufacturers. Li Auto (02015:xhkg/LI:xnas) reported on Monday before China open while Nio (09866:xhkg/NIO:xnas) reports on Wednesday. It will be key to watch how Tesla’s steep discounts and the end of government subsidies impacts the outlooks for these two Chinese EV manufacturers which got off to a slow start this year, and whether the decline in lithium prices lifts the outlook higher. Tesla (TSLA:xnas) will hold an Investor Day event on March 1 in what could be one of the key days of the year for the electric vehicle giant. Nio, Li Auto and XPeng (09868:xhkg/XPEV:xnys) also report February deliveries this week, and China’s EV and battery giant BYD (01211:xhkg/BYD:xnys) should release February sales by Friday. Occidental earnings preview Oil and gas companies have again reported the best earnings growth this US and Australian corporate reporting season - with increased profits and higher dividends from Shell, BP and Santos. Occidental Petroleum’s outlook will be a focus today, as well as Canadian Natural Resources results later in the week. Occidental is expected to report its highest-ever Q4 net income, with the US energy giant set to benefit from high energy prices amid tight supplies. The oil and gas giant generated about $2.8bn in free cash flow in the period after years of austerity and debt reduction, according to Bloomberg consensus. Investors will closely monitor its 2023 spending and capital-returns outlook with adjusted EPS of $1.79 expected. Occidental's shares are down 6.6% this year. Earnings to watch Today’s key US earnings releases are Occidental Petroleum, Li Auto, and Zoom Video with a preview of Occidental Petroleum in the section above. Zoom Video will be watched as many retail investors still have a big interest in this pandemic winning company with analysts expecting FY23 Q4 (ending 31 Jan) up 3% y/y and EBITDA of $353mn up from $278mn a year ago. Li Auto is also in focus as the electric vehicle adoption continues to accelerate with Chinese production expected to expand more rapidly in 2023 as the zero-Covid policy has ended. Analysts expect Li Auto revenue growth of 66% y/y. The three other key earnings we are watching this are Salesforce, Snowflake, and Coupang which we highlight in our earnings watch note from last Friday. Monday: Woodside Energy, Alcon, Occidental Petroleum, Workday, Li Auto, Zoom Video Tuesday: Bayer, Moncler, ASM International, Target, Monster Beverage, HP, First Solar, Coupang, Rivian Automotive Wednesday: Royal Bank of Canada, Beiersdorf, Reckitt Benckiser, Kuehne + Nagel, Salesforce, Lowe’s, Snowflake, NIO Thursday: Anheuser-Busch InBev, Argenx, Yunnan Energy New Material, Toronto-Dominion Bank, Fortum, Veolia Environment, Merck, Hapag-Lloyd, CRH, London Stock Exchange, Haleon, Flutter Entertainment, Universal Music Group, Broadcom, Costco, VMware, Marvell Technology, Dell Technologies Economic calendar highlights for today (times GMT) 1000 – Eurozone Feb. Confidence Surveys 1330 – US Jan. Preliminary Durable Goods Orders  1530 – US Feb. Dallas Fed Manufacturing Activity 1530 – US Fed’s Jefferson (Voter) to speak 1700 – ECB Chief Economist Lane to speak 2350 – Japan Jan. Industrial Production 0000 – New Zealand Feb. ANZ Business Confidence 0030 – Australia Jan. Retail Sales Source:Financial Markets Today: Quick Take – February 27, 2023 | Saxo Group (home.saxo)
The Commodities Feed: Further oil supply disruptions

Analysis Of Prices Movement Of The Crude Oil Commodity Asset

InstaForex Analysis InstaForex Analysis 27.02.2023 09:47
On the weekly chart, the Crude Oil commodity asset shows hidden deviations between its price movements and the Stochastic Oscillator indicator so that in the near future #CL has the potential to go down where in the near future it will try to test the Ross Hook (RH) level at 70.10 if this level succeeds penetrated below, the 62.43 - 57.26 area will be the main target to aim for and if the momentum and volatility are sufficiently supportive then it is possible that the 33.64 level will be the next target to aim for provided that during the way down to these targets there is no upward correction movement significant upwards to pass the 93.74 level because if this level is broken then all the downside scenarios that have been previously described will become invalid and cancel automatically.  Read next: Pfizer Is In The Early Stages Of An Acquisition Of Biotech Company Seagen, Twitter's Staff Has Shrunk Since Elon Musk Took Over| FXMAG.COM Relevance up to 03:00 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/120205
The European Economy Has Demonstrated Amazing Resiliency Following The Supply Shock Of The Russian Invasion Of Ukraine

The UK And EU Reached A Deal On Northern Ireland's Trading Arrangements

Saxo Bank Saxo Bank 28.02.2023 08:30
Summary:  Risk sentiment revived on Monday, paring some of the jitters from a hot PCE report on Friday. Month-end flows saw Treasuries firmer and stocks higher, and the losses in dollar were accentuated by GBP strength after UK-EU deal to smoothen Northern Ireland trade. European indices however outperformed while Asia Pacific indices ASX and HSI remain in downtrends. Metal prices firmed up amid a softer dollar with Copper back above $4 support. Focus today on Eurozone flash CPI before US ISM and China PMIs take away the headlines.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) moved up cautiously, European equities outperform On Monday markets seemed pacified a little in a thin volume session after US headline durable goods orders fell in January while the UK and the EU reached a deal on Northern Ireland’s trading arrangements after years of friction caused by Brexit. The S&P 500 rose as much as 1.2% to 4018 in early trading before paring much of the gains to close 0.3% higher. Gains in the benchmark index were driven by consumer discretionary, industrials, and information technology stocks. The Nasdaq 100 finished Monday rising 0.7%. Union Pacific (UNP:xnys) surged 9.4% after the railroad company announced to search for a new CEO. Solar energy equipment makers Enphase Energy (ENPH:xnas) and SolarEdge Technologies (SEDG:xnas) each advanced 5.9%.Telsa (TSLA:xnas) rallied 5.5% amid its German plant hitting a production level of 4,000 per week, three weeks ahead of schedule. European equities started the week on a stronger footing as well with EuroStoxx 600 and Germany’s DAX each up 1.1%, France’s CAC index up 1.5% and UK’s FTSE 100 up 0.7%. Some of the optimism came from UK PM Sunak striking a deal with the EU on Northern Ireland trade (read below). Retailers bounced higher as consumer spending remains resilient after fears of recession and energy crunch have eased and the prospect of Chinese demand. The short end of the US Treasury curve (TLT:Xmas, IEF:xnas, SHY:xnas) rallied as the long lend dragged by supply Yields on the 2-year through 5-year Treasury dropped 5bps on short covering amid mixed economic data with a decline in headline durable goods orders due to weak Boeing orders, strong pending home sales, and a weak Dallas Fed manufacturing activity index. The long end underperformed, with yields on the 10-year shed 3bps and the 30-year finished the Monday session unchanged. Upcoming corporate supply estimated to be more than USD30 billion this week weighed on the long end. Across the pond, the 10-year German Bund yield rose to as high as 2.59%, the highest level since 2011 following hawkish comments from ECB Governing Council member Vujcic. Yields on the 10-year Gilts jumped 15bps to 3.81% following the UK and the EU reached an agreement on treading arrangements in Northern Ireland. Hong Kong’s Hang Seng Index (HSI.I) and China’s CSI300 (000300.I) slid; Chinese consumer names bucked the decline Hang Seng Index and CSI300 extended their declines, falling around 0.3% and 0.4% respectively. Haidilao (06862:xhkg), surging 13.7%, was the best-performing stock within the Hang Seng Index, following the Chinese hotpot restaurant chain preannounced positive profit alert with an FY22 earnings beat. The Chinese consumption space did well overall. Budweiser Brewing (01876:xhkg) and China Resources Beer (00291:xhkg) each advanced over 2%. Xiabuxiabu (00520:xhkg) climbed 1.2%. The performance of China internet names was mixed. Kuaishou (01024:xhkg) gained 2.6% and was the biggest winner with the Hang Seng TECH Index. Nonetheless, news about China’s National Radio and Television Administration studying measures to tighten regulation over short videos broke out after the Hong Kong market close. Baidu (09888) rose 2% while Alibaba (09988:xhkg) slid 0.7%. In the EV space, BYD (01211:xhkg) lost 3.4% on price cuts while Li Auto (02015:xhkg) advanced 2.1% after reporting a 41% Y/Y jump in Q4 non-GAAP earnings, beating estimates. XPeng (09869:xhkg) edged up 0.3% after being added to the Hang Seng China Enterprises Index with a weight of 0.59%. In A-shares, solar, AI generated content, media, electronic, and construction materials declined. Food and beverage, and Chinese white liquor names, coal mining, chemical, and communication bucked the overall trend of decline. Kweichow Moutai (600519:xssc) climbed 1.3%; Wuliangye (000858:xsec) advanced 1.8%. Australian equities (ASXSP200.I) move up - but remain at the lowest levels since Jan 12 The ASX200’s short term downtrend still appears to be at play, despite the market rising 0.6% today. Pressuring equities now are a trifecta of reasons- not only a more hawkish RBA, plus its ex-dividend season – marking the 2nd worst month of the year, and thirdly, from a technical perspective, quant traders will be on their toes as the ASX200 is testing a rising trend line, that it formed last year. If it breaks below the area tested yesterday - the market could be at risk of falling further. What does it mean when shares are trading ex-dividend? It’s simply where the dividend right is transferred to shareholders, ahead of dividends being paid out. This typically pressures share price performance. For longer term investors and those seeking yield (dividends)– it be worth considering buying a company’s shares before the ex-date if you wanted to be entitled to the upcoming dividend to be paid. But also keep in mind, when a company goes ex-dividend on the day, it usually falls. For example yesterday Fortescue shares fell 4.1% after going ex-dividend, moving FMG under its 50-day moving average. Today, one day after going ex-dividend Fortescue’s shares trade  3% higher. Though it is worth mentioning, the iron ore price rising 0.7% is adding to positive sentiment after the iron ore price fell over 3% on Monday. So - it’s important to consider companies going ex-dividend ahead. Today, Origin Energy, Evolution Mining, WorleyParsons and Domino’s go ex-dividend. Coles and Woolworths go ex-dividend on March 2, along with Pilbara Minerals. Next week on March 9 - BHP and RIO go ex-dividend, along with Mineral Resources, South32, the ASX, and CSL. FX: GBP surged on Brexit trade deal, AUD still a laggard The USD softened on Monday, nearly erasing all of Friday’s gains as yields fell and stocks jumped in a risk-on environment. US durable goods data missed estimates, cooling off some concerns of another uptick in the tightening pace. However, inflation fears continue to spell caution and no reversal in Fed’s tightening expectations was seen. Most of the USD softness came on the back of GBP strength on UK-EU finalizing a deal to smoothen Northern Ireland trade. GBPUSD surged from 1.1923 to 1.2060 and EURGBP slid below 0.88. AUDUSD failed to break below 0.67 handle but remained near recent lows even as metals recovered a notch. Copper back above $4 amid risk-on, Lithium supply concerns return A broad recovery in base metals was seen as the PCE data from Friday didn’t materialize in risk sentiment capitulation. Copper prices rose ~1.5% after dropping to lows of $3.94 yesterday. Focus this week is on China’s PMI releases due on Wednesday to assess the pickup in Chinese activity after Covid restrictions have been eased. Aluminum also gained following four weeks of losses amid ongoing supply concerns. Zinc and aluminium smelters in Yunnan have been asked to reduce output due to power rationing. Concerns about Lithium supply are also likely to rise as China investigates illegal mining. Operations in Yichun have been ordered to halt work indefinitely. The move could impact between 8-13% of global supply.   What to consider? UK-EU Brexit deal on Northern Ireland trade sealed The UK and EU reached a deal on Northern Ireland's trading arrangements aimed at ending years of friction caused by Brexit. The deal, known as “Windsor Framework”, aims to considerably cut customs paperwork and checks on goods moving from Great Britain but destined to stay in Northern Ireland. Existing requirements on trade from Northern Ireland to the UK will be removed. GBPUSD surged on the news to 1.20+. Yellen in Kyiv to show support Janet Yellen made an unannounced trip to Ukraine to highlight US support. She met with Zelensky and PM Shmyhal and also announced a disbursement of $1.25 billion in fresh economic aid, the first out of a total $10 billion pledged by the administration. It was also reported that the dignitaries discussed additional sanctions on Russia, including confiscating frozen Russian assets to benefit Ukraine's recovery, despite legal obstacles. Food price inflation continues to ease – wheat prices tumble to lowest levels since Sept, 2021   As mentioned in Saxo’s Quick Take global wheat prices remain under pressure from a flood of Russian supplies forcing EU and US sellers to lower prices to stay competitive. In Chicago the soon to expire March wheat contract trades near a 17-month low, down 48% from the March 2022 panic peak while Paris Milling wheat has declined by 38%. The focus is turning to the outlook for global wheat crops this year. According to Bloomberg, US farmers are likely to plant more than analysts expect, and nearly all of France’s soft-wheat crop is in good to very good shape. Traders are also watching talks on the Ukraine grain-export deal, which is up for renewal in March. Click for the technical levels to watch in Wheat, Corn and Soybean Energy giant Occidental goes against the grain of the energy sector and disappoints   Occidental reported adjusted EPS of $1.61, missing the $1.79 Bloomberg consensus expected for the fourth quarter. Despite production increasing by about 3% YoY, the miss on earnings was a result of lower than expected realised prices for natural gas, while it received slightly higher realised prices for oil than expected. This was all while OXY increased capital expenditure to $1.5b, vs the $1.3b expected in the quarter and repaid $1.1 billion of debt. Despite delivering record earnings that missed expectations, OXY increased its dividend by 38% and announced a new $3 billion share buy back. Warren Buffett’s Berkshire Hathaway is the largest Occidental shareholder. The company will hold a conference call to discuss these results Tuesday at 1 p.m. ET. For the year ahead, OXY guides for cap ex to be as high as $6.2b (vs $5.66b). Occidental shares fell 1% after hours, moving further away from its 50-day moving average. Occidental is the only major oil company lately to report results that missed market expectations; with Shell, BP, and Woodside all beating. Softer Eurozone flash February CPI may not be a big relief Broader expectations are for the Eurozone flash CPI to ease to 8.2% YoY in February from 8.6% last month amid lower energy prices. However, the core measure is still expected to be firm at 5.3% YoY, underpinned by higher non-energy industrial goods. This continues to suggest that the underlying price pressures remain firm, and another 50bps rate hike from the ECB remains likely in March. The minutes from the last ECB meeting are also out on Thursday, and the path after the next 50bps rate hike remains on watch. Lagarde previously noted that the ECB will not be at peak rates in March and there will most likely be ground left to cover, which suggested that hopes for a pause in May could be disappointed.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Markets Today: Risk sentiment recovers; Month-end flows in play – 28 February 2023 | Saxo Group (home.saxo)
The Indian Rupee Pair Takes Clues From The Receding Fears Of Hawkish Fed Rate Moves

The Indian Rupee Will Display A Power-Pack Action After The Release Of The Q3 GDP Data

TeleTrade Comments TeleTrade Comments 28.02.2023 08:32
USD/INR has shifted its range below 82.70 amid an overnight correction in the USD Index. The Indian Rupee will display a power-pack action after the release of the Q3 GDP data. S&P500 futures have further added gains after a modest positive Monday, portraying ease in the risk-off mood. The USD/INR pair has shifted its business below 82.70 in the Asian session led by an overnight sell-off in the US Dollar Index (DXY). The asset has slipped as investors have ignored clouds of uncertainty associated with accelerating consumer spending in the United States amid an upbeat labor market. US tight labor market has shifted the bargaining power in the favor of job seekers from the hiring agencies amid a shortage of labor. This has flushed significant liquidity in the palms of households for disposal, which is fueling retail demand efficiently. No doubt, the fears of more rates by the Federal Reserve (Fed) are skyrocketing. But for now, the risk-off profile has eased gradually. S&P500 futures have further added gains after a modest positive Monday session, portraying an improvement in the risk appetite of the market participants. The alpha generated on 10-year US treasury bonds has turned lackluster around 3.92%. Meanwhile, the Indian Rupee will display a power-pack action after the release of the Q3 Gross Domestic Product (GDP) data for FY2022-23. The Indian economy showed double-digit growth in Q1 as helicopter money released by the Indian administration and expansionary monetary policy by the Reserve Bank of India (RBI) was spurting overall growth. In the second quarter, GDP started moderating and trimmed to 6.3% as the administration started contracting liquidity to bring down galloping inflation. The RBI projected the real GDP growth for 2022-23 at 6.8% and for the third quarter at 4.4%. On the oil front, the oil price has recovered to near $75.80 as the economy is betting on China’s reopening after a prolonged lockdown to contain the pandemic. It is worth noting that India is one of the leading importers of oil in the world and higher oil prices can impact the Indian rupee.  
UK Gfk Consumer Confidence index got better fourth month in a row

Sterling (GBP) Modestly Firmer In The Wake Of Post-Brexit Settlement Between The EU And UK

Saxo Bank Saxo Bank 28.02.2023 09:23
Summary:  In FX, The US equity market tried to rally yesterday after Friday’s pummeling on hot inflation data, but generally failed to maintain altitude and dropped back close to unchanged on the session as key support remains in place. End of month flows could drive volatility today. In FX, sterling modestly firmer in the wake of post-Brexit settlement between the EU And UK on the Northern Ireland border issue. What is our trading focus? US equities (US500.I and USNAS100.I): S&P 500 futures remain in limbo US equities bounced back yesterday at point engulfing the entire selloff from last Friday before S&P 500 futures gave up its gains towards the end of the session. This morning the index futures opened higher but have sold off trading around the 3,984 level in early European trading hours. Equities have moved into a short-term hibernation until the market gets more clearer evidence of where the bond market wants to go and whether growth is picking up in China following the reopening of the economy post its zero-Covid policy. Hang Seng Index (HSI.I) pared early gains as tech names tumbled The Hang Seng Index jumped over 1% in early trading before paring all the gains and headed south, losing about 0.3% in the absence of headline drivers. Chinese developers, technology, and solar names led the charge lower. While A-share solar, energy storage, and chemical stocks retreated, the CSI300 was supported by consumer, textile, and pharmaceutical names and managed to advance 0.5%. FX: GBP rallies on Brexit trade deal, AUD still a laggard The USD softened in early Monday trading in the US yesterday, nearly erasing all of Friday’s gains as yields fell and stocks jumped in a risk-on environment, but the risk rally faded and the USD rebounded slightly. US durable goods data missed estimates, cooling off some of the momentum in short US yields. However, inflation fears continue to spell caution and no reversal in Fed’s tightening expectations was seen. Most of the USD softness came on the back of GBP strength on UK-EU finalizing a deal to smoothen Northern Ireland trade. GBPUSD surged from 1.1923 to 1.2060 and EURGBP slid below 0.88. AUDUSD failed to break below 0.67 handle but remained near recent lows even as metals recovered a notch. Crude oil remains anchored near lower end of range Crude oil futures slipped again on Monday before finding a bid overnight in Asia. Developments that continue to see the price action being confined within a narrowing range. Crude oil may nevertheless be heading for a fourth monthly loss as concerns about tighter monetary policies raises concerns about a hard landing and with that weaker demand for crude and products. While a slower than expected start to the year has triggered price downgrades from banks, the consensus still points to a pickup in demand and prices above $90 later in the year. A view shared by Vitol, the world’s largest independent oil trader who sees oil rise later in the year in response to a 2.2 million barrels a day jump in 2023 demand. In Brent we find ascending trendline support at $80.70 with resistance at $83.60. Copper back above $4 amid risk-on, Lithium supply concerns return A broad recovery in base metals was seen on Monday as the focus turns to this week’s Two Sessions gathering in Beijing where traders will be looking for fresh signals from the government. Copper trades back above $4 after finding support around $3.94, the December high. Also, in focus this week is China’s PMI releases due on Wednesday to assess the pickup in Chinese activity after Covid restrictions have been eased. Aluminum also gained following four weeks of losses amid ongoing supply concerns. Zinc and aluminium smelters in Yunnan have been asked to reduce output due to power rationing. Concerns about Lithium supply are also likely to rise as China investigates illegal mining. Operations in Yichun have been ordered to halt work indefinitely. The move could impact between 8-13% of global supply. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) flat ahead of end-of-month US Treasury yields rose slightly again yesterday to new 15-year highs after Friday’s jump on hot US PCE inflation but then eased back to approximately unchanged. It’s been a tough month for treasuries, with the 2-year yield benchmark surging some 60 basis points this month and the 10-year benchmark yield up over 30 basis points. Today is the last trading day of February and could see month-end rebalancing as we await incoming US data. Read next: EUR/USD Pair Is Trading Around 1.0560, USD/JPY Is Above 136.20, GBP/USD Gained| FXMAG.COM What is going on? UK-EU Brexit deal on Northern Ireland trade sealed The UK and EU reached a deal on Northern Ireland's trading arrangements aimed at ending years of friction caused by Brexit. The deal, known as “Windsor Framework”, aims to considerably cut customs paperwork and checks on goods moving from Great Britain but destined to stay in Northern Ireland. Existing requirements on trade from Northern Ireland to the UK will be removed. GBPUSD surged on the news to 1.20+. Yellen in Kyiv to show support Janet Yellen made an unannounced trip to Ukraine to highlight US support. She met with Zelensky and PM Shmyhal and also announced a disbursement of $1.25 billion in fresh economic aid, the first out of a total $10 billion pledged by the administration. It was also reported that the dignitaries discussed additional sanctions on Russia, including confiscating frozen Russian assets to benefit Ukraine's recovery, despite legal obstacles. Tesla shares gains 5% on German production ramp up Reuters reported yesterday that Tesla’s German car plant production hits 4,000 cars/wk which is ahead of schedule boosting sentiment. At this point, we do not know how big the cannibilazation is against its Shanghai production plant which has been the main exporter to Europe. On Friday, one of its more prolific investors Ross Gerber pulled his activist board seat bid suggesting shareholders are holding back from their criticism. Overnight one of Tesla’s suppliers, South Korea based L&F, announced that it had won a KRW 3.8trn cathode materials order, again suggesting demand is ramping up for Tesla. Zoom video rallied over 7% in post-market trading on a strong profit outlook The company reported slightly weaker sales than expected, but forecast Q1 profit of 96-98 cents per share versus analyst consensus of 87 cents and full year profits and especially 2024 profits well above analyst estimates. Zoom is reporting growth in enterprise customers while a shrinking revenue from individual consumers and small businesses. Energy giant Occidental reports disappointing results Occidental reported record quarterly earnings, but missed expectations after costs rose more than expected. The company guided for higher spending ahead, including on its direct air carbon reduction project. For the year ahead, it expects capital expenditure to be as high as $6.2b - vs $5.66b expected. OXY increased its dividend by 38% and announced a new $3 billion share buyback. Its adjusted EPS came in at $1.61, missing the $1.79 Bloomberg consensus. The miss also comes as it received lower than expected realised prices for natural gas - while realised prices for oil were slightly higher than expected.  Warren Buffett’s Berkshire Hathaway is the largest shareholder. A conference call to discuss the results for OXY is at 1 pm ET on Tuesday. Occidental shares fell 1% after hours. Occidental is the only major oil company reporting recently that missed market expectations – while Shell, BP and Woodside all beat. What are we watching next? Softer Eurozone flash February CPI may not be a big relief Broader expectations are for the Eurozone flash CPI to ease to 8.2% YoY in February from 8.6% last month amid lower energy prices. However, the core measure is still expected to be firm at 5.3% YoY, underpinned by higher non-energy industrial goods. This continues to suggest that the underlying price pressures remain firm, and another 50bps rate hike from the ECB remains likely in March. The minutes from the last ECB meeting are also out on Thursday, and the path after the next 50bps rate hike remains on watch. Lagarde previously noted that the ECB will not be at peak rates in March and there will most likely be ground left to cover, which suggested that hopes for a pause in May could be disappointed. France and Spain report preliminary Feb. CPI figures today, while Germany reports CPI tomorrow. Earnings to watch Today’s key US earnings to watch is Coupang and First Solar with the former being part of our earnings preview from last Friday and analysts expecting Coupang to announce 7% revenue growth and EBITDA of $197mn up from $-248mn a year ago as the company is under pressure to increase profitability. Coupang reports its Q4 earnings releases after the US market close. First Solar is expected to report its Q4 earnings after the US market close with analysts expecting 10% revenue growth y/y and EBITDA of $48mn down from $262mn a year ago. Tuesday: Bayer, Moncler, ASM International, Target, Monster Beverage, HP, First Solar, Coupang, Rivian Automotive Wednesday: Royal Bank of Canada, Beiersdorf, Reckitt Benckiser, Kuehne + Nagel, Salesforce, Lowe’s, Snowflake, NIO Thursday: Anheuser-Busch InBev, Argenx, Yunnan Energy New Material, Toronto-Dominion Bank, Fortum, Veolia Environment, Merck, Hapag-Lloyd, CRH, London Stock Exchange, Haleon, Flutter Entertainment, Universal Music Group, Broadcom, Costco, VMware, Marvell Technology, Dell Technologies Economic calendar highlights for today (times GMT) 0745 – France Feb. Flash CPI 0800 – Spain Feb. Flash CPI 1215 – UK Bank of England Chief Economist Huw Pill to speak 1330 – Canada Dec. GDP 1400 – US Dec. S&P CoreLogic Home Price Index 1500 – US Feb. Consumer Confidence 1500 – US Feb. Richmond Fed Business Conditions 1530 – US Feb. Dallas Fed Services Activity 1930 – US Fed’s Goolsbee (Voter 2023) to speak 2130 – API's Weekly Crude and Fuel Stock Report 0030 – Australia Q4 GDP 0030 – Australia Jan. CPI 0130 – China Feb. Manufacturing/Non-manufacturing PMI 0145 – China Feb. Caixin Manufacturing PMI     Source: Financial Markets Today: Quick Take – February 28, 2023 | Saxo Group (home.saxo)
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Oil Prices Remain Very Choppy, Gold Is Weak Again

Craig Erlam Craig Erlam 28.02.2023 10:49
Choppy trade ahead? Oil prices remain very choppy with gains today largely offsetting losses at the start of the week. We may have to wait for more hard-hitting economic data next week before we see the upper or lower ranges tested as the uncertainty appears to be preventing a serious move in either direction. Should the January data prove to be a blip, it could put pressure on the upper end of the range as longer-term economic prospects improve, while another month of hot data could necessitate much higher rates and threaten a soft-landing, weighing on demand prospects. In the interim, choppy trading looks likely to persist. Testing major support Gold is edging lower again this morning, moving ever closer to a very interesting area of support between $1,780 and $1,800. There is a lot of technical support around here from the 50 fib – November lows to February highs – to the 200-day simple moving average. It was also previously a major rotation level and with momentum slipping on approach this time, it could prove to be the case again. Ultimately, the data may determine how firm a support zone it will be but either way, how it reacts to this level could give a strong indication of sentiment in the markets at this time. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Technical Analysis: Gold/Silver Ratio Still On The Rise

The Commodities Feed: Metals markets eye key China meeting that might drive demand

ING Economics ING Economics 28.02.2023 11:51
The metals markets are awaiting the outcome of China’s ‘Two Sessions’ political meeting in Beijing this weekend that might drive demand. Meanwhile, Freeport has restarted the Grasberg copper mining complex after nearly two weeks of inactivity due to landslides and floods Freeport's Grasberg copper and gold mine in Indonesia, pictured in 2013 Energy – Freeport resumes commercial operations at the LNG terminal The oil market traded flat this morning with ICE Brent prices heading for a fourth consecutive monthly decline, as the persistent weak macro sentiments and higher stockpiles weighed on recent supply concerns as well as the healthy demand expectations from China. Meanwhile, a stronger USD index is also adding pressure to oil prices. Meanwhile, Ecuador is preparing to restart its OCP and SOTE pipelines today after finishing contingency and repair work. These two crude pipelines were shut down on 22 February after being affected by soil erosion, which resulted in Petroecuador declaring force majeure on oil exports of around 2.88MMbbls. Ecuador’s oil output has also dropped by nearly half to around 244Mbbls/d as the shutdown of the pipeline forced the company to shut its oil wells as well. In a filing to FERC, Freeport has reported that the commercial operations at train-3 of the LNG terminal have reached full capacity whilst train-2 is going on with the restart activity. The company reported that it has sought approval to resume commercial operations at train-1 as well once the restart activity is complete and certain operating conditions are met. The Freeport LNG terminal with a capacity of around 2.2bcf/d was shut down in June 2022 due to an accident at the site. The latest data shows that feed gas deliveries to the Freeport LNG terminal have increased to around 700-800MMcf/d recently as train-3 resumed operations. LNG export resumptions from the terminal are likely to help improve natural gas supplies in the European market. NYMEX henry hub prices have jumped by around 30% over the past week as demand increases. Metals – Freeport restarts Grasberg mine Freeport McMoRan has restarted operations at its Grasberg mining complex in Indonesia after shutting it earlier in the month due to landslides and floods. The company said that the damage to the mill and plant was limited, although it has not confirmed the number of supply disruptions due to the mine closure. At around 5m pounds per day of copper production, the two-week mine closure has likely impacted around 30kt of copper production. SGX iron ore has recovered marginally today after falling nearly 6.5% over the past week as Tangshan city (a steelmaking hub in north China) started production restrictions in an effort to control emissions ahead of the ‘Two Sessions’ political gathering in the country. The meeting is watched closely for any government support towards the economy and industry, especially the construction and steel sector. The latest market reports suggest that some lithium mines at major production hubs in China have restarted after a government investigation halted mining activity last week. Lithium mines at Yichun located in the southeastern Jiangxi province were forced to halt operations last week, impacting roughly 10% of the global output. However, it was later reported that all mines with valid government permits have resumed operations. The move came following the reports of unlicensed mining and environmental infringement activities in the province, resulting in a complete halt of mining activities in Yichun. Agriculture – UNICA reports marginal gains in cane crush The recent report from the UNICA shows that sugar cane crushing in Center-South Brazil over the first half of February stood at 73kt compared to no crushing a year ago, as the processing had already been halted by this time. Cumulatively, crushing has risen by 3.8% year-on-year so far this season and stands at 542.5mt. Meanwhile, sugar production stood at just 2kt during the above-mentioned period, with around 23.6% of cane allocated to sugar production. Cumulatively, sugar output has risen by 4.5% YoY to 33.5mt in the season so far with most of the sugar cane mills finished their processing for the season. The latest data from Ukraine’s Agriculture Ministry shows that the nation exported around 31.8mt of grains as of 27 February so far in the 2022/23 season, a decline of 27% compared to 43.5mt grains exported during the same period last year. Total corn shipments stood at 18.2mt (-5.8% YoY), while wheat exports fell 38% YoY to 11.2mt as of Monday. USDA’s weekly export inspection data show demand for US soy and corn fell while remaining strong for wheat for the week ending 23 February. US weekly inspection of soybean for exports fell to 691kt over the last week, lower when compared to 1.58mt in the previous week and 739.5kt during the same time last year. Similarly, corn shipment inspections have declined to 572.6kt over the last week, compared to 623.8kt from a week ago and are significantly down from 1.56mt during the same time last year. Meanwhile, wheat export inspections rose last week from 374.4kt to 591.7kt, while remaining higher when compared to 430kt during the same time last year. Read this article on THINK TagsOil Metals Grains Energy Commodities Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The USD/JPY Price Seems To Be Optimistic

Saxo Bank Podcast: The Struggling JPY, Tesla's Incoming Investor Day And More

Saxo Bank Saxo Bank 28.02.2023 11:59
Summary:  Today we look at yields remaining near cycle highs, with US equities struggling into the close after an odd, intraday rally stumbled. Note that end of month is rolling into view today after a terrible month for bonds, with the US 2-year yield up 60 basis points month-to-date into today. On that note, we delve into whether yields really have any bearing on company investment. Elsewhere, pondering what inspires crude to pull itself out of the range, forward curves in the commodity space, the struggling JPY, Tesla's incoming Investor Day and much more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: Elon Musk Is Richest Man Again, The State Bank Of India Had Raised $1 Billion From Global Banks| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Can yields also be the cart and not the horse? | Saxo Group (home.saxo)
The Commodities Feed: Further oil supply disruptions

The Current Crude Oil Market Depression Can Be Explained By A Stable Supply

Marek Petkovich Marek Petkovich 28.02.2023 12:03
It is hard to find a more depressed asset in financial markets than oil. Brent and WTI have fallen for the fourth month in a row on fears that the Fed's overly aggressive monetary tightening will push the global economy into a deep recession. And even though the time of this recession is moving further away, neither the optimism of China's recovery nor the stability of the U.S. and the eurozone can save oil. And yet oil is traditionally regarded as an indicator of the global economy's health. If its health is improving, why are futures falling? Monthly oil dynamics Indeed, there are many mysteries in the oil market that create confusion in forecasts. While Bank of America lowers its 2023 Brent average price estimates from $100 to $88 per barrel, citing the remarkable resilience of Russian supply and a weak start to the year, JP Morgan, by contrast, keeps its forecast at $90. According to the company, the recovery of the Chinese economy will support the entire commodity market, and oil will benefit the most from this. Read next: Elon Musk Is Richest Man Again, The State Bank Of India Had Raised $1 Billion From Global Banks| FXMAG.COM The current oil market depression can be explained by a stable supply and fluctuating demand. Alas, the optimism about China clashes with the factor of rising U.S. inventories for the 10th week in a row, bringing the figure to its highest level since May 2021. As strong as the U.S. economy has been, the demand for oil in the U.S. is not increasing, which is holding back prices and causing the rig count to drop for 5 of the last 8 weeks to its lowest level since July 2022. On paper, this means reduced supply going forward. The same can be said for Russian oil. Its vital downstream market, India, faces additional scrutiny to meet the G7 oil price ceiling of $60 per barrel. This could potentially reduce the volume of purchases. As a result, the sustainability of Russian oil supplies will be called into question, which will also have a favorable effect on prices. Dynamics and structure of Russian oil supplies by sea Thus, in the next 3–6 months, the market will begin to face a lack of supply, which, against the backdrop of growing demand, is good news for Brent and WTI. Indeed, why is oil in no hurry to grow amid the pleasant surprises from the U.S., Eurozone, British and other economies? As a rule, the stronger the global economy, the better it is for oil. My guess is it is hindered by a strong U.S. dollar. Due to sticky inflation, it sincerely hopes for an increase in the federal funds rate to 5.5% or higher. U.S. currency-denominated commodity market assets, on the other hand, tend to struggle during a USD index rally. Technically, on the daily chart, Brent clearly won back the inside bar, allowing us to make money on falling prices. As noted in the previous article, the return of oil to its upper limit at $84.4 per barrel is a reason to buy. You can try to enter long earlier—at a breakout of $83.3   Relevance up to 08:00 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/336275
The European Economy Has Demonstrated Amazing Resiliency Following The Supply Shock Of The Russian Invasion Of Ukraine

