Nasdaq closed at a new high due to the strong performance of technology stocks

• GLOBAL CAPITAL MARKETS OVERVIEW:

European stock markets closed lower on Friday and fell for the first time in seven weeks weekly. People are worried that the new round of shutdown measures in Europe will hit the economy, and economic sectors such as bank stocks and automakers have been hit. The pan-European STOXX 600 index fell 0.3% and hovered near record highs earlier in the session. The index closed down 0.1% this week. This fall, Austria will become the first country in Western Europe to re-implement a complete blockade in response to a new wave of infections. After the news, the pan-European index fell. German Health Minister Jens Spahn said that the German epidemic is severe, and the possibility of a lockdown is not ruled out, including those vaccinated. The German DAX index closed down 0.4%, and sectors such as banking, automakers, and travel and leisure stocks that were more affected by the economic cycle fell 1.5%-2.2%. The southern European market, including Spain and Italy, fell about 1.5%. European Central Bank President Lagarde said earlier that inflation would recede, so the European Central Bank should not tighten policy because this may stifle the economic recovery. She also hinted that it would continue to buy bonds next year. The European Central Bank will decide the future of its bond purchase plan at its policy meeting on December 16. The French CAC-40 index closed down 0.42%, and the British FTSE index closed 0.45% lower. The US stock market mixed on Friday, the Nasdaq Index closed above the 16,000 mark for the first time in history and set a record closing high for the second consecutive day. Driven by the rise in technology stocks, the pandemic concerns dragged down the Dow Jones Industrials. The index closed lower on the fourth day of the past five trading days. The Nasdaq and S&P 500 Indexboth recorded weekly gains, up 1.2% and 0.3%, respectively, and fell last week, ending the previous five consecutive weeks of the uptrend. The Dow fell 1.4% this week, the second consecutive week of weekly decline, erasing the gains in November, and the decline since the record high hit on November 8 reached 2.3%. Banking, energy, and aviation stocks plummeted, causing stocks to fall today, and another surge in new crown cases in Europe has sparked concerns about the re-imposition of lockdown measures. Austria launched a comprehensive blockade plan and worried that Germany might follow suit shocked global stock markets. Bank stocks fell 1.6%, following the trend of U.S. Treasury yields as investors scrambled for safe-haven bonds. The S&P Energy Index fell 3.9%, the worst-performing sector, due to the sharp drop in oil prices. Delta Air Lines DAL, United Airlines UAL, American Airlines Group AALand other airlines, and Norwegian Cruise Line NCLH, Carnival Corp. CCL Cruise companies such as. N weakened across the board, with declines ranging from 0.6% to 2.8%. Falling yields and safe-haven demand support large technology stocks, which in turn push up the Nasdaq index. Since 2020, FAANG stocks, which have generally remained strong despite economic shocks, have generally risen. Netflix Inc NFLX.O rose along with other home benefit stocks. The chipmaker Nvidia NVDA closed up 4.1%, rising for the third day in a row. The Philadelphia Semiconductor Index rose 0.3%, hitting record highs in three of the past four trading days. The Dow Jones Industrial Average.DJI closed down 268.97 points, or 0.75%, to 35,601.98 points; the S&P 500 index closed down 6.58 points, or 0.14%, to 4,697.96 points; the Nasdaq Index .IXIC closed up 63.73 points, or 0.4%, reported 16,057.44 points. The S&P 500 index fell in volatile trading. The day before, it was boosted by retail stocks and hit a record high. Standard & Poor's consumer discretionary stocks rose 0.3%, setting a record closing for the second day in a row, breaking a record high earlier in the session. Before this, retailers announced strong results this week, and holiday shopping showed positive signs. Japan's Nikkei Index rose on Friday, chip manufacturing giants followed the rise of US peers, while energy stocks surged after oil prices rebounded. However, SoftBank Group fell for the second consecutive trading day, limiting the market's gains. On Thursday, SoftBank Group’s most significant asset, Alibaba, predicted that its revenue growth would be the