This week’s key international financial events include: the Western embargo order on Russian oil and the Russian oil price ceiling, the observation of signs of the unblocking of China’s epidemic prevention, and the interest rate decisions of Australia and Canada. In terms of economic data, both the United States and China will announce the producer price index (PPI) and the latest trade balance, and US companies including Broadcom, Costco, and Lululemon will announce their earnings.
This week’s trading notes (1205-1209)
1. Russian oil embargo takes effect
Oil market investors are paying close attention to the European Union’s ban on Russian seaborne crude oil imports next week. In addition, the price limit for Russian oil has been finalized at US$60. Companies must prove that they pay less than the price limit for Russian oil to be allowed to sell. Access to critical services such as insurance.
Western countries hope to weaken Russia’s war funds for invading Ukraine by continuing to rely on oil revenue, but at the same time they also hope to maintain a certain degree of flow of Russian oil and avoid soaring international oil prices.
The G7 issued a statement emphasizing that it will review and adjust the oil price ceiling in due course, taking into account market developments, the impact on allies and low- and middle-income countries and regions.
Although news of the Russian oil price cap caused oil prices to fall last Friday, analysts believe that the impact will not be significant, because the ceiling price of $60 per barrel will allow Russia to continue exporting oil easily. Manish Raj, chief financial officer of Velandera Energy Partners, said: “The Russian oil price limit is a joke. Asian buyers are buying at prices below the limit price.”
2. Changes in China’s epidemic prevention policies
The Chinese people are dissatisfied with the long-term closure and clearing of the city. The “white paper movement” recently broke out. A shares rose.
China’s “epidemic prevention tsar” Sun Chunlan said twice at a symposium held by the National Health Commission last week that the pathogenicity of the Omicron variant virus has weakened. Xinhua News Agency also published a current commentary, stating that “quick sealing and quick release, and all that should be released” is the proper meaning of adhering to scientific and precise prevention and control, and is an inevitable requirement for effectively coordinating epidemic prevention and control with economic and social development; “fast sealing” is for rapid To curb the spread of the epidemic, “Quick Solution” is to minimize the inconvenience caused by the epidemic.
Chinese President Xi Jinping told European Council President Charles Michel in Beijing last Thursday that the less lethal Omicron is now the main strain of the virus prevalent in China, according to a European official. Gabriel Wildau, managing director of consultancy Teneo Holdings LLC in New York, said it appeared to be another sign that China was laying the groundwork for an exit from zero.
At the same time, governments across China continue to loosen epidemic prevention measures, including travel, medical treatment, drug purchase, and nucleic acid testing. For example, the announcement issued by the Chengdu Metro Weibo shows that starting last Friday, Chengdu citizens do not need to show a nucleic acid test certificate.
3. Interest rate decisions by the central banks of Australia and Canada
The Reserve Bank of Australia (RBA) held an interest rate decision-making meeting on Tuesday. Due to the unexpected sharp drop in the inflation rate in October, the market forecasted that the chances of holding the policy and raising interest rates by 1 yard were evenly divided. Most economists believed that interest rates would still be raised, but some People speculate that December may be the last rate hike in this cycle of rate hikes.
The Bank of Canada also meets this week. The market predicts that the Bank of Canada (BoC) may raise the benchmark interest rate to 4.25% in the same manner as in October, and may pause the pace of raising interest rates to observe the effect of the policy. Canada has raised interest rates by 350 basis points so far in March.
4. Broadcom Costco Financial Report
The US stock market earnings season has come to an end, but there are still several important companies that will release results this week, including Broadcom (AVGO-US), Costco (COST-US)、Lululemon(LULU-US)。
S&P 500 Index 99% of the constituent stocks have announced their financial reports, 70% of which have EPS better than market expectations, and 71% of which have exceeded revenue expectations. Overall, the S&P constituents’ mixed earnings growth rate for Q3 was 2.5%, which if finalized would be the slowest growth rate since the third quarter of 2020.
The outlook for the fourth quarter is bearish. 63 S&P constituent companies have issued negative EPS forecasts, but 34 companies have issued positive EPS forecasts.