ECB Terminal Rate Pricing Briefly Touched 4%, Focus Today Is On Commodities

Saxo Bank Saxo Bank 01.03.2023 08:22
Summary:  Hot Spanish and French inflation data, along with a soft US consumer confidence report and month-end flows, made for a bumpy ride in equities and bonds to close the month of February. Dollar strength however prevailed at the close of the month despite a bump higher in EUR and GBP earlier in the day. A big miss in Australia’s Q4 GDP and January inflation saw AUDUSD plunge 30bps. Target beat earnings estimates but missed margins and lowered annual guidance. On watch today will be China PMIs, German inflation and US ISM manufacturing.   What’s happening in markets? Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) slipped on falls in consumer confidence and Chicago PMI The major U.S. equity indices posted their second negative month in three - despite starting the year higher. Treasury yields are denting sentiment amid fears that higher Fed Reserve rates would remain in place for longer after inflation fears have been creeping back into the market - while stronger European inflation data strengthened the case for more hikes. On Tuesday, the S&P 500 dropped 0.3% and Nasdaq 100 slipped 0.1% following an unexpected decline in the Conference Board Consumer Confidence and a weaker Chicago PMI print. Most sectors within the S&P500 were down while materials, communication services, and financials inched up. Target (TGT:xnys) gained 1% after the discount store chain beat earnings estimates but missed margins and lowered annual guidance. With traders again reducing bets that the Fed will cut rates this year, the S&P 500 was down 2.6% last month. In contrast, European indices closed in gains for the month of February, with France’s CAC up 2.7%, Euro Stoxx 600 up 1.8% and German DAX up 1.6% despite a big surge in European yields as well. Yields on the short end of the US Treasury curve (TLT:Xmas, IEF:xnas, SHY:xnas) climbed on hotter-than-expected inflation prints in France and Spain Yields on U.S. Treasuries climbed in early trading following the sell-off in European government bonds in response to hot inflation prints in France and Italy. The long end of the Treasury curve recovered after the Chicago PMI, Richmond Fed Manufacturing Index, and Conference Board Consumer Confidence unexpectedly slipped. The 10-year notes pared most losses and finished Tuesday only 1bp cheaper at 3.92% while the yield on the 2-year was 4bps higher at 4.82%. The 2-10 year curve flattened to -89. Hong Kong’s Hang Seng Index (HSI.I) and China’s CSI300 (000300.I) ended a three-month streak of gains The Hang Seng Index and CSI300 index finished February with the first monthly loss since October 2022, ending a three-month streak of gains. In February, Hang Seng Index fell sharply by 9.4% while A-shares’ broad benchmark CSI300 outperformed, sliding moderately by 2.1%. The weakness in Hang Seng Index was driven by large declines in mega-cap e-Commerce platforms. Weighed on by the prospect of intensifying competition, JD.com (09618:xhkg) tumbled 25%, Meituan (03690:xhkg) down 22.4%, and Alibaba (09988:xhkg) down 19.6% over the month. Baidu (09888:xhkg) bucked the market trend and weakness among peers, climbing 1.8% on traction gained in AI-generated content solutions. In the near term, investors will be having a gauge into the strength of the economic recovery from the official NBS Manufacturing PMI, Non-manufacturing PMI, and Caixin China Manufacturing PMI scheduled to release today. After that, the focus will be on the State Council’s Government Work Report which includes, among other items, the growth target for 2023, delivered to the National People’s Congress on 5 March, and then the reshuffling of top leadership in the State Council and other key offices of the Chinese government during the National People’s Congress. Australian equities (ASXSP200.I) retreat back to January levels, with markets pricing in more Fed and RBA hikes Focus today is on commodities – with oil and copper moving higher, while the broad market is being pressured with markets adjusting to higher for longer CPI. We will be watching the reaction to China PMIs - which are expected to boost sentiment in commodities. Short term pressure continues for the Australia dollar after GDP and CPI slowed Australian GDP data showed fourth-quarter economic growth slowed down to pace of 2.7% YoY as expected- quashed by higher inflation and interest rates. Meanwhile, headline monthly CPI showed inflation is cooling – falling to a pace of 7.4% YoY vs the 8.1% price growth forecast. This theoretically pressures the Aussie dollar lower in the shorter term, while the US dollar is continuing to move up – with the dollar index up 4% from its lows - with the market pricing in more Fed rate hikes and potentially no Fed cuts this year – which is in line with our view. Our view is that the Aussie dollar could see strength return in Q2, and we maintain a longer-term bullish view on the Aussie dollar in line with our positive commodity outlook. In other news, Sydney property prices, the bellwether of the Australia market, rose for the first time in 13 months in February in - this is a positive sign for home values – but goes against the grain of what the RBA expected and supports the notion of the RBA keeping rates higher for longer. FX: AUD and JPY were the laggards last month as dollar regained ground The dollar closed firmer at the end of the month which spelled inflation concerns coming back and sent the short-end yields surging to record highs. AUDUSD was the weakest on the G10 board as a beating of the risk sentiment and weaker metal prices saw pair test 0.67 despite the return of RBA’s hawkish stance. Yen had a double blow from surging yields and Ueda’s dovish read, and USDJPY tested 137 last night before getting back below 136.50. EURUSD touched highs of 1.0650 after the French/Spanish inflation prints last night but is back below 1.0570 now. GBPUSD also got in close sights of 1.2150 but back closer to 1.2000 now. Commodities: Copper and oil nudge up - we think the commodity bull market run will be on pause till Q2   The oil prices rose 1.5% with traders reading between the lines at IEA commentary - which alluded to Chinese demand rising - while there is a bigger worry for the EU - should there be a complete halt to Russian flows - which would be a bullish scenario for oil and perhaps see prices move back up to last year's unsustainable highs. As for other commodities - Copper moved further above the key $4 mark after rising almost 2%. Aluminium rose 0.6%, while other metals were lower. At Saxo - our view is that the Commodity bull market will be on pause - before restarting strongly in Q2 with material demand expected to rise from China. Crude oil showing some early signs of life A rally in crude oil prices to the top of last week’s trading range is suggesting some early signs of a recovery towards the top of the trading range that has been established since late 2022. With the Fed rate hikes now well priced in by the markets, focus is moving back to sanctions on Russia that continue to threaten supplies. Meanwhile, sentiment on China demand recovery may be back with the Two Sessions likely to announce a strong policy commitment to growth rebound this year. This is offsetting global demand concerns emanating from API data showing a 10th straight weekly crude build. WTI prices touched $78 overnight and Brent was at $84.   What to consider? US consumer confidence in a surprise drop, labor market strength intact The Conference Board's US consumer confidence index saw a surprise fall to 102.9 in February (vs. exp 108.5) from January’s 106 which was also revised lower from 107.1. The present situation index looked resilient at 152.8 from 151.1 and reaching its highest levels since April 2022, but the forward expectations index declined to 69.7 from 76.0 previously. While the headline figures may be a small input for the Fed, the labor-supply mismatch has become more evident from the consumer confidence report. The report showed that the labor differential improved to 41.5 in February from 37 in the prior month, rising for a third consecutive month and reaching its highest levels since April 2022. The differential represents the percentage of respondents who say jobs “are plentiful” less those who say jobs “are hard to get”. Its rise could be an early indication of labor market strength heading into next week’s payrolls and JOLTs reports. Focus turns to ISM manufacturing survey today which is expected to accelerate but still remain in contraction. ECB rate hike bets pick up after higher French and Spanish inflation Consumer prices in France jumped by a record 7.2% YoY in February as food and services costs increased, while Spain saw a stronger-than-expected 6.1% YoY advance. The strong inflation now results mostly from companies passing through to consumers higher prices in the service sector and higher food prices. Looking at the French data, food prices (price increase of+14.5% YoY) contribute twice more to inflation than energy prices. The increase of prices in the service sector (which represents about 50% of the CPI basket) is another source of worry. Expect it to get worse in the short-term. We also see a similar trend in most European countries (the situation is even uglier in the CEE region), with the first print of German February inflation due today and the Eurozone print due tomorrow. Euro bonds slid with German yields up 7bps and Spanish yields up 6bps as ECB terminal rate pricing briefly touched 4%. China PMIs are expected to show further recovery in the economy Scheduled to release on Wednesday, the official NBS Manufacturing PMI, according to survey from Bloomberg, is expected to bounce further into expansion at 50.6 in February from 50.1 in January and the Non-manufacturing PMI is forecasted to climb to 54.9 from 54.4. Despite the sluggishness in exports, Caixin China PMI is expected to return to the expansionary territory at 50.7 in February, from 49.2 in January. The Emerging Industries PMI jumped to 62.5 in February from 50.9 in January adding to the favourable forecasts for the NBS and Caixin PMIs. Target’s earnings beat with stronger-than-expected sales growth but margins missed and annual guidance weaker-than-expected Target (TGT:xnys) reported FYQ4 (ending Jan 31, 2023) EPS of USD1.89, nearly 28% above the consensus estimate of USD1.48. The earnings beat was driven by a stronger-than-expected 0.7% Y/Y growth in same-store sales and a 1.3% Y/Y growth in total sales, while both were expected to fall. Notable strength was found in food and beverage, beauty, and household essentials. Discretionary categories remained soft. Weakness, however, showed up in the gross margins which declined to 22.7% in Q4 from 25.7% in the prior-year quarter. EBIT margins fell to 3.7% from 6.8% a year ago. For the current fiscal year’s annual guidance, the management is expecting between a low-single-digit decline and a low-single-digit increase in same-store sales and a below-consensus operating income of about USD 4.9 billion. Brewers results on watch amid the reopening trade   Budweiser Brewing Co (1876 HK), the Asia distributor - is due to release results today. Q4 revenue is expected to get a little boost from the FIFA World Cup trading - but is still expected to dive. Its outlook could be tainted as higher beer taxes are ahead for South Korea - while Budweiser’s APAC brands are on notice with proposed liqueur taxes there looming – which could slow business growth. The world’s largest brewer Anheuser-Busch InBev SA/NV (BUD) reports on Thursday, and could see higher volatility - for more click here. EV makers on watch: Tesla bolsters efforts to boost production, Rivian gives lacklustre outlook Tesla is continuing to march ahead with its lofty EV production goals - and now looks set to build a plant in northern Mexico. The news precedes Wednesday's reveal of Elon Musk's next phase "master plan," which will test the resurgent enthusiasm for the EV maker. Further details of the Mexico plan are expected to also be released this week. Meanwhile, Tesla’s competitor, Rivian forecasts 50,000 EVs will be produced this year – which was weaker than the market expected. Its fourth quarter revenue also missed expectations making $663 million – vs the $717 million consensus expected.     For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Markets Today: Crude oil and copper recover – 1 March 2023 | Saxo Group (home.saxo)
The Commodities Feed: Specs continue to cut oil longs

Talks Of Higher Supplies From The OPEC+ Group Exert Downside Pressure On Crude Oil

TeleTrade Comments TeleTrade Comments 01.03.2023 09:01
WTI crude oil rises for the second consecutive day, renews intraday high of late. Strong China PMI data bolster upbeat expectations from the world’s largest commodity user. Higher OPEC+ supplies, talks of more Russian Oil floating un-bid challenge WTI bulls. Fears of higher rates, inflation also keep a tab on energy benchmark ahead of US PMIs, official Oil inventories. WTI crude oil renews its intraday high around $77.60 during the initial hour of Wednesday’s European session. In doing so, the black gold marks another attempt to regain the $78.00 after the previous day’s pullback from a one-week high. That said, the energy benchmark’s previous pullback could be linked to the US Dollar’s run-up amid hawkish Fed bets, as well as inflation fears, while the fears of more Oil supplies joined the force to challenge the commodity bulls afterward. It’s worth mentioning that talks of higher supplies from the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, despite binding to the output cut commitments, exert downside pressure on the black gold price. On the same line could be the news shared via Bloomberg that says, “As many as 1.9 million barrels of Russian diesel-type fuel is currently in floating storage, the most since October 2020.” The news also mentioned that this phenomenon indicates some cargoes loaded from Russian ports without buyers. It should be noted, however, that the mixed US data and strong prints of China’s Caixin and NBS Manufacturing PMIs for February, as well as the Non-Manufacturing PMI for the said month, pushes back the hawkish Fed concerns and favor hopes of more demand from the world’s biggest commodity user. Looking ahead, the US S&P Global and ISM PMI details for February will be important for immediate directions ahead of the weekly official Oil inventory data from the US Energy Information Administration (EIA). Technical analysis A clear upside break of the 12-day-old descending trend line, previous resistance around $76.65, directs WTI crude oil buyers toward the 50-DMA hurdle of $78.00.
Economic Data From China Positively Affected Copper, Aluminum, Zinc And Iron Ore

Economic Data From China Positively Affected Copper, Aluminum, Zinc And Iron Ore

Saxo Bank Saxo Bank 01.03.2023 09:22
Summary:  US equities posted an uninspiring session, as the price action is bottled up ahead of the key support of the 200-day moving average in the major indices. Overnight, China’s official Manufacturing PMI ripped higher in February with its strongest reading since 2012, strong suggesting that the China re-opening is swing into motion. Hot inflation data from France and Spain pulled ECB expectations sharply higher yesterday, with German Feb. CPI up today. What is our trading focus? US equities (US500.I and USNAS100.I): caught between growth and inflation US equities headed lower yesterday with S&P 500 futures closing at the 3,975 level. The index futures are trying to rebound this morning following stronger than expected China February PMI figures suggesting the economy is responding positively to the reopening. This growth impulse lifted Hang Seng futures by 4.2% and breathed fresh air into commodities. The growth impulse from China will keep inflation pressures high in the global economy and that could force long-term bond yields in the US and Europe higher from current levels which will make equities caught between responding positive to growth or negatively to inflation and potentially higher interest rates. Hang Seng Index (HSI.I) and CSI300 (000300.I) jumped on strong China PMIs Hang Seng Index surged 3.5% and CSI300 gained 1.7% by in the morning session following the release of strong PMI data much above consensus estimates. The headline official NBS Manufacturing PMI surged (more below). The NBS non-manufacturing PMI and the Caixin Manufacturing PMI, also released today, both bounced strongly and signaled economic expansion. Mega-cap China internet names surged 5-7% and EV stocks jumped 5-8%. In A-shares, telcos, digital economy, software, gaming, and media stocks led the charge higher. FX: AUD and JPY were the laggards last month as dollar regained ground The dollar closed firmer at the end of the month as inflation concerns returned and sent the short-end yields surging to 15-year highs. AUDUSD was the weakest on the G10 board as a beating of the risk sentiment and weaker metal prices saw pair test 0.67 despite the return of RBA’s hawkish stance. Yen had a double blow from surging yields and the dovish read of Ueda’s nomination hearing for the Bank of Japan governorship, and USDJPY tested close to 137 yesterday before reversing back below 136.50. EURUSD touched highs of 1.0650 after the French/Spanish inflation prints yesterday but is back below 1.0600 this morning. GBPUSD nearly hit 1.2150 yesterday after the N. Ireland border announcement, but is back closer to 1.2050 this morning. Crude oil recovers as strong China PMI re-ignites demand focus Brent crude trades near $84 and WTI at $77.50 as both futures markets continue to recover from the latest the macroeconomic related selloff. With a hawkish Fed having been priced in, the dollar has started to weaken allowing traders to return their focus to an ongoing recovery in China. The strength of which was confirmed overnight when China’s PMI data showed across the board strength. The official headline surged to 52.6 and highest since 2012 while production and new orders improving markedly and new export orders move well above 50 and into expansion territory for the first time in 23 months. Increased tightness is being signaled through steepening prompt spreads with Brent trading at 59 cents a barrel from a recent 34 cent low. Also supporting are reports that Russia is struggling to find new buyers with million of barrels currently stored at sea. Ahead of EIA’s weekly stock report, the API said US inventories rose 6.2m barrels last week. Short-term momentum indicators point to higher prices with Brent once looking to challenge the downtrend from last March around $84.50. Silver led gold higher, but more work needed to shift sentiment Precious metals trade higher for a third day after the market concluded the latest round of hawkish comments from US FOMC members and additional rate hikes were now being fully priced in. Continued strength in US yields, near recent highs, have been offset by weaker dollar, allowing buyers once again to gain the upper hand. Silver, down around 12% in January, led the recovery which gathered speed overnight following the release of stronger than expected economic data in China (see below). The gold-silver ratio which yesterday hit a four-month high at 88.4 (ounces of silver to one ounce of gold) has since retraced to around 86.80. Gold as a minimum needs to break $1864, and silver $22 to signal an end to the current corrections Industrial metals jump on strong China rebound Copper and not least aluminum, zinc and iron ore traded higher following a batch of economic data from China showed improved factory activity as well as rising home sales, both driving expectations for an accelerated demand recovery, thereby once again replacing concerns about the economic impact of additional US rate hikes. Having found support below $4, the HG copper futures contract trades back above its 21DMA, a sign momentum is turning positive again. Since mid January the price has traded within a 30 cents downward trending channel, and for that to change, the price needs to break above $4.20, some 2% above the current level. Focus now turns to on China’s “Two Sessions” starting at the weekend. Yields on US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) steady near recent highs US Treasury yields staid pinned near recent cycle highs, with the 2-year trading above 4.8% this morning again and the 10-year benchmark hovering just below 4.00%. Yields were dragged higher yesterday by a fresh surge in European short yields on the French and Spanish CPI data for February (see below) and stayed elevated in the US despite the weak February Consumer Confidence print. The next test for the US treasury market is perhaps the February ISM Services survey on Friday. What is going on? China's economy shows strong recovery as PMI’s beat expectations The official NBS China Manufactuing PMI surged to 52.6 in February, the highest level since 2012, from 50.1 in January. The strength was across the board with the Production sub-index and New Orders sub-index improving markedly to 56.7 and 54.1 respectively. When a diffusion index goes above 50, it signals expansion. The export sector, which has until now been sluggish, showed signs of a strong recovery. The New Export Orders sub-index in the NBS survey unexpectedly surged to 54.1 in February from 46.1 in January and was the first time returning to the expansion territory in 23 months. The Caixin Manufacturing PMI, which covers smaller and more private enterprises in the export-oriented coastal regions of China relative to those covered in the NBS survey, also recovered strongly to 51.6 in February from 49.2 in January and the new order sub-index in the Caixin survey bounced to 52.2 from 49.3. The NBS non-manufacturing PMI continued to accelerate well into expansion, rising to 56.3 from 54.4. Both major sub-indices rose further, with the Services sub-index advancing to 55.6 and the Construction sub-index soaring to 60.2. US consumer confidence in a surprise drop, labor market strength intact The Conference Board's US consumer confidence index saw a surprise fall to 102.9 in February (vs. exp 108.5) from January’s 106 which was also revised lower from 107.1. The present situation index looked resilient at 152.8 from 151.1 and reaching its highest levels since April 2022, but the forward expectations index declined to 69.7 from 76.0 previously. While the headline figures may be a small input for the Fed, the labor-supply mismatch has become more evident from the consumer confidence report. The report showed that the labor differential improved to 41.5 in February from 37 in the prior month, rising for a third consecutive month and reaching its highest levels since April 2022. The differential represents the percentage of respondents who say jobs “are plentiful” less those who say jobs “are hard to get”. Its rise could be an early indication of labor market strength heading into next week’s February Payrolls data. Focus turns to ISM manufacturing survey today which is expected to improve but still remain in contraction. ECB rate hike bets pick up after higher French and Spanish inflation Consumer prices in France jumped by a record 7.2% YoY in February as food and services costs increased, while Spain saw a stronger-than-expected 6.1% YoY advance. The strong inflation now results mostly from companies passing through to consumers higher prices in the service sector and higher food prices. Looking at the French data, food prices (price increase of+14.5% YoY) contribute twice more to inflation than energy prices. The increase of prices in the service sector (which represents about 50% of the CPI basket) is another source of worry. Expect it to get worse in the short-term. We also see a similar trend in most European countries (the situation is even uglier in the CEE region), with the first print of German February inflation due today and the Eurozone print due tomorrow. Euro bonds slid with German yields up 7bps and Spanish yields up 6bps as ECB terminal rate pricing briefly touched 4%. AUD swings to a gain after China’s economy shows signs of a stronger rebound After China's manufacturing activity hit a decade high as noted above, the Australian dollar against the US dollar (AUDUSD) rose sharply. Iron ore, copper and aluminium prices all gained. This supported the AUDUSD pair rebounding from 10-week lows, which it hit earlier after Australian GDP slowed to pace of 2.7% YoY in Q4 as expected while headline monthly CPI cooled to 7.4% YoY, vs the 8.1% growth forecast. Short covering also added to the Aussie dollar whipsawing higher. What are we watching next? Tesla Investor Day Tesla’s annual ‘Investor Day’ is scheduled for tonight at 21:00 GMT and will be livestreamed on Tesla’s website. Elon Musk has teased in tweets that the Investor Day presentation will revolve around the part 3 in his ‘Master Plan’ which was first announced back in 2006 and Elon Musk has specially written that the ‘Master Plan 3’ is about ‘the path to a fully sustainable energy future for Earth...’ suggesting it might be around energy. One the key variables in the path to electrifying society is about energy production, energy storage, and the electric grid, and as such it might be that Tesla will aim solve these issues so Tesla’s growth is not constrained too early by the lack of investments and solutions on the infrastructure side of the equation. Germany’s Feb. CPI data today, Eurozone Feb. CPI tomorrow After French and Spanish February CPI readings sparked higher expectations for the ECB as noted above, we will get a look at German regional CPI releases this morning for February and the nationwide data this afternoon at 1300 GMT, with the German 2-year yield having leaped to nearly 3.20% yesterday after starting the weak below 2.9%. Expectations are for a reading of +0.5% MoM and +8.5% YoY vs. +8.75 in January, with the “EU Harmonized” reading seen slowing to +9.0% YoY vs. 9.2% in Jan. Earnings to watch Today’s key US earnings releases to watch are Salesforce (reporting after the close), Snowflake (reporting after the close), and NIO (reporting before the open). Analysts expect Salesforce to report 9% y/y revenue growth for the quarter that ended in January and EBITDA of $2.67bn up from $1.02bn a year ago as the software application maker is under pressure from several activist investors to improve profitability. Analysts expect Snowflake to report revenue growth of 50% y/y in the quarter that ended in January and EBITDA of $25mn up from $-146mn a year ago. NIO, that finally ramped up its EV production in Q4 after several quarters of slow increases, is expected to report 73% y/y revenue growth but still delivering an operating loss of CNY -3.4bn. Wednesday: Royal Bank of Canada, Beiersdorf, Reckitt Benckiser, Kuehne + Nagel, Salesforce, Lowe’s, Snowflake, NIO Thursday: Anheuser-Busch InBev, Argenx, Yunnan Energy New Material, Toronto-Dominion Bank, Fortum, Veolia Environment, Merck, Hapag-Lloyd, CRH, London Stock Exchange, Haleon, Flutter Entertainment, Universal Music Group, Broadcom, Costco, VMware, Marvell Technology, Dell Technologies Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final Feb. Manufacturing PMI 0855 – Germany Feb. Unemployment Change / Claims 0930 – UK Jan. Mortgage Approvals 1000 – UK Bank of England Governor Andrew Bailey to speak 1300 – Germany Feb. CPI 1500 – US Feb. ISM Manufacturing 1530 – EIA's Weekly Crude and Fuel Stock Report 1830 – Mexico Central Bank Inflation Report 0030 – Australia Jan. Building Approvals   Source:Financial Markets Today: Quick Take – March 1, 2023 | Saxo Group (home.saxo)
Expect the ECB to keep increasing rates at the short-term, at least until the summer

CPI Report Cranked Up The Hawkish ECB Rate Expectations

Swissquote Bank Swissquote Bank 01.03.2023 11:02
Inflation in Europe took the wrong direction in February. The data released yesterday printed a record inflation of 7.2% in France and ticked higher to 6.1% in Spain. Both were higher than expected, of course, and cranked up the hawkish European Central Bank (ECB) rate expectations. US market In the US, cooling US house prices for a seventh straight month, and ugly Richmond manufacturing index cooled the hawkish Federal Reserve (Fed pressures yesterday, but the S&P500 couldn’t hold on to its gains above the 50-DMA, and closed yesterday’s session below this level. As a result, the month of February ended with a 2.7% loss for the S&P500, and with mounting pressure from the bears. Crude Oil Elsewhere, crude oil jumped yesterday, although the latest API data showed another 6.2 million barrel build last week in the US crude inventories. The strong PMI data from China certainly helped keeping the oil bulls alert. It also helped Aussie rebound following soft CPI data. Read next: Elon Musk Is Richest Man Again, The State Bank Of India Had Raised $1 Billion From Global Banks| FXMAG.COM Stocks In individual stocks, Target and Zoom gained after results, while Rivian lost 10% in after hours trading on mixed results and soft outlook. Watch the full episode to find out more! 0:00 Intro 0:36 Hot European inflation boosts ECB hawks 5:24 Strong China PMI counter soft AUD inflation, but... 6:30 S&P500 closes the month 2.7% down 7:59 Crude oil gains but solid inventory data could limit rally 8:44 Target, Zoom gain, Rivian tanks post earnings Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Eurozone #inflation #ECB #rate #hike #EUR #USD #AUD #Crude #Oil #Target #Zoom #Rivian #earnings #Stoxx #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Asia Morning Bites - 10.05.2023

Saxo Bank Podcast: PMI Reports From China Suggest The Fastest Rate Of Expansion In China's Manufacturing Sector In More Than A Decade

Saxo Bank Saxo Bank 01.03.2023 11:16
Summary:  Today we look at the stunning official February Manufacturing PMI numbers out China overnight, which suggested the most rapid pace of expansion in China's manufacturing sector in over a decade. We look at how this development propagated through commodities and currencies, as well as the impact on EU rates after hot CPI numbers from France and Spain yesterday. Thoughts on inflation and real growth, stocks and earnings to watch, weakening US Consumer Confidence expectations and what that signals and more also on today's pod, which features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: Elon Musk Is Richest Man Again, The State Bank Of India Had Raised $1 Billion From Global Banks| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com Source: Podcast: The China reopening narrative tries to get back on the rails | Saxo Group (home.saxo)
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The Chinese PMI Helped The Crude Oil Price, Gold Has Approached A Key Support

Craig Erlam Craig Erlam 01.03.2023 11:35
PMIs a big positive for oil It’s not just equities that have been lifted by Chinese PMIs, oil is also rallying today on the prospect of a stronger Chinese recovery and resilient global demand. While this was just one survey, the breakdown of the surveys was undoubtedly encouraging and that’s lifting Brent and WTI in early trade. All we need to see now are signs of cooling price pressures and perhaps less heat in the labour market in order for crude to potentially break higher. Higher interest rates forcing a hard landing remains the main downside risk for crude prices which has driven the consolidation we’ve seen in recent months, and recent data has only fed those fears. But with China transitioning well and survey evidence indicating resilient demand, all we’re missing is the removal of that downside growth risk. We may need to wait a little longer though as the data points traders will be most focused on for that are released over the next few weeks. A repeat of January could come as quite a shock. Read next: Some Mcdonald's Locations Don't Promote Hip-Hop Stars' New Meal| FXMAG.COM Creeping higher Gold is quietly heading for a third day of gains, boosted by a softer dollar today as other currencies react favourably to the Chinese survey data. The yellow metal fell almost 8% from its highs in February, coming close to key support around $1,780-$1,800. With momentum fading on approach, it would not come as a shock to see it pare those losses ahead of crucial US data over the coming weeks. Of course, it’s reliant on yields not spiking again and some improvement in risk appetite wouldn’t do it any harm either. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
InstaForex's Irina Manzenko talks British pound amid latest events

Sterling Was Thrown Overboard On Dovish Comments From Bank Of England Governor Bailey

