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March 17. Economists recorded a peak drop in oil amid banking turmoil

Analyzing the dynamics of oil prices in recent days, economists have come to the conclusion that oil has suffered the biggest losses in a week this year. The drop in raw materials is mainly due to significant shocks in the world markets in the banking sector.

Recall that on March 11, the 16th largest US bank Silicon Valley Bank (SVB) was declared bankrupt. The bankruptcy of this major Silicon Valley bank was the second largest in U.S. history after Washington Mutual Bank, whose collapse in 2008 led to a drop in stock prices in Europe and the closure of another bank in the United States.

Today, futures for North American WTI crude oil fell below $68 per barrel. At the end of the week, the drop was about 10%. The current price of the asset is $67.17 per barrel. Brent oil is also showing a decline – to the level of $73.40 per barrel.

Market participants are waiting for a reaction to the current collapse in prices from OPEC+. However, there is an opinion that the cartel will not take any action until the price of Brent crude oil falls below $70 per barrel for a long period of time.

At the same time, the International Energy Agency predicts that the oil market will be in surplus in the first half of 2023, despite the reduction in oil production in Russia in March. The European Union expects that the average price of Brent crude oil this year will be $84.8 per barrel.

 

April 17. The oil market is unstable at the beginning of a new trading week

Oil quotes show high volatility at the beginning of the new trading week in the price range of $85.65-86.50 per barrel.

The current Brent quote is $85.67 per barrel, WTI oil is trading in the range of $81.70-82.60 per barrel. Last week, Brent rose by 1.4%, WTI – by 2.3%, and both types of oil rose in price for the fourth week in a row.

The market was supported by the forecast of the International Energy Agency published on Friday, according to which the supply deficit on the world market in the third quarter will amount to 2 million barrels per day. The IEA noted that another reduction in production by OPEC+ countries threatens a further decline in supply and an increase in oil prices at a time when inflationary pressure is already damaging consumers.

In the second quarter, the deficit will be 400 thousand b/d. Previously, the IEA expected demand to exceed supply only in the third quarter. The average deficit in 2023 is estimated at 800 thousand b/d.

At the same time, OPEC, which published its monthly forecast the day before the IEA, still expects an increase in oil demand in 2023 by 2.3 million barrels per day (up to 101.89 million b/d) – above the pre-Covid level.

Also today it became known that the countries of G7 intend to maintain the ceiling of prices for Russian oil at $60 per barrel.

 

April 24. Binance allowed deposits with Russian cards

The Binance crypto exchange has returned to users from Russia the opportunity to replenish deposits using Qiwi wallets and Russian bank cards.

The Binance support service states: «You can make a deposit on our platform using a Russian card via Qiwi. At the same time, all Visa, Mastercard and other cards issued in Russia are supported.»

Among the currencies that can be used to replenish the deposit, rubles, Turkish lira, British pounds, euros, Kazakhstani tenge, Australian dollar, Ukrainian hryvnia, Czech crown and a number of others are offered. At the same time, there is no US dollar.

Recall that in March last year, against the background of events in Ukraine, the crypto exchange announced the suspension of operations using Mastercard and Visa bank cards issued in Russia. In 2023, Binance also banned Russian citizens and persons residing in the country from making transactions with dollars and euros through the money transfer service between individuals (P2P) in connection with the tenth package of sanctions adopted by the EU.

 

May 5. Apple's profit in the first half of the year fell by 9%

The manufacturer of phones and smart devices Apple has presented a profit report in the first half of the 2022-2023 fiscal year, which ended on April 1.

The company's net profit decreased by 9% year-on-year and reached $54.158 billion. Diluted earnings per share were $3.41 compared to $3.62 a year earlier. The company's revenue for the reporting period increased by 4% to $211.99 billion.

In the second quarter of fiscal year 2022-2023, Apple's net profit decreased by 3.4% to $24.16 billion. Diluted earnings per share were $1.52, the same as a year earlier. The company's revenue for the reporting period decreased by 2.5% to $94.836 billion.

At the same time, revenue from iPhone sales in the second quarter increased by 1.5% y/y and amounted to $51.334 billion, Mac – decreased by 31.3% to $7.4168 billion, iPad – by 12% to $6.67 billion.

Sales of devices in the Wearables, Home and Accessories segment (which includes Apple Watch and AirPods) showed a decrease of 0.6% to $8.757 billion, and sales of the Services division rose by 5.5% to $20.907 billion.

