T-Bond Futures (ZB1!), H1 Bearish Drop

Type: Bearish DropKey Levels:Resistance: 149'12Pivot: 148'14Support: 146'14Preferred Case:With price expected to reverse off the Ichimoku resistance, we see the potential for bearish drop from our Pivot level at 148'14 in line 61.8% Fibonacci retracement towards our 1st support level at 146'14 in line with the horizontal swing low support.Alternative Scenario:If price breaks out, it can potentially move towards our 1st resistance level at 149'12 which is in line with 78.6% Fibonacci retracement and horizontal swing high resistance.Fundamentals: Economic risks from inflation and tightening monetary policy causes bearish sentiments around the bonds market.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/t-bond-futures-zb1-h1-bearish-drop28"
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Investment Bank Outlook 29-03-2022

Credit AgricoleAsia overnightSentiment was firm in the Asian session, following the first face-to-face peace talks between Ukrainian and Russian officials as well as the retreat in oil prices. The peace talks are generating hopes among investors of a ceasefire, and China’s movement restrictions continue to weigh on oil prices. At the time of writing, most Asian bourses and S&P 500 futures were trading modestly higher. The JPY was the biggest gainer in G10 FX on the back of further verbal intervention by Finance Minister Shunichi Suzuki as well as flattening in the UST curve. Despite strong Australian retail sales data, the AUD was the underperformer during the Asian session as AUD/JPY long positions were squeezed by the stronger JPY.USD/JPY: the Kuroda line becomes the Suzuki line Back in 2015, USD/JPY reached 125 and BoJ Governor Haruhiko Kuroda said the JPY was unlikely to weaken further as it was already weak in real TWI terms. USD/JPY retreated and 125 became known as the “Kuroda line”. This line was crossed on Monday, and while the JPY is already weaker in real TWI terms than it was in back in 2015, Kuroda is not verbally intervening and is maintaining the stance that a weak JPY is good for the economy. Instead, Finance Minister Shunichi Suzuki is verbally intervening in the currency by saying he is scrutinising movements in FX and monitoring the negative economic effects of the JPY’s weakness. This division of labour will continue as FX policy is the domain of the Finance Ministry, which makes the decision on any physical FX intervention.The BoJ will remain focused on inflation and capping the JGB 10Y yield at 0.25%. We continue to closely watch the UST 2-10Y spread for guidance on the top in USD/JPY – at just +7-8bp the spread is close to inverting and a becoming a more significant drag on the exchange rate. Suzuki also made another interesting comment recently: Japan’s law does not allow the BoJ to confiscate the reserves of foreign central banks. We do not think Russia’s liquidating of its JPY reserves and exchanging them for USD has contributed to USD/JPY’s rally, however: (1) as of June 2021, Russian reserves with the BoJ were 6% of its total or about USD27bn; according to the BIS’s triennial FX survey, the average daily turnover in USD/JPY in April 2019 was USD1.1trn, and any liquidation of Russia’s JPY reserves would have been a drop in the ocean of USD/JPY’s daily flows; (2) such a transaction would have been in breach of USD sanctions implemented by the US; and (3) confiscation – ie, taking possession of – is vastly different from simply not allowing Russia access to its JPY reserves.CitiEuropean OpenRates markets continued to be in focus post the European close, as flattening pressures resumed. UST 2y yields popped 8bps higher in Asia, with the rest of the curve up 2-3bps. Equity markets held onto their gains seen post European close, while oil markets held steady following yesterday's declines. DXY saw a slight decline after an initial spike in Asia, with G10 currencies mostly in the green against the dollar. JPY gained, paring some of yesterday’s losses, as BoJ bond purchase operations saw better takeup. In the EM markets, KRW rallied on the back of corporate unloading of USD, and broad downside pressure on USDKRW from lower oil prices.Looking ahead, two days of talks with Russia in Istanbul are set to start today. USD will see Fedspeak from Harker, who is expected to be hawkish, after consumer confidence data. EUR also sees consumer confidence data.

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Three stocks to protect your portfolio from the energy shock

The Organisation of Arab Petroleum Exporting Countries – a regional cousin of oil cartel Opec – discovered its tremendous pricing power in oil markets after the Yom Kippur War in 1973. That realisation, among other factors, helped usher in the stagflation of the 1970s and a lost decade for investors. In the latter half of 2021, we became concerned that Vladimir Putin had reached the same conclusion regarding natural gas in Europe. Prior to the invasion of Ukraine, Russia supplied 40% of Europe’s gas, and a higher gas price would mean higher European electricity prices and higher inflation. 

