Boletines
MARKET COMMENTARY
U.S. stocks made a positive start to February, with reaction buying at the bottom after the Fed anxiety and the volatility in the balance sheet season. In addition to the strong balance sheets, Google and Amazon, especially supported the indexes.
Speculation at the beginning of the month on whether the Fed's rate of tightening would increase by 25 or 50 basis points posed a threat to the positive outlook.
After the strong US employment data, the expectation of 5 interest rate hikes for 2022 strengthened in the market, while the decline in technology shares stood out as the factor that put pressure on indices in the USA.
US inflation increased to 0.6% on a monthly basis and 7.5% on an annual basis, surpassing previous and expectations data, reaching the highest level in the last 40 years.
After the data, the US 10-year and dollar index strengthened. The data strengthened the possibility of a 50 basis point increase in the Fed rate hike for March at the same time.
Fed Chairman James Bullard stated that he supports a total increase of 100 basis points at the next 3 FOMC meetings. Bullard also argued that the downsizing of the balance sheet should begin in Q2, adding that it may require asset sales. Thus, the possibility of an increase of 50 basis points for the first time since 2000, under the pressure of high inflation, strengthened its place on the agenda.
In the second half of the month, with the increase in tensions between Russia and Ukraine, the attention in the financial markets shifted to this direction. The markets came under pressure with the effect of the possibility of war.
While the US and the UK advised their citizens to leave Ukraine, the US has stated that Russia may begin military action against Ukraine from next week.
The Russian Ministry of Defense released images showing that some of its military units returned to the base after the exercises. However, US President Joe Biden said that they could not confirm this move yet and that Russia still poses a danger to Ukraine.
Although many of them are not confirmed, the news from the region created activity in the markets.
In the last week of the month, although the expectation that US President Biden and Russian President Putin could meet positively affected the markets, the statement from the Kremlin that Putin would recognize the regions demanding independence in Ukraine again led to a decline in the risk appetite.
Putin ordered the deployment of troops in the regions of Donetsk and Luhansk, which declared their unilateral independence from Ukraine, and signed agreements with the leaders of both regions that allow Russia to build military bases in these regions.
Joe Biden's widening of sanctions against Russia, the termination of the Nord Stream 2 pipeline by Germany and the imposition of new penalties on Russian company officials also suppressed the risk appetite. However, there was some optimism among investors as the White House's sanctions against Russia were not as extensive as initially expected. The inadequacy of the sanctions to reduce geopolitical risks brought the indices down again.
As a matter of fact, in the morning of February 24, Russian President Vladimir Putin launched a military operation against Eastern Ukraine, while Russian forces launched missile attacks on many Ukrainian cities and landed on coastal cities.
The news that Kyiv was about to come under Russian control, as well as Putin stated that his intentions was not to invade the whole country, triggered the purchase of risky assets led by technology shares. High volatility was observed in all assets.
The same day, the Biden administration announced new sanctions against Russia. It was stated that while a total of 5 big Russian banks, especially Sberbank, were included in the sanctions list, some people close to the Putin administration and their family members were also sanctioned.
No matter where in the world critical technology products such as micro-chips were produced, if they were produced using US technology, the export to Russia was also prohibited.
Last weekend, Western countries removed Russia from the international SWIFT payment system and took steps to prevent Russia from using its 630 billion dollars worth of foreign exchange reserves.
On the US side, Dow Jones ended the month with a monthly loss of 3.53%, S&P500 index 3.14% and Nasdaq 3.43%.
On the economic data side, according to the data announced in China, the service sector PMI index was realized as 51.4 points in January, above the 50.5 expectations.
January PPI data, which is expected to decrease from 10.3% to 9.5%, was announced as 9.1%, while CPI, which is expected to decrease from 1.5% to 1.0%, was 0.9%.
NBS manufacturing PMI data was announced as 50.2 against the expectation of 49.9, Caixin manufacturing PMI data was announced as 50.4, above the expectation of 49.3, and a recovery was seen in the construction sub-index in the data.
On the European side, the fourth quarter revised GDP data was announced as 0.3%, below the expectation of 0.4%, and the unemployment rate as 7%.
The manufacturing sector PMI index took the value of 55.8 points and increased compared to the previous period.
The last revised CPI for January was announced as 0.3%, in line with the expectations.
Among the prominent data in the USA, January Services PMI was announced with 51.2, 0.3 points above the expectations, similarly, the composite PMI was realized above the expectations with 51.1.
Non-farm employment data, on the other hand, was announced at +467 thousand, well above the expectation of 150 thousand. The unemployment rate was announced as 4% against the expectations of 3.9%.
PPI was announced as 1.0% while the monthly core was expected to be 0.5% and 9.7% while the annual core was expected to be 9.1%.
On the central banks side, the Bank of England increased the interest rate by 25 basis points to 0.50%, in line with the expectations, thus increasing the interest rate twice in a row for the first time since 2004.
Tensions between Russia and Ukraine put pressure on the euro, it increased gold and the dollar, which are seen as safe assets.
The dollar index rose to 97,735, its highest level since June 2020, while the euro tested its lowest level since May 2020 at 1.1105 against the dollar.
