Overview of TOP weekly news

Slowing of purchases of ETF funds by the Central Bank of Japan

The Bank of Japan (BOJ) considers restricting purchases of exchange-traded funds (ETFs). The reason is the current calm environment in the markets, which foreshadows that purchases can be limited to prevent the largest possible increase in its shares in companies.

“It is important to keep in mind the financial health of the BOJ when buying ETFs and REITs. As BOJ shares increase, so does the impact on financial health, “said Hitoshi Suzuki, a member of the BOJ Board of Directors.

In reviewing its policy instruments, the BOJ has ruled out a numerical target for the rate of purchase of ETFs and Real Estate Trust Funds (REITs) as part of efforts to increase the sustainability of its large-scale stimulus program.

Suzuki also expressed slight disappointment at the development of Japanese bond yields, which are currently in a narrow range, despite BOJ’s efforts to allow a more flexible long-term interest rate movement around its 0% target.

It was interesting that the BOJ is ready to consider new schemes if necessary to meet the changing financial needs of companies that have been affected by the pandemic for a long time.

The price of solar energy at maximums

Solar energy is known among the public as a cheap source of energy. However, the declining cost trend is slowing. The data show that the prices of solar modules have increased by 18% since the beginning of the year. In the long run, they have fallen by 90% over the last decade. This reversal is due to a fourfold increase in the cost of the key raw material polysilicon.

According to Canadian Solar, the current higher prices affect demand, which may have an impact on the slowdown of some projects. According to analysts at Cowen & Co., large projects in the US could be expected to be postponed.*

On the positive side, the gap in the long-term downward trend in costs is being offset by continuous improvements in the efficiency of solar panels, says Nitin Apte, CEO of Vena Energy.

In the long run, this trend foreshadows the construction of new polysilicon factories to meet demand.*

Excellent vaccine results of Moderna

In a new report, Moderna announced the high efficiency of the covid-19 vaccine in patients aged 12 to 17 years. The company also plans to ask the FDA for approval for adolescent vaccination. According to Moderna, the observed side effects did not deviate from the range of reactions in adults.

The drug from Moderna could potentially become the second covid vaccine, with the US lowering the age limit for administration to 12 years. The FDA and the Centers for Disease Control and Prevention (CDC) have already approved the Pfizer / BioNTech consortium, which has been given to people from the age of 16 since May.

Inflation pushes gold higher

Gold is gradually erasing the losses it recorded during 2021. The main factor is the current inflationary pressures, which has raised concerns among investors, whom the US Federal Reserve subsequently sought to reassure with the outlook for monetary policy. Looking at the dollar index, the dollar shows a gradual decline in prices, which also nominally increases the price of gold. [1]

Performance of XAU/USD (Source of the graph: Tradingview) [2]  

A new player in the oil market

Iran’s return to the oil market can be a reality, which could significantly exceed current expectations of US fuel demand, which has been reinforced by declining weekly stock estimates. The final talks will take place this week in Vienna after Tehran and the UN nuclear agency extended the pact to monitor the nuclear program in the Middle East. *

Performance of Brent oil futures (Source of the graph: Tradingview) [3]

Watch this week:

Thursday, May 27, 2021

Germany will publish the development of GfK’s consumer climate. The expectation is a slight increase from -8.8 to -5.2 points. *

The US will publish initial jobless claims. Analysts predict 425,000 new applications. *

Friday, May 28, 2021

The US reports a core PCE price index in April. The prediction is 2.9% year-on-year growth. *

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

 

[1,2,3] Past performance is no guarantee of future results

*     Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

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