Morning Brew March 14 2022
Senior Relationship Manager
Summary: Key week for global markets - Risk on and Higher USD today
We are going into a week that should be extremely interesting.
Diplomatic efforts to resolve the Ukraine crises are intensifying even as fighting remains fierce.
After a weak end of the week, Equities are friendly this morning, except the US500, which is losing 0.5%.. The US30 is at 33200, +0.7%, the US 500 at 4234 or -0.5%, the USTECH100 13370 or +0.5%, the GER40 gains 2.5% to trade at 13880.
The current average move per Day for the GER40 is at 660 points, the average for the last year is 250, calling for smaller position sizes.
Gold gives up 12.7 USD to trade at 1975, Silver is 25.65, EURUSD 1.0918 and GBPUSD at 1.3020. The USD Index rose to 99.25 as US 10 Year Yields exceed 2% in the forefront of the FOMC. Current probabilities are a hike of 25 bps with a probability of 93% and 50 bps with 7%.
From Ole`s Commodity Update:
The Bloomberg Commodity Spot index jumped a massive 11.2% during the reporting week, with gains being led by industrial metals, and not least energy where crude oil surged higher by 20% before suffering a major correction the day after the reporting week ended. Overall it was another week where surging volatility across most commodities saw money managers cut both long and short position, the net result being a small 2% reduction in the overall long across 24 major commodities to 2.17 million lots. Increasingly difficult market conditions helped trigger a 180k lots reduction across oil, fuel products and natural gas while net length was added to most other sectors led by grains and softs.
UK Oil has retreated to 109.90 from last weeks high of 138.
Reminder that US will go on Daylight Saving Time this coming weekend. The clocks are rolled forward one hour. As a result the US Exchanges will trade 14:30 CET to 21 CET until March 27,
As a result of this please be aware of the following changes to trading hours during the next 2 weeks, until Europe also moves to daylight savings on March 27th and there are changes to the ICE trading schedule you can see in the trading conditions.
China is suffering increased Covid Cases and has shut down public transport in Shenzen, Two key apple suppliers, Foxconn and Unimicron have halted production
Ride haling company DIDI lost 40% in the NY listing on Friday.
Today is rather thin in terms of economic data, tomorrow we will see the UK Employment data at 8:00 CET, German ZEW at 11 along with the EU Industrial Production and the US OOI at 13:30.
Wednesday the FOMC rate decision will be one of the weeks key events.
As said last week, check your risk in the market and trade safely.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.