While it was a question of how the Fed before the tightening would be affected by this situation, expectations that events might delay the exit from monetary easing increased. At the beginning of the month, the possibility of increasing 50 basis points seemed high, but at the end of the month, this possibility almost disappeared.
Gold tested $1,974, its highest level since September 2020. On a monthly basis, the premium was 6.20%.
Oil started declining with the re-enforcement of the agreement signed in 2015, thus lifting sanctions on Iran's oil sales and profit-taking, as well as talks between the US and Iran that could lead to an increase in global supply. However, Russia-Ukraine tensions supported prices due to supply concerns and caused premiums. While Brent oil was at a premium of 10.72% in February, a premium of 8.59% was seen in US crude oil.
LME copper started February at $9,545 while trading volumes remained weak due to the Chinese Lunar New Year holiday. However, at the same time, LME copper tested its highest level since October 19 at $10,289, supported by increased risk appetite, the decline in stocks and the dollar index, and the expectation of taking steps to support the economy in China.
LME copper inventories fell as low as 70,125 to the lowest level since November 2005, while LME copper ended February at $9,859.50 with a premium of 3.36%.
LME aluminum, on the other hand, broke the record, while nickel tested $25.705, its highest level since 2011. Russia produces about 6% of the world's aluminum and accounts for about 7% of the global nickel mine supply.
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The first week of the new year started with an increase in volume as traders returned from the holidays. Despite the increase in the epidemic, the fact that the world economy has the potential to meet this has caused positive pricing with the increase in risk appetite.
The U.S. Food and Drug Administration has approved the third dose of Pfizer and BioNTech's coronavirus vaccine to be administered to children aged 12-15, reducing the six-month waiting period for a booster dose to five months.
More evidence is emerging that the Omicron variant affects the upper respiratory tract and causes milder symptoms than previous variants, the World Health Organization official said.
On the economic side, expectations for monetary policy were at the forefront, along with the Fed minutes. While the expectation that the Fed may raise interest rates earlier and faster, the board drew attention to the ongoing supply problem may last longer than expected and the downside risk posed by the Omicron variant.
In other news, Fed Chairman Jerome Powell appeared before the Senate Banking Committee regarding his re-nomination for a second four-year term. While underlining that necessary steps will be taken to combat high inflation, Powell stated that they will continue to pursue full employment and price stability targets while doing this. He also mentioned that the focus has shifted to price stability because the employment market is healthy, but the success to be achieved here will also positively affect the employment market. He also repeated the statement that the balance sheet reduction operation of the Fed will be carried out relatively faster and with larger steps, since the balance sheet of the Fed is larger than in previous periods. The President's statement was softer than the recent statements of other Fed members.
After Powell's explanations, the tense atmosphere partially dissipated and the risk appetite was supported, with the US inflation data being released at a level in line with expectations.
Retail sales rose only 1.7% year-on-year in December, below the projected 3.7%, according to data released in China. China's economy grew 8.1% in 2021 as industrial output rose steadily through the end of the year, offsetting the decline in retail sales, according to official data from China's National Bureau of Statistics.
The People's Bank of China also unexpectedly lowered loan rates by 10 basis points. China also made a new change in its monetary policy and economic outlook by lowering the benchmark housing loan interest rates. In response to tighter monetary policy and rising interest rates in major economies, China has lowered the reference interest rate for housing loans for the first time in nearly two years.
Towards the end of the month, in addition to the geopolitical risks in the Ukraine-Russia axis, the possibility that the Fed will be more hawkish than expected at the interest rate meeting and the selling pressure in the indexes increased.
In the statement text after the Fed meeting, it was stated that economic activity and labor market conditions continued to strengthen, but the sectors most affected by the pandemic recovered, but were affected by the recent sharp increase in cases.
While it was stated that inflation was considerably higher than the committee's 2% target and that it would be appropriate to start an interest rate hike in the near future, emphasizing the strong employment market, Powell stated that a March meeting was considered at the press conference.
Although Powell once again underlined that flexible behavior will be made according to the conditions, by stating the scenario that high inflation will be more permanent than envisaged, he stated that flexibility can be used in favor of a more hawkish attitude. Asset purchases will be terminated in March, and balance sheet reduction will begin after the interest rate hike.
To the question of whether interest rate hikes would be effective in reducing inflation without adversely affecting the employment market, he answered that there is plenty of room to increase interest rates without posing a risk to the labor market, thus negatively affecting the risk appetite in the market.
On the economic data side, inflation data in the USA was announced as 0.5% increase in December, exceeding the 0.4% increase expectation, and 7% on an annual basis, in line with the expectations and recording the largest increase in nearly 40 years.
The US PPI, was 9.7%, lower than expected (9.8%) but up from the previous month.
In the USA, the manufacturing sector PMI index for January was 55 points, below the expectation of 56.7, and recorded a decline compared to the previous period.
The last revised CPI data for the European Region in December was announced as 0.4%, in line with the expectations.
