Thread: ForexMart's Forex News

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 19. Tether lost $7 billion: is it the collapse of stablecoins?​​​​​​​

According to CoinGecko, Tether's turnaround offer has dropped from about $83 billion a week ago to less than $76 billion dollars on Tuesday. Investors withdrew more than $7 billion from this stablecoin after it briefly lost its dollar peg.

As you know, Tether is tied to the dollar – it should always cost $1. But last Thursday, its price dropped to 95 cents amid panic over the collapse of a competing token called Terra USD.

Most stablecoins are backed by fiat reserves, which means that they have enough collateral in case users decide to withdraw their funds from them. However, the new generation of «algorithmic» stablecoins (such as Terra USD or UST) have a dollar peg based on a mathematical code.

The loss of the dollar peg drew attention to the problem of reserves behind Tether. When the reserves data were last released, cash accounted for $4.2 billion. Another $34.5 billion consisted of unidentified Treasury bills with a maturity of less than 2 months, and $24.2 billion of assets accounted for commercial securities.

Experts note that the destabilization of tokens has worried regulators in the United States and Europe. Last week, US Treasury Secretary Janet Yellen warned of risks to financial stability if stablecoins continue to grow unchecked. At the same time, she urged lawmakers to adopt laws regulating this sector by the end of 2022.

France is also concerned about the situation in the cryptocurrency market, calling it a «wake-up call» for global regulators. According to the governor of the Bank of France, Francois Villeroy de Gallo, cryptocurrencies can destroy the financial system, especially stablecoins, if they are not regulated. As a result, the European Union plans to subject stablecoins to strict regulatory oversight through new rules known as Crypto Asset Market Regulation or MiCA.

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 26. Brent rises after the release of US data on stocks

On Thursday, the oil market is showing a rise after the release of data from the US Department of Energy on crude oil reserves in the country, which showed a decrease in oil and gasoline reserves before the start of the automotive season.

The current Brent quote is $111.60 (the daily maximum is at $111.86 per barrel). WTI oil is trading at $111.11 per barrel.

According to the report of the Ministry of Energy, commercial oil reserves in the United States for the week ended May 20 decreased by 1.02 million barrels to 419.8 million barrels. Experts on average expected a decrease in reserves by 2.13 million barrels. Stocks at the terminal in Cushing decreased by 1.1 million barrels. Oil production remained at 11.9 million barrels.

Gasoline stocks decreased by 482 thousand barrels, distillates – increased by 1.66 million barrels. Analysts expected a reduction in gasoline stocks by 2.13 million barrels and an increase in distillate stocks by 1 million barrels.

Earlier this week, it was also reported that the administration of US President Joe Biden is considering restricting the export of petroleum products from the country to curb the rise in gasoline and diesel fuel prices.

May 25. Russia and Iran switch to settlements in national currencies​​​​​​​

Russia and Iran held a meeting during which the countries agreed to switch to settlements in national currencies and discussed the possibilities of Shetab and Mir payment cards.

The negotiators note that the relevance of the topic of financial and banking relations between countries, as well as the creation of conditions for mutual settlements and payments between legal entities and organizations is a huge step forward.

In addition, the countries discussed swap supplies of oil and gas, as well as increased investments for the implementation of joint oil and gas projects in the republic. According to Russian Deputy Prime Minister Alexander Novak, cooperation between Russia and Iran in the current conditions is becoming one of the most key, including for the transit of goods from the Persian Gulf.

The parties also agreed to accelerate the preparation of an agreement on a free trade zone. Currently, Russia has a free trade agreement with the CIS countries – it was signed on October 18, 2011.

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.

May 30. Inflation in Germany accelerated to a record 8.7% in May

According to data from the German Federal Statistical Office Destatis, consumer prices harmonized with EU standards jumped by 8.7% year-on-year in May. This indicator has become a record since the beginning of his calculations. Analysts had expected a more moderate growth of 8%. Inflation in April was fixed at 7.8%.

On a monthly basis, consumer prices increased by 1.1% in May after an increase of 0.7% in April. Experts expected an increase of 0.5%.

Consumer prices calculated only by German standards jumped by 7.9% y/y and 0.9% m/m in May. Analysts had expected growth of 7.6% and 0.5%, respectively.

According to the Destatis report, annual growth has become a record since the winter of 1973-74.

Energy carriers rose the most: the price increase in May amounted to 38.3% in annual terms after an increase of 35.3% in April. Food prices rose by 11.1% (in April – by 8.6%). The growth of prices for services slowed to 2.9% from 3.2%.

