Tag: global markets

Oil extends two-day climb on renewed optimism for US rate cuts

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

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Oil headed for a third day of gains — putting crude on course for a weekly advance — as US jobs data supported the case for Federal Reserve rate cuts this year, buoying risk assets.

Brent rose above $84 a barrel after a two-day climb that added about 1%, holding above the 100-day moving average. West Texas Intermediate neared $80. Initial applications for US unemployment benefits increased to the highest level since August, supporting the case for looser monetary policy. The dollar slipped on Thursday, making commodities more attractive for most buyers.

Crude’s latest gains belie relatively muted price action, with futures set to log their smallest weekly trading range since March. Prices remain higher this year, aided by OPEC+ supply cuts, solid global demand, and recurrent tensions in the Middle East. The Organization of the Petroleum Exporting Countries and its allies are due to meet next month to decide on output over the second half.

“The crude oil market will remain beholden to OPEC supply policies,” ANZ Banking Group Ltd. analysts Daniel Hynes and Soni Kumari said in a note. “Ongoing curtailments should support prices, but the market is susceptible to geopolitical issues.”

In the Middle East, Israel said it would press on with its fight against Hamas in the Gaza Strip even without help from the US. President Joe Biden had said he would halt additional shipments of offensive weapons to Israel if the country launched a ground invasion into Rafah.

Market indicators are mixed. Brent’s prompt spread — the gap between the two nearest contracts — was 56 cents a barrel in backwardation, a positive pattern. That’s little changed over the week, but lower than a month ago. Option skews remain in a bias toward puts, which profit from lower prices, and profits from making fuels like gasoline from crude have declined.

Also Read: Asian stocks rally as US shares near fresh record

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

Asian stocks rally as US shares near fresh record

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

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Shares in Asia rose Friday after an upbeat day on Wall Street following jobs data that supported the case for US rate cuts.

Equities in Japan, South Korea and Australia climbed alongside futures for Hong Kong. US contracts also drifted higher after the S&P 500 index gained 0.5% to trade less than 1% away from its all-time high on Thursday. The Nasdaq 100 index rose 0.2%.

Treasuries held a Thursday rally as Australian and New Zealand government bonds played catch-up, edging higher in early Friday trading. The US 10-year yield edged four basis points lower to 4.45% on Thursday, supported by a successful $25 billion sale of 30-year US bonds.

Initial applications for US unemployment benefits rose last week to the highest level since August, topping estimates, with cooling in the jobs market supporting the case for interest rate cuts. Fed Bank of San Francisco President Mary Daly said rates are currently restraining the economy, but it may take “more time” to return inflation to their goal.

“Time will tell whether it’s a one-off or part of a genuine cooldown in the labor market,” said Chris Larkin at E*Trade from Morgan Stanley. “Investors may have adjusted to the idea of the Fed waiting until September to cut interest rates, but that doesn’t mean they’re comfortable waiting indefinitely.”

Emerging market currencies extended gains against the greenback, which was steady after weakening Thursday as US yields fell. The dollar’s move failed to lift the yen after trading flat Thursday and was little changed early Friday at around 155 per dollar.

The pound was little changed after a Thursday rally that came despite growing confidence the Bank of England may soon begin loosening policy.

Data set for release in Asia Friday includes industrial output for India, and the first-quarter current account balance for China. New loans and money supply data for China may also be released as early as today.

Elsewhere, JPMorgan Chase & Co. said it was on track to include India in its emerging market debt index from June, a move that is expected to drive inflows from global investors. Meanwhile, Oversea-Chinese Banking Corp. offered S$1.4 billion ($1 billion) to buy the remaining stake in Great Eastern Holdings Ltd. that it does not currently own, in an effort to solidify its wealth management leadership position.

Oil extended gains into a third day as key technical levels provided a floor for losses while investors digested a mixed US inventories report. Gold traded little changed after jumping more than 1% on Thursday. Bitcoin climbed above $63,000.

US Rebound

To Doug Ramsey at Leuthold, another 10% gain in the S&P 500 isn’t out of the question, at least statistically. He analyzed 80 years of data on bull-market rallies, focusing on those that happened when unemployment was this low and the economic cycle this mature. If the current rally meets the prior records for length and height, the S&P 500 would end the year at 5,705.

Apple Inc.’s stock climbed as Bloomberg News reported the company will deliver some of its upcoming artificial-intelligence features this year via data centers equipped with its own in-house processors. Nvidia Corp. led losses in chipmakers.

Blackstone Inc. President Jon Gray said economic growth will slow as stubborn inflation weighs on the Fed’s ability to begin lowering borrowing costs.