The dollar index, which made a slightly premium start to the new year, depreciated after non-farm employment and CPI data, falling to 94,629, the lowest level since November. Fed minutes, rising US bond yields and the US economy, which grew above expectations, supported the dollar. After rising to 97,441, the highest level since July 2020, towards the end of the month, the dollar index ended the month at 96,540 with a premium of 0.60% on a monthly basis.
While the Euro fell to its lowest level since June 2020 with 1.1119, it closed the month with a loss of 1.19% at 1.1233. The monthly loss in Sterling was also 0.62%, while the closing was at 1.3445.
Oil prices started the new year with a premium, amid concerns that global supply would decline with the impact of both the decrease in production in Libya and the uprising in oil producer Kazakhstan.
There are many reasons such as the more than expected decrease in oil stocks in the USA, the attack of the Houthis to the United Arab Emirates, the explosion in the Kirkuk-Ceyhan crude oil pipeline, the tension between Russia and Ukraine, and Goldman Sachs' expectation that the $100 level will be seen by the third quarter. Despite the profit realizations, Brent oil ended the month with a premium of 2.13%, USA crude oil 1.57%.
LME copper started the new year at $9,681 and ended January almost completely in negative correlation with the dollar.
Copper tested its highest level since October at $10,072 in the month, supported by the weakening dollar, after Powell made less hawkish statements than expected.
Other factors supporting the prices were the low stocks and the loosening of monetary policies in China.
China's central bank will implement more policy measures to stabilize the economy, Liu Guoqiang, vice-president of the People's Bank of China, said after the latest rate cut.
Towards the end of the month, the hawkish statements at the Fed press conference and the rising dollar and other industrial metals depreciated. LME copper, which dropped to $9,458, its lowest level since December 21, on the last trading day of the month, ended January at $9,539 with a loss of 2.21%.
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Global stock markets started December higher with the news that Omicron cases were showing mild symptoms. Asian markets also gained as the People's Bank of China eased its monetary policy.
The People's Bank of China has announced that it will reduce the amount of cash that banks have to hold in their reserves. With this move, China provided long-term liquidity to the economy for the second time to accelerate the slowing economic growth. While China, the world's second-largest economy, has recovered impressively from the pandemic, economic growth has lost momentum in recent months due to slowing manufacturing, real estate debt woes and ongoing coronavirus cases.
Pfizer CEO said the variant appears with milder symptoms but spreads faster and could lead to more covid mutations. British drug manufacturer GSK announced that the antibody-based coronavirus treatment developed with its US partner Vir Biotechnology is effective against all mutations of the new Omicron variant.
Concerns about the Omicron variant rose after British Prime Minister Boris Johnson said the UK was facing a "new wave of cases" from Omicron, and the World Health Organization said the Omicron variant posed a major "global risk".
Meanwhile, US President Joe Biden is preparing to sign an executive order directing it to purchase only zero-emission vehicles by 2035. The directive aims for the federal government to achieve net zero greenhouse gas emissions by 2050.
While consumer prices in the USA increased by 0.8% on a monthly basis, against the expectation of 0.7%, an increase of 6.8% was announced on an annual basis, in line with the expectation. With the data released in line with expectations, inflation in the USA reached the peak of 40 years. After the data, eyes were turned to the Fed meeting, which will take place on December 14-15.
While the PPI data for November was expected to be announced at a rate of 0.5% on a monthly basis, it was announced at a rate of 0.8% above the forecasts and rose to 9.6% on an annual basis.
In the middle of the December, policy meetings of central banks were on the focus. The possible tightening perception in the market before the announcements was reflected negatively on the stock markets.
On the Fed side, it was expected to move away from its temporary discourse on inflation, especially with the rapid rise in inflation in the last period, and it did. While supply/demand imbalances continue to trigger inflation, the reduction-tapering process of bond purchases has been accelerated and increased from $15 billion to $30 billion, and monthly bond purchases of $60 billion will continue as of January.
According to the median forecasts of the Fed, it is expected to increase interest rates three times in 2022 and three times in 2023. "The economy no longer needs supportive policies," Fed Chairman Jerome Powell said in his speech after the monetary policy meeting.
The Bank of England surprised the markets by raising the policy rate from 0.1% to 0.25%.
The European Central Bank decided to keep the interest rates constant and gave the message that it would gradually reduce its asset purchases.
The Bank of Japan did not change its loose monetary policy, but stated that it is still preparing to stop the supportive financial aid it started during the epidemic period.
Markets started the third week of the month, dropping more than 1% after Joe Biden's social spending and climate law draft a major hurdle. On the other hand the spread of cases originating from Omicron in the USA and Europe and the number of cases doubling every two to three days also brought the indexes down.
In the last week of 2021, despite the record levels of Covid-19 cases, global stock markets rose in general.
The UK will not receive new Covid-19 restrictions before the end of 2021 as the government awaits more evidence on whether healthcare can cope with high infection rates, the UK's Health Minister said in a briefing.
While the virus is expected to find more place on the agenda in January, supply chain problems in the global logistics sector are expected to continue in 2022. However, the 5.1% rise in industrial production in South Korea in November was seen as an indication that the bottleneck in the global supply chain has eased.
Regardless of the news about the course of the pandemic, the prominent news came from China, where authorities will allow full foreign ownership of passenger car production in the country from January 1, 2022.
