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On September 7, OPEC+ agreed to increase production again in October. Amid weakening global demand, the Saudi-led OPEC group is pressing ahead with a six-month plan to regain market share. This decision will put pressure on oil prices, further confirming that Saudi Arabia has given up on pursuing higher prices and is focused on increasing revenue by restoring as much idle production as possible. Eight OPEC members, including Saudi Arabia, Iraq, and the UAE, said they will increase production by a total of 137,000 barrels per day next month. However, analysts say only Saudi Arabia and the UAE will be able to increase supply because most other members are already close to their production capacity limits. People familiar with the matter said that for Saudi Arabia, the political and economic costs of maintaining production cuts are too high. By quickly restoring production, Riyadh will also be able to assess the production capacity of each member country for possible future renegotiation of quotas.With a September Federal Reserve rate cut all but certain, options traders are widely betting on a stable stock market ahead of Thursdays CPI data. However, this bet could be risky if the data shows rising inflation. The markets rationale for a rate cut is straightforward: US job growth is stagnant and the economy needs stimulus. Fridays weak jobs data reinforced this expectation, prompting investors to fully price in a 25 basis point rate cut from the Fed next week. The markets reaction has been muted: US stocks fell slightly on Friday, and the fear gauge edged up slightly, but remains well below the critical 20 level, where it has mostly remained since June. Looking ahead, options traders are betting on a roughly 0.7% two-way move in the S&P 500 following Thursdays CPI release, below the 1% average realized move over the past year. However, this trade ignores a key risk: what if inflation figures significantly exceed expectations? "Its a very delicate balance right now," said Eric Teal, chief investment officer of Comerica Wealth Management. "Any data thats very positive or very negative could change the market outlook."On September 7, U.S. Treasury Secretary Jeffrey Bessant stated that the United States and Europe are discussing a new round of sanctions and secondary tariffs against Russia, hoping that the "collapse" of the Russian economy will prompt Putin to engage in peace talks with Ukraine. "We are ready to increase pressure on Russia, but we need the cooperation of our European partners," Bessant said. He also stated that President Trump and Vice President Cyril Vance spoke with European Commission President Ursula von der Leyen on Friday, and that von der Leyen subsequently discussed sanctions with Bessant.Israel Airports Authority: The first flight from Ramon Airport to Tel Aviv will take off soon.Russian Deputy Prime Minister Novak: OPEC+s production increase plan is beneficial to the Russian economy.

Hang Seng Index, ASX200, Nikkei 225: Bulls Deliver Friday Support

Jimmy Khan

Mar 03, 2023 14:49


Industry Snapshot

Asian stock markets had a positive start, with the Hang Seng Index, ASX 200, and Nikkei 225 all rising.

Despite a tightening labor market and a sharp rise in labor costs, US economic data failed to push risky assets into the red. Initial applications for unemployment decreased from 192k to 190k, and unit labor expenses increased by 3.2% in Q4 compared to Q3's 2.0%. The more aggressive Fed interest rate track to achieve goal inflation was backed by the most recent labor market data.


Bostic, a member of the FOMC, softened the impact by emphasizing the need for gradual increases in interest rates. Bostic wants to raise rates by 25 basis points later this month, allaying concerns about a 50-basis point increase.


The Dow Jones and S&P 500 both saw increases of 1.05% and 0.76% on Thursday, while the NASDAQ Composite Index increased by 0.73%. The US Futures, however, predicted a more tense Friday session. This morning, the NASDAQ mini fell by 34 points while the Dow mini lost 36 points.


Later today, the US ISM Non-Manufacturing PMI data and several FOMC members' remarks may revive Fed Fear. Support for risky assets would be put to the test by a further uptick in service sector activity and a steep rise in the ISM Non-Manufacturing Prices Index combined with aggressive Fed comments. Logan, Bowman, and Bostic, members of the FOMC, will speak today.

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