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Market News Financial Breakfast on May 31: Both supply and demand are positive, Brent Oil has overcome the 120 mark in Qilianyang, the US dollar has fallen continuously, and the price of gold has been volatile
Financial Breakfast on May 31: Both supply and demand are positive, Brent Oil has overcome the 120 mark in Qilianyang, the US dollar has fallen continuously, and the price of gold has been volatile
Oil prices are also supported by a continued weakening of the U.S. dollar as Asia eases coronavirus lockdowns, Europe and the U.S. usher in the peak summer travel season, demand is expected to improve, and traders digest expectations that the European Union will eventually agree on a ban on Russian oil imports. Brent crude oil broke through the 120 integer mark, reaching a maximum of 122.01 US dollars per barrel. The U.S. dollar index hit a low of 101.29 on Monday, the lowest since April 26. The improvement in global market risk appetite suppressed the safe-haven demand for the U.S. dollar, and the market’s expectations for the Federal Reserve to suspend interest rate hikes in September increased.
2022-05-31
7136
At the beginning of the Asian market on Tuesday (May 31), U.S. crude oil continued its upward trend and once refreshed the high since March 10 to $117.82 per barrel. Due to the relaxation of epidemic control in Asia, Europe and the United States ushered in the peak summer travel period, and demand is expected The improvement and traders priced in expectations that the European Union would eventually agree on a ban on Russian oil imports, continued to weaken the dollar also provided support for oil prices. Brent crude oil broke through the 120 integer mark, reaching a maximum of 122.01 US dollars per barrel. The U.S. dollar index hit a low of 101.29 on Monday, the lowest since April 26. The improvement in global market risk appetite has suppressed the safe-haven demand for the U.S. dollar, and the market has raised expectations for the Federal Reserve to suspend interest rate hikes in September. Spot gold fluctuated within a narrow range in the 1848-1864 area on Monday, and is currently trading around 1852.63, but it is necessary to pay attention to the suppression of safe-haven demand for gold due to rising global stock markets.
Commodities closed, U.S. COMEX gold futures rose 0.04% to $1,858. July Brent crude, which expires on Tuesday, settled up $2.24, or 1.9%, at $121.67 a barrel. U.S. crude for July futures rose 1.8% to $117.17 a barrel, with no delivery due for the holiday.
U.S. stocks were closed on Monday for the Memorial Day holiday.
European shares hit their highest level in nearly a month on Monday, as optimism buoyed by easing coronavirus lockdowns in Asia and adding fresh stimulus.
The pan-European STOXX 600 index rose 0.6% to 447.79, its highest level since early May, with luxury goods shares providing the biggest boost due to strong demand for luxury goods in China.
"Everyone breathes a sigh of relief ... the strict lockdowns will be eased, especially in Shanghai and Beijing, because (investors) are really concerned about the zeroing strategy being implemented and the impact on the Chinese economy," said Hargreaves Lansdown senior investment and market analyst Susannah Streeter said.
Stocks were broadly higher, led by technology stocks, which rose 2.0%. Trading was light, however, as U.S. stocks were closed for the Memorial Day holiday.
European stocks had their best week since mid-March as upbeat U.S. consumer confidence data, signs of inflation peaking and clarity on the Federal Reserve's future plans calmed market participants.
Data this week is expected to show euro zone inflation rising further from a record high last month, weighing on the ECB.
German inflation rose to the highest in nearly half a century in May, driven by soaring energy and food prices, reinforcing the case for the European Central Bank to sharply hike interest rates by half a percentage point in July.
The STOXX 600 index pared losses in May to 0.9% after gaining on Monday. Only March this year recorded a monthly rise.
As of the close, Germany's DAX index closed up 0.79%, France's CAC 40 index rose 0.72%, and the British stock FTSE 100 index closed up 0.19%.
Gold prices held firm on Monday, trading in a 1848-1864 range, boosted by a weaker dollar, while investors tempered expectations for further aggressive U.S. monetary tightening. U.S. gold futures were up 0.04% at $1,858. Gold prices are likely to fall for the second consecutive month.
