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April 1. Does Nord Stream-2 have a future?

Against the background of acute geopolitical tensions in Europe, the future of the Nord Stream-2 gas pipeline is now in great doubt, say energy analysts.

The 1,234 km (2,468 km) offshore gas pipeline was designed to double gas supplies between Russia and Germany. However, in November last year, the German energy regulator suspended the certification process of the gas pipeline, and in February, with the beginning of the Russian military operation in Ukraine, it froze it altogether.

Analysts note that the large-scale geopolitical crisis has put an end to any joint projects and business partnership between Russia and the West. And Nord Stream-2, worth $11 billion, became one of the first victims of anti-Russian sanctions.

Moreover, the European Union has stated that by the end of 2022 it is going to reduce the import of Russian gas by two–thirds, and by 2030 it is going to completely end dependence on Russian imports of fossil fuels. At the same time, Russian President Vladimir Putin announced the termination of gas exports to «unfriendly» countries if gas payments are not made in rubles. The main EU countries responded to this demand with a refusal.

Many analysts and politicians doubt the likelihood of the resumption of the gas pipeline. It is obvious that the future fate of the Nord Stream-2 will depend on how the Ukrainian crisis ends, and who will ultimately dictate the conditions.

There are assumptions that the Nord Stream-2 will be able to be used for the transportation of hydrogen in the future, and Russia will be a potential supplier. However, this method of using the gas pipeline will depend on the decision of Germany itself – whether it will eventually want to revive energy relations with Russia using next-generation fuel under the flag of decarbonization.

March 31. Oil declined sharply after a significant increase

On Thursday, oil prices showed a sharp decline after the publication of the weekly report on oil reserves in the United States. In addition, traders are waiting for Washington to announce measures to support American consumers amid rising energy prices.

Brent oil quotes fell from the level of $112 per barrel to $105.12 in just a few hours. By Thursday morning, the price had recovered somewhat to $107.22 per barrel. The cost of North American WTI oil decreased from $108 to $100.55 per barrel. The current WTI quote is $102.56.

Today, the White House is to present a package of measures aimed at reducing energy prices on the American market. The Biden administration is considering releasing approximately 1 million barrels of oil per day from U.S. strategic reserves within a few months to combat rising gasoline prices and supply shortages.

At the same time, analysts note that the rise in prices and other problems caused by the Ukrainian crisis are of a medium- and long-term nature, while the release of oil from strategic reserves is only a short-term solution.

Another factor influencing the oil market was yesterday's report from the US Department of Energy, according to which commercial oil reserves in the country fell by 3.45 million barrels per week. Experts expected a less significant decrease – by 2 million barrels.

At the same time, gasoline reserves increased by 785,000 barrels and amounted to 238.83 million barrels, distillate reserves increased by 1.4 million barrels to 113.53 million barrels. Analysts predicted a decrease in gasoline stocks by 1.6 million barrels and a drop in distillate stocks by 1.5 million barrels.

April 13. The UK is preparing for new inflationary jumps

Analysts of the Confederation of British Industry (CBI) say that the UK is waiting for new jumps in inflation, as well as rising costs for business and an increase in the cost of living.

Annual inflation in the country accelerated from February 6.2% to 7% by the end of March. This indicator has updated the record since 1992. At the same time, on a monthly basis in March, consumer prices rose by 1.1% after an increase of 0.8% in February.

Alpesh Palea, a leading economist at the CBI, noted that such a jump in inflation in March is not the last, and we should expect another price increase in April, when the increase in marginal energy prices will take effect. The volatility of global commodity prices and ongoing disruptions in supply chains continue to be additional factors of price growth. As a result, businesses will face higher costs, and households will face an increase in the cost of living.

Palea believes that the apparent dependence of inflation on the cost of energy carriers underscores the need to double investments in green energy. The economist believes that improving the energy efficiency of residential and commercial buildings will help reduce consumer demand and costs.

Covid-19 outbreak in China damages growth prospects of country's economy​​​​​​​

China's economy is set to break growth records, but an unexpected outbreak of coronavirus, forced restrictive measures, and numerous problems abroad are limiting its surge.

In Q1 2022, the country's GDP showed fairly strong growth compared to the previous quarter. The GDP jumped by 4.8% on a yearly basis, according to the published data from the National Bureau of Statistics of China. According to Trading Economics, experts had forecasted China's economy to grow at a lower rate of 4.4%. Notably, in Q4 2021, China's GDP rose at an annualized rate of 4%. In the first three months from the beginning of this year, the Chinese economy grew by 1.3%.

