Oil prices began to recover amid rising demand ahead of summer. China’s trade balance data is disappointing

By JustMarkets

The Dow Jones Index (US30) decreased by 0.17% at Friday’s close, while the S&P 500 Index (US500) added 0.05%. The NASDAQ Technology Index (US100) gained 0.18% on Monday.

Goldman Sachs joins Barclays in predicting that the Federal Reserve will cut interest rates significantly this year. But the latest futures position data from the Commodity Futures Trading Commission shows that hedge funds expect the Fed to keep rates higher longer.

A report from the New York Federal Reserve showed Monday that bank stresses that began in March had little impact on American sentiment. The Federal Reserve regional bank reported in its April survey of consumer expectations that respondents forecast inflation after one year at 4.4%, up from 4.7% in the March survey. The report also showed that respondents’ perceptions of the current financial situation improved in April, while their expectations for the year worsened. Respondents indicated they expect unemployment to rise and to be more likely to lose their jobs, as well as difficulty finding a new job.

The PacWest stock jumped by 5% on Monday. The company announced a dividend cut from 25 cents to 1 cent per share late Friday night. PacWest CEO Paul Taylor assured investors that the bank’s business remains “fundamentally sound.” Concerns about regional banks have not subsided since regulators took over the First Republic last week, leading to the US bank’s third collapse since early March. Rapidly rising interest rates have put pressure on banks with long-term bonds, causing deposit outflows.

Stock markets in Europe were mostly up on Monday. Germany’s DAX (DE30) decreased by 0.05%, France’s CAC 40 (FR40) added 0.11% yesterday, Spain’s IBEX 35 index (ES35) was up 0.70%, Britain’s FTSE 100 (UK100) was not trading Monday.

The European Central Bank should keep raising interest rates amid “too high” core inflation levels, ECB Governing Council spokesman Klaas Knot said over the weekend. The ECB will have to raise borrowing costs “until core inflation is suppressed.” Last week, the eurozone central bank raised its deposit rate by a quarter point to 3.25%, and ECB President Christine Lagarde also signaled that more interest rate hikes are likely.

Oil prices are up more than 2% as recession fears begin to fade. Fears of a recession are easing the risks of lower demand. Typically, oil demand rises in the run-up to summer as more travel occurs. And with OPEC+ countries still cutting production on a daily basis, black gold prices are projected to rise for the next three months. Analysts at Commerzbank say concerns about oil demand are exaggerated and expect prices to rise in the coming weeks.

Asian markets were mostly on the rise yesterday. Japan’s Nikkei 225 (JP225) declined by 0.71%, China’s FTSE China A50 (CHA50) jumped by 1.17%, Hong Kong’s Hang Seng (HK50) added 1.24% over the day, India’s NIFTY 50 (IND50) increased by 1.08%, and Australia’s S&P/ASX 200 (AU200) was up by 0.78%.

Continued soft monetary policy from the Bank of Japan is fueling a rally in Japanese markets, with the Nikkei 225 largely outperforming its global peers on the prospect of soft monetary conditions.

China’s latest trade balance data showed an increase in exports and a drop in imports. This suggests that local demand remains weak, which may prevent a more significant economic recovery this year. The prospect of weak demand in China does not bode well for Asian markets, which depend on the country as an export destination.

Australia recorded its first budget surplus in 15 years as its treasury was bolstered by unanticipated tax revenue from higher commodity prices and wages. The budget projected a small surplus of about A$4 billion ($2.71 billion) for the fiscal year ending in June. At the same time, deficit estimates for subsequent years have been revised downward.

S&P 500 (F) (US500) 4,138.12 +1.87 (+0.045%)

Dow Jones (US30)33,618.69 −55.69 (−0.17%)

DAX (DE40) 15,952.83 −8.19 (−0.051%)

FTSE 100 (UK100) 7,778.38 +75.74 (+0.98%)

USD Index 101.41 +0.20 +0.19%

• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – US FOMC Member Williams Speaks at 19:05 (GMT+3).

By JustMarkets

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.