Daily Market Brief 22-11-22

Market Summary – April 4, 2023

US indices jumped after OPEC+ decide to cut production, while Tesla shares lost $40 billion in one day.

US indices closed mixed in the first sessions of the second quarter after the Dow Jones and S&P 500 rose, supported by energy stocks, while technology stocks pressured the Nasdaq Composite Index.

Energy stocks rose after several countries in OPEC + announced unexpected production cuts that could push oil prices toward $100 a barrel.

Shares of Chevron Corp., Exxon Mobil, and Occidental Petroleum jumped strongly.

At the same time, the prospect of higher oil costs added to inflation fears after Wall Street breathed a sigh of relief as data showing weak manufacturing activity in March raised expectations that the Fed may soon end its tightening policy.

Dow Jones:

The Dow Jones index rose by 1%, or the equivalent of 327 points, to close above 33,600 points for the first time in 6 weeks. The energy index topped the list of the sectors gaining the most in the Dow Jones after it jumped by more than 4%, followed by the health sector, with an increase of 2.8%.

S&P 500 and Nasdaq Composite:

The S&P 500 rose by 0.4%, closing above 4,100 points for the first time in 6 weeks.

These rises come as the first-quarter earnings season approaches, amid expectations that central banks will start submitting their reports in the coming weeks and provide details about the general health of the sector after the Silicon Valley bank collapse raised fears of a global banking crisis.

On the other hand, the Nasdaq Composite Index fell by 0.3%, falling from its highest level in two months, under pressure from the technology sector, which is more sensitive to higher interest rates.

Tesla stock:

Tesla stock fell more than 6%, its most significant daily loss in two months after the company reported car deliveries in the previous quarter, which were up just 4% of the prior quarter, despite CEO Elon Musk cutting car prices in January to boost demand.

Tesla’s market value fell to about $616.2 billion, losing more than $40 billion in one day after these declines.

Oil is rising as investors’ focus shifts to the demand outlook.

Oil prices rose in Asian trading Tuesday, April 4, after the OPEC + decision to cut more production shook the markets yesterday. Investors’ attention turned to the prospects for demand and the impact of high prices on the global economy.

Brent crude futures rose 41 cents, or 0.5%, to $85.34 a barrel by 0400 GMT. US crude futures also rose 41 cents, or 0.5%, to $80.83 a barrel.

Both benchmarks jumped more than 6% yesterday, Monday, after the 

Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, in what is known as the OPEC + alliance, shook the markets by announcing on Sunday plans to cut production targets by another 1.16 million barrels per day.

The latest pledges raise the total volume of OPEC+ cuts to 3.66 million barrels per day, including 2 million barrels in October, equivalent to about 3.7% of global demand.

The OPEC+ production constraints prompted most analysts to raise their forecast for Brent crude prices to around $100 a barrel by the end of the year. Goldman Sachs raised its forecast for Brent to $95 a barrel by the end of this year and $100 for 2024.

However, the oil alliance’s decision increased investor concerns about rising costs for businesses and consumers, fueling fears that an inflationary shock to the global economy due to higher oil prices could lead to further interest rate hikes.

Gold is falling as investors assess the OPEC + production cut and after weak US data.

Gold prices fell on Tuesday, April 4, as investors evaluated the expected path of monetary policy in the United States after data showed a decline in manufacturing activity there and amid inflationary risks raised by production cuts from the OPEC + group. Spot gold fell 0.3% to $1978.10 an ounce by 05:49 GMT, while US gold futures fell 0.2% to $1997.30.

The dollar index rose 0.2%, which makes the precious metal more expensive for buyers holding other currencies. While silver lost 0.9% in spot transactions, recording $23.79 an ounce, while platinum fell 0.3% to $982.62, and palladium fell 0.4% to $1453.64.

Gold prices fell yesterday, Monday after the OPEC + group announced a sudden reduction in crude oil production at the beginning of the week. But prices changed direction, rising 1 percent, as the dollar tumbled after weak US economic data were published.
US manufacturing activity fell in March to its lowest level in nearly three years as new orders tumbled and may continue to decline due to tightening credit.

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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