Mohicans markets：MHM Today News

April 3, 2023 - Fundamental Reminder

☆ 9:45 CNY Caixin Manufacturing PMI (MAR)

☆ 22:00 USD ISM Manufacturing PMI (MAR) This indicator is often considered a leading indicator of the economy. The market expects it to record 47.5.

☆ Today, the OPEC+Joint Ministerial Monitoring Committee will hold a virtual meeting.

☆ Closing Reminder: Taiwan Stock Exchange Corporation is closed for one day due to Children's Day.

Market Overview

Review of Global Market Trend

Last Friday, spot gold briefly shot up $10 after the release of expected PCE data, but in late trading, it took up most of its gains and fell below the 1970 level, eventually closing 0.57% lower at $1969.13 per ounce. Spot silver rose sharply during the European session, but although it fell somewhat late in the session, it closed up 0.83% higher at $24.10 per ounce. Gold prices rose $150 in March, their best monthly performance since July 2020.

The US dollar index gained 0.41% to 102.59, recovering all losses during the day during the US session. In the past five weeks, the US index has closed in Yin for four weeks. US bond yields rose, while 10-year US bond yields fell sharply to 3.473%; The yield on two-year US Treasuries, which are more sensitive to interest rate policies, remained at a 4% level and closed at 4.038%.

In terms of crude oil, WTI crude oil rose more than 1% during the day and closed up 1.78% at $75.65 per barrel. Brent crude oil started its rally in Europe and once approached the $80 mark, closing up 1.61% higher at $79.13 per barrel.

Over the weekend, after the OPEC+emergency official announced a production cut, WTI crude oil opened high and rose more than 7%, currently standing above $80.

The Nasdaq Composite Index ended 1.74% higher, with a cumulative gain of 16.7% in Q1,which was the best quarterly performance since 2020 Q2; The Dow closed up 1.26% and the S&P 500 Index closed up 1.44%. Large tech equity performed strongly during the quarter, with Nvidia up about 90% and Tesla up about 68%. Baidu led the popular Chinese stock market, with Q1 up more than 30% and Alibaba up about 16%.

European stocks closed higher across the board, with Germany's DAX30 index up 0.69%, the FTSE 100 index in the UK up 0.15%, France's CAC40 index up 0.81%, and Europe's Stoxx 50 index up 0.69%.

Market Focus

1. When Saudi Arabia announced voluntary cuts of about 1.6 million barrels a day outside the OPEC + deal over the weekend, the White House responded: “It is not advisable to reduce production now.” Saudi Arabia was annoyed that the Biden administration did not replenish its war oil reserves last week, the sources said.

2. Former US President Donald Trump, who has been indicted on criminal charges, will speak in Florida on Tuesday.

3. The Foreign Minister of Iran spoke by phone with the Foreign Minister of Saudi Arabia.

4. Tesla delivered 422,900 yuan in the first quarter, compared with market estimate of 421,200 yuan.  

5. India extends export restrictions on gasoline and diesel.

6. India announced that trade with Malaysia could be settled in Indian rupees.

7. The Chilean Foreign Minister stated that the time is not yet ripe to establish a joint organization of lithium producing countries in South America, “Lithium Peck.”

8. The Autonomous Region of Kurdistan said it had reached an agreement with Iraq to resume oil exports.

9. Swiss media reports say UBS will cut 20 to 30 percent of its workforce after completing the Credit Suisse acquisition, cutting as many as 36,000 jobs globally.

Geopolitical Situation

Conflict situations:

1. Russian Ministry of Defense: The Russian army hit the command post and communication center of the 58th motorized infantry brigade of Ukraine in the Donetsk region of Zinchman.

2. Russian Ministry of Defense: The Russian army launched an offensive in the directions of Kupiyansk, Zinchman, Donetsk, Zaporoge, and Kherson, destroying various Ukrainian military equipment such as radars, armored vehicles, and howitzers. In addition, the Russian army also intercepted multiple Ukrainian rockets and shot down more than ten Ukrainian drones.

3. General Staff Department of the Ukrainian Armed Forces: In the past 24 hours, the Ukrainian Armed Forces have repelled multiple attacks by the Russian army in four directions, including Zinchman and Bahmut. The Ukrainian air force has carried out multiple strikes against Russian military personnel and equipment assembly points. The missile and artillery units of the Ukrainian army attacked several important targets such as the Russian military command post.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: OPEC+has very large pricing power, raising oil price expectations

On April 3rd, Goldman Sachs said that the nine member countries of OPEC+announced an unexpected “voluntary” collective production reduction, totaling 1.66 million barrels per day, which will take effect from May until the end of 2023. Compared to the past, OPEC+has a very large pricing power, and this unexpected production reduction is consistent with their new principle of preemptive action, as they can take action without significantly losing market share. As we have assumed that Russia's production reduction will continue into the second half of 2023, we have lowered the OPEC+2023 production forecast by 1.1 million barrels per day by the end of 2023. Taking into account the significant decline in OPEC+supply, a small decline in demand, and small-scale storage release actions in France, we have raised the price forecast for Brent crude oil by the end of 2023 from $90 per barrel to $95 per barrel, and raised the price forecast for 2024 from $97 per barrel to $100 per barrel.

02

SOCIETE GENERALE

【Societe Generale: The focus of the Eurozone government bond market is now turning to economic fundamentals】

On March 31, interest rate strategists at Societe Generale wrote in a report that the focus of the Eurozone government bond market is now shifting to economic fundamentals, which indicate that there is no imminent crisis risk, but the outlook remains bleak. Eurozone government bonds with a smaller market may perform better than Eurozone government bonds with a larger market. The strategist at the French bank said that interest costs, particularly in Italy, would continue to grow and curb the sharp narrowing of interest spreads.

03

MUFG

The issuance of AT1 bonds still continues as planned.