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Japan Stocks Fluctuate as Investors Weigh Yen, U.S. Data, Rates

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Japanese stocks swung between gains and losses as investors weighed a strengthening yen with prospects for lower U.S. interest rates. Economic data released Friday did little to change the view that the Federal Reserve will take a gradual approach to raising rates.

The Topix index rose 0.6 percent to 1,309.57 at the lunch break in Tokyo, erasing a loss of 0.7 percent. The index dropped 4.7 percent last week, its worst weekly performance in two months. The Nikkei 225 Stock Average added 0.2 percent to 16,197.79. The yen traded at 111.50 per dollar after strengthening 0.8 percent on Friday. Even with signs of life in American manufacturing and jobs data that topped estimates adding to optimism in the U.S. economy, traders still don’t expect higher interest rates until the fourth quarter.

“American ISM figures were encouraging. The dollar-yen is falling for now because the Fed’s stance is taken as being a bit dovish, but that won’t continue into infinity,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “At some point the dollar will stop falling because investors will realize the U.S. economy is, after all, quite strong. And at that time we’ll could see a sudden rebound in the value of Japanese firms that do business globally.”

Odds of a Fed hike this month remained at zero even as data for last month showed that U.S. manufacturing expanded for the first time in seven months and more workers than expected were added to nonfarm payrolls, while the jobless rate crept higher as more people sought work. Expectations for a hike in June are at 24 percent, slightly higher from 20 percent prior to the economic data.

Futures on the Standard & Poor’s 500 Index were little changed after the underlying gauge added 0.6 percent on Friday to close at the highest level this year. Optimism in the U.S. economy and expectations for only gradual Fed tightening overshadowed a selloff in oil.

Car Sales

Exporters led losses on Monday in Tokyo as the stronger yen and weaker-than-expected U.S. sales figures weighed on the sentiment of automakers. Toyota Motor Corp. and Nissan Motor Co. each fell at least 2.6 percent, while Mazda Motor Corp. tumbled 5.8 percent.

Sun Corp., which surged 97 percent last month, was little changed at the lunch break after tumbling as much as 5.8 percent. Shares of the Japanese firm have risen on speculation the company’s Israeli unit is helping the FBI crack iPhones.

Kaneka Corp. surged 11 percent, the most in five years, after the Nikkei reported the chemical manufacturer has developed lithium-ion batteries that are 100 times faster than conventional technology and that can be used to charge mobile phone in 10 minutes.

Sharp Corp. jumped 5.6 percent after the Apple Inc. supplier on Saturday formally signed a rescue deal to sell a majority stake to Foxconn Technology Group. The company also said late Friday that it reached an agreement with its banks on loan terms.

Bloomberg

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Energy

U.S. and Ghana Inaugurate New $64.7 Million Energy Infrastructure Investment at Pokuase

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electricity

U.S. Ambassador to Ghana Stephanie Sullivan joined the President of Ghana H.E. Nana Akufo-Addo and other Ghana government officials to formally inaugurate the Pokuase Bulk Supply Point (BSP) in Accra today.  The U.S. Millennium Challenge Corporation (MCC) funded the $64.7 million (GH₵ 391.9 million) electrical infrastructure project under the Ghana Power Compact.

“The Pokuase Bulk Supply Point represents sustainable infrastructure investment by the United States with Ghana that will benefit hundreds of thousands of Ghanaians now and into the future,” remarked Ambassador Sullivan at the inaugural event. “It will help deliver more reliable power to the people, places, and businesses of Accra that drive increased economic activity benefitting families, businesses, and communities.”

This represents a flagship investment under the Millennium Challenge Corporation’s Ghana Power Compact.  The Pokuase BSP will reduce outages in the power system, help stabilize voltages, and improve the quality and reliability of power supplied to the northern parts of the capital city of Accra.  It will also reduce technical losses in the power transmission and distribution system, contributing to the financial viability of the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo) in the long term.  The Pokuase BSP is now the largest-capacity BSP in Ghana at 580 megavolt amperes (MVA) and will directly benefit 350,000 utility customers.

The Government of Ghana implemented the project through the Millennium Development Authority (MiDA).  MiDA formally handed over the new power substation to ECG and GRIDCo in today’s ceremony.

The Pokuase BSP is the first major construction project to be completed under the Ghana Power Compact. The $316 million compact is helping the Government of Ghana improve the power sector through investments that will provide more reliable and affordable electricity to Ghana’s businesses and households. The compact is also funding a BSP at Kasoa and two primary substations at Kanda and Legon, in addition to other power sector investments, energy efficiency programs, and women’s empowerment programs within the power sector. The compact program will officially close on June 6, 2022.

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Crude Oil

Oil Falls Slightly as China Steps in to Curb Rising Coal Prices

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Crude oil - Investors King

Global oil prices moderated slightly on Wednesday following the Chinese government’s decision to curb high coal prices and ensure coal mines function at maximum capacity.

Brent crude, against which Nigerian oil is priced, dropped to $83.98 per barrel at 11:00 am Nigerian time. While the U.S. West Texas Intermediate (WTI) crude fell by 80 cents or 1 percent to $81.20 a barrel.

“China is planning to take steps to combat the steep rises in the domestic coal market … which could put considerable pressure on the coal price there and reverse the fuel switch to oil,” Commerzbank said.

Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day.

China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures. read more

Oil markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.

But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group which showed U.S. crude stocks rose by 3.3 million barrels for the week ended Oct. 15, according to market sources.

That was well above nine analysts’ forecasts for a rise of 1.9 million barrels in crude stocks, in a Reuters poll.

However, U.S. gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand.

Data from the U.S. Energy Information Administration is due later on Wednesday.

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Crude Oil

Oil Prices Hit Multi-year Highs on Monday

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Crude oil - Investors King

Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.

U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.

Both contracts rose by at least 3% last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.

“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.

Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.

China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.

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