MILANO – Futures on European equities are up slightly after the timid day before, characterized by Russia’s braking on the breaches of peace that seemed to open from Istanbul, where delegations of negotiators from Moscow and Kiev met last time. The movement of oil is important, with the price collapsing while the White House evaluates the possibility of releasing other reserves to avoid supply (and price) problems given the crisis in Eastern Europe. A decision that circulates a few hours after the meeting of OPEC +, the cartel of producers led by Saudi Arabia and Russia itself, which should confirm the modest growth in extraction also for the month of May, without revolutionizing its schedule despite the US pressing to increase production to calm prices.
Oil in a swoop, Biden puts his hand to stocks
Oil is in sharp correction after rumors about the release of strategic reserves on a daily basis by the US to compensate for the supply problems on the markets caused by Russia with the war against Ukraine: the West Texas Intermediate (WTI) gives way in the negotiations Asian 5.21%, at 102.20 dollars a barrel, while Brent loses 4.23%, at 108.65 dollars. According to Reuters, Biden is thinking of a 180 million barrel withdrawal for “several months”.
Unicredit analysts take note of the move in their pre-opening market note, and the strong impact on prices. But they admit that, with this kind of news, falls in prices are usually short-lived. For two reasons. First, it is difficult to combat a problem of lack of raw material (which is potentially infinite) with a resource that is by definition finite, namely stocks. Secondly, once reserves drop above a certain threshold, markets begin to fear that they are insufficient to respond to a new shock, so they push prices back up. If we consider, then, that no big news is expected from OPEC +, the drop in prices today could be short-lived.
Weak stocks in Asia, Chinese tech weighs
Tokyo closes down 0.73%, Shanghai is equally weak and Hong Kong around -1%, while lockdowns in China continue. Precisely the data on Chinese production are beginning to reflect the impacts of the new closures and fuel doubts about the pace that local productions are able to keep. In March manufacturing activity in China it contracted for the first time in five months, penalized by an epidemic rebound that is leading to confinement and weighing on activity, according to official data published today. The manufacturing PMI index stood at 49.5 points against 50.2 in February, when the deterioration in health conditions was already putting pressure on the economy, as announced by the national statistics office. A number above 50 indicates an expansion of the business, below we are contracting.
A Wall Street Futures advance timidly, after yesterday the S&P 500 closed down by less than a percentage point, despite having gained more than 10% in the last two weeks, despite the war in Ukraine and the anticipation of the ‘hawk’ moves of the Fed. The S&P 500 has moved to 5% from its record high and investors are hoping it will not lose ground in April, which has historically been a good month for Wall Street as the index has risen 15 times over the past 16 years. at a rate close to 1.3%.
The impact of the war on Russia and Ukraine. But the ruble recovers
On a day full of macro data, new estimates arrive on the economic impact of the conflict in Ukraine: it will plunge the Ukrainian economy into its strongest contraction in over 25 years with GDP plummeting by 20% this year. But if there were a “ceasefire” in the next two months, the rebound would be significant and in the order of + 23% in 2023. These are the forecasts of the European Bank for Reconstruction and Development. The invasion and sanctions will collapse the Russian economy by 10% this year. In 2023, there will be no record growth: Moscow has lost about $ 30 billion in export revenue due to recent sanctions on oil and gas, equivalent to about 2% of GDP.
Despite these troubling numbers, the ruble recovers on the dollar and returns momentum to the values pre-Russian aggression against Ukraine, settling at 76 (-5.263%): to buy a dollar, in other words, 76 rubles are now needed, against 84.95 of February 24 and the 139.7 recorded on March 7 at the moment of maximum weakness. The upward trend benefited from the hypothesis not excluded by China of using rubles or yuan in the trade of energy sources, according to what reported by TASS, citing the Beijing Foreign Ministry, according to which “market operators are free to choose the currency in bilateral agreements “.
As mentioned, there are many data for the day. In the fourth quarter the Great Britain’s GDP it ran more than expected, marking + 1.3% against the 1% previously estimated. In 2021, the economy grew by 6.6%, while the consensus indicated + 6.5%. Growing the German retail sales: + 0.3% monthly in February, + 7% on the year.