China is trying to cope with the resulting domestic and external difficulties, compensating for the obvious dips in the economy in March with surprisingly strong growth of indicators in January and February. However, the effects of the COVID-19 outbreak on China's economy cannot be avoided. Severe restrictive measures, which the Chinese government imposed on its population in March, undermined the production of goods and markedly reduced consumer spending within the country. Only the sharp growth of the economy in the first two months of 2022 formed quite optimistic overall figures for the entire first quarter.

Consequently, retail sales fell by 3.5% in March, showing a much worse-than-forecast reading, while in January-February they were estimated at 6.7%.

The Chinese labor market traditionally experienced a revival in March, as factories usually try to attract as many employees as possible to their shops after the Lunar New Year holiday. This March, however, the sector suffered a severe shock. According to surveys, the national unemployment rate in March was 5.8%, which was last seen only at the beginning of 2020. Moreover, unemployment in more than thirty major cities reached a record 6.0%.

The industrial sector in China showed more positive figures in March than the labor market. Given the widespread shutdowns, production managed to increase by 5.0% year-on-year and even beat forecasts of 4.5%. However, we should admit that compared to the unprecedented rise in January-February, when production increased by 7.5%, the figures for March were rather lackluster.

The investment into the fixed capital in the first quarter is following a similar scenario: investment increased, but there was some damage in March to the elated growth of the first two months of the year. Thus, investment in fixed capital in the first quarter grew by 9.3% year-on-year, but this growth is not so positive, as in the first two months alone it was as much as 12.2%. Notably, fixed-asset investment is the key growth driver of the Chinese economy. These are the indicators that the Chinese government is counting on.

The real estate market in China is increasingly slipping into recession. Home sales by value fell by a full 26.2% year-over-year in March, and new construction declined by 17.5%. According to Reuters, the drop was the largest since early 2020.

The unexpected outbreak of coronavirus in China derailed the enthusiastic growth of the economy and sent it into a sluggish state of moderate recovery. The Russian-Ukrainian conflict and the sanctions imposed on Russia have also hit key sectors of the Chinese economy, as they have shaped unprecedented increases in the prices of energy, metals, and wheat, and further undermined global supply chains.

Many economists are already highly doubtful that Beijing can achieve its goal of a 5.5% GDP increase this year. The Wall Street Journal notes that demand for Chinese exports in the US and Europe has been severely weakened due to record inflation last seen decades ago.

Oil market news: while prices falling, return to the old days remains impossible​​​​​​​

Oil is declining sharply on Monday due to expectations of falling demand for energy resources in China. Thus, June futures on Brent crude on London's ICE Futures exchange is estimated at $101.37 per barrel today, down by 4.49% from the previous session's close. The price of WTI futures for June on NYMEX electronic trading is $97.42 per barrel, which is 4.42% lower than the result of the previous trading. According to last week's results, the price of benchmark Brent crude fell by 4.5% and WTI crude dropped by 4.1%.

China's largest city and financial center, Shanghai, reported a record number of new COVID-19 cases in the past two days - 39 deaths. The total number of deaths among those infected in this city with a population of 25 million people now stands at 87. The first deaths in Shanghai were reported on April 18. A lockdown was imposed in Shanghai on March 28, with most businesses shut down, markets and stores closed and residents locked in their homes and apartments. The population in Shanghai is daily tested for COVID-19 and those who test positive are sent to isolation centers.

Lockdown in Shanghai strongly affects global markets, as huge batches of Chinese components due to idling in factories and plants simply cannot reach production facilities in other countries.

The lockdowns fully affected the demand for gasoline, diesel, and jet fuel, which in China in April is likely to fall by 20% on a yearly basis. According to Bloomberg, the fuel price drop only for the current month has all chances to reach 1.2 million barrels per day. If this forecast comes true, the drop will be the most rapid since the beginning of the COVID-19 pandemic in the Chinese city of Wuhan more than two years ago.

In the light of Russia's rapidly developing military action in Ukraine, the situation in the oil markets is getting much worse. However, the disrupted global supply chain system, skyrocketing inflation, and acute shortages of energy resources were observed in the world even before the Russian special military operation, which has only worsened the prospects and made it impossible to find a quick way out of the current situation.

However, according to some experts, the conflict in Ukraine will end sooner or later, after which the global commodity market will return to its normal pre-crisis state. For example, analyst Michael Lynch reported in Forbes magazine that Russia's military operation will definitely end. The oil market will no longer have reason to worry, and it is sure to return to normal, and fuel prices will fall to quite acceptable levels. Analysts believe that the situation will be normalized by the lifting of sanctions against Russia. The return to the normal operation of the energy market is probably the main condition for Western European countries to maintain their economies and their usual standards of living.

However, the lifting of sanctions is a forced measure for the political elites of the European Union, but not for the United States. US Secretary of State Anthony Blinken, who has repeatedly stressed in his speeches that it did not matter to his country whether Russia ends its military operation or not, the sanctions against it would not be lifted by the United States anyway.

