Asia Europe and American indicators are in the red area
Asia Europe and American indicators are in the red area..
Asia Europe and American indicators are in the red area.. Oil is retreating for the second session
Today it has not been good for stocks and oil market investors, as most stock indexes in Asia,
Europe, and the United States of America almost fell while oil continued to decline for the second day in a row, against the background of the worsening epidemiological situation in India,
and the progress of the US – Iran talks.
A new decline in oil due to Iran and the epidemiological situation in Asia
Crude oil prices decreased for the second day in a row, affected by demand fears over high cases of Coronavirus infections in Asia, along with a potential rise in inflation in the United States which could cause the Federal Reserve Board to raise interest rates, potentially limiting economic growth.
The price of Brent crude for the July delivery contract decreased by 57 cents,
or 0.8%, to reach $68.14 a barrel.
During the previous trading session,
crude prices fell by 1.1% after they briefly rose above $70 earlier in the session.
The price of West Texas Intermediate crude futures (WTI) for June delivery declined by 61 cents (0.9%),
to record $64.88 a barrel after falling by 1.2% on Tuesday.
Earlier, the rise in Brent crude above $70 was pushed by optimism about reopening the American
and European economies, among the world’s largest oil consumers.
However, prices were later corrected amid fears of a slowdown in fuel demand in the
Asian region with the rising of Covid-19 cases of infections in India, Taiwan, Vietnam, and Thailand,
leading to a new wave of movement restrictions.
Assessing the global demand profile remains a challenge at the present time.
Given the reopening of the world versus new constraints in other countries.
Inflation uncertainty in the United States has also led investors to reduce their exposure
to high-risk assets such as oil.
There is some speculation that the Federal Reserve may raise interest rates
because inflation fears weigh heavily on growth prospects and will in turn affect demand for goods.
The Federal Reserve Bank
The Federal Reserve Bank indicated that interest rates will remain at their lowest current levels until 2023, although futures markets suggest that investors believe that the bank may start raising interest rates in September 2022.
On the other hand, weak oil prices continued despite the weakness
of the US dollar to its lowest level in 4 and a half months against a basket of other currencies.
The weakness of the dollar makes oil cheaper for holders of other currencies
and supports crude oil prices.
Investors will also keep an eye on the latest US oil inventories and
Energy Information Administration data to be released later today.
Yesterday, data from the American Petroleum Institute (API) showed that crude oil inventories
increased by 620,000 barrels during the week ending on May 14th.
Meanwhile, gasoline inventories retreated by 2.8 million barrels, and distiller inventories
declined by 2.6 million barrels, according to 2 market sources.
The increase in crude inventories was less than the 1.6 million barrels which were expected
by analysts on average in a Reuters survey.
Meanwhile, the decline in gasoline inventories and distillation products was larger than expected.
Meanwhile, investors are following the course of talks between world powers
regarding a nuclear agreement with Iran.
A return to the 2015 Agreement with Iran could pave the way for lifting the United States sanctions against the country and increasing Iranian oil exports to world fuel markets in addition to OPEC + countries increasing their oil supplies.
A Russian envoy announced during talks about a nuclear agreement
with Iran that significant progress had been made in the negotiations,
causing oil to retreat strongly yesterday, but the drop in oil prices
was halted after the same diplomat denied the disclosure of important information today.
the nuclear agreement
Although the announcement of the nuclear agreement may affect price sentiment,
at the same time, it must absorb all additional supplies even from Iran,
and the OPEC countries if they increased their productivity.
On the other hand, Germany, France, Great Britain, Russia,
and China are currently trying to persuade Iran and the United States to comply with the agreement.
The United States withdrew from the agreement in 2018 and imposed severe sanctions that plunged Iran’s oil-producing country into a severe economic crisis.
For its part, Iran is no longer bound by all the terms of the agreement.
Forecasts for European indicators to decline
Analysts expect the FTSE-100 index in London to decline by 63 points,
the DAX – 30 index in Frankfurt by 148 points, the CAC index in Paris by 60 points,
and the FTSE MIB index in Milan by 220 points at the opening of the session today.
Global markets remain deeply concerned about increasing inflationary pressures.
Investors fear that central banks may be forced to raise interest rates
owing to the strong range of prices that have accompanied the reopening and recovery of economies.
The collective decline for Asian indicators
In Asia and the Pacific, the main indicators almost declined without exception today.
MSCI Asia ex-Japan, calculated by Morgan Stanley Capital International,
excluding Japan, was 0.34% to 683,15 points.
The Tokyo Stock Exchange has been closed at 1.28%and 1.90% in Sydney.
Shanghai index retreated by 0.69%, while the Shenzhen index rose by 0.45% before closing by a little difference. Stock Exchanges in Hong Kong and Seoul will be closed on Wednesday.
A negative trading night in Wall Street
In New York, the average of the Dow Jones Industrial index fell by 0.78%,
the Standard and Poor’s 500 indexes declined by 0.85%,
and the Nasdaq Composite market index fell by 0.56%.
Futures indicators are expected to drop moderately
to around 0.4% during the opening of Wednesday.
The Federal Reserve
The Federal Reserve which serves as the American Federal Reserve Bank
will release the minutes of the latest interest rate decision meeting on Wednesday.
Investors are trying to look for control in the document to determine
when the Federal Reserve could begin phasing out its massive asset purchase program,
which could be a step before interest rates are raised.