Saxo Bank Saxo Bank 02.03.2023 09:36
Summary:  US equity futures are edging lower overnight and are below the critical support at the 200-day moving average that has been tested of late, setting up a compelling test of animal spirits in coming sessions. The treasury market is providing fresh headwinds as the US 10-year treasury yield edged above 4.00% for the first time since November. Sterling was thrown overboard on dovish comments from Bank of England Governor Bailey, while the euro remains firm on hot inflation data this week. What is our trading focus? US equities (US500.I and USNAS100.I): the ‘ketchup effect’ in US bond yields is here US equities continued their slide lower with S&P 500 futures making a new lower close at 3,956, the lowest level since 20 January, and this morning the index futures have continued lower trading around the 3,932 level. This suggests investors are sceptical that China’s reopening will make a significant difference for global growth in the first half. The decline also reflects that the US 10-year yield has finally pushed above the 4% level this morning trading around 4.04% which is a significant breakout and pushing interest rates to the highest level since 10 November. With S&P 500 futures breaking below many key levels over the past couple of session the 3,900 level is definitely in play now. Hang Seng Index (HSI.I) and CSI300 (000300.I) retreated after yesterday sharp gains Hang Sang Index slid 0.8% and CSI300 inched down 0.3%. China Internet names led the decline with Alibaba (09988:xhkg) falling 4.3%. Container liners outperformed, with Orient Overseas (00316:xhkg) rising 4.4% and COSCO Shipping (01919:xhkg) up 3.8% as yesterday’s new export orders sub-index in the PMI surveys signaled an improvement in China’s export outlook. Following the Ministry of Industry and Technology ‘s statement in a press conference that China will accelerate the rolling of 6G infrastructure, A-share telcos and communication equipment makers advanced. FX: GBP blasted on Bailey comments, USD edges higher as sentiment wilts The US dollar found only hesitant support in places yesterday on a fresh surge in treasury yields, where the longer portion of the yield curve finally tested a bit higher and the 10-year Treasury benchmark yield poked above 4.00% for the first time since November. But as the focus in recent days has been on hot EU inflation data and yesterday’s hot German CPI number, EU yields have led the charge higher this week, so the euro is quite firm togethe with the greenback. The JPY remains under pressure as EURJPY returned back above 145.00. Elsewhere, sterling was thrown overboard after Bank of England Governor Bailey’s noncommittal comments on inflation risks and policy tightening (see more below). GBPUSD south of 1.2000 this morning and EURGBP has now rejected its test below 0.8800 and what semed a capitulation back into the lower range, surging to nearly 0.8900. Crude oil weighs China demand against hawkish Fed speak Crude oil prices trade near recent highs supported by the strong signal on Chinese demand recovery from upbeat PMI data. In addition, the inventory data was also bullish signalling a recovery of demand in Asia and Europe. US commercial crude oil inventories gained less than expected last week, rising only 1.2 million barrels as US exports of crude hit a record 5.6 million barrels a day last week. However, on the other hand, US ISM data and hawkish comments from Atlanta Fed Bostic continued to highlight inflation fears are here to stay and may spark some US demand concerns. WTI futures traded just below $78/barrel while Brent touched $84.50. Gold trades lower on ISM and Bostic comment Financial markets, including the investment metals, have gone back to worrying about inflation, interest rates and growth after the prices paid component of the ISM index for February rose for a second month to 51.3. In addition, the Atlanta Fed’s Bostic said rates could rise to 5.25% and stay there well into 2024. Currently the market has priced a terminal rate around 5.65%. Gold gave back some of Wednesday’s strong gains after ten-year US yields topped the closely watched 4% and the dollar drifted higher. With +3 additional 25 basis point hikes priced in, the selling pressure on gold and silver have eased but for the current recovery to attract support from technical buyers, prices as a minimum need to break $1864, and silver $22 to signal an end to the current corrections. Metals complex excited about China, but.. Copper drifted lower in Asia with profit taking emerging after futures in New York and London failed to build on yesterday’s strong China PMI-led gains. The report reignited the reopening theme but as we wrote in are recent update, the next sustained move higher is unlikely to be triggered until the second quarter or later, the timing to a certain extend depending on the economic outlook for the rest of the world and whether recession, as we believe, will be avoided. For now, the 30-cent wide downward sloping channel is providing some resistance at $4.2/lb in HG and $9115/tons in LME. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) sold off on ISM Price Paid Index The 10-year US Treasury yield breached 4% briefly during the session and edged higher overnight following a ISM Price Paid index shooting up above the expansion/contraction threshold. The implied terminal Fed Fund rate rose above 5.5% at one point yesterday. Comments from the Fed’s Kashkari saying he is undecided between a 25bp and 50bp hike at the March FOMC and Bostic’s 5-5.25% “well into next year” remarks added fuel to the selloff. Yields on the 2-year notes rose 6bps to 4.88%, the highest level since 2007. What is going on? Mixed US ISM Manufacturing survey details – but steady message on inflation The US ISM manufacturing marginally rose to 47.7 from 47.4, coming in below expectations of 48.0. New orders lifted to 47.0 (prev. 42.5), while employment fell to 49.1 (prev. 50.6), entering contractionary territory. But the message on price pressures continued to roil markets. ISM priced paid rose back into expansionary territory to 51.3, well above the prior 44.5 and the expected 45.1, re-affirming that it may be too soon to call goods inflation disinflationary. Hawkish Fed talk brings 10-year yields to top 4% Fed member Kashkari (voter) signaled an openness for a 50bps hike at the March meeting, saying he is open to both 25bps and 50bps. Still, he emphasized that the terminal rate is more important than the size of rate hikes, where also he hinted that it could be revised higher from December. Another member Bostic (non-voter) maintained his view that the Fed policy rate needs to rise to 5.00-5.25% range, but said that the rate should be left there “until well into 2024”. 10-year Treasury yields rose above the key 4% mark for the first time since November, sending another warning signal to equities. Hot German inflation print creates further pressure for the ECB Coming on the heels of hotter than expected inflation prints in France and Spain for February, German CPI print was also hotter than expected at 9.3% YoY (vs. +9.0% exp and +9.2% prior). The message on disinflation has therefore continued to weaken, and both Fed and ECB are likewise pressured to do more on policy tightening to ensure the inflation comes back to target. The aggregate Eurozone print is out today and expectations of a softening to 8.3% from 8.6% last month may be tested. Bank of England Governor Bailey comments pound sterling The Bank of England governor preferred to keep in question whether the Bank of England will continue to tighten policy or pause here, which looks especially dovish at a time when especially ECB expectations are ratcheting higher on hot inflation data for February released this week. “I would caution against suggesting either that we are done with increasing Bank Rate, or that we will inevitably need to do more....nothing is decided.” EURGBP rallied hard from the lows since January near 0.8750 to nearly 0.8900 yesterday. Tesla shares down 5% on Investor Day presentation There was little for Elon Musk to present. No new magic around boring tunnels or making robots run or thinking. It felt empty all along and shareholders agreed sending shares down 5%. The only real new news, which had already been leaked, was the new EV manufacturing plant in Mexico which would increase Tesla’s production capacity. At the very end of the presentation Elon Musk talked about the need for a significant increase in renewable energy production without sacrificing economics, but that was as concrete as it could get this time. A more detailed plan would be announced later. For all the showman Elon Musk is, there was a lot to support the grandiose show. Earnings recap: First Solar, Salesforce, and Snowflake First Solar shares surged about 16% to its highest since 2009 after the panel maker’s backlog of orders look like they will take the second half of the decade to fill. The surging demand comes as the company is benefiting from the Inflation Reduction Act, signed last year by President Joe Biden. The software giant Salesforce gave a surprisingly upbeat forecast for the year ahead - and plans to step up share buybacks to $20bn, which is positive vs its $167bn market cap. Operating margins will be about 27% in FY24 exceeding Bloomberg consensus estimates of 22.4%. This eases pressures Salesforce faces from a group of activist investors. Salesforce shares rose 14% in post market trade, after closing at $167.35 in normal trade. Snowflake shares fell 6% in extended trading following Q1 revenue guidance fell short of expectations and the fiscal year guidance on revenue was $2.7bn vs est. $2.8bn as companies are cutting down on their cloud spending. What are we watching next? China’s “two sessions” in focus Following on from Wednesday’s stronger than expected PMI which supported the view that China’s economy is picking up steam, focus now turns to the Chinese government and what they will do to further help along a post-lockdown economic recovery. The first session of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC) will begin on March 4 and followed up the following day by the 14th National People’s Congress (NPC. During what is collectively known as the “two sessions”, Chinese officials will release a set of social and economic development goals and various policy measures to achieve them. Earnings to watch Today’s key US earnings releases are Dell Technologies and Broadcom both reporting after the close. Analysts expect Dell to report FY23 Q3 revenue growth of -16% y/y and EBITDA of $2.39bn down from $4bn a year ago as declining technology spending is hitting technology providers such as Dell hard. Analysts expect Broadcom to report FY23 Q1 (ending 31 Jan) revenue growth of 16% y/y and EBITDA of $5.6bn up from $4.4bn a year ago. Thursday: Anheuser-Busch InBev, Argenx, Yunnan Energy New Material, Toronto-Dominion Bank, Fortum, Veolia Environment, Merck, Hapag-Lloyd, CRH, London Stock Exchange, Haleon, Flutter Entertainment, Universal Music Group, Broadcom, Costco, VMware, Marvell Technology, Dell Technologies Economic calendar highlights for today (times GMT) 1000 – Italy Feb. Preliminary CPI 1000 – Eurozone Feb. Preliminary CPI 1230 – ECB Meeting Minutes of Feb. ECB meeting 1330 – US Weekly Initial Jobless Claims 1500 – UK Bank of England Chief Economist Huw Pill to speak 1530 – EIA's Weekly Natural Gas Storage Change 1900 – US Fed’s Waller (Voter) to discuss economic outlook 2100 – New Zealand Consumer Confidence Survey 2300 – US Fed’s Kashkari (Voter 2023) to speak 2330 – Japan Tokyo Feb. CPI 0145 – China Feb. Caixin Services PMI   Source: Global Market Quick Take: Europe – March 2, 2023 | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

The Commodities Feed: US oil inventory increases further

ING Economics ING Economics 02.03.2023 09:58
The latest Energy Information Administration (EIA) data show a continuous build-up of crude oil inventory in the US. Demand for US crude in the external market is strong due to the high discount to WTI; however, slower domestic demand continues to keep the market in surplus At current price ratios, silver appears to offer better value for investors than gold Energy – High inventory puts pressure on WTI The spread between Brent and West Texas Intermediate (WTI) active contracts widened to US$6.5/bbl yesterday, increasing from US$6.3/bbl a week ago and a recent low of around US$4.3/bbl in early January, as the weekly EIA report continues to highlight the crude oil supply surplus in the US market. A heavier-than-usual refinery maintenance season in the country keeps domestic crude oil demand under pressure with refinery inputs staying below the five-year average so far in the year. The latest data from the EIA show that US commercial crude oil inventories have increased by 1.2MMbbls over the last week, the tenth consecutive week of inventory build-up. The inventory gain was smaller than what American Petroleum Institute (API) reported yesterday at 6.2MMbbls and the market expectations of around 1.4MMbbls. US crude oil inventory has now increased by around 60MMbbls since the start of the year, with total stocks sitting at 480.2MMbbls as of 24 February 2023 compared to the five-year average of around 437.8MMbbls at this point in the season. EIA data also show that US crude oil exports increased to a record high of 5.6MMbbls/d (+1.03MMbbls/d WoW) over the last week as higher discounts of WTI over the Brent and healthy demand from Europe pushed up demand for US cargoes. Meanwhile, crude oil imports were down by 0.12MMbbls/d to 6.2MMbbls/d. As for refined product inventories, gasoline stocks fell by 874Mbbls, while distillate stocks increased by a marginal 179Mbbls. Refinery utilisation was also down 0.1% year-on-year to 85.8%. Metals – High gold-silver price ratio makes silver attractive again The uncertainty around the US Federal Reserve rate hikes and economic slowdown concerns have been putting more pressure on silver compared to gold in recent weeks. Silver prices have dropped by around 13% since the start of the year whilst gold is largely flat. The gold-silver price ratio has increased from around 76 at the start of the year to 88 currently. At current price ratios, silver appears to offer better value for investors compared to gold. Meanwhile, gold exchange-traded fund (ETF) holdings continue to fall whilst silver ETF holdings have recovered significantly from lows in January. Bloomberg data show that total known ETF holdings of silver have recovered to around 762.3m oz currently after hitting a low of 738.5m oz in January 2023. Brazil’s iron ore exports recovered in February after falling sharply in the previous month primarily due to weather-related disruptions. The latest data from Brazil’s Trade Ministry shows that monthly iron ore shipments from the nation rose 25.5% YoY and 2% month-on-month to 23.4mt in February. Earlier, iron ore shipments from Brazil declined more than 22% MoM in January which tightened the supply outlook for the raw material. Agriculture – ICCO foresees limited supply deficit for cocoa The latest report from the International Cocoa Organization (ICCO) estimates a largely balanced market for cocoa in 2022/23 although supply risks remain due to inclement weather, especially in West Africa. The organisation expects global cocoa production to rise by 4.1% YoY to 5.02mt for the 2022/23 season. Total grindings are expected to decline marginally by 0.6% YoY to 5.03mt during the same period. Meanwhile, cocoa stockpiles are forecasted to drop by 3.5% YoY to 1.7mt in 2022/23. ICCO believes that these forecasts are subject to risks rising from climate change, crop diseases and the macroeconomic outlook. The most active contract of ICE Cocoa futures rose to the highest level in three years following the global supply shortage expectations. The All India Sugar Trade Association trimmed its forecast for sugar production in the nation from 34.5mt to 33.5mt for 2022/23. The association said that the heavy rains caused waterlogging in the fields impacting the growth of cane. Meanwhile, there is potential for further downside to current estimates. Read this article on THINK TagsSilver Oil Gold Commodities Cocoa Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Pound Sterling: Short-Term Repricing Complete, But Further Uncertainty Looms

Hotter-Than-Expected EU Inflation Data, Euro Is Recovering

Swissquote Bank Swissquote Bank 02.03.2023 10:40
Hotter-than-expected inflation data pushes the European yields higher. The higher yields support recovery in the euro, but not the European stock valuations. A slowing economic growth Across the Atlantic Ocean, the news is not great, either. The ISM manufacturing index revealed a slower contraction in February, but the improvement compared to the last month was less than expected.A slowing economic growth is not bad news for the Federal Reserve (Fed), but the mounting price pressure is. This is what the ISM report revealed yesterday, and further fueled Fed hawks. Fed Activity on Fed funds futures now gives more than 30% chance for a 50bp hike at the next meeting, and Fed swaps price in a peak Fed rate of around 5.5%. This number was around 4.9% at the start of the year. Yields Consequently, the US 2-year yield continues its steady climb toward to 5% mark, and the 10-year spiked above the 4% psychological level yesterday.The S&P500 tested the critical 200-DMA to the downside. There is major speculation about an aggressive selloff below this 200-DMA level. And given the persistent positive pressure on the yields, clearing the 200-DMA support is not a matter of if, but a matter of when. Read next: Twitter Employees Are Overburdened As Elon Musk Tries To Run Twitter With Fewer Staff| FXMAG.COM Watch the full episode to find out more! 0:00 Intro 0:37 European inflation pressures yields and euro higher, equities lower 4:03 Just a matter of time before S&P500 slips below 200-DMA 8:41 Crude oil gains, but China-led rally may never materialize 10:02 Why Elon Musk’s Master Plan III was a flop? Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Eurozone #inflation #ECB #rate #hike #EUR #USD #Crude #Oil #Tesla #Master #Plan #EV #Stoxx #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Would Federal Reserve (Fed) go for two more rate hikes this year? Non-voting Bullard say he would back such variant

The US Dollar Gained Broadly Against Major Currencies

Saxo Bank Saxo Bank 03.03.2023 08:35
Summary:  Despite U.S. bond yields continuing to climb and the 10-year going above 4% in yield, U.S. stocks managed to rebound nearly 1% on Fed Bostic comments. Hong Kong and China stocks slid and gave back some of the gains from the previous session in the absence of notable headlines ahead of the “two sessions” meeting starting this weekend. The US dollar gained broadly against major currencies. Crude oil continued to climb with WTI crude finishing Thursday at USD78.2.   What’s happening in markets? Nasdaq 100 and S&P 500 rebounded on Fedspeak The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) clawed back early losses after dovish comments were made by the Fed’s Raphael Bostic  - seeing the indices gain 0.9% and 0.8% respectively. All sectors in the S&P 500 except consumer discretionary and financial advanced. Salesforce (CRM:xnys) shares rose 11.5% on a Q4 earnings beat and upbeat guidance – making it the top gainer in the S&P500. Kroger (KR:xnys) rose 5.4% after the grocery chain reported sales and earnings beat. Tesla (TSLA:xnas) fell 5.9% as investors were somewhat disappointed with the EV giant’s Investor Day held on the prior day. US Treasury curve bear steepened, 10-year yield at 4.06% US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) sold off across the curve in the morning following an upward revision of Q4 unit labour costs to 3.2% from the previously reported 1.1% and initial jobless claims continued to come in below 200K. After Atlanta Fed Bostic’s comments in favour of a 25bp hike at the March meeting and the Fed could pause by mid to late summer saw yields on the 2-year paring much of the loss from an intra-day high yield of 4.94% to finish at 4.89%. Yields on the belly of the curve however remained 6bps higher by the time of closing, with the 5-year yield at 4.31% and 10-year at 4.06%. The Treasury Department announced the auction of USD40 billion of 3-year notes, USD32 billion of 10-year notes, and USD18 billion of 30-year bonds next week. Hong Kong’s Hang Seng Index and China’s CSI300 retreated after yesterday’s sharp gains Hang Sang Index (HSI.I) dropped 0.9% and CSI300 (000300.I) slid 0.2% on Thursday after rising sharply the day before. China Internet names led the decline with Alibaba (09988:xhkg) falling 4.7% without notable news. Bilibili (09626:xhkg) plunged 7.8%.  After the Hong Kong market close, the online entertainment platform reported Q4 earnings beating the consensus estimate. Nio (09866:xhkg) tumbled 13.2% on a Q4 margin miss and a weaker-than-expected Q1 2023 guidance. Container liners outperformed, with Orient Overseas (00316:xhkg) rising 6.7% and COSCO Shipping (01919:xhkg) up 4.1% on an improved outlook of China’s exports. In A-shares, telcos and communication equipment makers advanced, following the news that the Ministry of Industry and Technology said that China will accelerate the rolling of 6G infrastructure. Australian equities (ASXSP200.I) trade lower for the fourth week  - markets prices out rate cuts – PMIs rise   So far this week - Monday to Friday the market is trading lower - marking its fourth straight week of losses. It comes as the Australian share market prices out rate cuts this year – and looks ahead to the RBA interest rates decision and commentary next week - with another 25bp hike expected. Today - hotter Australian and manufacturing prints showed PMIs rose back to expansionary phase, pushing Australian bond yields higher, up 6 bps to 3.92% - that’s near YTD highs of 4%, which is a cautionary signal given this is a better return than the average yield for the Australian share market.    FX: GBP edges below 1.2000 on dovish Bailey The US dollar was broadly in gains on Thursday as yields continued to surge higher despite supposedly dovish comments from Fed member Bostic. SEK was the underperformer on the G10 board amid risks of a deepening recession in Sweden. GBPUSD continued to tumble further below the 1.20 handle after dovish comments from BOE governor Bailey this week attempting to engineer a pause in market expectations. EURUSD also gave up some of its post-regional CPI gains to inch below 1.06. AUDUSD still in close sights of 0.67 as risk sentiment deteriorates while pickup in metals prices remains unconvincing for now. Crude oil volatility continues Oil fluctuated with traders weighing up a revival in demand from China, vied with inflation fears and OPEC boosting supplies. OPEC increased supplies by 120,000 b/d to 29.24 million a day in February – with Nigeria accounting for two-thirds of the increase - with its output hitting a one-year high. Meanwhile Russian seaborne diesel exports stranded at sea hit new records. This comes all while nations such as Turkey are trimming purchases of Russian crude. What to consider? Fed officials hinting at a higher dot plot The biggest headlines today are referring to Fed member Bostic’s (non-voter) comments as dovish, while he said he is firmly in favour of a 25bps hike path (to reduce the possibility of a hard outcome) and even said we could be in a position to pause by mid-to-late summer which appears to be exactly in-line with current market expectations. If his comments suggest 25bps rate hikes each at the March, May and June meetings, we still may end up in the 5.25-5.50% terminal rate which is higher than what the December dot plot suggested. Waller (voter) also hinted at an upwards shift in the dot plot, more clearly so, saying that Fed may need to raise rates beyond December's central tendency view of 5.1-5.4% if the incoming job and inflation data does not pull back from strong readings for January. US labor market strength sustains, focus shifting to ISM services US initial jobless claims fell by 2k to 190k last week from 192k prior and 195k expected, continuing to signal a tight labor market. Unit labor costs climbed an annualized 3.2% in the fourth quarter from the initial 1.1% read, well above expectations for a rise to 1.6%. Increased labor costs keep concerns of a wage-price spiral alive, and will likely keep the Fed on its toes in tightening policy. ISM services for February will be on watch later today, and is expected to ease to 54.5 from a big jump to 55.2 last month, but still remain comfortably in expansion. Attention will also be on the prices paid component after a similar component from the manufacturing print this week created jitters and services prices are likely to be more sticky. Worrying inflation prints in the Eurozone Yesterday, the eurozone core inflation rose to 5.60% year-over-year in February with both core goods (6.8%) and services (4.8%) reaching new record highs. This is much higher than expected (5.3%). We pay more attention to core inflation as it can show how entrenched inflation is. As a matter of that, it appears the inflation headache will remain an issue for most of the year. All the country prints which were released earlier this week came in above expectations: Germany 9.3% vs 9.0% exp. France 7.2% vs 7.0% exp. Spain 6.1% vs 5.7% exp. In these circumstances, talks about a potential monetary policy pause are ill-timed. From a monetary policy perspective, we think the ECB is unlikely to slow the pace of tightening until we see the first signs of underlying inflation peaking. Expect at least two other 50 basis point hikes in March and in May (there is no meeting in April). The market consensus forecasts that another 25 basis point hike could happen in June. It will depend on the evolution of inflation, of course. China and Australian trade relations are improving – adding to our optimist view that the commodity bull run could resume in Q2 China and Australia resumed diplomatic and economic discussions to stabilize and improve bilateral relations. It comes as China’s Foreign Minister Qin Gang met with counterpart Penny Wong at the G-20 summit in India. This is supporting commodity prices today – with the Iron Ore (SCOA) price trading higher for the fourth session following on from stronger-than-expected Chinese manufacturing data - showing overall Chinese orders are back at 2017 levels. Despite this the Aussie dollar vs the USD (AUDUSD) is little changed on the day and week at 0.6729 after losing 0.5% on Thursday. Downside is still in play with the Aussie trading below the d Qantas hires 8,500 workers – underscoring the aviation industry’s growth trajectory Qantas Airways (QAN) plans to hire 8,500 more workers in the next decade - which is about the same number it cut during in the pandemic. This highlights the aviation’s growth trajectory less than a year after the crisis. The hires include pilots, cabin crew and airport staff – with about 300 new aircraft arriving in the next 10 years – and Qantas also planning to open an engineering academy to help maintain its feet. For more on the travel sector, refer to Saxo’s Asia Pacific Travel equity theme basket.  We are in the early inning of the comeback of European equities European equities have previously outperformed US equities over long periods of time, but the relentless bull market in US technology stocks over the past 13 years has erased our memory of European equities being an interesting market. But since October last year, European equities have significantly outperformed US equities and clients are most interested than ever. In an article yesterday, Peter Garnry, Saxo’s Head of Equity Strategy, provides an overview of how Europe's equity market is constructed and how it differs from the US equities, and also why they are more interesting for investors amid the comeback of the physical world. His three main points are: Europe lost the digital technology race to the US with a 13-year-long period of significant underperformance, but since October 2022 things have turned around and maybe we are in the early inning of Europe’s comeback. European equities have 20 super-sectors and the diversification of European equities is much better compared to US equities. European equities are cheaper relative to US equities and they have recently improved their operating margins while US equities have seen a significant margin compression. China’s Caixin Services PMI is expected to rise to 54.5 Caixin Services PMI is expected to confirm the continuous expansion of activities in the services sector as indicated in the official NBS PMI survey. According to Bloomberg, Caixin Services PMI is expected to rise to 54.5 in February from 52.9 in January. China’s “Two Sessions” meeting commences this weekend China is holding the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference, which together are known as the “Two Sessions, this weekend. Premier Li will deliver the Government Work Report on 5 March, in which the focus will be on the GDP growth target for 2023. The weighted average of provincial GDP targets released was around 5.6% and economists are expecting a national target of between 5% and 5.5% for 2023. Investors will also pay attention to the fiscal deficit target and quota for bond financing. In addition, investors will pay close attention to the leadership reshuffle at the State Council and other top government bodies. It is widely expected that Li Qiang will be the new Premier and He Lifeng will be one of the Vice Premiers and given the portfolio of economic and financial affairs. Japan’s Tokyo CPI for February hinting at sticky prices Japan’s Tokyo-CPI for February came in at 3.4% YoY for the headline, softer than last month’s 4.4% but still hotter than the 3.3% expected. The slower print is partially a result of PM Kishida’s latest stimulus announcement to support utilities prices which included a 20% discount on household electricity rates. Core CPI at 3.3% YoY matched estimates while the core-core measure (ex-fresh food and energy) was a notch higher at 3.2% YoY vs. 3.1% expected. Inflation continues to be sticky and above the BOJ’s 2% target although the incoming Governor Ueda is unlikely to rush into any monetary policy moves at this point. Bilibili earnings beat, non-GAAP net loss narrowed as operating margin improved Q4 Revenues in Bilibili rose 6% Y/Y to RMB6.14 billion, slightly higher than the RMB6.12 billion expected. Non-GAAP net loss came in at RMB1.31 billion, better than the consensus of RMB 1.43 billion and 20.6% smaller than in Q4 last year. Mobile games revenue falling 12% Y/Y and advertisement revenue falling 5% Y/Y  were weaker than expected. Revenues from E-Commerce and others grew 13% Y/Y and those from Value-added Services rose 24%, both above consensus estimates. The number of monthly active users increased 20% Y/Y to 326 million. India’s Adani Group gets foreign interest as prices drop After a drop of over $100 billion in market value, Adani group stocks got a respite with US boutique investment firm GQG Partners purchasing shares worth $1.87 billion in four Adani group companies. The deal shows investor interest may be returning to Adani after record drops in its share prices, and any further interest from foreign investors could potentially put a floor to near-term pressures for the conglomerate. This week, the group told bondholders it had secured a $3bn credit line from investors including a sovereign wealth fund.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Global Market Quick Take: Asia – March 3, 2023 | Saxo Group (home.saxo)
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

WTI Crude Oil Price Is Expected Further Upside Movement

TeleTrade Comments TeleTrade Comments 03.03.2023 08:42
WTI crude oil price struggles around two-week high, eases from four-month-old resistance line of late. Recently firmer MACD signals, upbeat RSI (14) hints at the quote’s further upside, 100-DMA acts as additional resistance. WTI bears remain off the table unless the quote stays beyond one-week-old support line. WTI crude oil buyers take a breather around a fortnight high, printing mild losses near the $78.00 threshold during early Friday. In doing so, the black gold price retreats from a four-month-long resistance line, as well as snapping a three-day winning streak. It’s worth noting that the bullish MACD signals and the firmer RSI (14), not overbought, joins the quote’s successful trading above the one-week-long ascending support line to keep the WTI bulls hopeful of overcoming the adjacent resistance line, close to $78.30 at the latest. However, the 100-DMA hurdle surrounding $79.75 and the $80.00 round figure acts as an extra filter towards the north. In a case where the Oil price remains firmer past $80.00, tops marked in January 2023 and December 2022, respectively near $82.55 and $83.30, could lure the commodity bulls. Alternatively, pullback moves appear unimpressive beyond the aforementioned support line stretched from the last Friday, close to $77.25 at the latest. Following that, a quick drop to the previous weekly low of $73.85 can’t be ruled out. Though, a clear downside break of $73.85 will highlight February’s bottom and December 2022 lows, close to $72.50 and $70.25, as the key support to watch during the commodity’s further downside. WTI: Daily chart Trend: Further upside  expected
USD/JPY Weekly Review: Strong Dollar and Yen's Resilience in G10 Currencies

Adani Group Stocks Got A Respite With US Boutique Investment Firm GQG Partners Purchasing Shares

Saxo Bank Saxo Bank 03.03.2023 11:32
Summary:  Equities came back from the brink yesterday, as US stocks rallied late in the session after the major indices had broken below the 200-day moving average earlier in the day. Still, considerable tension afoot here as the 10-year US Treasury yield rose above 4.00% on further signs of a tight jobs market and ahead of today’s February ISM Services survey. European stocks have been choppy of late, but are generally resilient despite the jump in ECB rate tightening expectations this week on hot February inflation data. What is our trading focus? US equities (US500.I and USNAS100.I): can S&P 500 futures climb above 4,000? US equities rallied yesterday on no real news, so we expect it to be mainly flow driven rather than driven by changes to fundamentals. S&P 500 futures closed at the 3,985 level still failing to push above the 4,000 level, and if the US 10-year yield remains above the 4% our view is that US equity futures will struggle to maintain momentum into the close before the weekend. The upside risk to that view is of course the ISM February report out later today which could send another bullish signal on the US economy extending the rebound in economic activity we saw in January. Hong Kong’s Hang Seng Index (HSI.I) and China’s CSI300 (000300.I) rallied ahead of the Two Sessions Hang Seng Index advanced over 1% and CSI 300 climbed 0.3% ahead of the Two Sessions, which are the annual meetings of China’s legislature and top political advisory body, commencing this weekend. Caixin Services PMI rose to 55 in February from 52.9 in January, echoing the strength of the recovery in the official NBS PMI survey earlier in the week. Hang Seng TECH Index gained 2.8%, with China internet names leading the charge higher. BiliBili (09626:xhkg) surged 11.2% following the online entertainment firm reporting a smaller net loss in Q4. In A shares, shipping, semiconductor, and lodging stocks gained. FX: USD firm on higher US treasury yields The US dollar rose sharply yesterday on a surge in US treasury yields after another firm weekly jobless claims print & upward revision in Unit Labor Costs for Q4 (see below), but perhaps as well on the 4.00% psychological resistance in the US 10-year benchmark treasury yield falling. The greenback’s strength faded in late trading as risk sentiment managed to stage a comeback, with US equities avoiding a meltdown after testing below key support. The February ISM Survey is in focus today, but as we emphasize below, trust in this survey may be weak. Crude oil rises on China demand optimism Crude oil prices are heading for a weekly gain but overall remain stuck within a narrowing range as China demand optimism is being offset by concerns about US monetary policy as the battle against inflation remains a key focus. Overall, however, with the dollar trading down on the week and prompt spreads indicating a tightening market, prices have managed to recover. Brent trading above its 21-DMA for a third day may add some technical support with the next level of resistance being the February high at $86.90. Focus on China where the annual National People’s Congress kicks off this weekend (see below). Gold supported by China comeback and sticky inflation Gold is heading for its best week since mid-January following a week that saw a hot EU inflation print and strong economic data from China, a top buyer of gold. The result being a softer dollar and gold has moved higher to challenge the 21-DMA, currently at $1844 for the first time since February 3. Atlanta Fed’s Bostic saying rates could rise to 5.25% and stay there well into 2024 has been shrugged off as the market is already pricing a terminal rate around 5.5%. It is also worth noting that this week's 10 basis point jump in US 10-year bond yields has primarily been driven by rising breakeven rates (inflation) leaving real yields close to unchanged. For the current recovery to attract support from technical buyers, prices as a minimum need to break $1864, and silver $22 to signal an end to the current corrections. US natural gas rally pauses after weekly stock report US natural gas prices fell on Thursday following a six-day rally which lifted the front month futures price by 29% in response to signs of lower production and rising exports. In addition, a current cold spell through mid-March has also supported the short-term demand outlook. The small correction seen yesterday came after the EIA reported an 81 bcf drop in stocks compared with a five-year average decline of 134 bcf for this week. The smaller than normal draw lifted total stocks to 2,114 bcf, some 19.3% above the 5yr avg. for this time of year, and highest surplus since May 2020. A mild winter suppressing not only demand but also producers’ willingness to maintain record production levels has created a very volatile market in recent months. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) sold off on ISM Price Paid Index The 10-year US Treasury yield surged above the psychologically important 4.00% that appeared to be supporting the treasury market of late, rising as high as 4.09% before retreating overnight to 4.03% in early European trading this morning. The sharp rise in EU yields has lead global yields higher this week on a series of hot inflation numbers across the bloc, capped by a further acceleration in the EU core CPI yesterday. But short yields in Europe retreated several basis points from new cycle highs yesterday, as did the US 2-year yield, which trades this morning at 4.87% after as high as 4.94% in the immediate wake of yesterday’s US data. The Treasury Department announced the auction of $40 billion of 3-yr notes, $32 billion of 10-year notes, and $18 billion of 30-year bonds next week. What is going on? Worrying inflation prints in the eurozone Eurozone core inflation rose to 5.60 % year-over-year in February with both core goods (6.8 %) and services (4.8 %) reaching new record highs. This is much higher than expected (5.3 %). We pay more attention to core inflation as it can show how entrenched inflation is, and it appears the inflation headache will remain an issue for most of the year. All the country prints which were released earlier this week came in above expectations, topped by Germany’s 9.3% vs 9.0%. In these circumstances, talks about a potential monetary policy pause are ill-timed, and from a monetary policy perspective, we think the ECB is unlikely to slow the pace of tightening until we see the first signs of underlying inflation peaking. Expect at least two more 50 basis point hikes in March and in May (there is no meeting in April). Depending on the trajectory of inflation, the market consensus forecasts that another 25-basis point hike could happen in June. Fed officials hinting at a higher dot plot The biggest headlines today are referring to Fed member Bostic’s (non-voter) comments as dovish, while he said he is firmly in favour of a 25bps hike path (to reduce the possibility of a hard outcome) and even said we could be in a position to pause by mid-to-late summer which appears to be exactly in-line with current market expectations. If his comments suggest 25bps rate hikes each at the March, May and June meetings, we still may end up in the 5.25-5.50% terminal rate which is higher than what the December dot plot suggested. Waller (voter) also hinted at an upwards shift in the dot plot, more clearly so, saying that Fed may need to raise rates beyond December's central tendency view of 5.1-5.4% if the incoming job and inflation data does not pull back from strong readings for January. US claims and unit labor cost data feed the inflation narrative US initial jobless claims fell by 2k to 190k last week from 192k prior and 195k expected, continuing to signal a tight US labor market. Unit labor costs were revised sharply higher to an annualized 3.2% in the fourth quarter, versus the initial 1.1% read. Increased labor costs keep concerns of a wage-price spiral alive and will likely keep the Fed on its toes in tightening policy. Japan’s Tokyo CPI for February hinting at sticky prices Japan’s Tokyo-CPI for February came in at 3.4% YoY for the headline, softer than last month’s 4.4% but still hotter than the 3.3% expected. The slower print is partially a result of PM Kishida’s latest stimulus announcement to support utilities prices which included a 20% discount on household electricity rates. Core CPI at 3.3% YoY matched estimates while the core-core measure (ex-fresh food and energy) was a notch higher at 3.2% YoY vs. 3.1% expected. Inflation continues to be sticky and above the BOJ’s 2% target although the incoming Governor Ueda is unlikely to rush into any monetary policy moves at this point. India’s Adani Group gets foreign interest as prices drop After a drop of over +$150 billion in market value to $83 billion, the Adani group stocks got a respite with US boutique investment firm GQG Partners purchasing shares worth $1.87 billion in four Adani group companies. The deal shows investor interest may be returning to Adani after record drops in its share prices, and any further interest from foreign investors could potentially put a floor to near-term pressures for the conglomerate. This week, the group told bondholders it had secured a $3bn credit line from investors including a sovereign wealth fund. Four days of gain this week has seen the total market capital across the ten companies in the group rise to $103 billion. What are we watching next? February US ISM Services in focus today after erratic readings in Dec. and Jan. The US ISM services survey for February will be on watch later today and is expected to ease to 54.5 from a big jump to 55.2 last month but remain comfortably in expansion. The last two months of this data series have shown erratic moves, with a bizarre collapse in the survey December to 49.2 after 55.5 in November and then the January survey resurgent at 55.2. Can we trust this data series? Attention will also be on the prices paid component after a similar component from the ISM manufacturing survey this week created jitters and services prices are likely to be stickier. China’s “two sessions” in focus Following on from Wednesday’s stronger than expected PMI which supported the view that China’s economy is picking up steam, focus now turns to the Chinese government and what they will do to further help along a post-lockdown economic recovery. The first session of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC) will begin on March 4 and followed up the following day by the 14th National People’s Congress (NPC. During what is collectively known as the “two sessions”, Chinese officials will release a set of social and economic development goals and various policy measures to achieve them. Earnings to watch There are no important earnings releases today. We have highlighted next week’s most important earnings releases below with the most market attention going earnings from Adidas, CATL, and JD.com. Adidas has a huge inventory of Yeezy sneakers following the abrupt end to the partnership with Ye that caused a massive writedown in the previous quarter and investors have generally lost short-term trust in Adidas following a string of bad results. Analysts expect Adidas to report Q4 revenue of €5.2bn up 1% y/y and EBITDA of €-419mn. CATL is the world’s largest battery maker and is firing on all cylinders with analysts expecting Q4 revenue growth of 87% y/y and EPS of CNY 2.65 down 11% y/y as the company has not passed on all input costs to its EV customers after a significant surge in lithium carbonate prices last year. Monday: Trip.com Tuesday: Ashtead Group, Sea Ltd, Ferguson, Crowdstrike Wednesday: Ping An Bank, Thales, Adidas, Geberit Thursday: CATL, Deutsche Post, JD.com Friday: Daimer Truck, AIA Group, Oracle, DiDi Global Economic calendar highlights for today (times GMT) 0815-0900 – Eurozone Final Feb. Services PMI 0930 – UK Feb. Final Services PMI 1000 – Eurozone Jan. PPI 1330 – Canada Jan. Building Permits 1445 – US Feb Final Services PMI 1500 – US Feb. ISM Services 1600 – US Fed’s Logan (Voter 2023) to speak 1700 – ECB's Wunsch to speak 2000 – US Fed’s Bowman (Voter) to speak Source: Global Market Quick Take: Europe – March 3, 2023 | Saxo Group (home.saxo)
Are crude oil prices rebounding on the back of a possible debt ceiling deal?