Oil Price reported that the long duration of today's stalemate increases the chance that there would be no return to the old pattern. For example, the fact that Europe is shifting from pipeline gas to liquefied natural gas and that Russian exports are shifting to Asian markets is irreversible. In this regard, the prognosis so far is disappointing for buyers: high oil prices promise to remain so for a long time.

May 16. Gold fell below $1,800 for the first time since the beginning of February

Today, the price of gold fell below the psychological level of $1,800 for the first time since the beginning of February. The daily low was fixed at $1,785.40 per troy ounce. The current quote for the precious metal is $1,815.87.

Analysts note that at the end of the past week, the price of gold fell by 3.9%, a record pace since June 2021.

Experts say that the main reason for the decline in quotes is the strong dollar and the growing yield of bonds, because against this background, gold, which does not bring interest income, loses its attractiveness in the eyes of investors.

The ICE currency index, which shows the dynamics of the dollar against six major world currencies, is down about 0.15% on Monday after rising to a 20-year high last Friday.

July futures for silver, meanwhile, are growing in price – up to $ 21.465 per ounce. Moreover, last week silver finished falling by 6.2%, the maximum since the end of January.

May 18. Johnson Matthey: palladium market may face a deficit in 2022​​​​​​​

According to the review of the world's largest producer of materials for autocatalysts, the British company Johnson Matthey, the palladium market in 2022 may become scarce against the backdrop of a decrease in the output of the metal in South Africa and the risk of disruption in supplies from Russia.

The palladium market was already in deficit in 2020 (about 650 koz), but in 2021 the situation has become relatively balanced.

Johnson Matthey fears that in the current environment, Norilsk Nickel, the world's largest palladium producer, may not be able to supply all of its products to the market. Due to the uncertainty in this matter, it is very difficult to calculate the total supply in the palladium market.

Another major supplier, South Africa, will cut shipments by more than 6% in 2022 compared to 2021, amid depletion of work-in-progress inventories and planned maintenance of processing facilities.

Moreover, the situation in Ukraine created significant supply risks due to Russia's status as the world's largest supplier of palladium and a major producer of platinum and rhodium. At the moment, Russia provided about 28% of the total supply of primary and secondary palladium.

Experts believe that net demand for palladium will grow by 3% in 2022 to 6.9 million ounces. Demand growth will be constrained by weak car production and cost-cutting programs on the part of metal consumers.

May 23. Experts believe that the EU will not be able to replace Russian oil

The topic of the embargo on Russian oil is one of the main topics for discussion on the international market. At the same time, a number of analysts believe that the European Union will not be able to find a replacement for Russian hydrocarbons in the medium term in the event of a ban on oil supplies.

Vagit Alekperov, ex-head of the Russian oil and gas company Lukoil, said that in the event of an embargo, Russia will be forced to reduce oil production and freeze wells, as it was at the beginning of the coronavirus pandemic in 2020. Therefore, a ban on oil from the Russian Federation would be a shock to everyone and the most negative scenario for all parties.

Moreover, it will take years to build a new infrastructure to redirect Russian oil entering the European market today.

Earlier, the European Commissioner for Economics Paolo Gentiloni said that the EU member states currently cannot agree on an embargo on the import of Russian oil – Hungary takes a firm position «against». The country insists on extending the transition period and/or withdrawing the country from restrictions. In addition to Hungary, other countries, including Bulgaria, do not agree with the embargo.

It is worth noting that the introduction of an oil embargo against Russia in the EU has been actively discussed since the beginning of May, but so far the dialogue on this issue has not led to a consensus. In addition, it became known that the embargo on oil from the Russian Federation is not spelled out in the basic scenario of the European Commission's spring economic forecast for 2022-2023.

May 20. Cisco shares collapsed 14% amid China lockdown​​​​​​​

Shares of network equipment maker Cisco fell sharply on Thursday after the release of a forecast for sales in the current quarter. According to the forecast, the indicator fell significantly due to the damage caused to the supply chain by quarantine restrictions in China.

In particular, the company expects a decrease in sales in the fourth quarter of this fiscal year by 1-5% compared to the same period last year. Analysts, on the other hand, had expected growth of 5.9% to $13.9 billion.

As a result, Cisco shares fell 14% to $41.36 (the lowest price since November 2020), and 24 million shares traded on the exchange exceeded the average daily sales volume of 22 million shares during the first hour of trading.

The company said there was solid demand in the third quarter, but sales were hurt by coronavirus restrictions in China, which cut the company's revenue by $300 million, and a Russian special operation in Ukraine, which reduced sales by another $200 million. It’s expected that the quarantine in Shanghai will be lifted on June 1.

Cisco's Q3 adjusted earnings were 87 cents per share on $12.8 billion in revenue. Analysts had expected 86 cents per share on $13.3 billion in revenue.

