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Lockdown fears return

Inflation main concern for markets

Inflation main concern for markets

Austria has decided to lock down a significant portion of its citizenry, as a national mandate for vaccinations will go in effect. That being said, the real concern is that perhaps a larger economy such as Germany may do the same, as there already whispers of that making the rounds.

 

With Austria going into full lockdown on Monday, there have been comments coming out of various German officials that perhaps they may have to do something a little bit stricter in Germany as well. One of the big stories of the week has been the unraveling of the Euro, which of course has had a lot of upward pressure on the US dollar as a result. The knock-on effects have been felt in various markets beyond just Forex, as demand for energy suddenly is a question.

US and China discussing joint reserves release

US and China discussing joint reserves release

As OPEC has decided against extending production, the governments from the United States and China are discussing whether or not to release oil from the strategic reserves of both countries in order to cool global energy prices ahead of the next OPEC meeting. The Biden administration has asked several big countries to do the same, which includes India, Japan, and South Korea. The massive demand after the rebound from the pandemic has had many nations around the world frustrated with OPEC as they have rebuffed requests to increase production.

 

OPEC has stated that they believe world economies remains far too fragile will more increasing supplies very quickly. Oil markets have struggled over the last couple of weeks, so many analysts out there believe that a Strategic Petroleum Reserve release is already priced into the market, perhaps suggesting that any reaction to that move may be somewhat limited.

Semiconductor stocks continue to rally as chip shortage continues

Semiconductor stocks continue to rally as chip shortage continues

One of the hottest sectors to be involved in when it comes to stocks over the last several months has been the semiconductor area, as many of the world’s largest semiconductor companies have seen massive gains as of late. As the chip shortage continues with various places in China and Taiwan struggling with output, the pricing power of some of the industries giants has increased exponentially.

 

Nvidia, Qualcomm, and AMD are all up over 30% for the last month, which is quite extraordinary. With the massive problems in the supply chain continuing, it is very likely that the semiconductor space will continue to attract a lot of “hot money.” Momentum chasers have been jumping into the stocks over the last several weeks, and now they threatened to go parabolic.

 

What could further exacerbate the issue is not just the production of semiconductors, but the fact that transportation continues to be a major issue as well. The occasional port closure in Asia, the Port of Los Angeles continuing to struggle offloading, and a simple lack of truck drivers have all contributed to what is likely to be an issue heading into the new year, and perhaps even through most of it. Semiconductors continue to be thought of as a scarce asset, prompting some automakers to get rid of various amenities such as heated seats, to simply save chips for other features.

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