A dearth of oil and natural gas exploration in recent years has exacerbated the issue. Similarly, the transition to a low carbon economy will be inflationary as productive energy capacity is taken offline and replaced with new renewable energy sources. The tragic events unfolding in Ukraine have reinforced these trends. These considerations helped inform our portfolio positioning as we came into 2022. 

Let there be light

We hold a basket of renewable energy infrastructure funds, including NextEnergy Solar Fund (LSE: NESF), which look set to benefit from the current macroeconomic backdrop in two ways. First, around half of NESF’s revenues are derived from the sale of electricity. Electricity prices have increased fourfold over the past 12 months, and many renewable energy funds are beginning to lock in these prices via longer-term agreements. Its other source of revenue is government subsidies which, in the UK, are linked to the retail price index. The fund stands to profit from high inflation and any increase in long-term inflation forecasts will flow through to its net asset value (NAV).  

A tried and tested inflationary hedge

SPDR MSCI Europe Energy ETF (LSE: ENGY) is an exchange-traded fund (ETF) comprising the major European oil producers, including Shell, BP and Total. The European oil sector trades at seven times earnings, assuming a longer-term oil price of $80 per barrel. This level seems sustainable given rising annual demand and low levels of exploration. During the stagflationary period of the 1970s, the top performing stockmarket sectors were energy and materials. Technology and consumer staples – the stockmarket darlings of the recent past – lagged badly. This ETF could provide a hedge to such an environment.

Falling back on the basics 

Taylor Maritime Investments (LSE: TMI) holds a portfolio of 30 modern dry-bulk carriers, which typically carry agricultural and industrial commodities. The market is under-supplied with these vessels and, unlike container ships, that shortage looks set to persist since few new deliveries are scheduled in coming years. This shortage translates to high charter rates: TMI’s portfolio is delivering average cash yields of 25% per annum, before depreciation. It has low leverage and trades at around a 10% discount to NAV.  

Historically speaking, shipping has done well during periods of war, as war disrupts trade patterns, increasing shipping miles and therefore fleet utilisation. Dry-bulk carriers are also relatively insensitive to economic fluctuations since they transport staples such as grain, soybeans and iron ore. The fund targets a dividend of over 5% but has signalled that, due to elevated levels of cash generation, it may pay special dividends in the coming months.

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Soybean Futures (ZS1!), H4 Potential for Bullish bounce!

Type: Bullish BounceKey Levels:Resistance: 1687'6Pivot: 1660'4Support: 1646'6Preferred Case:With price expected to reverse off the stochastics support, we have a bullish bias that price will rise from our pivot at 660'4 in line with the 100% Fibonacci projection to our 1st resistance at 1687'6 in line with the horizontal pullback resistance and 50% Fibonacci retracement.Alternative Scenario:Alternatively, price may break our pivot structure and head for 1st support at 1646'6 in line with the horizontal swing low support.Fundamentals: No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/soybean-futures-zs1-h4-potential-for-bullish-bounce29"
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XRPUSD, H4 I Potential Drop

Type: Bearish ReversalKey Levels:Resistance: 1.01Pivot: 0.91Support: 0.69Preferred Case:On the H4, with price expected to reverse off the stochastics resistance, we have a bias that price will drop from pivot of 0.91 in line with the horizontal swing high resistance, 78.6% Fibonacci projection to 1st support at 0.69 in line with the pullback support and 78.6% Fibonacci retracement.Alternative Scenario:Alternative Scenario:Alternatively, price may break pivot structure and head for 1st resistance at 1.01 in line with the horizontal swing high resistance and 127.2% Fibonacci extension.

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Wheat Futures (ZW1!), H4 Potential for Bearish Dip!