The U.S. dollar index hit a more than one-month low, making gold a little cheaper for investors holding other currencies. Yields on the 10-year U.S. Treasury note closed just above a six-week low on Friday.
Craig Erlam, senior market analyst at OANDA, said: “Gold could gain further if concerns about the economy further weigh on yields, with $1,870 being the first test, then $1,900. Sentiment remains extremely fragile, but as long as the market pays attention The focus is on a worsening economic outlook, rather than pricing in more rate hikes, and gold can continue to perform well.”
Investors now expect the pace of U.S. monetary policy tightening to eventually slow after the Fed hiked rates in June and July.
Brent crude climbed above $120 a barrel on Monday, hitting a fresh two-month high of $122.01 a barrel, as Asia eased coronavirus lockdowns and traders digested expectations that the European Union will eventually agree on a ban on Russian oil imports.
Trading was muted as the U.S. coincided with a public holiday. July Brent crude, which expires on Tuesday, settled up $2.24, or 1.9%, at $121.67 a barrel. U.S. crude futures were up 1.8% at $117.17 a barrel by 5:00 GMT+8 on Tuesday, extending last week's strong gains.
"One of the reasons is the imminent lifting of the coronavirus lockdown in Shanghai, fueling hopes that Chinese oil demand will pick up again," Commerzbank analysts said in a note to clients.
EU leaders made it clear on Monday that they would not be able to agree on a ban on Russian oil imports at a Brussels summit, prompting criticism from Ukrainian President Volodymyr Zelensky, who accused EU leaders of being too soft on Russia.
Leaders of the 27 EU nations will agree on the principles for an eventual oil embargo at a two-day summit, a draft conclusion of the summit showed. But they will save tough decisions for later.
The U.S. dollar extended losses on Monday as risk appetite briefly strengthened across markets on the back of encouraging economic data and bets that the Federal Reserve will ease policy tightening.
The U.S. dollar index, which tracks the greenback against six major rivals, was on track for its first monthly decline in five months, as the safe-haven greenback lost momentum after a strong start to the year.
The U.S. dollar index is on track to drop more than 1.5% in May, but is still up about 6% from a year earlier. It closed down 0.3 percent at 101.35 late on Monday.
Trading was thin on Monday as U.S. stocks and bonds were closed for the Memorial Day public holiday.
U.S. consumer spending rose more-than-expected in April, households increased purchases of goods and services, and inflation slowed, data released on Friday showed. Encouraging economic data, coupled with bets that the Federal Reserve will tighten policy more cautiously, is weakening the dollar, analysts said.
Global stocks rose on Monday as China's easing of coronavirus restrictions and fresh stimulus helped sustain last week's rally.
After the news of the resumption of work and production came out, the dollar fell against the offshore renminbi by 1% at one point, and closed down 0.79% in late trading to 6.6656 yuan.
"How the U.S. consumer performs going forward, and how the Chinese economy performs from a global perspective, will be key determinants of investors' overall risk appetite," MUFG foreign exchange analysts said in a note. "
A slew of economic data will also be released this week, including U.S. jobs data and China's purchasing managers' index (PMI), which could shed light on the outlook for global growth.
Inflation data from Germany and Spain on Monday showed price gains accelerated in May, driven by soaring energy prices, ahead of euro zone inflation data due on Tuesday. The euro was up 0.4% at $1.0774 on Monday after hitting a monthly high of $1.0786, even as inflation data capped gains in the euro.
[European Council President Michel said that EU leaders agreed to ban Russian oil exports to the EU]
EU leaders agreed on Monday to ban Russian oil exports to the bloc, European Council President Michel said. "This immediately covers more than two-thirds of oil imports from Russia, cutting off a huge source of funding for Russia's war machine," Michelle tweeted. The leaders also agreed to kick Russia's largest bank, Sberbank, out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system and ban three other Russian state broadcasters, he added.