 

May 17. The pound remains under pressure after the speech of the head of the Bank of England

The British pound sterling has been showing a significant drop in recent days in a pair with the US dollar, falling to the level of 1.2422. On Wednesday, after a speech by the governor of the Bank of England, Andrew Bailey, who said that the central bank expects price pressure to ease in April, the pound remains under pressure.

Speaking at the annual world conference at the UK Chamber of Commerce, Bailey said that if price pressures prove more sustainable, further policy tightening will be required. At the same time, he added that there were signs of some weakening of the labor market.

Yesterday, data on unemployment in the UK were published: it rose to 3.9%. However, the growth rate of wages, including bonuses, remained unchanged, and this forced market participants to moderate expectations for further rate increases.

The current quote of the GBP/USD pair is 1.2477. The EUR/GBP pair also shows a drop during the day – to the level of 0.8677.

The Bank of England began tightening monetary policy at the end of 2021. Since then, the British central bank has raised its key interest rate by 400 basis points in total. However, to date, market opinions regarding the next step of the central bank are divided.

Thus, the probability of a rate hike at the June meeting of the Bank of England by 25 basis points is 66%. Analysts note that the further steps of the regulator will depend on the incoming macroeconomic data, while the inflation report for April, which is expected next week, will be important.

 

May 30. Food inflation in the UK has fallen for the first time in two years

According to the British Retail Consortium (BRC), food inflation in Great Britain fell for the first time in two years from a record 15.7% in April to 15.4% in May. The last time the indicator decreased was in August 2021.

Analysts note that the reason for the decline was the fall in electricity prices and the cost of production costs.

According to the BRC, price inflation for canned food rose to 13.1% from 12.9% in April, and for perishable products – fell from 17.8% to 17.2%.

At the same time, the consumer price index presented by BRC increased by 0.2% compared to April – up to 9% – due to the low exchange rate of the pound, increased labor costs, as well as electricity bills for stores.

Earlier, the National Statistical Service of Great Britain reported that real incomes of the population continue to fall at the fastest pace in ten years against the background of the inflation rate exceeding the increase in wages. As a result of record inflation, there is a wave of strikes in the country – employees of railway companies, lawyers, airport employees, postmen and workers in other fields come out to protest.

 

June 16. Natural gas prices in Europe jumped by 30% due to the closure of the field

Natural gas prices in Europe have soared by 30% due to the closure of the largest Groningen gas field in the Netherlands. This decision was made after a series of earthquakes that damaged thousands of homes.

Although a final decision has not yet been made, the official closure of the field is expected after a government meeting at the end of June. This deposit is the oldest in the country and it has been in operation for 60 years.

This news caused a significant increase in gas futures prices, and then prices stabilized and rose by 10%, reaching 42.16 euros per megawatt hour.

The closure of Groningen is due to frequent earthquakes caused by gas extraction, which have led to the destruction of thousands of homes in the region since the 1980s. Plans to close the field were accelerated after a vote of no confidence in Prime Minister Mark Rutte and accusations of an ineffective government response to the problems.

The Groningen field will operate at minimum levels until the final closure and about 2.8 billion cubic meters of gas will still be produced.

 

September 8. German inflation slowed to 6.4% in August

According to the final data of the German Federal Statistical Office, in August consumer prices that meet European Union standards increased by 6.4% compared to the same period last year.

Thus, inflation slowed down from 6.5% in July. The result corresponds to the preliminary assessment and forecasts of experts.

On a monthly basis, prices for consumer goods and services increased by 0.4%, after an increase of 0.5% in July.

Inflation, calculated only by German standards, also slowed down – in August the indicator fell to 6.1% y/y from 6.2% in July. This was the minimum growth in the last three months.

The cost of energy in Germany accelerated its growth to 8.3% from 5.7%. The cost of food increased by 9% (in July – by 11%).

Core inflation, excluding volatile energy and food prices, remained stable and amounted to 5.5% y/y in August, remaining at the level of the previous month.

Preliminary data on the dynamics of inflation in Germany in September will be published on September 28.

 

September 11. Oil market news

On Monday morning, oil prices remain stable in the area above $90 per barrel.