May 27. Gold shows a downtrend​​​​​​​

Gold quotes settled at $1,855 per troy ounce, which is 11% lower than the maximum value reached on March 8, 2022 ($2,078 per ounce).

Since the beginning of May, prices have fluctuated in the range of $1800 – $1870. Analysts note that this trend is the result of a temporary decrease in the degree of geopolitical tension in the world.

Economists predict that gold prices will average $1880 per ounce this year. At the same time, the main factor influencing the dynamics of precious metal prices will be the tightening of the monetary policy of the US Federal Reserve. And a further increase in the federal funds rate of the US Federal Reserve will help maintain the downward trend in gold quotes.

However, analysts do not rule out a trend reversal. This may happen in the event of a more serious deterioration in geopolitics than the market currently predicts.

It is worth noting that gold often acts as an important protective tool for developed countries. As a rule, wealthy EU citizens try to hedge the risks of financial market volatility and sharply increased inflation through investments in gold ETFs or bullion. Current interest rates are not very attractive and do not give Europeans the opportunity to protect their savings. Moreover, the EU countries are in close proximity to the military events in Ukraine, which also strengthens their motivation to invest in protective assets.

At the same time, the demand for gold in China has decreased. Severe coronavirus restrictions negatively affect the physical ability of the population to purchase precious metals.

Summing up the above, it can be assumed that attempts to stabilize the world economy, tightening the DCP and reducing the influence of the geopolitical factor will lead to a gradual decline in gold prices. However, it is worth remembering that a sufficiently high level of uncertainty in the short-term prospects will currently keep prices from falling sharply.

June 1. Experts: 3 tips for surviving a recession​​​​​​​

As the likelihood of a recession in the United States grows, more economists are pointing out the growing downside risks and offering advice on how to invest during this period.

Many analysts are bearish in their forecasts as the US economy is experiencing multiple shocks today. Among the main risk factors, experts point out the escalation of the conflict in Ukraine, the rise in oil prices to $150 per barrel, the extraordinary strengthening of the dollar, as well as the strongest pressure on companies due to rising costs.

In this difficult period of constant volatility in the market, economists advise the following:

Buying shares in three defensive sectors

Investment bank Morgan Stanley recommends investing in protective sectors: healthcare, utilities and real estate. In healthcare, stocks trade at a discount to the general market. The Bank favors large-cap pharmaceutical and biotechnology stocks as they trade at an attractive price and offer relatively large dividend yields.

The real estate sector grew 42% last year and outperformed the broader US market by 16%. This sector provides stable income and dividends, in particular – protection against inflation through leases, rent increases and rising property values.

The utilities sector provides relative protection against high costs (due to the established pricing structure in utilities) even against the backdrop of the effects of rising energy prices.

Keeping patience

Analysts are sure that during a recession special patience is required when using cash for any investment opportunity. A bear market can last for about a year and sometimes causes a drawdown of around 30%. Therefore, it is also important to diversify investments throughout the period.

Purchase of investment grade bonds

Another recommendation from experts is to buy quality bonds and avoid low-quality or high-yielding bonds.

June 6. Asian stock markets showed growth, pulling European indices along with them​​​​​​​

Stock indices of the Asia-Pacific region (APR) on Monday mainly show growth after the publication of strong statistics on China.

The business activity index (PMI) in China's services sector rose to 41.4 points in May from 36.2 points a month earlier. The composite index in industry and services rose from 37.2 points in April to 42.2 points in May.

As a result, the South Korean index of the Shanghai Stock Exchange Shanghai Composite ended trading up to 3236.37 points, the index of the Shenzhen Stock Exchange Shenzhen Composite rose to 2073.56 points, and the Hong Kong Hang Seng Index rose to 21653.9 points.

Positive statistics on China have improved traders' expectations about the prospects for economic recovery, especially in light of the easing of quarantine restrictions in the country. Following the Asian markets, European stock indexes also started to grow.

In particular, the British FTSE 100 index rose to 7626.28 points, the French CAC 40 – to 6542.73 points, the German DAX – to 14560.11 points.

In addition, European indices are supported by shares of energy companies, which are becoming more expensive against the backdrop of rising oil prices. For example, the securities of Eni, Total Energies, Shell and BP are growing in price by 1.33%, 1.43%, 0.87% and 2.28%, respectively.

June 8. New obstacles in concluding a deal for Musk's purchase of Twitter​​​​​​​

The uncertainty surrounding the deal to buy Twitter by Elon Musk may lead to the disruption of plans to attract an additional $ 2-3 billion from third-party investors.

At the moment, Musk's attempts to organize new financing of the transaction have been suspended. In total, the entrepreneur planned to invest $ 33.5 billion in the transaction, and to attract the rest (of the total $ 44 billion) from outside investors.

