Market Drivers – US Session – 21-01-2022

Mohamed Abdelhamid 22 January, 2022 3:56 am Commodities, Cryptocurrency, Forex Market, Global Stock Market, Market Update

The US dollar declined on Friday, along with US Treasury yields, while investors looked ahead to next week’s Federal Reserve meeting for more clarity on the outlook for rate hikes.

US Treasury yields fell as stock market declines reflected poor risk appetite, while concerns about potential conflict in Ukraine drove demand for the safe haven debt.

Shares of Citigroup Inc. C, -1.85% slid 1.85% to $63.27 Friday, on what proved to be an all-around grim trading session for the stock market, with the S&P 500 Index SPX, -1.89% falling 1.89% to 4,397.94 and Dow Jones Industrial Average DJIA, -1.30% falling 1.30% to 34,265.37. Citigroup Inc. closed $17.02 short of its 52-week high ($80.29), which the company achieved on June 2nd.

The stock demonstrated a mixed performance when compared to some of its competitors Friday, as JPMorgan Chase & Co. JPM, -1.75% fell 1.75% to $145.08, Bank of America Corp. BAC, -1.81% fell 1.81% to $44.92, and Wells Fargo & Co. WFC, -2.42% fell 2.42% to $53.67. Trading volume (28.2 M) eclipsed its 50-day average volume of 23.2 M.

Economic Data
Retail sales in Britain added to recent weaker economic data. The pound was down 0.3% against the dollar at $1.3553.

The US economy has kept growing in the face of the rapid spread of omicron. The US leading index rose a solid 0.8% in December, signaling steady growth even as the record spread of the omicron virus nibbled at the edges of the economy. Economists polled by The Wall Street Journal had forecast a 0.8% increase.

The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys. A measure of current economic conditions rose 0.2% in December, a bit faster than in the prior month, the Conference Board said Friday. The privately-run company is the publisher of the report.

The Eurozone Consumer Confidence has fallen to -8.5 in January flash estimate versus expected decline to -9.0 According to the flash estimate of the European Commission’s Eurozone Consumer Confidence survey, the headline index fell to -8.5 in January versus forecasts for a drop to -9.0 from -8.4 the month prior. December’s reading was revised slightly lower from -8.3.

As for the market’s reaction, the euro has not reacted to the latest data, which was broadly in line with expectations.

US energy firms this week cut oil rigs for the first time in 13 weeks after crude prices fell for six weeks in a row from late October-early December. Oil prices, meanwhile, have recovered and traded at their highest since 2014 this week. Energy analysts said it usually takes about a month or two for drillers to add or remove rigs following oil price moves.

The combined US oil and gas rig count, an early indicator of future output, rose by three to 604 in the week to Jan. 21, the highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Baker Hughes said that puts the total rig count up 226 rigs, or 60%, over this time last year. US oil rigs fell by one to 491 this week, while gas rigs rose four to 113, their highest since January 2020.

Other Developments
US crude futures traded over $87 per barrel earlier this week, their highest since October 2014, and were on track to rise for a fifth week in a row for the first time since October.

With oil prices up about 13% so far this year after soaring 55% in 2021, a growing number of energy firms said they plan to boost spending for a second year in a row in 2022 after cutting drilling and completion expenditures in 2019 and 2020.

China, the world’s second largest economy, should review its zero-tolerance approach to the pandemic or risk damaging the global recovery, according to the head of International Monetary Fund.

Kristalina Georgieva said Beijing should reassess the use of lockdowns to limit the spread of the highly contagious Omicron variant since it became clear the harm to human health was less severe than the Delta variant.

Speaking at the World Economic Forum on a virtual panel, Georgieva said that while the hardline approach had contained the pandemic in China for “quite some time”, the restrictions were now proving to be a burden on the economy in China and globally.

The dollar index, which tracks the greenback against major peers, was down 0.1% on the day at 95.650 but up 0.5% for the week.

In cryptocurrencies, bitcoin was also dragged lower and hit its lowest level since August. It was last down 6%, while ether was down more than 8%.

Against the yen, the dollar was last down 0.4% at 113.680. For the week, the dollar was down about 0.5% against the yen. The euro was last up 0.3% against the dollar at $1.1341, while it was down about 0.6% for the week.

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