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Market News April 15th Financial Breakfast: European Bank hinted that it is not in a hurry to raise interest rates, the dollar continues to strengthen, gold prices fall, and U.S. oil rose nearly 9% this week
April 15th Financial Breakfast: European Bank hinted that it is not in a hurry to raise interest rates, the dollar continues to strengthen, gold prices fall, and U.S. oil rose nearly 9% this week
On April 14, the US dollar index hit a new high of 100.76 in nearly two years, and the euro fell after the European Central Bank kept interest rates unchanged. Lagarde's speech was also seen as a sign of no rush to raise interest rates, which is consistent with the aggressive tightening of monetary policy by the Federal Reserve. efforts are in stark contrast. Spot gold fell slightly to close at $1,973.52 an ounce, with rising U.S. dollar and U.S. bond yields putting pressure on gold prices. U.S. oil rose nearly 9 percent this week, closing at its highest level in nearly two weeks, amid news that the European Union may impose a phased ban on Russian oil imports.
2022-04-15
8778
The dollar index extended gains on Thursday (April 14), with the euro hitting its lowest level since April 2020 at 1.0758, after European Central Bank President Christine Lagarde said there was no clear timetable for when to start raising interest rates. Spot gold rose for two consecutive weeks, up 1.34% this week, as the Ukrainian crisis and rising inflation triggered safe-haven demand to push up gold prices. U.S. oil rose more than 2 percent in late trade, supported by news that European Union officials were drafting a plan to ban Russian oil imports.
On the commodity side, June gold futures on COMEX closed down 0.5%, ending a five-session winning streak before, at $1,974.90 an ounce. WTI May crude oil futures closed up $2.70, or 2.59%, at $106.95 a barrel; Brent June crude oil futures closed up $2.92, or 2.68%, at $111.70 a barrel.
U.S. stocks closed: The Dow Jones index closed down 113.75 points, or 0.33%, to 34450.84 points; the S&P 500 closed down 54.29 points, or 1.22%, to 4392.30 points; the Nasdaq Composite closed down 292.51 points, or 2.14% , reported 13351.08 points.
Many countries and regions are closed on Good Friday, and trading in CME's precious metals, U.S. crude oil and foreign exchange contracts is suspended throughout the day
10:00 a.m. on April 15th, the National Development and Reform Commission press conference to introduce the situation of actively expanding effective investment
U.S. stocks ended lower on Thursday as U.S. bond yields resumed their gains as investors assessed mixed earnings and economic data. Trading hours were shortened this week due to the holiday. All three major stock indexes fell for the week, with U.S. markets closed on Friday for the Good Friday holiday.
Ryan Detrick, chief market strategist at LPL Financial, said it was a combination of ongoing concerns that had seen a mixed earnings season so far, coupled with high inflation and a hawkish Fed, leading to a sell-off ahead of the holiday long weekend.
Rising 10-year U.S. Treasury yields weighed on growth stocks, dragging down the S&P 500 and Nasdaq, with the Dow Jones Industrial Average falling less. Rising yields weighed on higher growth stocks, Detrick said.
Of the 11 major sectors in the S&P 500, technology stocks were the worst performer, falling 2.5%. The first-quarter earnings season is still early, with 34 of the S&P 500 companies reporting results. Analysts now expect S&P 500 earnings to rise 6.3% from a year earlier, down from a forecast of 7.5% at the start of the year.
Spot gold fell slightly on Thursday to close at $1,973.52 an ounce after a stronger dollar and higher U.S. bond yields as investors braced for a U.S. interest rate hike, but safe-haven demand sparked by the Ukraine crisis and rising inflation continued to drive gold prices for the week The line rose 1.34%.
While the world's major central banks are scrambling to contain a surge in inflation, the European Central Bank on Thursday stuck to its plan to taper stimulus this year in a move seen as less aggressive.
Edward Moya, senior analyst at OANDA, said the European Central Bank gave a dovish surprise, which did provide support for the dollar. As a result, gold has been hit hard.
