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October 27. Gold is stable in the middle of the week

On Wednesday evening, the price of gold fluctuates slightly near $1,795 per ounce. Market participants monitor the general dynamics of trading, evaluate the financial reports of companies and expect the results of the meetings of the ECB and the US Federal Reserve.

Analysts note that a slight decline in precious metal quotations could be caused by an increase in appetite for risky assets against the background of the publication of strong financial reports of companies. Despite all the risks and the unstable economic situation in the world, many companies have demonstrated an increase in reporting indicators.

In addition, investors are waiting for the decisions of central banks on further monetary policy, which will inevitably affect the dollar and gold exchange rates. On Thursday, the European Central Bank will hold a meeting, and on November 3, the results of its meeting will be announced by the US Federal Reserve System. It is expected that regulators will begin to curtail support measures.

Of considerable interest are the data on US GDP, which will be published on Thursday. Analysts expect growth in the third quarter to slow to 2.7% year-on-year after an increase of 6.7% in the second quarter.

 

October 28. Annual inflation in Germany accelerated to its highest in 28 years

According to preliminary estimates by the German Federal Bureau of Statistics (Destatis), inflation in the country in October in annual terms accelerated to 4.5% from 4.1% a month earlier. This growth has been a record since October 1993. On a monthly basis, consumer prices in Germany rose 0.5%.

Monthly inflation rates were in line with analysts' forecasts, but annual inflation was expected at 4.4%.

At the same time, consumer prices in the country according to EU standards (harmonized consumer price index) in October accelerated growth to 4.6% from 4.1% on an annualized basis, and on a monthly basis – to 0.5% (from 0.3%). Analysts had forecast rates at 4.5% and 0.4%, respectively.

The department noted that there are a number of reasons for the high inflation rates observed since July 2021. Here is the basic effect of the price reduction in 2020, and a temporary reduction in VAT rates, as well as a sharp drop in prices for petroleum products.

 

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November 01. Oil is recovering after the morning fall

On Monday, oil began the trading day with a decline in quotations to the level of $83 per barrel. Pressure on the asset was exerted by China's public statement that it intends to sell gasoline and diesel fuel stocks from its reserves in order to increase supply on the market and stabilize prices. Analysts note that Beijing has announced the release of reserves for the first time.

However, almost immediately, Brent quotes managed to recover to the level of $84.70 per barrel. WTI rose from a daily low of $82.75 to $84.19 per barrel.

At the same time, the oil market continues to be under pressure. Another driver of the decline in prices this week may be concerns that OPEC+ countries, following the results of the upcoming meeting on Thursday, may ease production restrictions and increase the supply of raw materials to world markets.

In addition to OPEC+, the US Federal Reserve will also hold a meeting this week, which may also have a significant impact on the dynamics of the value of «black gold».

October 29. Bill Gates: Abandoning nuclear power could lead to problems with energy supply

Microsoft founder Bill Gates said that abandoning nuclear power could lead to serious problems with electricity supply, for example, to an increase in electricity prices and difficulties with its supply.

In his interview, Gates noted: «Shutting down nuclear reactors will make it difficult to ensure reliable electricity supplies and favorable prices.» Speaking about the transition to renewable energy sources, he also said that no solution can be ruled out until the costs and reliability are checked.

The head of Microsoft is concerned about whether there will be a new generation of nuclear power plants that will be better in terms of costs, safety and disposal. According to Gates, he is now financing an enterprise that is building a new, fourth-generation nuclear reactor.

At the same time, Bill Gates spoke negatively about the construction of gas power plants in Europe. In his opinion, gas is not a real transition technology. At the same time, Gates stressed that the world will continue to consume a lot of natural gas until emissions of harmful substances fall to zero.

 

November 02. Wall Street breaks records amid Tesla's sharp growth

At the close of trading on Monday, the main Wall Street indexes reached record highs amid a sharp rise in the value of Tesla shares. The company's securities jumped in price by 8.5%, which contributed to the growth of the S&P 500 consumer services sector by about 1.5%.

It is worth noting that last week the market value of the electric car manufacturer exceeded $1 trillion, and since then the shares have continued to rise in price.

Yesterday, the Dow Jones index exceeded 36,000 points for the first time in history. Today, the index is hovering at 35,913.84. The S&P 500 has risen by 8.29 points to 4,613.67 points. Nasdaq soared to 15,905.28 points.