The current quotation of Brent crude oil is $90.30. The maximum reached at the end of last week is $90.83. North American WTI oil shows similar dynamics: the current price is $86.97 per barrel, Friday's maximum is $87.75.

These marks were the highest since November last year. Over the past week, prices for Brent rose by 2.4%, and for WTI – by 2.3%.

The current slight decline in prices is probably a technical correction. Although the oil market is still under pressure from concerns related to the slowdown in economic growth in China.

China returned to inflation in August, but the growth rate was slower than expected. Consumer prices (CPI index) in the country last month increased by 0.1% in annual terms, which was below the average analysts' expectations of 0.2%. In July, the decline was 0.3%.

This week, attention should be paid to the publication of OPEC's monthly report on the oil market, which is scheduled for Tuesday. And on Wednesday, the US Department of Energy will present a weekly report on crude oil reserves in the country.

 

The main events by the morning: March 21

The Fed kept its key rate at 5.5%. Jerome Powell said that a rate hike could stifle the country's economy and budget due to rising public debt costs. At the same time, inflationary pressures are still too high to mitigate monetary policy.

The US dollar is getting cheaper after the Fed meeting, which did not bring surprises to the market. The Fed's forecasts for 2025 suggest only three rate cuts instead of the previously expected four, which somewhat reduces the prospects for the dollar and highlights uncertainty in the US economic future, including the risk of continued inflation.

There are more and more problems with the supply of Russian oil to India. Reliance, India's largest energy company, has stopped accepting Sovcomflot tankers with oil on board due to fears of secondary sanctions. The company requires a change of the carrier.

German companies are concerned that the EU is losing its attractiveness for doing business. More than half of the surveyed German entrepreneurs (56%) noted a decrease in the attractiveness of the EU as a business platform over the past 5 years, while only 7% of executives see the situation in a positive light. The main reasons were the growing bureaucracy and trade restrictions.

Japan is demonstrating a reduction in trade with Russia. In February, total exports from Japan to Russia decreased by 33.6%, while imports from Russia fell by 10.2%. Nevertheless, there is an increase in certain sectors: LNG supplies from Russia increased by 8%, fish and fish products – by 9%, Japanese motorcycles to Russia – by 13.2%.

The U.S. Department of Justice is preparing to file a new antitrust lawsuit against Apple. This time, the company is accused of restricting access to iPhone hardware features. This case will be the third time in the last 14 years that the agency is suing the tech giant, which may be part of a broader Biden administration campaign against the dominance of large technology companies in the United States.

 

The price of gold continues to break records

Gold, which ended trading at a historic high on Thursday, continues to rise on Monday amid expectations of interest rate cuts by the Federal Reserve. On Friday, due to Easter, the exchanges of the United States and many European countries were closed.

The price of June gold contracts at the close of trading on the New York Comex exchange on Thursday was $2,238.4 per ounce. On Monday, the futures price rose 1.8% to reach $2,286.35. In March, the price of gold increased by 8.9%, and for the entire first quarter – by 8%.

Analysts note that the unprecedented rally in gold was caused by softer inflation data in the United States, which increased expectations of a Fed interest rate cut in June. The consumer price index (PCE) in the United States in February increased by 0.3% compared to the previous month, which was lower than analysts' expectations, who predicted an inflation rate of 0.4%.

Markets estimate the probability of a Fed base rate cut in June at about 70%, and also expect that by the end of 2024 it will decrease by 75 basis points from the current level of 5.25-5.5% per annum.

As you know, lower interest rates create a favorable environment for gold, increasing its attractiveness as an investment asset. Gold investors act with confidence that the Fed will prefer to lower interest rates regardless of whether inflation reaches the target level.
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Oil prices are on the rise due to the situation in the Middle East

Oil prices rose slightly on Monday after the strongest weekly drop in seven months. Brent quotes rose to $83.70 per barrel. North American WTI crude is trading near $79.00.

This came amid growing signs that recent cease-fire talks between Israel and Hamas have not made significant progress. The media reported that the last round of negotiations ended without reaching an agreement. This happened after the Israeli strike on Rafah, which killed at least 10 people.

The ongoing conflict increases expectations of geopolitical unrest in the Middle East, which may lead to a reduction in oil supplies from this region.

However, further growth in oil prices is limited by the prospect of weaker demand and reduced supplies this year. These factors also contributed to the sharp decline in oil prices last week. High interest rates and inflation are expected to remain factors putting pressure on the global economy this year, which could undermine oil demand.