Starting December at $9,476, LME copper started with the support of China's infrastructure investment commitment. LME copper rose to $9,795, its highest level since Nov.
Despite the year-end profit realization in LME base metal prices, the weak dollar was supported by easing Omicron concerns and increasing risk appetite. Although low trading volume has been observed in LME copper in recent weeks, it ended December at $9,755 with a premium of 3.22% and 25.81% year-on-year.
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US stock markets started the month on a positive note, supported by gains in Tesla. The rise was supported by the fact that the company's profit margins remained quite good despite rising commodity prices and supply chain problems. According to the announced balance sheets, it was seen that most companies managed to pass on the increased costs to consumers and the majority earnings estimates were above expectations.
Fed, which did not change interest rates, announced that it would reduce its asset purchases by $15 billion per month as of November. Stating that Fed can be patient when it comes to an interest rate hike, Chairman Jerome Powell stated in his speech that they expect the inflation pressure to decrease as of the second half of next year. The emphasis that the inflation pressure is temporary and the dovish statement than expected had a positive effect on the US indices and the risk appetite did not broke after the decision.
Officials, who asked not to be named, said it is planned to work with the U.S. Army Corps of Engineers over the next 60 days on $4 billion worth of construction projects at coastal ports, inland waterways and other corps-appropriate facilities.
In the coming days, the focus of investors was the meeting between US President Joe Biden and Chinese President Xi Jinping. Both leaders stated that they feel responsible towards the whole world to avoid conflicts between their countries, and that at the beginning of the talks they feel responsible to avoid conflicts between the two countries. However, although the leaders signaled that the tension in Sino-US relations would ease, they did not change their stance on most issues on which they disagreed.
Towards the middle of the month, there was a decrease in risk appetite in line with the increase in covid cases and increasing inflation concerns on the European side. While the increasing number of cases caused Belgium to introduce the rule of working from home and mask, the number of cases in Germany is at the peak levels. It was noteworthy that Austria was the first western European country to impose widespread restrictions, that some parts of Germany closed non-essential businesses, as well as the introduction of remote working rules and the Netherlands' decision to close shops and bars early.
Towards the end of the month, Biden's appointment of Jerome Powell as Fed chair for the second time instead of board member Lael Brainard caused mixed movements in the indexes. Markets thought Powell was a more flexible proponent of monetary policy than Brainard, but Brainard was also appointed vice president. Powellwas seen as a step towards policy continuation at a time when concerns that the US central bank might fall behind the curve in the fight against inflation. Powell's appointment was seen as a step toward policy continuation at a time when concerns that the U.S. central bank might fall behind the curve in the fight against inflation.
On the other hand, scientists announced that the new variant detected in South Africa may escape the response of the body's immune system. Thinking that the new variant is the most effective variant ever seen and that it may be resistant to the vaccine, British authorities imposed travel restrictions to South Africa. The World Health Organization has described the new strain of covid, called Omicron, as an alarming variant, citing the possible increased risk of infection. The World Health Organization has described the new type of covid, called Omicron, as worrying.
The variant news following the full closure policy initiated by Austria caused the possibility of different countries to implement similar policies to be discussed and spoiled the risk appetite in the markets.
The British central bank (BOE), surprisingly, announced that it did not change the interest rate, which was 0.10%. After falling to the level of 1.3193 on the last day of the month against the dollar, the pound ended November at 1.3295 with a loss of 2.89% on the same day.
European Central Bank President Christine Lagarde, said that it is not possible to increase interest rates in 2022, opposing the expectations of an interest rate hike as early as next October. The Euro, which tested to the level of 1.1616 during the month, also lost value by 1.95% against the dollar in November.
On the economic data side, the US October non-farm payrolls report was followed. The data was announced as 531 thousand, above the estimates of 450 thousand, and the unemployment rate was announced as 4.6%, below the previous month and expectations.
The US October PPI index was announced as 0.6% in line with the expectations. The US consumer price index, increased 6.2% in October compared to last year. Inflation data showed consumer prices rose at the fastest pace since 1990 in October, and rising inflation boosted expectations that the Fed will tighten monetary policy.
While the Chinese CPI data came in as 1.5%, slightly above the expectations, the PPI data was announced as 13.5%, indicating that the price increases could be reflected on the consumers on the supply chain.
According to the data announced in the Euro Zone, the growth in the third quarter was 2.2% on a quarterly basis, in line with the market expectations. The annual growth rate was 3.7%.
The dollar index rose to the level of 96,938 during the month as the CPI and retail sales data, which were above the expectations. It closed the month of November at 95.994 with a increase of 1.99%.
The fact that the minutes of the Fed's meeting held on November 2-3 showed that officials could raise interest rates earlier than anticipated also supported the rise in the dollar.
Oil prices started the month down after industry data pointed to rising stockpiles of crude and distilled oil in the US, the world's largest oil consumer, and pressure on OPEC to increase production and Iran and world leaders agreed this month to resume nuclear talks. . The increasing number of covid cases in Europe also pulled prices down with demand concerns.
