We start the week with days off in the United States, Canada and China, where the Lunar New Year celebrations are underway and will last until Wednesday. In the U.S., in turn, Americans celebrate President's Day and Canadians celebrate Family Day. However, this does not seem to change market trends.
One of the biggest trends in recent times has been in crude oil. OPEC's very flexible policy and skillful response to the changing demand situation due to the epidemic means that still demand exceeds supply, and the price is able to climb higher and higher. This seems to have allowed the price of a barrel of WTI to rise by almost 25% since the beginning of the year, to $60. However, there now seems to be a new thread that could be a price driver for oil.
Oil prices climbed to their highest level in 13 months today. The reason may have been events in the Middle East. On Sunday, the Arab coalition announced that it had intercepted and destroyed about 10 drones fired by Yemeni militants towards Saudi Arabia. Risk appetite was also whetted by reports that President Joe Biden is expected to talk about the need for a global response to the COVID-19 virus pandemic and commit the nation to multilateral engagement, including joining the COVAX global vaccine initiative.
A $1.9 trillion fiscal stimulus plan is in the approval stage. On the supply side, the OPEC+ alliance maintains a supply cut through the end of the month, with Saudi Arabia voluntarily reducing production by an additional 1 million barrels per day by March.
In the stock market, excellent sentiment continues in Japan. The Nikkei 225 index rose to 30084 points, its highest level since August 1990. Preliminary data showed that the Japanese economy grew by 3.0 percent in the fourth quarter of last year relative to the third quarter, beating market expectations of 2.3 percent.
Japan formally approved Pfizer Inc's antiviral vaccine on Sunday. It is expected to start vaccinating health workers within days. The Nikkei index is up nearly 10 percent since the start of the year, beating the Nasdaq 100, with a gain of about 7 percent, or the S&P 500, with a gain of about 5 percent.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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