Market participants are also waiting for the outcome of the US Federal Reserve meeting. Many predict that tomorrow the US regulator will approve a reduction in the $120 billion monthly bond repurchase program, as well as give comments on interest rates and how stable the recent increase in inflation is.

 

November 03. The gas price in Europe jumped after Gazprom's decision

Gazprom announced that it had not booked additional capacity for transit through the gas transportation system of Ukraine in the first and third quarters of 2022. After this news, gas prices in Europe jumped by more than 4% to $814 per thousand cubic meters. Gazprom also did not book additional capacities through the gas pipeline through Poland.

On November 1, the daily transit of Russian gas through Ukraine fell by more than a third compared to the level of October 1. Ukraine reported that the volume of pumping decreased by 34%, to 57 million cubic meters per day. In total, Gazprom pays for transit capacities of 109 million cubic meters.

Earlier in October, the cost of gas in Europe fell by more than 10% after Russian President Vladimir Putin instructed Gazprom to start planned work on pumping gas into European storage facilities. The head of the energy company Alexey Miller said that Gazprom is ready to start additional supplies to Europe after November 8, when the storage facilities in Russia will be filled.

 

November 9. Bitcoin has updated the historical maximum twice a day

Over the past day, bitcoin has reached maximum values twice, rising first to $67 thousand, and then to $68440. The current price of the cryptocurrency is $68 thousand per coin.

Analysts believe that such growth is not the limit and further increase is possible. Some even expect the price to rise to $98 thousand by the end of November. Experts explain the current rise partly by fundamental factors.

As you know, a bill on infrastructure support for the economy for more than a trillion dollars was passed in the United States. This implies another infusion of money into the country's economy, some of which will be directed to the cryptocurrency market.

If we talk about the long term, there is an opinion that the demand for bitcoin will grow, and the supply will fall. On the horizon of 10 years, it will be possible to see a price increase 10 times higher than the current figures. At the same time, a correction in the near future is not excluded, with a decrease in the price to the level of $ 30 thousand.

November 8. The oil market in the green zone at the beginning of a new trading week

On Monday, the price of Brent rose to the level of $84 per barrel. The current value of the asset is $83.42.

The «black gold» was supported by the news that the Saudi state oil company Saudi Aramco in December intends to raise prices for all grades of oil for buyers from Asia, the United States, Northwestern Europe and the Mediterranean.

In particular, the price of oil supplied to Asia will be raised by $1.1-2.8 per barrel, in the United States – by $0.5 per barrel, for the countries of Northwestern Europe, the increase will be $1-3.3 per barrel, and for the Mediterranean states – $1.1-3 per barrel.

Such a decision was prompted by assumptions that demand would remain strong, as OPEC countries and other major oil exporters would continue to restrain supply.

Recall that last week OPEC+ decided to continue to adhere to the plan to increase oil production by 400 thousand barrels per day, despite calls from many countries to increase production.

 

November 11. Oil continued to decline after inflation-induced drop

Oil prices continued to decline on Thursday, reaching the level of $82.10 per barrel. The drop in quotations began yesterday, after the release of inflation data in the United States.

According to recent statistics, the consumer price index (CPI) in the United States in October increased by 6.2% year-on-year. Analysts had forecast an increase of 5.8%. Such price growth has become the fastest in the last 30 years. The US dollar reacted with a strengthening amid expectations that the White House and the Federal Reserve will take measures to curb inflation. And this is a negative factor for oil prices.

WTI oil quotes are also declining, today's minimum was fixed at $80.22 per barrel.

The statistics on crude oil reserves in the United States had an additional impact on the dynamics of the oil market. According to the Ministry of Energy, reserves last week increased by 1 million barrels to 435.1 million barrels. Gasoline reserves decreased by 1.56 million barrels, to 212.7 million barrels, distillates – by 2.61 million barrels, to 124.51 million barrels.

November 10. US consumer prices in October increased by 6.2%

According to recent statistics, consumer prices in the United States in October rose more than forecasts suggested. This led to the highest annual increase in inflation since 1990.

Thus, inflation in the United States in October amounted to 0.9% on a monthly basis, while analysts predicted growth of 0.6%. Experts also note that inflation may remain high next year against the background of global supply chain problems.