With the expectations that the USA, Japan and China, which want to reduce high inflation and rising energy prices, will be able to sell from their crude oil reserves, prices have dropped sharply, while brent oil and US light crude oil lost value by 16.37% and 20.81% on a monthly basis.
In November, which started cautiously with the Fed meeting, gold rose to the level of $1,850 after the Fed announced that it would not be in a hurry to raise interest rates. However, risks stemming from inflation could not stay at these levels due to the strong dollar and expectations that interest rate hikes would be realized sooner than anticipated, and the company closed the month of November with a 0.51% loss at 1.774%.
LME copper, started November with a loss amid concerns over demand in China and a premium on the dollar. Prices were bolstered by strong export growth data from China during the month, falling inventories and the adoption of the $1 trillion US infrastructure bill. China's announcement of measures to support the real estate sector also supported LME copper prices positively. However, despite the US dollar rising to a 16-month high, LME copper, which rose to $9,920 in the last days of the month, ended November with a loss of 0.97% at $9,451 with the news of the newly identified coronavirus variant in South Africa.
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International stock markets started October with sales amid concerns that high inflation might be permanent.
The general positive mood was created by Fed chairmen's statements that supply woes are putting pressure on them, but that price increases will not continue. Afterwards, Senate minority leader Republican McConnell announced that they plan to submit a proposal to raise the debt ceiling by December, supporting the indexes positively.
Deepening sales, after natural gas prices rose 40% in one day in European indices, slowed down with Putin's statements that they would increase natural gas exports to Europe and that they were ready to help balance the energy market.
Later in the month, stock markets came under the pressure of intensifying debates on whether the rise in energy prices will make inflationary temporary or long-term.
In the US indices trying to find direction, positive closings were seen with the sharing of the minutes of the FOMC meeting. The minutes showed that the authorities had increased inflation concerns and agreed to start reducing asset purchases soon. According to the minutes, if a decision is made to start reducing asset purchases next month, the decision may be implemented in mid-November or December.
Higher-than-expected company earnings relatively quelled concerns about the energy crisis and supply chain disruptions. However, Fed Chairman Powell's pointing out that inflation may remain high for longer than previously predicted pushed the markets down. Jerome Powell said the Fed should start the process of reducing its support for the economy by reducing asset purchases, but should not touch interest rates yet.
The auto industry was under pressure as chip supply problems continued to affect European auto companies. VW has announced that it will halt all production in the Czech Republic for two weeks due to the lack of semiconductors of the Skoda unit.
China's Evergrande Group transferred money to pay off the dollar-denominated bond whose coupon payment expired on September 23. If the payment, which came days before the deadline for the last payment, was not realized, the company would officially go into default.
In the last week of the month, while the rise in oil prices carried the energy sector up, Tesla's over 1 trillion USD market value was at the top of the agenda.
New concerns about the Chinese real estate sector, on the other hand, were the factor limiting gains in Asia. China's announcement that it will impose a pilot property tax in some regions has increased investors' concerns about the Chinese real estate sector.
Stock markets saw a decline, with company balance sheets clearly pointing to disruptions in the supply chain. The balance sheets showed that the largest manufacturing companies in the US, including General Motors, General Electric, 3M and Boeing, face logistical problems and higher costs due to the supply bottleneck that is expected to continue next year.
Investors, worried that inflation will strengthen due to the supply chain problems observed around the world, are watching whether the main central banks will reduce the measures to support the economy, which they put into practice during the epidemic period.
On the economic data side, unemployment data was announced as 4.8%, below the 5.1% expectation on the US side, while non-farm employment was announced as 194 thousand against the expectation of 500 thousand.
Inflation data for September were expected to increase by 0.3% and 0.2% on a monthly basis in the headline and core, respectively, while the data were announced as 0.4% and 0.2%. Consumer prices increased by 5.4% in September compared to the same month of the previous year.
The US third quarter growth data, which is expected to come in at 2.6%, was announced at the level of 2%. Third quarter personal consumption was announced at 1.6%, above the estimates of 0.9%.
In China, the September PPI data recorded the fastest increase in history due to energy restrictions and rising commodity prices, causing the pressure on businesses to increase. Producer prices rose 10.7% in September from last year, the biggest increase since the data were first released in 1996, according to data released by the Chinese statistical agency. According to the data of the institution, China's September CPI data was announced as 0.7%, below the expectations of 0.9% compared to the previous year.
China's third-quarter GDP came in at 4.9% year-on-year, below expectations of 5%. Chinese industrial production, which is expected to be 3.8% on an annual basis for September, was announced as 3.1%.
On the European side, the region's inflation was in line with the expectations of 3.4% annually and 0.5% monthly, and in line with the previous period.
The European Central Bank did not change its interest rate policy. The fact that the ECB chairman took a slight step back in his firm stance against a possible interest rate hike made investors think that interest rate increases may be in the near future.
The Bank of Canada (BoC) is ending its quantitative easing program earlier than expected and signaling that it may raise interest rates by April 2022, sooner than expected. The BoC's move also supported expectations that the Fed could act more quickly on rate hikes.
The monetary policy of the Bank of Japan (BOJ) did not change as expected.