It is clarified that Musk intended to receive additional financing from a group of private investment companies led by Apollo Global Management Inc in exchange for preferred shares of Twitter.

However, back on April 15, Twitter's board of directors adopted a shareholder rights protection plan, which was supposed to prevent an undesirable takeover of the company by Musk. On April 25, the parties still managed to agree on a deal. According to the agreements, Musk will buy Twitter for $ 44 billion ($54.2 per share).

But in May, the conclusion of the deal was again in question: Elon Musk stated his desire to make sure that spam and fake Twitter accounts account for less than 5%. And the day before yesterday, on June 6, Musk accused Twitter that the company refuses to provide this information and thus violates the agreement on the deal.

June 15. Industrial production in China increased by 0.7% in May

According to the data of the National Bureau of Statistics, the volume of industrial production in China in May increased by 0.7% compared to the same month in 2021 against the background of the weakening of quarantine coronavirus measures in the country. Analysts on average expected a decline of 0.7% last month. In April, industrial production in China fell by 2.9%.

In particular, manufacturing output rose 0.1% after falling 4.6% in April. The output of chemical products and raw materials increased by 5%, food products – by 1.6%, communication equipment – by 7.3%. The growth of mining production in May slowed to 7% from 9.5% in April, electricity generation – from 1.5% to 0.2%.

In the first five months of this year, Chinese industrial production increased by 3.3% compared to the same period in 2021.

The National Bureau of Statistics of China also presented statistics on retail sales in May. The decline in sales slowed to 6.7% year-on-year after falling 11.1% in April. Analysts had expected a decrease of 7.1%. It is noted that sales have been declining for the third month in a row amid restrictions to combat a new outbreak of coronavirus. In the period from January to May, retail sales decreased by 1.5%.

Unemployment in China fell to 5.9% in May, compared with 6.1% in April. The target unemployment rate in the country today is 5.5%.

June 14. Bitcoin remains below $23 thousand

On Tuesday, the price of bitcoin continues to remain in the area of local lows: the current price of BTC is $22153. During the day, the cryptocurrency even dropped to $20,834, for the first time since December 2020.

Analysts note that against the background of falling quotations, the capitalization of the cryptocurrency market has fallen below $1 trillion and is now $959.1 billion.

The price of bitcoin has been declining for seven consecutive trading sessions. During all this time, the cryptocurrency has lost about 27% of its value. The strongest decline occurred at the beginning of this week – at the same time there were sales on the world stock markets. Yesterday, for example, the main US stock indexes fell by 2.8-4.7%, and the indices of Asia and Europe today show multidirectional dynamics.

In total, since the beginning of June, bitcoin has fallen in price by more than 28%, in spring its value has dropped by 26%, since the beginning of the year – by half. At the beginning of January, bitcoin cost $ 46.2 thousand.

Economists note that the crypto market is also under pressure after one of the largest multifunctional players in this area, Celsius Network, on Monday suspended the possibility of withdrawing funds due to a liquidity crisis.

June 21. The Bank of England urged not to use monetary policy to stabilize the pound​​​​​​​

Hugh Pill, chief economist at the British central Bank, said that the Bank of England should focus its monetary policy on the main goal of controlling inflation, rather than trying to stabilize the exchange rate or economic activity.

Pill also noted that the regulator should pay attention to what is happening in the foreign exchange market and in other central banks, but at the same time realistically assess their capabilities.

«Monetary policy is an inaccurate tool, not a panacea,» the economist stressed.

A day earlier, a member of the Monetary Policy Committee, Catherine Mann, suggested that a more significant increase in interest rates in the short term could compensate for the weakening of the pound caused by inflation.

In December, the Bank of England became the first of the key central banks to raise the cost of borrowing after the pandemic and has since raised the key rate five times, bringing it to 1.25%. Pill suggested that further policy tightening may be required in the coming months, as inflation is approaching 11%.

July 4. Germany records first monthly trade deficit since 1991

The German authorities announced that in May, for the first time in 30 years, a trade deficit of almost €1 billion was formed.

According to the German Federal Statistical Office, in May, against the background of sanctions, the country's exports amounted to €125.8 billion, while imports reached €126.7 billion. For many years, Germany exported more goods than it imported into its territory. Analysts note that this is the first such case in the history of Germany since 1991.

The change in the economic situation in the country began after the start of the military special operation of the Russian Federation on the territory of Ukraine and against the background of Western sanctions imposed in this regard.

After the introduction of restrictions, the trade turnover between Germany and Russia sharply decreased: in March exports decreased by 62%, in April – by another 9.9%. The recovery of indicators was noted only in May – exports increased by 29.4%. At the same time, imports from Russia to Germany continue to decline: in April it fell by 16.4%, in May – by another 9.8% (up to € 3.3 billion). One of the most significant areas in which there has been a reduction is the energy market.