May 31. The oil market continues to grow on the sanctions news

Oil quotes continue to follow the upward trend that began last week. Then Brent was trading below the level of $110, while today the current quotation of the commodity asset reached $123.32 per barrel.

North American WTI crude is trading at $119 per barrel, up from $105 last week.

The driver for growth today was the news that the leaders of the EU countries finally agreed on a partial ban on the import of Russian oil. In particular, the participants of the debate agreed to impose an embargo on two-thirds of oil supplied from Russia. At the same time, by the end of the year, the EU hopes to get rid of 90% of Russian raw materials.

The decision to impose not a full, but a partial embargo was a compromise, since not all countries supported the introduction of an import ban. Hungary, which is heavily dependent on energy resources from the Russian Federation, opposed it.

Analysts note that a complete rejection of Russian oil may lead to its rise in price to $ 185 per barrel.

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 3. Economists predict the collapse of thousands of digital currencies

The cryptocurrency market today has more than 19 thousand cryptocurrencies and dozens of blockchain platforms, however, a number of cryptocurrency firms suggest that in the coming years many digital tokens will collapse, and the number of blockchains will decrease. Experts predict that in the future there will be only dozens of cryptocurrencies.

Universal attention to the vulnerability of cryptocurrencies was attracted by the recent collapse of the so-called algorithmic stablecoin Terra USD and the associated digital token Luna. The fall of Luna shocked the market, after which many economists began to think more and more about the future and viability of digital currencies.

Web3 Foundation CEO Bertrand Perez drew a parallel between cryptocurrencies and «dotcoms». He believes that the collapse of Terra was one of the consequences of too many blockchains and tokens on the market, which confuses users and involves some risks for them.

Just like at the beginning of the Internet era, when too many «dotcom companies» appeared, many of them were fraudulent and did not bring any value. However, over time, the market «cleared» of them, leaving only useful and legitimate companies. Today, the situation in the crypto market is repeating itself, and many experts agree that most of the cryptomonets will no longer exist in the future. The only question is which ones will stay afloat. A number of analysts believe that only bitcoin and Ethereum will survive.

Currently, the market continues to be under pressure. Bitcoin has fallen by more than 50% compared to its all-time high reached in November ($67,789). The current BTC quote is $30,416. Many other digital currencies have also seriously fallen in price compared to historical peaks.

June 2. US stock market closed in the red on fears of tightening monetary policy

The US stock market closed in the red, although at the beginning of yesterday the trading session began with growth.

The value of the Dow Jones Industrial Average fell by 0.54% to 32,813.23 points. The Standard & Poor's 500 dropped 0.75% to 4101.23 points. The Nasdaq Composite index lost 0.72% to 11,994.46 points.

Surprisingly, the negative factor this time was the strong statistics on manufacturing activity in the country, because, according to experts, it increased the likelihood of a more aggressive tightening of the Fed's monetary policy.

In particular, the index of business activity in the US manufacturing sector in May increased to 56.1 points from April's 55.4 points. Analysts on average expected it to decline to 54.5 points. Tomorrow we should pay attention to the statistics on the American labor market. It is expected that unemployment will decrease in May to 3.5% (from 3.6% in April), and the number of jobs will grow by 325 thousand (after an increase of 406 thousand in April).

Analysts note: «There is some irony in the fact that the pressure on the US stock market may increase if the statistical data indicate the continued active growth of the US economy and raise the yield of government bonds to the highs of the current cycle.»

In addition, on June 1, the Fed began reducing the amount of assets on its balance sheet, which reached $ 9 trillion.

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 7. The yen is trading at a 20-year low to dollar on the softer policy of the Central Bank of Japan​​​​​​​

According to trading data, the Japanese yen is trading at a twenty-year low against the dollar amid a softer monetary policy of the central bank of Japan.

On Tuesday morning, the yen fell against the US dollar to 132.77. Earlier in the course of trading, the Japanese currency fell even lower against the dollar – to the minimum of April 2002.

Economists note that the weakening of the yen against the dollar is due to the rhetoric of the Central Bank of Japan. The regulator intends to maintain the current soft parameters of monetary policy, while the US Federal Reserve makes more «hawkish» decisions on the discount rate.

On the eve of the deputy head of the central bank Masazumi Wakatabe said that it is necessary to patiently continue easing monetary policy, without excluding the possibility of additional easing.

In addition, yesterday, the head of the Bank of Japan, Haruhiko Kuroda, said that the priority for the regulator is to support the economy and commit to maintaining monetary stimulus. He noted that the economic situation in Japan today does not require tightening of monetary policy at all, since the economy is still in the process of recovering from the effects of the pandemic.