Expectations that the Fed will tighten monetary policy sooner than expected, in addition to the anticipated rise in inflation and concerns that global economic growth will slow down, supported the dollar. On the other hand, the fact that the US industrial production data was below expectations and the increasing risk appetite put pressure on the dollar. The dollar index ended October at 94.123 with a 0.11% depreciation.
Euro/usd, recovered after falling to 1.1523, a 15-month low, and closed at 1.1561 with a loss of 0.17% on a monthly basis.
LME copper, which fell to $8,887 at the beginning of the month, later rose with the impact of Chinese investors returning from a long vacation, supported by the decline in Shanghai stocks and the resurgence of supply concerns in Peru.
The expectation that the Fed will not rush to reduce asset purchases after the below-expected US employment data continued its upward movement with the support of the positive news flow from LME Week and the rise in premiums.
While rising energy prices caused disruption in the production of downstream consumers, causing the smelter to stop production, concerns about refined copper production increased. Backwardation increased due to the tightness in the spot market.
Meanwhile, the news of the supply cut from Peru destabilized the market. LME copper stocks fell to a 23-year low and Shanghai copper stocks fell to a 14-year low, while refined copper supplies in China shrank due to power cuts.
LME copper 3-month futures price rose as high as $10,453 in the month. The gap between cash price and futures price opened to a record above $1,100, indicating that stocks are tight.
In the coming days, as the supply shortage eased and the attention was focused on the threat of slowdown in demand in the top consumer China, LME copper depreciated in value, but the high backwardation in the market continued.
In order to prevent high backwardation, the London Metal Exchange took the transactions under examination and brought temporary measures to the market.
Towards the end of the month, LME copper, which declined due to concerns that the rising dollar as well as the electricity crisis in China and slow economic growth would reduce demand, ended October at $9,544 with a monthly premium of 6.66%.
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September started with Asian stock markets falling despite Wall Street hitting an all-time high, as concerns about slowing Chinese economic growth and regulatory changes dampened risk appetite.
After the Jackson Hole symposium and the inflation data, the eyes were focused on the non-farm payrolls data, which the FED followed closely for both the timing of tapering and the rate hike. Global markets faced selling pressure after the weak data, while the US non-farm payrolls data also cast a shadow over the global growth and inflation outlook. The US non-farm employment data recorded the lowest increase in the last 7 months, remaining limited to an increase of 235k against the expectation of 733k increase.
However, markets rose on expectations that the FED will likely delay the start of reducing asset purchases after nonfarm payrolls rose more slowly than expected.
European Central Bank (ECB) did not change the policy rate in line with the expectations, it was announced that it would start to reduce its bond purchases in the next quarter. Euro Zone 2 quarter growth data was announced as 2.2%, above the 2% expectation.
The rise in oil prices towards the middle of the month reflected positively on the markets. European markets were also boosted by the reflection of the sharp rise in commodity prices, especially oil and natural gas, on sector shares.
However, China's tightening of controls on technology companies and the growing liquidity crisis of Evergrande, the country's largest construction company, made investors confused.
Concerns that the Chinese real estate company Evergrande, which is heavily indebted, would not be able to pay its debts became a featured agenda item in September. While this situation caused investors to avoid risky assets, it was watched whether the difficult situation of the company would expand to the general Chinese real estate sector. Investors feared that other companies in the Chinese real estate sector could face similar problems at a time when economic growth is fragile if Evergrande goes bankrupt or close-out.
The United Nations warned that the global economy is expected to see its fastest recovery in almost fifty years this year, but that inequality between developed and developing countries is deepening.
In line with the market expectations, the FED did not change the interest rate. It was also stated in the text that the asset purchase program could be reduced in the near future if the inflation and employment targets are approached. When we look at the median forecasts of the members, it was seen that two more members predicted an interest rate hike in 2022 compared to June. In his speech, FED Chairman Powell stated that mid-2022 might be suitable for ending asset purchases and pointed to the November meeting for tapering decision if economic data goes in line with expectations. In order to the Fed's tightening in monetary policy, it is predicted that interest rates will increase to 1% in 2023 and to 1.8% in 2024. These forecasts revealed that there would be an earlier rate hike than the FED's expectations in June.
While the dollar index started September with a flat course with the effect of economic data before the US non-farm employment data, it decreased after the employment data. However, with the depreciation of the euro before the ECB decision, the strong economic data announced in the USA and the expectations in the markets that the FED will start monetary policy tightening, it started to rise and rose to 94.503. On a monthly basis, it closed at 94.230 with a increase of 1.73%.
Against the dollar, the Euro fell 1.91% and the pound by 2.05% on a monthly basis, closing at 1.1581 and 1.3472 levels, respectively.
LME copper started September with a increase as employment data led to a depreciation in the dollar. However, prices have pulled back again as Chinese factory data raised concerns about Chinese demand.
In the coming days, copper prices also came under pressure as Chinese August imports, higher prices and sluggish economic growth hit demand.
LME copper, which rose to the level of $9,756 with the strike concerns and increasing risk appetite in Chile, could not hold on to this level as the strike disappeared and investors remained cautious before the US inflation data. Afterwards, although it turned its direction up for a short time after the data, the news flow about the expected stimulus reduction for the US economy, the uneasiness before the Fed meeting and the stronger dollar suppressed prices.