Recall that as part of the package of anti-Russian sanctions, Germany decided to abandon the purchase of oil from the Russian Federation, and now the country is urgently looking for ways to replace Russian gas. However, it is still impossible to completely abandon Russian raw materials: without gas supplies from Russia to Germany, there will be enough for only 1.5 months.

July 7. What will affect the markets today: July 7, 2022

Last night, the minutes of the US Federal Reserve meeting for June were published. According to the document, another increase in the interest rate by 0.75 percentage points is expected.

The protocol also showed that officials are in favor of a transition to a «restrictive policy» in case of continued increased inflationary pressure. The Fed has already acknowledged the likelihood of a recession in the US economy, but the regulator wants to achieve a «soft landing», which means lower inflation without job cuts. After the publication of the protocol, the shares of technology companies rose, stabilizing the market as a whole.

What other events will be able to influence the dynamics of the market today, July 7?

Applications for unemployment benefits

First, it is worth paying attention to the data on the number of applications for unemployment benefits in the United States. The monthly Non-Farm Payrolls report will be published tomorrow (it is expected that 268 thousand jobs will be created in the economy, which is lower than the May figure of 390 thousand). But first, the States will provide statistics on weekly applications for unemployment benefits. According to the forecast, this number will remain at the level of 230 thousand compared to a week earlier. The number of open vacancies will amount to 11.25 million vacancies, which exceeds the expected 11 million.

Crude oil reserves

The main event of this week was the fall in crude oil prices below the level of $ 100 per barrel. A report from the US Department of Energy on crude oil reserves in the country will be published today. Analysts expect a decline to the level of 1.04 million barrels.

Levi Strauss Earnings

Levi Strauss & Co, a well-known clothing and footwear manufacturer in the United States, is expected to report earnings of 23 cents per share on revenue of $1.4 billion. In addition, bank reporting will begin next week, and Wall Street's attention will be drawn to the business conditions for large lenders (as it assesses the long-term damage from sustained price increases).

July 11. Brent fell to $103.70 per barrel​​​​​​​

Oil prices were actively declining during Monday's trading, reaching a local low at $103.70 per barrel. The pressure on the asset was exerted by news about the increase in the incidence of coronavirus in China. During the day, Brent managed to recover to $106.80 per barrel.

According to official data, 352 new cases of Covid-19 were detected in China on Sunday. As a result, the authorities of several large cities have re-introduced strict restrictive measures in order to prevent the further spread of infection. And this, according to analysts, may lead to a reduction in fuel demand in the world's largest oil importer.

In addition, the focus of the markets this week is the visit of US President Joe Biden to Saudi Arabia. Biden intends to meet with the Crown Prince of the country, as well as with the leaders of other Arab countries, including Egypt, Jordan, Iraq and the United Arab Emirates.

The meeting will address the issue of increasing oil production in the region. However, even if the participants decide to increase production, this will have an extremely insignificant impact on the dynamics of the market, since the reserve capacities of the OPEC states are limited.

July 13. The Central Bank of South Korea raised the rate by 50 bp at once​​​​​​​

For the first time in history, the Bank of Korea decided to raise the key rate by 50 basis points at once to combat high inflation. Now the rate is now 2.25% per annum. After the announcement of the regulator's decision, the exchange rate of the South Korean won rose against the US dollar by 0.6%. However, the currency still remains near the lowest in 13 years.

The rate has been increased for the sixth time since August 2021 and the pace of its rise has become the highest since the adoption of the key rates policy by the regulator in 1999. Analysts are confident that the central bank will continue to tighten policy in the coming months.

The chairman of the central bank of the country, Chanyon Ri, said that the non-standard decision on the rate was made unanimously, however, if the inflation curve follows the projected trajectory, further rate increases will be the usual 25 bps.

Inflation in South Korea in June was 6% in annual terms, which was the highest since November 1998. This year, inflation is expected to exceed the previous forecast of 4.5%. At the same time, the regulator presented a worsened forecast for GDP in 2022: it is expected that the rise will be weaker than 2.7%, which were predicted earlier.

July 20. Oil is moderately cheaper in the middle of the week​​​​​​​

Oil quotes are moderately declining on Wednesday after yesterday's growth to the highest since the beginning of July.

On July 18 Brent was trading near $99.65 per barrel, then on the 20th the asset sharply strengthened to $107.60. The current quote is $105.57 per barrel.

North American WTI oil shows similar dynamics: a decline to $98.94 per barrel after rising to a maximum of $100.55. The current WTI quote is $99.10 per barrel.

