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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

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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