Oil is at the highest level since October 2014 and the labor market is improving in Britain

2022-01-18T19:45:43
Asia gold Oil Positive Dynamics Wall Street
...

Oil is at the highest level since October 2014 and the labor market is improving in Britain

Oil is at the highest level since October 2014 and the labor market is improving in Britain: The current tensions in the Middle East have been reflected positively on oil,
particularly in the United Arab Emirates, after yesterday’s incident, which killed 3 people. 

Evest follows market developments in the following report.

Topics:

Oil rises under the geopolitical developments in the UAE

Positive dynamics in Asia and closing in on Wall Street

Gold keeps its gains

UK labor market booming after interest rate hike last month for the first time since the pandemic

Average profits growth

 

 

 

Oil rises under the geopolitical developments in the UAE

Oil prices rose on Tuesday with rising geopolitical tensions, and Brent crude trading above $87 per barrel,
the highest level since October 2014.

On the eve of this, it became known about the impact of drones on the territory of the United Arab Emirates,
which resulted in the death of three people.
The UAE authorities charged the Yemeni Houthi rebels with carrying out the strikes.

Three oil tanks in Abu Dhabi were damaged by the explosion that resulted in the attack.
In addition, the fire started inland at the international airport in Abu Dhabi.

The cost of March Brent oil futures on the London Stock Exchange Futures is $87.3 per barrel on Tuesday,
$0.82 (0.95%) higher than the closing price of the previous session. 

As a result of Monday’s trading, these futures rose by $0.4 (0.46%) – to $86.48 per barrel.

The price of West Texas Intermediate crude futures for February in electronic trading on the New York Mercantile Exchange (NYMEX) is $84.92 per barrel,
$1.1 (1.32%) higher than the final value of Friday’s session.

On Monday, the main trading of WTI was not held because of a holiday in the United States.

According to Bloomberg experts: “The shortage of oil supply while maintaining strong demand means that the market situation is more difficult than expected.”

Positive dynamics in Asia and closing in on Wall Street

The stock exchanges were closed in the United States on Monday because of the celebration of Martin Luther King Day.

The positive dynamics of stock indices prevailed in Asia today, Tuesday, with Japan’s Nikkei index rising 0.5%,
China’s Shanghai Composite 0.9%, and Hong Kong’s Hang Seng 0.1%.

On Monday, the People’s Bank of China (PBOC, the country’s central bank) cut two key interest rates to support the Chinese economy.

The one-year medium-term lending facility (MLF) program was reduced by 10 basis points (bp) to 2.85% per annum from 2.95%,
and the seven-day reverse buybacks interest rate was reduced by 10 basis points to 2.1%.

MLF is an important lending tool used by the Central Bank of China to provide liquidity to commercial banks,
and directly affects the prime interest rate (the basic loan rate, LPR),
which became a standard in the summer of 2019.

 

Gold keeps its gains

Gold prices maintained their gains on Monday, with expectations of tightening monetary policy in the United States.

Spot gold rose by 0.1 percent to $1819.41 an ounce, while US gold futures rose by 0.1 percent to $1818.80. US markets have been closed for a public holiday.

Although gold is considered an inflationary hedge, it is very sensitive to rising U.S. interest rates,
increasing the opportunity cost of holding non-yield alloys.

US 10-year Treasury yields hit a two-year high last week amid expectations of higher interest rates.

the US Federal Reserve’s January 25-26 meeting had a key role after policymakers indicated that they would start raising interest rates in March to curb inflation. 

According to experts: “Market participants are likely to refrain from buying gold before the US Federal Reserve raises the first interest rate,
perhaps hoping that next week’s Fed meeting will give them more signals or make it clear that the Fed will start the rate hike cycle in March.”

Reflecting the broader morale, data on Friday showed speculators cut their net gold deals at Comex in the week ending January 11.

On the other hand, spot silver rose by 0.1% to $22.97 per ounce, platinum rose by 0.4% to $974.32, and palladium increased 0.5% to $1887.19.

UK labor market booming after interest rate hike last month for the first time since the pandemic

British employers added 184000 employees to their payroll in December, showing little impact of the Omicron variant of the Coronavirus,
while vacant jobs hit a new record level, which could increase inflation concerns at the Bank of England.

On Tuesday, the Office for National Statistics said the broader unemployment rate in the three months to the end of November fell to 4.1 percent,
below economists’ expectations in a Reuters poll, to stabilize at 4.2 percent, its lowest level since June 2020.

British Finance Minister Rishi Sunak said, “Today’s figures are evidence of a booming labor market,
with employee numbers rising to record levels and repetition notifications at their lowest level since 2006 in December.”

concern about potential labor shortages and medium-term wage pressures had a key role,
in raising interest rates last month by the Bank of England for the first time since the start of the pandemic

Financial markets expect a greater than 80% chance that the Bank of England will raise interest rates again on February 3 after its next meeting.

The performance of the British labor market was stronger than predicted by the Bank of England late last year,
with unemployment falling despite the end of the government’s job support program, which supported more than a million workers in September.

More recently, the increase in Covid- 19 cases associated with the Omicron variant of the Coronavirus,
has caused widespread employee absences and caused increased demand in the hospitality sector.

But most economists expect that the adverse effects won’t last long.

 

Average profits growth

Tuesday’s data showed that average profits growth in the three months to November were 4.2% higher than the previous year ,
in line with economists’ expectations – while vacancies in the three months to December were 1.247 million.

The Office for National Statistics (ONS) said that it believed that temporary factors,
that had negatively affected wage increases earlier in 2021 had now largely disappeared.

In nominal terms, wage growth is much higher than the 2-3% range seen before the pandemic,
and potential inflation concerns in the Bank of England due to weak basic productivity growth.

But rapidly rising inflation weakens workers’ high wage benefits.

Wages excluding bonuses were fixed in inflation-adjusted terms in the three months to November, the weakest performance since July 2020.

brandfooter