January 10. Wall Street futures decline in anticipation of further inflation in the US Monday began with a decline in futures on major US stock indexes. Pressure on the market is exerted by the expectations of statistics, which should confirm the continued acceleration of consumer price growth in the United States. In particular, futures for the Dow Jones Industrial Index (DJIA) declined by 0.02% to 36102 points, futures for the S&P 500 broad market index – by 0.11% to 4662.75 points, and the NASDAQ high–tech index – by 0.29% to 15536 points. Consumer price statistics in the United States will be published on Wednesday. Analysts suggest that last year's inflation was 7%, which will be the highest since 1982. A month earlier, annual inflation in the United States reached 6.8%. Experts note that the stronger-than-expected growth in average wages in the country reinforced the inflation expectations of investors. If the forecasts turn out to be correct, the US Federal Reserve will have to start raising the discount rate earlier than planned. However, the tightening of monetary policy is unfavorable for nominal stock prices. High-tech companies, whose value depends more on future profits (which, in turn, is closely related to «cheap» money in the economy), may suffer the most. Therefore, NASDAQ futures are getting cheaper more significantly than other indices.
January 11. Gold rises in anticipation of Powell's comments The price of gold on Tuesday is rising for the third session in a row amid a decline in the dollar and treasury yields ahead of a speech by the head of the US Federal Reserve Jerome Powell. Market participants are confident that the regulator will start raising interest rates very soon, which puts pressure on the US currency exchange rate. The spot price of gold rose today to $1.810 per troy ounce, subsequently declining to $1.805. The yield on 10-year Treasury bonds retreated from a near two-year high, and the dollar declined against its main competitors. Jerome Powell promised to prevent further acceleration of already high inflation. And it is the inflationary rhetoric of the policy that will be the central topic of the hearings in the banking committee devoted to the consideration of Powell's candidacy for a second term at the head of the Fed. In addition to Powell's speech, markets are waiting for tomorrow's data on consumer prices in the United States: the index is expected to have grown in December by 5.4% year-on-year compared to November's 4.9%. Palladium has risen in price today to $1,937.78 per ounce, silver – $22,710 per ounce, and platinum – up to $950,00.
13.01. Oil is growing after the publication of reserves statistics On Thursday, the price of oil continues to rise, despite the appearance of quite alarming signals. The current Brent quote is $84.75, North American WTI oil is trading near $82.50 per barrel. Yesterday, industry statistics from the US Department of Energy were presented, and the data came out somewhat ambiguous. In particular, according to the weekly report, oil reserves in the United States decreased by 4.6 million barrels, which turned out to be better than forecasts. Production decreased by 100 thousand b/d to 11.7 million b/d. At the same time, gasoline stocks jumped by 8 million barrels at once, exceeding the average level for 3 years. Moreover, the level of oil refining remained stable, and the loading of the refinery even decreased slightly, from 89.8% to 88.4%. This may mean that the growth of gasoline stocks is associated with the weakness of demand. If this turns out to be a temporary phenomenon, then oil prices will remain high. Otherwise, alarm signals may begin to put pressure on oil prices. Brent and WTI are supported by the general weakness of the US dollar after the release of inflation data. The growth of consumer prices in the country reached 7% (in November, inflation was 6.8%), which was the highest since 1982. Against this background, the DXY dollar index showed an impressive drop, updating two-month lows.
January 17. Oil jumped to a three-year high The price of Brent crude oil on Monday jumped sharply to a three-year high at $86.69 per barrel. The cost of a barrel of North American WTI oil has risen to $84.09 (the maximum since November 10, 2021). The main support for the oil market is provided by expectations that supply will remain limited against the background of curbing production by major producers, and global demand will not suffer from a wave of infections with the Omicron coronavirus strain. Analysts note that bullish sentiment persists, as OPEC+ does not provide sufficient supply to meet high global demand. And if investment funds increase the share of crude oil, prices may reach 2014 highs. Experts are also confident that a summer surge in demand is inevitable ahead, especially in Europe and the United States, which may be greater than last year (if the hopes that Omicron will finally turn the Covid-19 pandemic into an epidemic are justified). However, during the day, Brent quotes declined slightly, to the level of $85.60 per barrel, amid an increase in production in Libya. According to the National Oil Corporation of the country, the total volume of oil production has returned to the level of 1.2 million barrels per day. Recall that last week production in Libya was about 900 thousand barrels per day due to the blockade of western fields. January 14. European stock exchanges decline on Friday According to Friday's trading data, Europe's main stock indexes are declining after the release of data on the first monthly trade deficit in the eurozone in almost eight years. A similar indicator in the UK, which is now not part of the euro area, is fixed at almost zero. The German DAX index declined during the day to 15,833.73 points, the French CAC 40 – to 7,119.01 points, the British FTSE 100 – to 7,523.02 points. European macro statistics exerted pressure on the stock market. Thus, the deficit of the foreign trade balance of the eurozone countries in November amounted to 1.5 billion euros after a surplus of 3.6 billion in October. At the same time, analysts expected a surplus of 7.6 billion euros. The European statistical Agency Eurostat also noted that the trade deficit was recorded for the first time in a month since January 2014. It is also worth noting that the stock markets of Europe repeat the dynamics of the American and Asian ones, which closed mainly in the red (due to news about the deterioration of the epidemiological situation in these countries).
