Last week, investors' attention was focused on European inflation data, US labor market data, geopolitics, and the OPEC+ meeting. On Friday, non-farm payrolls showed that the number of jobs in the US increased by 431,000 in March, while a rise of 490,000 was expected. US unemployment rate fell to 3.6% in March from 3.8%. The strong labor market scenario mentioned by Fed Chairman Mr. Powell has been fully implemented. Accordingly, the Fed has more room to raise rates quickly to catch up with the yield curve. At the moment, analysts see a 75.5% chance of a double rate hike (50bp) at the May 4 meeting.
"The Federal Reserve needs to move monetary policy towards a more neutral stance, but the pace at which it tightens credit will depend on how the economy reacts," New York Fed President John Williams said on Saturday. The average neutral rate rating by policymakers is 2.4%. Currently, traders believe the Fed will achieve this by the end of this year. That rate will require a 0.5% increase at two of the remaining six Fed meetings this year, and the first is expected to take place at the May 4 Fed meeting.
The US stock market traded without a single dynamic last week. By the close of the stock market on Friday, the Dow Jones index (US30) increased by 0.40% (-0.04% for the week), the S&P 500 index (US500) added 0.34% (+0.11% for the week), and the NASDAQ Technology Index (US100) gained 0.29% on Friday (+0.59% for the week).
According to FlightAware, a data tracking site, more than 6,041 flights were delayed, and 1,933 flights were canceled on Saturday due to a major storm in Florida, USA. JetBlue Airways (25%), Spirit Airlines (23%), Southwest Airlines (10%), American Airlines (7%), and EasyJet (7%) had the most flight cancellations.
Major European indices were trading higher on Friday. German DAX (DE30) gained 0.22% on Friday (+0.49% for the week), French CAC 40 (FR40) gained 0.37% (+1.61% for the week), Spanish IBEX 35 (ES35) added 0.69% (+1.76% for the week), British FTSE 100 (UK100) jumped by 0.30% (+0.73% for the week). The inflation rate in the Eurozone rose sharply from 5.9% to 7.5% year on year. This surge in inflation has increased the likelihood that the ECB will soon announce the end of its quantitative easing program.
The UK agrees to join the US in releasing strategic oil reserves. The situation in the energy market is difficult now. On the one hand, due to Russia's invasion of Ukraine, there is a shortage of energy resources on the market, especially in Europe. On the other hand, the US and its partners are ready to release strategic reserves to curb rising oil prices. As a result, oil prices volatility is now extremely high. Oil lost more than 10% last week.
The situation in the gas market is also very difficult. On the one hand, Russia wants Europe to pay for Russian gas in rubles. On the other hand, last week, the United States announced that it would work to supply 15 billion cubic meters of LNG to the European Union this year. US natural gas exporters have already benefited from the supply crisis in Europe and Norway. Many European countries (UK, France, Germany, Austria) refuse to pay for gas in rubles. Russia cannot cut off gas to European countries because it would violate previously signed supply contracts. In addition, it should be noted that more than 80% of Russia's revenue comes from the sale of oil and gas. Therefore, the cessation of supplies to Europe will significantly reduce its revenues. It would be like shooting yourself in the foot. Lithuania has become the first EU country to no longer import natural gas from Russia.
Due to Russia's aggression against Ukraine and threats against Europe, Finland and Sweden are considering joining NATO under an accelerated procedure.
Asian markets traded flat last week. Japan's Nikkei 225 (JP225) decreased by 1.49% over the week, Hong Kong's Hang Seng (HK50) gained 2.88% over the week, and Australia's S&P/ASX 200 (AU200) closed with +1.18% over the week.
The EU has warned China against helping Russia circumvent sanctions. The EU will remain vigilant about any attempt to help Russia circumvent sanctions imposed on its invasion of Ukraine. EU leaders also said that Brussels would welcome China's positive steps to end the war between Russia and Ukraine. For its part, China has promised the European Union that it would seek peace in Ukraine, but "on its terms." Beijing has shied away from pressuring the country to take a tougher stance on Russia.
The war in Ukraine continues. This weekend, the Ukrainian armed forces managed to regain control of the Kyiv region. But footage from cities such as Bucha and Gostomel was shocking. Hundreds of civilians were killed, tortured and shot, and hundreds of mutilated civilian bodies were on the streets. The Russians shot civilians, raped Ukrainian women, killed dogs, robbed and looted. War crimes in Bucha and other cities during the Russian occupation will be considered by the UN Security Council and The Hague. The Minister for Foreign Affairs of Ukraine, Dmytro Kuleba, called on a mission of the International Criminal Court to come to Bucha and other cities in the Kyiv region to gather evidence.
In the commodities market by the end of the week futures on orange juice (+3.91%), coffee (+2.95%), and natural gas (+1.98) showed the biggest gains at the end of the week. Futures on BRENT oil (-13.18%), WTI oil (-12.71%), wheat (-10.80%), soybeans (-7.57%), palladium (-4.77%), silver (-3.36%), corn (-2.75%) and timber (-2.49%) showed the biggest drop.
Main market quotes:
S&P 500 (F) (US500) 4,545.86 +15.45 (+0.34%)
Dow Jones (US30) 34,818.27 +139.92 (+0.40%)
DAX (DE40) 14,446.48 +31.73 (+0.22%)
FTSE 100 (UK100) 7,537.90 +22.22 (+0.30%)
USD Index 98.57 +0.25 (+0.26%)
- – Australia Retail Sales (m/m) at 04:30 (GMT+3);
- – UK BoE Gov Bailey’s Speech at 12:05 (GMT+3);
- – Canada BoC Business Outlook Survey at 17:30 (GMT+3).
by , 2022.04.04
We advise you to get acquainted with the daily forecasts for the major currency pairs.This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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