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01/20/2020

In Switzerland, the Davos World Economic Forum has started. This time, the agenda includes debates on corporate responsibility to society. The moods in the markets in the beginning of the week are still up due to the conclusion of a trade agreement between the United States and China. Demand for risky assets remains high: risk indicators are showing a slow start in the context of overbought equity markets. The protection instruments are ready to anticipate the likely change in market moods.

The Fitch agency has published its forecasts for global economic growth for this year estimated at 2.6% vs 2.5% previously forecast.

In the United States, trading platforms are closed today due to Martin Luther King Day. Nevertheless, electronic transactions are in progress: the futures contracts for the main American indices lost 0.1% (Dow Jones) and 0.2% (S&P 500).

This afternoon, the European indexes display a multidirectional dynamic. The DAX index reached 13 545.55 p. (+ 0.14%), the CAC 40 index reached 6 090.51 p. (-0.17%) and the FTSE 100 index reached 7 661.47 p. (-0.17%).

In China, the Shanghai Composite index rose by 0.5% without being able to go further. The Nikkei index was up 0.2%. The weakening of the Japanese yen reached its lowest level in 8 months which is affecting stock prices. Australian ASX index rose by 0.3% despite natural disaster as restoration work will require additional efforts from the country’s industry, as well as Reserve Bank of Australia will improve  return rate of the capital of national companies.

In the Middle East, the Libyan national army has closed oil pipelines that transport oil from southwest of Libya which could cut country supplies by 90%. Libyan oil volumes could easily be offset by other suppliers, but oil in Libya is light. As a result, its deficit can lead to supply disruptions at a number of refineries. This afternoon, Brent reached $ 65.36 (+ 0.79%), WTI: $ 58.97 (+ 0.67%), gold: $ 1,559.7 (-0.04%), copper : $ 6,284.3 (+ 0.18%), nickel: $ 13,965 (+ 0.40%), palladium: $ 2,289.8 (+ 2.92%).

As for the raw materials market, palladium continues to increase in value. Today, its price has reached $ 2 286, a new record. The increased demand for palladium comes from the automotive industry. The supply deficit for palladium is growing and its production is declining. One of the world’s major producers of palladium – South Africa – has reported a decline in production of platinum. In November, this metals group, which includes palladium, posted a production decrease of 13.5% y/y while the global demand for palladium increases by 30% per year. The agreement signed between China and the United States has also boosted palladium prices. In China, new requirements for automotive emission standards are coming into effect, which could push up palladium prices.

 

 

 

 

 

 

 

 

 

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