August 26. Gold drops in anticipation of Jackson Hole symposium Gold prices continued to decline for the third day in a row on the back of a strengthening dollar and rising US Treasury yields. The dollar index rose 0.1%, putting pressure on gold, while the yield on the 10-year US Treasury bonds held near a two-week high. Investors are also awaiting tomorrow's symposium in Jackson Hole and possible signals about the curtailment of incentives during the speech of the head of the Fed, Jerome Powell. The current price of gold is $1,787 per ounce, palladium has fallen in price to $2,400 per ounce, silver has dropped to $23.67. The platinum price dropped to $987.65. J. Powell will speak at the Fed's annual economic symposium on Friday. Market participants hope to receive more detailed information about the regulator's plans to roll back economic support measures. Many people do not realize this is possible, as the spread of the delta strain of coronavirus continues to cause concern.
August 27. Oil continues to rise as a storm approaches the Gulf of Mexico At the end of the week, oil prices continue to rise amid an approaching storm in the Gulf of Mexico. Investors fear that major supply disruptions could reignite in the market as energy companies cut production in the Gulf ahead of the weekend. As a result, Brent quotes rose to $71.50 per barrel on Friday, while WTI rose to $69 per barrel. Additional support for the oil market is provided by the expectation that OPEC + may resist the increase in production, given that the new strain of the delta coronavirus has affected oil demand. An important factor for the further dynamics of oil will be the results of today's speech by the head of the US Federal Reserve in Jackson Hole, since they will have a strong impact on the dollar rate. Market participants expect Jerome Powell to give signals regarding plans to cut the bond buying program in the 4th quarter.
September 1. Trump criticized cryptocurrencies again Former US President Donald Trump in his speech on the air of Varney & Co said that investing in cryptocurrencies is a «potential disaster.» Trump also added that he is not a fan of cryptocurrencies, does not invest in bitcoins and calls for investments in the American currency. According to the ex-president of the United States, investing in cryptocurrencies harms the dollar, since bitcoin generally looks more like a «scam», and the euphoria around this cryptocurrency weakens the dollar. Trump boldly reiterated that «the dollar should be the currency of this world.» However, as long as Bitcoin and other cryptocurrencies remain unregulated in the US financial system, they pose a threat to the US dollar and reduce its value. In addition, according to him, cryptocurrencies can be fake, and few people know what they are. During his tenure as President of the United States, Trump has maintained both the weakness and the strength of the dollar. When the dollar weakened, it was more profitable and cheaper for foreign countries to buy American goods. Trump has also frequently accused China of deliberately undervaluing its currency, the renminbi, in order to reduce the cost of exports. The head of the US Securities and Exchange Commission (SEC) Gary Gensler shared a slightly more positive view of the crypto market, who noted that he supports digital currencies, but believes that this industry should be within the framework of laws related to money laundering, tax compliance and investor protection.
September 03. Oil price exceeds $73 due to hurricane disruptions On Friday, crude oil prices rose above $ 73 a barrel. The reason for the growth was the message that it may take longer than anticipated to resolve disruptions in the operation of the energy complex in the Gulf of Mexico. About three quarters of offshore production is still not functioning. The current Brent quotation is $ 73.15 per barrel, the price of WTI oil is $69.95. Additional support to prices was provided by data on oil reserves in the United States. According to a report from the Ministry of Energy, over the past week, hydrocarbon reserves in the country decreased by 7.2 million barrels. The decline has been noted for the third week in a row. Analysts note that petroleum product inventories are generally at their lowest for this period of the year since 2018, while refining capacity in Louisiana continues to slowly recover. Moreover, yesterday, US President Joe Biden ordered Energy Secretary Jennifer Grenholm to use the strategic oil reserve to combat the surge in fuel prices in the country caused by Hurricane Ida.
September 06. The European market started the week with growth On Monday, European stock indexes showed a rise on the background of an increase in industrial orders in Germany, as well as a disappointing employment report in the United States, which indicated a delay in tightening the Fed's monetary policy. In particular, the DAX index in Germany rose to 15,900, the CAC 40 in France rose to 6,746, and the British FTSE 100 – to 7,191. The positive sentiment was helped by the news that orders for German industrial goods unexpectedly increased by 3.4% month-on-month in July, reaching a maximum. Analysts had expected that the volume of orders would decrease by 1.0% compared to the previous month. Also, investors are still «digesting» Friday's US employment report, which showed a much smaller increase in the number of vacancies in August than expected. The number of jobs outside the agricultural sector increased at the lowest pace since January – by only 235 thousand, while analysts expected an increase of 750 thousand. The unemployment rate fell from 5.4% to 5.2%, as expected. These statistics delayed the timing of the reduction of the Fed's bond-buying program, while the US central bank is assessing the economic impact of rising Covid infections. On Thursday, it is worth paying attention to the results of the meeting of the Board of the European Central Bank, since it is expected that the regulator will discuss the issue of reducing incentives at the meeting. Recent reports indicate that inflation in the euro area has risen to a 10-year high (by 3%). And this may lead to a slowdown in the ECB's asset purchase program.