In annual terms, the consumer price index (CPI) increased by 6.2% against the forecast of growth of 5.8%.

Excluding food and energy prices, consumer prices rose by 0.6%, with a growth forecast of only 0.4%. On an annualized basis, the base index grew by 4.6%, the forecast is an increase of 4.3%.

Meanwhile, data on the number of applications for unemployment benefits came out: it fell to 267 thousand, while analysts assumed the figure at the level of 265 thousand. Such figures were the lowest since mid-March 2020.

 

November 15. Slowing GDP growth in China could lead to a global financial crisis

The US authorities continue to monitor the development of the real estate crisis in China caused by the default of the developer China Evergrande Group. US Treasury Secretary Janet Yellen said that the consequences of the debt crisis in China and the slowdown in the country's economic growth could trigger a global financial crisis.

Yellen also noted that real estate is a very important sector of the Chinese economy, which accounts for about 30% of demand. And the contraction of the Chinese economy will hit many countries with trade ties with China.

It is worth noting that not only China Evergrande is struggling with a high level of debt and a potential default, but the size of the debt itself is impressive – $300 billion. To date, the company has managed to pay several overdue coupons on time, preventing default, but the situation continues to be tense.

November 12. The oil market is stable after the release of the monthly OPEC report

Oil at the end of the week continues to fluctuate in the range of $81.40-82.50 per barrel. The current Brent quote is $82.20.

The situation in the United States remains in the focus of attention of market participants, where pressure on President Joe Biden is increasing. Many, including representatives of his own party, expect the new president to solve the problem of high prices, since the inflation rate in the United States was the highest in the last 30 years.

In addition, investors are analyzing OPEC's monthly report, which contained unfavorable estimates for the oil market: the organization slightly lowered forecasts for oil demand growth in 2021 and 2022. First of all, the OPEC secretariat lowered its estimate of global oil demand in 2021 in North America and India, despite the fact that the recent figures of these countries significantly exceeded the level of a year ago.

At the same time, OPEC expects an increase in demand in China, which also came as a surprise to market participants, given the restrictions on flights in force in the country against the background of the growing number of infected Covid–19.

The non-OPEC supply forecast for 2021 has not been changed, and for 2022 it has been slightly reduced.

 

November 17. The oil market remains highly volatile

For several days now, the oil market has been showing increased volatility, and the quotes of Brent and WTI fluctuate within wide ranges. If yesterday a barrel of Brent was worth about $83 per barrel, then today the quotes have dropped to $81.50.

Pressure on the «black gold» was exerted by the news that the administration of US President Joe Biden, considering the possibility of selling oil from the strategic reserve, is trying to achieve the same from China. At talks with Chinese President Xi Jinping, Biden also urged him to sell oil from the country's reserves, but China is not yet ready for such measures.

The current Brent quote is $81.90 per barrel, WTI oil is trading at $79.20 per barrel. Analysts note that if China agrees to release oil in order to lower prices on the market, it will be possible to talk about the beginning of a «bearish» trend.

Additional pressure on oil prices was exerted by yesterday's data from the American Petroleum Institute (API), according to which hydrocarbon reserves in the United States increased by 655 thousand barrels. A week earlier, inventories fell by 2.485 million barrels. Today, the US Department of Energy will present similar data. Analysts predict an average weekly decline in oil reserves by 2.5 million barrels, gasoline – by 100 thousand barrels, distillates – by 1.3 million barrels.

November 16. The Turkish currency has updated the anti-record again

On Tuesday, the exchange rate of the Turkish lira paired with the US dollar again updated the historical minimum amid expectations of another reduction in the discount rate by the country's Central Bank.

The current quote of the USD/TRY pair is 10.28 lira per dollar, which has become a new anti-record.

At the end of October, the Central Bank of Turkey decided to reduce the discount rate from 18% to 16% against the background of a record fall in the Turkish lira. After that, the national currency accelerated the decline. On Thursday, the Turkish regulator intends to lower the interest rate again.

Recall that the lira began to fall sharply in mid-October, after the news that three high-ranking officials of the Central Bank, including two deputy heads of the regulator, were dismissed by decree of President Tayyip Erdogan. As you know, they voted against reducing the interest rate at a meeting in September. Erdogan is in favor of lowering the rate, arguing that the increase in inflation is due to high interest rates.

