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A good day for oil, not so good for stocks and dollar

Markets saw oil gain second day in a row caused by OPEC+ speculations. Stocks were mostly down as production may halt again in China.

Dollar falls as investors await Powell’s speech

With Federal Reserve chairman Jerome Powell scheduled to speak on Wednesday, the dollar slipped down versus the yen on Tuesday. In contrast, the Australian currency surged as confidence improved. This confidence was sparked with expectations that China would resume business after the COVID shutdowns.

Traders are awaiting important non-farm payroll data for November due on Friday. Fed chairman Powell’s remarks will be scrutinized for any fresh indications of hawkishness. Investors are anticipating the U.S. central bank hitting its peak rate early next year. As inflation pressures are predicted to ease, the dollar index declined from a 20-year high of 114.78 on September 28 to 106.82 overall.

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The euro decreased 0.15% to $1.0324 against the dollar. The dollar fell to 138.69 Japanese yen 0.15%. The risk-sensitive Australian dollar increased 0.46% to $0.6684. The upcoming Euro zone inflation report, which is scheduled on Wednesday, is also under the spotlight following reports that inflation in Spain and Germany came in below forecast.

China is still unsure related to Covid restrictions

Tuesday’s S&P 500 struggled to find direction as an Apple-related setback weighed on the tech sector. Investors continued to worry about how the performance of the tech giant will be impacted by a Covid-led disruption to iPhone manufacturing in China. Apple dropped 2%, compounding its losses from the previous day.

The Dow Jones Industrial Average dropped 0.20%, or 67 points, while the Nasdaq dropped 0.8%. The S&P 500 dropped by 0.4%. The continued rise in Treasury yields hit Microsoft and Alphabet Inc. Data indicated that consumer spending, which accounts for roughly two-thirds of economic growth, remained healthy.

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The Chinese tech stocks were up sharply. Alibaba, JD.com and Baidu Inc. rallied 5.25%, 6.69% and 5.28% respectively. The stocks flew up amid speculation that recent social turmoil in China may push Beijing to relax its Covid rules. 

Crude oil extends gains from Monday

Tuesday saw a rise in crude prices for the second day straight. Expectations that China will face pressure from its protesting citizens to lift Covid lockdowns helped the sentiment. There are also rumors that OPEC+ may further reduce output when the oil-producing alliance meets at the weekend.

London’s Brent traded comfortably above the $85 level. The session high for U.S. crude had reached $79.56, getting close to the crucial $80 test. The previous day, both benchmarks hit 11-month lows. The price of WTI crude oil for January delivery increased by 96 cents or 1.2% to settle at $78.20 a barrel with the closing bell. Despite this week’s recovery, WTI is still down more than 9% for the month of November.

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The price of Brent for February delivery was $84.43 per barrel, up from Monday’s closing price of $83.19. On Monday, Brent fell to low of $80.83 before recovering to end the day up 0.2%. The global crude benchmark is down more than 10% for the entire month of November.

Tomáš is a financial reporter with US markets as his main field. He actively started in finance only recently, however has been surrounded by many analyst and reporting professiona...

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