Mohicans markets：MHM Today News

November 2, 2022 - Fundamentals Reminder

☆  At 20:15, the United States announced the number of ADP employees in October. The market believes that the employment data has a great impact on the Federal Reserve's policy, and focuses on whether the data will reveal a further cooling of the US employment market.

☆  At 22:30, the US announced EIA crude oil inventory and strategic oil reserve inventory for the week of October 28. API crude oil inventory unexpectedly dropped this morning.

☆  At 02:00 the next day, the Federal Reserve FOMC announced the interest rate resolution and policy statement; At 02:30 the next day, Federal Reserve Chairman Powell held a press conference on monetary policy. It has been a consensus for some time that the Federal Reserve will raise interest rates by 75 basis points this week. The focus of the market is whether this interest rate meeting can send a signal to the market to slow down the pace of interest rate increase in December.

Review of global market trend

On Tuesday (November 1), the dollar index fell below 111, closing 0.036% lower at 111.56, as the market expected the Federal Reserve to indicate that the pace of interest rate increase would slow down from December. The euro rose 0.7% against the US dollar and broke through 0.99, but the US stock market missed this threshold and gave up all its gains. The British pound rose nearly 100 points against the US dollar at one time, but failed to reach the 1.15 mark in intraday decline. The US dollar fluctuated around 148 against the Japanese yen.

The US bond yield reversed in a V-shaped manner in the session, and the 10-year US bond yield once fell below 4%. However, the US job openings data supported the hawkish position of the Federal Reserve. The 10-year US bond yield subsequently returned to above 4%, and the two-year US bond yield also rose in the session and forced up 4.55% to a higher level in more than a week.

Spot gold rose 0.83% to US $1646.63/oz; Spot silver stood at $20/oz in the middle of the session, up 4.5% at one time, and finally ended up 2.56% at $19.63/oz.

The risk of energy supply is still rising. The price of crude oil rose for the first time in three days. WTI crude oil closed 2.73% higher at 89.25 dollars/barrel; Brent crude oil closed 1.7% higher at US $96.42 per barrel. The European benchmark TTF Dutch natural gas futures fell nearly 6% in late trading, losing 117 euros/megawatt hour, further hitting the lowest level since mid to late June. ICE UK Gas fell 7% to less than 280p/kcal. U.S. natural gas fell 10 percent to another round $6 per million British thermal units.

US stocks opened higher and moved lower, turning lower during the day. The Dow closed 0.24% lower, the Nasdaq closed 0.89% lower, and the S&P 500 closed 0.41% lower. Most of the popular Chinese stocks ended higher, with NetEase closing up more than 7%, Ideal Auto closing up more than 6%, Alibaba and Bilibili closing up more than 3%.

European stocks generally gained, with Germany's DAX30 index up 0.64%, Britain's FTSE 100 index up 1.29%, France's CAC40 index up 0.98%, and Europe's Stoxx 50 index up 0.93%.

Market Focus

1. Atlanta Fed GDPNow model: lowers U.S. Q4 economic growth to 2.6% from 3.1%.

2. Foreign media: Argentina may allow exporters to postpone wheat shipments because the harvest has been hit hard.

3. World Gold Council: Central banks continue to buy gold, with purchases estimated to have reached a quarterly record of nearly 400 tons.

4. The Australian Federal Reserve raises interest rates by 25 basis points to 2.85%, a rate hike in line with market expectations.

5. U.S. Energy Security Envoy: U.S. needs to buy back 200 million barrels of oil to replenish strategic oil reserves.

6. UAE and the US sign a strategic agreement: both sides will invest $100 billion in clean energy projects.

7. All trading on the Canadian Toronto Exchange is suspended for a time due to technical problems.

Geopolitical Situation

Conflict Situation:

1. Russian Defense Ministry: 87,000 out of 300,000 people have been sent to special operations zones after partial mobilization was completed.

2. Zelensky: Russia has destroyed 40% of Ukraine's energy infrastructure.

3. Head of Kherson region: The evacuation area around the Dnipro River will be extended by 15 kilometers due to the Ukrainian attack on the Kakhovka dam.

4. The online map of air defense alerts of the Ministry of Digital Transformation of Ukraine shows that air defense alerts are issued in four regions of Ukraine. Subsequently, air defense sirens are sounded again throughout Ukraine.

Food Situation：

1. Joint Coordination Centre (JCC): The movement of vessels under the Black Sea Grain Initiative will be interrupted for the first time on Wednesday, November 2, and is expected to resume on Thursday. The Ukrainian side says that the number of vessels leaving the port is eight.

2. Putin: After a detailed investigation of the Sevastopol attack, Russia's participation in the Black Sea grain trade could be considered for resumption.

3. Russian Foreign Minister: it is necessary to obtain guarantees that the humanitarian maritime food corridor will not be used for military purposes.

4. Putin: Russia is ready to supply Africa with large quantities of grain and fertilizers free of charge.

Assistance Situation：

1. The United States will transfer eight Norwegian Advanced Surface-to-Air Missile Systems (NASAMS) to Ukraine, two of which will arrive in Ukraine in the near future.

Energy Situation：

1. Russian gas exports fall in October due to flow restrictions in Europe.

2. Warm weather causes European gas prices to fall again, but prices are still currently about four times higher than at the same time in previous years.

3. Turkey's gas hub roadmap will be finalized by the end of the year.

4. CEO Vitrenko announces his resignation from Gazprom.

5. German Economy Minister: Energy assistance tax should be imposed on individuals with an annual income of around 75,000 euros.

6. German Chancellor: Infrastructure is being built to prepare for the long-term use of hydrogen and natural gas to replace coal use.

7. Mayor of Kiev: Water and electricity supply has been restored in Kiev, but power cuts remain a problem due to inadequate power system. The National Energy Company of Ukraine announced the imposition of power restrictions on Kiev and 7 oblasts.

8. Deputy Prime Minister of Moldova says that Russian gas will reduce gas supply to Moldova.

Institutional Perspective

1. Goldman Sachs：BOE won't go too far in raising interest rates.

2. SOCIETE GENERALE：The Bank maintains our forecast of a 75 basis point BOE rate hike next week and a peak of 4.5% at the March 2023 meeting.

3. MUFG：Sterling may fall on growth risks and the BOE may not raise rates as much as expected.

Statement|Disclaimer

Disclaimer: The information contained in this material is for general advice only. It does not take into account your investment goals, financial situation or special needs. We have made every effort to ensure the accuracy of the information as of the date of publication. MHMarkets makes no warranties or representations about this material. The examples in this material are for illustration only. To the extent permitted by law, MHMarkets and its employees shall not be liable for any loss or damage arising in any way, including negligence, from any information provided or omitted from this material. The features of MHMarkets products, including applicable fees and charges, are outlined in the product disclosure statements available on the MHMarkets website. Derivatives can be risky and losses can exceed your initial payment. MHMarkets recommends that you seek independent advice.

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