Oil High and Mixed sentiment in stocks and gold markets
Oil High and Mixed sentiment: The market is witnessing a state of anticipation for the results of Senate elections in Georgia,
as Democrats seemed to be very close to resolving the results amid high sentiment that dominates markets,
matched by a state of anxiety and uncertainty due to the epidemic situation.
Evest tracks market movements closely to help you make the right investment decision at the right time.
A sharp rise in oil prices after OPEC decision
Oil prices rose today supported by OPEC decisions taken yesterday,
as the Organization of Petroleum Exporting Countries maintained current production levels.
Brent crude rose 0.54%, recording $ 53.40 a barrel,
while US West Texas Intermediate crude rose 0.20% to trade at $ 50.03 a barrel.
The organization announced that Moscow intends to increase its oil production in
February and March at the expense of Saudi Arabia.
This decision was reached by OPEC + countries through mutual consent.
Russia and Kazakhstan will increase production by a total of 75.000 barrel a day,
by 65.000 and 10.000 barrels a day respectively.
Saudi Arabia is voluntarily reducing its production by one million barrels a day
during February and March, which leads to reducing net production by more than 900.000 barrels a day.
Oil prices rose after OPEC + countries agreed to reduce oil production in
February and March, which will reach 7.125 million barrels a day now.
The organization had agreed to reduce production because of Coronavirus as of March 9, 2020
witnessed the largest sharp drop in prices since 1991 with the start of the Gulf War.
After that, there were many price collapses in the oil market –
against the backdrop of the situation of Coronavirus and restrictions due to epidemic in the world’s largest economies,
leaving the market mired in a sharp drop in demand and excessive oil surplus.
On April 12, 2020, OPEC + member states including Russia agreed to reduce oil production.
OPEC+ production reducing agreement provides for a production limit of 7.7 million barrels a day till the end of 2020.
Last year, on December 3 OPEC + countries including Russia,
agreed to maintain the cuts imposed on oil production, which have been in place since April 2020,
but with some easing of these cuts through increasing production by 500.000 barrels a day,
provided that this agreement will be monthly reviewed.
Gold falls after Republicans reduced the lead with Democrats in Georgia
Gold is still watching the developments of the run-off in Senate elections in Georgia,
as the yellow metal fell as Democrats’ progress was reduced in two seats which might give Joe Biden the largest legislative tool in USA.
Gold has lost about $ 5 since the start of today’s trading, as it is now trading around $ 1945 an ounce.
Democrats and Republicans are competing for a final two seats in Senate,
where Democrats’ victory means the party’s control of the legislative branch after they have already controlled the executive one.
Democrats’ victory will lead to more economic stimulus which will by its turn weaken dollar and support gold’s upward trend.
This i s an early talk, as results are still not announced yet.
In general, expectations are increasing that gold will trade positively through the coming period,
supported by weak dollar and a wider spread of Coronavirus in addition to increasing financial stimulus.
Democrats’ victory would give market immediate higher sentiments in a short time,
which would push gold to higher levels and make a price recovery, even if it is short.
Divergence in Asian stock markets.. US market closed higher
After tracking the performance of exchanges by Evest,
East Asian and Australian stock exchanges did not show a clear direction for trading
as some high sentiment dominate regarding the victory of Democrats in Georgia.
This was matched by declining sentiment due to the accelerating number of Corona virus
Covid-19 infections besides, new restrictions imposed as a result.
Kospi Index in Seoul rose by more than 3000 points for the first time but it declined and closed down 0.75%, recording 2.968.21 points.
As for Shanghai Composite Index, it witnessed a positive change of about 0.51% to 3546.74 points,
while Hang Seng Index decreased by less than 0.01% and recorded 27.649.08 points,
as business activity slowed among Chinese service providers in December.
PMI also declined to 56.3 points after it reached 57.8 points in November.
Nikkei continues its negative trend declining by 0.38%,
recording 27055.94 points as Japan will make its decision tomorrow regarding a state of emergency in Tokyo and 3 neighboring cities.
In Sydney S &P / ASX-200 index fell 1.1%, to 6.607.10 points as traders took profits
after the index made its best start since 2001.
In USA, optimistic state of Democrats’ victory pushed the three main indices higher
as Standard & Poor’s 500, Dow Jones and Nasdaq, each recorded an increase of 0.71%, 0.55% and 0.95%, respectively.
European stock exchanges are witnessing divergence due to mixed and optimistic
sentiment by Democrats for the state of Georgia but pessimism due to the increased frequency of HIV infections.
US Dollar declines against a basket of major currencies
US dollar retreated after a short recovery as Democrats were close to sealing results
in the state after Republicans initially narrowed the difference.
Euro rose by 0.32% against US dollar, recording $ 1.2334, while Sterling rose by 0.25%, recording $ 1.3650,
but Australian dollar rose by 0.53%, reaching $ 0.7795 and New Zeeland dollar rose by 0.39% to record 0.7281.
US Dollar fell slightly against Japanese yen recording 102.70 and against Chinese Yuan by 0.05%, registering 6.4565 Yuan.