 

November 18. Analysts named the factors exerting pressure on the oil market

Yesterday ended with a decline in oil prices under the psychological level of $80 per barrel. What was the reason for this impressive fall?

The weakening of the oil market was recorded even despite the positive data on oil and petroleum products reserves in the United States. Yesterday, a report from the EIA was published, showing a decrease in oil reserves by 2.1 million barrels, which turned out to be better than forecasts for a decrease of 1.4 million barrels. Production decreased from 11.5 to 11.4 million b/d, net imports fell by 0.5 million b/d.

Oil sales accelerated after reports emerged that the United States is negotiating with other major global consumers, including China, India and Japan, to release oil reserves to compensate for market shortages. Back in early November, Washington criticized the slow pace of OPEC+ production growth, declaring its intention to use all tools to reduce energy prices.

At the same time, an increasing number of market participants are skeptical about oil prices. Fresh forecasts from the EIA, IEA and OPEC indicate a surplus throughout 2022, starting from the first quarter. The OPEC Secretary General even said that a surplus could be observed as early as December. And with such forecasts, the news about the possible release of stocks finally «crushed» the quotes.

During Thursday's trading day, Brent still managed to recover to $80.85 per barrel, but you can forget about updating the highs (which market participants were sure of until recently), experts say.

 

November 22. Cryptocurrency Market | November 22 – 26

While the main cryptocurrency, bitcoin, is declining from the $58,000 level, some altcoins have started to grow and even reached new historical highs.

Bitcoin

Analyzing the dynamics of bitcoin, analysts predict that a «bearish» trend may take over the market in the near future. And if the cryptocurrency fails to stay near $57 thousand, then the further target of the decline will be the area of $52,500 – $50,000. In the worst case scenario (a breakthrough below the psychological support at the level of $ 50 thousand), you can expect the strongest sales, as traders will hurry to get out of their positions.

A more positive scenario assumes the recovery of bitcoin and the completion of the correction near $60 thousand, from where further growth can begin.

Last weekend, the President of El Salvador (the only country where bitcoin is recognized as legal tender) announced plans to build Bitcoin City – a city that will run exclusively on renewable geothermal energy sources. Residents of Bitcoin City will be exempt from paying all taxes (on income, property, capital gains, etc.), except VAT.

To finance the project, the authorities of El Salvador will issue tokenized 10-year bonds worth $1 billion.

Dogecoin

According to research, this cryptocurrency turned out to be the most popular by search queries in 23 US states. Analysts explain this popularity by the increased attention of Elon Musk to the asset. Recall that in May, Musk invited users to vote for the option of accepting payments in Dogecoin. Moreover, the billionaire said that in 2022 SpaceX will launch a Doge-1 satellite to the moon. The current Dogecoin quote is $0.22.

Shiba Inu

Another popular token is a clone of Dogecoin Shiba Inu. Cryptocurrency has outstripped many other crypto assets in popularity. Moreover, it became known that an anonymous investor last week acquired Shiba Inu for about $8.3 million.

 

November 23. Trump criticized the current US energy policy

Former US President Donald Trump criticized the policy pursued by the current head of the White House Joe Biden in the energy sector. Trump noted that the United States is at the mercy of OPEC, and gasoline prices in the domestic market of the country continue to rise.

The former American president said that earlier for decades, strategic oil reserves in the United States were very low, since no president was engaged in replenishing them. During the Trump presidency, the reserves were replenished as much as possible, and they were intended for use in serious, emergency situations, for example, in the event of war. Biden's current policy seems outrageous to Trump.

«We were energy independent one year ago, now we are at the mercy of OPEC. Gasoline is selling for $7 in parts of California, going up all over the country, and they are taking oil from our Strategic Reserves. Is this any way to run a country?», Trump was indignant.

Recall that today Joe Biden announced the release of 50 million barrels of oil from the strategic reserve in order to lower commodity prices. It is noted that China, India, Japan, South Korea and the United Kingdom also intend to use oil from their national strategic reserves.

 

November 24. Japan also announced the sale of reserve oil

Japanese Prime Minister Fumio Kishida officially announced the decision to print part of the national oil reserve in response to similar actions by the United States and Biden's request to join the sale of oil reserves in order to stabilize world prices.

