Week in a Glance: OPEC +, NFP, Pandemic and stimulus

٧ ديسمبر ٢٠٢٠

The past week turned out to be quite intense in fundamental terms. At the same time, the general trends and sentiments in the financial markets have not changed: the level of greed continues to go off scale, as generates excessive the demand for risky assets.

The main event of the week, perhaps, can be considered the OPEC + meeting. Despite the preliminary negotiations, on Monday the OPEC + participants were not ready for constructive actions and the meeting was postponed until Thursday. The results are as follows: from January production will increase by 0.5 million b / d. Further actions will be agreed monthly. Is this a victory for the bulls? Well, the very fact that oil production will increase somehow does not look like a triumph of buyers. Let us also remind that the markets were expecting a decision to extend the current volume of production cuts by 3-6 months. And while things could have been worse (with a 1.9mn b / d increase in production since January 1), we think the OPEC + results is an excellent reason for oil sales.

Another important event of the week was the publication of official statistics on the US labor market. Figures from ADP on Wednesday warned that NFP may well be worse than expected. And so it happened: the data turned out to be 2 times worse than forecasted and once again reminded that the pandemic has a completely material economic price. In this regard, we note that the past week again turned out to be a record one in terms of the number of new cases in the world and in the United States, in particular. Around the world, the numbers were close to 700K per day, and in the US - to 240K.

Still markets have not been confused with these figures and, in general, sentiments have not changed so far. However, we believe that the markets have deviated too much from the normal, which means that a correction is just around the corner. So, we will continue to sell in the stock markets.

At the same time, we do not exclude that this week the optimistic mood stays unchanged. In the US, there seems to be some progress on stimulus issue. And although the sum announced is 2 times less than the previous minimum figure for the Democrats, even $900 billion may be enough to keep the demand for risky assets going off scale. Plus news from vaccine manufacturers can help maintain the proper degree of optimism. After all, it is this week that the US FDA is due to approve the Pfizer vaccine.