September 08. Aluminum reached the 13-year highs The price of aluminum jumped to the highest in 13 years amid traders' concerns about possible disruptions to supplies from Guinea, the main producer of bauxite, after the coup in that country. An additional factor in the price increase is the restrictions in China related to the policy of reducing CO2 emissions. Dow Jones reports that aluminum futures for delivery in three months on the London Metal Exchange (LME) on Wednesday rose to $2.798 per ton – the highest since 2008. The October aluminum contract on the Shanghai Futures Exchange reached $3.416 per ton during the session. Since the beginning of the year, aluminum has risen in price by almost 41% on the LME due to high demand for the metal in the world while reducing its production in China due to carbon restrictions. Aluminum showed the second best result among the main metals in London after tin.
September 13. The consequences of the hurricane continue to support oil prices The price of oil continues to rise at the beginning of a new trading week amid investor concerns about limited production in the United States due to Hurricane Ida, as well as amid expectations of improved demand. Brent crude futures rose to $73.65 per barrel, WTI – by 0.7% to $70.47 per barrel. Both contracts touched their maximum values since September 3 during the session. Recall that as a result of Hurricane Ida, about three quarters of production on the shelf of the Gulf of Mexico has been stopped since the end of August. This is about 1.4 million barrels per day, which is approximately equal to the entire production of Nigeria, an OPEC member. Additional support for oil prices was provided by the fact that more and more refineries in Louisiana are resuming operations, and this increased the demand for crude oil. This week, we should pay attention to the likelihood of a revision of the forecast of oil demand by OPEC and the International Energy Agency (IEA). The fact is that the increase in the incidence of coronavirus may force OPEC to revise its demand forecast for 2022 downward. September 10. Experts predict an early recovery of the cryptocurrency market Analysts note that Bitcoin and Ethereum can win back the fall within ten days and grow to $48500 and $3630, respectively, despite the ongoing investigation of the US Securities and Exchange Commission (SEC) and the problems in El Salvador. The current price of Bitcoin is $46180, Ether – $3407. According to forecasts, by the end of next week, the price of Ether may reach $3630, and the current price can be considered quite acceptable for purchase. In this case, the stop order should be placed at the level of $3250. Analysts emphasize that significant support levels have been reached in Ethereum, from which a new growing trend will be formed further. The decline in the cryptocurrency market observed this week was caused by several factors. Bitcoin sank by more than 10% after El Salvador declared this coin an official means of payment. This led to the fact that rating agencies lowered the country's already low credit rating, and pointed to increased risks in the insurance industry of El Salvador. Moreover, the World Bank supported the position of rating agencies and refused to provide support to El Salvador in the field of using cryptocurrencies. Another factor of pressure on the crypto market was the SEC investigation against one of the largest decentralized crypto exchanges, Uniswap. In addition, the SEC threatened the American cryptocurrency exchange Coinbase with a lawsuit due to the launch of the Lend lending service by the platform.
September 16. JPMorgan: S&P 500 to grow another 6% by the end of the year Despite the fact that some Wall Street firms are lowering their forecasts for stock market growth by the end of the year, JP Morgan, on the contrary, raised expectations for the S&P 500 from 4,600 to 4,700 (which is 6% more than the current values) and maintained a «bullish» stock forecast. The current index value is 4480. In 2022, the index value is expected to reach 5000 points. According to the investment bank, the pace of economic growth has slowed due to concerns about a new delta strain of coronavirus, which is temporary. JP Morgan experts explain their optimism that Covid is beginning to weaken in the world, and the upward momentum in the economy will continue in 2022, as enterprises will begin to restore depleted reserves and increase capital expenditures after historically low levels. At the same time, other large organizations such as RBC, Morgan Stanley and Goldman Sachs suggest that it is necessary to prepare for the correction of the S&P 500 index to 10%. And the biggest risk for the market by the end of the year may be the threat of an increase in corporate taxes. However, JP Morgan also disagrees with this – the bank's experts believe that a strong change in the income tax rate is unlikely.
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September 21. Oil is getting more expensive amid several factors On Tuesday, oil prices are showing growth, reaching a daily high at $75.17 per barrel. The current Brent quote is $74.65 per barrel, the price of WTI oil rose to the level of $70.92 (a maximum of $71.47 per barrel). The main support for prices is provided by signals of a reduction in the supply of fuel in the United States. Utilities around the world are switching to fuel oil due to rising gas and coal prices (since production in the Gulf of Mexico has not yet fully recovered after Hurricane Ida), which will inevitably lead to a decrease in supply. Market participants are also waiting for the results of the upcoming meeting of the US Federal Reserve, at which the regulator may announce the start dates of monetary policy tightening. And this can reduce the attractiveness of such a risky asset as oil. In addition, the market may see an increase in demand for oil after the US announced the lifting of the travel ban for vaccinated foreign travelers in early November. September 22. IFO lowered the forecast of German GDP growth to 2.5% The German Economic Institute IFO today announced a reduction in the growth forecast of Europe's largest economy for 2021, as disruptions in supply chains and a shortage of intermediate goods slow down the German recovery. The IFO now believes that German gross domestic product growth will be 2.5% in 2021, which is 0.8 percentage points lower than the previous forecast, and 5.1% next year, which is 0.8 percentage points higher than the previous forecast. Timo Wolmersheuser, chief economist at Ifo, noted that a confident economic recovery after the coronavirus crisis (which was initially expected in the summer) is being postponed. Industrial production is currently declining due to bottlenecks in the supply of important intermediate goods. At the same time, service providers are actively recovering from the crisis, Wolmersheuser added.