Kishida noted in his interview: «So far, we have been cooperating with America to stabilize the global oil market, so our country is keeping pace with the United States and in that form, as long as it does not violate the law.» The Prime Minister also stressed that stability of oil prices is a very important task for economic recovery after the pandemic.

Moreover, the Japanese authorities do not intend to limit themselves to these measures. Japan plans to work with oil-producing countries, take measures to support the agriculture and fisheries sectors, as well as measures aimed at mitigating the sharp rise in gasoline and oil prices.

Recall that yesterday US President Joe Biden announced the release of 50 million barrels of oil from state reserves in order to lower prices for this raw material. In addition, India also confirmed its plans to release 5 million barrels of oil from its strategic reserves.

 

November 25. Emerging Markets shares break 6-day decline

Most emerging market currencies strengthened on Thursday, and stocks broke their six-day decline. The EM currencies were supported by the weakening of the US dollar after the rally caused by the tightening of the monetary rhetoric of the US Federal Reserve.

In particular, the Turkish lira rose to 11.99 per dollar, continuing its recovery after a long period of falling to historic lows at 13.45. The collapse of the lira was triggered by the actions of President Tayyip Erdogan, who called on the Central Bank to lower interest rates even in the face of a sharp rise in inflation.

The South African rand rose 0.4% to 15.84 per dollar. The Ukrainian hryvnia showed little fluctuation, staying close to its 13-week low. On the eve, Ukraine launched a «special operation» near the border with Belarus in order to strengthen the defense of its borders and prevent the migration crisis.

The Hungarian forint rose 0.5% against the euro, while the Polish zloty rose 0.3%. The MSCI stock index is up 0.1% after falling nearly 3% in the past six sessions.

Today the US Treasury and US equity markets are closed for Thanksgiving, so trading volume is expected to be low.

 

November 26. European markets in the red due to concerns about a new strain of coronavirus

On Friday, European stock indexes are falling as news of the newly identified new Covid-19 strain raises fears of another powerful blow to the global economy. Experts believe that the new strain may be resistant to vaccines.

As a result, the pan-European STOXX 600 index fell by 3.3% to 468.72, showing the worst session in more than a year. The British FTSE 100 index also fell by 3.3%, to 7,091.10. The German DAX index fell to 15,426.10, and the French CAC 40 – to 6,806.76.

According to experts, the new strain found in South Africa, Botswana and Hong Kong is still poorly understood. But there are already suggestions that it has an unusual combination of mutations and can evade the immune response, and is also possibly more contagious.

Shares of tourism and leisure companies fell by 6.5% after the UK banned flights from South Africa and several neighboring African countries. Travel restrictions from these countries have also been imposed by Japan, Italy and Singapore.

 

November 29. Serbia will save €1 billion thanks to the price of Russian gas

Serbian President Aleksandar Vucic said that the republic will be able to save about €1 billion due to the gas price set during negotiations with Russian President Vladimir Putin.

At the meeting of the two heads of state, an agreement was signed on an oil formula, which «did not always look as attractive as it does today». This formula, at an oil price of $82-83 per barrel, allows you to pay about €270-275 per 1 thousand cubic meters of gas. And this, as Vucic noted, is a huge saving for all citizens of Serbia. The price of €270 will remain for the next six months.

The Serbian leader also declared his readiness to continue working to maintain the lowest gas prices in Europe. While the average European gas price ranges from €650 to €1200 per 1,000 cubic meters, Serbia pays €270. Such a low price became possible due to the fact that Serbia had previously built the Balkan Stream main gas pipeline with a length of 402 km.

Serbian Foreign Minister Nikola Selakovic said that the agreement concluded between Moscow and Belgrade is historic, and the policy course based on respect for international law and Vucic's diplomatic relations with other world leaders has become a guarantor of Serbia's long-term development and prosperity.

 

November 30. Oil dropped below $71 for the first time since September

During trading on Tuesday, Brent oil quotes declined to $70.23 per barrel. The $71 level was broken for the first time since September 10. American WTI oil is also showing a decline – to the level of $67.09 per barrel.

Subsequently, prices recovered somewhat. The current Brent quote is $71.22 per barrel, WTI oil is $68.05.

