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October 10. Gold is trading below $1700 amid a strengthening dollar​​​​​​​

At the beginning of the new trading week, the price of gold shows a steady decline: on Monday, the precious metal quotes fell below the psychological level of $ 1,700. The current price of gold is $1,673 per troy ounce.

Gold prices have been declining for the fourth consecutive session on the back of the strengthening of the US dollar, supported by strong data on the labor market. Friday's Non-Farm payrolls report showed that unemployment in September fell to 3.5% from August's level of 3.7%, although markets did not expect a change in the indicator. The number of people employed in non-agricultural sectors of the economy increased by 263 thousand, while analysts predicted an indicator of 250 thousand.

Such macro statistics reinforced expectations that the US Federal Reserve will continue to tighten monetary policy, which traditionally supports the dollar and restrains the price of gold.

The dollar index reached a more than 7-day peak (113.225), making gold more expensive for holders of other currencies.

Silver for December delivery lost 3.4% in price and fell to $19,538. Palladium prices fell to $2,216 per ounce, platinum fell to $899.

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October 11. The yield on German government bonds has reached its highest in 11 years​​​​​​​

The yield on 10-year German government bonds rose to 2.346% per annum, which was the highest since 2011. The reason for the growth was the statements of German Chancellor Olaf Scholz on the sidelines of the EU summit in Prague.

Scholz expressed support for the joint placement of debt obligations by the countries of the European Union in order to raise funds to help the members of the bloc in the fight against the energy crisis. The funds raised should be distributed between countries in the form of loans, not grants.

Such a position suggests that the German leadership is significantly changing its rhetoric. Previously, Germany resisted the idea of raising funds together with countries that the German authorities consider more wasteful financially.

The change of position came after Scholz was criticized for the announced plan to support the national economy by 200 billion euros due to the energy crisis. Some countries were outraged that this plan is aimed solely at supporting the German economy, without taking into account the interests of other EU countries. And this can cause an imbalance in the block.

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October 17. The EM government bond market faces a crisis​​​​​​​

Analysts suggest that the authorities of countries with developing economies that have been actively borrowing on debt markets during a period of low rates are now facing an increase in debt refinancing costs. Experts fear that some Emerging markets may face a debt crisis similar to the situation in Asia in the 1990-s.

In the current period, the yield of government bonds of a third of the countries included in the EM Sovereign Dollar Debt Index exceeds the yield of US Treasuries by more than 10 percentage points. And this is already a generally accepted indicator of stress in the debt market. For example, the yield of government bonds of Kenya and Egypt exceeds the yield of U.S. government bonds by more than 10 pp, Argentina and Ghana – by more than 20 pp.

Earlier this week, the Finance Minister of Nigeria announced the attempts of the authorities to agree on the extension of the maturity of a number of bonds, stressing that we are not talking about Eurobonds. Some other EM countries intend to default and restructure their debt, as the growing debt burden leads to an outflow of investments and slows down the growth of economies.

A few years ago, many developing countries began to place bonds in local currencies en masse in an attempt to protect themselves from the risks associated with an increase in the cost of debt servicing in the event of a fall in the national currency.

However, over time, they have again increased activity in foreign capital markets against the background of extremely low interest rates in the United States and the eurozone. And in 2020, the volume of placements by developing countries of government bonds in dollars and euros reached a historic high and amounted to $747 billion.

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October 18. Oil quotes are stuck in the range of $91-93 per barrel

For several days now, the oil market has been showing increased volatility in the range of $91-93 per barrel. The current price of Brent crude oil is $92.10 (yesterday's low of $91.40). North American WTI oil is trading near the level of $85.30 per barrel (yesterday's low is $84.30).

Today, the oil market is on the rise against the background of a local weakening of the US dollar, which is getting cheaper due to increased investor appetite for risk. At the same time, concerns about a potential recession in the global economy limit the growth of oil prices.

In addition, the downward pressure on oil prices continues to be exerted by concerns about the tightening of monetary policy of many major central banks of the world, aimed at curbing inflation. At the same time, China is expected to maintain a soft monetary policy to support the economy in the face of restrictions related to the coronavirus.

The market dynamics is also affected by the decision of OPEC+ to reduce oil production. As you know, in early October, the organization agreed to reduce production quotas by 2 million barrels per day, starting in November.

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October 19. Oil started to rise after falling the day before

On Wednesday afternoon, oil prices accelerated their growth after falling to lows for more than 2 weeks the day before. This drop was caused by the news that the US presidential administration intends to sell some of the oil from the country's strategic reserves (15 million barrels) in response to OPEC+ decision to reduce oil production by 2 million barrels per day from November.

The current price of Brent oil is $91.27 per barrel. WTI oil rose to $84.19 per barrel. The day before, Brent fell by 1.7%, and the price of WTI fell by 3.1%.

However, analysts believe that the current local gowth is a temporary phenomenon. The oil market will continue to be under pressure while the US sells off its reserves. It is expected that the American president may make a similar decision repeatedly this winter.

The release of resources is aimed at curbing the rise in fuel prices at gas stations in the United States and for oil in the world as a whole. In total, it is planned to release 180 million barrels of «black gold». At the moment, the US strategic oil reserve is at the lowest level since 1984, which is about 400 million barrels of oil.

