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November 16. Inflation in the UK accelerated to the highest since 1981

According to the British Office for National Statistics, inflation in Great Britain accelerated to 11.1% in annual terms in October, which was the highest since 1981.

The rate of acceleration of inflation turned out to be higher than the expectations of experts, who predicted a price increase of 10.7%. In August, inflation was 9.9%, and in September – 10.1%.

Analysts call the increase in electricity tariffs the main driver of price growth. In addition, the rise in food prices had a strong impact on the dynamics of inflation. In particular, products in October rose in price by 16.4%, which was the highest in 45 years. The prices of milk, cheese and eggs have soared the most.

Thus, if we consider the poorest British families with a low level of expenses, who spend most of their earnings on paying bills and buying groceries, then for them the increase in inflation was more than 16% in October. The ONS also estimated that middle-income Britons spend about a third of the family budget for these purposes.

In the autumn, the British economy entered a recession, and the head of the Ministry of Finance of the kingdom said that Russia was responsible for this. According to him, it was Moscow that created a situation in the world that led to inflation and an increase in interest rates.

 

November 17. Wall Street: 3 oil companies whose stocks are worth paying attention to

Experts say that the tense situation on the world oil market does not bode well for many countries of the world that are still heavily dependent on fossil fuels.

However, despite this, Wall Street recommends that investors pay attention to the shares of 3 oil companies, which can bring substantial profits next year.

Shell is a multinational energy giant operating in more than 70 countries and producing about 3.2 million barrels of oil per day.

Shell has a stake in 10 refineries, and last year the company sold 64.2 million tons of LNG. The company's shares are listed on the London Stock Exchange, the Euronext exchange in Amsterdam and the New York Stock Exchange. It is worth noting that the shares registered on the NYSE have increased by 26% since the beginning of the year. Shell is trading at about $56 per share today.

Chevron is another major oil company benefiting from the commodity boom.

For the third quarter, Chevron made a profit of $11.2 billion, which is 84% more than in the same period last year, and the company's sales and other operating income for the quarter amounted to $64 billion, which exceeded last year's figures by 49%. Chevron approved a 6% increase in quarterly dividends to $1.42 per share, meaning its dividend yield was 3.0%. Over the year, the company's shares have grown by 57%.

Exxon Mobil has the largest market capitalization — more than $460 billion, which is more than Shell and Chevron.

In addition, the oil company boasts the strongest share price dynamics among all 3 companies in 2022: its shares have increased by 79% since the beginning of the year. In the first 9 months of 2022, Exxon earned $43.0 billion in profit, which is significantly more than $14.2 billion last year. Exxon Mobil's free cash flow for the first 9 months of 2022 was $49.8 billion compared to $22.9 billion for the same period last year. The company pays a quarterly dividend of 91 cents per share, which corresponds to an annual yield of 3.2%.

 

November 18. Inflation in Japan has reached its highest since January 1991

According to the Ministry of Internal Affairs and Communications of Japan, consumer prices in October increased by 3.7% compared to the same month last year. This was the highest value since January 1991, while the rise in prices was marked for the 14th month in a row.

In September, the inflation rate was fixed at 3%. Analysts had expected a 3.5% price increase.

On a monthly basis, consumer prices rose by 0.6% (the fastest pace since April 2014). In September, the indicator increased by 0.3%.

Consumer prices excluding fresh food (a key indicator tracked by the Bank of Japan) in October increased by 3.6% year-on-year after rising by 3% in September. This growth was the highest since February 1982.

In particular, food prices in Japan rose by 6.2%, fuel, electricity and water supply - by 14.6%, electricity – by 10.9%. The cost of transport and telecommunication services increased by 2%.

It is worth noting that the central bank's target is at the level of 2%, and the current inflation rate exceeds it for the seventh month in a row.

 

November 29. Oil prices rise in anticipation of OPEC+ meeting

World oil prices started to rise on Tuesday, reaching $86.68 per barrel. Investors are waiting for the weakening of quarantine measures in China and are assessing the prospects for the OPEC+ meeting scheduled for Sunday.