[Russian troops enter the edge of Severo Donetsk and launch a fierce attack]
Ukrainian and Russian troops fought on the outskirts of Severo Donetsk. It was the last city Kyiv controlled in Luhansk province and the focal point of Moscow's offensive in eastern Ukraine. Russian shelling has razed much of Severo Donetsk, but Ukrainian defenses have slowed broader Russian operations across the Donbass. Luhansk Governor Serhiy Gaidai said that Russian troops had entered the southeastern and northeastern edges of Severo Donetsk.
[Russia plans to use ruble to settle natural gas to repay European bonds, investors may not buy it]
Russia is considering using its rouble-for-gas mechanism to pay European bondholders principal and interest, though investors say the move will not prevent Russia from defaulting on its historic debt. According to the Kremlin and Russia's finance minister, the plan would allow Moscow to bypass Western payments infrastructure and pay coupons to bondholders. Russia said it had cash and was willing to pay, denying any suggestion of a default.
[Fed Governor Waller supports raising interest rates by 50 basis points at each future meeting until inflation falls sharply]
Fed Governor Waller said the Fed should be ready to raise rates by 50 basis points at every meeting from now until inflation is firmly under control. This underscores the intense debate within the Fed over how aggressively it needs to tighten policy to bring down high inflation. Waller said he was optimistic that a strong labor market would be able to handle rate hikes without a sharp rise in unemployment. Federal Reserve Chairman Jerome Powell and U.S. President Joe Biden will meet on Tuesday to discuss the state of the U.S. and global economy.
[German inflation rose to a near 50-year high in May, strengthening the ECB's case for a larger rate hike]
German inflation rose to a near 50-year high in May, boosted by soaring energy and food prices, reinforcing the case for the European Central Bank to raise interest rates by a massive 0.5 percentage point in July. Data from Germany's Federal Statistics Office on Monday showed that the preliminary reading of the Harmonized Consumer Price Index (HICP) rose to 8.7% year-on-year in May from 7.8% in the previous month, the highest in nearly 50 years and well above the 8% expected. The flash consumer price index (CPI) rose 7.9 percent in May from a year earlier, compared with expectations for a 7.6 percent rise in a Reuters poll.
[Bank of America: Sterling may encounter a "perfect storm" and recommends hedging against the pound crisis]
Bank of America strategists said investors should hedge against a sterling crisis, given the challenges sterling typically faces in emerging markets. Strategist Kamal Sharma said in a report that continued rate hikes by the Bank of England will not be enough to save the pound. The country's current account deficit, deteriorating relations with the EU over Northern Ireland and questions about the central bank's credibility could add up to a "perfect storm". Sharma advises clients to hedge against "current-account crisis" risks.
[Citi economist Benjamin Nabarro: The UK is expected to provide additional economic stimulus this fiscal year]
The UK government is expected to provide more financial support to UK households by the end of the current financial year (to April 2023). The package unveiled last week set a precedent for the government to provide support to vulnerable households, and as household incomes continue to tighten, a package of between £5bn and £10bn is likely to be introduced. The UK government is expected to cut VAT in the fourth quarter and make permanent tax cuts from April 2023 to stimulate the economy, if persistent risks to inflation subside.
Commodities closed, U.S. COMEX gold futures rose 0.04% to $1,858. July Brent crude, which expires on Tuesday, settled up $2.24, or 1.9%, at $121.67 a barrel. U.S. crude for July futures rose 1.8% to $117.17 a barrel, with no delivery due for the holiday.
U.S. stocks were closed on Monday for the Memorial Day holiday.
Preview Tuesday
Major global market conditions
European shares hit their highest level in nearly a month on Monday, as optimism buoyed by easing coronavirus lockdowns in Asia and adding fresh stimulus.
The pan-European STOXX 600 index rose 0.6% to 447.79, its highest level since early May, with luxury goods shares providing the biggest boost due to strong demand for luxury goods in China.
"Everyone breathes a sigh of relief ... the strict lockdowns will be eased, especially in Shanghai and Beijing, because (investors) are really concerned about the zeroing strategy being implemented and the impact on the Chinese economy," said Hargreaves Lansdown senior investment and market analyst Susannah Streeter said.
Stocks were broadly higher, led by technology stocks, which rose 2.0%. Trading was light, however, as U.S. stocks were closed for the Memorial Day holiday.