At the same time, the potential for growth remains in the oil market amid traders' concern about the supply. The fact is that the EU embargo on energy supplies from Russia comes into force in December, and the G7 countries continue to work on the ceiling of prices for Russian oil. These factors will eventually be able to support oil prices at sufficiently high levels.

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October 20. France, Spain and Portugal will create Green Energy Corridor

French President Emmanuel Macron said at the EU summit in Brussels that France, Spain and Portugal intend to create a «green corridor» that will replace the MidCat gas pipeline and open access to the energy market of the European Union to the countries of the Iberian Peninsula.

The three countries intend to abandon the MidCat project and start working together to create a new gas pipeline that will be able to bring the Iberian peninsula out of isolation and create a green energy corridor between Portugal and Spain. It is also planned that the new gas pipeline will run through France to the rest of Europe.

Macron stressed that the aim of the project is to unite the energy networks of the EU countries and the soonest transition to green energy.

The new «green hydrogen pipeline» will also be able to transport gas needed by the European energy market due to the ongoing energy crisis.

The next meeting of the heads of state will take place on December 8 and 9 in Alicante at the Euromed summit, which will unite 9 Mediterranean EU states. There, France, Spain and Portugal will discuss the timing, investments, cost allocation and the amount of economic resources that will have to be used when creating a new project.

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October 24. The yuan fell to the minimum of the global financial crisis of 2008

On Friday, the Chinese yuan paired with the US dollar collapsed to its lowest level since the global financial crisis of 2008 – the level of 7.2515, despite attempts by state-owned banks to stabilize the market. As you know, the country's state banks sold the dollar on the continental foreign exchange market to prevent a further fall in the yuan.

At the end of the week, the USD/CNY pair strengthened by 0.78%, as the growing dollar continues to push down the currencies of developing countries. In total, the currency pair has grown by 12.3% since the beginning of the year.

Analysts note that the decline of the yuan may continue against the background of the general strengthening of the US currency. Pressure on the yuan is also exerted by a significant difference between the monetary policies of the central banks of both countries: the United States shows no signs of abandoning tough rhetoric regarding rates, while the Chinese authorities are trying to support their economy with the help of soft monetary policy.

It is also worth noting that in an attempt to maintain the stability of its currency during the Communist Party Congress, the Chinese authorities continue to set a higher than expected average yuan exchange rate. Since the opening of the market, the People's Bank of China has set the average dollar-yuan exchange rate at 7.1186 against 7.1188 on Thursday.

Analysts clarify that the high fixing, relative to which the yuan can deviate by no more than 2% up or down, limits the potential for a decline in the Chinese currency. At the average rate on Friday, the range of fluctuations of the USD/CNY pair is 6.9762–7.2610, and today it has already come close to the upper limit of this range.

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Crypto market scores gains. Experts foresee bullish rally​​​​​​​

Early on Wednesday, digital gold edged higher. At the moment of writing, BTC is seen hovering at $20,627.

Early on Wednesday, digital gold edged higher. At the moment of writing, BTC is seen hovering at $20,627.

According to CoinMarketCap, a website tracking the price of digital assets, bitcoin hovered between $20,348 and $19,261 yesterday. Overall, the coin added 5% on Tuesday.

This month, the flagship cryptocurrency used to consolidate in the $18,500–$20,300 range. However, in recent days experts noticed the potential formation of double support in the crypto market. Should bitcoin break through the mark of $20,300 and extend growth, along with noticeable trading volumes, this would be a clear bullish signal for BTC, analysts suggest.

Altcoin market

Ethereum, bitcoin's main rival, went up earlier today as well. At the moment of writing, ETH is seen trading at $1,485.

As for the top 10 cryptocurrencies by market capitalization, all coins, except for XPR, traded in the green zone yesterday, with ether leading the way (+10.66%).

Last week, ETH was also the best performer among the 10 cryptocurrencies by market capitalization, gaining 13.65%. Meanwhile, XRP, which lost 0.42%, was the list's worst performer.

This week, all the top 10 cryptocurrencies by market capitalization are scoring gains. At the same time, the former bearish resistance turned into important support for them. In light of those facts, many analysts forecast a bullish rally for popular coins in the crypto market in the next four months.

According to the world's largest virtual asset data aggregator, CoinGecko, over the past 24 hours, Aptos showed the worst performance, losing 4.98%, while the Toncoin coin showed the best results, gaining 23.10%, among the top 100 digital assets by market capitalization.

Last week, Axie Infinity (-16.19%) was the worst performer among the top 100 strongest digital assets, while Toncoin (+43.98%) showed the best performance.

Based on the CoinGecko data, the total crypto market capitalization exceeded $1 trillion on Wednesday morning. Yesterday, it grew by about 5%.

Since last November, when the daily crypto market capitalization was above $3 trillion a day ($3.08 trillion), it has more than tripled.

At the same time, the total trading volume of virtual coins over the past 24 hours reached $77.3 billion, with BTC (38.1%) and ETH (17.6%) seen as the main contributors.