Pressure on the market was exerted by the US statement that Washington does not intend to reconsider its decision to release oil from the country's strategic reserve, despite the fall in prices due to the appearance of a new omicron strain Covid-19. Recall, on November 23, the United States announced the release of 50 million barrels of oil from strategic reserves in order to reduce fuel prices for Americans. In addition to the States, India, Japan, South Korea and the United Kingdom made a similar decision.

Prices for «black gold» are also declining amid concerns caused by the spread of a new strain of coronavirus. The head of the drug manufacturer Moderna shared his doubts about the effectiveness of existing coronavirus vaccines against the omicron strain.

At the same time, due to the uncertain prospects for oil demand, expectations are growing that OPEC + will abandon the planned increase in oil production by 400 thousand barrels per day in January. And if the organization still decides to pause in increasing production, the oil market will receive a significant driver for strengthening.

 

December 2. In focus: OPEC meeting and the Fed's «Beige Book»

At the end of yesterday's trading session, the US stock market fell sharply after US health officials announced the discovery of the first confirmed case of omicron, a strain of coronavirus, in the country.

What will affect the dynamics of the market today?

First, we should pay attention to General Motors, which announced yesterday the creation of a joint venture with South Korean Posco Chemical Co Ltd to build a plant in North America. The plant will process critical materials for batteries for the GM Ultium electric vehicle platform.

As you know, General Motors has recently decided to gradually switch to electric vehicles, and collaboration with South Korea will help the company take control of the supply chain. Analysts of the automaker expect that for the full year profit before tax will reach about $ 14 billion, which is higher than previously forecast (from $11.5 to $13.5 billion).

Further, the results of the two-day OPEC meeting will be of interest. Today, the cartel will meet to make a decision on production in January, after the participating countries agreed to gradually increase the supply on the market.

The Joe Biden administration, which has been pressing OPEC to increase production, said it could adjust the timing of the planned release of strategic oil reserves. However, only if world energy prices fall significantly.

The Federal Reserve's Beige Book was published last night. According to her thesis, the US economy continues to be under pressure due to supply chain disruptions, labor shortages and inflation. At the same time, enterprises managed to raise prices to compensate for price pressure against the background of high consumer demand.

December 1. FED announced plans to accelerate taping

Chairman of the US Federal Reserve Jerome Powell said that at the December meeting of the Open Market Committee, the timing of the completion of the bond purchase program will be discussed. The regulator may complete the program several months ahead of schedule, given the good state of the economy, the shortage of workers in the labor market and high inflation.

Such a «hawkish» tone of Powell's comments took market participants by surprise, and also somewhat cooled the rally of US Treasury bonds. Stock indexes also rushed down: the S&P 500 index fell to 4,567.00, the Dow Jones fell to 34,483.72, and the NASDAQ – to 15,537.7.

Recall that in November, the Fed began to reduce $120 billion in monthly purchases of Treasury bonds and securities at a pace that would allow it to complete the winding down by mid-2022. Recently, an increasing number of Fed representatives have been advocating the end of asset purchases in the spring of next year. They are confident that this option will allow them to start raising key rates earlier, if the situation with rising inflation requires it.

Powell notes that the current inflation rate is twice the Central Bank's flexible target of 2%. And if earlier it was possible to apply the term «transitory issue» to high inflation, now this is no longer the correct definition for current levels.

 

December 3. Non-farm Payrolls disappointed the markets

According to the monthly Non-farm Payrolls report, the number of people employed in the US non-agricultural sector increased by only 210 thousand in November after an increase of 546 thousand in the previous month. This indicator turned out to be significantly lower than analysts' expectations (573 thousand).

At the same time, despite the large shortage of personnel, the unemployment rate decreased from 4.6% to 4.2%. At the same time, the labor force participation rate increased over the month to 61.8%, which is the highest since March 2020.

The Labor Department noted that the U.S. economy created far fewer jobs than expected in November, before the threat of a new Covid strain roiled markets and raised concerns about a slowdown in economic growth in the winter.

The sectors that showed the largest increase in November include professional and business services (90 thousand), transport and warehousing (50 thousand), as well as construction (31 thousand). Retail trade decreased by 20 thousand employees, even though the holiday shopping season is approaching.