slowest since its listing in 2014. The Nikkei index closed at 29,745.87 points, up 0.50%. Energy is the best performing sector, jumping 1.79%. The broader Topix Stock Index opened slowly but caught up in the afternoon and eventually rose 0.44%. The growth index rose by 0.56%, surpassing the 0.32% increase in the value index. Chipmaker Tokyo Electronics (Tokyo Velocity Technology) is the best-performing stock in the Nikkei Index, climbing 3.65%. Crude oil rebounded from a six-week low hit on Thursday, boosting energy stocks, with Inpex rising 3.22%. The US$490 billion stimulus plan announced by the Japanese government was largely ignored by the market, partly because the local media had reported relevant details on Thursday. SoftBank Group fell 1.86%, continuing the 2% decline of the previous day. The Russian stock market is falling for the second week in a row and has lost all October gains, returning to the values of the end of September. Over the week, the ruble index fell 2.6%. This is the worst week since February when the figure fell 2.9% over the week. The worst week of the current year was at the end of January when over five trading days, the Moscow Exchange index sank 3.1%. Accordingly, the third week of November has now closed the TOP-3 weekly drops in 2021. The Moscow Exchange index closed 6.4% below the all-time high of 4,292.68 points reached on October 14. Since the beginning of trading on Friday morning, the market continued the dynamics formed on Thursday afternoon, when the Moscow Exchange failed to pass up the resistance of 4150 p. In the first half of Friday, the Russian market was steadily sagging. As a result, before the start of trading in the US, for the first time since September 22, the quotes tested the support of 4000 points for strength. The 100-day moving average line is at the same level. The end of the day and week occurred in the range of 4000 - 4035 points. There are three factors of pressure on the Russian market on Friday. The first is geopolitical. We are talking about the plan for a resolution in the US Congress on the non-recognition of Vladimir Putin as the head of Russia if he decides to take part in the 2024 elections and NATO's statement on the possible deployment of the possible deployment nuclear weapons in eastern Germany. The second pressure factor relates to the external background, namely the minor dynamics on stock exchanges in Europe. Austria will introduce a nationwide lockdown from November 22 in connection with a record number of coronavirus cases. Covid vaccination will be mandatory from February, Austrian Chancellor Alexander Schallenberg said. The head of the German Ministry of Health Spahn also allowed the introduction of a nationwide lockdown due to COVID-19. The third pressure factor is partly a consequence of the second. The pandemic very strongly reminded us that the celebration of the victory over the coronavirus is very far away. As a result, oil prices fell below the critical support level of $ 80 / bbl amid the return of concerns about the pace of recovery in demand. (Brent) and reached $ 78.15 / bbl. - the lowest price since October 1. Of course, this negatively affected the quotes of shares of representatives of the oil and gas sector. Against the background of falling oil prices, the ruble fell against the dollar on Friday to 73.67. For the Russian currency, these are the worst levels since August. However, the weakening of the ruble helped the Moscow Exchange stay above 4,000 points. The RTS index fell to lows since September 21 and closed below its 100-day moving average line. 2 sectoral indices rose, and eight declined. The financial sector fell 2.6% and became the outsider of the day (-5.4% in November). The IT sector has grown by 1% and has become the leader of the trading day (+ 3.4% in November). Of the 43 shares of the Moscow Exchange index, eight rose in price, and 35 lost in value. Accordingly, for each index security that went up, at least four ones fell in price. The dividend yield for 12 months is 4.8%. The index is trading at a ratio of 8 to profit for the past year and at a ratio of 6.6 to the forecasted profit of its member companies for the coming year. The aggregate market capitalization of the companies included in the Moscow Exchange index is 60.2 trillion rubles. The Moscow Exchange Index has risen by 32% over the past 52 weeks. The Stoxx Europe 600 Index gained 25% over the same period.