Recent data on the growth of oil production in the United States to record levels and an increase in oil reserves have also affected oil prices, raising fears that OPEC and its allies may not extend production cuts until the end of June.

 

The main events by the morning: May 7

The EU is considering trade sanctions against Israel due to the policy of aggressive war in the Gaza Strip. Belgium proposed the initiative. And although Belgium had already decided on its own to impose sanctions a few weeks ago, the country's Prime Minister, Alexander De Croo, stressed that a collective approach from the entire alliance was needed.

Brussels has announced that the EU ambassador will not attend Vladimir Putin's inauguration on May 7. The authorities of Poland, the United States, Canada and the United Kingdom also announced their refusal to send their representatives to participate in the ceremony.

SberPay launched in Turkey. To use this service, you must inform Sber at the time of purchase that you want to pay through the Metropol system and then go to the website payinturkey.com.

The European Union plans to impose sanctions against the Russian version of SWIFT as part of the 14th package of sanctions.

The demand for workers who speak Chinese increased by 63% in 2024. Proficiency in Chinese at a fluent/conversational level increases the average earnings of a specialist by 18-20%. Chinese is the second most popular language after English.

The EU countries have reached a consensus on the use of proceeds from frozen Russian assets. German Chancellor Olaf Scholz announced the readiness of the EU countries to direct 90% of all profits to the military needs of Ukraine.

 

The markets of Europe and Asia have gone up after the publication of the CPI report in the USA

European futures, Asian stock indexes and regional currencies began to rise after the publication of a report on consumer inflation in the United States and strengthening hopes for an early Federal Reserve rate cut.

The report showed that core consumer inflation in the United States over the past year was at its lowest level in three years, which fueled hopes for a softer monetary policy by the Fed.

The dollar index fell to a one-month low as the dollar weakened against all major world currencies from the top 10. The Euro Stoxx 50 futures contract rose 0.3%, and Wall Street stock indexes reached new highs on Wednesday. Similar dynamics were observed in Asian markets.

Among Asian currencies, it is worth noting the growth of the Korean won, while the yen was trading at its highest level in the last week against the dollar.

The Australian dollar declined after the unemployment rate in the country in April did not meet analysts' expectations.

An analysis of the swap market shows that two Fed interest rate cuts are now expected in 2024, as opposed to one reduction expected earlier this year. The general data on core inflation gives the Fed an opportunity to consider an earlier rate cut, and the market is inclined to believe that this could happen as early as September this year.

 

The main events by the morning: May 21

The US Congress is concerned about the gradual abandonment of the dollar. Republican Thomas Massey said that countries are forced to abandon the American currency, including due to inflation. He is confident that other countries will start using alternative currencies, and the United States will have to rely only on the resources of its citizens.

China continues to get rid of American debt by selling a record amount of U.S. bonds in the first quarter of 2024. During this period, China sold bonds worth $53.3 billion, which is a historical record. Experts believe that the reason for this is the use of the dollar by the United States as a weapon. Contradictions arise, as users of the dollar see injustice in its use in economic conflicts.

The UN Security Council has not adopted a Russian draft resolution on the non-deployment of weapons in outer space. Seven countries voted for the draft, including Russia and China, while Switzerland abstained. Russia's permanent representative to the UN, Vasily Nebenzia, said that the rejection of the resolution proves the intention of the United States to militarize outer space.

France has supported the International Criminal Court's request for the arrest of Israeli officials and Hamas leaders. The ICC's demand became known yesterday. Washington rejected this demand, and President Biden said he saw no signs of genocide in the Gaza Strip.

Russians are less likely to repay mortgages ahead of schedule. In the first quarter of 2024, 432.7 billion rubles were spent on early repayment of mortgages, which is the lowest in the last four years. The reason for this is the high key rate, because of which citizens prefer to leave their excess funds in the bank at a high interest rate.

 

China may increase duties on car imports

The Chinese authorities are preparing to increase duties on car imports amid escalating trade contradictions with Western countries.

The Chinese Chamber of Commerce in the European Union received information from insiders about Beijing's intention to raise duties on the import of cars with large engines.

«Such measures will have a significant impact on European and American automakers, especially in light of Washington's recent increase in duties on Chinese electric vehicles and Brussels' preparations to introduce measures as part of an anti-subsidy investigation into electric vehicles from China», – the chamber said.

