Financial Markets’ Weekly Recap: February 6 – 10

Financial markets ended the trading week with cautious optimism following apparent uncertainty and concerns about the US central bank’s next moves regarding interest rate hikes and the Fed’s monetary policy. Oil prices rose more than 2% on Friday and posted weekly gains of over 8%, as Russia announced plans to reduce oil production next month after the West imposed price caps on the country’s crude and fuel.

Crude Oil

Brent crude futures rose to settle at $1.89, or 2.2%, to $86.39 a barrel. U.S. West Texas Intermediate crude futures (WTI) were up $1.66, or 2.1%, at $79.72. Brent posted a weekly gain of 8.1%, while WTI gained 8.6%. Russia plans to reduce its crude oil production in March by 500,000 barrels per day (bpd), or about 5% of output, Deputy Prime Minister Alexander Novak said.

Western nations have imposed restrictions, trying to choke off Russia’s oil revenues in response to the country’s actions in Ukraine. The production cut indicates that the European Union’s recent price cap and ban on Russian oil products, which came into effect on Feb. 5, have had some impact.

Powell Effect

Fed Chair Jerome Powell’s remarks were at the forefront among the key drivers of the performance of several financial assets throughout the week and analysts spoke a lot about Powell’s Rollercoaster Effect, particularly regarding the performance of gold prices and the US Dollar’s Index.

Economic data was generally upbeat and refreshed the financial markets at the level of the consumer and labour market indicators in the United States.

Despite the uncertainty, US stock transactions ended in an upward trend with a push from the tendency that traders sensed in the statements of the Fed Chair, during which Powell confirmed most of what was stated in his statements at the press conference that took place after the previous FOMC meeting, which witnessed a 25-basis point rate hike.

Economic Data

Data-wise, the preliminary reading of US consumer confidence rose in February, according to the index released Friday by the University of Michigan. The reading rose to 66.4 points, compared to the previous reading, which recorded 64.9 points, which is higher than expectations, which indicated 65 points, according to the reading issued last Friday.

A reading above 50 for this indicator indicates growth in US consumer confidence, while a reading below this level indicates a contraction in confidence. This preliminary reading is subject to review to a decrease or increase at the time of issuing the final reading, which is issued at a later time.

Weekly jobless claims rose in the United States to 196 thousand claims in the week ending on the third of last February, compared to the previous reading, which recorded 183 thousand claims, which came below the expectations of the markets, which indicated 190 thousand claims.


The total number of beneficiaries of US unemployment benefits rose to 1.688 million in the week ending January 27, compared to the previous reading of 1.650 million beneficiaries, which came higher than market expectations that indicated 1.658 million beneficiaries, according to data released last Thursday.

Euro

The Euro ended last week’s trading in a bearish direction, after negative data appeared on the level of industrial production.

The German industrial production index declined by -3.9% in December, compared to a reading of -0.5% in the same month last year, according to the annual reading, which shed light on a widespread deterioration in the sector that enjoys great importance in the largest economy in the region.

The monthly reading of the index also fell last December by -3.1%, compared to the previous month’s reading, which recorded an increase of 0.4%.

The weekly losses of the euro were driven by the negative statements that emerged from the corridors of the European Central Bank, which cast a negative shadow on future estimates of growth and inflation in the euro area.

Data from the German Statistical Office revealed that the Harmonized Index of Consumer Prices (HICP) fell to 9.2% year-on-year in January from 9.6% in December, well below market expectations of 10%, a positivity that the single European currency failed to achieve. benefit from it.

By contrast, the Sterling was able to take advantage of the weakness of the US dollar to post weekly gains. The British economy’s avoidance of recession in the last quarter of 2022 was also one of the reasons for the currency’s recovery.

Earnings reports, developments for the week ahead

Several companies listed on global stock exchange indices announced their financial results, which indicated, in their entirety, an improvement in profits, revenues, and financial performance in general in the last quarter of 2022 compared to the expectations and levels of these financial elements recorded in the previous year.

Pepsi, Tether, Lyft, and Uber were among the most prominent companies that announced progress in financial performance, according to earnings reports issued for the fourth quarter of last year.

Earnings reports remain one of the most important axes that affect the price movement in global financial markets during the new trading week. Important companies around the world are expected to announce their financial result including Coca-Cola, Cisco, Airbnb, Devon Energy, and First Energy.

But the most important place is likely to be the economic data that appears next week, as it contains the inflation data that appears next Tuesday.

CPI Data Awaited

The inflation data comes amid expectations of a decline in US consumer prices, which fell on an annual basis last December by 6.2%, compared to the reading recorded in the same month of the previous year at 6.5%, which is a significant decline compared to the highest levels in 40 years, which recorded 9.1% in June. the past.

US producer price inflation data will also appear next Thursday to determine the conditions for inflation in January. The annual reading of US producer prices fell by 5.4% last December, compared to the reading recorded in the same month of the previous year, which recorded an increase of 6.2%.