By Jeffrey Smith and Anna Beatrice Bartolo
Investing.com – US bond yields are rising worldwide as the minutes of the latest policy meeting illustrate a more aggressive monetary tightening this year than expected. In Brazil, the Federal Reserve’s harsh tone sent the stock market down. Tech stocks are expected to post more profits when the US market opens later, but financial and other cyclical companies are holding out. Brewery Corona Constellation Brands (NYSE:) and Walgreens Boots Alliance Inc (NASDAQ::) (SA 🙂 are submitting their budget reports, and Russia and its allies are expected to send troops to Kazakhstan to try to quell violent protests in the country.
Here’s what you need to know about the financial markets on Thursday, January 6th.
1. Headlines frightened of the Fed minutes
US bond yields continued to rise, putting new pressure on technology stocks and risky assets in general, after the minutes of the last meeting of the Federal Reserve raised the possibility that the Fed will reverse some asset purchases in the past two years.
Those from the Federal Reserve’s December meeting not only indicated that the first interest rate of the year could come as early as March, but also indicated that some policymakers have considered selling some of the $8.7 trillion in bonds the Fed has raised in its budget over the past decade through “quantitative easing” policies.
The benchmark 10-year yield rose to 1.74% in overnight trading, the highest level since April last year. The 30-year yield rose to a three-month high of 2.13%. It also boosted global bond yields as investors were forced to re-price the risk that other central banks would raise interest rates to keep pace with the Fed’s tightening.
2. Bad mood in the Brazilian market
The more stringent tone of the Fed meeting minutes made investors around the world flee risks, which caused Brazil to end the day down by 2.42%, to 101,006 points, and up by 0.47%, at 5.7161 Brazilian reals, with the strengthening of caution. Through the country’s well-known financial and political risks.
The Brazilian market was already running lower before the BC Americans announced, because it was a redemption day in stock funds and multiple markets, which usually leads to a downward movement due to liquidation of papers. Thus, the news from the United States only reinforced this movement according to experts.
In corporate news, the National Bank for Economic and Social Development (BNDES) reported that the stock offering in Eletrobras (SA :), which is essential to the state-owned company’s privatization process, should take place in March.
3. US stock market
There will likely be fresh pressure on ‘tech not-for-profit’ stocks in the US market later.
At 8:59 AM, futures were up 0.15%, while 100 futures and futures were down 0.52% and 0.08%, respectively.
Actions likely to come into focus later include nike (NYSE :), which has sued sportswear company Lululemon. Constellation Brands later reported earnings, as did Conagra Foods and Walgreens Boots.
4. Russia is ready to send troops to Kazakhstan
Russia and its allies will send troops to quell protests in neighboring Kazakhstan, which are said to have caused dozens of deaths in the past two days. Protests against years of thieves’ rule, sparked by a recent sharp rise in fuel prices, have erupted across the country.
The protests threaten to disrupt gas and gas exports not only from Kazakhstan, but also from Turkmenistan in the south. Both are important supplier to China. Kazakhstan is also a major exporter of copper and the largest exporter of uranium in the world.
The country’s largest onshore oil project, which is operated by a company led by chevron (NYSE 🙂 , was also affected by the protests. The protests came on the heels of the 10th anniversary of the massacre of striking oil workers in the town of Zanaujin by the security forces of former President Nursultan Nazarbayev, who has continued to wield power behind the scenes since leaving the presidency two years ago.
5. Rising oil prices in Kazakhstan worry OPEC
Crude oil prices rose in response to events in Kazakhstan and a growing awareness that a pledge by OPEC and Russia to increase oil production in February would be impossible to fulfill, due to a lack of investment in the past.
Only two of the world’s major producers – Saudi Arabia and the United Arab Emirates – are currently able to pump more oil two years ago, according to Goldman Sachs (NYSE:) (SA :), head of commodity research, Jeff Currie.
This will make it difficult to replenish global stocks that are now below historical five-year averages, unless continued prevalence of the micron variant leads to more aggressive measures to reduce mobility.
At 9:02 am, US oil futures rose 1.30% to $78.86, while US oil futures rose 1.09% to $81.68.
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