The market saw a sudden wave of selling at the beginning of the US session on Friday.
The retail data released at 21:30 in the evening fell short of expectations and recorded a negative value. Then the U.S. market opened, risk aversion continued to spread. The three major U.S. stock indexes opened lower collectively, with bank stocks generally falling, with Wells Fargo down more than 5%, Barclays down 3%, Citigroup down 2.6% and Bank of America down 1.7%. Today JPMorgan Chase, Citigroup and Wells Fargo will announce their earnings reports, and the market is not optimistic about their fourth quarter performance.
Meanwhile, European stocks also continued to sink, with Germany’s DAX and Spain’s IBEX 35 index extending their losses to 2%.
Forexlive commented that the dollar has climbed to its highest level of the day as the sell-off in U.S. stocks spread. As of press time, the U.S. index rose 0.5% during the day; U.S. bond yields once spiked higher, then weakened.
The higher dollar suppressed bullion gains and spot gold continued its downward movement, falling 0.84% below $1,830/oz. Meanwhile bitcoin was also abandoned. As of press time, bitcoin lost ground at $36,000 per coin, down 8.01% on the day.
Meanwhile the two oils were also sold off, with Brent crude and WTI crude futures falling 3% at one point and WTI crude losing $52/barrel. Commodity currencies fell badly, the dollar rose 1% against the Canadian dollar; the Australian dollar fell 1% against the dollar during the day.
There are two market focal points at the moment: one is whether Biden’s $1.9 trillion stimulus package will be passed, and the second is the pace of vaccinations.
Regarding the first, Golden 10 reported earlier today that many analysts are starting to worry about whether this plan can be passed by the Senate.
Although the Democrats picked up a majority in the Senate, they only have a slim majority advantage in passing the legislation. Democrats would either have to win the support of all members or win 10 Republican votes to get a bill approved.
As for the second point, it is also more disappointing to the market. Just today, Pfizer said it will try to deliver more doses of the vaccine this year than originally expected and announced a new goal of delivering 2 billion doses by 2021, but that the expected delivery of the vaccine in a given quarter may need to be adjusted. The German Ministry of health, the European Commission and EU member states have all been told that Pfizer will not be able to meet its vaccine delivery targets in the coming weeks.
Vaccine deliveries are stalled, while on the other hand, the virus is mutating faster than expected. The U.S. media reported on May 14 that researchers at Southern Illinois University’s Carbondale campus say they have discovered a new variant of the New Coronavirus, which first appeared in Texas last May and may spread more easily than other variants. Researchers say this variant of the virus may have become the leading variant of the strain across the United States.
The outbreak continues to spread and has already affected analysts’ expectations for the oil market outlook.
Rystad Energy’s head of oil markets said the spread of the outbreak is back in focus, with traders increasingly concerned about embargoes and new restrictions in various countries. Biden’s announcement of a new $1.9 trillion crown epidemic bailout package could increase oil demand in the world’s biggest crude consumer, but weaker-than-expected jobs data has overshadowed the plan.
Stephen Brennock of oil brokerage firm PVM also mentioned that the recent resurgence of New Crown virus infections, the emergence of new mutated viruses, the delayed launch of the vaccine and the renewed embargo measures in most major OECD economies have cast a shadow over the economic and demand recovery. In short, short-term demand expectations for oil are less optimistic.
Aviation fuel use is unlikely to recover until the third quarter of this year, hit by the outbreak, according to Mike Muller, head of Asian operations at Vito Group, the world’s largest oil trading company.
“Unless there is mass vaccination, demand for fuel will not recover. Travel travel in Europe, the Americas and Asia remains poor.”
Uncertainty over the recovery in Asian consumption has prompted local refiners to abandon long-term supply contracts in anticipation of higher prices ahead. Arif Mahmood of Malaysia’s Petroliam Nasional Bhd said in that oil production in Asia could fall by 1 million barrels a day due to lower margins.
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