Tag: global markets

Oil back above $90 a barrel after Israel attacks Iran

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

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Oil prices jumped $3 a barrel on Friday in reaction to unconfirmed reports on X that explosions had occurred in Iran, sparking concerns that Middle East oil supply could be disrupted.

Brent futures jumped $3.03, or 3.5%, to $90.14 a barrel by 0147 GMT, and US West Texas Intermediate crude rose $3.03, or 3.7%, to $85.76 per barrel.

“There are some unconfirmed reports of explosions in the Middle East,” ING’s head of commodity research, Warren Patterson, said.

The reports have sparked worry that Israel has responded to Iran’s drone and missile attack of last weekend, Patterson said.

Investors have been closely monitoring Israel’s reaction to the April 13 Iranian drone attacks on Israel. The geopolitical risk premium in oil prices had been unwinding this week on the perception that any Israeli retaliation to Iran’s attack would be moderated by international pressure.

In global crude oil supply, Venezuela lost a key U.S. license allowing the OPEC member to export oil to markets globally. The U.S. also announced sanctions on Iran, another OPEC member, targeting its unmanned aerial vehicle after the country’s drone strike on Israel last weekend.

The sanctions on Iran, however, exclude its oil industry.

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

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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 fall as yen in range after Japan CPI

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

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Asian stocks dropped after US shares and Treasuries extended this month’s selloff following solid economic readings and hawkish Federal Reserve commentary.

Equities in Australia, Japan and South Korea all fell, as did equity futures in Hong Kong. Contracts for US shares were lower after the S&P 500 slipped for a fifth day Thursday, with its most influential group — technology — leading declines.

Treasuries were little changed in Asia after declining across the US curve Thursday with two-year yields once again near the 5% mark. Australian bonds slipped in early trading, following the move in Treasuries. An initial quarter-point Federal Reserve interest-rate cut remained priced in for November.

The yen was little changed by Japanese inflation data that came in below economists’ estimates. The 2.7% monthly reading for March was just below the 2.8% consensus forecast. An increasing number of economists expect the BOJ to raise rates again in October after it stands pat next week, with most of them flagging an earlier move in July as a risk scenario, according to a Bloomberg survey.

The dollar traded in a narrow range against its major peers in early Friday trade after advancing Thursday.

Global markets have been ravaged as traders slashed bets on Fed easing this year following a series of hawkish comments from officials and data that indicates a robust US economy. An index of global bonds is down 2.3% so far in April, a decline that — should it hold — would mark the worst month since September. The MSCI All Country World Index has dropped 2.1%, on track for its biggest weekly decline since October.

US-listed shares of Taiwan Semiconductor Manufacturing Co. dropped 4.9% after the company revised down the revenue growth outlook for the semiconductor industry, citing a softer recovery across smartphone and personal computer sectors. Infosys Ltd. slumped in the US after forecasting tepid sales growth for the year.

New York Fed President John Williams said while it’s “not” his baseline expectation to hike interest rates, it’s possible — if warranted. His Atlanta counterpart Raphael Bostic said he doesn’t think it will be appropriate to ease until toward the end of 2024. The Fed may “potentially” hold rates steady all year, Minneapolis Fed chief Neel Kashkari told Fox News Channel.

In economic data, US jobless claims remained subdued, consistent with a healthy job market. Separately, the Philadelphia Fed factory index topped estimates. While existing-home sales fell, the pace was roughly in line with the median forecast of economists.

The market’s biggest worry right now is inflation, which is re-accelerating and throwing cold water on the idea of any rate cuts in 2024, according to Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management.

“We are firmly in the camp of no rate cuts in 2024,” he said. “We believe investors should prepare for a higher-for-longer regime when it comes to both inflation and interest rates and that investment portfolios should be positioned for these dynamics for the foreseeable future.”

Most emerging market currencies fell on Thursday, with the Mexican peso among the laggards as rising volatility derails carry trade positions that has propelled the currency higher for the past few months. Indonesia’s rupiah will be closely watched when trading resumes after the government asked state-owned firms to refrain from big dollar purchases in expectation the currency will weaken further.