The U.S. dollar rose 0.45 percent, making gold more expensive for buyers of other currencies, while a rise in the yield on the benchmark 10-year U.S. Treasury note also took a toll on gold prices.
Ross Norman, CEO of Metals Daily, pointed out that it was clear that the price of gold on Thursday was adversely affected by the rise in the dollar and U.S. Treasury yields. Gold prices have performed surprisingly well given the impact of the pandemic and lockdown measures to combat it.
The World Gold Council reported earlier this month that global inflows into gold-backed ETFs totaled 269 metric tons, valued at $17 billion, in the first quarter, the highest total quarterly inflows since the third quarter of 2020.
U.S. oil rose more than 2 percent to $106.54 a barrel in late trade, closing at its highest level in nearly two weeks, as investors covered shorts ahead of the long weekend and there was news that the European Union may impose a phased ban on Russian oil imports.
The two major contracts of U.S. oil and Brent oil both recorded weekly gains in the first week of April. For several weeks, prices have been at their most volatile since June 2020.
The New York Times reported that the European Union is moving towards a gradual implementation of the Russian oil ban to give Germany and other countries time to arrange alternative suppliers.
Andrew Lipow of Lipow Oil Associates said a phased implementation of the ban would force European buyers to "find alternative sources, some of which will be met in the short term by releasing strategic oil reserves, but more oil will be required in the future".
The International Energy Agency warned on Wednesday that Russian oil supplies could be cut by 3 million bpd from May due to sanctions or voluntary embargoes.
According to foreign media reports, major global trading companies plan to reduce purchases of crude oil and fuel from Russia's state-owned oil company as early as May 15 to avoid a conflict with EU sanctions on Russia.
In addition, traders adjusted their positions today, with U.S. May crude oil options expiring on Thursday. Industry experts said U.S. oil production forecasts were being revised up despite labor and supply chain constraints, as higher oil prices spurred more drilling and completions.
The euro hit a two-year low against the dollar on Thursday after comments from European Central Bank President Christine Lagarde were seen as a sign of no rush to raise interest rates, in contrast to the Federal Reserve's aggressive efforts to tighten monetary policy.
The dollar extended gains after data showed U.S. retail sales rose strongly in March, boosted by record gasoline prices. The dollar index was last up 0.45% at 100.30, having earlier hit 100.76, its highest since April 2020.
The euro hit $1.0758, its lowest since April 2020, before falling 0.51% to $1.0828 in late trade. Lagarde said there was no clear timetable for when rate hikes would begin, adding that it could be weeks or even months after the end of the stimulus package. When the time comes, we'll deal with interest rates.
The European Central Bank ended its latest meeting on Thursday, saying it would be cautious in withdrawing support measures, without setting a hard timetable. The central bank confirmed plans to cut bond purchases this quarter before ending them sometime in the third quarter.
The euro earlier hit a one-month low against the pound and was last down 0.28% at 0.8277.
Joseph Trevisani, senior analyst at FXStreet.com, said Lagarde's speech was in stark contrast to Fed Chair Powell. They could have used aggressive language, borrowing from Powell. Lagarde does not appear to be planning to do so. She is clearly more concerned about the war in Ukraine and its impact on Europe, perhaps understandably.
In addition to pushing up gasoline prices, the Russia-Ukraine war, now in its second month, has sent global food prices soaring, with Russia and Ukraine both major exporters of commodities such as wheat and sunflower oil.
The battered yen got some respite, recovering slightly from 20-year lows against the dollar. In afternoon trade, the yen was down 0.23% against the dollar at 125.86 yen. More than three-quarters of Japanese companies said the yen's exchange rate had fallen to the point where it was unfavorable for their business, and nearly half expected earnings to take a hit, according to a survey by the agency.
Several other central banks have tightened monetary policy, reinforcing expectations that global interest rates will be higher. On Wednesday, the Bank of Canada and the Reserve Bank of New Zealand both raised their benchmark interest rates by 50 basis points, the largest hike by either central bank in about 20 years. The Bank of Korea surprised markets by raising interest rates and the Monetary Authority of Singapore also tightened policy, pushing the Singapore dollar to its highest since February.