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De-dollarization or de-eurozation? Analysts consider both scenarios possible

Analysts have been discussing the possible ditch of the US dollar in foreign settlements for a long time. However, now, they do not exclude a similar scenario for the euro. Analysts are mulling over what could lead to such outcomes. They fear that in the near future the European currency will face the same challenges as the Us dollar. Currently, many countries are trying to replace the US dollar in mutual settlements.

Analysts pinpoint that the euro has more disadvantages than advantages. Settlements in the euro and its support are getting more expensive. According to the Eurobarometer, the euro is popular with 60% of the population. However, now many EU citizens are skeptical about the future of the euro. Some economists reckon that some EU states may leave the eurozone and ditch the euro.

Earlier, economists suggested a possible replacement of the US currency by many countries. However, the euro is now facing such a risk as well. De-eurozation looks quite feasible. However, the situation in the global financial market is unlikely to change in the near future, economists believe.

Currently, the authorities of many countries are trying to diversify their foreign exchange reserves to reduce dependence on the greenback. However, a sharp decline in the dollar share of international reserves looks unlikely as roughly 40% of the world's transactions are done in dollars.

The use of national currencies in international settlements spurs their demand and reduces dependence on the Fed's monetary policy. At the same time, the current geopolitical turmoil is fueling a rally of the US dollar as many countries prefer to keep the US currency in their reserves.

At the start of the week, the euro was trading almost at the same levels. On October 31, the EUR/USD pair was fluctuating near 0.9952, slightly below the previous pivot level of 0.9963.

Investors are now awaiting the release of the euro area's important macroeconomic report, namely GDP for the third quarter of 2022. According to preliminary estimates, from July to September, the economy declined slightly to 2.1%. In the second quarter of 2022, this figure totaled 4.1%.

The greenback has been rising for some time thanks to the Fed's hawkish stance. On November 2, the Bank of England and the Fed will hold their meetings. The Fed is widely expected to raise the key rate by 75 basis points to the range of 3.75-4%.

The Fed's key rate decision may significantly impact market sentiment. Some analysts believe that the regulator could switch to less aggressive tightening despite a 75 basis point rate hike. However, other analysts are certain that the regulator will hike the rate by 75 basis points at the next meeting scheduled for December 14.

At the February meeting in 2023, the watchdog is expected to increase the key rate by 25 basis points to 4.50-4.75%. Analysts suppose that three will be more 25 basis point rate increases next year. Such a scenario is bearish for the US dollar. The euro is also unable to regain long-term rise. Thus, it is recommended to buy the EUR/USD pair with a long-term target level above 1.0500.

Many economists are afraid that sentiment will become more bearish on the US currency. Last week, large traders initiated a sell-off of the greenback. As a result, the number of short positions during the week increased by 21%. If there are no positive fundamental favors, the greenback may drop lower.

Nevertheless, the US dollar remains the most popular currency, with close to 90% of all currency trades having the dollar as one leg of the transaction. It has been rallying for some time amid the Fed's aggressive tightening. In the last few months, the US dollar has reached multi-year highs against the euro, the pound sterling, the yen, and the yuan. It also took advantage of a recession in the eurozone as investors got rid of the euro in favor of the US dollar.

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November FOMC meeting: what to expect and how to act

Today, what many are expecting will not happen: it is unlikely that the Federal Reserve will announce a change in the future course of its policy, so it is possible that we may repeat the summer scenario, when everyone was about to expect one thing from the FOMC, but everything turned out completely otherwise. Let's figure out what to expect and how best to act today.

Most likely, the US central bank will hold a fourth super-scale interest rate hike, and Fed Chairman Jerome Powell will repeat his pledges to fight inflation. But whether it will open the door for a possible rate cut in the future is a big question. The Federal Open Market Committee is expected to raise rates by 75 basis points on Wednesday, to a range of 3.75% to 4%, the highest level since 2008. By doing so, the central bank will continue its most aggressive tightening campaign since the 1980s.

During his press conference, Powell may emphasize that the Fed remains steadfast in the idea of fighting inflation, leaving open options for further aggressive rate hikes at a meeting in mid-December this year. However, the markets are already divided into two camps: some expect another rate hike of 0.75%, while others believe that the Fed will slow down and raise them by only 50 basis points.

As I noted above, Powell's July speech was misinterpreted by investors as a short-term policy reversal, in response to which the markets rallied, which softened financial conditions and reflected on bond yields. This made it more difficult for the Fed to contain prices, which forced Powell to return to a tough tone of statements again. With the latest CPI data coming out, the Fed needs to continue to maintain tight financial conditions to keep the economy cool, only to help stop price increases in the near future.

Another important point is that the expected move from the Fed today will take place less than a week before the midterm elections in the United States, where the main accusations from Republicans are based precisely on high inflation, which was allowed by the Democratic Party and US President Joe Biden. Last week, two Democratic senators urged Powell not to cause unnecessary pain to the economy by raising rates too high.

As for the statements made today after the meeting, the dollar's succeeding direction will depend on them. If promises of a "further increase" in interest rates persist, the US dollar will strengthen its position against the euro and the British pound, as well as other risky assets. If the promises are "slightly changed", for example, in order to show that the Fed is getting closer to the economy, then this may have a positive impact on stock markets and risky assets, which will pull up the euro and the British pound.

