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US futures lower, Brent oil price booming

bitcoin

The S&P/ASX 200 closed down 0.1% at 7408.80. US futures are lower, indicating losses at the open of the markets there after a holiday on Monday.

Brent crude oil topped $US87 a barrel, highest in seven years, trading around $US87.41 a barrel. OPEC is due to release its monthly oil market report on Tuesday. Traders are likely to watch for signs that global oil demand has been affected by the surge in Covid cases around the world. The price of Brent is up more than 11% since the start of the year.

The BOJ kept its negative interest rate, bond yield target and asset purchases unchanged at the end of its meeting on Tuesday, a widely forecast decision given an overall inflation pulse that remains far weaker than in the US and other major economies. However, with energy costs surging, the bank nudged up its forecasts for prices in the year starting in April and the following year, and changed its view of the inflation risks they face, Bloomberg reported. The adjustment, also widely expected, signals that the bank now sees the possibility of inflation outstripping its projections, not just undershooting them, Bloomberg said.

Output in the real-estate sector in China shrank 2.9% in the fourth quarter after a 1.6% contraction in the previous three months, the National Bureau of Statistics said on Tuesday, the first consecutive quarterly decline since 2008. Data released on Monday showed that China’s economy in the fourth quarter grew at the weakest pace in more than a year, weighed down by the housing slump and weak consumer spending.

Bloomberg is reporting that Genting Hong Kong may file for provisional liquidation as soon as Tuesday after it wasn’t able to secure funds to help it stay afloat following an insolvency at its German shipbuilding subsidiary.

The Wall Street Journal is reporting that US stocks are off to a rocky start in 2022 with more than 220 US-listed companies with market capitalisations above $US10bn down at least 20% from their highs. While some have bounced from their lows, many remain in bear-market territory. They include S&P 500 behemoths like Walt Disney, Netflix, Salesforce.com and Twitter. The tech-heavy Nasdaq Composite has been particularly turbulent. Around 39% of the stocks in the index have at least halved from their highs, according to Jason Goepfert at Sundial Capital Research, while the index is roughly 7% off its peak. At no other point since at least 1999 — around the dotcom bubble — have so many Nasdaq stocks fallen that far while the index was this close to its high, Mr Goepfert said.

US markets were closed for the Martin Luther King Jr public holiday on Monday while European equities rose. In Europe, equities advanced with the Euro Stoxx 600 rising +0.70% lifted by health care +1.36% and technology +1.58% while real estate lagged -0.27%. The DAX also rose +0.32%, as did the CAC +0.82% and FTSE100 +0.91%.

Lithium

After lithium carbonate and hydroxide prices jumped a further 25% and 12.5%, respectively, in the first two weeks of 2022, broker Credit Suisse on Monday again increased its forecasts and said “unprecedented margins change everything” for the sector, reports The Australian Financial Review. It comes as the sector prepares to provide quarterly updates in the coming two weeks, with Allkem, which was formed following the recent merger between Orocobre and Galaxy Resources, to kick things off on Tuesday. Other major players – Pilbara Minerals, Mineral Resources and IGO – also report this month. Macquarie analysts on Monday said they remained “positive” on lithium and rare earths miners following a strong 2021 as bumper electric sales, chip shortages, climate change momentum and lack of supply combined to push prices “higher and faster than many have anticipated”.

Rio Tinto has narrowly beaten the bottom end of its revised iron ore shipment guidance for 2021, and flagged ongoing difficulty in finding skilled workers that could mean it has to push back exports. Shares fell slightly.

Electronics retailer JB Hi-Fi Ltd. said its first-half net profit likely fell by 9.4% even as sales momentum remained strong during the Covid-19 pandemic. JB Hi-Fi signalled a preliminary unaudited net profit of $287.9 million in the six months through December. Sales for the half-year period were assessed to be down 1.6% on the prior corresponding period. Online sales were $1.1 billion, up 63% on a year earlier and representing 22.7% of total sales, JB Hi-Fi said. For the three months through December, the company said its JB Hi-Fi Australia business grew sales by 1.2% and The Good Guys rose by 2.8% after stripping out the impact of newly opened stores. JB Hi-Fi New Zealand's comparable sales fell by 3.4%. Shares gained more than 7%.

ANZ bank debit and credit card spending dropped 27% in the first half of January, compared to the first half of December. A separate ANZ-Roy Morgan survey showed consumer confidence has slumped to its lowest level since October 2020, as the omicron wave surges across Australia.

Cryptocurrencies

Bloomberg reports that Singapore’s financial regulator told companies in the cryptocurrency industry to refrain from advertising their services to the public, in line with the city-state’s desire to curb retail speculation in volatile digital assets. Service providers should only market their activities on their own websites, mobile applications, or official social media accounts, the Monetary Authority of Singapore said on Monday in a statement. The guideline will cover a broad array of businesses, from banks to payment service providers and crypto exchanges. Bitcoin dropped below $US42,000 overnight, but has reclaimed that level into the afternoon AEDT.

Last year, Bitcoin’s use at merchants that use BitPay dropped to about 65% of processed payments, down from 92% in 2020, the company told Bloomberg. Ether purchases accounted for 15% of the total, stablecoins were 13% and new coins added to BitPay in 2021 -- Dogecoin, Shiba Inu and Litecoin -- accounted for 3%.

AUD/USD US71.93c

Bitcoin $US42,000

Gold $US1817.80 an ounce

Brent crude oil $US87.41 a barrel

WTI crude oil $US85.02 a barrel


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