Fear and hope of corona vaccine and increase in the number of patients

Last week started with the good news that Moderna's experiments were successful, with the Dow Jones Industrial Average moving to 30,000 and commodities growing well. The economic data released on Tuesday was not very good, and an interesting development was that Warren Buffett reduced his stake in Apple, sold shares in Casco and bought Pfizer and Merck instead, which are two pharmaceutical companies that combined to make up the market. Descended. Early news also came out of the OPEC meeting, as they announced on November 30 that they would continue to cut production for three months, which, of course, disappointed the market; The market first expected the downturn to be extended further, and second, it was also expected to increase the volume of output decline, which was not mentioned in the initial talks of the cabinet meeting, which had a negative effect on oil prices.

The market declined sharply over the weekend, with US unemployment insurance demand rising to 742,000, about three times the number of unemployment insurance claims in the first two months of 2020, indicating a slowing recovery in the US as well as a difficult Being on the way back to normal life is now accompanied by a huge increase in the number of people with coronary heart disease.

We conclude last week's review with the chart below, which shows Asian stock markets growing, Europe stabilizing, and the United States declining; Yields on bonds declined, but overall market stability was stable and the level of risk was reduced. The decline in the dollar index improved commodity trends, but gold declined due to reduced risk and good news about vaccines.


Market analysis

Thanksgiving is upon us, which means the stock market is closed on Thursdays and is open until 1pm on Fridays, reducing liquidity and trading in global markets; Another important issue with this holiday is its ability to reunite families, and health officials, given the new records of coronary heart disease, fear that after the Thanksgiving holiday, they may face an explosion of a number of new coronary bags that could The Biden administration has strengthened suspicions of a US shutdown. Tracking gold, dollars and bitcoins is also useful. Gold is touching support in the $ 1860 range and it remains to be seen whether the stock market will fall next week, which will push gold higher. The closer we get to the support package, the weaker the dollar becomes, as exemplified by the weakness of the dollar in the past week. Bitcoin is the third case that has seen significant growth recently, and unlike mid-2017, when the price growth and breaking of the bitcoin ceiling was accompanied by media controversy and emotional behavior, this time its growth is considered very normal and the emotional behavior is not heavy on it. It can also show us bitcoin as a risk indicator.

In the case of the important news that has been circulating in recent weeks, the initial optimism about the Corona vaccine has waned (ie, the positive effect of the vaccine news has become normal and does not have a profound effect on the market). And by the first half of 2021 we will not return to normal life before Corona. The US presidential election is still in a state of ambiguity, but Mr. Trump is suffering more and more defeats and his situation is becoming more difficult; A large support package is highly unlikely given the Democratic government and the Republican Senate, but a small support package is still possible, for example, to support the unemployed, small businesses, municipalities, airlines, and so on.

In the economic calendar, the first PMI of the United Kingdom, the United States, Germany and Europe will be released on Monday; On Tuesday we will have the final GDP rate along with market sentiment from the IFO Institute in Germany, and the US Consumer Confidence Index. The volume of investment in Japanese bonds and the final edition of US GDP for the third quarter will be released on Wednesday; Thursday and Friday will also be deserted for Thanksgiving.



Energy market
Last week was eventful for the energy industry; Both the OPEC meeting and the ministerial meeting were held. Although the outcome of this meeting is not policy-making and is for advisory purposes only, it is rumored that the quarterly production cut will be extended from January 2020. The same news, in addition to vaccine news, made the rally last week a "stock of energy-related companies," with US refineries accounting for 27%, shale oil exploration and production companies for 20.2%, major Canadian oil companies for 20%, and offshore oil producers for 17.4%. % European major oil companies grew 16.7%, US major oil companies 13.4% and Amazon shares 13.2%; For comparison, this week we have Black Friday, which is the biggest day for retailers and the best-selling day of Amazon!



Crude oil
In the United States, the arrival of vaccine news gave the market a slightly more optimistic outlook for the future of the energy industry, with shares of US shale oil production and exploration companies up 7% last week (down from the S&P 500, which fell about 1%). WTI crude rose about 5% last week to $ 42.17 a barrel and Brent crude rose 5.4% to $ 45.24 a barrel. In the drilling rigs sector, after 9 weeks of continuous increase, last week the number of drilling rigs decreased by two to 310 rigs; Of these, shale drilling rigs decreased by 5 to 231 and gas drilling rigs increased by three. The chart below shows the price perspective of oil and gas, as well as the trend of changes in drilling rigs.




Status of refineries
The margins of the refineries are moving in such a way that they seem to be preparing for the second round of nationwide closures. In many countries, traffic is already restricted at certain times of the day or when more than a certain number are gathered; In the United States, several states have extended their state of emergency due to corona restrictions, and some states, such as Massachusetts, have made home quarantine somewhat mandatory and mandatory for all. Margins continued to decline in Singapore; But in Europe, crack spreads saw a slight improvement in all petroleum products, as were the crack spreads for gasoline ($ 4.6) and diesel (4.1) in Singapore.



natural gas
Last week, gas prices rose above $ 3 to $ 2.7 per million BTU; One reason was the increase in gas inventory levels more than expected (31 BCF increase vs. 20BCF increase). Last year, this week, we had 94 BCF withdrawals from inventories, and the five-year average was 46 BCF withdrawals. Last week was also 61% warmer than this week in 2019 and 49% warmer than the 5-year average temperature, which reduced demand to some extent. In the long run, however, we expect growth for natural gas and stabilization above $ 3 in Henry-Hob.