[The European Central Bank keeps the interest rate decision unchanged, confirming to accelerate the withdrawal of the bond purchase program] On Thursday, the European Central Bank announced the latest interest rate decision, maintaining the three major interest rates unchanged. The ECB said rates would rise "for a period of time" after net bond purchases ended. The data reinforced expectations that the asset purchase program should end in the third quarter. If necessary, the ECB will do everything in its power to carry out its mandate. Any rate hikes will be gradual. Bond purchases in the third quarter will be data dependent. If the new crown epidemic worsens, the European Central Bank can restart the emergency anti-epidemic bond purchase program (PEPP). Net purchases under the PEPP can also be resumed if necessary in response to negative COVID-19 related shocks. The ECB plans to execute its regular bond-buying program at a rate of 40 billion euros per month in April, 30 billion euros per month in May and 20 billion euros per month in June. Maturity bonds from the Pandemic Bond Purchase Program will be reinvested until at least the end of 2024. Rates will not be raised until forecasts show inflation is sustainable at 2 percent and underlying price pressures support that target.
[Media: European Central Bank officials are trying to reach a consensus on raising interest rates by 25 basis points in the third quarter] European Central Bank officials are forming a consensus on raising interest rates in the third quarter of 2022, and the rate hike is expected to be 25 basis points for the first time in more than a decade. Earlier on Thursday, ECB officials reiterated plans to end asset purchases in the third quarter, with President Christine Lagarde saying the Russian-Ukrainian war had increased inflation risks and that the ECB was "very concerned about the current uncertainty". Lagarde declined to give an exact end date, saying the exit from bond purchases was a prerequisite for a rate hike, which would be "a week to a few months" after the end of bond purchases.
[Biden: U.S. inflation continues to rise, action needs to be taken to reduce the cost of living] On the 14th local time, U.S. President Biden said in a speech in North Carolina that U.S. inflation continues to rise, and the government urgently needs to take action to reduce the lives of Americans cost. U.S. oil and other commodity prices continued to rise last month due to the conflict between Russia and Ukraine, Biden cited a U.S. Labor Department report. Biden called on Congress to pass an innovation bill as soon as possible to fund domestic manufacturing of semiconductors and other materials. (CCTV News)
[U.S. 30-year mortgage rate hits 5% for the first time since early 2011] Mortgage rates in the United States have soared, reaching 5% for the first time in more than a decade. The average 30-year mortgage rate jumped further from 4.72%, data from Freddie Mac showed on Thursday. The last time the rate hit 5% was in February 2011. Borrowing costs have soared since early 2022, tracking gains in 10-year U.S. Treasury yields. In March, the Federal Reserve raised its benchmark interest rate and signaled further hikes to curb inflation. U.S. inflation rose to 8.5% in March, adding to the Fed's policy tightening pressure. “As Americans face historically high inflation, rising mortgage rates, rising home prices and tight inventory have pushed the cost of home ownership to the most expensive levels in decades,” Freddie Mac chief economist Sam Khater said in a statement.