Type: Bearish DropKey Levels:Resistance: 1759'2Pivot: 1070'6Support: 1637'4Preferred Case:Prices are on bearish momentum. We see the potential for a dip from our pivot at 1070'6 which is a graphical overlap towards our 1st support at 1034'0 which is an area of Fibonacci confluences.Alternative Scenario:Alternatively, price may break our pivot structure and head for 1st resistance at 1080'4 graphical overlap and in line with 23.6% Fibonacci retracement.Fundamentals:No major news

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T-Bond Futures (ZB1!), H1 Bearish Drop

Type: Bearish DropKey Levels:Resistance: 147'30Pivot: 146'27Support: 145'23Preferred Case: We see the potential for bearish drop from our Pivot level at 147'30 in line 23.6% Fibonacci retracement towards our 1st support level at 148'24 in line with 78.60% Fibonacci projection and 161.8% Fibonacci extension is. Our bearish bias is supported by how price is moving below the Ichimoku indicator.Alternative Scenario:If price breaks out, it can potentially move towards our 1st resistance level at 147'30 which is in line with 100% Fibonacci projection and horizontal swing high resistance. Fundamentals: Economic risks from inflation and tightening monetary policy causes bearish sentiments around the bonds market.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/t-bond-futures-zb1-h1-bearish-drop"
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NZDUSD, H4 | Potential for Pullback!

Type: Bearish ReversalKey Levels:Resistance: 0.70056Pivot: 0.6987 Support: 0.6923Preferred Case:Prices are at a pivot. We see the potential for a pullback from our Pivot at 0.6987 which is an area of Fibonacci confluences towards our 1st support at 0.6923 in line with 23.6% Fibonacci retracement. Divergence is spotted on RSI, further supporting our bearish bias.Alternative Scenario:Alternatively, prices may climb towards our 1st resistance at 0.70056

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nzdusd-h4-or-potential-for-pullback"
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USOIL, H1 | Potential For Bearish Dip

Type: Bearish ReversalKey Levels:Resistance: 113.112Pivot: 112.062Support: 109.008Preferred Case:Prices are on bearish momentum. We see the potential for a dip from our Pivot at 112.062 in line with 38.2% Fibonacci retracement and 61.8% Fibonacci retracement towards our 1st support at 109.008 in line with 78.6% Fibonacci Projection. Ichimoku is forecasting the bearish dip.Alternative Scenario:Alternatively, Prices might climb higher towards our 1st resistance at 113.112.

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When to buy shares in Britain's worst bank

It’s hard to believe now, but UK banks’ share prices had a strong start to the year, up between 15% and 25% until mid-February. They reported results for the financial year ending December 2021 at the end of last month, with no obvious problems. We saw profits rebound and outlook statements suggest improving revenue and further capital returns to shareholders in the form of dividends and share buybacks. Then Russia invaded Ukraine and NatWest’s, HSBC’s and Lloyds’ share prices fell by more than 20% from their 2022 highs. Barclays has been hit even harder, down 30%. They have since rallied somewhat, but still remain down by between 12% (HSBC) and 22% (Barclays). 

Direct exposure to Russia plays little part in this. UK banks have $3bn exposure to the Russian financial system, according to the Bank of International Settlements (BIS). While $3bn may sound like a lot of money, Austria (mainly Raiffeisen) has six times more exposure at $18bn. French (mainly Societe Generale) and Italian banks (Unicredit and Intesa Sanpaolo) have eight times more exposure at $25bn each. Societe Generale has said that it would be able to withstand the extreme scenario of having its Russian bank confiscated by the authorities, but so far banks have admitted losses that are in the tens of millions, not tens of billions. 

Following the 2008 financial crisis, lenders are in much better shape to absorb losses, mainly because regulators demanded that they rebuild their capital ratios and fund with more equity. Excluding NatWest – which has sold businesses and shrunk total assets by a trillion dollars – the sector has now increased tangible equity funding by around $90bn in the last ten years. In total, UK banks have $420bn of equity to absorb losses. So while $3bn UK bank direct exposure to Russia might sound like a lot of money, it really isn’t compared with the equity on their balance sheets, and is much less than that of European competitors.

Reassuring results

Results for the 2021 financial year were reassuring. Bank profits have been in long-term decline, but recovered in 2021. This was driven by lower bad debts compared with 2020, because banks took large provisions at the start of the pandemic and found that bad debts weren’t as high as the worst-case scenario. Hence statutory profit before tax doubled at HSBC and trebled at Barclays. The two banks the government rescued in 2008 fared even better, with Lloyds increasing profit before tax sixfold and NatWest recovering from a loss in 2020 to report a £4bn profit.