Petrochemical
The general level of margins in the world's petrochemicals was declining; The sharp rise in the number of coroners has raised some concerns in the market; However, urea prices rose in China, the United States and the Persian Gulf. The price of paraxylene was limited, but styrene was priced at $ 129; In methanol, demand increased downstream and methanol prices rose by about $ 1 to $ 9 in various regions; Chinese ethylene rose about $ 100 last week due to overhaul by Japanese manufacturers; Propylene saw a rise in prices by $ 15 to $ 20 and polypropylene rose by $ 20 to $ 45, driven by growing domestic demand in China; Light and heavy polyethylenes also saw an increase in demand and prices; In PVC, the price increased between $ 10 and $ 60 due to lack of supply and increased shipping costs.



Gold
Gold continued its downward trend after announcing the results of the Moderna tests and being 95% effective on November 16, from $ 1887 last week to $ 1869, a 0.88% drop for gold as a whole. Silver rose from $ 24.76 to $ 24.25 in the first week to fall like gold and lost 2.22%. One of the issues that has become a concern for the price of gold is the decline in gold purchases by ETFs, which has convinced UBS Investment Bank to raise gold to $ 1,600 to $ 1,700 in 2021, and Deutsche Bank changed its gold outlook two weeks ago. had been given; Despite all this, it is still possible to reach $ 2,500 gold in the long run, and a few important things that will help achieve this goal include: 1) US 10-year TIPS is one of the main drivers of gold, and It can go from minus 2 to 2.5 depending on the inflation outlook, which will raise gold to $ 2,500; 2) Starting a long-term bear market trend for the dollar and the possibility of further weakening it with support packages; 3) The increase in liquidity, which in the United States (and other parts of the world) can lead to inflation for up to four years, supports high gold prices; 4) Return of demand for gold from central banks and the purchase of jewelry, in the latter case, recovery is slow and will accelerate with economic recovery. 5) Reduction of speculation in gold, which can help stabilize the market and we can see the signs of price growth more clearly.



Industrial metals
The dollar index fell nearly 0.5% last week and remained at the bottom of the 92 channel. This, along with the positive news about the production of vaccines from Moderna and Astraznka, led to a significant increase in the price of industrial metals. The price of aluminum is approaching $ 2000 / ton, the price of copper is above $ 7000 / ton and the total price is $ 2700 / ton. Over the weekend, the market fell slightly, but in the meantime, the price of lead rose slightly to $ 1951 / ton. China has signaled an increase in production in two areas: first, automobile production, which is good news for all metals, especially aluminum, steel, and copper; and second, an increase in white goods, which require copper, galvanized sheet, and aluminum. Seen in the refrigerator section; Another sign of the cattle market for industrial metals is the increase in copper production in October, compared to October 2019 by 914 thousand tons, which indicates the high demand for copper in China. Last week, zinc inventory levels remained stable in the United States and Europe, but rose sharply in China; Copper inventories, however, declined in all markets; Aluminum had similar conditions to copper, and very high demand in China lowered inventory levels.



Steel chain
The price of hot rolled sheets in China reached a two-year high; Reducing inventory to 127.5 million tonnes in Chinese port warehouses pushed iron ore prices to a quarter; The level of orders in Turkey has improved and demand has risen, while the price of scrap and plate has also increased, the price of factory door delivery rebar in Turkey has reached $ 500 / ton. Steel in Chinese traders' warehouses fell 6.7 percent last week to 15.9 million tons. Long products decreased by 8.9% and now the stock of rebar has decreased by 770 thousand tons and wire by 130 thousand tons; In flat products, the total inventory level of warehouses decreased by 3.4% compared to last week, and hot sheets decreased by 170,000 tons, cold sheets by 30,000 tons and plates by 40,000 tons.




Basic section summary
In the industrial metals and steel chains sector, the demand market in China is still very booming; Gold also managed to maintain the support floor of $ 1860 and we still hope that it will grow in the future; In petrochemicals, although margins have declined, commodity prices have often risen; In refineries, rising corona patients continued to reduce margins, but crack spreads in Europe and Singapore increased slightly; In oil, we will have stability until November 30, when OPEC decides to reduce production, and in gas, we will have lower prices due to increased reserves than expected and warmer weather in early December, and in the long run, gas above $ 3.

谢谢分享

wang 发表于 2020-11-22 22:27
谢谢分享

The pleasure is all mine! I do not speak English or Chinese. I tried to write everything in simple language. I sorry! Thank you very much; your support is greatly appreciated.

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