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January 20. Cryptocurrencies are declining on expectations of a tightening of the Fed's policy Since the beginning of the new year, the cryptocurrency market has been showing steady weakening amid expectations that the US Federal Reserve System will soon begin to tighten monetary policy. The bitcoin exchange rate has decreased by 9.3% since the beginning of the year, and the Ether exchange rate, the second largest cryptocurrency after bitcoin, by 14.5%. The current BTC quote is $43,308.60, and the Ether quote is $3,253.92. The Fed is expected to raise the base interest rate in March and raise it at least three times in 2022. Some experts suggest that the rate increase in March may amount to more than 25 basis points. However, these are only assumptions, but market participants are waiting for «hawkish» comments from the Central Bank's leaders at the Fed meeting on January 25-26. At the same time, the dynamics of bitcoin is likely to remain volatile as a result of «hawkish» rhetoric, as analysts note. The negative dynamics of cryptocurrencies also affected the shares of companies related to the industry. For example, the price of Coinbase Global Inc. securities has dropped by 13% since the beginning of the year, Marathon Digital Holdings Inc. – by 24.4%, Riot Blockchain Inc. – by 21.7%.
January 24. Bitcoin skids to a 6-month low During Monday's trading session, the bitcoin exchange rate continued the fall, which began at the end of last week. The current quote of the cryptocurrency is $33.483. The last time such price values were recorded a half year ago, in July 2021. Since the beginning of the week, bitcoin has lost about 9%. Analysts say the main reason for the fall is the decline in the value of shares of the largest technology companies. In particular, the head of Tesla, Elon Musk, lost $25.1 billion, the head of Meta (former Facebook), Mark Zuckerberg, became poorer by $ 10.4 billion, and Changping Zhao, the owner of the Binance cryptocurrency exchange, lost $17.7 billion. In turn, the reason for the decline in the securities of technology giants was the widespread spread of the omicron strain, as well as the prospect of lower interest rates in the United States and the growth of instability in the world. At the same time, the main pressure on the crypto market was caused by fears of a military conflict between Russia and Ukraine – recently it became known that the United States and Great Britain began to withdraw diplomatic representatives from Ukraine. Many analysts predict a further decline in the value of the most popular cryptocurrency – up to $ 20 thousand.
January 25. Nikkei falls to 5-month low The Japanese Nikkei stock index closed near a five-month low on Tuesday due to investor caution amid the situation on the border with Ukraine, the expansion of inflation risks and concerns about a faster-than-expected increase in the US Federal Reserve interest rate. The current index value is 27.131.34 points, which was the lowest since August 20. During the trading session, the Nikkei declined to 26.890.94 – the lowest since December 29. The broader Topix index dropped to 1.862.62. The Mothers Index of startups has fallen to its lowest level since April 2020. Analysts note that the main driver of the downward dynamics of the index was the decline in the value of shares in the Japanese technology sector. In particular, the securities of the investor in startups SoftBank Group fell by 5.34%, shares of the manufacturer of equipment for creating chips Tokyo Electron – by 2.69%. NIDEC lost 4.44%. The monetary policy of the US Federal Reserve also has an important impact on the index. A two-day meeting of the US regulator starts today, and investors assume that there is a small chance that the central bank will unexpectedly announce a rate hike from January. Additional pressure on the Nikkei is also exerted by geopolitical tensions related to the buildup of Russian troops on the border with Ukraine. Yesterday it became known that NATO is putting its troops on alert and strengthening its positions in Eastern Europe with additional ships and fighters.
January 26. The US will release another 13.4 million barrels of oil from strategic reserves The US Department of Energy has announced plans to release an additional 13.4 million barrels of oil from the country's strategic reserves. The release of reserves will be distributed among seven companies: Shell will buy 4.2 million barrels, Trafigura – 3 million, Phillips 66 Company – 2.3 million, Macquarie Commodities Trading – 2 million, Chevron – 0.885 million, ExxonMobil – 0.515 million and BP Products North America – 0.5 million barrels. Recall that US President Joe Biden in November 2021 announced the release of 50 million barrels of oil from reserves due to high oil prices in the world and gasoline in the States themselves. The first deliveries were made in December, and the rest will be carried out gradually until April. The return of reserves to the strategic reserve is planned for 2022-2024. Today, oil quotes are showing growth again. The current Brent quote is $88.00 per barrel. Raw materials are getting more expensive after the release of yesterday's report from the American Petroleum Institute (API), according to which stocks decreased by 872 thousand barrels after rising by 1.4 million barrels a week earlier. Today, we should pay attention to similar statistics from the US Department of Energy. Experts expect that oil reserves in the country decreased by 2.1 million barrels last week, gasoline reserves increased by 2.2 million barrels, and distillate reserves decreased by 1.6 million barrels.
January 27. The US economy in 2021 showed the highest growth rate since Reagan According to the Bureau of Economic Analysis of the US Department of Commerce, the country's gross domestic product increased by 5.7% for the whole of 2021 after falling by 3.4% in 2020. Such economic growth has become the most impressive in the last almost 40 years, since the presidency of Ronald Reagan. In the last quarter of 2021, US GDP increased by 6.9% on an annualized basis, which exceeded analysts' expectations of 5.5% growth. In 2020, the American economy shrank for the first time since 2009 (by 3.4%), and the reason for this was the global coronavirus pandemic. However, by the middle of 2021, the economy had recovered and returned to the pre-pandemic level. Analysts note that high economic growth in the United States is accompanied by high inflation – it is also at multi-year highs. In particular, in 2021, inflation accelerated to 7%, which was the largest indicator since 1982. In response, the US Federal Reserve announced that it was curtailing anti-crisis measures, and in March it could raise the base interest rate for the first time in four years. Representatives of the regulator note that a tougher monetary policy is able to restrain price growth significantly exceeding the target level of 2%.