Copper tested to $8,810 on September 21, its lowest level since August 19, as the Evergrande Group debt crisis led to market sell-offs.
Although LME copper supported from Evergrande's statements that relieved the markets that it would pay its debts; September ended with a loss of 6.16% at $8,948 on the back of the power cuts in China, stronger dollar and the data that came below expectations and created demand concerns.
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May started with a rally in base metals due to rising hopes for global economic recovery, strong demand and weak dollar. LME copper, which was closed on the first trading day of the week, renewed its 10-year record in the first week of the month.
It were were effective in the sharp rise that producers stated that higher prices are needed for new investments, otherwise there will be a copper shortage in the coming years. On the other hand, copper production decreased in Chile for the 10th consecutive month.
LME copper hit an all-time record as high as $10,747.50 on May 10, after which it fell on profit-taking sales and expectation of a decline in demand in China.
At the same time, prices were supported by the threat of strikes in Chile and expectations that China will compensate for weak factory data. LME copper was on the rise again after a union representing workers at BHB's Escondida and Spence mines in Chile rejected a contract offer from the company and the threat of a strike, but failed to break the record again.
The news that China is planning to strengthen the management of both the supply and demand side in order to reduce the "irrational" increases in commodity prices was most important factor that stopped the price rise. It has been reported that China will impose serious sanctions on those who monopolize, stockpile and speculate among companies in the commodity markets.
Also, U.S. President Joe Biden delivered the first full budget proposal detailing its goals to expand the size and scope of the federal government by spending more than 6 trillion dollars in the coming fiscal year.
The dollar fell to a nine-week low after the Fed continued its pro-monetary policy easing and the White House's large-scale spending plans. End of month LME copper supported by the loss in the dolar, the workers' strike in Chile and the optimism of Biden's budget plan and ended May with %4.75 gain and $10,275 level.
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Copper prices started February to rose on expectations of further stimulus from the United States.Copper prices boosted by a weak dollar and hopes for better metals demand rose due to improved vaccine rollout and expactations of the U.S. stimulus. Copper prices underpinned by thinning inventories that pointed to higher demand for the industrial metal and by optimism over the prospect of a massive U.S. COVID-19 aid package. Before the China holiday copper prices continued to rise, scaled eight-year highs o as rising inflation expectations, a falling dollar, historically low stocks and progress in the battle against the coronavirus spurred fresh buying.
Copper took a breather on 11th Feb. as Chinese markets closed for the week-long Lunar New Year holiday after four days of rapid gains that lifted prices to their highest in eight years.
Industrial metals rose across the board in London and Shanghai on 19th Feb, with benchmark LME copper hitting a fresh nine-year high, underpinned by a weak U.S. dollar and tight supply concerns. Three-month copper on the London Metal Exchange rose to $8.995 a tonne.
London copper prices extended gains on 22th Feb to cross the $9.269 a-tonne level for the first time since August 2011, driven by a weaker dollar.
Three-month copper on the London Metal Exchange hit its highest since August 2011 of $9.617 a tonne on 25th Feb, only 5.6% below its record high level of $10.190 a tonne hit in February that year. Copper rose to a fresh 9-1/2 year high on a weaker dollar, low inventories and hopes that the metal will benefit from higher demand as major economies recover from the impact of the coronavirus.
Copper prices fell on 26th Feb., as a week-long rally in base metals ran out of steam, but the metal was on track for its best month since 2016 on low inventories and a bright demand outlook. Three-month copper contract on the London Metal Exchange closed February at $9.000 a tonne. It, however, gained 15.2% so far in February, set for its best month since November 2016.
Copper futures started to March of falls, as bleak manufacturing data from top consumer China pressured prices, while investors were cautious as they awaited a series of policy announcements. Most base metals fell on the first week of March, as a firm dollar made greenback-priced metals more expensive to holders of other currencies. LME copper edged down to $8.570 level on 4th of March.
Copper prices continued its weak course, despite of expectations of a faster economic recovery and higher capital inflows into markets after the U.S. Senate passed a long-awaited $1.9-trillion coronavirus stimulus bill. Industrial output growth in top metals consumer China accelerated faster than expected in January-February and concerns over global supply resurfaced in the middle of March. LME copper rose to $9.199,5 level on the 15th of March. But copper started to fall again with firmer dollar, as a stronger dollar made greenback-priced metals more expensive to holders of other currencies. Three-month copper on the London Metal Exchange fell 2.2% on March and closed the month to $8.809,5 level.
