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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.

Markets

Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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