The oil market is threatened by increased global geopolitical risks

2022-01-25T18:13:22
Asia Dow Jones indices Nasdaq composite Oil United States stock
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The oil market is threatened by increased global geopolitical risks South Korea’s economy is setting new records

The oil market is threatened by increased global geopolitical risks South Korea’s economy is setting new records: Oil prices rose during the Asian session on Tuesday, partially making up for the previous day’s decline, with investors watching for geopolitical risks in the Middle East and Eastern Europe.

Evest follows market developments in the following report.

Topics:

Oil rises under concern over geopolitical tensions

South Korea’s economy is growing at the highest rate in 11 years

United States stock indices shift trading at the last minute

The Expectations

Stock indices in the Asia Pacific region

Oil rises under concern over geopolitical tensions

The price of Brent crude futures for March on the London Stock Exchange stabilized at $86.70 per barrel on Tuesday,
$0.43 (0.5%) higher than the closing price of the previous session.

As a result of Monday’s trading, these futures fell by $1.62 (1.8%) to $86.27 per barrel.

The price of West Texas Intermediate crude futures for March in electronic trading on the New York Mercantile Exchange (NYMEX) is $83.61 per barrel,
$0.3 (0.36%) higher than the final value of the previous session. 

The day before, these futures fell by $1.83 (0.3%) to $83.31 per barrel.

The price of oil has risen by more than 10% since the beginning of the year.

As reported, NATO armed forces are preparing their forces and sending additional ships and fighter aircraft to Eastern Europe to build up Russian forces near Ukraine. 

In the meantime, Yemeni Houthi rebels fired two ballistic missiles into Abu Dhabi earlier and managed to intercept the United Arab Emirates Air Defense Forces.

In response, UAE forces destroyed the site from which the missiles were launched, Al Arabiya TV reported, citing the UAE Ministry of Defense.

On Tuesday, the market expects the American Petroleum Institute (API) to publish U.S. oil reserves data

The official Department of Energy report will be released On Wednesday.

On the other hand, demand for gasoline and diesel in the United States declined in the week ending January 21, indicating a rise in fuel inventories.

American gasoline inventories had also risen sharply the previous week, surpassing the end of January last year.

 

South Korea’s economy is growing at the highest rate in 11 years

South Korea’s economy expanded by 4% on an annual basis in 2021, according to preliminary data from the Bank of Korea,

the highest growth rate in the last 11 years.

In the fourth quarter, the country’s GDP rose by 4.1% on an annual basis and by 1.1% compared to the third quarter.

Analysts predicted an increase in the fourth quarter by an average of 3.7% for the year and 0.9% for the third quarter, according to Trading Economics.

Consumer spending rose by 6.3% in October and December from the same period in the previous year (in the third quarter, growth was 3.3%) ,
and government spending – by 8.1% (6.5%). Export volumes grew by 6.1%, and imports by 9.7%.

In the meantime, capital expenditure growth slowed in the third quarter to 1.1% from 1.5%.

Consumer spending rose by 1.7% in October and December compared to the third quarter and government spending by 1.1%.

Exports rose by 4.3% due to the supply of semiconductor components and petroleum products.

Imports also increased by 4.3% as a result of increased purchases of crude oil and chemical products.

In the third quarter, South Korea’s GDP rose by 4% on an annual basis and 0.3% quarterly.

United States stock indices shift trading at the last minute

US stock indices, which were falling sharply during most of Monday’s inflation,
shifted to growth towards the end of the session and climbed in the last 10 minutes of trading. 

The Dow Jones Industrial Index, which fell during the session to 1115 points (3.3%), ended trading Higher by 99 points.

The Nasdaq composite index rose by 4.9% during the session and Standard & Poor’s by 3.99%. 

The positive reflection of both indices during trading was the strongest since October 2008.

The Standard & Poor’s Index at some point was found to be in the bearish zone, that is,
its sharp decline from the peak recorded in early January reached 10%, which was first observed since February 2020. 

However, the index left the zone by the end of the session. Experts do not identify any incentives to reverse stock indices,
noting that these dynamics may be due to the large peak selling market.

This week, traders focus on the Fed meeting, which will take place from January 25-26.

 

The Expectations

Expectations that the Federal Reserve will raise the prime rate several times in 2022, with the highest inflation rate in nearly 40 years,
have contributed to higher US Treasury yields and a decline in the US stock market in recent days. 

Experts don’t expect the Fed to change interest rates at the January meeting,
but they believe that the statements of US Central Bank Chairman, Jerome Powell,
at a press conference will indicate a possible rate increase early in March.

The Federal Reserve Board is concerned that rapid growth in consumer prices will significantly increase inflation expectations and intends to act decisively to prevent this.

Inflation in the United States is expected to slow this year, and the Fed will not have to raise interest rates as quickly as the market predicts.

Investors are deeply concerned about the growing tension over Ukraine, which has worsened relations between Russia and the West.

Stock indices in the Asia Pacific region

Stock indices in the Asia-Pacific region show a negative trend on Tuesday morning.

Japan’s Nikkei 225 index fell by 2.06%, China’s CSI 300 by 0.8%, Hong Kong’s Hang Seng by 1.24%,
Australia’s S & P/ASX 200 by 2.7%, and South Korea’s Kospi by 2.9%. 

In the meantime, US Standard & Poor’s futures are losing 1.23% compared to the previous day’s closing,
indicating a potential resurgence of negative sentiment in the U.S. stock market on January 25.

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