 

• REVIEWING ECONOMIC DATA:

Looking at the last economic data:

- US: Vice Chairman Clarida said on Friday that central banks in different countries could effectively share analysis and may adopt similar policies to respond to standard global shocks, but Coordinated action may do more harm than good. In his speech to the 2021 Asian Economic Policy Conference, he stated that “adopting formal global monetary policy cooperation may erode the credibility of the central bank and the public’s support for the independence of the central bank.” Clarida did not use this speech to directly respond to the key question, whether the Fed should raise interest rates faster than it suggested. Fed Governor Waller urged this in another event that day. Instead, Clarida’s message is that central banks are different, even though they sometimes adopt a seemingly coordinated approach, simply because they face similar pressures. He said that each central bank’s mandate is slightly different, so defining joint goals will be difficult.

- US: As of November 19, 2021, the number of active drilling rigs in the United States increased by seven units compared to the previous week and amounted to 563 units. The number of oil rigs increased by seven teams to 461 units. The number of gas rigs did not change, amounting to 102 units. The share of oil rigs grew to 81.9% in the total drilling volume, while the share of gas rigs fell to 18.1%. The notable increase in drilling occurred in Texas, and the number of horizontal wells continued to grow. The number of wells drilled in November increased to 556 units against 538 units in October 2021, and a minimum of 249 units was observed in August 2020. According to preliminary data from the EIA, oil production in the United States in November was 11.50 million barrels per day.

- US: Key US index futures have reminded me of the quarantine period. The Dow Jones may start the day with a fall of 0.5%, but the NASDAQ recalls the "sit at home" mode and may open with a rise of 0.4%. The yield on 10-year Treasuries fell seven basis points to 1.535%.

There are a few statistics for Friday. One can only talk about the Baker Hughes report on active drilling. Therefore, the market will react to news of the coronavirus and other statements. In terms of corporate reports, there will be no particular surprises. 90% of companies have already reported, and 80% of them exceeded Wall Street expectations in terms of profit. The House of Representatives will continue to discuss the $ 1.75 trillion socio-economic development package. However, there may not be an immediate result.

- US: S&P has reaffirmed Ford's credit rating at BB + level and changed the rating outlook from negative to positive. The sharp improvement in the rating outlook is because S&P expects profit and cash flow from Ford Motor Co. in 2022 and 2023 are likely to be higher than previous agency forecasts. In addition, s&P expects current cost reduction programs, favorable prices on products and a reduction in working capital will increase the company's free cash flow (FCF). Implementation of a positive outlook on the Ford rating will mean transitioning a credit rating from an S&P agency to an investment category. The company also has credit ratings from the other two international rating agencies at Ba2 and BB + co-stable forecasts. In this regard, the S&P rating is positive. The forecast is closest to rising to the investment level.

- UK: Retail sales in the UK rose 0.8% in October against expectations of 0.5% growth. In October, producer prices in Germany rose by 3.8% to 18.4% in annual terms against expectations of 16.2%. However, ECB President Christine Lagarde still considers this to be a temporary phenomenon.

- CN: The People's Bank of China issued a third-quarter monetary policy implementation report on Friday night, stating that in the next stage, we must insist on not using real estate as a short-term means of stimulating the economy and insist on stabilizing land prices, housing prices, and expectations, and increasing housing leasing Financial support should be coordinated with relevant departments and local governments to jointly maintain the stable and healthy development of the real estate market; we must continue to implement comprehensive policies and actively and steadily respond to monetary policy adjustments in developed economies. The report also emphasizes that a prudent monetary policy takes the lead, focusing on me, enhancing autonomy, and grasping the intensity and pace of procedures following the domestic economic situation and price trends; deepening the market-oriented reform of the RMB exchange rate, and enhancing the flexibility of the RMB exchange rate; deepening the two-way financial direction Opening up will enhance the attractiveness of domestic RMB assets.

