Month: December 2015

BOJ blames EM slowdown for weak capital spending

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

A classic trade has gotten crushed this year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

For one of the most straightforward trading strategies on the Street, 2015 has been a year to forget.

In 2015, the currency carry trade, which attempts to profit from global differences among interest rates, has seen its worst year since the financial crisis, according to Deutsche Bank.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China to extend onshore yuan trading next yr in key reform

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asia equities extend holiday rally as energy plays lead

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Asian equities delivered some last-minute Christmas cheer, continuing to rally on the last full trading day of the week before the holiday period.

The recovery in oil prices lifted energy stocks in the region, with US crude nearly 1 percent higher in Asia trade following a 4 percent rally overnight. Data on Wednesday showed US crude inventories fell by 5.9 million barrels in the last week, compared with expectations for an increase of 1.1 million barrels.

“Judging by the moves in oil overnight, one could be forgiven for thinking that Santa’s sleigh runs on Light-Sweet Cushing, Oklahoma Crude….Of course, this looks like a temporary bounce with plenty of potential for further declines next year when Iran begins exporting oil again,” said IG market strategist Angus Nicholson in a morning note.

More healthy economic data saw all three major US averages rally 1 percent overnight, their third day of gains. U.S. personal consumption expenditures rose 0.3 percent on-month in November after remaining flat in October, adding to the market’s optimistic mood one day after better-than-expected third-quarter growth data.

Sydney, Hong Kong, Singapore and Wall Street will see half-day trading on Thursday while Tokyo and Shanghai will be the only major markets open on Friday.

Shanghai flat

China’s benchmark Shanghai Composite was little changed in early trade after snapping a two-day rally on Wednesday.

Insurers were in focus after regulators issued tighter disclosure requirements for firms when buying stakes in listed companies in an attempt to curb investment risks. China Life Insurance and New China Life Insurance rose 1 percent each.

Meanwhile, the yuan strengthened to 6.4777 per dollar after the People’s Bank of China said late on Wednesday that it will extend the currency’s trading hours starting January 4. By doing so, trading in the Chinese forex market will overlap with European trading hours, which will boost Beijing’s goal of internationalizing the currency.

Hong Kong’s Hang Seng Index added 0.7 percent with oil producers Petrochina, Sinopec and CNOOC leading gains by 3 percent each

Nikkei up 0.6 percent

Japan’s Nikkei index resumed trade higher after being shut on Wednesday for a public holiday. Minutes from the Bank of Japan’s November policy review released before the market open confirmed the central bank’s easing bias, with members saying policy adjustments should be necessary if the underlying trend in inflation changes.

Oil plays Inpex and JGC Corporation shot up more than 3 percent each while Show Shell Sekiyu added 2 percent.

Toshiba spiked as much as 2 percent on news that India may sign a deal with its unit Westinghouse to build six nuclear reactors. The rally is a sigh of relief for the troubled electronics maker after it warned of a record annual loss of $4.5 billion earlier this week, sending shares to six-year lows.

ASX gains 1.1  percent

Australia’s benchmark S&P ASX 200 index hit a more than two-week high, up for the seventh straight session.

In the resource sector, miners BHP Billiton, Rio Tinto and Fortescue Metals added 3-4 percent each despite iron ore prices falling below $40 a ton overnight, while energy plays Oil Search and Beach Energy soared 5 percent each.

Financials also rallied; National Australia Bank, Australia New Zealand Banking, Commonwealth Bank of Australia and Westpac rose over 1 percent each.

Kospi 0.3 percent higher

South Korean shares hit a new three-week high, on track to post a near 2 percent gain for the week.

Hyundai Motor added 0.7 percent after finally reaching a deal with its labor union that could avoid major production losses at its biggest manufacturing base. The agreement is subject to a vote by union members on Monday.

Retailed ignored data showing consumer sentiment fell to a three-month low in December, with Lotte Shopping and Hyundai Department Store up 0.3 percent each.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil spikes; US crude inventories fall by 5.9 mn barrels

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Oil prices extended gains on Wednesday, underpinned by an unexpectedly large fall in US crude inventories, but were still close to multi-year lows as supplies remained abundant and as OPEC lowered the demand outlook for its exports.

