Mohicans markets：MHM Today’s News

November 1, 2022 - Fundamentals Reminder

☆ At 11:30, the Federal Reserve of Australia announced the interest rate resolution. Bank of America expects the Federal Reserve of Australia to stick to the gradual rate increase of 25 basis points and raise the official cash rate by 25 basis points today. The stronger than expected CPI data in the third quarter means that the possibility of raising interest rates by 50 basis points cannot be ruled out, but the Federal Reserve of Australia will still focus on the downside risk of economic growth.

☆ At 04:30 the next day, the United States announced the API crude oil inventory for the week of October 28.

Market Overview

Review of global market trend

On Monday (October 31), the “mouthpiece of the Federal Reserve” issued another document, triggering hawkish expectations of interest rate increases. The dollar index rose back to 111, closing 0.822% higher at 111.6. However, the dollar index still fell 0.5% in October. EURUSD fell to below 0.99; Sterling fell more than 1% against the US dollar, falling below the two thresholds of 1.16 and 1.15; USD/JPY continued to rise close to 149.

With both US dollar and US bond yields rising, spot gold fell for three consecutive times, losing $1640, closing 0.6% lower at $1633.61 per ounce, erasing most of the gains since October 21, when it fell more than 1%; Spot silver closed 0.19% lower at $19.18 per ounce, up 1% in October.

The strength of the US dollar and the bleak demand outlook continued to put pressure on crude oil, and WTI crude oil fell 3%, closing 2.45% lower at US $86.93 per barrel; Brent crude oil closed 1.75% lower at USD 94.55/barrel.

Under the pressure of hawkish interest rate hikes and the previously unexpected financial reports of large technology stocks, US stocks fell on the closing day of October, with the Dow closing down 0.39%, the Nasdaq closing down 1.03% and the S&P 500 closing down 0.75%. The Dow posted its biggest monthly gain since 1976 in October.

Most European stocks ended slightly higher, with Germany's DAX30 index up 0.08%, Britain's FTSE 100 index up 0.66%, France's CAC40 index down 0.10%, Europe's Stoxx 50 index up 0.15%, Spain's IBEX35 index up 0.51%, and Italy's FTSE MIB index up 0.55%.

Market Focus

1. Biden: If oil companies don't lower oil prices, they should be taxed higher on their excess profits and will work with Congress on the issue (legislation).

2. Putin: Gazprom has been allowed to survey the site of the Nord Stream pipeline explosion.

3. Japan's Finance Ministry: Japan used 6.3 trillion yen ($42 billion) for foreign exchange intervention in October.

4. U.S. Treasury statement on restrictions on Russian oil: Russian oil loaded by Dec. 5 and unloaded by Jan. 19 is not subject to price caps. U.S. government officials said the level of the Russian oil price cap is still under discussion.

5. Korea Financial Services Commission statement: Korea's five major financial holding companies agreed to inject 95 trillion won of liquidity into the market.

6. The U.S. Treasury raised its borrowing forecast for the current quarter, expecting to raise $550 billion in debt, slightly higher than market expectations.

7. OPEC raised its global oil demand forecast for 2023; total investment in the oil sector is expected to reach $12.1 trillion by 2045, higher than expected in 2021.

8. Eurozone CPI recorded a record high of 10.7% annualized in October.

9. Credit Suisse announced the expected terms of the expanded bank syndicate, the share placement and the final terms of the share placement to qualified investors.

 ( Jinshi Data App)

Geopolitical Situation

Conflict Situation:

1. Ukrainian media: Russian forces carried out a large-scale strike on Ukraine on October 31. Air defense sirens were sounded throughout the territory of Ukraine. Putin: The attack on Ukraine on Monday was not all we could do.

2. Kiev Mayor: Parts of Kiev lost water and electricity supply after the Russian attack, 80% of Kiev residents have no water available. Ukraine's DTEK energy company restored electricity supply to Kiev customers.

3. The Russian Defense Ministry said that Russian forces continue to launch strikes against the Ukrainian military command system and energy system, and the established targets were hit and the purpose of the strikes was achieved.

4. Russian Defense Ministry: Russia completes partial mobilization. Russia's 2022 fall conscription began on November 1.

Sanction Situation：

U.S. Treasury Department: Russian oil loaded before December 5 and unloaded before January 19 is not subject to the price cap and the U.S. can provide services for it; And the price cap level for Russian oil is still being discussed.

Energy Situation：

1. Biden: If oil companies don't lower oil prices, they should be taxed higher on their excess profits; and it will work with Congress to address oil companies' excess profits.

2. Russian oil production and exports declined in October. Russia's offline primary refining capacity was revised upward by 25% to 1.197 million tons in November, according to Reuters calculations.

3. Uniper CEO: is confident that the first German LNG terminal will be completed in December. The German government has reached an agreement so that the gas price cap for large companies will in principle take effect on January 1, 2023 as planned. EU approves German industrial gas subsidy scheme.

4. Russia plans to increase diesel exports to a 7-month high next month before the EU ban takes effect.

5. Russia and Turkey are discussing the establishment of a gas hub at the expert level. ( Jinshi Data App)

Institutional Perspective

1. Goldman Sachs：A possible slowdown in the pace of Fed tightening, light positions and expectations for strong seasonal factors in the fourth quarter are behind the stock market's gains in recent weeks.

2. SOCIETE GENERALE：Looking ahead to next week's Bank of England interest rate resolution my bank maintains its forecast of a 75 basis point rate hike by the Bank of England next week and a peak of 4.5% at the March 2023 meeting.

3. MUFG：Mitsubishi UFJ: Falling yields on government bonds outside Japan may limit the yens decline.