Also Read: Trade Setup for April 19: Infosys may lend more pressure on the Nifty as Lok Sabha polls begin

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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 holds sharp drop after US stockpiles expand to 10-month high

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

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Oil held the largest decline in two months amid a slew of conflicting signals that ranged from rising stockpiles to tensions in the Middle East and the reimposition of US sanctions on Venezuelan crude.

Global benchmark Brent traded below $88 a barrel after slumping by 3% on Wednesday, while West Texas Intermediate was near $83. US crude inventories rose by 2.7 million barrels last week, hitting the highest level since last June, while gauges of fuel demand declined.

The weak US data overshadowed the impact of geopolitical tensions in the Middle East as traders await Israel’s response to Iran’s unprecedented recent attack. At present, there’s a premium of $5 to $10 a barrel baked in, but without fresh escalation, prices may fall, according to Goldman Sachs Group Inc.

US sanctions are in focus. President Joe Biden’s administration has reimposed restrictions on Venezuelan oil, ending a six-month reprieve in a move that may hamper flows from the South American nation. At the same time, a US government official said new sanctions on Iran’s oil could be included in a House foreign aid package that could be brought to vote this week.

Oil remains higher year to date as supply cuts from OPEC+ and geopolitical risks in the Middle East and Russia have combined to aid prices. The run-up had ignited speculation that crude may regain $100 a barrel, although the ascent has now faltered, with some market metrics including timespreads pointing to slightly less tight conditions.

“The market appears to have discounted the possibility of an Israeli retaliation to Saturday’s Iranian attack,” said Vandana Hari, founder of Vanda Insights. The midweek drop suggests “that the latest bout of risk premium from heightened Israel-Iran tensions has eroded,” she said.

Also Read: Asian stocks rangebound at open, tech in focus

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 at open, tech in focus

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

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Asian stocks were mixed at the open after US shares extended their losing streak to the longest since January.

Japanese stocks fell from the start of trade while Australian and South Korean equities rose. Equity futures in Hong Kong indicate early losses while similar contracts in China gained. US futures were little changed after the S&P 500 fell for a fourth day Wednesday, extending declines from last week’s record high to more than 4%.

Asian chipmakers such as Taiwan Semiconductor Manufacturing Co., which reports earnings later Thursday, and Tokyo Electron Ltd. will be closely watched in early trading. Europe’s most valuable tech firm ASML Holding NV said Wednesday orders tumbled in the first quarter, and its China sales are likely to be hampered by US export control measures. Nvidia Corp. led losses in US megacaps.

ASML’s earnings are “a little bit of a warning shot across the bow ahead of some of the megatech stocks which are reporting next week,” said Tony Sycamore, a market analyst at IG Australia in Sydney. “There could be a little bit of nerves creeping into semiconductor stocks. Anything with that semiconductor exposure, it’s going to be a pretty tough day.”

Meantime, Micron Technology Inc., the largest US maker of computer-memory chips, is poised to get more than $6 billion in grants from the Commerce Department to help pay for domestic factory projects, according to people familiar with the matter. It’s part of an effort to bring semiconductor production back to American soil.

Investors have been increasingly skeptical about how much further US stocks can go after their 10% rally in the first quarter — the strongest start to a year since 2019. The latest pullback takes place even as US data point to continued strength in the economy.

Just a day after Jerome Powell threw cold water on rate-cut bets, dip buyers emerged in the Treasury market, with two-year yields dropping further below 5% and a $13 billion sale of 20-year bonds drawing solid demand. The benchmark 10-year Treasury yield was steady in Asian trading.

“The US central bank remains on track to cut rates twice this year, most likely starting at its September meeting,” said Solita Marcelli, chief investment officer for the Americas at UBS Group AG’s wealth management unit. “This means the return outlook for quality bonds remains positive and attractive, and that recent losses in fixed income are likely to be temporary.”

The dollar was little changed in Asia after falling for the first time in six days Wednesday as officials in Japan and Korea continued to express concern over the declines in their currencies. The yen has fallen almost 9% and the won has dropped roughly 7% this year against the dollar.

The equity risk premium for US equities — a measure of the differential between stocks and bonds’ expected returns — is now deep in negative territory, something that hasn’t happened since the early 2000s.

While this isn’t necessarily a negative indicator for the stock market, it all depends on the economic cycle. The lower premium can be seen as a promise of a future boost in corporate profits, but also that a bubble is in the making.

Fundamentals and technical trends for equity markets still appear supportive, suggesting the recent pullback should prove temporary, according to HSBC strategists led by Max Kettner.

“Sentiment and positioning are not flashing a warning signal, though real money investors have started to extend their constructive stance on equities lately, they wrote.

Elsewhere, oil held most of Wednesday’s 3% decline, weighed by weaker Chinese industrial data and as US crude inventories swelled, while gold edged higher.

Also Read: Trade Setup for April 18: Midcaps, Smallcaps offer some hope as Nifty grinds lower

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 gains as prospect of Israeli response to Iran fans tensions

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

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Oil gained as Israel vowed to respond to an unprecedented attack by Iran, keeping tensions elevated in the Middle East.

Global benchmark Brent climbed toward $91 a barrel after a modest drop on Monday, while West Texas Intermediate was near $86. Top Israeli military officials said their country had no choice but to respond to Tehran’s weekend strike, even as European and US officials called for restraint.

Traders’ focus is now shifting to the nature and timing of the next Israeli move. Western and Arab nations are trying to convince Prime Minister Benjamin Netanyahu that an aggressive reaction to Iran’s assault would harm Israel’s interests. The Middle East accounts for about a third of global crude supply.

Oil has rallied this year, with OPEC+ supply cuts and elevated geopolitical risks in Russia and the Middle East helping to send prices higher. Demand has also been running at a good clip in leading economies, and there have been signs of strength in some product markets, including US gasoline.

Timespreads remain elevated, pointing to tight market conditions, while bullish call options — which profit from gains — are at a premium to opposing puts. Brent’s December-December spread — the gap between the contract for the final month of this year and next — has ballooned more than $6 a barrel in backwardation. That’s up from less than $3 in early January.

Also Read: Asian stocks fall following Wall Street tech slump

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 fall following Wall Street tech slump

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

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Asian stocks declined, tracking Wall Street shares lower, after the latest evidence of stubborn US inflation spurred bets the Federal Reserve will be in no rush to cut rates.

Equity benchmarks in Japan, South Korea and Australia were all in the red, while stock futures for Hong Kong slipped. Contracts for US shares declined in Asian trading after the S&P 500 erased earlier gains and fell more than 1% in a volatile session.

Treasuries steadied after bond yields jumped to new year-to-date highs on stronger-than-expected retail sales data. Oil edged higher as traders weighed Middle East tensions.

“Stocks began to violate uptrends and pull back,” said Craig Johnson at Piper Sandler. “Interest rates are expected to stay higher for longer. A more cautious and tactical approach is favored as earnings season gets underway.”

Investors will now turn their focus to China’s torrent of economic indicators Tuesday, including gross domestic product, retail sales and industrial production.

Elsewhere, the Japanese yen remained under pressure, having weakened overnight versus the dollar. Traders are on alert for any further declines and the increasing risk that authorities in Tokyo may intervene in the market to stem the drop.

“There are signs of some stress emerging in FX markets due to the strong dollar, the most conspicuous being the fall in the yen to another 34-year low,” said Kyle Rodda, senior market analyst at Capital.Com Inc. “It’s likely Japan’s Ministry of Finance will jawbone further if for no other reason, to lean against potential disorderliness in the yen,” he said.

Fear gauge

Volatility perked up, with the premium for one-month put options to protect against a pullback in US equities hitting the highest since October. Wall Street’s “fear gauge” — the VIX — hit levels unseen this year. The S&P 500 broke below 5,100, dropping to the lowest in almost two months. The tech-heavy Nasdaq 100 slid over 1.5%. Both gauges breached their 50-day moving averages — seen as a bearish signal by several chartists. Banks outperformed on a surprise profit from Goldman Sachs Group Inc.