The data surprise prompted crude futures for both US West Texas Intermediate and global Brent to rise to a session high. WTI (WTI) futures were up USD 1.48, or 4.1 percent, at USD 37.62 by 10:44 a.m. EDT (1544 GMT). Brent futures were up USD 1.25, or 3.5 percent, at USD 37.36 a barrel.

The Energy Information Administration reported crude inventories fell by 5.9 million barrels in the last week, compared with analysts’ expectations for an increase of 1.1 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2 million barrels, EIA said.

Earlier data published by industry group the American Petroleum Institute had suggested US crude inventories fell by 3.6 million barrels last week to 486.7 million.

Meanwhile, gasoline stocks rose by 1.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.4 million barrels gain.

Distillate stockpiles, which include diesel and heating oil, fell by 661,000 barrels, versus expectations for a 2.0 million barrels increase, the EIA data showed.

US crude futures traded above benchmark Brent prices, a pattern rarely seen over the last five years. Brent settled below US crude for the first time since August 2010 on Tuesday and touched USD 35.98 on an intraday basis, its lowest since July 2004.

The Organization of the Petroleum Exporting Countries (OPEC) in a report on Wednesday forecast that demand for its crude would be lower in 2020 than in 2016 as rival producers prove more resilient than expected in a low oil price environment.

It forecast 2020 demand for OPEC crude at 30.7 million barrels per day (bpd) versus 30.9 million bpd in 2016 and about 1 million bpd less than it is currently producing.

OPEC raised its forecast for tight oil output to 5.19 million bpd in 2020, up from 4.5 million bpd in its 2014 report.

OPEC failed to agree on a production ceiling at a December 4 meeting in Vienna for the first time in decades. Saudi King Salman said on Wednesday the kingdom was concerned about the stability of the oil market, but added that Saudi Arabia remained committed to further exploration activities in the oil and gas sectors.

In a sign of growing competition for market share among OPEC members in Asia, Iraq signed a USD 1.4 billion deal to supply 160,000 bpd to Indian refiners Reliance and Indian Oil Corp.

Iran is expected to add 500,000 bpd of crude exports next year and Iranian officials have already met with Indian refiners seeking proposals on how to make their crude more competitive.

On Wednesday, Brent traded as low as USD 36.28 a barrel, flipping WTI from a long-standing discount into a slight premium over the international benchmark for the first time since a short period in November 2014.

Since 2010, US petroleum imports have fallen from a peak of almost 14 million barrels per day (bpd) to around 9 million bpd, government data shows.
But as shale output dips and the government eases restrictions on crude exports, the US market could tighten while global supplies swell on sustained high output from Russia and OPEC.

Although no immediate large-scale exports are expected, some US oil will likely flow from the United States into the global market next year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil back at $95 but only in 24 years time: OPEC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Oil prices will take decades to recover and will still not reach the peak seen in recent years, according to the latest World Oil Outlook (WOO) from OPEC.

In the group’s latest outlook on supply, demand and prices to 2020 and 2040, OPEC predicted that a barrel of oil would cost (in real terms) around $70 by 2020 and $95 by 2040, a far cry from a high point of $114 a barrel last seen in June 2014 before prices began to plunge on oversupply. On Wednesday, a barrel of benchmark Brent crude cost $36.51, a shade above WTI at $36.47.

Price declines were exacerbated by the decision last year by OPEC, the 12-member producer group led by Saudi Arabia, not to cut production. Still, OPEC’s Secretary General Abdalla Salem El-Badri said OPEC had been a bastion of stability amid volatile times for the oil industry.

“The supply and demand balance in 2015 has been one of oversupply, with stock levels rising to well above the five-year average. Despite this market instability, OPEC has continued to be an efficient, reliable and economic supplier of oil,” El-Badri noted in the foreword of report.

While the oil price plunge has been largely down to an oversupply, demand for oil has been strong but just not strong enough. Looking at potential future demand in its outlook, OPEC predicted oil demand to rise to 97.4 million barrels per day (mb/d) by 2020, a slight rise of 500,000 barrels a day compared to last year’s outlook.

By 2040, OPEC predicted overall demand to be close to 110 million barrels a day – a decline of around 1 mb/d on last year’s forecast.

