FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 16 FEBRUARY 2023

16 Feb 2023

Oil prices rise as demand hopes counteract a large gain in American inventories

Asian stock market closes in red on Wednesday. The Shanghai Composite is in red 0.39% at 3280.49. Overall, the Singapore MSCI is down 0.71% at 298.75. Over in Hong Kong, the Hang Seng Index is down 1.43% at 20812.17. In Japan, the Nikkei 225 is down 0.37 at 27501.86. While the Topix index is down 0.27% at 1987.74, South Korea’s Kospi is down 1.53% at 2427.90. Australia S&P/ASX 200 down 1.06% at 7352.20.

Top News of the Day: –

Oil prices rose on Thursday as positive demand forecasts from the IEA and the OPEC helped markets look past a substantially bigger-than-expected jump in weekly U.S. inventories.

Traders also bought into heavily discounted markets after concerns over rising interest rates and weakening demand spurred steep losses earlier this week.

But both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) forecast a rebound in crude demand later this year as major importer China recovers from a COVID-induced lull.

China is expected to take up nearly half of 2023’s crude demand after the country relaxed most anti-COVID measures, the IEA said in its monthly oil report. The agency hiked its 2023 demand outlook and said global crude supply could also potentially tighten due to weak production from OPEC and Russia.

Earlier this week, the OPEC also slightly hiked its 2023 demand forecast on an expected recovery in China.

The forecasts helped traders look past data that showed U.S. crude inventories grew substantially more than expected last week, which could indicate a supply glut in the world’s largest oil consumer.

Market Summary as per 15/02/2023:

European equities Wednesday closing. The DAX futures contract in Germany traded up 0.82% at 15506.34, CAC 40 futures up 1.21% at 7300.86. UK 100 futures contract in the U.K. up 0.55 at 7997.83.

In the U.S. on Wall Street, the Dow Jones Industrial Average Closed down 0.02% at 34080.76. The S&P 500 up 0.09% at 4139.91 and the Nasdaq 100 up 0.59% at 12030.25, NYSE 0.56% closes at 16016.09.

Top Market News Today:

In the Forex market, GBPUSD up 0.13% at 1.2038. The USDJPY down 0.17% at 133.91, The USDCHF down 0.08 at 0.9229. EURUSD up 0.13% at 1.0700. EUR/GBP up 0.12% at 0.8888. The USD/CNY up 0.08% at 6.8556 at the time of writing.

In the Commodity market U.S. Gold futures up at 0.01% $1,835.62. Elsewhere, Silver futures up 0.20% at $21.66 per ounce, Platinum up 0.68% at $919.28 per ounce, and Palladium down 0.48% at $1451.00.

Brent Crude Oil up 0.62% at $85.92 per barrel.

In the Cryptocurrency Markets, Bitcoin at 24663.60 up at 1.37%, Ethereum up 0.88% at 1690.84, Litecoin at 101.91 down 0.92%, at the time of writing.

Top Market Segment to Watch Out Today:

BITCOIN– bitcoin Climbs 10.02% In Rally.

It was the largest one-day percentage gain since November 10, 2022.

The move upwards pushed Bitcoin’s market cap up to $468.9B, or 42.48% of the total cryptocurrency market cap. At its highest, Bitcoin’s market cap was $1,275.5B.

Over the past seven days, Bitcoin has seen a rise in value, as it gained 5.95%. The volume of Bitcoin traded in the twenty-four hours to time of writing was $32.5B or 50.05% of the total volume of all cryptocurrencies

Economic News:

US: – The Congressional Budget Office said the U.S. Treasury Department will exhaust its ability to pay all its bills sometime between July and September, unless the current $31.4 trillion cap on borrowing is raised or suspended.

In a report issued alongside its annual budget outlook, the non-partisan CBO cautioned that a historic federal debt default could occur before July if revenue flowing into the Treasury in April – when most Americans typically submit annual income tax filings – lags expectations.

The pace of incoming revenue, coupled with the performance of the U.S. economy in coming months, makes it difficult for government officials to predict the exact “X-date,” when the Treasury could begin to default on many debt payments without action by Congress.

“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government would be unable to pay its obligations fully,” the CBO report said. “As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”

Separately, the CBO said annual U.S. budget deficits will average $2 trillion between 2024 and 2033, approaching pandemic-era records by the end of the decade – a forecast likely to stoke Republican demands for spending cuts.

Meanwhile, CBO estimated an unemployment rate of 4.7% this year, far above the current 3.4%.

CBO Director Phillip Swagel attributed the rise to higher interest rates that particularly are hitting the housing industry, coupled with slowing business investment.

The sobering analysis reflects the full impact of recent spending legislation, including investments in clean energy and semiconductors and higher military spending, along with higher healthcare, pension and interest costs. It assumes no change in tax and spending laws over the next decade.

Euro Zone: The European Central Bank will raise its deposit rate at least twice more, taking the terminal rate to 3.25% in the second quarter, with a vast majority of economists polled by Reuters saying the greater risk is it goes even higher.

ECB President Christine Lagarde said at a news conference this month that the euro zone’s central bank would add 50 basis points to the deposit rate. Economists took her at her word, with all 57 of them polled in the Feb. 10-15 period expecting a deposit rate hike to 3.00% at the March 16 meeting.

The ECB will follow up on March’s move with a further 25-basis-point lift next quarter, medians showed, giving a terminal deposit rate of 3.25% and a refinancing rate of 3.75%. The U.S. Federal Reserve and the Bank of England are also nearing the end of their tightening cycles.

But there was no clear consensus in the poll.

Twenty-six of 56 respondents expected a hike of 25 basis points next quarter, 19 expected a 50-basis-point move, while nine said no move and a further two said the ECB would accelerate its pace of tightening and deliver a 75-basis-point increase.

In response to an additional question, an overwhelming majority – 26 of 28 – said the risk was the terminal deposit rate ends higher than they expect, rather than lower.

“Given the persistently high underlying inflation pressures, the risk for our ECB call is skewed to the upside,” analysts at DWS Group said.

As well as raising the deposit rate by 50 basis points, the ECB will do the same with the refinancing rate next month, taking it from 3.00% to 3.50%, the poll showed.

“March is more or less basically a done deal. There will now be a lot of competing about what happens in May,” said Melanie Debono at Pantheon Macroeconomics.

Inflation in the 20 countries using the euro fell to an annual rate of 8.5% last month from 9.2% in December, official data showed. While the poll suggested it would continue to fall, it was not expected to reach the ECB’s 2.0% target until 2025 at least.

Top Economic Releases Today:

USD: Initial Jobless Claims Forecast 200K, Previous 196K at 19:00
USD: Building Permits (Jan) Forecast 1.350M, Previous 1.337M at 19:00
USD: PPI (MoM) (Jan)Forecast 0.4%, Previous –0.4% at 19:00
AUD: Employment Change (Jan) Actual –11.5K, Forecast 20.0K, Previous –14.6K at 06:00
EUR: ECB`s Panetta Speaks at 14:45