Markets

Asian Stock Outlook Burnished With Oil Above $40 on Weak Dollar

Published

9 years ago

March 18, 2016

Asian stock were on track for their longest run of weekly gains in 1 1/2 years as a resurgence in crude oil prices melds with a dovish Federal Reserve to bolster appetite for riskier assets. The dollar lingered near an eight-month low.

Mining and energy shares drove Australia’s benchmark to its highest level since the start of January, and index futures in South Korea and Hong Kong signaled gains after the Dow Jones Industrial Average erased its 2016 losses. Osaka-traded Nikkei 225 Stock Average futures were down, however, as the greenback maintained declines versus the yen to Australia’s dollar. The Bloomberg Dollar Spot Index was near its lowest closing level since June and forward contracts on Asian emerging-market currencies foreshadowed further gains. U.S. crude held above $40 a barrel, close to its highest.

The revival in equities moved on to a more solid footing this week as the Fed reduced the number of interest-rate hikes it expects to enact in 2016 amid concern over a global slowdown and its impact on the U.S. economy. Oil’s more than 50 percent recovery from an almost 13-year low reached just five weeks ago has underpinned a revival in risk assets, burnishing sentiment among traders bruised from the volatile start to the year. Despite stimulus moves in Japan and the euro area having a mixed impact on markets, policy makers pressed ahead this week, with the Fed’s dovish comments followed by rate cuts in Norway and Indonesia. The Bank of England held its rate at a record low.

“Markets are still settling down after the more-dovish-than-expected Fed,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients. “It appears FOMC members have become more concerned with the outlook for the global economy. Markets, of course, started the year with their own case of the jitters, but have shown a little more stability of late. Are central bankers therefore just a little late to the party? Or do they know something that we don’t?”

China reports on property prices Friday, and a gauge of consumer confidence in New Zealand is due. Japan updates on store sales and Thailand issues data on foreign reserves, while the Philippines reports on the balance of payments.

Stocks

Australia’s S&P/ASX 200 Index climbed a third consecutive day, adding 0.9 percent as of 8:48 a.m. Tokyo time following the bounce in commodities. Prices for iron ore, the country’s biggest export earner, rose 4.7 percent Thursday, with Bloomberg’s Commodity Index jumping 2.1 percent to its highest level since Dec. 4. New Zealand’s S&P/NZX 50 Index increased 0.3 percent, headed for a weekly advance of 1.1 percent, also its fifth straight gain.

Dow Average futures were up 0.2 percent with those on the Standard & Poor’s 500 Index after last session’s gains of at least 0.7 percent in those indexes. Contracts on the Kospi index in Seoul added 0.3 percent in most recent trading, while those on Hong Kong’s Hang Seng and Hang Seng China Enterprises indexes rose at least 0.2 percent.

In Japan, the outlook was less clear, with yen-denominated futures on the Nikkei 225 Stock Average climbing 0.4 percent to 16,770 after slipping 0.8 percent the previous session. In the Osaka pre-market, Nikkei 225 futures were bid for 16,780, down from 16,820 at their close on Thursday, while Singapore-traded contracts lost 0.5 percent to 16,730.

The yen, which typically moves at odds with Japanese stocks, was little changed at 111.32 per dollar after climbing 1 percent on Thursday. The currency is set for a weekly advance of 2.2 percent, the most in a month.

“There’s concern for exporters’ earnings,” Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo, said by phone. “If the yen’s trading around 114 to the dollar than companies will expect profits next fiscal year, but when its 110, most exporters will post losses.”

West Texas Intermediate oil rose 0.2 percent to $40.33 a barrel, on track for a weekly climb of 4.8 percent following Thursday’s 4.5 percent surge.

Up Next

Oil Declines From Three-Month High as Dollar Surges

Don't Miss

Asian Stocks Rise Ahead of Central Bank Meetings

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Comments

Energy

Nigeria Partners with ECOWAS and Morocco to Launch $26B African Gas Pipeline

Published

2 hours ago

November 5, 2024

Bassey Marshall

The Nigerian government, in partnership with the Economic Community of West African States (ECOWAS), Morocco, and Mauritania, has announced plans to advance the $26 billion African Atlantic Gas Pipeline project to drive economic growth across Africa.

This development was revealed on Monday, November 5, by Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), at the ECOWAS Inter-Ministerial Meeting on the Nigeria-Morocco Gas Pipeline Project.

Speaking at the meeting, which was attended by ECOWAS Ministers of Hydrocarbons and Energy as well as representatives from Morocco and Mauritania, Kyari stated that, once completed, the project will connect 13 African countries.

Represented by Olalekan Ogunleye, NNPC’s Executive Vice President for Gas Power & New Energy, Kyari said this will be Africa’s largest pipeline project.