OPEC to mop up

OPEC’s decision not to cut production in order to support prices was widely seen as a way for the group to retain its market share in the face of rivals, such as shale oil producers in the U.S. and Canada. The strategy has worked with many non-OPEC members, who tend to have higher production costs, struggling to break even.

As a result, many rivals have cut rigs and cancelled drilling projects while OPEC has continued to pump at record levels, often exceeding a self-imposed ceiling of 30 million barrels a day. OPEC has long predicted that the supply of oil from producers outside of the OPEC group would contract next year, just as world oil demand rises, and reiterated that prediction in the WOO.

As non-OPEC supply faltered, OPEC would be there to meet demand, El- Badri said.

“From the supply perspective, in last year’s WOO, non-OPEC liquids were expected to rise to 61.2 mb/d by 2020, whereas this year the number has dropped by 1million barrels a day to 60.2 mb/d. All this means that by 2020 the requirement for OPEC crude is anticipated to be at 30.7 mb/d, an increase of 1.7 mb/d from last year,” El-Badri said.

OPEC to invest

As rivals cut back on rigs, drilling projects and investments, OPEC warned that it was important that the “necessary future investments are made” and said it would do so.

“If the right signals are not forthcoming, there is the possibility that the market could find that there is not enough new capacity and infrastructure in place to meet future rising demand levels, and this would obviously have a knock-on impact for prices,” El-Badri noted in his foreword to the report.

OPEC signaled it was ready to invest in the “development of new upstream, capacity,” which, El-Badri noted, underscored “OPEC’s commitment to security of supply for consumers, which needs to go hand-in-hand with security of demand for producers.”

The group yet again signaled that it is ready to mop up market share from its competitors – especially those cutting back on production – stating that the increase in the overall requirement for OPEC crude between 2015 and 2040 is almost 10 million barrels a day — whereas for non-OPEC liquids it is just over 3 mb/d.

The forecast for demand had declined, however. “Overall demand by 2040 is at close to 110mb/d, around 1mb/d less than in last year’s WOO. This is the result of further energy efficiency improvements, environmental policies, as well as slightly lower long-term economic growth estimates,” OPEC’s secretary general said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nike beats on earnings; future orders soar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Don’t jump on the dollar bandwagon, just yet

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asia equities follow US rally; New Zealand at record high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Asian equity markets followed their Wall Street peers higher on Wednesday as investors cheered strong US data, a pause in the greenback’s rally and higher oil prices.

Markets in Japan are shut for the Emperor’s Birthday. The region is expected to see quiet trading for the rest of the week amid the Christmas holiday break. Australia, Hong Kong, Singapore and the Philippines will be open for a half-day on Thursday while Japan and China will be the only major markets open on Friday.

Positive headlines from the conclusion of China’s Central Economic Work Conference (CEWC), an annual meeting of Communist Party leaders, continued to lift sentiment in Asia. This week, the government announced several reforms, including plans to make monetary policy more flexible, increase the fiscal deficit ratio, reduce industrial overcapacity and ease property oversupply. The world’s second-largest economy will also push forward yuan convertibility on its capital account “in an orderly way” next year, regulators said on Tuesday.

After rallying sharply in recent months, the US dollar index recorded its fourth straight session of losses on Wednesday after briefly dipping below its 50-day moving average of 98.02 on Tuesday. Meanwhile, US crude added 1 percent, extending the previous sessions’s near 2 percent rally.

Overnight, the Dow Jones Industrial Average jumped nearly 200 points after the final estimate for US third quarter gross domestic product was revised down to 2 percent from a previous 2.1 percent, but that still beat expectations for a 1.9 percent reading.

Coming up on Asia’s economic calendar, Thai November trade figures as well as inflation data from Singapore and Malaysia are due for release.

Shanghai gains 0.2 percent

China’s Shanghai Composite extended gains into a third day, while the blue-chip CSI300 index retreated after hitting a four-month high in the previous session. The yuan opened at 6.4786 per dollar, weaker than the central bank’s mid-point rate of 6.4731.

Infrastructure plays were broadly higher following Beijing’s CEWC reforms; Long Yuan Construction added 0.7 percent while Anhui Conch Cement rose more than 1 percent. While China’s commitment to more fiscal support is market-positive, analysts question whether it will be sufficient to lift growth.