Strong China Data Boosts Energy, Eurozone Core CPI Hit A Record

Swissquote Bank Swissquote Bank 03.03.2023 11:59
The Eurozone’s flash CPI estimate looked as ugly as it smelled beforehand. Inflation in the Eurozone is estimated to have barely eased to 8.5% from 8.6% printed a month earlier, while core inflation advanced to a record of 5.6%, from 5.3% printed previously. CPI The latest CPI update confirmed the European Central Bank (ECB) hawks’ aggressive positioning for further rate hikes and pushed the European yields further up yesterday, but despite higher yields across the board, the Stoxx 600 closed Thursday’s session 0.50% higher. Jobs data Across the Atlantic Ocean, fresh jobs data came to fan the inflation worries yesterday in the US. US Yields US yields advanced but the S&P500 could avoid a further selloff, though it briefly stepped below the most-watched 200-DMA. EU and  US stock markets But for both the European and US stock markets, the rising yields call for downside correction. Watch the full episode to find out more! 0:00 Intro 0:32 Higher Eurozone inflation boosts EZ yields 2:24 … but Stoxx resist 5:01 Latest US jobs data points at heated inflation, as well 6:38 … S&P500 also resists to rising yields 8:36 USD upbeat, dollar-yen clears key resistance 8:58 Strong China data boosts energy, but… Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Eurozone #inflation #US #jobs #data #Fed #ECB #rate #hike #EUR #USD #JPY #Crude #Oil #Stoxx #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
The Commodities Feed: Oil maintains positive momentum

The Commodities Feed: Oil maintains positive momentum

ING Economics ING Economics 03.03.2023 12:08
The oil complex continued its positive momentum yesterday amid economic optimism from China. The Brent forward curve traded in deeper backwardation, reflecting a tighter physical market. Oil supply from OPEC increased further in February as output recovers in Nigeria and Libya. Source: Shutterstock Energy – OPEC output edges higher The oil market traded amid positive sentiment yesterday, with ICE Brent settling higher for a third consecutive day on overall market optimism over Chinese economic recovery. The Brent forward curve also tightened further, with the prompt/next month spread increasing to a three-month high of US$0.66/bbl of backwardation yesterday. On the other hand, positive economic data from the US and firm inflation pose a risk that the Fed rate hike cycle may continue for longer than initially estimated. Preliminary numbers from Bloomberg show that OPEC oil production in February increased by 120 Mbbls/d to an average of 29.24 Mbbls/d. The largest increases came from Nigeria, Libya and Venezuela, where output increased 80Mbbls/d, 70Mbbls/d and 30Mbbls/d respectively. Angola and Iran saw the largest declines, with output falling by 40Mbbls/d for both nations. Among other OPEC members, oil output remained largely flat as the group adhered to quotas fixed late last year. The OPEC+ committee is next due to hold an online meeting to review market conditions early next month. Operations at BP’s Rotterdam refinery were halted following a fire, potentially limiting fuel supplies from one of Europe’s biggest oil-processing units. The refinery has two main crude-processing units, each having a capacity of around 200Mbbls/d. The market report suggests that one of the units was taken offline. The plant is a major supplier of gasoline and diesel in the region. Supply disruption to the plant comes at a time of ongoing seasonal maintenance at other plants and could help tighten the refined products market even further. Metals – Trading with mixed signals Base metals traded mixed this morning as market participants await the comments from the upcoming annual National People’s Congress meeting in China, which is scheduled for Sunday. The meeting could outline the economic growth targets for the county along with upcoming stimulus plans - these will be watched closely to gauge metal demand expectations from the country. In mine supply, as per the latest data from Chilean copper commission Cochilco, Codelco’s copper production rose 5.1% YoY to 127kt while BHP’s Escondida copper mine reported gains of 15.2% YoY to 93.3kt in January. Collahuasi’s copper output declined 16.4% YoY to 43kt over the same period. Earlier, Cochilco reported that total copper production in Chile increased 1.3% YoY (down 12.5% MoM) to 435.9mt in January 2023. Agriculture – Extreme weather conditions hurt grain crops in Argentina The weekly report from the Buenos Aires Grain Exchange again raised alarm over inclement weather in Argentina. The exchange reported that ongoing heat waves and dryness may impact the current soy crop and that the production estimates could be revised down again, after already being cut by around 12% (from 38mt to 33.5mt) compared to last week’s report. For corn , the exchange might trim its production estimates of 41mt as late-planted fields are struggling from heat and drought. USDA released its weekly grains export sales report which shows that US grain sales remained weak for the week ending 23 February. Weekly export sales of corn were down to 598.1kt for the week, lower than the 848.7kt a week ago and 707.9kt the same time last year. These also remained lower when compared to the average market expectation of 788kt. For soybean, the agency reported that US export sales fell to 494.7kt for the above-mentioned week, lower when compared to 556.6kt in the previous week and significantly down from 2243kt a year ago. The markets expected a number closer to 635kt. Similarly, US wheat export sales declined to 301kt; compared to 418.8kt a week ago and 369.8kt a year ago. The market expected these exports to be around 360kt. Read this article on THINK TagsOil Commodities Brent Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: First US crude draw this year

Commodities: Energy concerns ease further

ING Economics ING Economics 04.03.2023 10:29
Energy prices came under further pressure in February, particularly when it comes to natural gas. Storage in Europe is looking increasingly comfortable, and it is a similar story for the US natural gas market. Oil prices continue to trade in a range-bound manner In this article EU gas storage increasingly comfortable US natural gas falls towards pandemic levels Oil market set to still tighten   The oil market is well supplied in the near term due to Russian supply holding up better than expected EU gas storage increasingly comfortable TTF prices broke below EUR50/MWh in February, the lowest levels seen since August 2021. This has occurred as EU gas storage looks increasingly comfortable. Strong liquefied natural gas (LNG) flows and weaker-than-expected demand has allowed storage to draw at a slower-than-expected pace. We now expect to end this heating season with EU storage at around 54% full, compared to previous expectations of a little over 50%. This is significantly higher than the 26% seen at the end of the last heating season and also above the five-year average of 34%. As a result, the EU will need to only see net additions of around 36bcm over the injection season to hit the EU storage target of 90% by 1 November. Over the same period last year, we saw roughly 67bcm added. This should be much more manageable for the region and in fact, there is a growing risk that storage could essentially be full ahead of the next heating season, which suggests the potential for further price weakness in the third quarter. We have revised lower our 2023 TTF forecast from EUR70/MWh to EUR57/MWh. We believe that further downside from current levels is limited as we move further into the coal-to-gas switching range. Lower Asian LNG prices should also start to spark some buying appetite. Risks to our view include a stoppage of remaining Russian pipeline gas flow to Europe, a stronger-than-expected recovery in Chinese LNG demand (we are assuming a little over 10% growth year-on-year) and a stronger European demand response to the more recent weakness in prices. It is worth noting that the EU is still in deficit and so will need to continue to see demand destruction through this year to manage – we are assuming 10% below the five-year average from April onward. EU gas storage comfortable but the region is still in deficit GIE, ENTSOG, Eurostat, ING Research US natural gas falls towards pandemic levels US natural gas prices briefly traded below US$2/MMBtu in February and hit their lowest levels since September 2020. The US has also seen a largely milder winter this year, which has meant that gas storage has been falling at a slower-than-usual pace. The US went into the 2022/23 winter with natural gas storage 1% below the five-year average at the end of October and, given weaker heating demand, it is now around 15% above the five-year average. This gap is also expected to widen before this winter ends. The extended outage of the Freeport LNG export plant has added further pressure on prices. However, this plant is in the process of restarting, which should provide a further outlet for US gas. Weaker demand has come at a time when we continue to see supply growth. US natural gas production is expected to grow in the region of 2.2Bcf/day in 2023, which would take total output in excess of 100Bcf/day this year, which would also be record levels. US storage is expected to remain above the five-year average for the remainder of this year, which suggests a limited upside in prices throughout the year. Oil market set to still tighten Oil prices continue to trade in a range-bound manner. Expectations that the oil market will remain well supplied in the near term, along with expectations for a more hawkish Federal Reserve, have kept a cap on prices for the time being. The market is well supplied in the near term due to Russian supply holding up better than expected. However, we expect that Russian supply will start to decline more aggressively in the months ahead, following the EU ban on Russian refined products. Russia has already announced that it will cut supply by 500Mbbls/d from March, whilst we expect that Russian output will decline by a little over 1MMbbls/d YoY in 2023. There are few other suppliers in the market who are able or willing to make up for Russia’s shortfall. OPEC has made it clear that it intends to stick to its current cuts throughout the year, whilst US supply growth in 2023 will not be able to make up for the Russian shortfall. As for demand, we are currently assuming that global demand will grow by 1.9MMbbls/d, which will take demand to record levels this year. This growth is predominantly driven by Asia, specifically China. Given that China dominates global growth, that does leave an obvious downside risk to the market. Strong demand growth and limited non-OPEC supply growth in 2023 suggest that the market will tighten as we move into the second half of the year. Therefore, we expect Brent to trade back above US$100/bbl later this year.   TagsRussian oil ban Oil Natural gas Monthly Economic Update LNG Energy China demand Read the article on ING Economics   Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Kelvin Wong talks JGB, US dollar against Japanese yen and more

Japan's "Shunto" Spring Wage Talks Will Be Key To Watch This Month

Saxo Bank Saxo Bank 06.03.2023 08:16
Summary:  US stock indices had a strong finish to the week, with the Nasdaq 100 rising 1.6% and the S&P 500 surging 2%. Despite the fading expectations for interest rate cuts in 2023, the S&P 500 has risen 5.4% and the Nasdaq 100 has soared 12.4% since the beginning of the year. Yields on the 10-year Treasury notes reversed and returned to below 4%, settling at 3.95% to close the week on Friday. On the first day of the First Session of the 14th National People’s Congress, China's Premier Li delivered his last Government Work Report. The report set a target of around 5% for the real GDP growth for 2023, which was at the lower end of expectations.   What’s happening in markets? US equities bounced on Friday to finish the week higher Nasdaq 100 (NAS100.I) rose 1.6% and S&P 500 (US500.I) surged 2% on Friday, securing a weekly gain of 1.9% and 2.6% respectively. All 11 sectors within the S&P 500 advanced, led by information technology, consumer discretionary, and communication services. Meta (META:xnas), First Solar (FSLR:xnas), and Broadcom (AVGO:xnas) were among the top gainers, rising more than or nearly 6%. Apple (AAPL:xnas) gained 3.5% after announcing the departure of its cloud business head next month. Rivian (RIVN:xnas) jumped 7.6% following raising its EV production target by 24% to 62,000 units. Since the beginning of the year, the S&P 500 has risen 5.4% and the Nasdaq 100 has soared 12.4% despite the expectations for interest rate cuts in 2023 having largely faded. NVidia (NVDA:xnas) up 65%, Tesla (TSLA:xnas) up 63%, and Meta up 53.9% were among the best-performing stocks that drove the indices higher. US Treasuries rallied with the 10-year yield reversing to below 4% After spending one day above 4% on Thursday, yields on the 10-year Treasury notes reversed and returned to below 4% and settled at 3.95% to close the week on Friday. Headlines were light. The decline in the ISM Services Index in February was smaller than expected and initially saw the short-end lower in prices and higher in yields before the losses faded and reversed as strong bids emerged in the long ends in the afternoon. The 2-10-year spread bull flattened 7bps to -91. Hang Seng Index and China’s CSI 300 advanced ahead of the Two Sessions On Friday, Hang Seng Index (HSI.I) was up 0.7%. Hang Seng TECH Index (HSTECH.I) was up 2.1% ahead of the Two Sessions in China, annual meetings of China’s legislature, and top political advisory body. Technology, auto, and Chinese developer stocks led the charge higher. Closing at 20567, Hang Seng Index was up 2.79% over the week.  Hang Seng TECH Index gained 2.8%, with China internet names leading the charge higher. Bilibili (09626:xhkg) surged 10.3% following the online entertainment firm reporting a smaller net loss in Q4. TVB (00511:xhkg) soared 51.6% on heavy volume after the television broadcaster announced cooperation plans with Alibaba’s Taobao for live-streaming broadcasts.  Wynn Macau (01128:xhkg) fell 4.3%, weighed on by hedging flows after the Macao casino operator issued a USD600m of convertible bonds. Benchmark A-share indices advanced. The CSI300 (000300.I) climbed 0.3% on Friday and gained 1.7% over the week. The Shanghai Stock Exchange Composite Index gained for the fifth day in a row, closing at 3328.39, the highest level since July 2022. The net purchase of northbound funds was RMB 2 billion. Large state-owned companies in strategic industries, typically those starting with the prefix “China”, were among the top gainers ahead of the Two Sessions. Australian equities remain pressured The Australian share market fell for the fourth straight week last week. And with BHP and Rio and Woodside all going ex-dividend this week, it could be very volatile week. For more on what to watch this week, refer to Saxo’s Week Ahead. FX: GBP recovers post-Bailey losses The USD was broadly weaker last week after a run higher in February on expectations that most of the Fed’s tightening is priced in and yields are potentially reaching close to their peaks. This week brings a test of this rhetoric with Chair Powell’s testimony and the US jobs report scheduled for release. GBPUSD once again found support at 1.1920 despite a dovish turn by BOE Gov Bailey last week, and returned to 1.2040. AUDUSD worth a watch again this week with support at 0.67 being eyed as the RBA meets this week and China’s lower growth expectations may weigh. USDJPY has reversed back below 136 as yields gains ease, but if US yields continue their run higher and/or Governor Kuroda stays overly dovish at his final Bank of Japan meeting this week then a return to 137+ remains likely.  Crude oil whipsaws but bulls in control Crude oil prices faced 2-way action on Friday with an initial move lower by over 2% on a WSJ report saying the UAE is debating internally whether to leave OPEC. But these reports were denied later on, and enthusiasm of the oil bulls going into China’s policy meetings over the weekend with policy stimulus expectations running high helped crude oil make a quick reversal. WTI prices got close to $80/barrel from a dip to $76 earlier, while Brent rose to $86 from $82.50. A modest weakness is coming back again this morning in Asia, keeping the range intact. However, China’s weaker than expected growth target set over the weekend may still keep oil prices choppy, with eyes also on any possibility of hawkish remarks from Chair Powell this week or the US jobs report.    What to consider? China’s 2023 GDP growth target at “around 5%” China sets a real GDP growth target of "around 5%" for 2023 in the Government Work Report to the National People's Congress. This target is at the lower end of expectations ranging from 5% to 5.5% going into the meeting. Other key macroeconomic targets include adding 12 million jobs to urban area employment for 2023, a consumer inflation target of 3%, and a fiscal deficit target of 3% of nominal GDP. The report emphasizes the importance of boosting domestic aggregate demand, particularly household consumption, and aims to deepen the reform of state-owned enterprises while encouraging private enterprises to grow. For more details, see our note here. US ISM services stays strong The headline ISM services cooled less than expected in February, falling to 55.1 from 55.2 in January, better than the expected 54.5. The prices paid component, which raised concerns again about the disinflation rhetoric from the manufacturing ISM report last week, cooled only slightly to 65.8 from 67.8 in January, showing sticky services prices. Employment rose to 54 from 50.0, matching the highest since March 2022 and therefore showing more signs of a tight labour market. New orders accelerated to 62.6 from 60.4 but business activity slowed to 56.3 from 60.4.  China’s Caixin Services PMI came in at the highest level since Sept 2022 Caixin Services PMI rose to 55 in February (consensus estimate: 54.5), the highest level since September 2022, from 52.9 in January, echoing the strength of the recovery in the official NBS PMI survey earlier in the week. Both the business activities component and the new order components were in the expansion territory. The Biden administration is drafting new rules to prohibit some U.S. investments in China In reports sent to Congress, the Biden administration told lawmakers that the Treasury Department and the Commerce Departing are drafting new regulations to prohibit U.S. companies from making advanced technology investments abroad, which is understood as focusing on China. Fed members continue to sound hawkish, eyes on Powell Fed member Mary Daly was on the wires over the weekend, and sounded hawkish as she raised the prospects of an upward shift in the Fed’s dot plot as well. She said that inflation is still high, and the Fed has to think about 'continuous tightening', signalling higher rates and remaining at elevated levels for a longer period of time, if inflation stays hot. Another member Barkin also clearly said that there will be no rate cuts this year. Focus will be on data in the run upto Fed’s March meeting, but Chair Powell’s testimony and the February jobs report this week will be key for the markets. Japan unions pushing for record wage increase The Japanese Trade Union Confederation (JTUC, more commonly known as Rengo) says its survey of 2000+ unions in the country shows an average pay rise request of 4.49% this year. This is the highest since 1998's 4.36% and is much higher than the 2.97% sought in 2022. The Bank of Japan continues to highlight that wage growth is key for achieving sustained demand-pull inflation. Japan's "shunto" spring wage talks will be key to watch this month as any larger than expected increase in wages will fuel more tightening expectations for the Bank of Japan, having a profound impact on global liquidity as well. COT reporting on Brent and (delayed) gold  Speculators or hedge funds raised bullish bets on Brent crude oil by 9.4k lots to near a 15-month high at 286k lots in the week to February 28. The cost of holding a short position in Brent, reflected through the current backwardation, supported a continued collapse in the gross short to a 12-year low at 22k lots.  While the ICE Europe Exchange is up to date in its reporting, the US CFTC is still catching up following a January 31 cyberattack on ION Cleared Derivatives, a third-party software and service provider for derivative trading. The latest report covered the week to February 7, when gold reached $1975 before crashing to $1885, triggering a 29% drop in the gold net long to 79k. The CFTC is expected to be up to data around mid-March.  Moving Visa, Mastercard, and Paypal from IT to Financials in the S&P500 Starting from 17 March, the S&P 500 will move Visa (V), Mastercard (MA), and Paypal (PYPL), which specialize in payment services from its Information Technology sector to the Financials sector, and Automatic Data Processing (ADP), which provide human resources services from the Information sector to the Industrials sector. For what to watch in the markets this week – read or watch our Saxo Spotlight.  For a global look at markets – tune into our Podcast. Source: Global Market Quick Take: Asia – March 6, 2023 | Saxo Group (home.saxo)
USD/CAD - Canadian economy added 41,400 jobs beating expectations

A Modest Pullback In Crude Oil Prices Undermines The Commodity-Linked Loonie

TeleTrade Comments TeleTrade Comments 06.03.2023 08:47
USD/CAD struggles to gain any meaningful traction and oscillates in a range on Monday. Retreating US bond yields keeps the USD bulls on the defensive and acts as a headwind. A modest downtick in Oil prices undermines the Loonie and lends support to the major. The USD/CAD pair kicks off the new week on a subdued note and seesaws between tepid gains/minor losses, around the 1.3600 mark heading into the European session. The pair, meanwhile, remains within Friday's broader trading range and is influenced by a combination of diverging forces. A softer tone surrounding the US Treasury bond yields keeps the US Dollar bulls on the defensive, which, in turn, acts as a headwind for the USD/CAD pair. That said, a modest pullback in Crude Oil prices - amid worries that a deeper global economic downturn will dent fuel demand - undermines the commodity-linked Loonie and lends some support to the major. The fears resurfaced after China set a lower-than-expected target for economic growth and forecast that the economy would expand by 5% in 2023. Apart from this, growing acceptance that the Federal Reserve will stick to its hawkish stance favour the USD bulls and support prospects for the emergence of some dip-buying around the USD/CAD pair. The incoming US macro data indicated that inflation isn't coming down quite as fast as hoped and pointed to an economy that remains resilient despite rising borrowing costs. Adding to this, a slew of FOMC members backed the case for higher rate hikes and opened the door for a 50 bps lift-off at the March policy meeting. Hence, the market focus will remain glued to Fed Chair Jerome Powell's semi-annual congressional testimony on Tuesday and Wednesday. Powell's comments will be closely scrutinized for clues about the Fed's future rate-hike path, which will play a key role in influencing the near-term trajectory of the USD. Investors this week will also confront the release of the closely-watched US monthly jobs report, popularly known as NFP on Friday, to determine the next leg of a directional move for the USD/CAD pair and before placing aggressive bets. Heading into the key event/data risks, the US bond yields and the broader market risk sentiment will continue to drive the USD demand and provide some impetus to the USD/CAD pair. Apart from this, Oil price dynamics should allow traders to grab short-term opportunities in the absence of any relevant market-moving economic releases on Monday, either from the US or Canada. Nevertheless, the aforementioned fundamental backdrop favours bullish traders and suggests that the path of least resistance for the major is to the upside.
Crude Prices Are Rallying After A Mixed Jobs Report Sent The Dollar Lower

Crude Oil Declined After China Announced Cautious Growth Targets

Saxo Bank Saxo Bank 06.03.2023 11:17
Summary:  Equity markets surged higher on Friday as the treasury market suddenly found solid support on Friday, taking the US 10-year yield back below 4.00%. At the weekend, China set a “modest” growth target of around 5% at key meetings. The week ahead is thick with central bank action, starting with the RBA on Tuesday, with Fed Chair Powell testimony up tomorrow and Wednesday, and Friday’s Bank of Japan meeting the likely highlight of the week, as it is Governor Kuroda’s last meeting. What is our trading focus? US equities (US500.I and USNAS100.I): strong rally as bond yields decline US equities rallied strongly on Friday with S&P 500 futures gaining 1.7% pushing above the 4,000 level closing at 4,050 with the momentum extending this morning. The rally in US equities came on the back of a ISM report showing the US economy is still humming along. US bond yields declined on Friday together with a weaker USD helping lift sentiment in equities which was an odd move given that inflation expectations were rising last week. This week we have Fed President Powell’s speech that could impact equities (read our preview below). In S&P 500 futures the 4,100 is a key upside level to watch if momentum extends. Hang Seng Index and CSI 300 oscillated on a modest Government Work Report The Hang Seng Index and CSI 300 Index oscillated after China set out a modest GDP growth target for 2023 and signalled a measured approach to fiscal and monetary policies as well as balanced support to the housing sector with avoiding systemic risks as a key priority. Lenovo (00992:xhkg) rising over 4% and reaching a new high, was the biggest gainer. The PC and server maker gained following its arch-rival in the server business, Inspur (000977:xsec) might be having difficulties in getting US parts after Inspur’s parent being put on the US ‘entity list’. FX: GBP recovers post-Bailey losses The USD was broadly weaker last week after a run higher in February on expectations that most of the Fed’s tightening is priced in and yields are potentially reaching close to their peaks. This week brings a test of this rhetoric with Chair Powell’s testimony and the US jobs report scheduled for release. GBPUSD once again found support at 1.1920 despite a dovish turn by BOE Gov Bailey last week, and returned to 1.2040. AUDUSD worth a watch again this week with support at 0.67 being eyed as the RBA meets Tuesday and China’s lower growth expectations may weigh. USDJPY has reversed back below 136 as yields gains ease, but if US yields continue their run higher and/or Governor Kuroda stays overly dovish at his final Bank of Japan meeting this week then a return to 137+ remains likely. Crude oil whipsaws with no clear direction yet to emerge  Crude oil prices faced strong two-way action on Friday with an initial move lower by over 2% on a WSJ report, later denied, saying the UAE is debating internally whether to leave OPEC, before finishing on a strong note on short covering after across market risk appetite improved and traders looked to China’s policy meetings over the weekend for support.  Overnight, however, crude declined after China, the world’s top oil imported, announced cautious growth targets and avoided any larger stimulus measures. Crude oil remains stuck within narrowing ranges, Brent between $81 and $89 with focus returning to the US and speeches from Powell to policy makers on Capital Hill Tuesday and Wednesday, as well as Friday’s job report.    Gold supported by drop in US real yields Gold rallied strongly last week after the market started pricing in higher long-term inflation, thereby challenging the FOMC’s own targets. While support was provided by US ten-year yields dropping back below 4% on Friday to end the week close to unchanged, it was developments in Breakeven (inflation) up 14 bps on the week and real yields, down 13 bps that helped support gold’s recovery. The close back above the 21-DMA on Friday, now at $1844, signaling a return of positive momentum, the strength of which may still be challenged this week with Powell speeches and Friday's job report the focus. For the current recovery, to attract support from technical buyers, prices as a minimum need to break $1864, and silver $22 to signal an end to the recent period of weakness. Copper takes China’s cautious growth target on the chin Copper trades close to unchanged after China set a cautious economic growth target with no major new stimulus measures being announced. With the focus primarily on supporting and stabilizing the economy, the metal could still be challenged in the short term by long liquidation from bulls having bet too heavily on the recovery story and increased spending towards infrastructure projects. Especially considering the recent buildup in inventories monitored by futures exchanges in London and not least in Shanghai. We maintain our long-held bullish outlook for copper and industrial metals in general but with China not providing growth stimulus, the short-term outlook may equally depend on whether other large economies can avoid a recession. US Treasuries (TLT:Xmas, IEF:xnas, SHY:xnas) rallied with the 10-year yield reversing to below 4% After spending one day above 4% on Thursday, yields on the 10-year Treasury notes reversed and returned to below 4% and settled at 3.95% to close the week on Friday. Headlines were light. The decline in the ISM Services Index in February was smaller than expected and initially saw the short-end lower in prices and higher in yields before the losses faded and reversed as strong bids emerged in the long ends in the afternoon. The 2-10-year spread bull flattened 7bps to -91. What is going on? China’s 2023 GDP growth target at “around 5%” China sets a real GDP growth target of "around 5%" for 2023 in the Government Work Report to the National People's Congress. This target is at the lower end of expectations ranging from 5% to 5.5% going into the meeting. Other key macroeconomic targets include adding 12 million jobs to urban area employment for 2023, a consumer inflation target of 3%, and a fiscal deficit target of 3% of nominal GDP. The report emphasizes the importance of boosting domestic aggregate demand, particularly household consumption, and aims to deepen the reform of state-owned enterprises. For more details, see our note here. COT reporting on Brent and (delayed) gold Hedge funds raised bullish bets on Brent crude oil by 9.4k lots to near a 15-month high at 286k lots in the week to February 28. The cost of holding a short position in Brent, reflected through the current backwardation, supported a continued collapse in the gross short to a 12-year low at 22k lots.  While the ICE Europe Exchange is up to date in its reporting, the US CFTC is still catching up following a January 31 cyberattack on ION Cleared Derivatives, a third-party software and service provider for derivative trading. The latest report covered the week to February 7, when gold reached $1975 before crashing to $1885, triggering a 29% drop in the net long to 79k. The CFTC is expected to be up to data around mid-March. US ISM services stays strong The headline ISM services cooled less than expected in February, falling to 55.1 from 55.2 in January, better than the expected 54.5. The prices paid component, which raised concerns again about the disinflation rhetoric from the manufacturing ISM report last week, cooled only slightly to 65.8 from 67.8 in January, showing sticky services prices. Employment rose to 54 from 50.0, matching the highest since March 2022 and therefore showing more signs of a tight labour market. New orders accelerated to 62.6 from 60.4 but business activity slowed to 56.3 from 60.4. Fed members continue to sound hawkish, eyes on Powell Fed member Mary Daly (non-voter in 2023) was on the wires over the weekend, and sounded hawkish as she raised the prospects of an upward shift in the Fed’s dot plot as well. She said that inflation is still high, and the Fed has to think about 'continuous tightening', signalling higher rates and remaining at elevated levels for a longer period of time, if inflation stays hot. Another member Barkin (non-voter in 2023) also clearly said that there will be no rate cuts this year. Focus will be on data in the runup to the Fed’s March meeting, but Chair Powell’s testimony before the Congress and the February jobs report this week will be key for the markets, as noted below.. Japan unions pushing for record wage increase The Japanese Trade Union Confederation (JTUC, more commonly known as Rengo) says its survey of 2000+ unions in the country shows an average pay rise request of 4.49% this year. This is the highest since 1998's 4.36% and is much higher than the 2.97% sought in 2022. The Bank of Japan continues to highlight that wage growth is key for achieving sustained demand-pull inflation. Japan's "shunto" spring wage talks will be key to watch this month as any larger than expected increase in wages will fuel more tightening expectations for the Bank of Japan, having a profound impact on global liquidity as well. What are we watching next? Busy agenda this week for central banks, topped by BoJ on Friday It’s a busy week for central bank messaging this week. First up is the RBA, which we expect will hike the policy rate another 25-basis points to 3.60%. This is not fully priced into market expectations, and the market has priced a total of 52 basis points of tightening over the next three meetings, including tonight’s.  The terminal rate is currently priced near 4.15%. On Wednesday, the BoC will discuss the pace of monetary policy, but at its last meeting signaled that it would like to pause the hike cycle to assess the economy, given the steep pace of policy tightening. We expect interest rates will remain unchanged at 4.5% after eight consecutive hikes. In the US, Fed Chair Powell will testify before Senate and House panels on Tuesday and Wednesday, respectively, on the economy and monetary policy. He will face hours of questioning and political posturing from Congress members. Finally, the most anticipated central bank meeting of the week will be Friday’s Bank of JA France general strike against pension reform France will face a rolling general strike against the pension reform starting tomorrow. The strike is likely to be prolonged for at least 10 days according to the trade unions. This could push the country’s GDP into contraction this quarter. Union representatives at EDF warned of the risk of reduced power output from France’s nuclear power plants due to the strike. US February labor market data up on Friday The US Feb. Nonfarm payrolls change report for February will be released on Friday. In January, US job creation increased at a very strong pace (507k). Consensus expectation look for a return to trend in February (consensus at +200k). The February unemployment rate is expected to marginally increase to 3.5% from the multi-decade low of 3.4% posted in January. Overall, the U.S. labor market is still very resilient, in a very good shape. This is unlikely to influence the Fed’s monetary policy decisions in the short-term. Earnings to watch This week’s most important earnings releases are listed below with the most market attention going to earnings from Adidas, CATL, and JD.com. Adidas has a huge inventory of Yeezy sneakers following the abrupt end to the partnership with Ye that caused a massive writedown in the previous quarter and investors have generally lost short-term trust in Adidas following a string of bad results. Analysts expect Adidas to report Q4 revenue of €5.2bn up 1% y/y and EBITDA of €-419mn. CATL is the world’s largest battery maker and is firing on all cylinders with analysts expecting Q4 revenue growth of 87% y/y and EPS of CNY 2.65 down 11% y/y as the company has not passed on all input costs to its EV customers after a significant surge in lithium carbonate prices last year. Monday: Trip.com Tuesday: Ashtead Group, Sea Ltd, Ferguson, Crowdstrike Wednesday: Ping An Bank, Thales, Adidas, Geberit Thursday: CATL, Deutsche Post, JD.com Friday: Daimer Truck, AIA Group, Oracle, DiDi Global Economic calendar highlights for today (times GMT) 0930 – UK Feb. Construction PMI 1000 – ECB Chief Economist Lane to speak 1000 – Eurozone Jan. Retail Sales 1500 – Canada Feb. Ivey PMI 1500 – US Jan. Factory Orders 2330 – Japan Jan. Labor Cash Earnings 0030 – Australia Jan. Trade Balance 0330 – Australia RBA Cash Rate Target announcement    Source: Global Market Quick Take: Europe – March 6, 2023 | Saxo Group (home.saxo)
The RBA Raised The Rates By 25bp As Expected

The RBA Raised The Rates By 25bp As Expected

Ipek Ozkardeskaya Ipek Ozkardeskaya 07.03.2023 08:40
The week started with worries that China setting its growth target to 5%, a meagre target for a post-pandemic kick-off, could mean a slower global growth ahead.   Today, the latest, and mixed trade figures further raised a couple of eyebrows regarding whether we are expecting too much from China. The decline in Chinese exports was less dramatic than expected, but imports fell more than 10% in February from a year ago.     Nasdaq's Golden China Dragon index kicked off the week down, while the S&P500 was better bid at the open, with gains up to 1%. But the gains melted to the close and all three major US indices closed Monday's session flat to very slightly positive. Still the S&P500 is heading to Powell's semi-annual testimony above the 4000 mark.   Today, all eyes and all ears are on  Federal Reserve (Fed) Chair Jerome Powell and what he thinks about the latest set of economic data.   Since the latest FOMC meeting, we saw a blowout NFP number, an uptick in inflation figures, lower-than-expected decline in the S&P500 earnings, and overall encouraging economic activity data.   And that's a problem. The fact that the US jobs market, or economic activity don't react to higher Fed rates is a problem for Fed, because it makes the Fed's arms less efficient for fighting against inflation. Many would argue that changes in rates take time to filter into the economy but the Fed's tightening campaign began in November 2021 - 17 months ago, the rate hikes began roughly a year ago. It's about time we start seeing the impact of higher rates through data.   Alas, half-a-million NFP read, with the lowest unemployment rate of the past half a decade and uptick in inflation are indeed worrying.  US crude above 100-DMA  Disenchanting growth target from China was expected to keep the oil bears in charge of the market, but the 100-DMA got surprisingly cleared to the upside yesterday.   Warning of tight global supply and rising Chinese demand from CERAWeek conference and Estonian foreign minister's idea that the EU should halve the Russian oil cap helped pushing the price of a barrel above the critical 100-DMA level.   Tight global supply, war, sanctions on Russia oil and the rising Chinese and global demand tilt the balance for higher oil prices in the medium run. But higher energy prices mean higher inflation, and higher inflation means tighter monetary policies which, in return, increase the global recession odds, and could weigh on oil prices.   Elsewhere  The Reserve Bank of Australia (RBA) raised the rates by 25bp as expected and said that there could be more rate hikes on the pipeline depending on the data, but the AUDUSD slipped below 67 cents.   The EURUSD extended gains and flirted with the 1.07 mark yesterday on the back of a surprisingly softer US dollar into Powell's testimony.   Gold sold off into the $1860 mark.   Hawkish Powell could reverse losses in the dollar later today. 
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The RBA Hiked The Rates To 3.6%, ECB’s Holzmann Called For Interest Rates To Be Raised By 50bps