Ogunleye confirmed that progress has been made with the front-end engineering design completed, the phase two study finalized, and work ongoing for environmental and social impact assessments as well as land acquisition and resettlement.

He emphasized NNPC’s readiness to execute the project: “Today, we come together to make significant progress in the African Atlantic gas pipeline project, which is a transformative initiative connecting at least 13 African nations in shared prosperity and development. These achievements underscore our capability to deliver this landmark project, supported by strong regional collaboration.”

Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), described the project as a game-changer for the regional economy, stating, “We stand at a critical juncture where these agreements can reshape our energy landscape, strengthen our economies, and uplift our people.”

He also highlighted that the project will increase Africa’s presence in the global gas market, noting that “the agreements demonstrate a strong commitment to advancing hydrocarbon and energy trade across ECOWAS, enhancing access to natural gas in West Africa, and expanding Africa’s global footprint in the gas market.”

Crude Oil

Nigerian Army Seizes 700,000 Liters of Stolen Petroleum in Sweeping Raid Across Four States

Published

7 hours ago

November 5, 2024

Bassey Marshall

In a series of raids across Rivers, Bayelsa, Akwa Ibom, and Delta states, troops from the 6th Division of the Nigerian Army seized 700,000 liters of stolen petroleum products, sealed 29 illegal refining sites, and arrested 24 suspected oil thieves.

In a statement issued by the Division’s Public Relations Officer, Lt. Col. Danjuma Jonah, it was noted that 14 boats involved in crude oil theft were also destroyed during the operation.

Jonah disclosed that the raids were conducted between October 28 and November 3, 2024.

He revealed that the troops intercepted a large wooden boat carrying over 150,000 liters of stolen crude oil in the Kula area of Akuku-Toru Local Government Area of Rivers State.

Providing a breakdown of the operation, Jonah stated, “Another boat carrying 50,000 liters of crude oil was seized, while three illegal refining sites were dismantled, and cooking pots containing 20,000 liters of stolen diesel were confiscated. Troops also dismantled ten illegal refining sites in Kay and Abesa in Akuku-Toru LGA, seizing 400,000 liters of illegally refined diesel.”

In Bayelsa State, soldiers deactivated two illegal refining sites at Boma Creek in Southern Ijaw LGA, recovering storage tanks holding over 2,500 liters of stolen crude. Similarly, operations in Obughene Creek in Southern Ijaw yielded over 4,500 liters of stolen crude, while another 3,000 liters of illicit product were seized at West Boma Creek.

In Akwa Ibom State, troops intercepted two Toyota Camrys loaded with illegally refined diesel, concealed in nylon bags, totaling 3,000 liters. The vehicles were stopped along the Ikot Abasi-Abak road, and the drivers were detained.

In Delta State, multiple raids were conducted, including the interception of a tricycle in Kwale, Ndokwa West LGA, carrying stolen iron pipes allegedly taken from decommissioned Oando pipelines.

Another raid in Patani town uncovered a storage dump containing 40 jerricans of stolen products, while troops patrolling Uro Community waterways intercepted a wooden boat with 200 sacks of premium motor spirit,” he concluded.

The statement added that suspects arrested during the raids have been handed over to relevant authorities for prosecution.

Crude Oil

OPEC+ Supply, Trump-Harris Election Face Off Lend Support to Oil Prices

Published

7 hours ago

November 5, 2024

Iyanuoluwa Martins

The decision of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to delay plans to increase output for another month and the close call of the presidential elections in the United States triggered a 2 percent rise in oil prices.

Brent futures were up $1.98, or 2.7 percent at $75.08 a barrel while the US West Texas Intermediate (WTI) crude rose $1.98, or 2.85 percent to $71.47.

OPEC+ said it would extend its output cut of 2.2 million barrels per day for another month in December at a meeting on Sunday.

Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates (UAE) agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024.

The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.

Also speaking on Monday, OPEC’s Secretary General, Mr Haitham Al Ghais said on Monday that OPEC remains very positive on demand for oil in both the short and long term.

The market has also shifted focus to the American presidential election between Democratic presidential nominee and current Vice President, Kamala Harris and Republican Donald Trump on Tuesday (November 5).

So far, the outcome has shown that the election is tight as it could take days after voting ends to know the eventual winner.

The market will also be looking at the developments in the Middle East, especially with anticipation that Iran was preparing to attack Israel from Iraq within days.

Markets were also watching a new tropical storm that was forecast to form on Monday in the Caribbean and threaten offshore oil production along the Gulf of Mexico.

Oil companies like Shell have moved its non-essential personnel from six platforms, adding it currently expects no other impacts on its production across the Gulf of Mexico.

There will be anticipation of what the US Federal Reserve will do at the next meeting on Thursday with expectations high that the US central bank will cut interest rates by 25 basis points.

Also, investors will be looking to China where the government is expected to approve additional stimulus to boost the slowing economy in the world’s largest oil importer.