All UK banks have profitability (as measured by return on tangible equity – ROTE) targets of 10% or above and the outlook statements (which were written before the Russian invasion) sounded more confident that these can be achieved. For instance, HSBC said that it was likely to achieve at least 10% ROTE in the 2023 financial year, a year earlier than it had previously expected. Barclays and Lloyds already exceed their targets, reporting 13.4% and 13.8% ROTE respectively. This was helped by each bank’s revenue performance, but also a £0.7bn impairment release for Barclays and a £1.7bn release for Lloyds. 

NatWest announced a £750m buyback; Barclays £1bn and Lloyds £2bn. The Asian-focused banks (HSBC and Standard Chartered), which are reporting lower returns and were trading on lower price to tangible book multiples, announced $750m and $1bn buybacks respectively. However, those buyback announcements have done little to support share prices. Since the obvious exposures to Russia’s economy are manageable, it’s the secondary and tertiary effects that share prices are responding to, and that’s what we should be thinking about as well.

Central banks have been slow to tighten

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Merryn interviewed Andy Haldane, previously the Bank of England’s chief economist, for the MoneyWeek podcast in July last year. Haldane worried that other central bankers were too relaxed about the risk of inflation and that its effects might not be transitory. In June last year he was the only member of the Bank’s monetary policy committee (MPC) to vote to raise interest rates. He suggested that inflation could exceed the Bank’s 2% target for longer than most people expected, which would result in central bankers’ credibility being questioned. 

Although central banks were slow off the mark in tightening policy, by the start of this year the strength of the post-pandemic economic recovery meant that most analysts were expecting to see steadily rising interest rates. You may be wondering: if interest rate rises have been expected, why the panic now? 

Ultra-low interest rates are no good for banks, because banks make money from lending out their deposit funding. In normal times, customers’ deposits (which are liabilities on banks’ balance sheets) represent a cheap and stable source of funding. However, when interest rates are below 1%, banks don’t derive any benefit from this deposit funding, because there’s so much other liquidity freely available. As interest rates rise, banks will be slow to pass on the benefit to savings customers. Instead, net interest margins will widen (which is better for shareholders than it is for customers). As long as central banks are responding to a strong economy, rising interest rates are good news.

That was the bull case. But Russia’s invasion of Ukraine and the oil price rising to over $120 per barrel has changed the outlook.

The threat of stagflation

HSBC warned in its annual report that “further increases in energy prices – for instance, as a result of escalation in the Russia-Ukraine crisis – could keep inflation high and force central banks to tighten monetary policies faster than currently envisaged”. During the global financial crisis of 2008-2009, oil peaked at almost $150 per barrel – trebling from the $50 per barrel it traded at in January 2007. At the time a wiser, older broker told me: “Oil has never trebled in value and not caused a recession”. It wasn’t different that time and it probably won’t be different this time. 

The problem is that we may see consumers’ disposable incomes being squeezed by higher commodity prices, rising inflation and rising unemployment all at the same time. That is what happened in the 1970s and it’s known as “stagflation” (stagnation + inflation). History shows that while quantitative easing might have helped stimulate growth from 2008 onwards, central banks can’t print their way out of a commodity shock. Longer term, rising inflation combined with rising unemployment is unambiguously negative for banks’ share prices. Any benefit from higher interest rates would be wiped out by bad debts. 

These are the risks that share prices are reflecting. And if we see stagflation, investors should avoid the sector altogether. But if these fears are overstated, there could be some value in banks at this point.

The case for NatWest – Britain’s worst bank

A common-sense investment strategy is to pick a sector with favourable long-term prospects and buy a company from that sector that has favourable economics. An example might be Halma or Spirax Sarco in the engineering sector.

When it comes to UK banks, common sense works less well. The “quality” bank with the best long-term record is HSBC, whose share price has halved in value in the last 20 years. It’s not much good to point out that in relative terms HSBC has done better than the competition: Lloyds and NatWest were part-nationalised and shareholders diluted by the government in 2008. Barclays has fared little better, with the shares down by 70% compared with 20 years ago. In short, banks have not been “buy and hold” investments. With that in mind, I would suggest a different, counter-intuitive approach: wait until the tide is on the turn and then buy the lowest-quality bank, which is NatWest. 

Expectations are low: NatWest lost money for nine consecutive years following the financial crisis. However, NatWest has essentially been three businesses i) a non-core shrinking “bad bank”; ii) good businesses that it was forced to sell as a result of receiving state aid (eg, Direct Line Insurance); and iii) a profitable core franchise. The years since the financial crisis have been dominated by the first two factors, but by their nature they have declined in importance and the core franchise should become more important.