Most likely, the Fed will recall its plans to reduce its huge balance sheet. Economists predict that the balance will reach $8.5 trillion by the end of the year before dropping to $6.7 trillion in December 2024.

As for the technical picture of EURUSD, the bears actively counterattacked, which led to a new wave of decline. For growth, it is necessary to return the pair above 0.9900 and 0.9950, which will spur the trading instrument to growth towards 1.0000 and 1.0040. However, the upward prospects will depend entirely on the further reaction of buyers of risky assets to the Fed meeting. The breakthrough of parity has taken place, which, for now, allows us to keep the market at the mercy of the bears. An exit below 0.9850 will increase the pressure on the trading instrument and push the euro to a low of 0.9820, which will only aggravate the position of buyers of risky assets in the market. Having missed 0.9820, it will be possible to wait for new lows around 0.9780 and 0.9750.

As for the technical picture of the GBPUSD, although the pound is being corrected, it has already reached quite important levels. Now the bulls are focused on defending the support at 1.1500 and breaking through the resistance at 1.1550, limiting the pair's growth potential. Only a break of 1.1550 will return prospects for recovery to the area of 1.1610 and 1.1690, after which it will be possible to speak of a sharper upward spurt of the pound, to the area of 1.1730 and 1.1780. We can talk about the trading instrument being under pressure after the bears take control of 1.1500. This will deal a blow to the bulls' positions and completely cancel out the short-term prospects of the bull market. A break of 1.1500 will push the GBPUSD back towards 1.1440 and 1.1345.

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Bullish sentiment in gold is growing​​​​​​​

Gold's bounce off a two-year low, followed by a nearly 3% gain on Friday, is creating solid bullish momentum among Wall Street analysts; however, some also point out that the precious metal still has some work to do to reverse the months-long downward trend.

The latest survey shows that market sentiment continues to improve and most market analysts expect prices to rise in the near future. Retail investors are also looking positively.

Bullish sentiment has been on the rise all week after gold prices ended October with their seventh straight monthly drop, the longest losing streak in 50 years.

Rising bond yields and the US dollar, which is at its highest level in 20 years, remain critical headwinds for gold; however, some analysts note that growing fears of a recession are driving demand for gold as a safe-haven asset.

Ole Hansen, head of commodity strategy at Saxo Bank, said the US recession would force the Federal Reserve to end its tightening cycle before it reaches its 2% inflation target. He added that a stagflationary environment of low economic growth and high inflation would be bullish for gold.

However, in anticipation that gold prices will have enough momentum to rise, a return to $1,680 will simply return the market to neutral territory.

Christopher Vecchio, senior market analyst at DailyFX.com, said he is neutral on gold as he would also like to see an initial push above $1,680 leading to $1,730.

Last week, 20 market professionals took part in the Wall Street survey. Ten analysts, or 50%, said they are optimistic this week. Two analysts, or 10%, said they were bearish. Eight analysts, or 40%, said they were neutral about the precious metal.

As for retail, 520 respondents took part in online surveys. A total of 240 voters, or 46%, called for an increase in the price of gold. Another 169, or 33%, predicted a fall in prices. While the remaining 111 voters, or 21%, were in favor of a side market.

Friday's rally helped gold prices end the week positively.

Problems in the labor market adds to the recession fears. On Friday, the Bureau of Labor Statistics said 261,000 jobs were created in October, exceeding all expectations. However, some analysts believe that if you delve into the essence, you can see a growing weakness.

Along with rising bullish fundamentals for gold, many analysts note that the technical outlook has turned positive as well.

"Gold had been building a technical base above $1,620 support and appears to be starting to launch up off of there," said Colin Cheshinsky, chief market strategist at SIA Wealth Management.

He added that bond yields remain well above 4%, which would be a deterrent for gold. And the Fed continues to raise interest rates, and in these conditions, gold's rally may turn towards sales.

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November 10. Amazon's market value has fallen below $1 trillion

Amazon became the first public company to lose $1 trillion in market value. On Wednesday, the company's shares fell 4.3% to $86.14, bringing its market value now to $879 billion. For comparison, back in July 2021, it was almost $1.9 trillion.

Analysts note that such a decline is almost equivalent to the loss of the market value of Google's parent company Alphabet, which now stands at about $1.13 trillion.

In 2022, Amazon shares lost about 48% of their value. The company's market value fell below the $1 trillion mark on November 1, a few days after the publication of the third quarter report and the forecast of the slowest growth in the fourth quarter in history.

Experts note that not only Amazon has suffered losses: due to rising inflation and other macroeconomic shocks, 5 other leading American technology companies have lost almost $4 trillion of their market value this year. The reason for this, analysts call the impoverishment of people's budgets, still high inflation and rising energy costs.

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November 14. The oil market is growing at the beginning of a new trading week

Oil prices have been showing growth for the third consecutive session amid expectations of demand growth in China as a result of changes in the policy of the country's authorities to combat coronavirus, as well as the introduction of new measures to support the economy.

As it became known, Beijing announced the reduction of mass testing of people for Covid-19, as well as the dissolution of «quarantine camps». The Chinese authorities have announced that they are planning further changes, thanks to which covid restrictions will become more focused, but not soft. Thus, China's adjustment of the «zero tolerance» for coronavirus has given a powerful incentive for the growth of the oil market.

