This week, the market saw major moves. The following were the key market movers during the week.
Crude Oil
Crude oil fell sharply during the week. This was mostly because of the increase in inventories. On Tuesday, American Petroleum Institute (API) released data that showed a sharp increase in inventories. In the week, inventories rose to more than 9.5 million barrels. This was higher than the 1.8 million barrels that traders were expecting. It was also higher than the sharp drawdown the organization had released earlier. The sharp declines were halted the following day when EIA’s number showed an increase in inventories. The increase was however smaller than that from the API. Another big news in the crude oil market was on Saudi Arabia. This week, Saudi Arabia said that the missing journalist had died by mistake in the consulate. Yesterday, they said that the death was pre-meditated. This was after the CIA director, Gina Haspel traveled to Turkey and listened to a tape of his murder.
Another big news on crude oil came yesterday. It was reported that China had asked its oil companies to halt purchases from Iran in line with American sanctions. This was a surprising move because China had resisted halting the purchases.
Earnings
This was a busy week for earnings as most large companies released their reports. More than 70% of all firms in the S&P 500 released their numbers. The most important ones were released yesterday. Twitter reported better-than-expected numbers leading its stock to rise. In the after-hours, Alphabet, Amazon, Intel, and Snap released their numbers that were mixed. Amazon disappointed the market by lowering the guidance of the fourth quarter. Alphabet disappointed after the ads revenues missed estimates and Snap declined after saying that the daily active users would continue to slide. A bright light was from Intel, which jumped after beating on revenues and EPS and raising guidance.
In all, this was a volatile week for the stock market. This is after the market continued to experience large swings. On Wednesday, the Dow lost more than 600 points while on Thursday, it gained by 400 points. Today, futures point to a triple digit decline.
Central Banks
This was another big week for the central banks. The first major bank to release its interest rates decision was Bank of Canada, which hiked interest rates by 25 basis points. This was the second time the bank hiked rates this year. In the monetary policy statement, the bank said that more rate hikes were necessary, even after the disappointing inflation numbers. This led to a short term gain in the Canadian dollar against the USD as shown below.
The BOC was followed by the ECB which delivered its rates decision yesterday. The bank left rates unchanged as expected. It also made no major news other than reiterating its previous statements about the end of the QE and the planned rate hikes after 2019 summer. This led to a fall of the EUR against the USD as shown below.
The decline in the euro – or the strengthening of the dollar – was also contributed by a statement by Richard Clarida, the vice chair of the Fed who said that more rate hikes were necessary. Today, focus will shift to the first reading of the third quarter GDP numbers.
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