Oil Resumes The March Back Upwards, Spectre Of Inflation Looms While NYSE Prepares To Get Into Crypto

Published on
  • Oil lifts above $95 a barrel as tensions rise again over Ukraine crisis
  • Inflation looms over consumer goods companies but Kraft provides resilience
  • NYSE files to register name as an NFT marketplace
  • Bitcoin and Ether lose ground as regulation looms

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Q4 2021 hedge fund letters, conferences and more

Oil Price Rally

“Hopes have begun to fade that Russia is pulling back troops in any meaningful manoeuvre casting fresh clouds over financial markets. It has meant that the brief backtracking in the upwards sprint in the price of oil hasn’t lasted long. The words of caution from NATO that there were no significant signs of de-escalation sent Brent crude tracking upwards  2.2% back above $95.3 a barrel and WTI rising 1.5%, at $93.21. With global demand rising amid lower production the risk is that supply could become even tighter if sanctions are imposed on Russia. Although higher fuel prices are the last cost many companies need right now, the resumption of the oil price rally is helping energy majors gain ground. Shell PLC (NYSE:SHEL) and BP plc (NYSE:BP) climbed higher in afternoon trade, while Exxon Mobil Corp (NYSE:XOM) and Chevron Corporation (NYSE:CVX) put in a robust performance in early trading in New York.

The spectre of inflation is looming large over the financial markets, causing ripples of concern about weakening consumer sentiment. There’s been a hotter reading in the UK with the CPI index set to march much higher by April and US retail sales data show higher prices are accounting for a large chunk of the increase in purchases. The indications that core spending is slowing is weighing on consumer goods companies, with expectations of a much tougher environment on main street and the high street in the months to come. But there will be winners and losers as shoppers inevitably become more choosy in their purchasing decisions. The pulling power of strong brands is winking through Kraft Heinz Co (NASDAQ:KHC)’s results with earnings for Q4 beating market expectations. Although it’s been passing on higher input costs to consumers, demand is still strong, showing that although consumers might seek out cheaper basics, they aren’t yet willing to give up their dollop of favourite ketchup.

NYSE Prepares To Get Into Crypto

A move to potentially set up an NFT marketplace by the New York Stock Exchange hasn’t jump started fresh interest in crypto currencies. The NYSE has filed an application to register its name as a non-fungible tokens exchange, with its sights clearly set on virtual reality and metaverse opportunities. The announcement prompted fresh falls in Bitcoin, down 1.8% and Ether which accelerated its decline, dropping by 3.4%. The prospect of bringing fans of non-fungible tokens into a regulated exchange rather than have little option but to trade tokens on the blockchain, may be partly behind the falls of Ether in particular, given that Ethereum has been a breeding ground for the NFT and overall DeFi sector. Given the intense interest in NFTs for companies ranging from Microsoft to Burberry it’s little surprise that  NYSE is taking steps to ensure it can become a future host for this emerging market.  But setting out the rules of the play is likely to be a big challenge given the highly speculative nature of tokens. For now appetite for electronic versions of music, art and popular relics remains high but given how sensitive crypto assets are to the movements of stocks and in particular tighter monetary conditions, there is significant risk of plenty of NFT bubbles popping.”

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

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