Due to the holiday, there were no trades yesterday on the US stock market. However, futures on indices were traded in the European and US sessions, respectively. The indices were slightly lower by the time the futures market closed on Monday, so there will be a price gap when the stock market opens on Tuesday.
It is important for traders to remember that it is the American earnings season. Today’s reporting businesses include United Airlines Holdings (UAL), Goldman Sachs (GS), Interactive Brokers (IBKR), and Morgan Stanley (MS).
Yesterday, European stock markets were mainly higher. The German DAX (DE30) increased by 0.31%, the French CAC 40 (FR40) by 0.28%, the Spanish IBEX 35 (ES35) by 0.12%, and the British FTSE 100 (UK100) by 0.20% as of Monday’s end.
The future direction of relative monetary policy cycles may be accurately predicted by short-term interest rate differentials. Economists anticipate the two-year EUR/USD swap difference to reverse this year using central bank policy estimates. By the end of this year, the disparity between swap prices for the dollar and the euro might change to 40 basis points. Currently, swap prices are trading at roughly 125 basis points in favor of the dollar. The EUR/USD currency pair will reach the 1.20 level before the year is out if this happens.
A relatively mild winter in Europe caused natural gas prices to decrease. Europe’s storage capacity might be at more than 50% capacity by the time the heating season is over. Due to this, the increase in natural gas prices in the second half of 2023 could only reach about €140–160/MWh. Although still expensive, this is far lower than the €250–300/MWh level from the summer of 2016.
Due to the increase in demand in China and Europe, Goldman Sachs increased its projection for aluminum prices. Analysts predict that the metal will cost, on average, $3125 a tonne this year. It is noted that the spring will see a steady increase in the rising price impulse.
After a sharp increase last week ahead of the release of OPEC and IEA demand predictions, oil prices declined on Monday, stabilizing after a sharp surge. The worldwide demand for oil is significantly influenced by these monthly updates on the oil market. Given the market’s emphasis on a potential rebound in Chinese oil demand, it could be this month.
Yesterday, the Asian markets were unchanged. On Monday, the Nikkei 225 in Japan fell by 1.14%, the FTSE China A50 in China rose by 1.50%, the Hang Seng in Hong Kong increased by 0.04%, the NIFTY 50 in India fell by 0.34%, and the S&P/ASX 200 in Australia increased by 0.82%.
After increasing by 3.9% in the previous quarter, China’s GDP growth fell in the most recent quarter to 2.9% year over year. However, despite a 1.3% increase in industrial production, the jobless rate decreased from 5.7% to 5.5% last month. According to analysts, growing domestic demand in China might be a significant counterbalance to declining growth in the US and Europe. Chinese blue chips, from major consumer items to financial firms, are once again being purchased by investors. At a time when the majority of wealthy nations are experiencing a recession, China’s stock market boom highlights hopes for an economic comeback. The amount of foreign money coming into China last week was roughly 44 billion yuan, the biggest amount since May 2021.
As bond rates approach the top limit, there is an increasing probability that the Bank of Japan may make a big policy adjustment this week. There are now just two possibilities, according to economists. The first (primary scenario) is the termination of the yield curve control policy. This might result in a sell-off in Japanese stocks, which would make the yen stronger. In the second scenario, the central bank of Japan can increase the range to 75 basis points on each side of its 0% objective for 10-year government bonds. This would buy time until Kuroda resigns at the end of the quarter. In any case, there is a greater likelihood that the Bank of Japan may alter its strategy as spring approaches.
S&P 500 (F) (US500) 3,999.09 0 (0%)
Dow Jones (US30)34,302.61 0 (0%)
DAX (DE40) 15,134.04 +47.52 (+0.31%)
FTSE 100 (UK100) 7,860.07 +16.00 (+0.20%)
USD Index 102.39 +0.19 (+0.18%)
S&P 500 (F) (US500) 3,999.09 0 (0%)
Dow Jones (US30)34,302.61 0 (0%)
DAX (DE40) 15,134.04 +47.52 (+0.31%)
FTSE 100 (UK100) 7,860.07 +16.00 (+0.20%)
USD Index 102.39 +0.19 (+0.18%)