- JP: Japan will prepare a record $490 billion spending plan on Friday to ease the impact of the new crown epidemic on the economy, which runs counter to the global trend of removing stimulus measures during the crisis and makes it already nervous The financial situation is even more stretched. Analysts said that a series of money-spending programs have led to inflationary spending and may force the government to issue additional bonds. The government’s money distribution plan includes expenditures that have been criticized for having nothing to do with the epidemic, such as distributing cash to families with teenagers 18 years of age or younger. Large-scale spending will highlight Prime Minister Fumio Kishida's determination to push up the inflation rate and let wealth redistribution favor households. He was once thought to be inclined to fiscal restraint. At a high-level meeting between the government and the ruling party on Friday, Kishida Fumio announced that he plans to spend about 56 trillion yen ($490 billion) in the economic stimulus plan and prepare an additional budget to fund these measures by the end of the year.

 

• LOOKING AHEAD:

Today, investors will receive:

- NZD: Core Retail Sales q/q, and Retail Sales q/q.

- EUR: German Buba Monthly Report and Consumer Confidence.

- USD: Existing Home Sales.

 

• KEY EQUITY & BOND MARKET DRIVERS:

- VTB Group announced its intention to sell approximately 17.28% of ordinary shares in Magnit. Up to 4.9% of the retailer's shares were offered in the fast-track order book formation procedure. The remaining shares were sold to the Marathon Group. The placement price within ABB was RUB 5,700 per share, which is approximately a 9% discount to Thursday's closing price. In total, VTB will gain a little more than 100 billion rubles for its stake. Marathon Group, which buys the remaining part of the bank's stake after ABB at the market placement, will pay approximately 70.7 billion rubles. Shares of "Magnit" were falling on the background of news about VTB's exit from the retailer, but already in the evening session on Friday, they moved to growth. Some investors have taken advantage of the drawdown to enter long positions at more attractive levels.
- SPB Exchange starts trading in its securities. The company's shares can also be bought on the Moscow Exchange. The company's shares on the SPB exchange are included in the first quotation list, on the Mosbirzh - in the third. Ticker - "SPBE." As a reminder, the company placed 15,217,392 ordinary shares as part of the IPO, 11.1% of the current share capital. The offering price is set at $ 11.5 per share, equivalent to 834.9 rubles at the official exchange rate set by the Bank of Russia for November 19, 2021. This corresponds to the upper border of the price range of $ 10.5-11.5. Based on the placement price, the company's value is $ 1.1 billion (pre-money) or $ 1.49 billion (post-money).

- Cruise stocks outperformed the market: Norwegian Cruise Line Holdings (NCLH) declined 3%, while Carnival (CCL) and Royal Caribbean (RCL) declined 4%;

- Applied Materials (AMAT) shares lost 3% after the company announced a weak forecast due to supply chain disruptions. However, some analysts believe these problems are temporary and view Applied Materials' long-term prospects as good;
- Farfetch (FTCH) shares declined 14% after weak quarterly earnings and a lower full-year outlook;
- JD.com (JD) and NetEase (NTES) rallied 4.2% and 3.2%, respectively, on news of upcoming Hang Seng inclusion;
- Intuit (INTU) shares gained 12% after a solid quarterly report and equally strong forecast;
- Micron Technology (MU) shares rose 2.8% after the head of the company said that the global chip shortage is slowly declining;
- Pfizer (PFE) shares rose 1.6% on news that US regulators have allowed the company to use booster packs more widely among adults;
- Moderna (MRNA) shares up 6% after approval of the company's booster;
- Rivian (RIVN) and Lucid (LCID) rose 9.2% and 11%, respectively, after several days of decline.

 

• STOCK MARKET SECTORS:

- High: Information Technology, Utilities, Consumer Discretionary.

- Low: Energy, Financials, Health Care, Real Estate.