Treasury 10-year yields spiked on Monday, while those on two-year notes came close to 5%. Bonds were also under pressure as JPMorgan Chase & Co. and Wells Fargo & Co. tapped the US high-grade bond market, the first in a likely parade of bond sales from banks after results.

US retail sales rose by more than forecast in March and the prior month was revised higher, showcasing resilient consumer demand that keeps fueling a surprisingly strong economy. As long as a robust labor market supports household demand, there’s a risk that inflation will become entrenched.

“If the S&P 500 is going to avoid its first three-week losing streak since last September, investors will need to move past concerns that rate cuts will be delayed because of sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. “In the near-term, that could come down to the tone set by the first full week of earnings season, but geopolitical tensions in the Middle East remain a wild card.”

In commodities, West Texas Intermediate reclaimed its $85 mark on Monday — after briefly falling below it — and edged higher Tuesday in Asia. Top Israeli military officials reiterated the country has no choice but to answer Iran’s weekend attack. Gold was steady in early trading.

Also Read: Trade Setup for April 16: What next for the Nifty after shedding 500 points in two sessions?

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 resumes gain as Israel prepares for potential Iran attack

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

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Oil resumed gains as Israel braced for a potential strike by Iran or its proxies, and traders looked ahead to an International Energy Agency report on the supply and demand outlook.

Brent futures rose above $90 a barrel after closing 0.8% lower in the previous session. West Texas Intermediate climbed toward $86. The US believes an attack on Israel is imminent in response to a strike on Iran’s diplomatic compound in Syria last week. The Wall Street Journal reported Israel is preparing for an assault in the next two days, citing a person familiar with the matter.

Escalating geopolitical tensions including Russian attacks on Ukrainian energy infrastructure have spurred bullish activity in the oil options market. There’s been elevated buying of call options — which profit when prices rise — in recent days, as implied volatility gains. Call options on Brent are still trading at a premium over the opposite put options.

Crude is on track for a weekly loss but Brent is still around 17% higher this year, in part due to OPEC+ supply cuts. OPEC maintained its robust outlook for global oil demand growth for 2024 in a monthly report on Thursday, as top traders and Wall Street banks strike a more bullish tone on prices.

The IEA will provide a snapshot of the market later Friday.

Also Read: Asian stocks edge higher as tech lifts US equities

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 edge higher as tech lifts US equities

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

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Equities in Asia advanced on Friday after a rally in the world’s largest technology companies drove a rebound in US stocks.

Japanese stocks rose while Australian shares were little changed and Hong Kong equity futures fell. US contracts were steady after the S&P 500 climbed Thursday while the tech-heavy Nasdaq 100 closed over 1.5% higher. A solid economy is expected to fuel a rise in profit growth for US companies — and strong margins from big tech will be a key driver.

Treasuries gained slightly in Asia after selling on Thursday pushed 10-year yields four basis points higher. US producer prices increased in March from a year earlier by the most in 11 months. Australian and New Zealand bonds faced selling pressure early Friday.

“It’s not going to be Federal Reserve rate cuts that drive the market going forward, rather it’s going to be earnings,” said George Ball, chairman of Sanders Morris. “Corporate earnings are much stronger than people have anticipated even in this elevated interest-rate environment.”

In Asia, the yen was steady after further weakness Thursday. Traders will be monitoring the currency once more as Japanese authorities warned that it will consider all options to combat weakness in the yen after it slumped to its weakest level against the dollar since 1990.

“Whether this involves currency intervention or not, we authorities are prepared for all situations all the time,” Masato Kanda, Japan’s top currency official, told reporters Thursday morning. Finance Minister Shunichi Suzuki later echoed that warning, telling reporters officials are watching currencies “with a high sense of urgency.”

Investors will also be closely watching the offshore yuan after it advanced against the greenback for a fourth time in five trading sessions. The strengthening follows support from the People’s Bank of China on Thursday.

Fewer rate cuts

While the latest PPI reading was constructive, investors should be prepared for fewer rate cuts this year — one or two — and for a first potential move not until the July meeting, according to Larry Tentarelli at Blue Chip Daily Trend Report.

“Although we understand the relief with which this report will be received, there is nothing very encouraging contained within it — and the best that can be said is that there was ‘no new bad news’ either,” said Michael Shaoul at Marketfield Asset Management.

Fed Bank of New York President John Williams said the central bank has made “tremendous progress” toward better balance on its inflation and employment goals, but added there’s no need to cut in the “very near term.” His Richmond counterpart Thomas Barkin said the US central bank still has work to do to contain price pressures and can take its time before cutting interest rates.

Earnings season in the US kicks into full swing Friday with a handful of US banks reporting. Wall Street projects S&P 500 members will show 3.8% annual growth in earnings per share for the first-quarter reporting period, data compiled by Bloomberg Intelligence show. Profits for the “Magnificent Seven” cohort — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia Corp., Meta Platforms Inc. and Tesla Inc. — are on course to rise 38% in the first quarter, according to BI.

Elsewhere in Asia, data set for release in the region includes industrial production in Japan, inflation in India and trade figures for China. The central bank of South Korea is due to deliver its monetary policy decision. Markets are closed in Indonesia, Thailand and Dubai.

In commodities, gold steadied in early Asian trading after climbing to a fresh record Thursday on the US inflation report. Meanwhile, oil edged higher Friday after a decline in the previous session as a swelling of US stockpiles overshadowed the possibility of an attack on Israel by Iran or its proxies.

Also Read: Trade Setup for April 12: Will the US inflation data spoil the Nifty party towards 23,000?

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

Stock Market Highlights | Nifty 50, Sensex fall 1% each ahead of TCS Q4 announcement

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

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Stock Market Highlights | Indian benchmark indices Nifty 50 and Sensex closed under pressure today, driven by ongoing developments surrounding the India-Mauritius Treaty Amendment. Frontline indices witnessed a significant downturn, with both benchmarks experiencing a 1% fall, trailing behind broader market movements. Within the Nifty index, 43 out of 50 stocks slipped, with notable losers including Sun Pharma, Maruti, Titan, and Power Grid. TCS closed half a percent higher ahead of its earnings announcement.

Catch highlights here

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 holds advance as traders brace for Iran strike on Israel

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

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Oil held the first gain in three sessions as traders watched for a potential attack on Israel by Iran or its proxies, which could spark a significant escalation of hostilities in the Middle East.

Brent futures traded above $90 after closing 1.1% higher on Wednesday, while West Texas Intermediate was near $86. The US and its allies believe a strike is imminent, according to people familiar, which would follow a threat by Iran to hit Israel for an attack on a diplomatic compound in Syria last week.

Oil is up around 17% this year as geopolitical tensions combine with OPEC+ supply cuts to drive prices higher. Still, there are headwinds in the form of swelling US crude stockpiles — now at the highest since July — and a hot US inflation print, which may delay rate cuts from the Federal Reserve.

Many of the world’s top traders and Wall Street banks are shifting toward a bullish tone on prices, with some seeing a possible return to $100 for the global benchmark. However, Macquarie Group said Brent will enter a bear market in the second half, with recent gains unlikely to hold if geopolitical events don’t lead to actual supply disruptions.

“The current geopolitical environment continues to provide support to oil prices,” said Warren Patterson, the head of commodities strategy for ING Groep NV in Singapore. However, “further upside is limited without a fresh catalyst or further escalation in the Middle East.”

On Wednesday, Iran’s Supreme Leader Ayatollah Ali Khamenei repeated a vow to retaliate against Israel for the Damascus strike. Even so, the head of the naval forces said recently that the country won’t block the Strait of Hormuz, a major trade route for Middle Eastern oil.

Also Read: Asian shares fall on global rate scare, yen plumbs 34-year low

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