[The provision coverage ratio of large state-owned banks has room for downward adjustment, and the released funds can accurately drip irrigation into the real economy] With the rapid growth of profits of large state-owned banks last year, in order to "save grain in a good year", the provision coverage ratio of large state-owned banks will appear in 2021. It has generally risen. As of the end of last year, the provision coverage ratio of the six major state-owned banks all exceeded 150%. Among them, the provision coverage ratio of four large banks including Postal Savings Bank, Agricultural Bank, China Construction Bank, and Industrial and Commercial Bank of China was above 200%. The Reserve Bank's provision coverage ratio is as high as 418.61%. This also provides room for large banks to voluntarily lower their provision coverage ratio in the future, and creates the possibility to strengthen their ability to provide credit, which can increase support for small and micro enterprises and individual industrial and commercial households that have been severely affected by the epidemic. (Securities Daily)
[Major projects are intensively unveiled, and trillion-level infrastructure investment is ahead of schedule] According to statistics from Zhongtai Securities, as of April 14, this year, 25 provinces have disclosed relevant plans for local major project investment in 2022. The total planned investment is 12.27 trillion yuan. Calculated on a comparable basis, the year-on-year growth rate was 14.7%, a new high since 2019. On the other hand, capital guarantees have also been followed up, and 3.65 trillion yuan of special bonds have been issued and used early. The agency predicts that the growth rate of infrastructure investment in the first quarter may exceed 10%, and this year's generalized infrastructure investment is expected to increase by 5% to 8%, helping the economy operate within a reasonable range. (China Securities Journal)
On the commodity side, June gold futures on COMEX closed down 0.5%, ending a five-session winning streak before, at $1,974.90 an ounce. WTI May crude oil futures closed up $2.70, or 2.59%, at $106.95 a barrel; Brent June crude oil futures closed up $2.92, or 2.68%, at $111.70 a barrel.
U.S. stocks closed: The Dow Jones index closed down 113.75 points, or 0.33%, to 34450.84 points; the S&P 500 closed down 54.29 points, or 1.22%, to 4392.30 points; the Nasdaq Composite closed down 292.51 points, or 2.14% , reported 13351.08 points.
Friday ahead
Many countries and regions are closed on Good Friday, and trading in CME's precious metals, U.S. crude oil and foreign exchange contracts is suspended throughout the day
10:00 a.m. on April 15th, the National Development and Reform Commission press conference to introduce the situation of actively expanding effective investment
List of major global market conditions
U.S. stocks ended lower on Thursday as U.S. bond yields resumed their gains as investors assessed mixed earnings and economic data. Trading hours were shortened this week due to the holiday. All three major stock indexes fell for the week, with U.S. markets closed on Friday for the Good Friday holiday.
Ryan Detrick, chief market strategist at LPL Financial, said it was a combination of ongoing concerns that had seen a mixed earnings season so far, coupled with high inflation and a hawkish Fed, leading to a sell-off ahead of the holiday long weekend.
Rising 10-year U.S. Treasury yields weighed on growth stocks, dragging down the S&P 500 and Nasdaq, with the Dow Jones Industrial Average falling less. Rising yields weighed on higher growth stocks, Detrick said.
Of the 11 major sectors in the S&P 500, technology stocks were the worst performer, falling 2.5%. The first-quarter earnings season is still early, with 34 of the S&P 500 companies reporting results. Analysts now expect S&P 500 earnings to rise 6.3% from a year earlier, down from a forecast of 7.5% at the start of the year.
Precious Metals and Crude Oil
Spot gold fell slightly on Thursday to close at $1,973.52 an ounce after a stronger dollar and higher U.S. bond yields as investors braced for a U.S. interest rate hike, but safe-haven demand sparked by the Ukraine crisis and rising inflation continued to drive gold prices for the week The line rose 1.34%.
While the world's major central banks are scrambling to contain a surge in inflation, the European Central Bank on Thursday stuck to its plan to taper stimulus this year in a move seen as less aggressive.
Edward Moya, senior analyst at OANDA, said the European Central Bank gave a dovish surprise, which did provide support for the dollar. As a result, gold has been hit hard.
The U.S. dollar rose 0.45 percent, making gold more expensive for buyers of other currencies, while a rise in the yield on the benchmark 10-year U.S. Treasury note also took a toll on gold prices.
Ross Norman, CEO of Metals Daily, pointed out that it was clear that the price of gold on Thursday was adversely affected by the rise in the dollar and U.S. Treasury yields. Gold prices have performed surprisingly well given the impact of the pandemic and lockdown measures to combat it.
The World Gold Council reported earlier this month that global inflows into gold-backed ETFs totaled 269 metric tons, valued at $17 billion, in the first quarter, the highest total quarterly inflows since the third quarter of 2020.