Saxo Bank Saxo Bank 07.03.2023 09:13
Summary:  The snapback rally in equities extended and then faded yesterday, a mirror-image of the action in treasury yields, which failed to hold an extension lower. Oil rebounded and the gold rally faded. In Australia overnight, the Reserve Bank of Australia hiked as most expected, but signaled it would like to pause the tightening regime soon, triggering a sharp slide in the Aussie. Today, Fed Chair Powell will testify on the economy and monetary policy before a Senate panel. What is our trading focus? US equities (US500.I and USNAS100.I): US equity momentum extends US equities gained slightly yesterday with S&P 500 futures closing at 4,052 after trading as high as 4,082 intraday. This morning in early European trading hours S&P 500 futures are extending their gains as the US 10-year yield continues to push lower lifting overall sentiment. During yesterday’s session social media stocks such as Meta, Pinterest, Snap, and Alphabet were rallying as TikTok bans across the US and Europe are gaining traction. The earnings and macro calendars are light today so the only market moving event is Fed Chair Powell’s speech later today at 1500 GMT. Hang Seng Index and CSI 300: rally fades on Sino-American tensions After follow-through rallies in state-owned enterprises in Hong Kong and mainland bourses in the telecommunication and energy space in the morning, the Hang Seng Index and CSI 300 lost steam and turned south, losing 0.7% and 1.2% as of writing. In a press conference on the side-line of the Two Sessions, China’s Foreign Minister Qin Gang reiterated the “China-Russia comprehensive strategic partnership of coordination for a new era” and downplayed Russia’s invasion into Ukraine to that the “Ukraine crisis has complex historical fabrics and practical reasons with the underlying nature being the eruption of the conflicts in the security governance of Europe”. The pro-Russian stance, as opposed to the more conciliatory-leaning stance in recent months toward the West, added to investors’ concern over the Sino-American relationship. FX: AUD in the dumps on dovish RBA, EUR firm The US dollar is not the focus at the moment as the market awaits further signals from Fed Chair Powell today and tomorrow in his two days of testimony before Congressional panels. The euro is firm on hawkish rhetoric from the ECB (more below) that has the market pricing more than 150 basis points of further tightening this year. Elsewhere, the Aussie weakened sharply as the statement overnight suggested the RBA is looking for excuses to pause its tightening regime – more on that below. The JPY trades passively as we await a pivotal Bank of Japan meeting on Friday, Governor Kuroda’s final meeting before he leaves office in early April. Crude oil climbs to a five-week high Cude oil trades higher for a sixth session amid a broader rally in stocks and a softer dollar. The market will keep an eye on comments from oil insiders, currently meeting in Houston at the annual CERAWeek, one of the world's premier energy conferences. Commentary made alluded to a pickup in demand, while supply remains somewhat restricted. It was said at the conference that 75% of global oil demand growth will come from China this year. Meanwhile, Estonia called for the EU to halve the $60 price cap on Russian oil this month. Overall, crude oil remains rangebound with Brent currently stuck between $81 and $87. US natural gas plunged on forecasts for milder-than-expected weather, and in just two trading sessions it gave back almost half the 53% gain achieved during the prior two weeks. Gold eying Powell’s testimony Gold (XAUUSD) hit a five-week high on Monday at $1858 before reversing lower overnight to test support around the 21-DMA at $1844. Together with US real yields reversing higher following last week’s drop when inflation expectations moved higher, the market sentiment is becoming a bit more cautious ahead of testimonies on Capitol Hill from Fed Chair Powell today and tomorrow. However, with the market currently pricing in a terminal Fed fund rate around 5.5%, any weakness in incoming data – the next major being Friday’s job report – may add further support. For the current recovery to become more than just a bounce, the price as a minimum need to break above $1864, the 38.2% of the February drop. US wheat drops below $7/bu as market awaits monthly supply/demand report The Chicago benchmark wheat contract (ZWc1) dropped below $7 a bushel on Monday for the first time in 17 months, pressured by adequate global supplies, especially from Russia, and optimism a deal can be reached to extend the UN-brokered Ukraine grain corridor deal when the current deal expires later this month. Ukraine’s grain exports are down 26.6% at 32.9 million tonnes in the 2022/23 season so far. Meanwhile, the Australian Bureau of Agricultural and Resource Economics raised its estimate of its 2022/23 wheat harvest by 2.6 million tons to a record 39.2 million tons. Traders now look ahead to USDA’s monthly supply and demand report (WASDE) on Wednesday, in which the main change is expected to be another sizable drop in Argentine’s soybean and corn harvests following a troubled crop year hit by droughts and excessive heat. US Treasury yields (TLT:Xmas, IEF:xnas, SHY:xnas) close near unchanged after probe lower The US 10-year yield extended to below 3.90% at one point yesterday before resistance came in and yields rebounded to unchanged near 3.95% ahead of two days of testimony from Fed Chair Powell today, although yields may pay more attention to the February US jobs report this Friday and CPI next Tuesday as Powell may bring little new to the table in his semi-annual testimony today, which is often more about the political theatre of the Congressional politicians. What is going on? Dovish hike from the RBA, which guides for a tightening pause The RBA hiked by 25bps as expected to 3.6%, with the RBA seeing further tightening ahead. But a small change of phrase positioned this as a dovish hike and an RBA that may be seeking to pause its hiking regime at coming meetings. In the guidance on further tightening, February’s “In assessing how much further interest rates need to increase”, was changed in March to “In assessing when and how much further interest rates need to increase”, with the introduction of “when” a tip-off that the RBA is hoping to pause. Australia’s 2-year yield dropped some 14 basis points as the implied Australian cash rate this year peak fell from 4.1% to 4%. The RBA is concerned both that services inflation remains too high, but also that the lag effects of interest rates had not yet been felt in full by mortgage holders. AUDUSD erasing its intraday gain and slid into the red to below 0.6700 at one point. Hawkish ECB chatter supporting EUR ECB’s Holzmann called for interest rates to be raised by 50bps at each of the next four meetings, and suggested a restrictive policy rate would start from ~4%. President Lagarde and Chief Economist Lane were also on the wires suggesting more rate hikes as well. One of the investment banks, as a result, came out with a terminal rate forecast of 4.25% in wake of Holzmann's remarks, and this led to a drop in EU bonds and a surge higher in EUR crosses. HelloFresh slips 9% in pre-market trading The world’s largest meal-kit provider reports Q4 revenue of €1.87bn vs €1.92bn ahead of the European equity session and EBITDA of €160mn vs est. €137mn. HelloFresh is guiding FY23 EBITDA of €460-540mn vs est. €543mn. Investors are not impressed by these figures sending the shares down 9% in pre-market trading. TikTok ban making progress in the US Senate Intelligence Committee Chairman Mark Warner is set to unveil a bill Tuesday that would allow the US to ban the popular video-sharing app TikTok and other Chinese technology. He said that the law will give the US the power to ban or prohibit foreign technology where necessary, considering companies like TikTok do not keep American data safely and is also a propaganda tool. US tech stocks Snap (+9%), Alphabet (+1.6%) and Pinterest (+1%) rallied on reports. Similar TikTok bans are sweeping through the continent of Europe with the EU parliament banning TikTok across three institutions and other EU members are considering national bans. Trip.com beats estimates Trip.com beat revenue and EPS forecasts as it reported Q4 results yesterday, fuelling more weight to the case for the upcoming surge in Chinese outbound travel demand. We had launched the APAC tourism basket to get exposure to this trend, and Trip.com is also included in this basket. Trip.com reported revenue of $729mn (vs. $709mn expected) and EPS of 11 cents (vs. loss of 3 cents expected). What are we watching next? Powell’s testimony kicks off today Fed Chair Powell will begin his two-day testimony today before Congress, beginning with a session before the Senate Banking panel today. Over the last few weeks, data out of the US has been far more resilient than expected, fueling bets that the Fed will have to raise rates beyond what was communicated earlier and rates will stay elevated for longer as well. Most Fed members have also sounded hawkish, raising the prospect of a shift higher in March dot plot. If a similar message is conveyed by Chair Powell, we could see US Treasury yields rising again and the USD reversing back to an uptrend. Earnings to watch Today’s key earnings release is Crowdstrike expected to report FY23 Q4 (ending 31 Jan) results after the US market close. Analysts expect revenue of $625mn up 45% y/y and EBITDA of $113mn up from $7mn a year ago. Crowdstrike is expected to remain optimistic on its outlook as demand overall for cyber security solutions remain strong. It recent partnership with Dell Technologies provides additional exposure to on-premise workloads and should help on the outlook. Tuesday: Ashtead Group, Sea Ltd, Ferguson, Crowdstrike Wednesday: Ping An Bank, Thales, Adidas, Geberit Thursday: CATL, Deutsche Post, JD.com Friday: Daimer Truck, AIA Group, Oracle, DiDi Global Economic calendar highlights for today (times GMT) 1500 – US Fed Chair Powell before Senate Banking Panel 1700 – EIA's Short-term Energy Outlook (STEO) 1730 – Switzerland SNB President Jordan to speak 1800 – US Treasury to sell 3-year Notes 2130 – API's Weekly Crude and Fuel Stock Report 2155 – Australia RBA’s Lowe to speak   Source: Global Market Quick Take: Europe – March 7, 2023 | Saxo Group (home.saxo)
Australian dollar - the sharp drop can be attributed to technical factors and hawkish Fed

RBA hikes, Aussie Falls, Chinese Stocks Under Pressure

Swissquote Bank Swissquote Bank 07.03.2023 10:46
Disenchanting growth target from China was expected to keep the oil bears in charge of the market, but the 100-DMA got surprisingly cleared to the upside yesterday. Forex Stocks closed flat and the dollar softened. The Aussie fell after the Reserve Bank of Australia (RBA) announced 25bp hike and the EURUSD flirted with the 1.07 mark. Fed Today, all eyes and all ears are on Federal Reserve (Fed) Chair Jerome Powell and what he thinks about the latest set of economic data. Since the latest FOMC meeting, we saw a blowout NFP number, an uptick in inflation figures, lower-than-expected decline in the S&P500 earnings, and overall encouraging economic activity data. The S&P500 is above 4000 into Powell’s testimony, and the dollar is soft. Could Jay Powell reverse that? Watch the full episode to find out more! 0:00 Intro 0:38 Chinese stocks under pressure, US stocks zen pre-Powell 3:02 Powell will sound hawkish but investors may chose not to listen 6:24 US crude clears 100-DMA resistance 9:00 FX update: RBA hikes, Aussie falls, dollar bulls in retreat Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #Powell #testimony #inflation #jobs #economic #data #China #growth #target #energy #crude #oil #RBA #rate #decision #USD #AUD #EUR #XAU #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH      
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Oil Prices Rebounded, Yellow Metal Has Run Into Resistance

Craig Erlam Craig Erlam 07.03.2023 10:50
Pushing the highs Oil prices rebounded again on Monday, the second day in a row that they’ve reversed sizeable early losses to end the day in positive territory. They’re now on a good run and traders were clearly not deterred by China’s modest growth target for long. Against that backdrop, it may well be the case that Brent and WTI are about to test the upper end of their trading ranges that they’ve remained within since early December. A break above $89 would be a very bullish signal for Brent while the same would be true of $83 in WTI. Whether they have the momentum to pull that off may well depend on Powell’s dual testimonies and/or Friday’s jobs data. Tentatively higher Gold is edging tentatively higher ahead of Powell’s testimony, during which conditions could become much more volatile. The yellow metal has run into resistance around $1,860 this week which was always likely to be the first test to the upside. Above here, $1,890-$1,900 will be a big test, should it get that far. Of course, all of this may simply depend on what Powell has to say. A hawkish testimony could wipe out any bullish momentum built up over the last week, at which point attention will shift back to the lows around $1,780-$1,800. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Gold Is Consolidating As Investors Await Any Signs Over How Much More Restrictive Fed Policy Will Become

Ed Moya Ed Moya 07.03.2023 14:20
US stocks are slightly higher ahead of Fed Chair Powell’s Congressional testimony.  Everyone is expecting Fed Chair Powell to deliver his best hits of ‘we have more work to do’ and ‘higher for longer’.  Powell might not commit how much higher rates will go, but he will keep the door open for the Fed’s dot plots to move higher.  Lawmakers will argue that we don’t need to see a recession to bring inflation back to target.  Powell will likely signal that Americans could see economic pain later this year. Powell will most likely stay hawkish given how high inflation remains and the strength of the labor market.    Biden This week, Wall Street is expecting to get President Biden’s budget proposal for fiscal 2024. This morning, President Biden’s op-ed in the NY Times gave a sample of what he will be proposing.  He noted that, “my budget proposes to increase the Medicare tax rate on earned and unearned income above $400,000 to 5% from 3.8%.” He is aiming to keep the Medicare trust fund solvent beyond 2050.  This is just the beginning of budget negotiations as House Republicans will not get on board with this first pitch.  RBA The RBA did not surprise after raising its cash rate target by 25bps to 3.60%.  The RBA is nearing the end of its tightening cycle as they removed the language about hikes in the coming months. Australia doesn’t have the same wage pressures that the US has and that is why they believe inflation has peaked and that further hikes will be data dependent.  The RBA’s dovish hike sent the Australian dollar lower by 0.9% against the US dollar.  EUR After a day to digest ECB’s Holzmann case for four half-point rises, ECB hike odds continue to rise. It looks like no one wants to listen to doves, especially considering we keep seeing core CPI make fresh record highs.  Holzmann argued for 50bps point rises in March, May, June and July, with restrictive policy starting at 4.00%.  Nomura bumped up their ECB forecast from 3.50% to 4.25%.  Earlier in the week, Morgan Stanley increased their ECB forecast to 4.00%.  Dovish ECB member Lane argued against having policy on ‘autopilot’, emphasizing that it should not be on autopilot, but stay data dependent.     The euro could see some support once we get beyond Fed Chair Powell’s testimony and Friday’s nonfarm payroll report.  Oil Crude prices are wavering ahead of Fed Chair Powell’s testimony to the US Senate. Oil has had a nice start to the month, but lingering demand concerns and further oil inventory increases should cap this rebound.  Oil looks like it might need to trade in a range a little longer until we have a clearer outlook for the US economy.  The debate over what type of recession will hit the US economy will not be answered in a couple of months time, so we might see conservative calls for demand to remain healthy over the short-term.  In the event, risk appetite runs wild following Fed Chair Powell’s Senate appearance, WTI crude should find major resistance at the $84.80 region.  Gold Ahead of Fed Chair Powell’s testimony to the Senate, gold is consolidating as investors await any signs over how much more restrictive Fed policy will become.  A strong bullish argument for holding bullion could be made as global central banks are growing confident peak tightening will soon be in place.  The RBA rate decision provided optimism that inflation may have peaked and that further tightening might not be needed if disinflation trends remain firmly in place.  Gold might benefit if the rest of the major central banks start delivering dovish hikes. Also providing a boost for gold is the steady demand it is seeing from China.  This current macro environment should lead to stronger central bank buying.  The focus for many is the steady buying by the PBOC and if the weaker dollar trade unfolds later this year, gold could shine.  Bitcoin Bitcoin remains anchored despite a potential weekly death cross pattern.  Bitcoin had a great start to the year, but since the middle of February prices have gradually softened.  Contagion risks from Silvergate Capital and hard landing fears are keeping cryptos heavy, but the key trading range of $21,000 to $25,500 continues to hold up.  Crypto traders are closely watching the bond market and if yields refuse to breakout higher, Bitcoin may remain in this trading range.    This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

China’s Foreign Minister Qin Gang Downplayed Russia’s Invasion Into Ukraine

Saxo Bank Saxo Bank 08.03.2023 08:29
Summary:  Equities tumbled as 2-year Treasury yields surged above 5% and dollar reached its YTD high on Powell opening the door for a bigger rate hike and a higher terminal rate. As risk sentiment deteriorated, AUD was a notable underperformer with RBA also going for a dovish hike. CAD in focus today with Bank of Canada expected to pause. China import data also remained mixed, and oil prices slumped by over 3% while Copper broke below the key $4 mark.   What’s happening in markets? S&P fell below 4000 after Powell’s testimony The Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) retreated following Jerome Powell’s testimony to the Senate. Powell warned that the FOMC would probably hike rates more and possibly faster than previously anticipated, given the latest data has come in stronger than expected. The S&P 500 fell 1.50% to 3986, below the 4000-handle and the benchmark’s 50-day moving average, while the Nasdaq 100 lost 1.2%. Rivian (RIVN:xnas) plunged 14.6% after the EV maker announced a private offering of USD1.3 billion convertible notes. Tesla (TSLA:xnas) shares fell over 3.2% and Apple (AAPL:xnas) lost 1.5%. Facebook’s parent Meta Platforms (META:xnas) closed almost steady after it was reported the social media giant plans another round of layoffs that could affect thousands of workers. Meanwhile, in Europe, stock markets also closed in the red - the benchmark Euro Stoxx 600 fell 0.8% with Santander being one of the worst performers, losing 2.4% most despite the business moving to target institutional clients. 2-year US Treasury yield jumped above 5%, for the first time since July 2007 Following Fed Chair Powell opening the door for a 50bp rate hike at the March FOMC meeting, investors sold the front-end of the Treasury curve and saw the 2-year finishing the session at 5.01%, the highest level since July 2007. The longer end of the curve, however, recovered from their intraday lows with the 10-year yield closing only 1bp cheaper at 3.96% and the 30-year yield 2bps richer at 3.87%. The 2-10-year yield curve flattened to -105bps, the deepest inversion since September 1981. The interest rate futures are pricing an over 60% chance for a 50bp rate hike at the next FOMC and a terminal rate at around 5.64% by September this year. The USD 40 billion 3-year auction went well with strong demand. Hang Seng Index and China’s CSI 300 dropped as SOE telcos rally faded to reverse lower After the follow-through rally, n central-government-owned enterprises in Hong Kong and mainland bourses in the telecommunication space lost steam, and the Hang Seng Index and CSI 300 dropped 0.3% and 1.5%. China Telecom (00728:xhkg) slid 4% and China Mobile (00941:xhkg) retreated 2.7%. China Tower came down 2.1%, paring some of the strong gains yesterday. On the other hand, SOE oil and gas giants managed to sustain gains and finish Tuesday higher with PetroChina (00857:xhkg) up 4.4%, Sinopec (00386:xhkg) up 4.2%, and CNOOC (00883:xhkg) up 3.3%, Chow Tai Fook (01929:xhkg) plunged 6% following the departure of the jeweller’s mainland operation chief. SJM (00880:xhkg) slid 4.1% after the loss widened to HKD7.8 billion in FY22. Australian equities slide after Powell’s comments Despite the RBA today suggesting it is at a closer point of pausing rate hikes, the Australian share market’s benchmark, the ASX200 has fallen 0.93% - taking it below its 50-day moving average. The pressure on Aussie market comes after Fed Chair Powell gave hawkish remarks to the US Senate – the FOMC would possibly hike rates faster than previously anticipated. Some of the day’s laggard on the ASX include Woodside (WDS) which has fallen 1.8% after going ex-dividend. BHP and Rio Tinto down by 0.5% ahead of going ex-dividend tomorrow. For what ex-dividend means for investors and traders, click here for possible implications. Despite the overall tone being negative today – as set by the Fed - the best performing companies are those that are benefiting and are likely to continue to benefit from China’s reopening  - with Qantas and Webjet trading over 1.4% higher, with Webjet hitting a 52-week high of $7.01. US dollar notches its biggest gain in a month. The Aussie dollar sinks over 2% After Powell said the US central bank is likely to raise rates higher than previously thought, the US dollar index surged to a fresh cycle high, moving back to levels not seen since December. That resulted in the Aussie dollar tumbling over 2%. Compounding on the AUD pressure, the RBA Governor said today, it is closer to where it's appropriate to pause rate rises. This comes just a day after Australia’s central Bank hiked interest rates for the 10th straight meeting, taking the cash rate to 3.6%. The RBA said monthly inflation had ‘peaked’, goods prices were expected to moderate in the months ahead, and the Bank alluded to services inflation being only temporary. Futures markets now suggest Australia’s cash rate could peak at 4% in September. The Aussie dollar against the US (AUDUSD) trades at 0.6585. Further declines could see the pair move to the next support level, at perhaps the 0.649 level. FX: JPY descent continues; CAD in focus With Powell’s hawkish remarks, 2-year Treasury yields jumped over 5% after a 12bps gain and the USD was pushed to fresh YTD highs. AUD and NZD were hurt by the deterioration in risk sentiment, with the former also pressured by a dovish turn from the RBA. Widening yield differential between US and Japan weighed on the yen, and USDJPY was seen testing 137.50 in the Asian morning session despite volatility risks from the Bank of Japan meeting scheduled on Friday. GBPUSD broke below the 200DMA to reach YTD lows, with BOE’s Mann commenting that sterling could weaken further. EURUSD dropped below 1.06 paring some of the hawkish ECB Holzmann reaction earlier in the week. CAD could be in focus today with a potential pause coming from BOC (read below), with USDCAD likely to take a look at 1.38+ levels. Crude oil drops over 3% on hawkish Powell After touching the top of the recent range, crude oil prices slid on Tuesday as Powell hinted at bigger and longer rate hikes, raising concerns of demand weakness. This comes along with a weaker-than-expected growth target from China for this year which continues to limit the optimism on Chinese demand recovery. Meanwhile, short-term supply concerns are subdued. OPEC Chief Haitham Al-Ghais also said that slowing oil consumption is US and Europe poses a concerns for the market, despite strong growth from Asia. EIA also released its short-term energy outlook and lowered its crude oil production forecasts for US supply for both this year and next amid signs of subdued growth and higher costs. WTI prices touched lows of $77 while Brent was back at $83 from $86+ earlier. Copper broke below $4 mark Base metals were broadly pushed lower on Tuesday as dollar surged to fresh YTD highs on remarks from Powell’s testimony opening the door for a bigger hike in March and a higher terminal Fed funds rate. China import data also gave mixed signals on the first two months of the year, with mined copper ore imports increasing but inflows of refined copper declining. Supply constraints from Peru also seemed to ease as the Peruvian government expects shipments of copper and zinc will normalise with days, following months of social unrest prompted by the impeachment of former President Pedro Castillo. Copper prices fell 2.8% to close below the $4 mark, bringing last week’s low of $3.93 and the 100DMA at $3.86 into focus. What to consider? Powell’s testimony opens the door to a 50bps rate hike in March Fed Chair Powell, in his prepared remarks to Congress, said if incoming data indicates faster tightening is required, the Fed is prepared to increase the pace of rate hikes, warning that the ultimate level of interest rates is likely to be higher than previously anticipated given the string of hot January data. This is another signal that March dot plot could see an upward shift. Not just that, but Powell has also opened the door to a 50bps rate hike in March and market pricing has shifted more in favor of a bigger hike on March 22. Terminal rate expectations have shifted higher to 5.63% from 5.48% previously. Remarks brought the 2-year yields above 5% and the deepest inversion in the 2-10 year yield curve. China’s exports and imports dropped further in February China’s exports fell 6.8% Y/Y and imports dropped 10.2% in February. The larger-than-expected decline in imports was partially due to the fall in commodity prices while commodity import volume grew. China to establish the Ministry of Science and Technology and the National Data Bureau At the National People’s Congress, China announced the establishment of the Ministry of Science and Technology to promote innovation in technology, the National Financial Regulation Bureau to replace the China Banking and Insurance Regulatory Commission (CBIRC) and take over from the People’s Bank of China the regulation of financial holding companies and from the China Securities Regulatory Commission investor protection, and the National Data Bureau to promote the development of the digital economy. The overhaul of the financial regulatory authorities, as we noted in our Two Sessions preview, is to strengthen the Chinese Communist Party’s leadership in the institutional setup, the division of functions, governance. China’s Foreign Minister reaffirmed the strategic partnership with Russia In a press conference on the side-line of the Two Sessions, China’s Foreign Minister Qin Gang reiterated the “China-Russia comprehensive strategic partnership of coordination for a new era” and downplayed Russia’s invasion into Ukraine to that the “Ukraine cries has complex historical fabrics and practical reasons with the underlying nature being the eruption of the conflicts in the security governance of Europe”. The pro-Russian stance, as opposed to the more conciliatory-leaning stance in recent months toward the West, added to investors’ concern over the Sino-American relationship. The Bank of England (BoE) worries about core inflation Yesterday, BoE’s Catherine Mann, former Global Chief Economist at Citibank, expressed concerns about the persistence of core inflation in the United Kingdom. It is currently running at 5.80% year-over-year versus a long-term average of 1.84%. Mann embraced a hawkish tone, highlighting the need for further interest rate hikes. She indicated that the terminal rate is beyond forecast horizon now. The monetary market forecasts it will be at 4.75 %. This implies three consecutive hikes of 25 bp in March, May and June. She also mentioned that the evolution of the sterling plays a very important role for monetary policy due to the high levels of imports. Despite worries about the state of the UK economy, the sterling has been rather resilient this year. It is down only 0.47% against the euro YTD. Most economists still expect the UK economy will go through a period of recession in 2023 (drop of GDP estimated at 0.6%). But a minority of them even expect the UK economy could avoid a recession if the decrease in energy prices continues. This is quite a change compared to forecasts initially released at the end of 2022. Iron ore price steady ahead of peak Chinese construction season Iron ore  - the steel-ingredient is trading slightly lower today, down 0.2% at $126.75, but holds around 2023 highs, after its price rose 2.1% yesterday. China is expected to increase demand - as it usually does ahead of China’s peak construction season. Around this time of year, steel mills typically start restocking iron ore, ahead of building work ramping up amid supportive weather. Adding to sentiment, yesterday Rio Tinto (RIO) said it’s seeing good demand from China - with the country shaking off pandemic restrictions. BHP and Rio go ex-dividend tomorrow, March 9. For implications of ex-dividends click here.   Bank of Canada meets next After RBA’s dovish hike, the stage is set for the Bank of Canada to pause on its tightening cycle at the meeting today. In light of the weaker-than-expected data and BOC’s signal from the January meeting, market is not expecting any rate hikes today although the message is likely to convey policy flexibility. Read our full preview here to know what it means for the CAD as the divergence of BOC to the Fed widens. Investing with a Gender Lens Gender Lens Investing is a strategy which puts weight on gender-based considerations in your investment decisions, so you can in some way contribute towards efforts to close the “gender gap”. As today is the International Women’s Day, we explore why and how we can invest with a gender lens in this video. We also look at some ETFs and Saxo's Women in Leadership equity theme basket which can help you get exposure to this theme. Here’s wishing everyone a very happy International Women’s Day from Saxo   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Global Market Quick Take: Asia – March 8, 2023 | Saxo Group (home.saxo)
The USD/INR Pair Traders Could Be The Cautious Mood Ahead Of The Key Inflation Numbers For India And The US

The USD/INR Pair Is Expected To Remain Volatile

TeleTrade Comments TeleTrade Comments 08.03.2023 08:39
USD/INR has climbed to near 82.30 amid a strengthening risk-off mood. The demand for US government bonds has dropped dramatically, which has pushed the 10-year US Treasury yields above 4.0%. Fed’s Powell believes that the terminal rate is likely to be higher than earlier expected. The USD/INR pair has witnessed stellar buying interest at the opening as investors have started discounting the impact of the overnight jump in the US Dollar Index (DXY). The USD Index has printed a fresh three-month high above 105.80 as the Federal Reserve (Fed) chair Jerome Powell has endorsed a higher terminal rate to tame the persistent inflation. S&P500 futures have surrendered their nominal gains generated in the Asian session, portraying an increase in the strength of the risk-aversion theme. The demand for US government bonds has dropped dramatically, which has pushed the 10-year US Treasury yields above 4.0%. It seems that January’s above-targeted inflation figures, resilience in consumer spending, and surprising heavy addition of payrolls in the labor market forced Fed’s Powell to sound extremely hawkish for interest rate guidance. Fed’s Powell cited “Ultimate level of interest rates is likely to be higher than previously anticipated,” after the “latest economic data have come in stronger than expected.” The USD/INR is expected to remain volatile ahead of the release of the United States Automatic Data Processing (ADP) Employment Change data. As per the preliminary estimates, the economic data is seen at 200K, higher than the former release of 106K. On the oil front, oil prices have dropped below $78.00 amid the mounting risk of recession in the US economy. From a longer-term perspective, Haitham Al Ghais, the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), said, “China is expected to account for 500k-600K bpd (barrels per day) of new oil demand this year.“ He further added, “We are cautiously optimistic about China, but Europe is a concern.” It is worth noting that India is one of the leading importers of oil and higher oil prices will support the Indian Rupee.
The Commodities Feed: Specs continue to cut oil longs

WTI Crude Oil Remains On The Bear’s Radar

TeleTrade Comments TeleTrade Comments 08.03.2023 08:50
WTI retreats from intraday high, consolidates the biggest daily loss in two months. 200-HMA, sluggish RSI restricts immediate moves below the key resistances. One-week-old horizontal line, 100-HMA restricts immediate upside. Ascending trend line from late February challenges bears before giving them control. WTI crude oil fades the early Asian session corrective bounce as it retreats to $77.65 amid Wednesday morning in Europe. That said, the black gold marked the biggest daily loss since early January the previous. The energy benchmark’s losses on Tuesday dragged it below the 100-Hour Moving Average (HMA), as well as one-week-old horizontal support, now immediate resistance around $78.40. However, the oversold RSI (14) and the 200-HMA seem to have prodded the Oil bears afterward. It should be noted that the commodity bears remain hopeful unless the quote trades below the 100-HMA level of $78.80. In a case where the WTI buyers keep the reins past $78.80, the last Friday’s high near $79.90 and the $80.00 round figure could check the upside momentum before directing the run-up towards the monthly high surrounding $81.00. On the flip side, an upward-sloping support line from February 22, close to $76.80, puts a floor under the Oil price. Following that, a downturn towards the February 22 swing low of $73.85 and then to the previous monthly bottom surrounding $72.50 can’t be ruled out. Overall, WTI crude oil remains on the bear’s radar despite the latest corrective move. WTI: Hourly chart Trend: Further downside expected
The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

The Bank Of Canada Paused Rates Hiking, The ADP Employment Report Had A 242K Increase In Jobs

