Investing.com – Markets are back in the minority. And the economy is not to blame here – although that, in general, does not help much. In Europe, monthly retail sales fell sharply in January, but unemployment, against the forecast, did not increase. In the US, the number of initial unemployment claims picked up, but less than expected, and it is still possible to hope that the downward trend will continue.
The incidence of coronavirus does not decrease: Hungary announces plans to close most companies, new quarantine measures are introduced in the Czech Republic and Germany, and the situation is reduced in a number of other countries.
But this is not even the reason the S&P 500 futures are slipping again, and overall it appears to be doing so for the third week in a row. Today, another attempt to recover began as early as 3780p. – it fell there after another one and a half days of hesitation near the level of 3900 p. But reaching this time to 3840 p., By 22.00 hours in Moscow the market went below 3730 p. And broke through the line of an uptrend of almost one year …
Investors could be encouraged by the next speech by Fed chief Jerome Powell, but he rarely succeeds. And this time, they expect at least something good from him about the problem with the growth of Treasury yields, but he actually ignores this question. “He did not go as far as some Fed officials who said higher yields reflect improvements in the economy, but he showed no hint of action or even dissatisfaction,” said Adam Button, editor-in-chief at ForexLive, angrily. “All he said was that he was paying attention to it and that he ‘might have been worried about the clutter and the constant tightening of financial circumstances. “Of course, implying that we are not in this position right now. No help, no hint of help!”
Now, for several years, the Fed has been accused of the market’s unhindered pumps, and investors are taking tens of percent a year here. Now the regulator is not even accused of a refusal, but of a hitch in the continuation of pumps. Completely in line with Gogol’s “I gave birth to you, I will kill you.”
This has even caused confusion in the oil market. In the afternoon, bids for a future barrel went sharply from $ 63.5 to $ 67.5 over rumors from the OPEC + ministerial meeting. According to the latest data, they decided to leave production at the same level for April as a whole, including a voluntary cut by Saudi Arabia – it will start to increase production in May. There are only small setbacks: as last time, they were allowed to gradually increase production in Kazakhstan and Russia – according to various sources, our growth can reach 100-130 thousand barrels per day. After 9pm in Moscow, however, bids fell back below $ 67.
“Everyone is waiting for signals from the monetary authorities, primarily the United States, whether there will be control over the yield curve. Rising medium- and long-term rates determine what happens: the rotation of stocks from “growth companies” to “value companies”. And the Fed has taken a rather strange position and has so far said nothing about controlling the curve. Analysts talk about the recurrence of Operation Twist. , Australia increased long-term buybacks last week, and Powell’s introduction today does not sound like that. And markets are frustrated. Medium- and long-term yields are rising and equities are falling. backlog will continue, “says Andrey Lifshits, portfolio manager of Cypriot FFF Asset Management.
Everything is fine in Russia. President Vladimir Putin said he opposed child pornography, child prostitution and drug trafficking on the Internet. Which search service he used and for what purpose the politician did not specify. Ministries complain about the reluctance of state-owned enterprises to buy domestic products, including those produced by state-owned enterprises themselves, but do not know what to do about it. And the Ministry of Agriculture, which this week received promises from a number of large producers of milk and meat not to increase prices for at least a few months, has already indicated a shortage of chickens and eggs.
The completion of the construction of the Nord Stream 2 gas pipeline has been postponed for another five months due to US sanctions, until the end of September. And Uniper, one of the project’s financial partners, warned investors about the risk of not completing it. However, as reported, the pipeline ship “Akademik Chersky” came out of nowhere and went somewhere.
But Sberbank (MCX 🙂 is growing faster than the market: good consolidated financial statements came out – net profit for 2020 decreased by only 10%, which is much better than expected: despite the overall decline in rates across the country, the bank succeeded to increase loan income.
In the morning, the Russian market continued to decline due to the day, but in the second half of the day it began to improve. At the end of the main trading session it lost 0.54% and went below 3400 points, but the index, due to the temporary strengthening of the ruble, even added 0.07%. By 9pm in Moscow, however, the ruble had lost almost everything it had purchased, and the exchange rate quickly returned from where it had come from.
Most likely, the strengthening of the ruble was associated with rumors about a possible reduction of the loan program of the Ministry of Finance. This was evident in the RGBI index of government securities: today it grew at the same time by 0.52%, which has not happened since November, and returned to the level on 16 February. But Powell destroyed everything.
“At the beginning of the year, investing in emerging markets was considered promising because everyone was determined to recover from the pandemic, increase demand for raw materials and compensate for their backwardness in the US market by 2020 – in this stage of the cycle they are most in. However, the growth of rates is becoming a depressing factor, and with the falling S&P 500 index no growth should be expected here either, – concludes Andrey Lifshits. completing the correction in the US and adjusting to new interest rates, the prospects for emerging markets are good.Merals are losing out on increasing rates, but inflation expectations are pushing up commodity markets, and this is pushing up emerging markets.It’s worth waiting until America declined to invest in Russia.
(Text prepared by Daniil Zhelobanov)