U.S. oil rose more than 2 percent to $106.54 a barrel in late trade, closing at its highest level in nearly two weeks, as investors covered shorts ahead of the long weekend and there was news that the European Union may impose a phased ban on Russian oil imports.
The two major contracts of U.S. oil and Brent oil both recorded weekly gains in the first week of April. For several weeks, prices have been at their most volatile since June 2020.
The New York Times reported that the European Union is moving towards a gradual implementation of the Russian oil ban to give Germany and other countries time to arrange alternative suppliers.
Andrew Lipow of Lipow Oil Associates said a phased implementation of the ban would force European buyers to "find alternative sources, some of which will be met in the short term by releasing strategic oil reserves, but more oil will be required in the future".
The International Energy Agency warned on Wednesday that Russian oil supplies could be cut by 3 million bpd from May due to sanctions or voluntary embargoes.
According to foreign media reports, major global trading companies plan to reduce purchases of crude oil and fuel from Russia's state-owned oil company as early as May 15 to avoid a conflict with EU sanctions on Russia.
In addition, traders adjusted their positions today, with U.S. May crude oil options expiring on Thursday. Industry experts said U.S. oil production forecasts were being revised up despite labor and supply chain constraints, as higher oil prices spurred more drilling and completions.
foreign exchange
The euro hit a two-year low against the dollar on Thursday after comments from European Central Bank President Christine Lagarde were seen as a sign of no rush to raise interest rates, in contrast to the Federal Reserve's aggressive efforts to tighten monetary policy.
The dollar extended gains after data showed U.S. retail sales rose strongly in March, boosted by record gasoline prices. The dollar index was last up 0.45% at 100.30, having earlier hit 100.76, its highest since April 2020.
The euro hit $1.0758, its lowest since April 2020, before falling 0.51% to $1.0828 in late trade. Lagarde said there was no clear timetable for when rate hikes would begin, adding that it could be weeks or even months after the end of the stimulus package. When the time comes, we'll deal with interest rates.
The European Central Bank ended its latest meeting on Thursday, saying it would be cautious in withdrawing support measures, without setting a hard timetable. The central bank confirmed plans to cut bond purchases this quarter before ending them sometime in the third quarter.
The euro earlier hit a one-month low against the pound and was last down 0.28% at 0.8277.
Joseph Trevisani, senior analyst at FXStreet.com, said Lagarde's speech was in stark contrast to Fed Chair Powell. They could have used aggressive language, borrowing from Powell. Lagarde does not appear to be planning to do so. She is clearly more concerned about the war in Ukraine and its impact on Europe, perhaps understandably.
In addition to pushing up gasoline prices, the Russia-Ukraine war, now in its second month, has sent global food prices soaring, with Russia and Ukraine both major exporters of commodities such as wheat and sunflower oil.
The battered yen got some respite, recovering slightly from 20-year lows against the dollar. In afternoon trade, the yen was down 0.23% against the dollar at 125.86 yen. More than three-quarters of Japanese companies said the yen's exchange rate had fallen to the point where it was unfavorable for their business, and nearly half expected earnings to take a hit, according to a survey by the agency.
Several other central banks have tightened monetary policy, reinforcing expectations that global interest rates will be higher. On Wednesday, the Bank of Canada and the Reserve Bank of New Zealand both raised their benchmark interest rates by 50 basis points, the largest hike by either central bank in about 20 years. The Bank of Korea surprised markets by raising interest rates and the Monetary Authority of Singapore also tightened policy, pushing the Singapore dollar to its highest since February.
market news
[The European Central Bank keeps the interest rate decision unchanged, confirming to accelerate the withdrawal of the bond purchase program] On Thursday, the European Central Bank announced the latest interest rate decision, maintaining the three major interest rates unchanged. The ECB said rates would rise "for a period of time" after net bond purchases ended. The data reinforced expectations that the asset purchase program should end in the third quarter. If necessary, the ECB will do everything in its power to carry out its mandate. Any rate hikes will be gradual. Bond purchases in the third quarter will be data dependent. If the new crown epidemic worsens, the European Central Bank can restart the emergency anti-epidemic bond purchase program (PEPP). Net purchases under the PEPP can also be resumed if necessary in response to negative COVID-19 related shocks. The ECB plans to execute its regular bond-buying program at a rate of 40 billion euros per month in April, 30 billion euros per month in May and 20 billion euros per month in June. Maturity bonds from the Pandemic Bond Purchase Program will be reinvested until at least the end of 2024. Rates will not be raised until forecasts show inflation is sustainable at 2 percent and underlying price pressures support that target.