Saxo Bank Saxo Bank 09.03.2023 08:16
Summary:  The ADP employment and JOLTS job opening numbers released on Wednesday leaned into the notion that the Fed can resume a faster pace. But it seems the market is coming to terms with the fact that interest rates will remain elevated as the VIX Index declined, and the US Dollar Index steadied manner. Ahead are CATL results, JD.com and DocuSign. The all-important jobs report on Friday and the U.S. CPI next week could bring about another round of market volatilities. Read on for more.   What’s happening in markets? US equities edged up modestly, digesting the message from Powell and job data The Nasdaq 100 (NAS100.I) gained 0.4% and S&P 500 (US500.I) inched up 0.1% on Wednesday, remaining calm to the hotter-than-expected ADP employment and JOLTS job openings data and Powell’s congressional testimony in his second day. The volume of 10.2 billion shares across U.S. exchanges was below average. As WTI crude fell by more than 1% to USD76.5, the energy sector was the biggest loser within the S&P500. Telsa (TSLA:xnas) slid 3%, following the National Highway Traffic Safety Administration highlighting potential issues in the EV maker’s Autopilot system and steering wheels that can detach on the Model Y SUVs. Campbell Soup (CPB:xnys) gained nearly 2% on earnings beat and sales increases. Crowdstrike (CRWD:xnas) rose 3.2%, paring some of the post-result after market gains the day before. In Europe, the STOXX Europe 600 finished the session flat. Yields on U.S. Treasuries moved higher on hot JOLTS job openings and a poor 10-year auction The Treasuries market did not act much to the hotter-than-expected ADP employment data and Powell’s second-day congressional testimony. Short-covering flows especially in the futures contracts drove the market higher and yields lower in the morning until selling emerged following the JOLTS job openings data which was stronger than estimates. Demand in the 10-year auction was weak as the auction stopped at nearly 3bps cheaper from the market level at the time of the auction and had a bid-to-cover ratio of 2.35, lower than 2.66 last time. The Treasury is auctioning USD18 billion of 30-year bonds today. The 2-year yield rose 6bps to 5.07% and the 10-year yield edged up 2bps to 3.99%, inverting the curve further to -109bps. Hang Seng Index and China’s CSI 300 decline on regulatory overhaul in China and U.S. interest rates Yesterday, the Hang Seng Index dropped by 2.4% and the Hang Seng TECH Index plunged by 3.2%.  EV and China Internet stocks led the charge lower. XPeng (09868:xhkg) plunged 7.1% and Li Auto (02015:xhkg) lost 6.3%. China internet names slid, with Alibaba (099088:xhkg), Meituan  (03690:xhkg) and JD.com (09618:xhkg) each down 3-4%. On top of the tighter U.S. interest rate outlook stemming from Fed Chain’s Powell’s testimony, the establishment of the National Financial Regulation Bureau and the National Data Bureau and the consolidation of power around them may have stirred up concerns about uncertainty in the mind of investors about the regulatory trend on areas such as mobile payment and e-platform data.  China telecommunication stocks were among the top gainers. China Unicom (00762:xhg) rose 3.5% after reporting Q4 earnings in line with estimates. TVB (00511) jumped 85% on Wednesday, following the Hong Kong TV broadcasting company holding its first live-streaming online shopping on the Taobao platform in mainland China. The 6-hour live-streaming session had around 4.85 million viewers. Over the past 4 sessions, the share price of TVB has gone up by 247%. In A-shares, the CSI300 finished 0.4% lower, clawing back most of the early losses, with telecommunication, defense, computing, media, and 6G concept names leading the rebound.  The US dollar consolidates, post-Powell gains The US dollar was little changed versus major currencies and was consolidating its strong gains after Powell’s first-day testimony the day before. USDJPY fell back below 107. Australia’s shares are under pressure as the heavy weights trade ex-dividend today BHP and Rio are trading ex-dividend, which is pressuring the equity market, while on the other side Myer shares jolted higher after the retailer declared a super-sized dividend. While accounting software company Xero also trades higher on announcing it will cut 800 jobs to improve its profitability. Meanwhile, in breaking news - part of the Aukus security partnership, Australia looks set to buy as many as five nuclear-powered Virginia class submarines from the US, with the submarine plan expected to be announced next week – when US President Joe Biden meets UK Prime Minister Rishi Sunak and Australian Prime Minister Anthony Albanese  - as part of the 18-month old Aukus partnership. Gold ticks higher as the market digests the latest hawkish Fed commentary that could lead the US into a recession Gold advanced on Wednesday after slipping about 2% in the prior session  - gaining strength as the US dollar's rally cooled. Despite the stronger dollar overall, gold has found support in the $1800 area – driven by economic uncertainty and the probability of a recession creeping higher. We await Friday’s jobs report – given rates are expected to remain higher – weakness in the data on Friday may be a catalyst for the US dollar to take a step back, which could theatrically trigger upside in the precious metal.   What to consider? Bank of Canada kept rates unchanged The Bank of Canada (BOC) was the first major central bank to pause from hiking rates. As widely expected, The BOC kept the policy rate unchanged at 4.50% but the door is open to come back on the hiking track to fight inflation as the central bank dropped the forward guidance that it expects to hold the policy rate unchanged if the economy evolves in line with its outlook. Powell largely repeated his message on the second day of his testimony On the second day of his congressional testimony, this time to the House Financial Services Committee, Powell told lawmakers that no decision had yet been made on the size of the rate hike at the March FOMC while he reiterated that the Fed was likely to bring the policy rate higher than previously anticipated and could move at a faster pace. More hot job data coming out of the U.S. The ADP Employment report had a 242K increase in jobs in February, rising from 119K (revised from 106K previously reported) in January and way above the 200K consensus estimate. JOLTS Job Opening also came in stronger than expected at 10,824K (consensus estimate: 10,546K; January 11,234K). Europe leads Australia, with more females in executive roles. The US lags  Various studies have shown that gender diverse executive teams can outperform the overall equity market. So, for International Women’s Day we dissected the makeup of listed companies' executive teams. We found that Europe has the most female representation followed by Australia - with the US lagging. An astounding 33 companies in the Stoxx600 have executive teams that are made up of over 50% women. Healthcare company Halma - also in the Stoxx600 - has a 60% female executive team. While media business- Future PLC, takes the cake - with a 100% female executive team. Australia follows Europe with a high portion of diversity.  14 of the ASX200 companies have executive teams that are over 50% female lead. Gold mining giant- Newcrest Mining- has an 86% women executive team. What’s also pleasing to see is that the world’s biggest mining company, BHP has over 50% female representation on its executive leadership team. And lastly- in the US- in the S&P500, just five companies have executive teams that are made up over 50% women. That includes Bed & Body Work with its 60% executive team - being female. To explore this thematic further, refer to Saxo’s Women in Leadership equity basket.   China’s inflation is expected to slow in February The growth in CPI is expected to slow to 1.9% Y/Y in February from 2.1% in January and PPI to contract further to -1.3% Y/Y. Eyes on CATL’s growth and outlook CATL, the world’s largest battery maker - and Tesla’s battery supplier - reports results on Thursday. It’s expected to report revenue growth of over 80%. However, there is room for a positive surprise - given strong battery and energy storage demand. CATL is also expanding overseas - teaming up with Ford to build a battery manufacturing plant in Michigan, which we will hopefully get detail on. As for its outlook - we expect it to be strong, as CATL’s increased its war chest, after selling its $856 million stake in Australia’s biggest lithium company, Pilbara Minerals. We also think guidance could be upgraded - given auto sales in China are expected to rise in 2023, following years of lockdowns. CATL outlook’s will be closely watched by not only EV makers - but also by EV investors – as they could give a gauge on how much car maker’s battery costs could rise.   Other company reports to watch ahead include JD.com - a Chinese consumer spending bellwether and DocuSign- a covid-19 stalwart All eyes will be on JD.com, the Amazon equivalent in China. It could give further insight into Chinese consumers’ appetite post lockdown. And what they’re seeing in consumer spending ahead. It's also worth watching Saxo’s China Consumer and Technology basket of stocks. And in the US - DocuSign reports after the market close on Thursday – this will be interesting to watch as over the last two years DOCU has beaten EPS and revenue estimates. The electronic signature company raised full its guidance when it reported third-quarter results that topped expectations. It’s also joined the spate of tech companies making mass-layoffs and cut 10% of its employees.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast. Source: Global Market Quick Take: Asia – March 9, 2023 | Saxo Group (home.saxo)
The Commodities Feed: First US crude draw this year

The Commodities Feed: First US crude draw this year

ING Economics ING Economics 09.03.2023 08:23
The EIA reported the first weekly decline in US crude oil inventories for the year. However, the market paid little attention to this, with all focus on Fed Chairman Jerome Powell Source: Shutterstock Energy - US crude stocks fall Oil prices settled lower yesterday despite EIA weekly numbers showing the first draw in US crude oil inventories this year. Instead the market appears more focused on the Fed, following Jerome Powell’s hawkish testimony this week. US commercial crude oil inventories fell by 1.69MMbbls over the last week according to the EIA. This is the first decline in stocks since mid-December. The draw was largely in line with market expectations. Cushing crude oil inventories also fell for the first time this year, declining by 890Mbbls. There were fairly small changes on the products side, with gasoline inventories declining by 1.13MMbbls, while distillate fuel oil inventories edged up by 138Mbbls. This leaves US distillate stocks at a little over 122MMbbls - their highest levels since January 2022, but still below the 5-year average for this time of year. Total implied demand was weaker over the period, falling by 1.36MMbbls/d to 19.05MMbbls/d. Freeport LNG in the US has received approval to restart its third and final production train. And it is expected that production at the export plant will return to normal in the coming weeks. Sticking with LNG, strike action in France has affected energy infrastructure in the country, including the stoppage of operations at four LNG terminals. This has done little to support the market, with TTF still settling lower yesterday. Metals – LME aluminium on-warrant stocks decline LME on-warrant aluminium stockpiles fell by 9,950 tonnes to 442,850 tonnes, the biggest fall since 3 February, according to the latest data from the exchange. Most of the outflows were reported from warehouses in Malaysia and Singapore. Cancelled warrants for aluminium rose by 6,325 tonnes (after declining for two consecutive sessions) to 111,450 tonnes as of yesterday, signalling potential further outflows. Exchange inventories for the metal declined for the third straight session by 3,625 tonnes to 554,300 tonnes as of Wednesday. Nickel output in the Philippines fell 11% YoY to 29.3mt in 2022 with lower production from most mining projects, according to data from the Mines and Geosciences Bureau.. In precious metals, the World Platinum Investment Council forecasts the global platinum market deficit to widen to 556koz in 2023 following higher demand from the automotive sector and limited supplies. This compares to a previous estimate of a supply deficit of 303koz for the current year. Total consumption is expected to rise by 24% YoY to 7.98moz, whilst global supply is forecast to increase by only 3% YoY to 7.43moz in 2023. Investment demand is expected to increase significantly this year, whilst automotive demand is expected to grow by 10% YoY and industrial demand is expected to increase by 12% YoY. Agriculture - Argentine crop downgrades The USDA increased estimates for US 2022/23 corn ending stocks from 1.27b bushels to 1.34b bushels on the back of softer exports. This was slightly higher than the roughly  1.3b bushels the market was expecting. For the global corn balance, 2022/23 ending stocks were increased from 295.3mt to 296.5mt. This is higher than the little more than 293mt expected.  Argentina saw further declines in output estimates with hot and dry weather seeing the domestic crop cut by 7mt to 40mt. For soybeans, the USDA lowered its US 2022/23 ending stock estimates from 225m bushels to 210m bushels (the lowest in seven years) with stronger exports offsetting lower consumption. The market was expecting an ending stock number closer to 220m bushels. Meanwhile, the global soybean balance saw production revised lower, which was driven by Argentina. The Argentine soybean crop was cut by around 8mt to 33mt. These supply losses were partially offset by weaker demand. However, 2022/23 global ending stocks were still cut from 102mt to 100mt , which was in line with market expectations. For wheat, the WASDE was fairly neutral. US 2022/23 ending stocks were left unchanged at 568m bushels. Although the market was expecting a number of around 573m bushels. The global market saw 2022/23 ending stocks cut from 269.3mt to 267.2mt, despite expectations for slightly larger output (largely Australia). The lower ending stock number was due to a combination of slightly higher demand and revisions to the stock number at the beginning of the marketing year. The market was expecting ending stocks to be left largely unchanged. Read this article on THINK TagsWASDE USDA Platinum Oil LNG Grains EIA Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Commodities Feed: Further oil supply disruptions

Crude Oil Cheers The Broad-Based US Dollar Retreat And Upbeat Oil Inventory Data

TeleTrade Comments TeleTrade Comments 09.03.2023 08:55
WTI clings to mild gains around intraday high, snaps two-day downtrend. US Dollar retreat, upbeat Oil inventories seem to underpin WTI’s corrective bounce. Downbeat China inflation, upbeat signals of US jobs join proposed increase in US taxes on rich to probe Oil buyers. Friday’s US employment data becomes the key to clear directions. WTI crude oil grinds near the intraday high of $76.86 during the first profit-making day in three amid early Thursday. In doing so, the black gold cheers the broad-based US Dollar retreat and upbeat Oil inventory data. However, downbeat inflation from China and fears of hawkish monetary policies prod the commodity buyers. US Dollar Index (DXY) snaps a two-day uptrend while easing from the highest levels since December 01, 2022, down 0.13% intraday near 105.55 by the press time, as markets brace for Friday’s key employment data amid mixed US statistics. On Wednesday, the US ADP Employment Change rose to 242K in February versus 200K market forecasts and 119K prior (revised). Further, the US Goods and Services Trade Balance dropped to $-68.3B from the $-67.2B previous reading (revised) and $-68.9B analysts’ estimations. It should be noted that the US JOLTS Job Openings for January improved to 10.824M versus 10.6M expected but eased from 11.234M revised prior. It should be noted that the WTI crude oil’s official inventory data from the US Energy Information Administration (EIA) traced the industry stockpile report from the American Petroleum Institute (API) while posting a draw in the stocks during the week ended on March 03. Elsewhere, disappointment from China’s inflation data also dims the prospects of recovery in the world’s second-largest economy and weighs on the risk profile. On the same line could be the fears of higher taxes in the world’s biggest economy, the US, as well as the political chaos relating to it as US President Joe Biden proposes raising corporation tax from 21% to 28% in his latest budget guide ahead of Friday’s release. Amid these plays, the S&P 500 Futures struggles for clear directions after bouncing off a one-week low the previous day. Further, the US 10-year Treasury bond yields rise to 3.99%, up one basis point (bp), whereas the two-year counterpart pares intraday losses near 5.05% at the latest. US yield curve inversion widened to the highest levels since 1981 and propelled the recession fears on Wednesday. However, an absence surprise in Fed Chair Powell’s Testimony 2.0 and mixed US data seemed to have triggered the US Dollar’s latest pullback. Moving on, a light calendar may allow the WTI crude oil to pare some of its weekly gains ahead of Friday’s all-important US Nonfarm Payrolls. Technical analysis WTI crude oil rebound remains elusive unless crossing $81.00 while an upward-sloping support line from early February challenge the commodity bears near $75.15.
Astonished by the week ahead? Barclays, NatWest Group and Microsoft earnings are also released shortly

Apple Reorganization From China To India, The Final Bank Of Japan Meeting With Kuroda At The Helm Ahead

Saxo Bank Saxo Bank 09.03.2023 09:13
Summary:  After Wednesday’s sentiment shock on hawkish Fed Chair Powell testimony, yesterday saw markets frozen in their tracks, awaiting key incoming data that will determine whether the Fed must continue turning the rate tightening screws, starting with the US February jobs data up tomorrow. In Asia’s Friday session tonight, we await the final Bank of Japan meeting with Kuroda at the helm before his exit next month. Will he surprise again as in December or leave the next steps in the direction of normalization for his successor? What is our trading focus? US equities (US500.I and USNAS100.I): more wait and see Following the big move in Tuesday’s session on Powell’s hawkish comments on policy rates and inflation yesterday’s session had much lower energy and ended with a small rebound in S&P 500 futures gaining 0.1%. Stronger than expected ADP job figures had a small initial negative impact as the jobs data continue to suggest a strong US labour market despite the higher interest rates underpinning the structurally higher inflation case. This morning the low energy in US equity futures continues and it feels like the equity market is back at the wait-and-see mode on inflation and the economy. As we have said before, it is the bond market that will dictate where equities go from here. If S&P 500 futures slips below Tuesday’s close, then the 3,950 level is the next level to watch and the approximate area for the 200-day moving average. Chinese equities (HK50.I and 02846:xhkg): oscillated in a lacklustre session Hang Seng Index and CSI 300 Index swung between small gains and losses. China’s CPI growth slowed to 1% Y/Y in February, much lower than the consensus estimate of 1.9%. Growth in food prices decelerated to 2.6% Y/Y from 6.2% Y/Y while growth in non-food prices halved to 0.6% Y/Y in February from 1.2% in January. PPI slide 1.4% Y/Y in February, bringing the producer prices deeper into deflation. Semiconductor Manufacturing (00981:xhkg) and Hua Hong Semiconductor (01347:xhkg) advanced, as investors expect the domestic chip making leaders to benefit from government policy initiatives and import substitution. COSCO China Shipping Energy Transportation (01138:xhkg) jumped 11.5% as investors anticipated the Chinese tanker and dry bulk shipping operator to benefit from recent rises in freight rates. FX: USD strength eases ahead of data. JPY firms. CAD weak on BoC The USD strength on the back of Fed Chair Powell testimony failed to find further momentum as the market awaits key incoming US data tomorrow (Feb. jobs report) and next Tuesday (Feb. CPI) for further conviction. With the rise in yields easing slightly, the JPY perked up after USDJPY failed to close above the 200-day moving average and as the market awaits a possible surprise from the outgoing Kuroda at tonight’s (Friday in Asia) Bank of Japan meeting (preview below). The Bank of Canada confirmed its prior guidance and did pause its rate tightening cycle at its meeting yesterday, continuing to signal a wait-and-see stance, which looks dovish in this environement. This saw CAD weak across the board yesterday, and USDCAD traded above 1.3800 at one point for the first time since November. Crude oil holds Powell-led losses, but support is not far away Crude oil futures remain stuck near a one-week low as the negative sentiment around further monetary tightening more than offset a surprise drop in US stocks, the first in ten weeks. Brent and WTI trade below their 21-day moving averages for a second day but the loss of momentum has yet to see either of them challenge trendline support, in Brent at $81.40 and WTI at $73.50. Rangebound for months and in no hurry to change that amid a balanced flow of supply and demand related news, the market is likely to pay close attention to the general level of risk appetite which is currently being dictated by the FOMC and its close attention to incoming data. With that in mind the next major market moving event is likely to be Friday’s US job report. Gold trades near key support on Powell’s higher, faster and longer threat Gold trades near support in the $1800 area as traders continue to digest Fed chair Powell’s comment on Capitol Hill that interest rates could go higher, faster and for longer. In the short-term with Powell signalling an incredible data dependency, the focus now turns to incoming US data, and ahead of Friday’s job report, another report showed US job openings drop to 10.8 million, still a number too high for the Fed. However, given the level of elevated rate hike expectation currently priced in, any weakness in incoming data may now trigger a stronger positive response than otherwise called for. Below the $1800 area the next level of interest is the 200-DMA at $1775. Yields on U.S. Treasuries moved higher on hot JOLTS job openings and a poor 10-year auction The Treasuries market did not react much to the hotter-than-expected ADP employment data and Powell’s second-day congressional testimony. Short-covering flows especially in the futures contracts drove the market higher and yields lower in the morning until selling emerged following the JOLTS job openings data which was stronger than estimates. Demand in the 10-year auction was weak as the auction stopped at nearly 3bps cheaper from the market level at the time of the auction and had a bid-to-cover ratio of 2.35, lower than 2.66 last time. The Treasury is auctioning USD 18 billions of 30-year bonds today. The 2-year yield rose 6bps to 5.07% and the 10-year yield edged up 2bps to 3.99%, inverting the curve further to -109bps. What is going on? The Netherlands proposing a chip gear export restriction to China As part of the US CHIPS Act the US pushing its trading partners to also restrict semiconductor technology to China which has hurt chipmakers including Nvidia. So far, the Dutch-based ASML, the world’s largest lithography machine makers for chip production, has said that those restrictions did not apply to them. However, non-compliance by ASML and other equipment makers would make it possible for China’s semiconductor industry to circumvent the intentions in the new US policy on semiconductors. Yesterday, the Dutch government announced that the Netherlands is proposing chip gear export restrictions to China and will include DUV (deep ultraviolet) lithography machines which are the most advanced machines for chip production. ASML says that the new export restrictions will not affect the 2023 outlook nor the long-term outlook, but the latter part might be a stretch and only time will tell. Apple to put more focus on India growth Apple is revamping its global sales unit shifting its focus to India from China with a new separate sales office and reporting line in India. This move follows the decision to increase production capacity of various Apple products to India from China underscoring the shifting geopolitical interest for the US and its corporate sector. With Apple being one of the most important companies in the US this is an important signal to other US companies about how to change global supply chains and where to get revenue exposure. WASDE adds further downside pressure on corn and wheat futures Chicago corn and not least wheat futures extended their slump on Wednesday after the USDA said domestic stockpiles rose by more than expected in response to lower exports. The agency also boosted the outlook for Ukraine corn exports while wheat, already under pressure from Russian sales and expectations the Ukraine grain corridor deal will be extended, dropped to an 18-month low after the agency raised production estimates for Kazakhstan, Australia and India. Soybeans meanwhile found support after the USDA slashed production from drought-stricken Argentina by more than expected. The world’s biggest exporter of soymeal and soyoil will harvest 33 million tons of beans this year, the smallest crop since 2011 and a 20% decline from its February estimate. More hot job data coming out of the US The ADP Employment report had a 242K increase in jobs in February, rising from 119K (revised from 106K previously reported) in January and way above the 200K consensus estimate. JOLTS Job Opening also came in stronger than expected at 10,824K (consensus estimate: 10,546K; January 11,234K). Bank of Canada confirms pause in rate tightening regime The Bank of Canada confirmed its guidance from the prior meeting and did not hike the policy rate yesterday, a particularly jarring divergence relative to the hawkishness we saw this week from Fed Chair Powell which has the market debating a re-acceleration in the pace of Fed hikes, and at a time when the ECB, for example, is priced to hike another 150 basis points or more this year. The Bank of Canada continues to expect that inflation in Canada will ease to “around 3%” by mid-year. The guidance on further in the policy statement remained unchanged: "Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target.". One particularly complicating factor for the Canadian economy is the heavy load of private debt, much of it in mortgages, with a large minority of Canadians financing with adjustable rate mortgages and even fixed rate mortgages adjust their rate every five years, which will stress the budgets of a growing portion of Canadian households with every month that passes at the current yield levels – several multiples of where rates were for the 2020-2021 timeframe. Powell largely repeated his message on the second day of his testimony On the second day of his congressional testimony, this time to the House Financial Services Committee, Powell told lawmakers that no decision had yet been made on the size of the rate hike at the March FOMC while he reiterated that the Fed was likely to bring the policy rate higher than previously anticipated and could move at a faster pace. What are we watching next? Bank of Japan meeting tonight will be Kuroda’s last after 10 years as Governor Significant two-way volatility potential for the JPY tonight on the Bank of Japan meeting as the market well remembers the surprise decision from Governor Kuroda to expand the yield-curve-control “band” for 10-year Japanese Government bonds (really a cap in this era of higher interest rates) to +/- 0.50% from the prior 0.25%. One-week implied volatility in USDJPY options remains very elevated at almost 19% in anticipation of tonight’s decision and guidance, as the market is uncertain whether Kuroda might significantly tighten policy at his last meeting as a kind of declaration of victory on succeeding in bringing more sustained inflation to the Japanese economy, or whether he will leave the bulk of the tough process of policy normalization to his likely successor, Kazuo Ueda. USDJPY rose above its 200-day moving average this week at 137.20 and traded most of the way to 138, but has retreated this morning to well below 137.00. The market is only pricing a policy rate (the short rate) of positive 0.15% by the end of this year, versus –0.10% currently. More likely for the Bank of Japan to focus on loosening yield-curve-control for now rather than tinkering with the policy rate. Earnings to watch Today’s key earnings release to watch are CATL and JD.com which will provide fresh information from China’s corporate sector. JD.com is expected to report FY22 Q4 earnings before the US market open with analysts expecting revenue growth of 7% y/y down from 23% y/y a year ago, and EBITDA of CNY 8.06bn up from CNY 5.08bn a year ago. The outlook from JD.com matters a lot this time as it will reflect management’s confidence and expectations related to the Chinese reopening. CATL is expected to report sometime after the Chinese equity market close and is expected to report Q4 revenue growth of 87% y/y reflecting the strong demand for electric vehicles and batteries. Thursday: CATL, Deutsche Post, JD.com Friday: Daimer Truck, AIA Group, Oracle, DiDi Global Economic calendar highlights for today (times GMT) 1200 – Mexico Feb. CPI 1230 – US Feb. Challenger Job Cuts 1330 – US Weekly Initial Jobless Claims 1400 – Poland National Bank Governor Glapinski press conference 1530 – EIA's Weekly Natural Gas Storage Change 1800 – US Treasury to auction 30-year T-bonds 1845 – Canada Bank of Canada Deputy Governor Rogers to speak Asian session: Bank of Japan meeting   Source: Global Market Quick Take: Europe – March 9, 2023 | Saxo Group (home.saxo)
UK PMI Weakness Supports Pause in Bank of England's Tightening Cycle

Chinese Inflation Slows, Powell Tried To Walk Back A Part Of His Hawkish Comments

Swissquote Bank Swissquote Bank 09.03.2023 10:36
We could see some relief, and correction after two difficult days for risk assets, but investors will likely refrain from opening fresh positions before Friday’s US jobs data, because only God knows what could happen when the data falls in. Risks are two-sided, as soft data could easily spur a risk rally. Watch the full episode to find out more! 0:00 Intro 0:42 Why European stocks should’ve reacted more to the hawkish Powell? 3:53 Powell’s attempt to cool Fed hawks was spoiled by fresh data 6:43 Catch your breath before Friday’s US jobs data 7:42 Wasn’t gold supposed to have a good year? 8:32 Crude oil sold after hitting 100-DMA 9:48 Chinese inflation slows… 10:09 The ’ TikTok bill Ipek Ozkardeskaya Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #Powell #testimony #inflation #jobs #economic #data #USD #EUR #XAU #Crude #oil #Occidental #Petroleum #China #TikTok #ban #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary _____ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr _____ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 _____ Let's stay connected: LinkedIn: https://swq.ch/cH
Saxo Bank Podcast: The Risk Of An Escalation In The US-China Confrontation, The Risk Of An Escalation In The US-China Confrontation And More

Russia Unleashed A Wave Of Drone And Missile Attacks On Ukraine Overnight, SHEIN Is Expected To Raise Around $2 Billion In A New Round

Kamila Szypuła Kamila Szypuła 09.03.2023 09:48
The war in Ukraine is not coming to an end, and the recent acts of Russia show that the situation may escalate even more. Despite the lack of peace in the markets, companies continue to expand. Chinese retailer SHEIN has ambitious plans for this year. In this article: War in Ukraine The flotation Insights on the world economy and markets War in Ukraine Kiev and other major cities in Ukraine, including Lviv, Kharkiv and Odessa, were hit by a wave of Russian drone strikes and missile attacks overnight, Ukrainian officials said. The mayor of Kiev, Vitali Klitschko, said that there were a series of explosions in the capital that damaged the energy infrastructure and injured several civilians. The air alert lasted for almost seven hours in the capital. Officials at the southern port of Odessa, Lviv in western Ukraine and Kharkiv in northeastern Ukraine also reported nighttime drone and missile attacks. As a result of the missile attack on Ukraine, the power supply to the Zaporozhye nuclear power plant was interrupted. The Zaporozhye nuclear power plant, the largest of its kind in Europe, has repeatedly been at the center of conflict between Russian and Ukrainian forces, which accuse each other of shelling and threatening the operation and safety of the facility, and the risk of a potential catastrophic nuclear accident. International observers called for a demilitarized zone around the plant. 'The enemy is raging': Russia unleashes wave of drone and missile strikes on Kyiv and other cities https://t.co/4U3opXhcFh — CNBC (@CNBC) March 9, 2023 The flotation Chinese online apparel retailer SHEIN is expected to raise around $2 billion in a new round of funding this month and aims to go public in the US in the second half of this year. The UAE's sovereign wealth fund Mubadala is the lead investor in this round. Last month, the company held preliminary talks with several investment banks to select major bookrunners for its US IPO, with Tiger Global Management as the new investor. The flotation, if successful, would be one of the biggest worldwide this year. SHEIN is aiming for a U.S. listing and the flotation, if successful, would be one of the biggest worldwide this year and a test of U.S. investor appetite for Chinese companies amid volatile capital markets and geopolitical tensions https://t.co/A4W0RC864O pic.twitter.com/R1JpfFARyM — Reuters Business (@ReutersBiz) March 9, 2023 Insights on the world economy and markets Late last year, OPEC announced a production cut of 2 million barrels a day in response to slowing global growth and increased risk of recession among developed countries. However, increased demand from China following the lifting of COVID-19 restrictions, coupled with a slight increase in non-OPEC production this year, is likely to prompt OPEC to reverse. According to a new report by Goldman Sachs Research, oil prices could rise as high as $107 a barrel by the end of the year from around $84 today, depending on how OPEC responds to emerging market conditions. What's more, the problem of inflation and thus porcelain alloys is still on top. Stronger economic data has recently raised concerns that inflation is likely to remain stickier than expected. Goldman Sach also looks at how retailers cope with slowing consumer demand, high interest rates and rising prices. Which global macro risk are investors most worried about for 2023? Over 40% of attendees polled at our Global Macro Conference said ‘US-China tensions’, followed by 26% saying ‘inflation’. Explore our research insights by topic: https://t.co/Yfvww77V8h pic.twitter.com/EeH1hvfGJP — Goldman Sachs (@GoldmanSachs) March 9, 2023
Astonished by the week ahead? Barclays, NatWest Group and Microsoft earnings are also released shortly

The US And India Are Looking To Sign Semiconductors Agreement

Saxo Bank Saxo Bank 10.03.2023 08:37
Summary:  U.S. banking stocks tumbled on Silicon Valley Bank’s liquidity crisis and bond portfolio losses as well as the winding-down of Silvergate Capital, a crypto-focused bank. The KWB Bank index tumbled 7.7%. Yields on the 10-year Treasuries dropped to 3.90%. All eyes today are on the Bank of Japan meeting and the U.S. employment report.   What’s happening in markets? US equities slide with banking stocks being heavily pressured Banks were front and center in yesterday’s sell-off in U.S. equities. Financials plunged 4.1% and were the biggest loser among the 11 S&P 500 sectors. The KWB Bank Index tumbled 7.7%, its biggest drop since June 2022. The S&P 500 broke below its 200-day moving average, a key support level, and ended 1.9% lower, while the Nasdaq 100 shed 1.8%. SVB Financial (SIVB:xnas), parent of Silicon Valley Bank, suffered a record 60% crash in share prices after the bank said it suffered from a liquidity crisis and sold off a swad of securities in a portfolio that’s been hit by significant losses. Silvergate Capital (SI:xnys) plunged 41.8% following the crypto-focused bank said that it was winding down and returning deposits to customers. Bank of America (BAC:xnys) plunged 6.2%; JP Morgan Chase (JPM:xnys) shed 5.4%. Oracle (ORCL:xnys) dropped 4.1% in extended-hour trading following reporting inline revenue and earnings beat but a miss in cloud license and on-premise license. Yields on U.S. Treasuries dropped on a spike in jobless claims and bank stocks woes A bounce in initial jobless claims to 211K (consensus 195K) from 190K triggered the short-covering in the front end ahead of the employment report which is scheduled to release on Friday. The buying intensified as banking stocks tumbled on woes on Silvergate Capital and SVB Financial. Large block buying emerged in the June 2023 SOFR contracts. Yields on the 2-year plunged 20bps to settle at 4.87%. The 10-year yield dropped 9bps to 3.90%. The 2-10-year yield curve steepened to -97bps, Hang Seng Index and China’s CSI 300 retreated as the Sino-American tech friction escalated Hang Seng Index dropped 0.6% and CSI 300 Index slid 0.4%. China’s CPI softened to 1% Y/Y and PPI declined 1.4% Y/Y in February did not excite investors with monetary stimulus expectations but added to the worries about the strength of the economic recovery in China. China consumer names were under selling pressure. Restaurant chains Xiabuxiabu (00520:xhkg) and Haidilao (06862:xhkg) plunged 7%  and 4.5% respectively. China Resources Mixc Lifestyle Services, a leading property management name, dropped 4.7% and was the biggest loser within the Hang Seng Index on Thursday. The latest announcement from the Netherlands to impose additional restrictions on exports of advanced microchip equipment to China and the U.S. moving close to banning TikTok caused concerns of escalation of the technology friction and geopolitical tension between China and the U.S. The Dutch company ASML is the world’s largest and most dominant supplier of advanced chip-making equipment including the immersion DUV lithography machines in the latest export ban. State-owned telcos continued to rise, with China Telecom (00728:xhkg) surging 4% and China Mobile (00941:xhkg) climbing 3.1%. COSCO China Shipping Energy Transportation (01138:xhkg) jumped 12.5% as investors anticipated the Chinese tanker and dry bulk shipping operator to benefit from increases in freight rates. In A-shares, consumer stocks were among the biggest losers with Chinese white liquor, retailer, catering, and tourism stocks leading the charge lower. Semiconductor names gained on anticipation of import substitution. Australian equities (ASXSP200.I) slide 1.6% on Friday, but are almost steady over the week Despite the S&P500 sliding 3% Monday to Thursday, the ASX200 is managing to hold almost steady, and is down 0.2% Monday to Friday (at the time of writing). Today most sectors are under water today, bar the defensive, Utility sector, while Financials down the most following alarm bells being rung in the banking sector on Wall Street. Pressure is also being felt in lithium stocks after CATL’s results beat expectations. Meanwhile BHP is trading 2% lower, despite the iron ore (SCOA) price moving up 1% to $129.10. FX: USD modestly weaker ahead of BOJ and NFP The rise in jobless claims on Thursday saw yields dipping lower, taking the dollar off the recent highs as well. The Japanese yen saw a recovery with lower yields, and focus now shifts to Bank of Japan meeting which can cause significant volatility. USDJPY finding support at 136 for now after reaching 3-month highs earlier this week on Powell’s hawkish testimony. GBPUSD rose back above 1.19 ahead of UK data dump today likely to show that a recession has been delayed, but focus will shift to NFP later as the key USD driver. CAD remained the underperformer, with USDCAD rising to 1.3830, as Fed-BOC divergence widened and oil prices remained weak. The choppiness in crude oil prices continued WTI prices ended the day below $76/barrel after touching highs of $78 earlier, while Brent dipped below $82 from $84 earlier. Even as the jobless claims data cooled, markets were in a flight to safety mode ahead of NFP as jitters on a tighter monetary policy remained. Demand concerns remained despite crude inventory recording its first weekly fall after several weeks of gains. EIA inventory report showed crude stocks down 1.7mn barrels last week vs. expectations of +1.6mn. Signs of a pickup in Chinese demand also remain mixed. The highs earlier in crude oil prices were reached on the back of supply concerns arising out of French refineries because of the nationwide strikes in France. Gold reverses back higher from support Gold caught a bid in the run upto the jobless claims release last night, reversing higher from near its support levels at $1800 to reach $1835. Focus turns to NFP today after Fed Chair Powell in his testimony this week opened the door to a 50bps rate hike in March. Now, data will need to confirm the need for that, else expectations may be quick to reverse. Support at 100DMA at $1806 remains key to hold.   What to consider? Jobless claims cool, focus now on NFP data today Initial claims rose 211k in the week of 4th March, above the 190k prior and the 195k expected. It was the first time that the jobless claims came above the 200k mark since January, and it was the highest claim YTD. The continued claims also rose to 1.718 mn from 1.649 mn, coming in above estimates as well. While this may have raised some concerns that the US labor market is softening, the print is still strong and eyes now turn to the February payrolls data out today in the US. Our full preview is here, which says that Overall message, despite a potentially softer headline print, is likely to be that US labor market is still tight and there are millions of open positions even as layoffs continue to ramp up in some of the sectors. Headline jobs are expected to come in again at 200k+, but risk of disappointment remains given the scope of correction from +517k in January. A strong print could further cement the case for a 50bps rate hike this month. SVB’s nosedive of 60% highlights the venture capital and tech bubble is spilling to banks- Is this just the beginning? Investors were spooked by Silicon Valley Bank announcing its  taking emergency steps to shore up capital after suffering a $1.8 billion after-tax loss in the first quarter. SVB sold about $21 billion of securities from its portfolio and plans to raise $2.25 billion. SVB’s shares tumbled 60% on the announcement, taking its shares to its lowest level since September 2016, while erasing $9.6 billion in market value. This reflects the pain of higher interest rates and tighter liquidity on the venture capital start-up bubble and how that’s heavily flown right to banks - who are also now suffering a liquidity crisis. It seem a vicious cycle. While, at the same time, people’s trust in the financial system is weakening, which is why we saw the banking sector heavily sold off on Thursday, with the KWB Bank Index tumbling 7.7%, its biggest drop since June 2022. Not only have we seen floundering prominent startups go bust – such as FTX, but banks have been making exuberant investment in such firms for years. This is all despite banks slowing their pace of investing and offering stingier terms. This not only reflects the hot air been blown into starts up - yet banks have become heavily reliant on such risky and volatile businesses.Also on Thursday, another California lender, Silvergate Capital Corp, which is targeting cryptocurrency firms, such as FTX, announced its winding down operations, following the meltdown of its financial strength, after digital assets plunged, seeing Silvergate lose billions in deposits. After announcing plans to liquidate, it says it will repay all deposits in full. Silvergate was previously scrutinised by regulators for its dealings with fallen crypto giants FTX and Alameda Research. Silvergate shares sank 40%. Bank of Japan is the biggest event risk While data and commentary from officials has been less supportive of the case for further tweaks in Bank of Japan policy, outgoing governor Kuroda is known for his surprises. At his last meeting on Friday, he may want to part with some sparks resulting in a numb yen in the run upto the meeting. We discussed all this and more in our central banks note this week, and significant scope of two-way volatility in the yen is seen. China’s CPI softened sharply to +1% Y/Y, PPI deep into deflation at -1.4%Y/Y China’s CPI growth slowed to 1% Y/Y in February, much lower than the consensus estimate of 1.9%. Growth in food prices decelerated to 2.6% Y/Y from 6.2% Y/Y while growth in non-food prices halved to 0.6% Y/Y in February from 1.2% in January. PPI slide 1.4% Y/Y in February, bringing the producer prices deeper into deflation. US-India ties expand into semiconductors The US and India are looking to sign an agreement to boost coordination of their chip industry to focus further on information sharing and policy dialogue, as India forges ahead to boost its presence in the global technology supply chain amid China’s crackdowns on the private sector and growing geopolitical issues. CATL delivers stronger than expected results underscoring surging EV demand China’s Contemporary Amperex Technologies Limited (CATL), the world's biggest battery maker and Tesla’s battery supplier, delivered results eclipsing estimates, amid stronger EV demand, while its results also cement CATL as the industry leader. Net income surged 93% y/y, to 30.72-billion-yuan, vs 28.8 billion yuan expected – with both its power battery and energy storage division’s revenue growing far more than expected amid clean energy demand. Power battery revenue rose to 236.59 billion yuan, up from the 91.49-billion-yuan same time last year - while exceeding the 228.46-billion-yuan consensus expected. That said, its power battery gross margin came in at 17.2%, on par with estimates – as EV sales growth in China slowed in Q4 as the economy was hit by a wave of COVID-19 infections with Tesla cutting output in Shanghai, with CATL suffering rising inventory. That said, CATL’s outlook seems bright and it’s continuing its global expansion, planning to set up 13 production bases, including in Germany and Hungary, with five R&D centres. It recently licensed its LFP battery technology for Ford to use in a new $3.5 billion EV battery plant – which Ford will run in Michigan.  We expect CATL’s results will continue to grow strongly given COVID disruptions came to an end. Fitch suggests EV sales in China will account for 35% of vehicles sales this year, up from 27% in 2022. EV sales grew 60% in 2022 to 10.4 million units and are expected to reach 13.9 million units this year, with most growth in China, according to Bloomberg. This also reflects strong demand for EV batteries ahead, as well as the key battery components including lithium, copper, graphite and aluminium. You can explore some of the companies in this space in Saxo's Lithium- Powering EVs equity theme basket.  CATL's had 37% share of EV battery global market in 2022, which is testament to its cheaper-to-produce lithium-iron-phosphate batteries. In joint second place, South Korea’s LG Energy Solution and China’s BYD Co, with a 13.6% share each. JD.COM gave a downbeat Q1 revenue guidance citing cautious Chinese consumers JD.COM (09618) reported Q4 revenue of RMB 295 billion, rising 7% Y/Y, in line with consensus estimates. Benefiting from a 1.4pp Y/Y improvement in operating margin to 2.5%, the e-commerce giant’s non-GAAP net profit came in at RMB 7.66 billion, a 115% increase Y/Y and nearly 40% above consensus. However, the share price of its ADRs plunged 11.3% overnight or 6.2% from its Hong Kong closing price on Thursday, on downbeat guidance on Q1 revenues. JD.COM expects JD Retail’s sales to fall by a low-to-mid single-digit percentage Y/Y in Q1, below analysts’ estimates of 1-3% growth. The Company’s management said the sentiment of Chinese consumers is still fragile and consumers have become more prudent on discretionary items. Reopening might also divert some of the online purchasing to off-line consumption such as dining and traveling.   For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: Global Market Quick Take: Asia – March 10, 2023 | Saxo Group (home.saxo)
The Commodities Feed: Specs continue to cut oil longs

