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OPEC+ meeting failed to cheer the markets.

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Markets expected an agreement for an oil production increase from OPEC+ latest meeting, but it never happened, so what’s next?

The meeting of OPEC+, the oil-producing countries, ended without any significant agreement.

As expected, the member countries decided to continue with their current policy of increasing production by 400k BPD. An increase that might not calm the markets that are powerlessly witnessing the upward race in energy raw materials, threatening to cause a slowdown of global growth in addition to a sustained rise in price levels or inflation.

This scenario would be the most feared, not only by investors but also by the political and monetary authorities. As soon as they announced the decision, the price of oil experienced strong upward momentum with rises around 3% that took it to levels not seen since 2014, which was expected in the first place.

 

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In case of a long upward momentum, it can increase negative market sentiments about the future of the economies, with relevance to Natural Gas that rose around 7%.

The market reacted in the traditional style of risk aversion when facing these gloomy prospects by buying treasury bonds, which in the case of the American Tnote, its yield fell to the level of 1.48%. Although the Federal Reserve has already almost committed to starting tapering with capital flows towards the Japanese yen, which made the USD/JPY fall below 111.00 and with massive sales of the stock indices.

We should note that the stock markets were already suffering strong downward pressure due to both: the announcement of ending the stimulus policies by the Federal Reserve and the bad news from China with companies the size of Evergrande defaulting.

And as usual, the most affected index was the Nasdaq technology that technically closed below the critical 100-day SMA line, something that had not happened for five months, and crossed the support level located around 14,500.

From a technical perspective, a continuation of the bearish movement below this zone would threaten to end the entire bull market for the index.

 

Sources: Bloomberg, Reuters

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.