NatWest’s annual report shows the bank should benefit by almost £1bn from a one percentage-point parallel shift in the sterling yield curve (that means short-term rates rise as the Bank of England raises the base rate, but the ten-year bond yield – which central banks don’t control – goes up by the same amount). That’s an automatic benefit equal to 25% of last year’s profit before tax of £4bn. As long as the yield curve remains upward sloping – meaning short-term rates (eg, 2%) remain lower than longer-term bond yields (eg, 4%) – some of that benefit is sustainable in future years. 

Aside from the macro-economic background, there are still company-specific concerns. For instance, last year NatWest paid £466m of “conduct costs” for the financial year 2021, including £265m for money laundering for a Bradford jeweller that deposited £260m in cash, some in bin bags with a “musty smell”. Many of these problems were the result of cultural failings – and as the bank shrinks, it should become easier to avoid these hangovers from the past. Note also that the UK government still owns 52% (down from 97% in 2008), but not all of these shares are being placed on the market. Instead, NatWest is buying back from the government at the market price. 

NatWest is trading on 0.5 times revenue and 0.6 times tangible book value. The forecast price/earnings ratio is less than six times forecast 2023 earnings, according to SharePad. That suggests investors believe it will deliver returns well below management’s target of 10% ROTE. But having shrunk its balance sheet by over £700bn in the last decade, the bank has been de-risked. The share price currently looks to be anticipating a very difficult stagflationary environment.  The Ukraine war and sanctions may drive that scenario – but if we see commodity prices fall, that would be the signal the tide has turned, and would be the time to buy.

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ETHUSD, H4 I Potential Rise

Type: Bullish BounceKey Levels: Resistance: 3549Pivot: 3248Support: 3013Preferred Case:On the H4, with price moving above the Ichimoku cloud, we have a bias that price will rise to our 1st resistance at 3549 in line with the 127.2% Fibonacci extension from our pivot at 3248 in line with the horizontal pullback support.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 3013 in line with the horizontal overlap support and 38.2% Fibonacci retracement.

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Market Update – March 28 – Yen, Oil & Stocks Dive as BOJ Remains “Ultra Loose”

BOJ announced unlimited bond buying policy, but yields still rose and YEN crashed, pulling down Asian stock & Oil markets, also hit by a strict 11-day lockdown in Shanghai (27 mill.). The US Treasury 5-to-30-yr yield curve has inverted for the first time since 2006, history suggests slowdown & possible recession. US 10-yr back over 2.5%. USD bid. APPLE talks of long-term subscription model moving away from selling products, as it reduces supply of iPhone SE & AirPods.

Biden & Blinkin “clarify” – “Putin cannot remain in power” comments, Zelensky talks of neutrality but insists on geographic integrity, walking back earlier comments. Russian & Ukrainian negotiators to meet in Istanbul later. Israel hosts 4-Arab states & Blinkin, NK tests more ICBM’s. Japan tightens FX laws and Crypto loopholes to sanction Russia.

Week Ahead   – US NFP (380k), US, UK and Canada GDP and many central bankers’ speeches.

• USD (USDIndex 99.14). closed Friday 98.85. Friday’s US data weak (Pending Home Sales at 2-yr low &  Consumer Sentiment at 11-yr low)    
• US Yields 10-yr up to 2.53% currently & new 3-yr highs, from Friday’s close 2.492%
• Equities – USA500 +22.90 (+0.51%) 4543. US500 FUTS now at 4519 now. (Closed up +1.8% last week – Nasdaq best performer last week +2.0%. 
• USOil – Fell to start the new week to $108.94 now – from Friday’s close at $112.50   
• Gold – slipped to $1935 now,  from Fridays close at $1955.      
• Bitcoin breaks up 4.4% from the 42k-45K range to $46,800  now. 
• FX markets – EURUSD back to test 1.0950, unable to hold breach of 1.1000, USDJPY over 123.00 & new 7-year highs and Cable back to 1.3130 now, from over 1.3200 on Friday.    