“We see a deceleration of growth,” Gray said at the Macquarie Australia Conference in Sydney on Thursday. “Central banks will be slow on the cutting of rates, because they don’t want to see a rise of inflation,” he said. “The Fed will be patient, they’ll have the opportunity to cut once this year,” he added.

If the economy is slowing, unemployment rising, inflation receding, and the Fed is expected to cut rates, there will be plenty of buyers for US Treasury notes and bonds, according to Joe Kalish at Ned Davis Research.

“But make no mistake. When conditions change, prices can change too – and quickly!”

Also Read: Trade Setup for May 10: Recent swing low for the Nifty back in focus after breach of 22,000

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 ticks higher as traders digest mixed US inventory snapshot

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

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Oil edged higher after a mixed snapshot of US inventories that included an unexpected drop in nationwide crude holdings.

Brent crude rose toward $84 a barrel after climbing by 0.5% in the previous session, with West Texas Intermediate above $79. Overall stockpiles of crude declined by 1.36 million barrels last week, although inventories expanded at the Cushing storage hub to hit the highest level since last July.

Oil has been on the decline since early last month as tensions in the Middle East eased. Softer timespreads, poorer refining margins, and options skews remaining in a bias toward puts collectively suggest a weaker global market. In addition, OPEC+ supply is in focus, with Russia pumping above an agreed-upon target before the cartel meets next month to decide whether to extend curbs.

Goldman Sachs Group Inc. no longer expects the group to announce a partial unwind of its voluntary production cuts in June, analysts including Daan Struyven said in a note. “We expect lower OPEC+ supply for longer,” they said. Still, higher production targets remain “plausible” as growing spare capacity could increase the pressure to raise output.

Separately, the Biden administration raised the price it’s willing to pay to refill the country’s emergency oil reserves. The Energy Department will pay as much as $79.99 a barrel, the first time an explicit ceiling has been set.

“After being on the back foot over the past two weeks, oil prices are attempting to stabilize,” said Yeap Jun Rong, market strategist at IG Asia Pte. “A gridlocked situation in the Middle East between Israel and Hamas, and a drawdown in US crude inventories, are offering reasons for bearish sentiment to unwind a little.”

Also Read: Bond losses extend to Asia as stocks tread water

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 confined to tight range with Middle East and stockpiles in focus

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

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Oil was steady near the the lowest level since mid-March as traders tracked tensions in the Middle East and a mildly bearish US stockpiles report.

Brent traded near $83 a barrel, closing just above the 100-day moving average in the previous two sessions. Futures have traded in a range of just over $1 so far this week. West Texas Intermediate was above $78 a barrel. With Israel’s military edging into the Gazan city of Rafah, a truce deal between the Jewish state and Hamas remains elusive.

Crude stockpiles at the storage hub in Cushing, Oklahoma, rose by more than 1 million barrels last week, the American Petroleum Institute estimated, according to people familiar with the figures. The breakdown also showed higher nationwide holdings of gasoline and distillates. Official data come later on Wednesday.

Oil has been on a downtrend since early April, posting losses in three of the past four weeks, with market indicators from timespreads to processing margins pointing to a weaker outlook. Brent and WTI’s prompt spreads have narrowed to multi-month lows, suggesting that conditions are becoming less tight. In addition, profits of making fuels like diesel and gasoline from crude have also declined.

Also Read: Asian stocks languish at open as US rally falters

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

Asian stocks languish at open as US rally falters

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

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Stocks in Asia struggled for direction following a sluggish US session, with investors split on whether the market can sustain this month’s rally given economic crosscurrents.

Equities in Japan fell while those in South Korea and Australia climbed. Futures for Hong Kong pointed to a flat open. Contracts for US stocks were little changed. The S&P 500 briefly hit 5,200 before paring its advance at the close.

Treasury 10-year yields were steady after falling on solid demand in a sale of three-year notes. The Bloomberg dollar index held on to gains recorded Tuesday. The yen inched lower, as US calls for caution on intervention added to expectations that the currency will face continued pressure. Japanese Finance Minister Shunichi Suzuki said the government stands ready to take all possible measures as needed.

In Asia, the focus will be on President Xi Jinping’s trip to Europe and how trade relations will develop from here. In another sign of geopolitical tensions between China and the West, the US has revoked licenses allowing Huawei Technologies Co. to buy semiconductors from Qualcomm Inc. and Intel Corp., according to people familiar with the matter.

Stocks across the world have been trying to make a comeback after April’s rout, with gains fueled by prospects of Federal Reserve rate cuts and solid earnings.

“We continue to see a path higher for stock prices as long as fundamental conditions remain stable and profit growth remains on a positive trend,” said Anthony Saglimbene at Ameriprise. “Elevated interest rates and sticky inflation, along with the Fed holding monetary policy at restrictive levels for longer than most expected at the start of the year, introduce some added risks.”

Despite resilient consumption and artificial-intelligence optimism, US economic growth slid last quarter while inflation stayed high. Fed Bank of Minneapolis President Neel Kashkari said Tuesday it’s likely the central bank will keep rates where they are “for an extended period of time” until officials are certain prices are on track to their target.

In commodities, oil was little changed as traders tracked tensions in the Middle East and a mildly bearish US stockpiles report.

US growth momentum is resilient, but likely slowing, and that could weigh on equities, which have decoupled from the Fed by assuming that an acceleration in growth was lying ahead, a JPMorgan team led by Mislav Matejka wrote.

The biggest buyers of US equities, American companies, are back in the market and ready to drive the next leg of the stock rally, according to Goldman. About a sixth of the $934 billion in estimated share repurchases this year are expected get executed in May and June, the firm’s tactical specialist Scott Rubner wrote.

Also Read: Trade Setup For May 8: Is the Nifty set for a retest of 22,000 on the downside?

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 rises with Middle East tension to the fore as truce talks falter

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

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Oil advanced for a second day on tensions in the Middle East, with Israel rejecting a cease-fire proposal for the Gaza Strip, and a risk-on mood that helped lift wider financial markets.

Global benchmark Brent rose toward $84 a barrel after a 0.5% gain on Monday, while West Texas Intermediate was near $79. Israel’s war cabinet rejected a cease-fire proposal agreed to by Hamas. The Jewish state has vowed to continue military operations in Rafah, a major Gazan city.

Crude’s advance came after US stocks pushed higher on Monday on optimism the Federal Reserve will start cutting interest rates this year. Lower US borrowing costs should be a plus for the nation’s energy demand.

Oil is clawing back some ground after posting its worst weekly drop since February. Prices remain higher year-to-date as OPEC+ production cuts have tightened the market. While the cartel is expected to keep supplies tight, the demand outlook is clouded, with diesel flashing signs of weakness.

The Energy Information Administration is due to release its Short-Term Energy Outlook later Tuesday, offering clues on the market outlook, including the pace of US supply growth. Additional commentary may come from oil giants BP Plc and Saudi Arabian Oil Co., known as Aramco, as they issue earnings.

Also Read: Asian stocks climb after US gain on rates optimism

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

Asian stocks climb after US gain on rates optimism

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

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Asian stocks rose in early trading, following Wall Street’s gains on optimism the Federal Reserve will start cutting interest rates this year. The yen dropped.

Japan’s benchmark Nikkei 225 climbed as much as 1.6% as the market reopened on Tuesday after a holiday. Australian shares rose 0.7%. The upward momentum came after the S&P 500 rose 1% and topped its average price over the past 50 days — a level seen by many chartists as key in maintaining the positive sentiment.

The yen fell after Japan’s top currency official Masato Kanda said that while authorities would take action in the event of volatility, there was no need for the government to intervene if the market is functioning properly.

Oil rose 0.5% in early Asia trading, while US stock futures were steady after Israel rejected a statement from Hamas that it had accepted a cease-fire proposal to end the fighting in Gaza.

The US equity benchmark rose above 5,180 on Monday. Nvidia Corp. and Tesla Inc. paced gains in megacaps. Micron Technology Inc. jumped on an analyst upgrade. Apple Inc. fell, with Warren Buffett revealing he’d cut his stake even after heaping praise on the iPhone maker. Treasury 10-year yields slid two basis points to 4.49%.

“Bulls will be looking to maintain their momentum after snatching last week from the jaws of bears,” according to Chris Larkin at E*Trade from Morgan Stanley. “This week is light on high-profile economic data, but heavy on Fed members hitting the speaking circuit. Traders will be dissecting any comments they make about potential rate cuts.”

In Asia, there’s renewed optimism for the bruised Chinese economy, with Beijing’s latest supportive policy stance helping to boost shares and the onshore yuan on their return from holiday on Monday. Battered assets are getting a second look as a combination of earnings recovery, policy support and cheap valuations lure investors.

Australia’s central bank is expected to keep its key interest rate on hold Tuesday, while reinstating a hawkish bias to acknowledge sticky consumer prices.

In the US on Monday, investors waded through remarks from some of the many Fed officials due to speak this week.

Fed Bank of Richmond President Thomas Barkin said he expects high rates to slow the economy further and cool inflation to the 2% target. His New York counterpart John Williams said eventually there will be rate cuts — but the decision on when will depend on the totality of the data.