“The fact that economic conditions in China remained lukewarm despite significant stimulus spending in the third quarter points to rapidly contracting private demand, as can be evident from multi-year lows in the prices of coal, iron ore and steel,” said economists at Mizuho Bank in a morning note.

In Hong Kong, the benchmark index added 0.3 percent with blue-chips Petrochina and Li & Fung both more than 1 percent higher.

ASX up 0.6 percent

Australia’s resource-heavy S&P ASX 200 index logged a sixth session of gains, trading in sight of a fresh two-week high. The Australian dollar was flat against the greenback, well off a one-month low of USD 0.7097 hit last week.

Miners rallied after iron ore prices jumped 1 percent to USD 40.8 a ton on Tuesday, notching 3.5 percent gains in the past four days, according to IG. Fortescue Metals and Rio Tinto both jumped 4 percent while BHP Billiton rose more than 3 percent despite news that it will release the findings of a law firm hired to determine the cause of a dam burst at one of its Brazilian mines.

Atlas Iron popped 12 percent after announcing a debt restructuring deal in which the miner’s lenders would be issued 70 percent of shares.

New Zealand’s benchmark NZ 50 added nearly 1 percent to hit a fresh record high of 6,206 points, eclipsing its previous record of 6,162 hit earlier this month.

Kospi 0.5 percent higher

South Korea’s Kospi hit a fresh three-week high for the second consecutive session.

Index heavyweights Hyundai Motor and Kia Motors traded in opposite directions on news both automakers will buy stakes in affiliate firm Hyundai Capital from General Electric for a combined USD 600 million. Hyundai increased 0.3 percent while Kia shares lost 0.2 percent.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why the pain in commodity markets isn’t over

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Oil and iron ore have had a shocker of a year and National Australia Bank says the two commodities may fall further in 2016.

“Risks remain tilted to the downside amidst stubborn oversupply and weak demand conditions,” the bank said in a note Tuesday.

For iron ore, NAB expects a sharper slowdown in global steel production, particularly in China where the economy — and construction — continues to slow, might push the metal`s price toward USD 30 a tonne, around Australian miners` breakeven. The bank is currency forecasting an average price of USD 42 a ton.

Spot iron ore for China delivery was at USD 39.40 a ton on Monday after touching a low of USD 37 earlier in the month, the lowest since late 2008 when data began to be compiled.

“Chinese iron ore production will also remain the swing factor – while production has fallen 8.5 percent so far in 2015, this remains stronger than previously anticipated despite its lower grade and higher cost of production (above the current spot price),” it said.

The picture isn`t much better for oil, the bank said.

“The global oil glut is also expected to continue into 2017 as market competition becomes more decentralized, with major producers from the US and Middle East continuing to supply at a robust rate in a bid to defend market share and sustain revenue,” NAB said. It sees a “significant downside risk” to its forecast that oil prices will range from USD 40-USD 50 a barrel in the first half of the new year.

“Significant upside risks to production from OPEC, accompanied by further expected appreciation in the US dollar, suggest that oil prices could go as low as in the USD 20s in 2016 under a worst case scenario,” it said.

But it added that prices aren’t likely to stay that low for long as those levels are below the cost of production for higher-cost companies.

WTI crude futures for February delivery were up 0.8 percent, or 29 cents, at USD 36.10 in Asia trade after dipping Monday below USD 34 to hit a fresh near-seven-year low. Brent for February delivery was up 20 cents, or 0.6 percent, at USD 36.55, after hitting USD 36.04 a barrel Monday, its lowest since July 2004.

NAB isn`t alone in seeing continued risks to commodity prices.

Australia`s Department of Industry, Innovation and Science on Tuesday released a report cutting its iron-ore forecasts, Reuters reported.

It cut its average iron ore forecast to USD 40.40 a ton for 2016 from a USD 50 a ton estimate in September, Reuters reported.

ANZ is also skeptical that either oil or iron ore will rebound soon.

“Iron ore prices have found a base near term, but crude oil has yet to find a bottom. Both markets are at risk of making new lows in the first quarter of 2016,” the bank said in a note Tuesday.

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow