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LGT Navigator: Biden taps strategic oil reserves and Putin wants ruble

April 1, 2022

The US government announced a release of most of its crude oil reserves. This caused crude oil prices to fall in energy markets. For his part, Russia's President Putin threatened to cut off gas supplies from “unfriendly Western customers” if the foreign currency was not converted into rubles. Meanwhile, NATO sees no real signs of détente in the Ukraine war. Russian units would not withdraw, but merely reposition themselves, Secretary General Stoltenberg warned. Today, we expect from the US the regular labor market report and purchasing managers' indices from the US and European industrial sectors.

Biden taps strategic oil reserves and Putin wants ruble

US President Joe Biden announced yesterday that to alleviate the painful increase in fuel prices against the backdrop of the war in Ukraine and the conflict with Russia, he will release a large part of the strategic oil reserves. This involves one million barrels of crude oil per day, or up to 180 million barrels of crude oil in total. Oil prices then fell sharply at times. On the other hand, Kremlin leader Vladimir Putin announced that Russian gas would only be supplied if Western countries opened an account with Gazprombank and the foreign currency was then exchanged in the customer's name and then transferred to Gazprom in rubles.

On Wall Street, indices extended their previous day's losses. The Dow Jones Industrial closed -1.56% lower than the previous day at 34,678.35 points, which means that the Dow is again well below the important mark of 35,000. At the end of the first quarter, the stock market barometer thus posted a minus of -4.6%. However, the monthly balance in March is positive for the Dow with a plus of +2.3%. The S&P 500 and the indices on the Nasdaq fell on Thursday by about -1.5%. In the first quarter, the technology indices on the Nasdaq thus lost about -9%. On Asia's stock markets, the negative trend continued at the end of the week, respectively at the beginning of the second quarter. In the bond market, the yield on ten-year US government bonds fell yesterday to 2.34% and is now back at 2.38%.

The Fed’s inflation indicator continues to rise

The Federal Reserve's (Fed) preferred inflation indicator (Personal Consumption Indicator, PCE) increased to +6.4% in February from +6.0% in the previous month. The "official" inflation rate in the US is currently +7.9%. Whichever way you look at it, the upward pressure on prices seems to be strengthening further.

Japan's business community more pessimistic according to Tankan survey

The Bank of Japan's quarterly survey of Japanese business sentiment, the so-called Tankan report, has deteriorated for the first time in seven quarters. The most widely followed indicator of large manufacturing companies fell from plus 17 to plus 14 points at the end of the first quarter. In the outlook for the coming three months, most companies also expect the business climate to deteriorate further. Around 10,000 companies were surveyed.

Sharp rise in inflation in France and Italy

The cost of living in the second and third largest economies in the euro zone continued to rise in March. In France, consumer prices rose by +5.1% on an annual basis (consensus +4.9%), compared with an inflation rate of +4.2% in February. Compared with the previous month, consumer prices rose by +1.6%, driven by higher energy, food, and service prices. In Italy, the annual inflation rate in March reached +7.0% (consensus +7.2%), the highest level since the introduction of the euro in 1999, compared with +6.2% in the previous month. On a monthly basis, the average price increase was +2.6%.

Unemployment rate in the eurozone lower than ever before

In the euro area, the unemployment rate fell to a record low (since the introduction of the euro) of 6.8% in February. Just a year ago, the unemployment rate had been significantly higher at 8.2%, reducing the number of unemployed by 2.15 million. Unemployment in the eurozone reached its highest level to date during the euro crisis at the beginning of 2013, at 12.1%.

  

Economic Indicators April 1

MEZ Country Indicator Last period
00:00 CN Holiday
08:30 SZ Consumer Prices (March, y/y) +2.2%
09:00 AUT Consumer Prices (March, y/y) +5.5%
09:15 ESP PMI Manufacturing (March) 56.9
09:30 SZ PMI Manufacturing (March) 62.6
09:45 IT PMI Manufacturing (March) 58.3
09:50 FR PMI Manufacturing (March) 54.8
09:55 GE PMI Manufacturing (March) 57.6
10:00 EZ PMI Manufacturing (March) 57.0
10:30 UK PMI Manufacturing (March) 55.5
11:00 EZ Consumer Prices (March, y/y) +5.9%
11:00 EZ Core Consumer Prices (March, y/y) +2.9%
14:30 US Non-Farm Payrolls (March) +678,000
14:30 US Unemployment Rate (March) 3.8%
15:45 US PMI Manufacturing (March) 58.5
16:00 US ISM Manufacturing PMI (March) 58.6

 

Earnings Calender April 4

Country Company Period
ESP Repsol Q1 Sales

 

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Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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