European stocks had their best week since mid-March as upbeat U.S. consumer confidence data, signs of inflation peaking and clarity on the Federal Reserve's future plans calmed market participants.
Data this week is expected to show euro zone inflation rising further from a record high last month, weighing on the ECB.
German inflation rose to the highest in nearly half a century in May, driven by soaring energy and food prices, reinforcing the case for the European Central Bank to sharply hike interest rates by half a percentage point in July.
The STOXX 600 index pared losses in May to 0.9% after gaining on Monday. Only March this year recorded a monthly rise.
As of the close, Germany's DAX index closed up 0.79%, France's CAC 40 index rose 0.72%, and the British stock FTSE 100 index closed up 0.19%.
precious metal
Gold prices held firm on Monday, trading in a 1848-1864 range, boosted by a weaker dollar, while investors tempered expectations for further aggressive U.S. monetary tightening. U.S. gold futures were up 0.04% at $1,858. Gold prices are likely to fall for the second consecutive month.
The U.S. dollar index hit a more than one-month low, making gold a little cheaper for investors holding other currencies. Yields on the 10-year U.S. Treasury note closed just above a six-week low on Friday.
Craig Erlam, senior market analyst at OANDA, said: “Gold could gain further if concerns about the economy further weigh on yields, with $1,870 being the first test, then $1,900. Sentiment remains extremely fragile, but as long as the market pays attention The focus is on a worsening economic outlook, rather than pricing in more rate hikes, and gold can continue to perform well.”
Investors now expect the pace of U.S. monetary policy tightening to eventually slow after the Fed hiked rates in June and July.
crude
Brent crude climbed above $120 a barrel on Monday, hitting a fresh two-month high of $122.01 a barrel, as Asia eased coronavirus lockdowns and traders digested expectations that the European Union will eventually agree on a ban on Russian oil imports.
Trading was muted as the U.S. coincided with a public holiday. July Brent crude, which expires on Tuesday, settled up $2.24, or 1.9%, at $121.67 a barrel. U.S. crude futures were up 1.8% at $117.17 a barrel by 5:00 GMT+8 on Tuesday, extending last week's strong gains.
"One of the reasons is the imminent lifting of the coronavirus lockdown in Shanghai, fueling hopes that Chinese oil demand will pick up again," Commerzbank analysts said in a note to clients.
EU leaders made it clear on Monday that they would not be able to agree on a ban on Russian oil imports at a Brussels summit, prompting criticism from Ukrainian President Volodymyr Zelensky, who accused EU leaders of being too soft on Russia.
Leaders of the 27 EU nations will agree on the principles for an eventual oil embargo at a two-day summit, a draft conclusion of the summit showed. But they will save tough decisions for later.
foreign exchange
The U.S. dollar extended losses on Monday as risk appetite briefly strengthened across markets on the back of encouraging economic data and bets that the Federal Reserve will ease policy tightening.
The U.S. dollar index, which tracks the greenback against six major rivals, was on track for its first monthly decline in five months, as the safe-haven greenback lost momentum after a strong start to the year.
The U.S. dollar index is on track to drop more than 1.5% in May, but is still up about 6% from a year earlier. It closed down 0.3 percent at 101.35 late on Monday.
Trading was thin on Monday as U.S. stocks and bonds were closed for the Memorial Day public holiday.
U.S. consumer spending rose more-than-expected in April, households increased purchases of goods and services, and inflation slowed, data released on Friday showed. Encouraging economic data, coupled with bets that the Federal Reserve will tighten policy more cautiously, is weakening the dollar, analysts said.
Global stocks rose on Monday as China's easing of coronavirus restrictions and fresh stimulus helped sustain last week's rally.
After the news of the resumption of work and production came out, the dollar fell against the offshore renminbi by 1% at one point, and closed down 0.79% in late trading to 6.6656 yuan.
"How the U.S. consumer performs going forward, and how the Chinese economy performs from a global perspective, will be key determinants of investors' overall risk appetite," MUFG foreign exchange analysts said in a note. "
A slew of economic data will also be released this week, including U.S. jobs data and China's purchasing managers' index (PMI), which could shed light on the outlook for global growth.
