Asian stocks slipped as the dollar advanced on Thursday after hawkish comments from Federal Reserve Chair Janet Yellen reinforced the case for an interest rate hike later this month.
Australian shares fell 0.6 percent and South Korea’s Kospi .KS11 shed 1 percent. Shares in Hong Kong, Malaysia and Singapore also declined.
Shanghai shares .SSEC bucked the trend and were last up 0.5 percent, brushing aside a Caixin/Markit Purchasing Managers’ Index showing China’s services sector growth cooling in November. Weak indicators often stir hopes of government stimulus, providing a burst of support for Chinese shares.
Japan’s Nikkei .N225 eased from 3-month highs and stood nearly flat, bound in narrow range as a wait-and-see mood prevailed ahead of the European Central Bank’s policy decision due later in the session.
Fighting stubbornly low inflation, the ECB is expected to deliver measures that could include a deposit rate cut and changes to its asset-buying program.
“The ECB’s decision will likely set the direction for the Japanese market tomorrow and beyond, but it’s also true that the market is seen overbought recently,” said Hikaru Sato, a senior technical analyst at Daiwa Securities in Tokyo.
MSCI’s index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.5 percent after Wall Street slid overnight on Yellen’s comments.
The Fed chair said Wednesday she was “looking forward” to a U.S. interest rate hike that will be seen as a testament to the economy’s recovery.
Her comments come after expectations for a Fed rate hike at the central bank’s Dec. 15-16 policy meeting were slightly shaken by poor manufacturing data released earlier in the week.
However, faith in the U.S. economy was partially restored by Wednesday’s stronger-than-expected ADP private employment report. ECONUS
The dollar index advanced to a 12-1/2-year high of 100.51 .DXY following Yellen’s comments and the upbeat data. It last stood at 100.13.
The euro dipped 0.2 percent to $1.0594 EUR= as the markets braced for the ECB.
“There is great potential for euro volatility as the ECB announces its policy decision, followed by the press conference by President (Mario) Draghi starting 45 minutes later,” wrote Sean Callow, a senior strategist at Westpac.
“Draghi and selected colleagues have clearly signaled that there is sufficient risk of undershooting the ECB’s inflation target to warrant further loosening of monetary settings.”
While the prospects of further ECB easing dogged the euro, expectations of added stimulus have lifted European stocks. The pan-European FTSEurofirst 300 index .FTEU3touched a 3-month high this week.
In commodities, crude oil bounced modestly on bargain hunting following a tumble overnight prompted by surging U.S. stockpiles and a stronger dollar.
U.S. crude CLc1 was up 1.2 percent at $40.43 a barrel after tumbling 4 percent overnight. Crude was still capped with OPEC widely expected not to opt for a production cut at Friday’s meeting despite a global supply glut.
Spot gold XAU= stooped to $1,045.85 an ounce, its lowest since February 2010. Higher interest rates would diminish the allure of non-yielding gold and a stronger greenback makes the dollar-denominated metal more expensive for buyers.
Industrial metals also remained under pressure amid global oversupply and shrinking Chinese demand, with spot iron ore prices plumbing 10-year lows this week.
Three-month copper on the London Metal Exchange CMCU3 was down 0.5 percent at $4,540.50 a ton. Copper edged back toward a 6-year low of $4,443.50 touched late last month with pleas for Chinese government intervention providing little tonic.
China’s major copper producers asked the government this week to buy the metal, joining a growing chorus in the country’s base metal industry that is pleading for state intervention.
Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns
Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.
Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.
The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.
This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.
While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.
Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.
Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.
Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.
Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.
Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.
Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.
The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.
However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.
Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.
He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.
Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.
The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.
NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade
The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.
Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.
Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.
In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.
Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.
He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.
Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.
In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.
Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.
The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.
As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.
Naira3 days ago
Black Market Dollar to Naira Exchange Rate Today, February 26th, 2024
Forex4 weeks ago
Dollar to Naira Black Market Exchange Rate February 1st, 2024
Company News4 weeks ago
UAC Posts N12.7 Billion Profit Before Tax in 2023
Forex4 weeks ago
Dollar to Naira Black Market Exchange Rate February 2nd, 2024
Banking Sector4 weeks ago
CBN Accuses Banks of Hoarding $5 Billion in Foreign Currencies
Naira3 weeks ago
Dollar to Naira Black Market Today, February 5th, 2024
Forex4 weeks ago
Dollar to Naira Black Market Exchange Rate January 31st, 2024
Forex3 weeks ago
CBN Mandates Nigerian Banks to Pay International Transfers in Naira