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RBA, UK Data, Boris, Oil, Gold, Bitcoin



Gold and Bitcoin - Investors King

RBA Joins Super-Sized Club

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets are back in the red on Tuesday, giving back the bulk of Monday’s gains in a sign of ongoing uncertainty as to the direction of equity markets and the economy.

There is clearly appetite at these levels but that’s not being backed up by the momentum of any kind. Hardly surprising given the sheer uncertainty around inflation, interest rates and the economy. Central banks are racing to catch up but that may come at a great cost.

The RBA overnight became the latest to join the super-sized club, following in the footsteps of the Fed, BoC and RBNZ, among others. The decision to hike by 50 basis points came as quite a shock to the markets, with 25 priced in ahead of the meeting. It was the biggest hike in more than two decades and another sign of policymakers belatedly recognising the urgency of the inflation problem. And there’s plenty more to come.

The ECB is very late to the party but will likely announce an end to net asset purchases on Thursday and a desire to raise rates from next month, bringing the deposit rate out of negative territory in the third quarter. This doesn’t exactly fall into the bracket of recognising the urgency but then it is the ECB, so by its standards perhaps it does.

The BoE was early to the party compared to many of its peers and it’s also been the first to concede defeat on a recession, something others may follow on in the months ahead. If today’s UK BRC retail sales data is a sign of things to come then the BoE is right to be so pessimistic. The cost-of-living crisis has well and truly arrived and the data suggests households are already cutting back. The final PMI data, while much better than the flash reading, was also a big drop from April and reflects the more pessimistic outlook.

One thing the UK won’t have to deal with (yet) is political uncertainty after Boris survived the no-confidence vote. He didn’t exactly do it in an emphatic fashion though, leaving many to believe he has merely postponed his departure rather than prevent it altogether.

Oil struggling to hold above $120

Oil is continuing to struggle at around $120 on Tuesday, with Brent and WTI very slightly lower. We’ve seen $120 broken on a few occasions over the last week but each time it’s been quickly repelled in a sign of momentum starting to run a little thin. The fundamentals remain bullish for oil prices as China continues to reopen and the OPEC+ “production hike” does little to alleviate the tightness in the market. Still, it’s been a very strong run over the last month, with the price up more than 20% from the May lows. We could potentially see some profit-taking in the short-term but it’s hard to imagine it being too severe, barring significant growth downgrades or a surge in Covid cases in China.

Gold consolidation continues

As has so often been the case in recent weeks, gold is continuing to fluctuate around $1,850 today and showing little sign of a burst in either direction. It struggled once more around $1,870 on Friday, reinforcing it as a key area of resistance to the upside, while $1,830 continues to be the first line of support below. We may have to wait for the inflation data at the end of the week for an interesting move in either direction.

Another failed break higher

Bitcoin is also trading around the same level it has for most of the last month but at least the price action this week has been a little more interesting. A 6% rally on Monday has been followed by a 6% decline today, taking bitcoin back below $30,000 and confusing crypto traders in the process. It’s really struggling to hang onto rallies much to the frustration and perhaps even concern of the crypto crowd. This remains a key level and a break to the downside could cause far more stress than it did almost a month ago.

Crude Oil

Oil Prices Slide on Soft Demand and Pending Fed Interest Rate Decision



markets energies crude oil

Oil prices saw a slight decrease on Wednesday following indications of weak demand and the anticipation of a crucial interest rate decision by the U.S. Federal Reserve.

Brent crude oil, which had risen almost 3% earlier in the week, fell by 0.40% to $75.02 a barrel, while U.S. West Texas Intermediate (WTI) crude oil was down 0.42% at $69.38.

Data from the American Petroleum Institute released on Tuesday put the demand for oil into question after revealing an unexpected increase in U.S. crude inventories, contradicting analyst predictions of a decline.

Oil prices were also impacted by an unexpected rise in UK inflation in February, raising concerns of more interest rate hikes a day before the Bank of England’s latest interest rate decision.

The global market is waiting to assess the decision of the U.S. Federal Open Market Committee (FOMC) on interest rates later today to decipher the future direction of price action.