The current quotation of Brent crude oil is $86.00 per barrel, North American WTI oil is trading at $79.35 per barrel.

Yesterday, the quotes showed a noticeable decline: the Brent price fell below the level of $81 per barrel for the first time since January 11, 2022.

As you know, a record increase in Covid-19 infections was recorded in China for several days in a row, as a result of which some quarantine restrictions were tightened, and riots and protest actions took place in a number of cities. Now the markets expect that the Chinese authorities may move to ease restrictive measures. And since China is one of the largest consumers and importers of oil, expectations about the country's economy affect the prospects for demand for this type of raw material.

In addition, market participants are waiting for the OPEC+ meeting scheduled for Sunday. Traders evaluate what measures the alliance can take against the background of supply and demand risks. Also, the market dynamics are influenced by the results of meetings of EU countries, at which European diplomats are trying to agree on the introduction of a specific price limit for Russian oil. At the moment, the countries have again failed to come to an agreement.

 

December 6. Analysts: US bear market is two-thirds of the way

According to analysts, the US stock market has already experienced most of the current bear market, but not all of it. Therefore, the current fall in stocks will last for some time before a new rally begins.

Many have regarded the recent surge in the market as a potential start of a new bull market, but history shows that this rally may be a retreat. Traditionally, the average bear market since the Second World War lasted 14 months and led to a decline of 35.7% from previous highs. The current bear market has been going on for about 11 months and has fallen by 15%, which suggests that it has gone two-thirds of the way.

At the same time, the S&P 500 index rose by 16% from its low in mid-October of 3491.58 points – on expectations that the US Federal Reserve will begin to reduce the pace of rate hikes, and inflation will slow down.

And now the market has moved away from the October lows and returned to levels that require significant premiums to fair value. And even with the downturn this year, stock valuations still do not reflect the growing difficulties in the economy and still have not declined to the level seen during past recessions.

The federal funds rate has risen from 0.0% to a range of 3.75% to 4%, and a sixth increase is expected to take place before the end of 2022. But at the same time, the Fed will slow down the rate of increase to 50 basis points.

 

December 27. Analysts predict a strengthening of the US dollar in 2023

Analysts at Danske Bank believe that the state of the global economy will be crucial for the dynamics of exchange rates in 2023. The bank's review says that all forecasts for the next year are based on the strengthening of the US dollar and the tightening of financial conditions in the world.

However, if inflation concerns quickly fade away, the prospects for the foreign exchange market will be different. Because the US Federal Reserve System may make a U-turn in its policy of aggressive rate hikes.

To date, market participants believe that the US currency will decline in 2023, but Danske Bank is still skeptical about the justification of such optimism. Analysts believe that a fair assessment of the EUR/USD pair is closer to $0.9. Experts also expect that inflationary pressure will weaken in the US faster than in the eurozone, which may put strong pressure on the single European currency.

Therefore, in the absence of any positive developments, the euro may go down. In general, analysts adhere to the «bearish» forecast for the EUR/USD pair, as many negative economic factors will continue in 2023. On the other hand, the lifting of anti-bullying restrictions in China may have a positive impact on the eurozone economy and its currency.

According to forecasts, the euro exchange rate will be around $1.05 in the next month, $1.02 – in three months. At the same time, experts raised the estimate in twelve months to $ 0.98 from the previously expected $0.93.

 

January 9. Oil exceeded the level of $81 per barrel

On Monday, oil quotes are steadily rising after a significant decline in the results of last week.

The current Brent quote is $81.28 per barrel. The minimum of last week was marked at $78. North American WTI crude is trading near $76.50 per barrel after falling to $73.20 last week.

Support for prices today was provided by concerns about the prospects for oil demand in China, where the number of COVID-19 diseases has sharply increased after the lifting of quarantine restrictions. Experts note that the increase in economic activity in China is the main factor that can push oil demand to growth. At the same time, serious uncertainty remains regarding the timing of the return of the PRC economy to normal activity.