Fears that the actions of the US administration to combat climate change will negatively affect oil production in the country contributed to the growth of both assets. Yesterday, US President Joe Biden promised to take decisive measures on the part of the executive branch in order to combat climate change and support renewable energy. However, the president did not specify the details, which caused a wave of concerns among market participants.

Previously, the environmental measures of the authorities included reducing the area of territories adapted for oil and gas production.

Today, yesterday's data from the American Petroleum Institute put pressure on Brent and WTI. The report showed that the growth of crude oil reserves in the United States last week amounted to 1.5 million barrels, which was higher than the projected 400 thousand barrels. Today, we should pay attention to similar statistics from the US Department of Energy – if official data confirm the growth of hydrocarbon reserves, oil quotes will continue to decline.

-- Edited by Charot FXMart on Wednesday 20th of July 2022 02:58:23 PM

July 26. Gas prices in Europe jumped above $1,900​​​​​​​

According to the London ICE exchange, gas prices in Europe are rising moderately on Tuesday and are holding above $1,900 per thousand cubic meters.

The cost of «blue fuel» jumped sharply yesterday after Gazprom announced plans to reduce supplies via the key Nord Stream gas pipeline from Russia to Europe. According to the plan, from June 27, the pipeline will pass no more than 33 million cubic meters per day, which is only 20% of the nominal capacity of the main line.

Analysts believe that exchange prices for gas in Europe may exceed $2,000 per thousand cubic meters for the first time in four months. The last time the cost of gas exceeded this mark was in early March – then gas quotes approached the $4,000 mark due to fears of a ban on Russian energy resources.

The estimated gas price on the European stock exchange in July averages $1,742 per thousand cubic meters. This is several times higher than in the same period last year. Experts note that there have not been such consistently high prices in the entire history of the operation of gas hubs in Europe – since 1996.

July 25. Brent fell below $98 per barrel

World oil prices continue the decline, which began at the end of last week. The current Brent quote is $97.66 per barrel.

Pressure on the commodity asset is exerted by traders' concerns about the prospects for economic growth and demand for energy resources in the world in conditions of high economic uncertainty. The fact is that the world's central banks are aimed at curbing the acceleration of inflation, which can lead to a recession.

The focus of the markets in the last trading week of July is the meeting of the US Federal Reserve System, which is likely to be another reminder of the economic difficulties in the country and in the world. The results of the meeting will be published on Wednesday, and most analysts expect another rate hike by 75 basis points, to 2.25-2.5%.

As for demand, analysts believe that oil demand may exceed expectations even in the event of a weakening of the US economy. The fact is that consumption growth in recent years has lagged behind the average level for 40 years due to coronavirus restrictions and should return to normal levels.

In general, despite the local decline, the oil market is likely to continue to grow in the coming weeks, given the beginning of the hurricane season, which may limit production in the Gulf of Mexico. And this traditionally pushes oil prices up.

August 8. The oil market remains under pressure​​​​​​​

Yesterday, oil prices again showed a decline in the area of multi-month lows – to the level of $93.20 per barrel. Today, Brent crude managed to recover to the level of $94.25.

Pressure on the oil market continues to be exerted by investors' fears that rising interest rates and a slowdown in the global economic recovery will have a significant negative impact on demand.

The worries of market participants intensified yesterday after the Bank of England decided to raise the base interest rate to 1.75% from 1.25% per annum, at a record pace since 1995. At the same time, the British regulator noted that it expects a decline in the UK economy in the fourth quarter of 2022, and this decline will last throughout 2023.

However, a number of analysts believe that it is too early to say that the world economy is in recession. Moreover, sharp fluctuations in the oil market due to the current global economic conditions make it difficult to forecast a deficit or surplus of production for 2022.

On August 3, OPEC+ decided to increase oil production in September by 100,000 barrels per day, and this decision is aimed at studying the market reaction and may be revised.

August 10. Crypto market news​​​​​​​

Bitcoin has sharply increased in price by $1.000 and exceeded the level of $24.000 after the release of inflation data in the United States. The current BTC quote is $24.077, over the past day the cryptocurrency has risen in price by 3%. The cost of bitcoin increased after the US Department of Labor reported an increase in consumer prices in the country by 8.5% year-on-year in July.

The Coinbase crypto exchange recorded a loss of $1.1 billion in the second quarter. This became known from the company's financial report. Coinbase has suffered due to a sharp decline in trading volumes caused by the collapse of cryptocurrency quotes in recent months. In particular, the price of bitcoin has dropped by almost 70% from the historical maximum set in November 2021.

The developers of the Phantom cryptocurrency service announced the results of an investigation into the hacking of 9230 Solana wallets and the theft of $4.08 million in cryptocurrency that occurred on August 3. The representatives of the project found out that all the affected addresses were related to the Slope mobile application – they were created, imported or used in it. Further investigation is ongoing.