 

• TOP CURRENCY & COMMODITIES MARKET DRIVERS:

- Oil reacted to the news about the total quarantine in Austria with a completely logical fall. If similar measures are taken in Germany and several other countries, Brent quotes may lose another 5% -10%. Also, the market is under pressure from expectations that the United States and China will start selling oil from strategic reserves. So far, there is no direct news about sales, but even expectations themselves are destructive to oil. Consider the situation in Brent's future. Brent for January delivery is still $ 0.8 more expensive than the February contract. The March contract is almost $ 1.4 cheaper, and the April contract is $ 2 cheaper. That is, the backwardation structure is still preserved, which indicates the current supply deficit. However, if quarantine measures in Europe expand, a return to contango can be allowed when near futures are cheaper than long-range ones.Brent - $ 78.39 (-3.51%), WTI $ 75.82 (-3.30%), Aluminum - $ 2658 (+ 1.61%), Gold - $ 1863.8 (+ 0.11%), Copper - $ 9574.71 (+ 0.89%), Nickel - $ 19805 (+ 0.85%).

- Gold prices fell to a one-week low on Friday, dragged down by the strengthening of the U.S. dollar after the Federal Reserve Board of Governors (FED) Councilor Christopher Waller called for an early reduction in economic support measures to help formulate tightening measures of Monetary Policy. The spot gold fell 0.6% to $1,848.05 per ounce. US gold futures closed down 0.5%, with a settlement price of US$1,851.60. The dollar index rose 0.5%, making gold more expensive for holders of other currencies. After the news that Austria will re-implement a complete blockade in response to a new wave of virus infections, the stock market plummeted, and there are signs that Germany may do the same. Silver fell 0.6% to $24.63 per ounce. Platinum fell 1.8% to US$1,028.74, and Palladium fell 3.4% to US$2,060.24. The weekly trend will record its first decline in three weeks.

 

• CHART OF THE DAY:

Chicago Wheat (CME) futures have surpassed 800 cents per bushel ($ 294 per tonne), heading towards 850 cents per bushel ($ 320 per tonne). The closing price of the trading session on November 18 was 820 cents per bushel ($ 301 per ton). Global wheat production is expected to peak in the 2021-22 season (775.3 million tonnes according to November data from the US Department of Agriculture). Still, stocks at major exporters may fall to historic lows. Wheat production is projected to be almost flat on an annualized basis, and the 2021-22 season will mark the second consecutive deficit season when demand growth outstrips production growth. Global consumption has increased by 5.3% over the past two seasons, while production has increased by just 1.7%, the most significant imbalance in the past several years. According to preliminary estimates, in the 2021-22 season, wheat exports from the USA (by 11% compared to the 2020-21 season), Canada (by 42%), Russia (by 10%) will decrease under the influence of a decrease in the grain harvest due to unfavorable weather conditions in the period growth. World wheat consumption will continue to grow and amount to 787.4 million tons in the 2021-22 season. Against the backdrop of excess consumption of production, world stocks will decline by 4.2%, and the ratio of stocks to consumption will drop to 35% (with an average level over the past 12 seasons of 33%). The USDA forecast shows that the ratio of wheat stocks to consumption for major exporters, including Russia and the United States, will fall to 12.1%, the lowest recorded in six decades. This is even though total world wheat stocks are at historically high levels. This is due to the accumulated stocks in China, which in the 2021-22 season account for 51% of the world's wheat stocks. The 2022-23 season outlook is still dim and will only begin to clear up in the spring of 2022. Both US and Canadian farmers are expected to increase their wheat plantings in the 2022-2023 season. This will go a long way in the 2023 wheat outlook, assuming no second catastrophic drought will occur in these regions. Deliveries of the 2022 harvest will begin in the middle of next year, so the shortage of wheat and high prices may persist until the spring-summer of 2022. In the spring, usually, farmers begin to dump the remaining stocks of the old crop, exchanging goods for cash for sowing. However, given the constraint on exports from Russia, low levels of stocks at exporters, and sufficient liquidity in the financial system at low-interest rates, it is difficult to say how active this process will be. Thus, in the coming months, the level of prices for wheat in the world market may remain at the current level or slightly higher than at present. In March-April, we can expect the beginning of a seasonal decline in prices. In general, the trend is still growing. Intense resistance levels are seen at levels of 850-900 cents per bushel.• Wheat futures - D1, Resistance (target zone) around ~ 857& 907, Support around ~ 770.

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