☆At 11:30 this evening, the United States will announce the EIA crude oil inventory for the week to January 6. At present, the market expects that it will decrease by 2.375 million barrels, less than the previous increase of 1.694 million barrels.
Market overview
Review ofthe global market trend
On Tuesday, spot gold continued to fluctuate and was held back by the 1880 dollar mark, and finally closed up 0.31% at 1877.47 dollars/ounce; Spot silver remained in a narrow range and ended down 0.09% at US $23.61/ounce.
The US dollar index was flat in the day and ended up 0.11% at 103.3. The yield of 10-year US Treasuries rose to 3.615%.
In terms of crude oil, WTI crude oil rose in the US market, its price was close to $76/barrel at one time, and then gave up most of the increase, finally closing down 0.2% at $74.68/barrel; Brent crude oil closed down 0.01% at $79.54 per barrel.
In terms of natural gas, due to the reduction of heating demand in warm winter, the European benchmark TTF Dutch natural gas futures fell by more than 7%, ICE UK natural gas futures fell by more than 8% in the intraday, and the US natural gas futures fell by 9% in the intraday.
The three major US stock indexes closed higher and the amplitude decreased. The Dow rose 0.56%, the Nasdaq rose 1.01%, and the S&P 500 index rose 0.7%. China shares continued to maintain the opening year's rise, with the Golden Dragon Index up 1.7%, Fortu up 5.6% and Alibaba up 3.6%, which has accumulated 30.4% this year.
Most European stocks ended lower, with Germany's DAX30 index closing down 0.12% at 14774.6; The FTSE 100 index of the United Kingdom ended down 0.39% at 7694.49; The European Stoxx 50 Index closed 0.27% lower at 4057.46.
Market Focus
1. Morgan Stanley: China stocks are expected to be the best performing market in the world this year.
2. JPMorgan Chase CEO Dimon expects a 50% probability that the Fed will raise rates to 6%. Dimon made a surprising prediction last January that the Fed would raise rates seven times in 2022, when the Fed was still just coming off the wording that inflation was temporary.
3. Fed Chairman Powell: restoring price stability in the face of high inflation will require unpopular measures in the short term.
4. LME: will soon announce the restart of nickel trading in the Asian session.
5. API crude oil inventories unexpectedly surged by 14.8 million barrels, analysis says it may be caused by refinery shutdowns.
6. EIA: expects global crude oil demand to grow by 1.05 million barrels per day this year and sharply cut the average price of U.S. and Bu oil by about $9, to $77.18 and $83.1 respectively.
7. World Bank: lowered global economic growth forecast for 2023 from 3.0% to 1.7%; lowered U.S. economic growth for 2023 from 2.2% to 0.5%.
8. Fed discount rate meeting minutes: 9 local Feds support simultaneous 50BP increase in discount rate to 4.5%, 3 local Feds seek to keep it unchanged.
9. G7 seeks to impose two price caps on Russian oil products from Feb. 5 for premium and discounted oil products; Russian Energy Ministry: it is studying measures to limit the discounted price of Russian oil.
Geopolitical Situation
Conflict Situation：
1. British military intelligence: Russian and Wagnerian forces have tactically advanced on the Donbass town of Soledad in the past four days.
2. Officials of the Donetsk People's Republic: The center of the eastern Ukrainian town of Soledad is now under the control of Russian troops.
3. According to Russian media reports, Russian private military company Wagner issued a statement saying that the fighting in the center of the eastern Ukrainian town of Soledad is still going on.
Energy Situation：
1. The Moldovan government said they will temporarily close five checkpoints on the border between Moldova and Ukraine because of the lack of electricity supply from Ukraine.
2. G7 seeks to impose two price caps on Russian oil products from Feb. 5, for premium and discounted oil products.
3. Russian Energy Ministry: further measures are being studied to limit the discounted price of Russian oil.
Assistance Situation：
1. The U.S. is discussing the feasibility of including advanced Stryker armored vehicles in a new batch of military aid list to Ukraine.
2. British Prime Minister's spokesman: We have not made any final decision on supplying tanks to Ukraine.
3. The U.S. will begin training Ukrainians on Patriot missile systems in Oklahoma as early as next week, with 90-100 Ukrainians to be trained in a few months.
4. Canadian Prime Minister Justin Trudeau: Canada will buy U.S.-made Nasams missile systems for Ukraine.
5. Zelensky: It is important to increase the supply of modern weapons from the West, because Russia is gathering forces to prepare for another escalation of the situation.
Institutional Perspective
01
Goldman Sachs
Upgraded expectations, no longer think the Eurozonewill fall into recession.
Goldman Sachs economists are no longer predicting a recession in the Eurozonedue to the resilience the Eurozoneeconomy showed at the end of 2022 and the sharp drop in natural gas prices. Goldman Sachs now expects EurozoneGDP to grow 0.6 percent this year, compared with its previous forecast of a 0.1 percent contraction. Economists led by Jari Stehn said Eurozoneeconomic growth will remain weak in the winter due to the energy crisis, but could grow 0.1 percent in the first quarter of this year. They also believe that Eurozoneinflation is slowing faster than expected and will fall to about 3.25% by the end of 2023. Goldman Sachs again reiterated that the ECB will raise rates by 50 basis points at its February and March meetings, followed by a 25 basis point hike in May, raising the deposit rate to 3.25%.
02
SOCIETE GENERALE
High interest rates are likely to support the euro throughout the year.
Kit Juckes, chief global foreign exchange strategist at Societe Generale, believes that the euro should be bought low unless there are new developments in the geopolitical situation. If not for the Russian-Ukrainian conflict affecting inflation and economic growth, public finances and terms of trade in Europe, the euro should now be trending significantly higher against the dollar, approaching the 1.20 level. Of course, the direct impact of the conflict on the economy and the exposure of the negative impact of the European energy crisis on confidence are important. However, if the impact of the conflict does not intensify or disappear altogether, our interest rate forecasts warrant another four-digit rise in EURUSD this year, which is consistent with our forecast for EURUSD to end the year at 1.12.
03
MUFG
The Bank of England eased its policy stance and the pound may fall with it.
Mitsubishi UFJ recently said that the pound may face a decline in the future because the Bank of England will no longer raise interest rates as sharply as the market expects. But the performance of the pound also depends on risk sentiment. Mitsubishi UFJ Financial Group currency market analyst Lee Hardman said in a report that the weakening of the Bank of England's monetary policy will itself be detrimental to the pound and pose upside risks to the EURGBP, especially in the case of the European Central Bank recently declared that the future will be firm and substantial interest rate hikes. But risk sentiment is also important for the pound, as it can offset the impact of yield spreads.
Leave a Reply