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On August 24th, the A-share market continued its consolidation recently. Although the market has not lost its activity, risk appetite has weakened significantly, reflecting that funds have not immediately formed a new consensus for offensive moves after quickly realizing high-level growth. Overall, the industry logic is shifting from "single-track technology spillover" to a balanced pattern of "retaining the technology theme, providing support through dividends and defense, and rotating in pharmaceuticals and consumer goods to fill the gap." Looking ahead, our judgment is that the market has entered a consolidation phase, and there may still be fluctuations in the short term, but the probability of breaking through previous lows is low. The main areas to watch are: first, energy security and dividend assets such as oil and petrochemicals, coal, and banks, with the core logic being the stability of cash flow under high oil price fluctuations and the "defensive" attribute brought by low valuations; second, the narrowing focus on AI hard technology sectors, with a focus on optical modules, switches, servers, PCBs, semiconductor equipment materials, and HBM—sectors with verifiable interim reports and orders; and third, pharmaceuticals and some resilient domestic demand sectors, utilizing their low crowding and performance potential to hedge against technology volatility.On August 24th, the South Korean Marine Corps announced that the United States had canceled a joint amphibious landing exercise scheduled for next month, following Washingtons citing limited U.S. troop strength due to the war with Iran. A South Korean Marine Corps spokesperson stated that the two sides are still in close consultation regarding resuming the exercise. He did not specify what measures might be taken to prevent future cancellations or to make up for lost training opportunities. This cancellation comes after President Trump unexpectedly ordered a reduction in another annual joint military exercise last Friday, citing high costs and Seouls refusal to participate in the war with Iran.Ukrainian President Zelensky: Our naval drones are in operation. The enemy has a fleet. Its turning into scrap metal.Gaza government media office: 189,000 aid trucks were supposed to enter the Gaza Strip, but only 66,607 have entered so far.On August 24th, at the Xiaomi Xuanjie chip technology communication conference, Xiaomi announced its new product plans. The Xiaomi 18 Fold, the top-of-the-line foldable screen flagship in the Xiaomi 18 series, will be the first to be equipped with the Xuanjie O3 chip, and the new phone is scheduled to be officially launched in September; the Xiaomi Mi Pad 9 Pro Max will also be equipped with the Xuanjie O3 chip at the same time.

WTI struggles at $87 as recession worries probe OPEC's forecast and supply deficit fears intensify

Daniel Rogers

Sep 14, 2022 11:42

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After reverting from the weekly high, WTI crude oil traders seek clear direction around $87.50 during Wednesday's Asian session. However, the present hesitation in the price of black gold may be attributable to the mixed concerns regarding the demand-supply matrix.

 

The Organization of the Petroleum Exporting Countries (OPEC) indicated in a monthly report that oil consumption will climb by 3,1 million barrels per day (bpd) in 2022 and by 2,7 million barrels per day (bpd) in 2023, which is unchanged from last month. Despite obstacles such as rising prices, the news also highlighted indications that major economies were performing better than projected.

 

The news that the United States intends to replenish its emergency oil reserves, as well as the German and European move to control Russian oil and gas prices, could also be favorable for energy prices. In addition, rumors that the Western oil deal with Iran is a long way off are bolstering fears of a supply bottleneck and should have helped energy bulls.

 

Tuesday's US inflation statistics revived concerns about the Federal Reserve's fast rate hike and exacerbated recession concerns. Also acting as downward drivers for WTI crude oil are expectations of economic slowdown due to China and Russia-related concerns.

 

In spite of this, the US Consumer Price Index (CPI) for August increased by 8.3% year-over-year, surpassing market expectations by 0.1%. However, the monthly data increased to 0.1%, exceeding the -0.1% projected and the 0.0% shown in previous assessments. The core CPI, or CPI excluding food and energy, likewise exceeded the 6.1% consensus and 5.9% prior to printing at 6.3% for the month in question.

 

It should be mentioned that the weekly prints of the American Petroleum Institute's (API) industry inventory report also contributed to the commodity's downfall. The API Weekly Crude Oil Stock climbed to 6,035 million during the week ending September 9, up from 3,645,000 the previous week.

 

In the future, the price of black gold may stay under pressure due to a stronger US dollar and economic troubles. Before today's official weekly inventory data from the U.S. Energy Information Administration, however, the supply crisis concerns could test the bears (EIA). Thursday's US Retail Sales for the month of August and Friday's preliminary reading of the September Michigan Consumer Sentiment Index will also warrant close attention.

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