Written Commentary
OPEC+ meeting takes centre stage on modest day for data; digesting weaker than expected Australia Trade and Japan Consumer Confidence, awaiting Brazil Q3 GDP & US weekly jobless claims; smattering of ECB & Fed speakers; French & Spanish debt auctions
OPEC+ cautious and offering few clues ahead of meeting; oil price volatility yet again a function of ‘paper oil’ getting caught
US Initial Claims: mean reversion to 240K after prior holiday affected record low expected, already back to pre-pandemic levels
Foreign flows into Japan stocks; Singapore power price surge
EVENTS PREVIEW
In the absence of any major data today, and ahead of tomorrow’s US labour data which thanks to Powell’s inflation and taper comments this week are reduced to a secondary, if not tertiary role (given that financial conditions remain paramount), markets will doubtless remain in thrall to a not infrequent bout of navel gazing, above all given year end considerations in the face of the volatility that has been unleashed, and likely to persist, even if not at current levels. Initial indications from the medical research fraternity on the Omicron do appear to suggest that while it is more contagious, the symptoms do not appear to be as bad as Delta or other strains, but it will still be 10-14 days before a more definitive view emerges. Statistically, there are the weaker than expected Australia Trade and Japan Consumer Confidence data to digest, while Brazil’s Q3 GDP and US weekly jobless claims are the only other highlights ahead. The OPEC+ meeting will be centre stage, above all given the recent rout in oil markets in reaction to the Omicron variant, the scale of which has been heavily exaggerated by the “paper oil” derivatives tail that has unleashed a swathe of options gamma hedging, once again underlining that chasing yield in energy or commodities forward curves all too often ends in tears. Comments from OPEC officials ahead of the meeting have been very cautious, though few have offered any substantive guidance on whether the group will continue with the current 400K bbls/month increase in output (which has proved to be challenging to meet for a number of countries, above all Iraq), or whether it might to pause in the face of the various SPR releases orchestrated by the U.S, and concerns about demand due to the Omicron variant. Otherwise there are more Fed and ECB speakers, France and Spain hold multi-maturity debt auctions, and Canadian banks top a modest earnings schedule. US weekly jobless claims are expected to mean revert to 240K after last week’s holiday affected outlier and record low of 199K.
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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