While the expected 25 basis point rate hike was a turnaround from the previously anticipated 50 basis point rate rise, analysts predict that it won’t have a significant impact on oil prices.

Craig Erlam, senior market analyst at OANDA, said, “It would be a big shock if the Fed reverted back to larger rate hikes now considering everything that’s happened this past couple of weeks.”

Last week, Brent prices hit their lowest levels since 2021 on concerns that the drop in bank shares could lead to a global recession and reduced fuel demand.

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Nigeria Generates Only 5000MW, Depends on Generators for 75% Electricity –Report



Power - Investors King

Nigeria circulates about 5000 megawatts for its over 200 million population leaving generator sets to supply 75 percent of electricity needed by its people, reports have shown.

Investors King gathered that generators supply about 25,000 megawatts of power compared to the 5000 megawatts supplied by the national grid.

The recent reports from the Society for Planet and Prosperity, GCA Capital Partners and Climate Advisers Network stated that Nigeria depends largely on diesel and petrol-powered generators for electricity.

The research firms revealed their findings on power supply and consumption on Monday during a press briefing in Abuja.

They harped on measures to ensure solution to the current power supply shortage in Nigeria, calling for action on the issued recommendations.

President, Society for Planet and Prosperity, Prof. Chukwumerije Okereke, said part of the 11 suggested measures is centered on improving the generation of electricity by the national grid.

“Number one measure is to increase the generation of electricity, both on-grid and off-grid. Nigeria currently generates about 5,000MW for a population of over 200 million people.

“5,000MW is about the amount of electricity that powers Heathrow Airport (London). South Africa generates 40 gigawatts (40,000MW). India, which we should be competing with, generates over 80GW (80,000MW),” he said.

According to him, lack of constant power supply cripples the economy as it discourages local and foreign investors from investing in the country. This in turn leads to an increase in the unemployment rate. 

Okereke stated that enhancing on-grid and off-grid power will significantly solve the issue of climate change and improve the economy.

Another measure mentioned was the extinction of generator sets of any kind as this will shift attention to the rapid growth of the national grid. 

“So we get nearly 75 percent of our electricity in this country through generators, which is one of the most polluting sources of electricity generation. Therefore, the elimination of diesel and petrol-powered generators is the second on the list that we have identified,” he said.

Speaking on how the use of generators can be halted, the Chief Executive, GCA Capital Partners, Obi Ugochukwu, noted that it could be done by massively increasing the power generation from renewable energy sources like solar, hydro, among others.

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Crude Oil

Investor Confidence Boosted by UBS-Credit Suisse Deal, Oil Prices Show Resilience

The deal eased investors confidence ahead of Federal Reserve meeting scheduled for tomorrow and boosted oil prices.



Crude Oil - Investors King

Global oil prices rebounded slightly in the early hours of Tuesday as concerns over banking section issues subside following UBS-Credit Suisse successful deal.

The deal eased investors confidence ahead of Federal Reserve meeting scheduled for tomorrow and boosted oil prices.

Brent crude oil, against which Nigerian oil is priced, traded rose to $73.84 per barrel while the U.S. West Texas Intermediate (WTI) crude oil gained 9 cents to $67.73 a barrel. A rebound from $3 decline recorded in the previous session.

The announcement of the UBS-Credit Suisse deal was followed by major central banks, including the U.S. Federal Reserve and European Central Bank, indicating that they would enhance market liquidity and support other banks.

Furthermore, officials with the G7 stated that they were unlikely to revise a $60-per-barrel price cap on Russian oil as planned. The officials said EU countries’ ambassadors were told by the European Commission over the weekend there was no pressing desire among the group for an immediate review.

Looking ahead, OPEC+, which includes the world’s top oil exporting countries and allies including Russia, is set for a meeting on April 3. The group agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023.

Overall, the UBS-Credit Suisse deal and central bank support has helped ease investor concerns and stabilize oil prices. However, the upcoming OPEC+ meeting will be closely watched for any potential changes to oil production targets.

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