More than 80% of the S&P 500 companies have now reported first-quarter earnings, and profit growth has easily surpassed “mediocre expectations,” according to Gina Martin Adams at Bloomberg Intelligence. The index is now on pace for a 6.5% earnings growth, almost double pre-season estimates of 3.75%, she noted.

The backdrop for stocks remains supportive, driven by healthy and broadening profit growth, inflation that will likely resume falling, a Fed that is more likely to cut than hike rates, and surging investment in artificial intelligence, according to David Lefkowitz at UBS Global Wealth Management.

A soft landing or a so-called no landing, where growth is resilient even as rates stay high, both remain possible for the US economy, the team led by Michael Wilson wrote in a note. This uncertain backdrop warrants an investment approach that can work as market pricing and leadership between groups of stocks gets whipsawed by the potential outcomes.

Also Read: Trade Setup for May 7: Is the rising VIX posing a threat to Nifty’s recovery?

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 steadies after weekly slump as Saudi Arabia raises prices

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

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Oil steadied after the biggest weekly drop since February as Saudi Arabia hiked selling prices for grades to Asia for the third month in a row, signaling confidence in the outlook with the OPEC+ cartel cutting supply.

Brent crude held above $83 a barrel after slumping more than 7% last week to post the biggest decline since February. West Texas Intermediate was near $78. State-owned Saudi Aramco raised the June official selling price of its flagship Arab Light grade by 90 cents to $2.90 a barrel above benchmark prices. That compares with an increase of 60 cents forecast in a Bloomberg survey.

Oil tumbled last week as risks of conflict in the Middle East eased, paring the commodity’s year-to-date gain. OPEC and its allies are widely expected to press on with supply cuts in the second half of this year when they meet next month. Ahead of that, laggards Iraq and Kazakhstan have outlined plans on how they will curb flows to bring output in line with already-agreed-upon quotas.

In the Middle East, talks over the weekend on a potential truce between Israel and Hamas broke up inconclusively. Options markets, meanwhile, have shed the risk premium as fears of a wider regional war dissipate. Brent option skews are at their most bearish in nearly two months, with the discount of calls to puts at the widest since March.

Also Read: Asian stocks rangebound before China reopening

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

Asian stocks rangebound before China reopening

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

Listen to the Article (6 Minutes)

Asian equity benchmarks are little changed in early trade as traders await the reopening of China from a long holiday break. Mainland markets look poised to gain as Beijing’s supportive policy stance adds impetus to a budding bullish momentum.

Australia’s share index edged higher after the S&P 500 gained 1.3% Friday when softer-than-expected US jobs data revived bets the Federal Reserve will cut interest rates this year. A gauge of Chinese shares listed on the Nasdaq rose 5.5% last week. Japanese markets are closed for a holiday.

Global stocks rose last week as risk sentiment improved. US Treasuries rallied as the payrolls release, and a cooldown in wages appeased investors worrying about “stagflation” or a recession. Instead, the print gave fodder to the believers in an economy that is gradually slowing and would allow a data-dependent Fed to start easing policy later this year.

Oil rose in early trading after Israel closed the Kerem Shalom humanitarian crossing into Gaza on Sunday following a rocket barrage fired by Hamas, in an incident that could derail weeks-long delicate hostage and cease-fire negotiations. Saudi Arabia lifted the price it sells crude to Asia as it attempts to tighten the oil market.

Traders will also be mindful of a swath of central bank meetings this week, led by a likely hawkish Reserve Bank of Australia on Tuesday following stronger-than-expected inflation data last month. Chinese activity data as well as inflation readings in key emerging markets are also due.

Also Read: Trade Setup for May 6: Can supportive global cues lend support to the Nifty?

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 set for biggest weekly drop since February on demand concern

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

Listen to the Article (6 Minutes)

Oil is headed for its biggest weekly decline since February on signs of weakening demand, increasing speculation that OPEC+ will prolong output cuts to shore up prices.

West Texas Intermediate traded near $79 a barrel for a weekly loss of more than 5%, after settling little changed on Thursday, while Brent closed below $84 a barrel. Almost 90% of traders and analysts surveyed by Bloomberg predict the Organization of the Petroleum Exporting Countries and its allies will extend curbs when they meet on June 1.

Oil has plunged about 10% from a five-month high in mid-April as the fallout from Iran’s unprecedented attack on Israel remained limited. A surprise surge in US crude stockpiles this week added to concerns about demand from top importer China and weakness in product markets including diesel and gasoline.

Also Read: Asian stocks rally, yen climbs to three-week high

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