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Copper prices rose on the first trading day of 2021 after data showed that factory activity in top consumer China had expanded, boosting confidence in the demand outlook, as the world's second-largest economy continues to recover from the coronavirus-led slump. The Caixin/Markit Manufacturing Purchasing Managers' Index was at 53.0 in December, well above the 50-level that separates growth from contraction, but down from November's 54.9, missing expectations and easing to the softest pace in three months. London copper prices headed towards the psychological level of $8.000 a tonne on 5th of Jan., as solid manufacturing data from major economies and a stronger yuan boosted sentiment. Meanwhile, China's central bank lifted its official yuan midpoint by the most since it abandoned a decade-old peg against the dollar in 2005, boosting risk sentiment and making greenback-priced metals cheaper to holders of the yuan. Copper prices rose the first week of 2021, as investors eyed more policy support in the United States amid chances that Democrats could take over control of the crucial Senate chamber. Copper is often used as a gauge of global economic health and Democrats usually favour bigger stimulus bills. London copper prices closed the first week with %4.2 weekly rise, on hopes for more stimulus from the United States. 8th of Jan LME copper reached the $8.238 level after 8 years later.
But London copper can not be stayed above $8.200 level, industrial metals fell on 11 Jan. as top metal consumer China saw its biggest daily increase in COVID-19 cases in more than five months. Copper prices continued to fell on the second week of Jan. as a stronger dollar buoyed by stimulus hopes and higher U.S. yields made greenback-priced metals more expensive to holders of other currencies.
Copper prices in London advanced on the 18th of Jan. as top metals consumer China posted stronger-than-expected growth in the fourth quarter of 2020, boosting demand confidence.China's economy grew 6.5% in the previous quarter, faster than the 6.1% forecasts by economists in a Reuters poll, ending a rough coronavirus-striken 2020 in remarkably good shape and remained solidly poised to expand further this year. Copper edged up to $8.116 level but can not remain above $8.000. Copper prices fell again on worries that demand from top consumer China will be dampened due to the country's rising coronavirus cases that could trigger further restrictions. On the 22nd of Jan. copper tested to $7.865 level but closed the week $7.986 level.
Base metals fell on the last week of Jan., weighed by a broader sell-off in global equities and as a stronger dollar made greenback-priced metals more expensive for holders of other currencies. LME copper closed the last week of January with %2.16. Copper gained %0.76 overall in January.
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London copper prices hit their highest in more than two years on the first day of September after data showed top consumer China saw a strong expansion in manufacturing activity in August.
Three-month copper on the London Metal Exchange jumped to $6,830 a tonne. But copper eased on the second day of September from a 26-month high hit in the previous session, as the U.S. dollar firmed and comments by a Peruvian government official eased concerns over supply from world's No. 2 producer. Making greenback-traded metals more expensive to buyers using other currencies, the dollar bounced off two-year lows on solid U.S. manufacturing data. Copper fell to $6,547 a tonne after the dollar strengthened on 3d oh September. Copper is often used as a gauge of global economic health.
Datas of first week showed solid growth in China's manufacturing and services sectors, boosting hopes that the world's second biggest economy is recovering from the COVID-19 pandemic. Copper prices gained on 4th September as low inventories in exchange warehouses, disrupted ore supplies and solid economic recovery in top consumer China lent support.
LME copper fluctuated in the band $6609-$6830 between September 07-17. Notwithstanding headwinds arising from the intensifying rift between Washington and Beijing, economic stimulus measures across the world continue to support prices of copper,seen as a gauge of global economic health.The metal has gained more than 40% since March and is the best performing base metal this year so far.
"Copper looks well supported by both demand and supply," said commodity strategists at ANZ in a note. "Ample stimulus is paving the way for strong consumption, while mining disruptions are keeping supply tight." Analysts at CRU estimate Chinese demand dropped 15% in the first quarter due to COVID-19. "But there has been a strong recovery in the second quarter. We expect Chinese refined copper demand will grow 1-2% this year." "Copper should remain supported in the mid $6,000s. Much of the risk in the short term comes from non-copper specific factors, namely the dollar, further fund inflows, government stimulus measures or the progression of Covid-19."
London copper fell by the most in seven sessions on 17th September to $6,676 as the dollar climbed after the U.S. Federal Reserve said it expected the post-coronavirus recovery to gain steam in the world's largest economy. London copper hit a more than two-year high on 18th September, buoyed by a weaker dollar and strong fund buying on hopes that Chinese stimulus would spur demand in the world's biggest metals consumer. London copper gained more ground on 21th September, climbing to its highest in more than two years ($6878), as a recovery in China's industrial production underpinned prices.
The global economy appears to be recovering from the coronavirus slump faster than thought only a few months ago, thanks to improving outlooks for China and the United States, the OECD said.
Physical copper premiums in China continued to fall, losing $4.50 to $59 a tonne, data showed, extending a decline from highs of $100 six weeks ago. That was the lowest level since the start of April.
LME copper stocks available for purchase dropped by 25% on 21st September. Total LME stocks remain at levels not seen since 2005. Despite that, official prices closed lower in the last session, thanks to markets reducing risk as global coronavirus cases rise. But copper prices declined on 21th September after tested $6,878 as a strengthening U.S. dollar made greenback-priced commodities more expensive for holders of other currencies. The three-month copper on the London Metal Exchange fell to $6449 a tonne on 24th Sept. "It's the strong U.S. dollar (behind copper's price fall).
London copper edged up the last days of September as solid manufacturing and services data from top consumer China boosted optimism, but a stronger U.S. dollar capped gains. Three-month copper on the London Metal Exchange closed to September on $6,686.
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