Inflation data from Germany and Spain on Monday showed price gains accelerated in May, driven by soaring energy prices, ahead of euro zone inflation data due on Tuesday. The euro was up 0.4% at $1.0774 on Monday after hitting a monthly high of $1.0786, even as inflation data capped gains in the euro.
international news
[European Council President Michel said that EU leaders agreed to ban Russian oil exports to the EU]
EU leaders agreed on Monday to ban Russian oil exports to the bloc, European Council President Michel said. "This immediately covers more than two-thirds of oil imports from Russia, cutting off a huge source of funding for Russia's war machine," Michelle tweeted. The leaders also agreed to kick Russia's largest bank, Sberbank, out of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system and ban three other Russian state broadcasters, he added.
[Russian troops enter the edge of Severo Donetsk and launch a fierce attack]
Ukrainian and Russian troops fought on the outskirts of Severo Donetsk. It was the last city Kyiv controlled in Luhansk province and the focal point of Moscow's offensive in eastern Ukraine. Russian shelling has razed much of Severo Donetsk, but Ukrainian defenses have slowed broader Russian operations across the Donbass. Luhansk Governor Serhiy Gaidai said that Russian troops had entered the southeastern and northeastern edges of Severo Donetsk.
[Russia plans to use ruble to settle natural gas to repay European bonds, investors may not buy it]
Russia is considering using its rouble-for-gas mechanism to pay European bondholders principal and interest, though investors say the move will not prevent Russia from defaulting on its historic debt. According to the Kremlin and Russia's finance minister, the plan would allow Moscow to bypass Western payments infrastructure and pay coupons to bondholders. Russia said it had cash and was willing to pay, denying any suggestion of a default.
[Fed Governor Waller supports raising interest rates by 50 basis points at each future meeting until inflation falls sharply]
Fed Governor Waller said the Fed should be ready to raise rates by 50 basis points at every meeting from now until inflation is firmly under control. This underscores the intense debate within the Fed over how aggressively it needs to tighten policy to bring down high inflation. Waller said he was optimistic that a strong labor market would be able to handle rate hikes without a sharp rise in unemployment. Federal Reserve Chairman Jerome Powell and U.S. President Joe Biden will meet on Tuesday to discuss the state of the U.S. and global economy.
[German inflation rose to a near 50-year high in May, strengthening the ECB's case for a larger rate hike]
German inflation rose to a near 50-year high in May, boosted by soaring energy and food prices, reinforcing the case for the European Central Bank to raise interest rates by a massive 0.5 percentage point in July. Data from Germany's Federal Statistics Office on Monday showed that the preliminary reading of the Harmonized Consumer Price Index (HICP) rose to 8.7% year-on-year in May from 7.8% in the previous month, the highest in nearly 50 years and well above the 8% expected. The flash consumer price index (CPI) rose 7.9 percent in May from a year earlier, compared with expectations for a 7.6 percent rise in a Reuters poll.
[Bank of America: Sterling may encounter a "perfect storm" and recommends hedging against the pound crisis]
Bank of America strategists said investors should hedge against a sterling crisis, given the challenges sterling typically faces in emerging markets. Strategist Kamal Sharma said in a report that continued rate hikes by the Bank of England will not be enough to save the pound. The country's current account deficit, deteriorating relations with the EU over Northern Ireland and questions about the central bank's credibility could add up to a "perfect storm". Sharma advises clients to hedge against "current-account crisis" risks.
[Citi economist Benjamin Nabarro: The UK is expected to provide additional economic stimulus this fiscal year]
The UK government is expected to provide more financial support to UK households by the end of the current financial year (to April 2023). The package unveiled last week set a precedent for the government to provide support to vulnerable households, and as household incomes continue to tighten, a package of between £5bn and £10bn is likely to be introduced. The UK government is expected to cut VAT in the fourth quarter and make permanent tax cuts from April 2023 to stimulate the economy, if persistent risks to inflation subside.
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