First Look With Surveillance: ECB Meeting, Fed Day
U.S. futures are pointing to a positive open when trading resumes in North America. Markets are pricing in a 75-basis point interest hike from the U.S. Federal Reserve this afternoon – an increase of that size hasn’t happened since 1994. Investors started pricing in a bigger increase in the past few days after U.S. inflation data rose to another 40-year high on Friday. The shift in sentiment has resulted in lots of volatility in recent days with bonds, equities and cryptocurrencies falling dramatically and the S&P 500 officially entering bear market territory amid growing concern that the American economy could soon be entering a recession.
EUROPEAN CENTRAL BANK HOLDS EMERGENCY MEETING
The European Central Bank has called an emergency monetary policy meeting just hours ahead of the Federal Reserve’s big announcement. The primary focus of the gathering is to “discuss current market conditions.” Following an emergency monetary policy meeting, the European Central Bank said it would apply flexibility to its reinvestments of Pandemic Emergency Purchase Programme (PEPP) redemptions “with a view to preserving the functioning of the monetary policy transmission mechanism.” The central bank is also telling its staff to prepare a new anti-crisis tool for approval to help fight unjustified moves in euro-area bond yields.
IEA SEES GLOBAL OIL DEMAND ABOVE PRE-PANDEMIC LEVELS NEXT YEAR
The International Energy Agency is warning there won’t be enough supply to meet demand next year. The Paris-based organization expects global oil demand to rise by 2.2 million barrels a day on average, topping its pre-pandemic level. Increased demand from China and risks of continued disruptions from Russia’s invasion of Ukraine will be the main drivers.
BIDEN WARNS BIG OIL
U.S. President Joe Biden has told American oil refiners that record profit margins are unacceptable and he is calling for “immediate action” to improve capacity as the soaring price of gasoline weighs on consumers and feeds record inflation and fears of a recession. In a letter to top oil executives Biden said, “at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.” He is also ordering Energy Secretary Jennifer Granholm to hold an emergency meeting on the subject in the coming days.
OTHER NOTABLE STORIES
- Shares of Algoma Steel are trading higher in the pre-market trade after the company announced it is paying its first quarterly dividend following strong fourth-quarter earnings
- BP is spending US$36-billion to buy a 40 per cent stake in Asian Renewable Energy Hub, a ‘green hydrogen’ project in Australia
- Caterpillar is joining other major American companies, including Tesla, Hewlett Packard Enterprise and Oracle, in moving its global headquarters to Texas from Illinois
- Notable data: Housing Starts, Existing Home Sales, MLS Home Price Index, US Retail Sales, US Trade Price Indices, Empire State Manufacturing Survey, Business Inventories
- Notable earnings: H&R Block, Gold Royalty, Haivision Systems Inc.
- 1400: FOMC Announcement and Summary of Economic Projections
- 1430: Fed Chair Powell’s Press Briefing
- Restaurant Brands AGM
- Algoma Steel Group’s Q4 earnings call
- Dick’s Sporting Goods AGM