Further Downside Movement Of WTI Crude Oil Is Expected - 10.03.2023

TeleTrade Comments TeleTrade Comments 10.03.2023 08:53
WTI crude oil drops to the lowest levels since February 27, down for the fourth consecutive day. Fears of higher inflation, rate lifts join pre-data anxiety to weigh on Oil price. Sluggish US Dollar, Treasury bond yields fail to recall energy buyers. US NFP, Russia’s reaction to US ties with UK, Australia for nuclear submarine eyed. WTI crude oil prices remain on the back foot around $75.20 as bears cheer the four-day losing streak amid early Friday in Europe. In doing so, the energy benchmark bears the burden of the risk-off mood ahead of the key data/events. That said, fears of higher inflation and the need for more rate lifts from the major central banks seem to roil the risk profile. New York Fed mentioned, in its latest report, that recent upward revisions to inflation data coupled with higher-than-expected levels of inflation had changed the picture of what had appeared to be cooling in price pressures. It should be observed that the previous day’s mixed signals of the US employment data allowed the US Dollar to remain weak, which in turn seemed to have put a floor under the Oil price. On the contrary, Bloomberg’s analysis suggesting China’s consumer spending is showing signs of a strong rebound joins the hopes of more stimulus from the dragon nation and the US readiness for more spending to prod the risk-off mood and the Oil bears. Additionally putting a floor under the WTI are the geopolitical fears surrounding US President Joe Biden’s budget proposal for 2024 and the US partnership with the UK and Australia for nuclear submarines. While portraying the mood, S&P 500 Futures remain depressed at the monthly low while US Treasury bond yields stretch the previous day’s pullback from a multi-day high. Moving on, Oil traders should pay attention to the risk catalysts, as well as the US employment report for February for clear directions. Technical analysis WTI slips below the 23.6% Fibonacci retracement level of its November-December 2022 downside, near $75.60, to stretch the early-week pullback from the six-week-old horizontal resistance area surrounding $80.80-$81.00. The black gold’s pullback joins bearish MACD signals and downbeat RSI (14), not oversold, to keep sellers hopeful of marking another try in breaking the two-month-old ascending support line near $74.20. Following that, $72.60 is likely a small buffer during the anticipated fall towards January’s low near $70.30. Alternatively, the 50-DMA level surrounding $77.80 guards the WTI’s immediate recovery ahead of the aforementioned multi-day-old horizontal resistance area near $81.00. It’s worth noting, however, that the 50% Fibonacci retracement level and a descending resistance line from early December 2022, close to $81.60 and $82.00 in that order, also challenge the WTI crude oil buyers. WTI crude oil: Daily chart Trend: Further downside expected
Japan: stronger-than-expected GDP supports BoJ policy normalization

The Bank Of Japan Kept Its Policy Unchanged, Lower Yields Saw The Dollar Trade Softer

Saxo Bank Saxo Bank 10.03.2023 09:36
Summary:  Financial market turbulence returned on Thursday after steep losses in two small US lenders, SVB Financial and Silvergate Capital Corp triggered a 7.7% sell off in the KBW Bank Index which includes major US banks. The S&P 500 fell to the lowest since January 19 while bond yields reversed sharply lower to surrender most of the gains triggered by Fed Chair Powell’s combatant statements on Capitol Hill earlier in the week. Lower yields saw the dollar trade softer while the loss of risk appetite sent crude oil and industrial metals lower. Before the banking woes took center stage, stocks had gained after a bigger than expected jump in weekly jobless claims raised speculation about a soft US job report due later today. What is our trading focus? US equities (US500.I and USNAS100.I): a warning shot has been fired The equity market has moved into risk-off mode following the 60% plunge in SVB Financial (indicated down again pre-market) as the bank has been forced to sell a considerable amount of its bond holdings causing big losses and the need raise more equity and hybrid capital. The S&P 500 Banks Index plunged 6.5% with JPMorgan Chase down 5.4%. We have seen a more muted reaction in the VIX Index only increasing to 22.6 which is a low figure given the risks coming into the market. Bill Ackman, a hedge fund manager, has said that the US government should consider bailing out SVB Financial as the bank is important the Silicon Valley ecosystem and for funding of start-ups in the US. The discussions about zero-days to expiry options (0DTE) and to what extent they can cause a big intraday move in the market will be tested today if the US jobs report fails to calm the market. Chinese equities (HK50.I and 02846:xhkg): tumbled on cautious consumer and tech war Hang Seng Index plunged 2.6% and CSI300 shed 1%. Investors were selling China internet and consumer names following downbeat comments from JD.COM on Chinese consumers.  The management of the Chinese e-commerce giant said that the sentiment of Chinese consumers is still fragile and consumers have become more prudent on discretionary items. In addition, reopening might also divert some of the online purchasing to offline consumption such as dining and traveling. JD.Com (09618:xhkg) tumbled 11.2%. Meanwhile, Hang Seng TECH Index dropped 3.2%. EV stocks fell sharply, led by an 8.7% decline of BYD (01211:xhkg). The tech war on semiconductors may extend from advanced equipment to materials. Investors are concerned that Japan may impose restrictions on the export of essential chemicals such as photoresist to China. The U.S. banking stock turmoil overnight in the U.S. also weighed on sentiment. FX: USD modestly weaker as risk sentiment weakens, JPY sold on unchanged BOJ The rise in jobless claims as well as the broader risk off arising from the SVB scare on Thursday saw yields dipping lower, taking the dollar off the recent highs as well but the decline remained modest with the USD coming in favor on the safe haven bid as well. Swiss franc also got a safe haven bid, and USDCHF plunged below 0.93 bringing the 50DMA at 0.9269 in focus. Bank of Japan’s unchanged monetary policy saw the JPY being the underperformer in the Asian session on Friday, but USDJPY could not pierce above 137. GBPUSD rose back above 1.19 ahead of UK data dump today likely to show that a recession has been delayed, but focus will shift to NFP later as the key USD driver in the very near-term. USDCAD continued to surge to fresh highs as Fed-BOC divergence widened and oil prices remained weak. The choppiness in crude oil prices continued Crude oil is heading for a weekly loss following another choppy session on Thursday which in the end took its cue from another loss of risk appetite as stress emerged in the US banking sector. Brent trades back below $81 after breaking below the trendline going back to the December low. While the signs of a pickup in Chinese demand remain mixed, the market has also been spooked by Powell’s combatant mood on Capitol Hill earlier in the week where he basically said recession was a price worth paying to get inflation under control. Gold finds support as stock market weakness drives bond yields sharply lower Gold caught a bid on Thursday in response to the high US jobless claims number and later a steep drop in US bond yields as the US banking sector slumped. The terminal US Fed fund rate dropped back to 1.5% while the market priced in a 1.25% rate cut in the following 12 months, developments that highlights the potential for US rates not being raised to the extend Fed chair Powell led the market to believe earlier in the week. Focus now turns to today’s job report after Fed Chair Powell in his testimony said the strength and duration of future rate hikes would be data dependent. Gold is once again testing the 21-day moving average resistance at $1835 ahead of at $1858 while support in the $1800 remains firm. Yields drop on financial market turbulence and spike in jobless claims A bounce in initial jobless claims to 211K (consensus 195K) from 190K kicked off the short-covering in the front end ahead of the employment report, due later today. The buying intensified later in the US on safe haven buying after the banking sector suffered its biggest drop since June 2020, with stocks in troubled Silvergate Capital and SVB Financial both tumbling. Yields on the 2-year plunged from 5.08% to 4.78% while the 10-year yield trades down to 3.82% from above 4% earlier in the week. The 2-10-year yield curve steepened to –97bps from –111 bps earlier in the session. What is going on? SVB’s 60% slump highlights the venture capital and tech bubble is spilling over to banks Investors were spooked by Silicon Valley Bank announcing it taking emergency steps to shore up capital after suffering a $1.8 billion after-tax loss in the first quarter. SVB sold about $21 billion of securities from its portfolio and plans to raise $2.25 billion. Having ended the regular session down 60% at 106 it went on the drop another 22% to 83 in afterhours trading. This reflects the pain of higher interest rates and tighter liquidity on the venture capital start-up bubble and it triggered heavy selling across banking stocks with KBW Bank Index tumbling 7.7%, its biggest drop since June 2020. Also on Thursday, another California lender, Silvergate Capital Corp, down 80% this month, which is targeting cryptocurrency firms, such as FTX, announced its winding down operations, following the meltdown of its financial strength, after digital assets plunged. Oracle shares down on cloud miss The software and database maker reported FY23 Q3 revenue growth of 18% y/y and adjusted EPS of $0.71 down 17%, but the disappointment was mostly in the outlook and especially in Oracle’s cloud business as customers are reducing spending growth. Oracle shares were down 4% in extended trading. Bank of Japan’s Kuroda ends term without sparks The Bank of Japan kept its policy unchanged at Governor Kuroda’s last meeting of his decade-long tenure. The target band for the 10-year JGB yield was kept unchanged at around 0%, with an upper limit of 0.50% after being raised in December. The BOJ held its short-term rate at -0.1%. Although data and recent communication had hinted at no change in monetary policy, there were some apprehensions given Kuroda is famous for giving surprises to the market. However, the outcome carried his usual dovish tone, ensuring a smooth handover to incoming Governor Kazuo Ueda who has conveyed policy continuity in his first remarks after being nominated. Jobless claims cool, focus now on NFP data today Initial claims rose 211k in the week of 4th March, above the 190k prior and the 195k expected. It was the first time that the jobless claims came above the 200k mark since January, and it was the highest claim YTD. The continued claims also rose to 1.718 mn from 1.649 mn, coming in above estimates as well. While this may have raised some concerns that the US labor market is softening, the print is still strong and eyes now turn to the February payrolls data out today in the US. Our full preview is here, which says that Overall message, despite a potentially softer headline print, is likely to be that US labor market is still tight and there are millions of open positions even as layoffs continue to ramp up in some of the sectors. Headline jobs are expected to come in again at 200k+, but risk of disappointment remains given the scope of correction from +517k in January. A strong print could further cement the case for a 50bps rate hike this month. US-India ties expand into semiconductors The US and India are looking to sign an agreement to boost coordination of their chip industry to focus further on information sharing and policy dialogue, as India forges ahead to boost its presence in the global technology supply chain amid China’s crackdowns on the private sector and growing geopolitical issues. CATL delivers stronger than expected results underscoring surging EV demand CATL, the world's biggest battery maker and Tesla’s battery supplier, delivered results eclipsing estimates, amid stronger EV demand, while its results also cement CATL as the industry leader. Net income surged 93% y/y, to CNY 30.7bn vs est. CNY 28.8bn with both its power battery and energy storage division’s revenue growing far more than expected amid clean energy demand. What are we watching next? The Australia, UK and US alliance thrusts the Defence and Nuclear sectors into the spotlight US President Joe Biden will host a meeting with the UK Prime Minister Rishi Sunak and Australian Prime Minister Anthony Albanese in San Diego on Monday, where they are expected to decide on how to move ahead with a multibillion submarine plan, which could involve Australia buying as many as five US Virginia class nuclear-powered submarines in the 2030s. They are also expected to deliberate on how to get other high-tech weaponry to Australia. This is all a part of the AUKUS alliance, which was formed 18 months ago, aimed at the countries sharing defence and military capabilities, to protect the Indo-Pacific region, and counter China. For the investor, it makes one reflect on the capital being spent in the industry, which may present as a potential investment opportunity to explore. So, we break down the next steps of the AUKUS alliance, where the vessels will be built, the potential financial outlay, the likely companies involved and Saxo’s Equity Defence and Nuclear theme equity baskets to watch. Read our article here. Earnings to watch Today’s key earnings releases are not market moving and thus the focus is on next week’s earnings with the most interesting earnings releases being Volkswagen, BMW, Adobe, and FedEx. Friday: Daimer Truck, AIA Group, DiDi Global Next week’s earnings releases: Tuesday: Foxconn, Volkswagen, Generali Wednesday: Constellation Software, BMW, E.ON, Ping An Insurance, Prudential, Inditex, Adobe, Lennar Thursday: Verbund, Rheinmetall, KE Holdings, Enel, FedEx, Dollar General Friday: Vonovia Economic calendar highlights for today (times GMT) 1330 – US Feb. Nonfarm Payrolls Change 1330 – US Feb. Unemployment Rate 1330 – US Feb Average Hourly Earnings 1330 – Canada Feb. Employment Data   Source: Global Market Quick Take: Europe – March 10, 2023 | Saxo Group (home.saxo)
Crude Prices Are Rallying After A Mixed Jobs Report Sent The Dollar Lower

Crude Prices Are Rallying After A Mixed Jobs Report Sent The Dollar Lower

Ed Moya Ed Moya 11.03.2023 10:08
US stocks settled lower in a volatile session as traders digested a cooling wage/ robust job growth report and SVB contagion risks. This was supposed to be an easy Friday with one massive jobs report, but SVB, a large bank with exposure across a range of sectors failed and triggered distress for several other smaller banks.  At the end of the day, traders are seeing this cooling/hot payroll report as confirmation that Fed policy is restrictive and that the their tightening work is almost done.  If we didn’t have SVB’s failure and contagion risk the case for a half-point rate hike would be valid. The focus will fall on SVB contagion risks and Tuesday’s inflation report.  As long as we don’t see a scorching hot inflation report, the Fed should continue with its quarter rate point hiking pace.   US data The US economy added 311, 000 jobs in February, more than both the consensus estimate of 225,000 and the whisper number of 250,000.  The NFP report had a strong headline beat, but the rest of the report supported the idea that the labor market is ready to cool.  Wage pressures came in much softer than forecasts and the unemployment rate rose from 3.4% to 3.6%.  Fed rate hike odds went on a rollercoaster ride post NFP as traders now have the March 22nd meeting as a coin flip between a 25bp rise or half-point increase and are also pricing in a rate cut by the end of the year.  The peak is in place and it seems traders got a preview about how this tightening cycle will start to drag down economic growth.  SVB SVB Financial Capital’s demise is bad news for many small tech companies as they were a go-to lender in silicon valley.  After Venture Capitalists decided to pull their money, SVB ended up losing ~$2 billion from selling securities as they rushed to secure funds, which is what triggered this bank run.     Startups and debt refinancing are some of the biggest financial risks that traders are analyzing, but this pressure on small banks appears it should remain contained and not weigh on the big banks. The KBW bank index had its worst drop since early in the pandemic and the contagion fears dragged down Comerica, Keycorp, and US Bancorp.  Signature Bank Investors are skeptical to hold anything crypto related in this market environment.  Banks vulnerable to financial instability risk and crypto exposure are easy targets and that has some traders eyeing Signature Bank. There are not a lot of publicly trade banks with significant crypto exposure, so the ones that have some are seeing selling pressure.  Oil Crude prices are rallying after a mixed jobs report sent the dollar lower as optimism grew that the Fed won’t have to be as aggressive with the end of its rate hiking campaign. Oil is quietly rallying as parts of Wall Street enter panic mode following small banking contagion risks.  It appears that parts of the economy are breaking and that is good news for bets that the Fed won’t have to accelerate their tightening pace.   Gold Gold is surging as Fed rate hike bets get scaled down and as SVB contagion risks trigger some safe-haven buying. The bond market is now starting to price in rate cuts by the end of the year and that is triggering a major collapse with yields.  The two-year yield posted its biggest two day decline since 2008.  Gold is becoming everyone’s favorite trade again and that could continue as liquidity risk concerns won’t be quickly answered for that corner on Wall Street.    Bitcoin All the headlines just turned bearish for Bitcoin.  The list of bearish crypto drivers are plentiful: Fallout from SVB as many crypto companies depend on small banks, mining might be harder if the White House pushes through a new 30% tax, NY crypto crackdown now covers KuCoin and after Huobi token’s flash crash.  Bitcoin was in a comfortable trading range and that just broke, which has many investors nervous that we could see a retest of the October lows. Bitcoin fell below the $20,000 level and has many traders nervous over what might happen over the weekend.  Crypto volatility appears to be back as Bitcoin’s range has been breached.  The $18,400 level is key support, but if that breaks momentum selling could look to target a retest of the October lows.   This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

Commodity: The World's Two Biggest Commodity Consuming Nations, Both Delivered Price Softening News

Saxo Bank Saxo Bank 12.03.2023 10:37
Summary:  The month of March kicked off with continued and broad weakness after China and the US, the world's two biggest commodity consuming nations, both delivered price softening news. Sentiment received a further setback after steep losses in two small US lenders helped drive the S&P 500 index to a two-month low. In the short term macro-economic developments, especially US data will be watched closely in order to decipher the pace and strength of future rate hikes. Today's Saxo Market Call podcast.Global Market Quick Take: Europe The month of March kicked off with continued and broad weakness after China and the US, the world’s two biggest commodity consuming nations, both delivered price softening news. Sentiment received a further setback after steep losses in two small US lenders – helping drive the S&P 500 index to a two-month low. The Bloomberg Commodity index, which tracks a broad basket of commodity futures spread evenly across energy, metals and agriculture, trades down 1.7% on the month and 7% on the year, with losses this month being led by energy and industrial metals. The strength of the expected demand recovery in China received a setback after its leaders announced a conservative growth target of 5% for 2023 – one of its lowest targets in decades. This, combined with only a modest increase in fiscal support, lowered expectations for additional stimulus to accelerate the economic recovery. In Saxo’s opinion, part of the reason for this is the Chinese government’s desire to avoid making the same mistakes other governments and central banks have made, which have driven inflation to a four-decade high. Development consumers are now suffering the consequences as central banks increasingly apply their interest rate weapon to bring inflation under control. Meanwhile, Federal Reserve Chair Powell stepped up his attack on sticky inflation. During his semi-annual two-day visit to Capitol Hill, he told lawmakers that he was prepared to increase the pace of rate hikes to a higher-than-expected level should incoming data continue to show strength. The swap market responded by lifting the terminal rate expectation above 5.66% from 4.75% at the beginning of February, before Thursday’s stock market rout across banking stocks helped bring the peak rate back down below 5.5%. During the Q&A session on Tuesday that followed his prepared statement, a tasty exchange between Powell and Sen. Elizabeth Warren (D) highlighted the risk the FOMC takes as it continues to hike rates until something potentially brakes. The senator asked Powell what he will say to the two million people losing their jobs if he keeps raising rates. He answered: “Will working people be better off if we just walk away from our jobs and inflation remains 5%-6%?”. His comment further supported the view that the FOMC will remain very data driven and, besides the small risk of a systemic event taking control, it will keep hiking rates despite the obvious risk to the economic outlook. Saxo will continue to watch the dollar closely, given its inverted correlation with commodities (especially gold) and increasingly how the market price the risk of a recession and with that the scale of the eventual drop-in rates. Saxo monitors this through the terminal Fed fund expectation and the size and speed of subsequent cuts once the terminal rate is reached, currently priced to occur around September this year. The trade stimulus from China’s reopening continued to fade, following a great deal of excitement at the start of the year, especially after the government set the mentioned moderate growth target. However, writing off China as a major driver for commodity demand growth is premature as it will take several months for the real impact to be felt and for prices to benefit. Not least considering producers tend to respond quicker in terms of adding supply before demand picks up. This was seen recently in China where a February rise in exchange monitored copper inventories has yet to be met by a corresponding pickup in demand.Crude oil remains rangebound despite headwinds stacking up The crude oil market remains rangebound with rising demand in Asia so far managing to offset darkening clouds elsewhere, especially in the US where Fed Chair Powell combatant performance on Capitol Hill this past week showed his willingness to risk a recession to bring inflation under control. While data points to a strong recovery in demand from a reopening China, the market was left disappointed after the government published the weakest growth target in decades. In addition, concerns about a banking crisis, however small, kept the risk appetite on the low side. Overall, these on balance price negative developments, have not been enough to force the market lower and out of the ranges that have prevailed since late November. In the short-term, the macroeconomic focus is likely to override any oil market developments, unless they have a material impact on prevailing supply and demand balances. Having broken the mini uptrend within the prevailing range, Brent may in the short term be exposed to further weakness, not least driven by long liquidation from funds who in recent weeks increased their net long to a 15-month high at 286k lots or 286 million barrels. At the same time, the gross short has continued to collapse – reaching a 12 year low at just 22k lots in the week to February 28.  Gold finds support in the numbers Gold and silver took a tumble mid-week when Fed Chair Powell, in his prepared remarks to Congress, said the Fed was prepared to increase the pace of rate hikes and to a higher-than-expected level should incoming data continued to show strength. Having failed to challenge resistance at $1864, gold tumbled before once again finding support ahead of $1800. Meanwhile, silver resumed its week-long slump, hitting a four-month low before finding some renewed buying interest around the $20 level. Relative weakness since late December has seen the gold-silver ratio surge higher from 75 (ounces of silver to one ounce of gold) to a six-month high at 91, a 21% underperformance, and it highlights the short-term challenge silver will be facing to attract fresh demand. In the short-term, with Powell signalling an incredible data dependency, the focus now turns to incoming US data with the first being Friday’s job report, a number which on balance eased the pressure on the Federal Reserve to increase the size of its next rate hike, pencilled in for March 22. Given the level of elevated rate hike expectation currently priced in, any weakness in incoming data may now trigger a stronger positive response than otherwise warranted. Saxo watches the timing of peak rates closely as well as how aggressive the market is pricing in a subsequent cut. According to the chart above, the peak rate is currently priced in around July around 5.34%, down from 5.70 earlier in the week. In addition, the subsequent pace of rate cuts has accelerated to 125 basis points during the following 12 months. This is important to note with gold historical performing well in the months that followed a peak in the Fed funds rate, with such a peak often being accompanied by a weaker dollar and lower bond yields. WASDE adds further downside pressure on corn and wheat futures  Chicago corn and wheat futures extended their slump this week after the USDA in its monthly supply and demand update said domestic stockpiles rose by more than expected in response to lower exports. The agency also boosted the outlook for Ukraine corn exports while wheat, already under pressure from Russian sales and expectations the Ukraine grain corridor deal will be extended, dropped to a 20-month low after the agency raised production estimates for Kazakhstan, Australia and India. Meanwhile, soybeans found support after the USDA slashed production from drought-stricken Argentina by more than expected. The world’s biggest exporter of soymeal and soy oil will harvest 33 million tons of beans this year, the smallest crop since 2011 and a 20% decline from the agency’s February estimate. All the major wheat futures contracts in Chicago and Paris remain under pressure and, according to the relative strength indicators, they have all reached oversold territory. This is a very different story to the price action that was seen this time last year when Russia’s invasion of Ukraine – a major supplier of high protein wheat ideal for human consumption – triggered panic buying. Chicago wheat topped out at $12.85 per bushel on March 9 before suffering a 50% setback to the current $6.66 a bushel level.   Source: Commodity Weekly: Commodities see bumpy start to March | Saxo Group (home.saxo)
Technical Outlook Of Natural Gas Commodity Asset

The Commodities Feed: Natural gas prices surge

ING Economics ING Economics 13.03.2023 08:24
Energy markets have managed to avoid the recent weakness seen in equity markets. For oil, there are signs of stronger demand, while for the European natural gas market, there are concerns following recent developments in France related to strike action and nuclear outages Energy - European gas prices surge The oil market has continued to move higher in early morning trading today, following a strong close at the end of last week. ICE Brent settled almost 1.5% higher on Friday. The strength in the market comes despite the continued weakness we have seen in equities given concerns over SVB and the broader banking sector. Instead, the market seems focused on a somewhat positive demand picture for oil, while more recently, expectations for Fed tightening have also fallen. The more positive demand picture is being driven by reports of some strong buying from China and this also ties in with the move that we have seen in the Brent-Dubai spread, which continues to narrow. This makes sense given the demand recovery that is expected not only from China but broader Asia following a relaxation in China’s Covid policy late last year. The latest positioning data shows that speculators increased their net long in ICE Brent by 12,291 lots over the last reporting week to 298,291 lots as of last Tuesday. This move was driven exclusively by fresh buying, rather than short covering. But although we saw buying coming through for Brent, NYMEX WTI saw speculators reduce their net longs by 26,959 lots to 164,292 lots. The more bearish positioning in WTI shouldn’t be too surprising, given the scale of inventory builds that we have seen in the US so far this year. European natural gas prices rallied significantly towards the end of last week. TTF was up around 25% over Thursday and Friday, which has taken the market back above EUR50/MWh. There are several catalysts for the move higher, including ongoing strike action in France which is affecting operations at 4 LNG import terminals. Also in France, EDF discovered some defects at two of its nuclear reactors, which has led to them being halted. And finally, these concerns are coinciding with a cold snap across large parts of Europe. However, for now, EU gas storage is still comfortable at about 56% full, well above the 5-year average of 36% full for this time of year. Metals – Canada to ban imports of Russian steel and aluminium products Canada will ban the import of Russian steel and aluminium products, the government said in a press release. The ban will include iron and non-alloy steel, semi-finished and finished products, such as tubes and pipes. It will also include all Russian aluminium products, such as unwrought aluminium, aluminium sheets, and finished products, including containers and other household items made from aluminium. In 2021, Canada imported C$45 million of aluminium and C$213 million of steel products from Russia, the government said. LME on-warrant aluminium stockpiles fell by 15,775 tonnes to 427,075 tonnes on Friday, the biggest fall since 29 December, according to the latest data from the exchange. Most of the outflows were reported from warehouses in Malaysia and South Korea. Net outflows for the week totalled 28,350 tonnes compared to inflows of 8,350 tonnes a week earlier. Cancelled warrants for aluminium rose by 12,975 tonnes to 121,300 tonnes, while exchange inventories declined for the fifth straight session by 3,625 tonnes to 548,375 tonnes (the lowest level in a month) at the end of last week. Copper inventories at the Shanghai Futures Exchange warehouses extended their decline for a second consecutive week amid a recovery in industrial demand in China. The latest ShFE data show that copper weekly inventories at the exchange fell by 26,008 tonnes (the biggest weekly decline since 28th October) to 214,972 tonnes as of Friday. Aluminium stocks rose 2.7% WoW to 310,888 tonnes, while lead inventories grew 4.1% WoW to 49,492 tonnes. Agriculture – Coffee market to remain in marginal deficit The International Coffee Organization forecasts the global coffee market to witness a marginal supply deficit for a second straight year in 2022/23 majorly due to concern over the arabica crop. Unfavourable weather conditions in Brazil and Colombia (major arabica-producing nations) in the past few years and labour shortages took a toll on yields. The coffee market witnessed a supply shortfall of 4-5m bags in the last season. The latest fortnightly report from UNICA shows that sugar cane crushing in Centre-South Brazil stood at 72kt for the second half of February, down 55% from a year ago. The cumulative cane crush rose 3.8% YoY this season to stand at 542.5mt. Meanwhile, sugar production stood at just 381t over the fortnight, with around 4.82% of cane allocated to sugar production. Cumulatively, sugar production rose by 4.5% YoY to 33.5mt.CS Brazil is in the middle of its off crop and the new season is set to start in a couple of weeks. Read this article on THINK TagsSugar Speculators Oil Natural gas Copper Coffee Aluminium Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

WTI Bulls Struggle To Cheer The Broadly Risk-On Mood

TeleTrade Comments TeleTrade Comments 13.03.2023 08:47
WTI crude oil defends the previous day’s bounce off two-week low despite lacking upside momentum of late. Risk-on mood, receding hawkish Fed bets underpin WTI strength. US-China tension, cautious mood ahead of OPEC, EIA reports and US inflation probe energy buyers. WTI crude oil remains sidelined near $77.00 as bulls struggle to cheer the broadly risk-on mood and the US Dollar weakness during early Monday. Even so, the black gold defends the previous day’s rebound from a short-term support line ahead of the monthly Oil market reports from the US Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC). The commodity prices initially dropped to the two-week low before bouncing off $74.90 on the US Dollar’s slump despite witnessing the better-than-forecast Nonfarm Payrolls (NFP) reports. It should be noted that the fears emanating from the Silicon Valley Bank (SVB) and Signature Bank fallout drowned the US Treasury bond yields and the US Dollar on Friday. However, the US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) undertook joint actions to tame the risks during the weekend.  While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.” Even so, the market’s concerns that the SVB and Signature Bank flagged fragile conditions of the US banks pushed back hopes of more rate hikes from the US Federal Reserve (Fed) and drowned the US Treasury bond yields despite the risk-on mood during early Monday. With this in mind, Goldman Sachs expects to rate hike in March while the Fed Fund Futures also cut previously upbeat odds favoring a 0.50% rate lift in the Fed rate in March. Elsewhere, a new term for China’s President Xi Jinping keeps the Sino-American tension on the table as he said earlier on Monday that they must resolutely oppose the interference of external forces, 'split' of Taiwan. The same raised fears of less energy demand from China and the US amid a lack of activity due to geopolitical tension. Against this backdrop, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.60% around 3,960 by the press time, whereas the US Treasury bond yields reverse the early-day rebound from monthly low amid fresh challenges for the hawkish Fed bets. Looking ahead, Tuesday’s US Consumer Price Index (CPI) for February to direct immediate market moves. Following that, the Retail Sales and preliminary readings of the Michigan Consumer Sentiment Index for March, up for publishing on Wednesday and Friday, will be crucial for WTI crude oil traders to watch for clear direction. Above all, monthly energy market reports from the OPEC and the EIA will be important for the WTI crude oil traders. Technical analysis Although a five-week-old support line restricts immediate WTI crude oil downside near $75.00, a daily closing beyond the 50-DMA hurdle surrounding $77.75 becomes necessary for the Crude Oil price to keep the buyers in the driver’s seat.
Inflation Numbers Signal Potential Pause in Fed Rate Hikes Amid Softening Categories