The current price of Brent oil is $96.70 per barrel. North American WTI oil is trading near the level of $89.60 per barrel.

Analysts note that the increase in oil consumption by China may coincide with a reduction in supply on the market (due to the upcoming entry into force of the European embargo on the import of Russian oil and a reduction in OPEC+ production).

Earlier, US Treasury Secretary Janet Yellen said that the entry into force of the European embargo on the purchase of oil in Russia on December 5 is likely to force Moscow to sell some oil at a price not exceeding the ceiling set by the US and its allies if Russia wants to avoid a significant reduction in oil exports.

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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.

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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%.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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January 17. The price of gas in the EU has dropped to $600/thousand cubic meters

The cost of gas in Europe fell below the level of $600 per thousand cubic meters for the first time since the end of August 2021, against the background of a warm winter and the temperature norm approaching optimal values.

The contract with the delivery «a day ahead» at the TTF hub in the Netherlands dropped to $590 per thousand cubic meters. February futures – up to $615.

Analysts note that the warm weather in October, November and January, as well as cost-saving measures, have led to the fact that at the moment the level of gas reserves in underground gas storage facilities (UGS) is the highest in the history of observations. And this strengthens the confidence of the authorities in the safe passage of winter.

According to Gas Infrastructure Europe (GIE) data from January 15, Europe's UGS are 81.49% full. In addition, gas quotes are affected by high wind power generation rates.

At the same time, Asian quotes remain significantly higher than European ones. In particular, the February futures on the JKM Platts index (Japan Korea Marker, reflecting the spot market value of goods shipped to Japan, South Korea, China and Taiwan) is located at $957.

Recall that on December 19, 2022, the EU countries agreed on a ceiling of gas prices in the amount of 180 euros per 1 MWh, (or $ 1975 per 1000 cubic meters). This price limit will take effect from February 15. The ceiling will be activated if the price of gas for TTF exceeds the agreed mark, and the spread to the price of liquefied natural gas in the EU will be more than 35 euros per 1 MWh. It is worth noting that the price ceiling will not apply to over-the-counter transactions.

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January 19. The share of the pound in international settlements fell to a June low​​​​​​​

According to the SWIFT international system, the share of the pound sterling in international settlements by the end of December fell to 6.08%, which was the lowest value since June.

During the month, the British currency lost 1.01 percentage points, while retaining third place in the list of the most popular settlement currencies. The last time when the value was much less than the current one, it was noted in June: then the pound accounted for 5.96% of international settlements.

Analysts note that the dollar and the euro have strengthened their positions in the rating of currencies – they took first and second places with a share of 41.89% and 36.34%, respectively. The «American» for the month grew by 0.51 percentage points, and the «European» — by 0.22 points.

The Japanese yen is still in fourth place at the end of December, the share of which increased by 0.34 percentage points to 2.88% over the month.

The Chinese yuan closes the top five with a share of 2.15% and a decrease of 0.22 percentage points over the month.

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January 23. Retail sales in Britain showed a record drop since 1997

According to the UK Bureau of National Statistics, retail sales in December 2022 decreased by 5.8% compared to the same period in 2021. This was a record drop in the entire history of observations since 1997.

According to the ONS, retail sales in Britain have declined for the second month in a row. In December, they unexpectedly fell by 1%, which is twice as much as the 0.5% predicted by analysts. In November, the drop was also 0.5%.

The State Bureau also reported that the sales volumes recorded in December were 1.7% less than in February 2020 before the outbreak of the coronavirus pandemic. Total retail sales fell by 3% between 2021 and 2022.

Analysts note that after the start of the special operation of the Russian Federation in Ukraine, the West increased sanctions pressure on Russia. As a result, the disruption of logistics chains has led to an increase in fuel and food prices in Europe and the United States. In the UK itself, the rising cost of living has hit millions of households.

Recall that the Bank of England raised the base interest rate by 50 basis points – from 3% to 3.5%. The regulator also announced the beginning of a recession in the country, which will last the whole of 2023 and the first half of 2024. Annual inflation in the UK at the end of December was 10.5%.

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January 25. Microsoft shares fell amid the release of a weak report

Microsoft shares jumped 5.26% to $254.79 in postmarket trading. However, then the dynamics changed, and according to the results of the postmarket, the IT giant's securities fell by 1.02%, to $234.64.

On Tuesday, Microsoft released its financial report for the second fiscal quarter, which ended in December 2022. The company reported a 7% decrease in adjusted net profit to $17.4 billion. Earnings per share (EPS) fell 6% to $2.32. At the same time, analysts predicted EPS at $2.29.

Microsoft's total revenue grew by 2% and reached $52.75 billion, while Wall Street forecast $52.94 billion. This was the lowest increase in quarterly revenue since 2016.

Experts also note that Microsoft is increasingly becoming cloud-based. The share of various kinds of cloud services already accounts for 40% of revenue and more than 40% of operating profit. At the same time, the corporation began to earn less in other segments. Thus, revenues from PC products, including the Microsoft Windows operating system and Office software, decreased by 19% to $14.2 billion.

The corporation also gave a forecast that disappointed investors: it is expected that in the third fiscal quarter revenue will be from $50.5 billion to $51.5 billion, which is about 3% more than a year earlier. Analysts predicted that revenue in the current quarter would be $52.43 billion.

