Severe fluctuations in stock markets… Oil and gold are trying to recover
Severe fluctuations in stock markets: Today, markets are witnessing sharp fluctuations,
as oil is suffering from deteriorating health conditions in China and the threat of stopping celebrations of Lunar New Year which will cause harm to oil markets,
while participants in gold markets are awaiting the passage of a large stimulus package worth 1.9 trillion dollars.
As for stock markets, volatility seems to be the most intense as major indices in Asia and European regions are collectively declining,
while some American indices have managed to avoid losing.
Oil is retreating and traders are awaiting situations in China
Oil prices declined today amid deteriorating demand expectations due to a continued high rate
of Coronavirus “Covid-19” around the world in addition to the slow pace of vaccinations.
New outbreaks of the virus in China threaten a recovery in oil demand in the country,
especially as demand is rising during Lunar New Year celebrations.
Chinese authorities are urging people who usually travel at this time of year to stop traveling in order to prevent the spread of Coronavirus.
North Sea Brent crude recorded $ 55.57 a barrel to represent $ 0.31 and 0.55%,
below the closing price of the previous session. Brent closed up 0.9%, and by 0.47%, at a rate of $ 55.88 a barrel on Monday.
The price of futures of US West Texas Intermediate crude oil for March delivery reached $ 52.43 a barrel which is $ 0.34
and 0.64% lower than the close of Monday as futures prices rose by $ 0.5 and at a rate of 1%.
A barrel reached $ 52.77.
Touring season in China which is integrated with Lunar New Year,
this year is supposed to start on January 28.
According to experts, the number of trips will be about 1.7 billion this year.
This represents 40% less than in 2019, but 15% more than 2020.
Traders are now assessing the effect of this on oil consumption as demand for oil will decrease due
to fewer trips and restrictions imposed on many citizens in different regions of China.
In spite of this, there are also signs of a decline in supply in the market.
This supports prices from time to time and also limits losses in event of a decline in prices.
According to the timetable, shipments of Russian Ural oil from Primorsk in February will reach about 2.2 million tons,
29% less than in January. At the same time, it had already become clear that Iraq plans to reduce production during the period from January to February.
Gold rises… Dollar’s recovery limits gains
Gold slightly rose today as traders accepted it as a hedge against inflation which is expected to happen after the announcement of a major US stimulus package.
Spot gold rose 0.1%, to record $ 1856.33 an ounce.
US gold futures also rose at the same percentage to reach $ 1856.80.
Despite this rise, the stronger US dollar limited gains of precious metal.
US dollar index which measures the performance of the green currency against a basket of major currencies recorded an increase of 0.1%.
US 10-year Treasury yields are hovering near their lowest level during three weeks.
According to Reuters, US Senate Majority Leader,
Chuck Schumer said that Democrats may try to pass a large part of the $ 1.9 trillion Coronavirus relief bill
by using a maneuver in measures so as to bypass Republican blockage.
He indicated that the passing of the package may be delayed until mid-March.
This by its turn led to raising US health officials’ concerns about a delay in supplying second doses of vaccine.
In case of passing package in the near future,
yellow metal would get the incentive that could make it cross the $1900 level as the faster the package is delivered,
the faster recovery in the metal market is.
A two-days US Federal Reserve policy meeting is supposed to begin later today.
The loose monetary policy adds pressure to government bond yields and is yielding interest on unprofitable gold.
Despite expectations that Federal Reserve Bank will sit idly regarding monetary policy,
investors will closely monitor its tone to get any clues to the future.
Negative trading in Asia and Europe… Wall Street survives
Yesterday, most US stock indices ended their dealings in a positive area
although they showed large fluctuations during the session.
Dow Jones Industrial Average fell by 0.12% to reach 30.960 points while S&P 500 rose to a rate of 0.36% to record 3,855.4 points.
Nasdaq Composite also rose by 0.69% to reach 13,636 points. Meanwhile,
both Standard & Poor’s and Nasdaq hit their highest levels at all.
Nasdaq index tested its all-time high but it fell by 2.4% after 20 minutes.
It managed to end this volatile session by rising at a rate of 0.69%.
Standard & Poor’s was able to rise supported by higher profits of energy companies,
consumer goods and information technology, while prices of oil and gas,
financial services, industrial companies, and material producers were fallen.
Major stock indices in European regions ended the session in negative territory.
Markets are still under pressure from rising in Covid-19 cases and challenges of vaccine provision and deployment.
This by its turn helps to offset optimism about the potential for massive US stimulus measures.
British FTSE index was down by 0.84%, while the French CAC index fell by 1.57%.
German DAX index decreased at a rate of 1.66%,
while the regional STXE 600 index was down by 0.83% to close at 405.13 points.
The vast majority of Asian markets are showing negative dynamics as the Japanese Nikkei index fell by 0.80%,
while Chinese CSI lost by 1.86%. In Hong Kong, Hang Seng Index traded in red as it fell by 2.2%, and the Korean Kospi index was down by 2.10%.