Inflationary pressures caused by the war in Ukraine are increasing market expectations for an aggressive response from US monetary policymakers, leading to higher US Treasury yields, a rising dollar index, and a falling yen. The 10-year US Treasury bonds reached 2.9% yesterday for the first time since 2018, but that didn’t spoil investor sentiment as their focus is now on quarterly earnings, and investors are betting on growth in the technology sector. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 1.61%, and the S&P 500 Index (US500) added 1.61%. NASDAQ Technology Index (US100) jumped by 2.15%.
Netflix stock fell more than 23% on the report in the last trading session. The report of a decline in subscribers in the first quarter fell short of analysts’ expectations. The streaming service Netflix lost 200,000 subscribers due to inflation and competition in the market. The service lost another 700,000 subscribers after it exited the Russian market. At the same time, analysts predicted an increase of 2.5 million people.
Tesla investors will be looking forward today to see if the electric car company will keep its ambitious 2022 delivery targets, as operations at its largest plant in Shanghai are limited due to the COVID-19 outbreak in the region and new plants are slow to ramp up capacity. But it should be noted that Kathy Wood’s Ark Invest fund predicts Tesla stock will more than quadruple to $4600 by 2026 as mass electrification of cars in the future.
Major European indices closed yesterday in the red zone. German DAX (DE30) decreased by 0.07% yesterday, French CAC 40 (FR 40) fell by 0.83%, Spanish IBEX 35 (ES35) lost 0.06%, British FTSE 100 (UK100) decreased by 0.20%. European markets are under price pressure because of the war in Ukraine. Record inflation in the region and uncertainty about the ECB’s actions are the main reasons for the euro’s decline. Meanwhile, the Swiss National Bank (SNB) considers the current rise in inflation a temporary phenomenon, Chairman Thomas Jordan said on Tuesday. Central banks, including the US Federal Reserve and the Bank of England, have already started to raise interest rates to fight rising prices, though the SNB is still holding the lowest interest rate globally at -0.75%. And this is despite the fact that inflation in Switzerland jumped by 2.4% in March from a year earlier, the highest level in recent years.
The International Monetary Fund lowered its forecast for global growth by 3.6% in 2022 and 2023 from previous forecasts of 4.4% and 3.8%, respectively.
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Oil prices rose about 1% on Wednesday, recouping some of their losses in the previous session because of concerns about energy demand after the International Monetary Fund (IMF) lowered its economic growth forecasts. The situation in the oil market is extremely uncertain now. On the one hand, the EU’s rejection of Russian oil may increase the already high deficit. On the other hand, the US and its partners are going to release strategic reserves in order to lower oil prices.
European automaker Stellantis N.V. will stop production at its plant in Kaluga. Also, the US General Motors is getting ready for its final exit from the Russian market: dealers have been notified that they will stop supplying cars and parts and the Russian office’s employees have been laid off.
Russians are being offered to buy Visa and MasterCard cards from a number of CIS countries on the Internet, as well as virtual cards from a US bank. It will be possible to pay for them abroad, replenish foreign services and withdraw currency in cash while traveling. The cards of Uzbekistan, Georgia, Serbia, and Kyrgyzstan are offered.
The founder of Tinkoff Bank (the parent company of TCS Group) Oleg Tinkov appealed to Western countries to be “more rational and humane” to help stop the war in Ukraine, where innocent people and soldiers were killed. The billionaire opposes the war in Ukraine. Tinkoff Bank declined to comment on Tinkov’s personal opinion, recalling that he is not a decision-maker in Tinkoff Group companies, has not been in Russia for a long time, and has been dealing with his health in recent years.
Asian stock markets traded yesterday without a single trend. Japan’s Nikkei 225 (JP225) increased by 0.69% yesterday, Hong Kong’s Hang Seng (HK50) fell by 2.28%, and Australia’s S&P/ASX 200 (AU200) jumped by 0.56%. China’s yuan hit its lowest level since October after the central bank promised support for the service sector and left the Loan Prime Rate unchanged. To the surprise of many analysts, China kept its benchmark lending rates for corporations and households unchanged, which runs counter to the global trend of tighter monetary policy. Japan recorded a trade deficit in March that was more than four times higher than market forecasts, as exports to China slowed sharply, and soaring energy prices increased the cost of imports, exacerbating economic problems caused by the war in Ukraine.
Main market quotes:
S&P 500 (F) (US500) 4,462.21 +70.52 (+1.61%)
Dow Jones (US30) 34,911.20 +499.51 (+1.45%)
DAX (DE40) 14,153.46 −10.39 (−0.073%)
FTSE 100 (UK100) 7,601.28 −15.10 (−0.20%)
USD Index 100.98 +0.19 (+0.19%)
- – China Loan Prime Rate (m/m) at 04:15 (GMT+3);
- – German Producer Price Index (m/m) at 09:00 (GMT+3);
- – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
- – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
- – US Existing Home Sales (m/m) at 17:00 (GMT+3);
- – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.