In China, more than 12 thousand accounts in local social networks were blocked, the owners of which promoted and advertised the cryptocurrency. Also, Chinese web platforms have deleted more than 51 thousand posts with illegal advertising of earnings through investing in bitcoin.

The Robinhood cryptocurrency service, by court decision, will pay compensation totaling $9.9 million to all users affected by platform outages in 2020. Then the blocking of traders' operations led to significant losses, as at the same time the financial markets showed record growth results.

August 15. The European market is growing at the beginning of the week​​​​​​​

European stock indexes are growing moderately at the beginning of a new trading week. And investors continue to analyze weak statistics on the Chinese economy.

The German DAX index is trading near the values of the previous session (13.786,72). The CAC 40 in France rose 0.2% to 6,533.12 points, and the British FTSE 100 was trading 0.2% higher than the previous close at 7,539.65.

Economic data from China showed that the pace of economic growth in the country unexpectedly slowed in July, which forced the central bank of China to reduce the key lending rate from 3.70% to 2.75%. Industrial production in July increased by 3.8% compared to a year earlier, but the growth rate was lower than the expected 4.6%. Retail sales increased by 2.7% compared to a year earlier, while failing to meet forecasts of 5.0% growth and 3.1% growth observed in June.

In Europe, the European Central Bank raised interest rates by half a point in July and is expected to do the same in September. The tightening of the ECB's monetary policy comes despite the fact that the risk of recession in the eurozone has reached its highest level since November 2020. And all because of record inflation against the background of a shortage of energy carriers.

Corporate news of European companies

Shares of AstraZeneca PLC rose 2.6% after the drugmaker announced that its anti-cancer drug Enhertu slowed the progression of a form of breast cancer in previously treated patients.

Shares of Henkel AG & Co. Stocks rose 0.4% after the German consumer goods company reported that its sales volume increased in the first half of the year, but profits declined due to rising prices for raw materials and logistics.

August 17. Macroeconomic events of the day | August 17​​​​​​​

New Zealand

The Central bank of New Zealand has introduced a policy to combat high inflation in the country, increasing the interest rate by 0.50 basis points – from 2.5% to 3%. This is the fourth year that the New Zealand central bank has raised interest rates.

Great Britain

Inflation in the UK reached double digits for the first time in 40 years: consumer prices rose by 10.1% in annual terms in July. Analysts note that the last time inflation in the UK was above 10% was in 1982. Compared to June, consumer prices increased by 0.7%. At the same time, economists predicted an increase in annual inflation to 9.8%.

Eurozone

According to the second estimate of the European statistical agency Eurostat, the GDP of 19 eurozone countries in the second quarter of 2022 grew by 3.9% year-on-year and by 0.6% quarter-on-quarter. Analysts expected growth of 4% in annual terms and 0.7% in quarterly terms.

The United States

According to the US Department of Commerce, the volume of retail sales at the end of July remained at the level of the previous month – 0.8%. At the same time, analysts expected sales to increase by an average of 0.1%. On a monthly basis, sales increased by 0.7% (excluding gasoline and car sales from calculations).

Oil

According to the official report of the US Department of Energy, commercial oil reserves in the country decreased by 7,056 million barrels per week after an increase of 5 million a week earlier.

August 19. The dollar index rose to highs on the signals of the US Federal Reserve​​​​​​​

On Friday, the US dollar shows strengthening to a one-month high in pairs with major competitor currencies. The dollar index is currently 0.17% higher than Thursday's closing level (107.65); the maximum value of the USDX index was reached on July 18 at 107.72.

The US currency is supported by statements by the heads of the US Federal Reserve on the need for further interest rate increases. Next week, the central bank's symposium will be held in Jackson Hole, and it is expected that representatives of the regulator will give new signals about the dynamics of monetary policy.

Earlier, the president of the Federal Reserve Bank of St. Louis, James Bullard, said that he was leaning towards a third consecutive increase in the key rate by 75 basis points at the Fed meeting in September. His colleague from San Francisco, Mary Daly, also believes that an increase of 50 or 75 points would be quite reasonable. Other representatives of the Federal Reserve are also confident that it is too early to ease monetary policy, since inflation is still at record levels.

Additional support for the dollar was provided by yesterday's data on the labor market in the United States. The number of initial applications for unemployment benefits decreased by 2 thousand from the revised figure of the previous week – to 250 thousand. Unemployment in May remained at the April level of 3.6%, and the number of people employed in non-agricultural sectors of the economy increased by 390 thousand people.

The USD/JPY pair has risen to a maximum since July 28 (136.69) and is preparing for the strongest weekly growth since June 10. EUR/USD is still sideways near the level of 1.0086, and the GBP/USD pair has fallen to a minimum since July 21, 1.1895.