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January 26. Brent crude oil exceeded the level of $87 per barrel

On Thursday, the oil market shows steady growth: Brent quotes rose to the level of $87.50 per barrel. The North American grade of WTI oil is trading today near the level of $81.50 per barrel.

Traders continue to evaluate data on fuel stocks in the United States. According to the report of the Ministry of Energy, commercial oil reserves increased by 533 thousand barrels last week. The growth of reserves was recorded for the fifth week in a row.

Gasoline inventories increased by 1.76 million barrels, while distillate inventories decreased by 507 thousand barrels. Analysts predicted an increase in oil reserves by 1.5 million barrels, an increase in gasoline reserves by 1.5 million barrels and a drop in distillate reserves by 1.6 million barrels.

Experts note that the data of the Ministry of Energy reflected what the market has been putting into quotes in recent weeks: the growing premium of Brent compared to WTI since the end of December leads to an increase in exports, which limits the growth of stocks, despite the weak workload of American refineries.

Investors are also assessing the risks of a recession in the global economy and the prospects for fuel demand in China. Fears of a recession and the weakening of hopes for a «soft landing» for the economy remain negative factors for the market. At the same time, analysts expect that optimism about a sharp recovery in demand in China will support oil quotes in the near future.

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January 27. Central banks are buying gold at the fastest pace in half a century

According to a report by economists of the International Monetary Fund and the University of California at Berkeley, gold not only did not leave the international reserve currency, but also significantly increased its performance, as the gold reserves of the world's central banks increased after the global financial crisis of 2008-2009.

Experts note that in the third quarter of 2022, leading central banks bought more gold than in any other quarter for 55 years. The main buyers at the same time were banks of developing countries, such as Russia, China, India, Turkey, Argentina, Hungary and Belarus.

Among the main reasons for the increase in purchases, analysts note the popularity of gold as a traditional and safe means of saving at a time when a number of countries are subject to financial sanctions.

An interesting fact is that Russia, Iran and other countries that are subject to US sanctions can now combine blockchain technologies with gold to launch a digital currency that can compete with the dollar. Blockchain will allow these countries to make transactions with gold without actually redirecting coins or bullion.

Moreover, gold today is the only significant asset that is not controlled by any country and that cannot be forged. It is also the only asset that largely guarantees financial confidentiality.

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January 30. The main economic events of the day: January 30, 2023

At the end of last week, the dollar managed to finish trading in positive territory, and its DXY index showed a modest increase of about 20 points. Last week, which was the last full trading week of the month, turned out to be extremely volatile and saturated with the publication of important macro statistics.

The current week promises to be no less interesting: meetings of the three largest world central banks (Fed, Bank of England, ECB) are expected at once, at which decisions on rates will be made. Market participants expect an interest rate increase of 0.50% from the ECB and the Bank of England, but only 0.25% from the Fed.

The week will end with the publication of key data from the US labor market: the US Department of Labor will present a monthly Non-Farm Payrolls report with data for January.

The main and only event of Monday, January 30, will be the publication of preliminary data on German GDP for the 4th quarter. Since the German economy is the locomotive of the entire European economy, a high value of the GDP indicator is considered a positive factor for EUR, and a low one is considered a negative factor.

Analysts predict that German GDP growth in the 4th quarter of 2022 amounted to 0%, and in annual terms – 0.8%. The previous values were marked at the levels of 0.4% and 1.2%, respectively. The data is better than the forecast may strengthen the euro in the short term.

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February 1. Experts predict an increase in ECB rates by 50 bps

Tomorrow, February 2, the first meeting of the European Central Bank in 2023 on the rate will be held. Market participants are confident that the ECB will raise key interest rates by 50 basis points, to the highest since 2008.

If the market forecasts come true, the base interest rate on loans will be raised to 3%, the deposit rate to 2.5%, and the rate on margin loans to 3.25%. At the previous meeting, the ECB increased all three rates by 50 bps. In total, they were raised by 250 bps in 2022.

Following the results of the December meeting, the head of the central bank, Christine Lagarde, said that the regulator intends to continue raising rates at a rate of 50 bps, and already in January, some representatives of the Central Bank confirmed the relevance of these plans. Now the main question for investors is whether the ECB will continue to increase rates by 50 bps in March, or will consider it necessary to slow down the pace of their increase.

It is worth noting that the European regulator usually makes a decision on rates not in advance, but directly at each meeting, taking into account the emerging data.

Today, data on inflation in the eurozone were published, according to which the growth rate of consumer prices in January slowed significantly – to 8.5% in annual terms (from 9.2% in December). This indicator has become the lowest since May last year, but it still significantly exceeds the ECB's 2% target.

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February 6. Oil has stabilized after a sharp drop last week

At the end of last week, oil prices showed a sharp drop from the level of $84 per barrel to $79.70. On Monday, Brent managed to stabilize, settling within the narrow sideways range of $80.00-$80.30 per barrel.

North American WTI oil shows similar dynamics: the current quote of the asset is $73.60 per barrel. Last Friday, WTI was trading at $77.75. At the end of last week, Brent fell by 7.5%, WTI – by 7.9%.

