February 24, 2023: Wall Street Closed Up, and Oil Achieves Easy Gains

Janet Yellen: America will resume economic talks with China at the proper time.

US Treasury Secretary Janet Yellen said that America would resume economic talks with China when appropriate, as Beijing continues to sell its huge holdings in US Treasury bonds.

According to Refinitiv data, China’s holdings of US Treasury bonds stabilized at the lowest level since May 2010, recording $862.3 billion, down by about $173.8 billion in 2022.

Yellen said the US has yet to set a specific time frame to do that, but we believe it’s essential, and we’re certainly open to such talks. Yellen stressed that there are many areas that the US and China need to work together on to address global challenges, including food security, debt, and climate change. She added that good communication between the two countries is a fundamental issue for the macroeconomic and financial conditions locally and for the global economy on a larger scale.

Yellen’s comments come from an expected meeting between Chinese President Xi Jinping and his Russian counterpart Vladimir Putin this spring to discuss deepening ties with Beijing.

A rough day on Wall Street.

US indices ended their trading on the rise after a session of sharp fluctuations as a result of the mixed reaction of investors about the impact of economic data on the path of interest rates and the US economy.

The Department of Labor revealed yesterday, Thursday, that the number of Americans who applied for new applications for unemployment benefits decreased unexpectedly last week. Also, the United States announced that its gross domestic product grew by 2.7% in the fourth quarter of last year, compared to previous expectations of growth of 2.9%.

According to Nomura Bank analysts, the substantial decline at the beginning of yesterday’s session resulted from large trading in short-term derivatives, which pressed firmly on the market.

The S&P 500 rose by 0.5% in Thursday’s session, ending a series of daily declines that lasted for four sessions and the longest series of daily declines in two months. Seven out of 11 major sectors in the S&P 500 rose, led by the energy sector index, which rose by 0.7% after seven consecutive sessions of decline. The Dow Jones rose by 0.3% after touching its lowest level in a month but still trades below the 50-day moving average. The Nasdaq Composite Index rose by 0.7% in Thursday’s session after it approached the 200-day moving average at the beginning of the session, amounting to 11,400 points, and then was able to rebound from these levels and close at 11,590 points. Nine of the 12 major sectors in the Nasdaq Composite Index rose, led by energy and education services, which rose by 1.6% and 1.5%, respectively.

Netflix shares fell by more than 3% in Thursday’s session, its lowest close in a month, after it was reported that the company is reducing subscription prices in about 30 countries to expand into new geographical areas amid a saturation of the United States and Canada markets.

Russia plans to reduce its oil exports by up to 25%.

According to a press report, Russia plans to implement significant cuts to its oil exports to raise the price of crude for the West. Sources told Reuters that Russia might reduce shipments from its western export hubs by 25% by March.

The sources confirmed that the state-run Transneft oil pipeline has already told two companies that they will receive 20-25% fewer shipments in March than they originally ordered from Russia’s western ports.

One source pointed out that the export cuts appear to be larger than the planned production cuts and are likely to help push the price of Russian oil.

The Russian Deputy Prime Minister, “Alexander Novak,” declared earlier this month that Moscow intends to voluntarily cut oil production by 500 thousand barrels per day, or about 5%, in March after the West applied a ceiling on Russian oil prices.

Oil is rising, supported by fears of a Russian supply cut

Oil prices extended their gains for the second consecutive session, Friday, February 24, as the impact of expectations of lower exports from Russia outweighed the increase in inventories in the United States.

Brent crude futures rose 61 cents, or 0.7%, to $82.82 a barrel. US crude futures rose 63 cents, or 0.8%, to $76.02 a barrel.

Both benchmarks ended Thursday’s trading sessions by about 2%, supported by Russia’s plans to reduce oil exports from its western ports by up to 25% in March, exceeding its announced reduction in production by 500 thousand barrels per day.

During the week, oil prices fell slightly, declining by nearly 4% in the past week on concerns that raising interest rates may boost the dollar, as well as the increase in US crude inventories for the ninth week. The dollar’s rise leads to increased commodity prices denominated in the greenback for holders of other currencies.

Gold slightly increases amid uncertainty on US monetary policy.

Gold prices rose slightly on Friday as the dollar stabilized, amid increasing uncertainty about US monetary policy ahead of important data release.

Today, the Fed’s preferred measure of inflation is the PCE data price index, which is expected to have risen 0.4% in January from 0.3% in the previous month.

Futures contracts for the yellow metal for April delivery increased by 0.26%, at $ 1831.60 an ounce, at exactly 07:22 GMT, and the spot price for delivery settled at $ 1823.60 an ounce. Gold prices are heading towards recording a fourth consecutive weekly loss, down by about 0.8% this week.

While silver futures for March delivery fell by 0.22% to $21.39 an ounce, the spot price of platinum fell 0.30% at $948.33, and palladium fell 0.67% to $1442.45.

Japan’s Nikkei index makes the biggest jump in a month, supported by chip stocks.

Japan’s Nikkei index posted its most significant jump this month on Friday, February 24, recovering from a one-month low reached in the previous session. The incline came after chip-related stocks rose, and the upcoming BoJ governor supported the current monetary easing policy. The index ended the day up 1.29% to 27,453.48 points. The Nikkei fell to its lowest level since January 23 at 27,046.08 points on Wednesday. Japanese markets were closed on Thursday for a national holiday.

Chip giants Tokyo Electron and Advantest contributed nearly half of the Nikkei’s total gain of 349 points. The Advantest stock was the best performer as it rose 8.22%, followed by Tokyo Electron stock which rose 7.13% after their US counterpart NVIDIA said that quarterly sales were better than expected. The Topix index rose 0.67% to 1,986.43 points.

Bank of Japan governor nominee Kazuo Ueda began his testimony to Parliament for several hours, saying that the central bank’s current policy is “appropriate” and “necessary.” Earlier yesterday, data showed that consumer price inflation in Japan reached a 41-year high in January.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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