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Oil is recovering and a promising performance in global stock markets

Oil is recovering and a promising performance in global stock markets

Oil is recoveringThis week witnessed important and great events,
as the US House of Representatives approved the US relief package and many important economic data were released.

Other data is on its way to be published today.

Evest is following up with you all this and more on the following lines.

 

Great recovery for oil

Oil prices rebounded by more than a dollar in today’s trading, after the United States of America agreed on the major stimulus package.

However, the slowdown in the growth of Chinese factory activities in February led to a limiting rise in oil prices.

 

Brent crude for May delivery rose by $1.24, or 1.9% to record $ 65.66 a barrel.

Likewise, West Texas Intermediate futures prices for April delivery rose by $ 1.18, or 1.9%, to trade at $ 62.68 a barrel.

 

Last week, both contracts touched their highest levels in 13 months.

However, both oil prices and financial markets retreated at the end of the week after falling bond yields amid fears regarding inflation.

According to Reuters

According to Reuters, oil prices have been recovered this morning in line with most risky assets on the back of the US stimulus bill which was approved by the US House of Representatives.

 

As it is known, the US House of Representatives approved an aid package worth $ 1.9 trillion to combat Coronavirus on Saturday morning (27/2).

Representatives voted by 219 against 212.

Thus, this bill will be presented to Senate as Democrats show a slim majority.

This by its turn led to increasing investors’ appetite for riskier assets in Asian stock markets.

Now, the aid package will be presented to US Senate for further discussion.

 

On other hand, approval of using Johnson & Johnson’s Covid-19 vaccine also supports economic expectations.

 

However, manufacturing data by major Asian oil importers were differentiated.

Factory activity data in China retreated to its lowest levels in 9 months during February, while manufacturing in Japan developed to be the fastest in more than 2 years.

 

Crude oil supplies

Crude oil supplies destined for major Chinese importers are expected to dwindle during the second quarter as higher oil prices lead to slowing down demand.

Preliminary data also showed that South Korea’s imports in February were down by a rate of 14.7%, compared to last year.

Organization of Petroleum Exporting Countries (OPEC) and its allies will meet on Thursday to discuss the possibility of a return for reaching 1.5 million barrels of crude oil to markets a day.

 

Some analysts believe that if combined (OPEC+) gains do not exceed 500,000 barrels a day, this will be bullish in relation to price.

They warn OPEC to be careful in avoiding surprising traders by releasing too many supplies in the market again.

 

There is a large amount of speculative money in oil at the moment,
so investors want to avoid any action that makes them get out of the market.

 

On the other hand, on Sunday, Iran refused to start talks with the United States and the European Union to revive the nuclear deal of 2015.

Iran insists that Washington must lift the unilateral sanctions that have sharply reduced Iran’s oil exports, first.

 

Technology stocks are attracting investors

Business optimism and strong guidelines of international exchanges,
especially technology stocks seem to encourage investors in the German stock market.

DAX, MDAX, and TecDAX indices rose at a rate of 1.4%.

 

This week, the German stock market began profitably trading and the DAX index rose by 1.4% to record 13,980 points.

Consequently, investors follow up positive indicators of Asia.

Eurostoxx 50, the leading euro-zone index rose by 1.5%.

In Tokyo, the Nikkei index closed up 2.4%.

Main indexes in Shanghai and Hong Kong stock exchanges rose by a range of 1.5%.

Last week’s inflation concerns seem to be fading into the background.

Positive news of the German auto industry may contribute to this.

 

Last week

Last week, for a short period, DAX rose above 14,000 points, then it closed below 200 points, at minus 0.7%, on Friday.

At present, there are no losers in the leading German index.

Above all, shares of Bayer and Deutsche Bank will rise by a range of 2.5%.

 

On other hand, on Monday, Wall Street surged ahead of the market.

Dow Jones Industrial Average rose by 1%.

S&P 500 rose by 1.1%, versus initial gains of 1.3% for the Technology Nasdaq index.

 

Markets are overcoming their fears of inflation and rising bond yields to focus on the possibility of economic stimulus
after approval of Biden’s plan in the House of Representatives.

 

Economic data is expected today

The final PMI manufacturing index for February will be released at PM 3:45 (outlooks 58.5),
while ISM manufacturing index for the same month will be released at PM 4 (outlook 58.9).

Thus, these 2 indicators will reflect continuing strong expansion.

Construction spending for January will be released at PM 4 (expectations are 0.8% higher, compared to last month).

 

In addition

In addition, John Williams, Kyle Brainard, and Rafael Bostic of Federal Reserve will speak during the day.

 

On other hand, in the morning, main European manufacturing PMIs for February were revealed.

THE final PMI for the manufacturing sector in Euro-zone settled at 57.9 in February, compared to 54.8 during January.

 

Thus, the index highlights the sector’s expansion for the eighth month in a row.

The index also highlights the strongest improvement in the economy for 3 years.

Spain’s manufacturing PMI beat expectations at 52.9, while the Italian index came out strong at 56.9.

French index rose to record 56.1, while German index reached 60.7.

UNITED KINGDOM index is in line with expectations of 55.1.

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