Pressure on the market was exerted by the weakening of investor optimism about the growth rate of demand in China after the lifting of anti-bullying restrictions, as well as strong data on the labor market of the United States. According to the report of the US Department of Labor, the number of people employed in the non-agricultural sector increased by 517 thousand, which is significantly higher than the forecast of 187 thousand and December growth of 260 thousand.

At the same time, the unemployment rate fell to the lowest since 1969 (3.4%). Data from the US Ministry of Labor showed that the Federal Reserve System still has room for maneuver in terms of tightening monetary policy.

Additional pressure on oil quotes was exerted by the statement of the head of the International Energy Agency that the economic recovery in China after the rejection of strict quarantine measures may be more powerful than expected. According to the IEA forecast, the Chinese economy will account for about half of the growth in oil demand this year.

It is also worth recalling that on February 5, the decision of the European Union and the G7 to impose an embargo on the import of petroleum products from Russia came into force. Market participants are closely monitoring the consequences of these measures.

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March 1. Oil began to decline on signals of rising stocks in the US

On the first day of March, oil quotes began to decline after the release of data from the American Petroleum Institute (API) on another increase in fuel reserves in the United States.

The price of Brent crude oil fell from the level of $84.10 to $82.70 per barrel. North American WTI oil shows similar dynamics: a decline to $76.20 after yesterday's growth to $77.65 per barrel.

According to API statistics, crude oil inventories in the United States increased by 6.2 million barrels last week. Today, we should pay attention to similar data from the US Department of Energy. Analysts assume that the official report will indicate an increase in reserves by about 500 thousand barrels.

Yesterday, oil showed strengthening amid optimism about the recovery of the Chinese economy. In particular, the Purchasing managers' Index (PMI) in the processing industry of China rose in February to 52.6 points (from 50.1 points a month earlier), reaching a record high since 2012. Analysts on average expected a more moderate increase, up to 50.5 points.

The PMI of the service sector in February rose to 56.3 points from 54.4 points in January. The indicator has updated the maximum since March 2021.

February 28. The IMF refused to ban cryptocurrencies

The International Monetary Fund intends to abandon the idea of a complete ban on cryptocurrencies. This was stated by the Managing Director of the IMF Kristalina Georgieva during her speech at the meeting of G20 finance ministers in Bangalore, India.

Instead of a ban, the fund plans to differentiate and regulate crypto assets. «We are in favor of regulating the world of digital money, and this is a top priority, despite the fact that there is still a lot of confusion in the classification of digital money,» Georgieva said.

To date, the IMF's first goal is to distinguish between government-backed digital currencies of central banks and publicly issued crypto assets and stablecoins.

The head of the fund also stated that fully secured stablecoins create a fairly good space for the economy, and unsecured crypto assets are speculative and high-risk assets that require more regulation. The IMF still believes that crypto assets cannot be legal tender, since they are not secured by anything.

Moreover, if states fail to develop a mechanism to combat money laundering through cryptocurrencies and protect investors, the IMF does not rule out a complete ban on the use of an innovative tool in the global economy.

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March 6. Gold is declining in anticipation of the speech of the Fed’s head

On Monday, gold prices are mostly declining, moving away from the maximum in 2.5 weeks. Pressure on the precious metal is exerted by expectations of the speech of the head of the US Federal Reserve System Jerome Powell, which will take place later this week. Market participants hope to clarify the prospects of the central bank's monetary policy.

The current quote of gold paired with the dollar is $1856.45. During the day, the asset fell from the level of $1863 to $1854 per troy ounce. At the same time, the dollar index increased by 0.1%, making dollar-denominated gold more expensive for holders of other currencies.

In addition to Powell's speech, investors are waiting for Friday's data on the US labor market. At the end of the week, the monthly Non-Farm Payrolls report on the number of new jobs in the non-agricultural sector will be published. A weaker than expected indicator will indicate that the US Federal Reserve rate will not rise too rapidly, and this will support gold.

Spot silver prices declined to the level of $21.17, recovering during the day to the current level of $21.23 per ounce. Platinum fell by 1% to $968.09, and palladium fell in price by 1.8% to $1,426 per ounce.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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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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.

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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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Paris lost the title of Europe's largest stock market to London

Political turmoil in France has led to London once again becoming Europe's largest stock market, overtaking Paris.

President Emmanuel Macron's surprise announcement of early elections sparked a wave of unrest, leading to the loss of about $258 billion in market capitalization of French companies last week.

The largest French banks such as Societe Generale, BNP Paribas and Credit Agricole, which are significant holders of government debt, have lost more than 10% of their value. As a result, the total share price of French companies now stands at about $3.13 trillion, slightly behind the British with $3.18 trillion.

The CAC 40 index, which reached record highs a month ago, has now returned to the levels of the beginning of the year. At the same time, the FTSE 100 index in the UK reached record highs due to the growth of shares of export-oriented companies such as Shell and Unilever. Over the past three months, Paris has lagged significantly behind the Euro Stoxx 50 index, while shares of companies such as Rolls-Royce Holdings have contributed to London's growth.

Globally, the UK is now the sixth largest stock market.
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The Bank of England left the rate at 5.25% per annum

The Bank of England kept the base interest rate at 5.25% per annum at the end of the June meeting, according to the British Central Bank.