In addition, there are also concerns about a downturn in the global economy in the context of the ongoing tightening of monetary policy by the world's largest central banks, which also supports the oil market.

The decline in oil prices last week was caused by the strengthening of the US dollar, falling natural gas prices, as well as the risks of recession in the world. In Europe, there is a fairly warm winter, which leads to cheaper gas. And this, in turn, weakens expectations that consumers will switch from gas to oil this winter.

 

January 11. The Egyptian pound has fallen to a historic low

The Egyptian currency has fallen to a historic low. The exchange rate of the US dollar against the Egyptian pound rose today to the level of 32.195, adding 16.3%. Over the past 12 months, Egypt's national currency has depreciated by more than 76%.

The weakening of the pound began after the International Monetary Fund yesterday outlined the details of a $3 billion aid package to the country. Egypt has committed itself to introduce a flexible exchange rate, strengthen the role of the private sector in the country's economy, and carry out a number of monetary and fiscal reforms.

In addition, among its obligations is to reduce investments in state and national projects in order to reduce inflation and reduce foreign currency spending.

Recall that Egypt faced a shortage of foreign currency, despite the sharp depreciation of the Egyptian pound last year. A year ago, the currency was trading in a narrow range below 16 Egyptian pounds per dollar. However, in March and October 2022, the Central Bank of Egypt allowed the pound to depreciate sharply. On October 27, the Egyptian pound fell by 15% after the announcement of a new financing package from the International Monetary Fund. Then the regulator announced that it was moving to a more flexible currency regime.

 

January 12. Gold exceeded $1900 amid the inflation data in the United States

The price of the February gold futures soared by 1.28% today and reached $1905 per troy ounce. Above the $1,900 mark, gold is trading for the first time since May 2022.

The driver of growth to an eight-month high was the weakening of the dollar on the eve of the release of US inflation data for December. The dollar index lost 0.79% and reached 102.09 points, which was the lowest since June 2022. And as you know, the weakening of the dollar makes gold more attractive to holders of other currencies.

According to the US Department of Labor, by the end of December, the year-on-year growth in consumer prices slowed to 6.5% against 7.1% in November, which coincided with analysts' forecasts. Core inflation (excluding food and energy prices) at the end of December amounted to 5.7% year-on-year, which also meets the expectations of experts. In November, this figure was 6%.

Analysts note that the pressure on the US currency is also exerted by a decrease in the yields of US government bonds. This suggests that fears that inflation will remain at a high level, forcing the Fed to maintain a tight monetary policy for longer, are gradually weakening.

 

January 13. Germany's GDP grew by 1.9% in 2022

According to the Federal Statistical Agency of Germany, the German economy grew by 1.9% in 2022. For comparison, in 2021, the country's GDP increased by 2.6%. The average growth rate for the period from 2011 to 2021 was 1%.

As noted in the agency's report, Europe's largest economy suffered last year from the energy crisis, high inflation, rising interest rates and disruptions in supply chains. The Covid-19 pandemic, though fading, is also having its negative impact on the economy.

The volume of GDP last year was 0.7% higher than the indicator of the pre-pandemic 2019. The main engine of growth of the German economy was consumer spending, which increased by 4.6% in 2022 (by 0.4% in 2021), while the rate of increase in investment in fixed assets slowed to 0.2% from 1.2%, the growth rate of government spending decreased to 1.1% from 3.8%.

Exports of goods from Germany increased by 3.2% last year, and imports increased by 6.7%. Which, by the way, had a negative impact on the country's GDP.

The total deficit of public budgets in Germany in 2022 amounted to 101.631 billion euros (compared to 134.252 billion euros in 2021). Thus, the decrease was 24%.

The negative balance of the federal budget decreased to 117.633 billion euros from 145.925 billion euros.

Throughout 2022, an average of 45.6 million people worked in Germany, which is 589 thousand (1.3%) higher than in the previous year.