Earlier, Liu Bin, chief expert of the China Automotive Technology & Research Center and deputy director of the China Automotive Strategy and Policy Research Center, who is involved in the development of China's automotive policy, noted that in the short term, duties on imports of sedans and SUVs with engines of more than 2.5 liters may be temporarily increased in order to reduce imports.

According to WTO rules, the duty can be increased up to 25%. In 2023, China imported about 250 thousand cars with engines of more than 2.5 liters, which accounted for 32% of all car imports.
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A new round of trade war – the EU intends to raise duties on cars from China

The European Union, following the United States, plans to increase duties on Chinese cars.

Last week, the United States significantly increased duties on some goods from China. It wasn't just cars that were hit. Tariffs for microchips were doubled to 50%, for batteries – from 7.5% to 25%, for solar panels – from zero to 25%. In turn, Europe is considering the possibility of imposing similar restrictions on Chinese goods.

The rapid development of affordable electric vehicle production in China is putting significant pressure on European brands. Due to the intensive supply of cars from China, they are postponing their plans to switch to electric vehicles, significantly lagging behind Chinese competitors in development.

Currently, the duty on Chinese cars in the EU is 10%. Analysts believe that it is necessary to increase this figure to at least 25%. Some experts believe that only tariffs above 55% will be able to change the situation.

 

India and Indonesia attract investors more than China

Analysts note the gradually growing contrast between India and Indonesia on the one hand and China on the other. The first two developing countries have a clear advantage over China due to the rapid population growth, especially among young people.

Experts note that stable population growth in these countries is becoming an increasingly important factor for investment decisions. They foresee a significant increase in infrastructure spending, which has a positive effect on the prospects of the economy. At the same time, China is facing rapid aging and population decline

In addition, India has the youngest population among major economies, which contributes to faster income growth. It is also worth noting that both India and Indonesia are holding national elections this year, which indicates the desire of these countries to become important economic centers.

All these factors create an optimistic mood among market investors, which leads to an increase in stock markets. For example, the Nifty index is already trading at historical highs and is expected to grow for the 9th year in a row, as well as the Jakarta composite index.

Structural reforms aimed at reducing bureaucracy and encouraging foreign investment are also yielding positive results. Robust structural reforms in India and Indonesia are contributing to the creation of sufficient jobs, which helps to take full advantage of the demographic boom.

 

Modi's election victory will support the growth of the rupee

The Indian rupee has gained the status of one of the most stable currencies in Asia this year, mainly due to the significant inflow of foreign currency into bonds denominated in rupees.

This positive trend may continue due to expectations of the election of Prime Minister Narendra Modi to promote economic policies conducive to the growth of the Indian economy. Voting is expected on June 4 after the completion of multi-stage elections in India, which began in April.

The rupee is expecting a significant strengthening in May and may even become the best currency of the year. The rupee is projected to peak at 82 rupees per 1 dollar by the end of 2024. However, risks may arise, including strict currency controls by the Reserve Bank of India in order to ensure the stability of the rupee and protect the country's export competitiveness.

Modi's election victory is seen as a favorable factor for the rupee, given the prosperity of the economy during his previous reign.

Foreign investors have already invested approximately $6 billion in bonds denominated in rupees before including Indian sovereign bonds in the emerging markets index from JPMorgan Chase & Co. in June.
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Apple again became the most expensive company in the world

After the worldwide developers conference last Monday, Apple's plans to integrate artificial intelligence have increased expectations for updates to its new iPhone models. This led to an increase in the company's market capitalization to $3.285 trillion, overtaking Microsoft and returning Apple to the status of the most expensive company in the world.

The market capitalization increased after a three-day increase in the company's shares by 11%. Previously, Apple was in third place in terms of capitalization after NVIDIA Corporation. Apple's stock growth was driven by optimism and investor confidence that the company would benefit from the use of AI. Analysts predict that Microsoft, Apple, and Nvidia will grow in leaps and bounds in the near future.

Meanwhile, Apple's revenue declined 4.3% in the second quarter of the fiscal year, marking the fifth decline in the last six quarters. However, the AI functionality provided by the Apple Intelligence system, according to experts, will create opportunities for a multi-year update cycle by quickly replacing older iPhone models.

Apple also recently announced a $110 billion share buyback plan.
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