The decision coincided with the forecasts of the market and analysts. Seven of the nine members of the Monetary Policy Committee (MPC) voted to keep the rate, while Matchmakers Dingra and Dave Ramsden proposed lowering it by 25 basis points.

Most experts predicted that the regulator would make just such a decision, despite the fact that inflation in May fell to the 2% target for the first time since 2021.

The Monetary Policy Committee of the Bank of England has left the rate unchanged for seven consecutive meetings, maintaining it at its highest level in the last 16 years. The market expects that the regulator will start lowering the rate no earlier than November.
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The EU bans its companies from using the Russian payment system

As part of the 14th package of anti-Russian sanctions, the European Union banned its companies operating outside the Russian Federation from using the Bank of Russia's Financial Messaging System (SPFS).

SPFS, the Russian equivalent of SWIFT, provides the transmission of financial messages both inside and outside Russia. The use of SWIFT within the Russian Federation was banned by the Central Bank of the Russian Federation in October 2023.

In a statement, the EU Council said: «Today's package significantly strengthens our financial sanctions by banning EU banks operating outside Russia from using the SPFS.» This also allows the EU to compile a list of non-Russian banks of third countries connected to the SPFS – these banks will be prohibited from doing business with EU operators.

In addition, the EU has imposed a ban on transactions with banks and suppliers of crypto assets in Russia and third countries that facilitate transactions supporting the Russian military-industrial base.

Recall that the SPFS was created in response to the first wave of anti-Russian sanctions in 2014. By the end of 2023, 556 organizations had become users of the SPFS, of which more than a quarter (159) non-residents from 20 countries made up the list. The Central Bank previously published a list of SPFS participants on its website, but hid it in April 2022 after a new wave of sanctions affected the largest Russian banks.
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The Central Bank of Sweden has kept the rate at 3.75% and expects 2-3 reductions in the second half of the year

The Central Bank of Sweden (Riksbank) kept its key interest rate at 3.75% per annum at its meeting on Thursday. This decision coincided with analysts' expectations.

It is noteworthy that in May, the regulator lowered the rate for the first time in eight years.

Riksbank noted that inflation is approaching the target 2%, and long-term inflation expectations are stabilizing. There is also a moderate increase in salaries.

The regulator’s management plans, while maintaining the current trajectory of inflation, to reduce the rate two or three times in the second half of the year.
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Bitcoin rises on the news of the assassination attempt on Trump

The bitcoin exchange rate is rising on Monday – market participants continue to evaluate the news about the assassination attempt on Donald Trump that occurred on Saturday.

According to CoinDesk, the current quote of the crypto asset is $62,603.50. Last Friday, the BTC/USD pair was trading near the level of $57 thousand. Overall, despite the 6.4% loss over the last month, bitcoin has grown by about 50% since the beginning of the year.

Donald Trump was injured at a campaign rally in Pennsylvania, but later said he felt fine. Analysts believe that the assassination attempt could increase Trump's chances of winning the election.

«Trump is considered a supporter of cryptocurrency, and there is an opinion that his position in the election race has strengthened. Traders are looking for assets that will benefit if Trump returns to power,» said Dan Coatsworth, an investment analyst at AJ Bell brokerage.
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The growth of public debt in the world's largest economies worries financial markets

The victory of the left-wing coalition in the French elections forced investors to pay attention to the country's financial problems. The budget deficit remains high at 5.5% of GDP, and the EU forecasts debt growth to 139% of GDP by 2034.

In the United States, the national debt is expected to grow from 97% to 122% by 2034. Donald Trump's popularity on the eve of the election is also worrying investors. They fear that his victory, especially under a Republican Congress, could lead to an increase in budget deficits and inflation.

Italy is facing EU disciplinary measures due to a budget deficit of 7.4%, which is the highest in the EU.

In the UK, the 2022 tax cuts caused the pound sterling and government bond prices to fall, forcing the central bank to intervene. The new Labour government, promising economic growth under tight control, is facing the problem of public debt, which is close to 100% of GDP.

Japan's national debt is more than twice the size of its economy – 261% of GDP. However, the bulk of the debt belongs to domestic investors, which reduces the risk of massive capital outflows.
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The price of gold has approached $2,450

Gold prices rose in Asian trading on Monday, playing back some of the decline seen during most of July.

The price increase is due to expectations of a reduction in interest rates from the Federal Reserve System at the upcoming meeting. US inflation data released on Friday showed a slight slowdown, which strengthens the Fed's confidence in the possibility of lowering rates. The weakness of the dollar caused by these data also contributed to the rise in gold prices, making it more attractive to investors using other currencies.

Spot gold rose 0.4% to $2.395.31 per ounce, while futures for gold with a December maturity rose 0.5% to $2.449.2 per ounce. Traders are almost completely confident of a 25 basis point rate cut in September, which favours gold, as it reduces the opportunity costs of investing in it.

Other precious metals rose along with gold: platinum futures rose 0.8% to $953.35 per ounce, and silver futures rose 0.8% to $28,242 per ounce.

Copper also showed gains on Monday after heavy losses over the past month. The growth was triggered by expectations of new signals from China, the main importer of copper.
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