US regulators closed Signature Bank, HSBC has announced to acquire SVB’s UK

Saxo Bank Saxo Bank 13.03.2023 10:23
Summary:  US equity futures are rallying, the dollar is lower, and Treasury yields have extended their declines following a busy weekend which resulted in regulators backstopping uninsured bank deposits at SVB Financial and Signature Bank. Traders have dialed back Fed rate-hike bets to just one while the yield curve has flattened as bank deposits are being converted to short maturity bonds. Gold jumped in response to these developments but whether the overall improved risk appetite can be maintained remains to be seen, and for this we need to watch credit spreads and default swaps. What is our trading focus? US equities (US500.I and USNAS100.I): be wary of the short-term celebration A busy weekend in the US for regulators have ended with a backstop of all insured and uninsured deposits of SVB Financial and Signature Bank including a new “Bank Term Funding Program” that will offer 1-year loans to banks on easier terms than normal. The Fed is also relaxing terms for lending through its discount window. US equity futures are rallying this morning with S&P 500 futures up 1.4% trading around the 3,955 level (just above the 200-day moving average), but our stance is that investors should be extremely cautious of celebrating too early. The lessons from the Great Financial Crisis and the Euro Crisis are that the early cracks and the first rescue attempt by regulators are often not enough as these events to not happen in vacuum. At this point we simply do not have enough information to guess the secondary effects from this event so investors should remain cautious. Investors should monitor money market spreads, yield curve shape, flows in USD etc., instead of equities this week for information what is happening in the system. Chinese equities (HK50.I and 02846:xhkg): Rally as US backstops depositors Hong Kong and Chinese stocks rallied as U.S. regulators rolled out plans to prevent the woes in Silicon Valley Bank and Signature Bank to turn into systemic risks. Hang Seng Index jumped 1.8% and CSI300 rallied 0.6%. China’s Two Sessions concluded this morning. President Xi secured a third term and his ally Li Qiang took the position of Premier, both being widely expected. The People’s Bank of China’s Yi Qang unexpectedly remains as the central bank’s governor. Nonetheless, his appointment is likely to be transitory pending the establishment of the National Financial Supervision Bureau. Energy, consumer, and internet stocks led the advance of the Hang Seng Index. In A-shares, SOE telcos outperformed. Belt-and-Road-Initiative-related stocks were well bid. FX: Dollar on the backfoot as Fed rate hike expectations recede on financial risks The dollar trades sharply lower following the Sunday announcement from the US authorities that it will backstop bank deposits to avert a deepening crisis after the SVB collapse. With short-end US yields collapsing and the market pricing just one rate hike before a December cut, the dollar index has dropped to a near a one-month low while the euro after finding firm support around €1.035 last week has rallied back above €1.07. AUDUSD pushed back above 0.66 to highs of 0.6672 in Asian session amid a recovery in sentiment. NZDUSD also pierced above the 200DMA to reach 0.62. GBPUSD rose above the 1.21 handle again with this week’s focus being the Spring budget and the labor market data. ECB’s hike remains in focus, and EURUSD taking another look above 1.07 as risk sentiment improved this morning in Asia.  Crude oil prices bounce as risk sentiment improves but economic outlook still weighing Crude oil prices continue to ebb and flow with the general level of risk sentiment and prices are higher overnight after US authorities stepped in over the weekend to restrain the SVB contagion. The result being a commodity supportive drop in the dollar as interest rates collapse and rate hikes are being priced out of the market. However, the risk of a US recession has strengthened on the back of these developments and with that in mind the short-term outlook points to continued range bound trading. Meanwhile, the spread between Brent and Dubai narrowed to USD2.70/bbl, as Dubai crude gained against the global benchmark, suggesting robust Asian demand. Both Brent and WTI will be facing resistance at their 21- and 50-DMA levels, both currently meeting at 83.75 and 77.70 respectively. Also, in focus this week are monthly oil market reports from OPEC and IEA Gold making a fresh stride higher despite easing banking sector crisis concerns Gold together with US government bonds have seen strong safe-haven demand since Friday as the SVB fallout has led to concerns about contagion in the banking sector. Two of gold’s main engines, the dollar and treasury yields have both seen a sharp drop since Friday and together with technical levels being broken and hedge funds holding a much-reduced long position, the market briefly managed to touch $1890 overnight. Despite the Sunday announcement from the US authorities, gold will likely benefit from continued worries about the financial system, increased recession worries and a swap market now pricing in just one rate hike ahead of a December cut. Support at $1871 and $1858 while a break above $1900 is needed to signal a reversal of the February correction. Treasury yields plunged on safe-haven bids amid banking woes and Fed speculation The Silicon Valley Bank Incident has since Friday driven continued safe-haven demand for bonds while the swap market is now pricing in just one more 25 bps rate hike, down from four since Thursday, with the first cut now priced in for December as recession worries and financial stability takes centre stage.  Prices of Treasuries climbed, and yields fell sharply, with the 2-year yield falling to 4.4% after briefly trading above 5% last week. Traders are now speculating whether the contagion of the crisis to other banks, and the widening of credit spreads will sway the Fed in favour of keeping the next hike at a modest 25bps, or even pausing earlier than expected. These speculations are supported by the slight 0.2% month-over-month or 4.6% year-over-year increase in average hourly earnings, and an increase in the labor force participation rate to 62.5% in February. Given the package rolled out by the regulators will backstop depositors but not unsecured creditors and the Fed may downshift, the front end of the Treasury curve is likely to remain in high demand. What is going on? US authorities step in to restrain the SVB contagion – what to watch from here? The US authorities have stepped in with a liquidity backstop of uninsured deposits and announced a new lending program for banks to prevent the risks of contagion from the collapse of Silicon Valley Bank (SVB) on Friday. Fed pause bets for March are increasing, but the authorities’ response on containing the financial risks suggests that the room to fight against inflation has been maintained. Risks to inflation also tilt further to the upside with the added liquidity measures, and the long-run impact on US tech sector innovation will remain key to consider in portfolios. Read more here. HSBC acquires SVB’s UK unit HSBC has announced to acquire SVB’s UK unit after meetings over the weekend highlighted the importance of SVB UK in relation to the UK’s VC and startup ecosystem risking wider economic implications if a plan to safeguard deposits was not found. Signature Bank closed by US regulators Yesterday, US regulators closed Signature Bank which was another smaller US bank that came under pressure Thursday and Friday last week. The bank is less connected to the startup ecosystem but has connections to the cryptocurrency industry which was rattled with the liquidation of Silvergate Capital last week. Signature Bank’s insured and uninsured deposits will be accessible to customers on the same basis and under the emergency process as with SVB Financial. ECB monetary policy meeting on Thursday There is little doubt the ECB will hike interest rates by 50-basis point this week, to 3 %. The uncertainty about the magnitude of the monetary policy tightening beyond the March meeting is high, however. Our baseline is that the ECB will certainly signal another 50-basis point hike in May and give no real guidance after that. There is another possibility: the ECB could confirm it will continue hiking rates by 50-basis point in the coming meetings and could open the door to a faster reduction of holdings after June. This would be a hawkish scenario, in theory good for the euro. But we think the likelihood it will happen is small. Ahead of Thursday's meeting, the money market forecasts that the terminal rate in the eurozone will be slightly above 4 %. Nomura is currently the most hawkish bank. Its economists call for 50-basis point hikes in March, May, June followed by 25-basis points in July, leaving the terminal rate at 4.25 %. US nonfarm payrolls remained elevated in February Nonfarm payrolls in the US rose by 311k last month, less than the January's blowout print of 504k (revised down from an initially stated 517k) but remaining elevated and above consensus expectations of 215k. While the headline continued to reaffirm a tight labor market, other indicators from the report were weak. Average hourly earnings rose +0.2% MoM in February, lower than the expected and last month’s +0.3% MoM. The annual rate of average hourly earnings rose from +4.4% in January to +4.6% YoY, a touch short of the 4.7% that the market was expecting. The unemployment also picked up by 0.2% pts to 3.6% against market expectations of no change, as participation rose 0.1% pt to 62.5%. The data remained short of cementing a 50bps rate hike possibility for March, also given the recent concerns on the US banking sector from the SVB collapse. Focus now turns to CPI release on Tuesday to further shape Fed expectations. China's February aggregate financing surged beyond expectations with 9.9% y/y Growth China's aggregate financing growth in February was much better than expected, reaching RMB 3160 billion, far above the RMB2300 consensus estimate. The outstanding aggregate financing growth also accelerated to 9.9% year-on-year (Y/Y) in February, up from 9.4% Y/Y in January. Furthermore, M2 increased at a faster pace in February, growing 12.9% Y/Y, up from January's 12.6%. What are we watching next? US inflation figures Tomorrow, the first estimate of the US February CPI will be released followed on Wednesday by the February PPI. The CPI is certainly the most important data point to focus on this week. This is the latest major US data release before the FOMC March meeting of 21-22 March. The Cleveland Fed produces nowcasts of inflation based on recent publicly observable price moves. According to their latest forecast, the monthly inflation will come in at a similar level to January for February. If so, that is not encouraging. A 50-basis point interest rate hike is certainly not a done-deal in March. But this is a clear possibility. Credit and money markets Besides the focus on US inflation figures this week, we will be watching financial conditions in the financial markets with a key focus on credit and money market rates and spreads to gauge risks in the banking system. In addition, Bitcoin will be monitored for understanding risks in the wider cryptocurrency system as this part of the market is where the highest marginal risk-taking takes place. Finally , June and December Fed Funds Rate futures should be monitored for assessing the market’s pricing of monetary policy off this event. Earnings to watch This week’s key earnings are Volkswagen, BMW, Adobe, and FedEx with tomorrow’s focus on Volkswagen where everything is about the EV outlook as it is increasingly looking like VW is having difficulties to keep up with the production ramp up at Tesla and BYD. Analysts expect FY23 revenue growth of 2% y/y for Volkswagen which if realized will prove to low to satisfy investors when the leading EV-makers such as Tesla and BYD are growing much faster. Later this week we will focus on Adobe and FedEx. Tuesday: Foxconn, Volkswagen, Generali Wednesday: Constellation Software, BMW, E.ON, Ping An Insurance, Prudential, Inditex, Adobe, Lennar Thursday: Verbund, Rheinmetall, KE Holdings, Enel, FedEx, Dollar General Friday: Vonovia Economic calendar highlights for today (times GMT) No major releases today Source: Global Market Quick Take: Europe – March 13, 2023 | Saxo Group (home.saxo)
UK PMI Weakness Supports Pause in Bank of England's Tightening Cycle

US CPI Still A Key Focus Ahead, Gold Broke Above The $1900 Barrier

Saxo Bank Saxo Bank 14.03.2023 08:20
Summary:  Banking sector concerns continued to roil markets as the SVB fallout still remains a big unknown despite measures from US authorities to stem contagion. Flight to safety accelerated further with 2-year Treasury yields slumping by a massive 60bps, and Fed rate expectations continued to shift lower with terminal rate expectations now down to 4.8% from 5.7% last week. Dollar was broadly sold and gold and silver were in favor on yield drop. US CPI still a key focus ahead but a softer print can prompt a further shift lower in the expectations of the Fed tightening path.   What’s happening in markets? US equities assess the probability of Fed rate cuts, while both the recession and volatility indexes spike After the sweeping failure of regional lenders, including Silicon Valley Bank, and ahead of the all-important US inflation read, tech stocks edged cautiously ahead, while bond yields fell - as SVB’s collapse severely complicated the Fed's rate path. Meanwhile, the NY Fed probability of a recession index, climbed to its highest level since the GFC, while the Volatility index hit its highest level since October last year. As such we remain cautious. The swaps market is now showing a less than 1-in-2 chance probability the FOMC can continue to hike rates, while also showing a probability of several rate cuts this year. So, the two-year treasury (bond) yield plunged 61 bps to below 4%, the biggest one-day slump in decades, while the 10-year yield dropped 16 bps. While the US dollar plummeted, sending the kiwi, yen and Aussie all up by 1.2% or more. Fed launches probe into the supervision of SVB. Bank stocks continue to tumble, notching biggest decline since the COVID19 crash The Federal Reserve will launch an internal probe to the supervision of Silicon Valley Bank after its collapse sparked criticism by the central bank oversight, with Michael Barr leading the review, which is said to be publicly released by May 1. Not only the Fed is concerned, but so too is Washington and investors alike. The KBW Bank Index shed 12% on Monday, continuing last week’s rout that saw the index slide 16%- with the index collectively notcing its biggest monthly pull back since COVID19. First Republic Bank shares tanked 62% on Monday, with other regional banks such as Western Alliance Bancorp falling 47%, and California-based PacWest Bancorp down 21% - as investors fret about the strength of liquidity in the lending market. Larger companies also are not immune to the sell off- Charles Schwab shares slid 12% with traders also de-risking and even perhaps shorting some financial institutions. As mentioned on Monday’s Podcast - we think the rout of several lenders in Silicon Valley could have a profound ripple effect on the innovation eco system – and future lending meaning access to liquidity in the VC and cryptocurrency market could be limited – and this could also impact the private equity market. All this reinforces Saxo long held belief that the physical world will continue to outperform the intangibles (the technology sector). This view was reinforced in our Quarterly Outlook. Massive bull steepening as investors flocked to 2-year Treasuries On the back of U.S. regional bank turmoil, investors quickly repriced the front end of the Treasury curve and removed additional future rate hikes in this tightening cycle. Investors flocked to 2-year Treasuries in safe-haven bids and traders closed out curve-flattening positions. Yields on the 2-year plunged 61bps to 3.98% while the 10-year yields fell “only” 13bps to close at 3.57%. The 2-10-year curve steepened to -46bps, after hitting as inverted as -110bps last week. Hang Seng Index and China’s CSI 300 rallied on U.S. regulators’ decision to backstop depositors Hong Kong and Chinese stocks rallied as U.S. regulators rolled out plans to prevent the woes in Silicon Valley Bank and Signature Bank to turn into systemic risks. Hang Seng Index advanced 2% and CSI300 climbed 1%. China’s Two Sessions concluded this morning. President Xi secured a third term and his ally Li Qiang took the position of Premier, both being widely expected. Premier Li Qiang’s remarks at the press conference had a pro-growth and market-friendly tone. Energy, telco, China consumption, and China internet stocks drove the advance of the Hang Seng Index. Hang Seng TECH Index gained 2.9%. Bilibili (09626:xhkg) jumped 10.7% following the video-sharing platform being included in the Stock Connect. In A-shares, SOE telcos outperformed. Belt-and-Road-Initiative-related stocks were well bid. Australian equities (ASXSP200.I) trade lower for the sixth week. Swaps show RBA’s hiking cycle is over After not only the dovish commentary from the RBA but the recent demise of several large VC and cryptocurrency lending banks in the US, now we are seeing that the RBA’s interest rate hiking cycle could be over. That’s according to the swaps market, which reflects that there is just a 50% chance for an increase in the RBA’s cash rate for the rest of this year. FX: Expectations of a less aggressive Fed weighing on the dollar The USD continued to slide on Monday as Fed expectations were revised further lower (read below) but some floor was being found in early Asian trading. AUDUSD touched highs of 0.6717 before reversing to 0.6650, while NZDUSD surged to 0.6250+ before heading back towards the 0.62 handle. GBPUSD could not move above 1.22 and focus turns to labor market data in the UK today before the budget announcement tomorrow. EURUSD touched 1.0750 with a 50bps rate hike still on the table this week. Safe haven JPY and CHF continued to outperform as bank risks reign, with USDJPY staying below 134 and USDCHF testing support at 0.91. Crude oil prices slump amid risk off Oil prices closed lower by 2.5% on Monday as banking sector concerns continued to spell caution on risk assets. However, expectations of a less aggressive Fed monetary policy helped crude oil to recover from its lows, and focus now turns ahead to the US CPI data due today. WTI futures still trading below $75/barrel while Brent is at $80. OPEC is scheduled to issue its monthly market report later Tuesday, while the International Energy Agency follows with its release on Wednesday, providing on snapshot on the outlook for supply and demand, but focus is unlikely to be back on fundamentals until market concerns ease. Gold and Silver benefitting from the drop in yields Gold broke above the $1900 barrier as flight to safety continued despite the efforts of US regulators to reduce the risk of contagion from the SVB collapse. The massive drop in 2-year Treasury yields of the order of 60bps as well as market pricing in as many as 4 rate cuts this year have seen the dollar come off considerably from its highs and brought the precious metals back in focus. Additional demand for Gold from momentum traders looking for a fresh upside attempt, could bring Gold towards the January high around $1950. Silver was up over 6% on Monday as well breaking the $21.70 resistance which will be followed by $22 and $22.27. What to consider? Bank worries bring a significant shift in Fed expectations Bonds continued to soar as markets digested the measures of the US regulators to stem contagion from the collapse of SVB. But that continued to complicate the path of monetary policy with the Fed having broken something. As markets continued to re-assess the path of monetary policy from here, 2-year Treasury yields plunged 61bps to below 4%, the biggest one-day slump in decades, while 10-years dropped 16bps. The CME FedWatch tool now shows a 35% chance of no move from the Fed next week, and 65% probability of a 25bps rate hike. Fed Funds futures are now pricing in a terminal rate of 4.8% as early as May (down from 5.7% in July earlier) and as much as 100bps of rate cuts this year (compared to one 25bps rate cut expected last week). Upside in US CPI is also unlikely to make Fed go for 50bps in March US inflation has been the talk of town for several months now, although the focus has lately turned to financial contagion risks that may stop the Fed from switching back to a higher rate hike path trajectory. In fact, several banks are now calling for a pause next week, with one also expecting a rate cut and an end to quantitative tightening. Still, February CPI – due to be released on Tuesday – will be a big test after last month’s print reversed the disinflation narrative in goods inflation, and continued to point at sticky services inflation. Headline consumer prices are expected to rise +0.4% MoM in February, cooling slightly vs the +0.5% in January, with the annual rate seen easing to 6.0% YoY from 6.4% previously. Core CPI is expected to rise +0.4% MoM in February, matching the January pace, though the annual rate is likely to fall to 5.5% YoY from 5.6% in January. Overall message is likely to remain that inflation remains stubbornly high, especially after tough weather conditions in California, but the risk of a 50bps rate hike from the Fed in March remains low as the central bank becomes wary of “something breaking”. Submarine deal moves ahead  - the market is still awaiting further detail The US, Australia and the UK unveiled further plans for a new fleet of nuclear-powered submarines when the country heads met in the US on Monday. There will be an initial budget of about A$9 billion through to June 2027, with the tri nations deepening their Aukus Defense partnership that formed 18 months ago, to counter China in the Pacific. The market awaits further detail with much of the discussion remaining confidential. To read more on what to expect, click our article here. Chinese peak construction season ramps up. Iron ore makes green shoots. Iron ore stocks follow higher The iron ore (SCOA) price has extended its rebound - with the steel ingredient's price is up 2.7% so far this week, after rising 2.7% last week. All in all, the iron ore is now trading 8% higher year to date, and above the $132 for the first time since April last year. We’ve been speaking a lot about how iron ore buying usually picks up around this time of year, with Chinese steel mills getting ready for peak construction season - which runs from March through to June. Fresh data released on Friday showed by both steel stockpiles and iron ore inventories fell last week, which implies there is a need to top of up stockpiles. We think buying of iron ore will likely continue in 2023, as the re-opening of China’s economy pick up, all while iron ore supply remains short. And this is underpinning price strength, despite some in Beijing accusing iron ore market participant's of price manipulation. Australian pulse checks: business and consumer confidence and jobs numbers   Australian business and consumer confidence, numbers released today – show consumer confidence is somewhat improving, while businesses remain cautious - feeling the aftereffects of the RBA’s 10th rate hike. Despite the RBA’s comments previously alluding to a potential pause on rate hikes soon - business confidence fell by 4 points in February. The next gauge we will get on Australia’s economy is due on Thursday - with all-important unemployment rate released for February. Bloomberg’s consensus is suggesting the jobless rate will fall from 3.7% to 3.6%, with 50,000 jobs expected to be added last month. If the data shows employment is rising, contrary to what the RBA expects, then the Australian dollar would likely gain pace, as the RBA would gain power to keep rising rates by 0.25%. UK labor data on watch today for the path of BOE The UK labor market data will be released on Tuesday and investors will be scrambling to gauge how much room does the BOE have to tighten further. Bloomberg consensus expects the unemployment rate to rise to 3.8% in the three months to January from 3.7% previously, with headline jobs growth likely to ease to 60k from 102k in January. However, even with a slightly softer jobs report, the BOE is expected to continue its hiking cycle in March as activity data has been stronger than expected, but the trend in labor market from here will be key to see where BOE could pause its tightening cycle. Focus also turns to UK’s budget announcement tomorrow. For what to watch in the markets this week – read or watch our Saxo Spotlight. For a global look at markets – tune into our Podcast.
BRICS Summit's Expansion Discussion: Impact on De-dollarisation Speed

The Federal Reserve Will Launch An Internal Probe To The Supervision Of Silicon Valley Bank

Saxo Bank Saxo Bank 14.03.2023 09:11
Summary:  An historic move in interest rates accelerated yesterday as investors rushed to price an end to the current Fed hiking cycle and even an eventual easing starting as early as Q3 after US officials moved to prevent contagion in the US banking sector. The US 2-year treasury yield, which traded above 5.0% mid-last week, traded below 4.0% late yesterday. The US dollar is down sharply, gold and bitcoin are soaring, and equities can’t decide whether to sell off on the uncertainty or celebrate the sharp drop in yields. What is our trading focus? US equities (US500.I and USNAS100.I): has the dust settled post SVB Financial bailout? Yesterday’s session saw big moves across US government bonds with especially the US 2-year yield declining 60 basis points as many corporates likely converted deposits into short-term bonds to reduce deposit risk. In equities mega caps were seen as safe havens with Apple shares gaining 1.5% while the broader S&P 500 Index was flat, and the Russell 2000 Index was down 1.5%. US financial conditions tightened to the tightest levels since late September and thus under those circumstances the S&P 500 Index should be trading closer to 3,600 than the close of 3,855 yesterday. Moves in times of crisis are always exaggerated and often not consistent so investors should continue to be cautious and not celebrate too early despite equities help up yesterday. The key indicators to monitor remain US bond yields, USD, FRA-OIS spreads (interbank stress), VIX, credit default swaps, and banking stocks. FX: USD weakens as market prices imminent end of Fed hiking cycle The USD continued to slide on Monday as US yields at the front end of the curve suffered an historic collapse, with Fed expectations revised lower (read below), although a floor in US rates was found in early Asian trading near 4.00% for the US 2-year yield. AUDUSD touched highs of 0.6717 late yesterday before reversing to 0.6650. GBPUSD found resistance ahead of 1.22 and focus turns to labor market data in the UK today before the budget announcement tomorrow, although incoming data feels suddenly less urgent than just a week ago, given the uncertainty the turmoil in the financial sector has generated since late last week. EURUSD touched 1.0750 with a 50bps rate hike still on the table this week from the ECB, although the probability for a hike of that size has dropped significantly, and ECB tightening expectations have seen a sharp downgrade since late last week. JPY and CHF continued to outperform, with USDJPY staying below 134 and USDCHF testing support at 0.91. Crude oil tests strength of support near bottom of current range Crude oil prices closed lower by 2.5% on Monday as banking sector concerns continued to challenge growth and demand dependent commodities from cotton and copper to crude oil. However, expectations of a less aggressive Fed monetary policy helped crude oil find support with WTI and Brent both finding support in the bottom 20% of their current ranges. In Brent, the prompt month backwardation remains elevated around 50 cents while the contango in WTI has not widened despite the current weakness, both signalling a discrepancy between current robust fundamentals and the overall weak sentiment. Ahead of today’s US CPI print, OPEC is scheduled to issue its monthly market report, while the International Energy Agency will follow on Wednesday. Gold and silver benefitting from the yield collapse Gold broke above $1900 barrier on Monday as flight to safety continued despite the efforts of US regulators to reduce the risk of contagion from the SVB collapse. The massive drop in 2-year Treasury yields of the order of 60bps as well as market now pricing in as many as four rate cuts this year (from four hikes less than a week ago) have seen the dollar come off considerably from its highs and brought the precious metals back in focus. Since the SVB news broke late Thursday, gold has gained 4.2% while silver has added a massive 8.5%, and with several rate cuts now priced in, and short end yields unlikely to continue their decline, the risk of a profit taking ahead of the CPI print has risen. Support levels that may get challenged in gold are 1900 followed by 1890 and 1872. Copper looks to China for support Copper trades back above $4 after managing to find support around $3.94, the December high. With the arrival of the peak season and the drop in copper prices, consumption in China is expected to continue to recover, potentially offsetting growth concerns elsewhere Massive bull steepening in US Treasuries as investors flocked to 2-year Treasuries On the back of U.S. regional bank turmoil, investors quickly repriced the front end of the Treasury curve and removed additional future rate hikes in this tightening cycle. Investors flocked to 2-year Treasuries in safe-haven bids and traders closed out curve-flattening positions. Yields on the 2-year plunged 61bps to 3.98% while the 10-year yields fell “only” 13bps to close at 3.57%. The 2-10-year curve steepened to -46bps, after hitting as inverted as -110bps last week. What is going on? Fed launches SVB probe as bank stocks tumble the most since the Covid-19 crash The Federal Reserve will launch an internal probe to the supervision of Silicon Valley Bank after its collapse sparked criticism by the central bank oversight. The KBW Bank Index declined 12% yesterday extending last week’s rout that saw the index slide 16%. In biggest declines were among banks such as First Republic Bank (-62%), Western Alliance Bancorp (-47%), and California-based PacWest Bancorp (-21%) as depositors and investors were nervous about smaller financial institutions. Larger financial institutions were not immune to the risk-off with Charles Schwab shares declining 12%. Credit Suisse has found material weakness in financial reporting The Swiss-based investment bank was forced to postpone the release of its annual report last week due to US regulators and the morning the bank says that it has identified material weaknesses in its financial procedures for 2021 and 2022. The bank is working on remediating those errors. Credit Suisse 5-year CDS prices hit a new all-time high yesterday at 485. Bank worries bring a significant shift in Fed expectations Bonds continued to soar as markets digested the measures of the US regulators to stem contagion from the collapse of SVB. But that continued to complicate the path of monetary policy with the Fed having broken something. As markets continued to re-assess the path of monetary policy from here, 2-year Treasury yields plunged 61bps to below 4%, the biggest one-day slump in four decades, while 10-years dropped 16bps. The CME FedWatch tool now shows a 35% chance of no move from the Fed next week, and 65% probability of a 25bps rate hike. Fed Funds futures are now pricing in a terminal rate of 4.8% as early as May (down from 5.7% in July earlier) and as much as 100bps of rate cuts this year (compared to one 25bps rate cut expected last week). What are we watching next? US CPI will still get some attention, even if incoming data’s importance has fallen sharply US inflation has been the talk of town for several months now, although the focus has lately turned chiefly to financial contagion risks that may stop the Fed from switching back to a higher rate hike path trajectory. In fact, several banks are now calling for a pause next week, with one also expecting a rate cut and an end to quantitative tightening. Still, the US February CPI – due to be released today – will be a big test after last month’s print reversed the disinflation narrative in goods inflation and continued to point at sticky services inflation. Headline consumer prices are expected to rise +0.4% m/m in February, cooling slightly vs the +0.5% in January, with the annual rate seen easing to 6.0% YoY from 6.4% previously. Core CPI is expected to rise +0.4% m/m in February, matching the January pace, though the annual rate is expected to fall to 5.5% y/y from 5.6% in January. Despite the SVB’s failure, we still believe the February CPI release will be particularly relevant for the FOMC’s March policy decision as the Fed may try to pretend that it can focus on business as usual. Evidence of economic resilience and persistent price pressures would prolong the Fed’s tightening cycle. However, by year-end, we expect the U.S. economy will start to experience more significant disinflationary pressures. NFIB survey for February Given that small businesses are particularly sensitive to domestic economic dynamics, sentiment among small business owners will provide an update on inflationary conditions and the labor market situation. Earnings to watch Volkswagen earnings are the big focus today at 9:00 CET but VW’s investment plans have already been surfaced increasing to €180bn in investments during 2023-2027 which is 13% higher than previously announced and with 70% going to EV. Next key US earnings are Adobe and Lennar tomorrow with analysts expecting Adobe’s revenue growth at 9% y/y which is unchanged from a year ago suggesting the growth rate is stabilising. Analysts are also expecting Adobe to show meaningful improvement in operating income as the software maker has reduced costs. Lennar is expected to report -3% y/y and –41 q/q revenue growth for FY23 Q1 (ended 28 Feb) and a significant hit to EBITDA at $725mn down from $1,527mn. Tuesday: Foxconn, Volkswagen, Generali Wednesday: Constellation Software, BMW, E.ON, Ping An Insurance, Prudential, Inditex, Adobe, Lennar Thursday: Verbund, Rheinmetall, KE Holdings, Enel, FedEx, Dollar General Friday: Vonovia Economic calendar highlights for today (times GMT) During the day: OPEC’s Monthly Oil Market Report 1230 – US Feb. CPI 1230 – Canada Jan Manufacturing Sales MoM 2030 – API's Weekly Crude and Fuel Stock Report 2120 – US Fed’s Bowman (Voter) to speak   Source: Global Market Quick Take: Europe – March 14, 2023 | Saxo Group (home.saxo)
The Commodities Feed: US announces SPR purchase

Brent And WTI Was Testing The Lower End Of These In Response To The Turmoil

Craig Erlam Craig Erlam 14.03.2023 10:34
Wild fluctuations in oil Oil prices are continuing to whipsaw while remaining within the broad ranges they’ve traded within since early December. Yesterday we saw Brent and WTI testing the lower end of these in response to the turmoil that erupted in the financial system that triggered widespread risk aversion. Today we’re seeing them trade lower again, albeit still higher than yesterday’s lows. If we see markets settle down, that could prevent a break of the lows but oil traders, like those elsewhere, will remain nervous about the prospect of further turbulence. Suddenly, a break below the lows looks a much greater risk which may keep pressure on in the short term. A strong rally An extraordinary rally in gold over the last couple of sessions has seen it rebound almost 5% and move back above $1,900 which could have been a major barrier of resistance under normal circumstances. But that isn’t what we’re seeing at the moment and the dramatic decline in yields, combined with a softer dollar and clamor for safe havens sent the yellow metal soaring. That may not last if markets correct themselves, assuming the dust settles, which could see interest rate expectations shift higher. Then there’s today’s CPI data which may refocus attention on the Fed’s primary goal of price stability and the success it’s having, or not, in driving inflation back to target. It promises to be another interesting day for gold. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: Further oil supply disruptions

Oil Is Unlikely To Be Helped By Speculation That The Fed May Keep The Federal Funds Rate At 4.75%

Marek Petkovich Marek Petkovich 14.03.2023 12:26
The oil market is full of mysteries. U.S. companies have drastically reduced investment in production, suggesting lower supply and higher prices. But prices are falling! Western sanctions were supposed to hit Russian exports, and strong U.S. macroeconomic data for January should have stimulated demand. Instead, oil reserves in the United States are increasing, and Brent has fallen below $79 per barrel for the first time since the beginning of the year. The U.S. dollar failed miserably due to the bankruptcy of the SVB, which on paper means a higher cost of oil, but it breaks all ties! What's the matter? Have the markets gone crazy? In fact, oil is an indicator of the health of the global economy. And its health is clearly not good. For a long time, Brent has been trading in consolidation as investors were choosing between the East, led by China, which is ready for a rapid recovery, and the West giving alarming signals. After deflation began to smell in China, it became clear that the "bears" were pulling the strings. Inflation cannot be weak in a strong economy! Chinese consumers continue to be cautious after exiting lockdowns, which deprives the North Sea grades of important support and forces the reversal risks down to their lowest level since August. Brent Reversal Risk Dynamics Sellers clearly outnumber buyers in the options market. Investors are more concerned about slower demand growth than supply issues, which results in the peak of Brent. Indeed, with Saudi Aramco predicting that oil consumption will reach a record 102 million bpd in 2023, worrisome signals of an imminent U.S. recession are undermining optimists' positions. The bankruptcy of the 16th largest U.S. lender suggests that something is broken because of the Fed's aggressive monetary restriction. More precisely, the banking system. And the more actively regulators try to save it, the more it scares the financial markets. The volatility of oil is not diminished at all by the guaranteed return of SVB deposits, 90% of which were actually uninsured. Let the U.S. labor market continue to look monolithic, but if the volume of bank lending goes down sharply, a slowdown in the economy cannot be avoided. Most likely, the recession, which the yield curve has been signaling for a long time, is just around the corner, which negatively affects the demand for oil and pushes futures down. Dynamics of oil volatility Oil is unlikely to be helped by speculation that the Fed may keep the federal funds rate at 4.75% in March, although a couple of days ago, investors believed in +50 bps. Combined with falling Treasury yields, this weakens the U.S. dollar. Nevertheless, the suspension of the cycle occurs due to the crisis, and the crisis in the economy is always for oil. Technically, the inability of the Brent bears to win back the three-touch pattern is a sign of their weakness. Falling below the $79.2 per barrel pivot level or rebounding from resistances at $81.75 and $82.7 are reasons to sell.   Relevance up to 08:00 2023-03-19 UTC+1 This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here. Read more: https://www.instaforex.eu/forex_analysis/337505

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