Tuesday, January 21, 2020

Oil prices jump to new weekly high; BoJ raises growth outlook

Tags
  • China
  • Dollar
  • Gold
  • Euro
  • Stocks

Market Recap: Oil prices jump to new weekly high as Libya’s oil production remain disrupted; BoJ keeps rates unchanged while raising its growth outlook

Global markets ended Monday's trading session mixed while Wall Street remained closed for a holiday. Equities were mostly down in Europe while Asian stocks were mixed after the People’s Bank of China (PBoC) unexpectedly left both its five-year and one-year loan prime rates unchanged at 4.80% and 4.15% respectively. The Hang Seng Index retreated after Moody downgraded the city as a long-term issuer by one notch. 

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The dollar was mostly mixed against other major currencies. The Dollar Index was flat while the euro reversed losses after French President Emmanuel Macron said that his discussion with US President Donald Trump over their digital tax dispute was positive, signaling that trade tensions between the US and EU may be easing.

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Gold extended gains by 0.23% to 1560.77 while the yen fell slightly against the greenback on Monday as investors stayed cautious ahead of the Bank of Japan's (BoJ) monetary policy meeting. Earlier today, the BoJ left rates unchanged and raised its growth forecasts. The central bank revised its GDP growth forecast upwards for all three years: 2019 (0.6% to 0.8%), 2020 (0.7% to 0.9%) and 2021 (1.0% to 1.1%). But the BoJ’s outlook for inflation (CPI) was lowered by 0.1% for all three years as well. The yen strengthened against the greenback by 0.21% as of 8.30am (GMT +4) as a result of the more optimistic outlook for the Japanese economy.

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Oil prices continued to rise on Monday after oil production in Libya was disrupted by forces loyal to Libyan National Army Chief Field Marshall Khalifa Haftar on Saturday. Brent crude oil futures rose 0.54% to 65.20, the highest in a roughly a week.

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Asian equities started the day mixed on Tuesday and look poised for losses. The Nikkei and KOSPI started Tuesday's trading session 0.04% and 0.13% lower. All major Asian indices fell later in the morning as investors become more risk adverse thanks to a spreading virus in China. US equity futures edged lower on Tuesday morning as well.

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Earnings season continues today with UBS' earnings call at 12pm (GMT +4) and Netflix’s quarterly earnings report at 1am (GMT +4) tomorrow.

Economic releases for the day ahead include unemployment rate in the UK at 1.30pm (GMT +4) and economic sentiment in the EU and Germany at 2pm (GMT+4).