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Asian Stocks Slump Amid Rising Yen

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Stocks

The global equity bear market deepened in Asia, with Japanese stocks suffering their worst week since 2008 amid anxiety over central banks’ ability to revive the world economy. European stock-index futures signaled gains as oil rose from a 12-year low.

The Topix index slumped 5.4 percent in Tokyo as traders returned from holiday, pushing the regional Asian benchmark toward its steepest weekly drop since gyrations in Chinese assets at the start of the year. The yen was set for its strongest two-week advance since 1998. U.S. index futures also flagged a rebound after losses there helped the MSCI All-Country Index cap a 20 percent slide from its May record.

“We’re in a moment where Peter Pan thinks he can’t fly any more,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. “When everyone thinks they can’t fly, we’re doomed. There’s nothing we can do but to try and overturn that sentiment.”

Japanese Finance Minister Taro Aso said regulators will respond to market volatility if necessary after a move to negative rates failed to assuage anxieties last month. A stronger yen threatens to imperil the world’s third-largest economy through disinflation and lower profits for exporters. Investors ignored a second day of testimony from Janet Yellen, whose indication that the Federal Reserve won’t rush to raise interest rates failed to stem a selloff in riskier assets.

Stocks

The MSCI’s Asia Pacific Index was down 2.8 percent as of 7:08 a.m. London time, on track for a weekly decline of 5.9 percent. The Topix has lost 12.6 percent this week, the most since October 2008. Nomura Holdings Inc. plunged 9.2 percent to the lowest level since December 2012. While Japan resumed trading after a Thursday break, markets in mainland China, Taiwan and Vietnam remain closed for Lunar New Year holidays.

Hong Kong’s Hang Seng Index lost 1 percent, the Kospi index in Seoul slipped 1.4 percent, while Australia’s S&P/ASX 200 Index sank 1.2 percent.

Futures on the Euro Stoxx 50 index were up 0.7 percent, while those on the Standard & Poor’s 500 Index rallied 0.3 percent. The S&P 500 reduced a slump of as much as 2.3 percent to close down 1.2 percent in afternoon trade.

Trading in South Korea’s Kosdaq exchange for smaller stocks was halted for 20 minutes after the benchmark gauge plunged more than 8 percent on concern valuations were excessive relative to earnings prospects. Celltrion Inc. slid 12 percent, paring its gain this year to 18 percent. The stock was among the 10 biggest gainers in Asia in 2015. Kakao Corp. tumbled 7.9 percent.

Currencies

The yen gained 0.3 percent to 112.14 per dollar. Japan’s currency has strengthened at least 2 percent against all its 31 major peers since Jan. 29 amid demand for haven assets. Government officials expressed concern at the moves, fueling speculation Japan may intervene.

“The verbal intervention has already started, with Ministry of Finance officials talking about moves being rough, which looks like the new code word for undesired strength,” said Ray Attrill, co-head of currency strategy at National Australia Bank Ltd. in Sydney. “110 might be some line in the sand when the MOF will lean on the BOJ to shore things up.”

Higher-yielding and developing nation currencies weakened. The New Zealand dollar fell 0.6 percent to 66.76 U.S. cents, while the Malaysian ringgit dropped 0.5 percent, the Thai baht slid 0.8 percent and the South Korean won lost 0.7 percent.

Bonds

Japan’s 10-year government bond yield rose 7 basis points to 7.5 basis points after falling below zero earlier this week. The similar U.S. Treasury yield rose three basis points to 1.69 percent. The Markit iTraxx Asia index of credit-default swaps rose two basis points to 183, the highest since 2012. That for Japan climbed five basis points to 107.

Commodities

Oil rebounded amid the most volatile prices since 2009 as speculation swirls over whether producers will act to bolster the market. Futures climbed as much as 5.9 percent and were recently up 4.1 percent.

Gold retreated 0.4 percent after a 4.1 percent surge on Thursday. Bullion is set to climb 5.9 percent this week, the most since 2011, as investors flee a bear market in global stocks, a weakening dollar and the fallout from negative interest rates. Nickel rose 0.9 percent after slumping 3.6 percent on Thursday to the lowest close since 2003.

Bloomberg

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Crude Oil

Oil Prices Steady Amid Mixed Signals on Crude Demand

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Crude oil

Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Crude Oil

Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73

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Crude Oil - Investors King

Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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