Morning Update

Yesterday saw a prevailing risk-on sentiment pervade throughout global markets, as investors around the world continued to rally on wage growth (and thus inflationary pressures) easing in the US, China’s reopening and inflation in the Eurozone coming off. This saw oil and equities rise across the board while bond yields and the DXY fell. In the UK today, focus will centre on the details of the Anti-strikes bill which is to be introduced to Parliament and will aim to ensure that public sector services are required by law to maintain minimum safety levels over periods of industrial action.

Oil Surges

Yesterday saw oil prices surge across indexes, with Brent crude futures rose as much as 3.5% to over $81dpb before while WTI crude futures rose from below $75dpb to over $76.5dpb. Much of this is being driven by the prospect of an increased demand from China as it begins to unwind its covid restrictions. Of course, China is the largest importer of crude oil accounting for imports of around 10m barrels per day, and thus any change in rhetoric from Beijing majorly influences wholesale prices across the board. ??

Elsewhere, Norway is expecting to increase its oil output by close to 7% this year as production increases from the Johan Sverdrup oil field. India's fuel demand also hit a nine-month high in December as investors also rally on the prospect of a less sever recession in the US and the Eurozone.

Poll Shows UK As Less Attractive Place for Manufacturing

According to Reuters, Britain is becoming a less attractive destination for investment into the manufacturing sector as energy prices and industrial action. In their article published yesterday, “The proportion of manufacturers who think Britain is a competitive location halved to 31% from 63% a year ago, and 43% said Britain had become less attractive to overseas investors, according to the survey by Make UK, the main trade body for British manufacturers, and accountants PwC”. This also comes as the UK government look set to withdraw the vast majority of energy support to businesses> indeed, only recently The Telegraph reported that the volume of subsidies will be cut by around 85% over the next financial year - limiting the cost to ￡5bn.

Today’s Events

Today will see Powell speak at the Sveriges Riksbank International Symposium ahead of the US CPI print on Thursday. The Symposium will also see Bailey speak as well as the BoJ’s Kuroda and the BoC’s Macklem.