Commodities, Currencies and Bonds
(27/3/2023)
ENERGY
International and domestic crude oil futures ended weaker on Friday on worries over European banks and after U.S. Energy Secretary said refilling the country’s Strategic Petroleum Reserves may take several years, dulling demand. • Data from Baker Hughes showed U.S. oil rigs rose 4 units to 593 last week, up for the first time in six weeks. • Downside remained capped after a Russian news agency quoted Russian Deputy Prime Minister Alexander Novak who said a previously announced cut of 500,000 barrels per day in Russia’s oil production would be from an output level of 10.2 million bpd in February. • That could mean Russia is aiming to produce 9.7 million bpd between March and June, a much smaller reduction in output than previously indicated. • CFTC data showed speculators cut its crude net longs F&O positions by 48,146 contracts to 56,285 in the week ending March 21. • U.S. NYMEX Gas and domestic futures gained on Friday on forecasts that the weather could remain mostly colder than normal for the next 2 weeks, keeping heating demand higher than usual through early April. • Prices also remained supported after Freeport LNG’s export plant was on track to pull in about 1.6 billion cubic feet per day of gas on Friday, up from 1.5 bcfd on Thursday.
BULLION
International and domestic gold futures ended weaker, while silver gained on Friday. • The benchmark U.S. bond yields ended lower and kept upside capped, but a recovery in the Dollar weighed on sentiments. • However, in a volatile week prices remained supported amid rising fears of a widespread banking crisis with European banks also remaining under pressure on Friday. • CFTC data showed speculators raised its gold net longs F&O positions by 21,593 contracts to 106,955 and switched to net longs in silver F&O positions by 886 contracts and added 4,647 in the week ending March 21.
BASE METALS
COMEX and MCX Copper prices fell on Friday after the dollar rebounded on Friday amid safe haven appeal for the greenback due to widespread banking crisis. • European banking stocks tumbled, with banking giants Deutsche Bank and UBS crashing and weighed on sentiments.
CURRENCY
The Indian Rupee gave all its gains in the last 30 mins of trade and ended the session weak on Friday as risk sentiment worsened on worries over the health of the financial sector in the United States and Europe. • The Rupee settled at 82.4800 per dollar, as compared with Thursday’s close of 82.2625. • Refinitiv reported that European and UK equities opened lower, with banking shares leading the fall and the euro weakened as Deutsche Bank’s credit default swaps jumped sharply • The fall implies that the sentiments remained weak in the global markets. • Asian currencies too tumbled on Friday amid worsening sentiments due to the banking crisis. • In the overseas markets, the U.S. Dollar Index rose on Friday amid lingering nervousness over banks. • Investors remained worried that regulators and central banks have not yet contained the worst shock to the sector since the 2008 global financial crisis. • The Euro and Sterling fell sharply against a strengthening dollar on Friday, while the Yen too gained on Friday amid safe haven appeal for the Japanese currency.
BONDS
Indian bond yields ended lower on Friday, and for the second straight week, tracking U.S. peers after the Federal Reserve hinted at ending the rate hike cycle soon. • The 10-year benchmark 7.26% 2032 bond yield ended at 7.318%, after closing at 7.345% on Thursday. • The yield fell 4 basis points (bps) last week, after falling 8 bps in the previous week. • U.S. bond yields were off 6-month lows but ended weaker on the day as concerns about further stress in the banking sector led investors to seek out the safe haven debt.
(Sriram Iyer, Senior Research Analyst at Reliance Securities)
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)
(સ્પષ્ટતા: અત્રેથી આપવામાં આવતી તમામ પ્રકારની માહિતી કોઇપણ પ્રકારે રોકાણ, ટ્રેડીંગ માટેની સલાહ નથી. બજારોમાં રોકાણ જોખમોને આધીન છે અને રોકાણ કરતા પહેલા કૃપા કરીને તમારા સલાહકારની સલાહ લો.)