European Open – The June 10-year Bund future is down -78 ticks at 157.87, underperforming versus Treasuries.  A lockdown in Shanghai weighed on the CSI overnight and left oil prices lower, while the Ukraine war’s drag on Europe’s energy costs is set to remain extremely high, with the resulting spike in the cost of living hitting consumers and consumption trends in many countries. In the UK that has already become apparent and last week’s budget offered not enough relief to soothe concerns. DAX and FTSE 100 are up 0.056% and 0.054% respectively at the moment.  A cautious start for stocks then into a data heavy week that brings the final round of Eurozone confidence numbers for March and preliminary inflation reports that are likely to look ugly.

Today – ASEAN summit, US 2yr and 5yr supply, Trade Goods Balance & US Inventories. Speech from BoE Governor Bailey.

Biggest FX Mover @ (07:30 GMT) AUDJPY (-0.98%) Big move against JPY today, continues trend of weaker YEN. MAs aligned higher, MACD signal line & histogram strong but cooling, RSI 71, OB but rising, H1 ATR 0.281, Daily ATR 1.120.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distribution.

from HF Analysis /323474/
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GBPNZD, H4 I Potential Drop

Type: Bearish ReversalKey Levels:Resistance: 1.91543Pivot: 1.90271 Support: 1.8844Preferred Case:On the H4, with price moving below our Ichimoku cloud, we have a bias that price will drop from pivot at 1.90271 in line with the horizontal pullback resistance and 50% Fibonacci retracement to 1st support at 1.8844 in line with the 161.8% Fibonacci extension.Alternative Scenario:On the H4, with price moving below our Ichimoku cloud, we have a bias that price will drop from pivot at 1.90271 in line with the horizontal pullback resistance and 50% Fibonacci retracement to 1st support at 1.8844 in line with the 161.8% Fibonacci extension.

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CF Industries: One of the Gainers Out of the Sanction Game?

“Fertilizer prices were already high before the war. They have now reached record levels amid a precipitous drop in Russian supply… The result is that fertilizer is about three to four times costlier now than in 2020” – Jon Emont and Silvina Frydlewsky, Wall Street Journal writers

Sanctions against Russia following its invasion on Ukraine have further intensified commodity and food shortages. Among them, a prohibition on Russia’s natural gas export does not solely hurt the oil market, but there is also a ripple effect towards the agricultural sector. This is because natural gas is a key input in the production of fertilizer, which is used by farmers to boost crop production.

Figure 1: Exporters vs Importers of Fertilizers, in 2020. Source: OEC.World.

According to financial research firm CFRA, more than 1/3 of the world’s potash production, a key ingredient in fertilizer, is controlled by Russia and its ally Belarus, while the former alone controls 14% of nitrogen-based plant food production. Although the US is less dependent on Russia’s fertilizer, which accounts for only 9% of imports, as it has its own robust domestic production, prices going higher is unpreventable because price increases in the world market are likely to translate into similar price increases in the US market.

Fig.2: Fertilizers Price Index. Source: YCharts.

Based on the latest reported data, the fertilizers price index, which takes into account the weighted average of natural phosphate rock, phosphate, potassium and nitrogenous prices, stands at 196.86, up more than 96% from a year ago. It has even exceeded prices seen during the food and energy crisis in 2008.

A robust global demand and skyrocketing prices of crop nutrients may continue to benefit manufacturers and distributors of agricultural fertilizers such as CF Industries. The company mainly makes nitrogen, which has the biggest volume and nutrient volume out of the NPK (nitrogen, phosphorous, potassium). Recent news shows that CF Industries is currently increasing fertilizer shipments  amid prolonged supply disruptions. Plant maintenance work of the company has had to be postponed until the second half of the year to meet growing demand. As the production rate may be less effective then, it will take some time to alleviate the supply shortages; consequently input prices remain at high levels, as do the company’s share values.

Technical Analysis:

Technically, #CFIndustries remains traded on a strong bullish trend since its rebound from the lows at $19.68 seen on 15^th March 2020. After two years, as of its close on last Friday, total accumulated gains have exceeded 450%. Candlestick remains attached to the upper line of Bollinger band, indicating trend continuation. In the near term, resistance to watch lies in the $114.45-$119.30 range, followed by $126.50. On the contrary, the middle line of Bollinger band at $94.90 serves as the nearest support. Breaking below the support may extend the bearish momentum towards the upper line of ascending channel, and confluence zone $82.60-$84.30.

Click here to access our Economic Calendar

Larince Zhang

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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