[Media: European Central Bank officials are trying to reach a consensus on raising interest rates by 25 basis points in the third quarter] European Central Bank officials are forming a consensus on raising interest rates in the third quarter of 2022, and the rate hike is expected to be 25 basis points for the first time in more than a decade. Earlier on Thursday, ECB officials reiterated plans to end asset purchases in the third quarter, with President Christine Lagarde saying the Russian-Ukrainian war had increased inflation risks and that the ECB was "very concerned about the current uncertainty". Lagarde declined to give an exact end date, saying the exit from bond purchases was a prerequisite for a rate hike, which would be "a week to a few months" after the end of bond purchases.
[Biden: U.S. inflation continues to rise, action needs to be taken to reduce the cost of living] On the 14th local time, U.S. President Biden said in a speech in North Carolina that U.S. inflation continues to rise, and the government urgently needs to take action to reduce the lives of Americans cost. U.S. oil and other commodity prices continued to rise last month due to the conflict between Russia and Ukraine, Biden cited a U.S. Labor Department report. Biden called on Congress to pass an innovation bill as soon as possible to fund domestic manufacturing of semiconductors and other materials. (CCTV News)
[U.S. 30-year mortgage rate hits 5% for the first time since early 2011] Mortgage rates in the United States have soared, reaching 5% for the first time in more than a decade. The average 30-year mortgage rate jumped further from 4.72%, data from Freddie Mac showed on Thursday. The last time the rate hit 5% was in February 2011. Borrowing costs have soared since early 2022, tracking gains in 10-year U.S. Treasury yields. In March, the Federal Reserve raised its benchmark interest rate and signaled further hikes to curb inflation. U.S. inflation rose to 8.5% in March, adding to the Fed's policy tightening pressure. “As Americans face historically high inflation, rising mortgage rates, rising home prices and tight inventory have pushed the cost of home ownership to the most expensive levels in decades,” Freddie Mac chief economist Sam Khater said in a statement.
[The provision coverage ratio of large state-owned banks has room for downward adjustment, and the released funds can accurately drip irrigation into the real economy] With the rapid growth of profits of large state-owned banks last year, in order to "save grain in a good year", the provision coverage ratio of large state-owned banks will appear in 2021. It has generally risen. As of the end of last year, the provision coverage ratio of the six major state-owned banks all exceeded 150%. Among them, the provision coverage ratio of four large banks including Postal Savings Bank, Agricultural Bank, China Construction Bank, and Industrial and Commercial Bank of China was above 200%. The Reserve Bank's provision coverage ratio is as high as 418.61%. This also provides room for large banks to voluntarily lower their provision coverage ratio in the future, and creates the possibility to strengthen their ability to provide credit, which can increase support for small and micro enterprises and individual industrial and commercial households that have been severely affected by the epidemic. (Securities Daily)
[Major projects are intensively unveiled, and trillion-level infrastructure investment is ahead of schedule] According to statistics from Zhongtai Securities, as of April 14, this year, 25 provinces have disclosed relevant plans for local major project investment in 2022. The total planned investment is 12.27 trillion yuan. Calculated on a comparable basis, the year-on-year growth rate was 14.7%, a new high since 2019. On the other hand, capital guarantees have also been followed up, and 3.65 trillion yuan of special bonds have been issued and used early. The agency predicts that the growth rate of infrastructure investment in the first quarter may exceed 10%, and this year's generalized infrastructure investment is expected to increase by 5% to 8%, helping the economy operate within a reasonable range. (China Securities Journal)
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