European equities gained while Asian stocks advanced, rebounding from their worst day since the aftermath of the Brexit vote, as crude oil held onto a recovery. The pound retreated with the Bank of England expected to cut interest rates.
The Stoxx Europe 600 Index gained after U.S. shares advanced Wednesday. Mining shares and energy producers drove the Asian index up from its lowest level since June 24, the day when referendum results showed Britain had decided to leave the European Union. U.S. crude extended gains into a second session after the steepest drop in American gasoline supplies since April soothed concern over a glut. The greenback rose before Friday’s jobs data and metals declined amid concern about increased supply from China.
The global equity rebound that took hold in July started to falter as August opened, with oil descending into a bear market and data failing to bolster confidence in the world economy. While central banks and governments have signaled unprecedented support, Japan’s latest efforts — which include monetary and fiscal stimulus — haven’t had their intended effect amid concern the plans won’t be enough to revive price growth. The Bank of England is expected to cut benchmark interest rates on Thursday, while non-farm payrolls data in the U.S. Friday could provide clues for Federal Reserve policy.
“The theme remains dominant in markets that monetary policy has effectively done as much as it can and that reflation, if required, should come via other means,” Sharon Zollner, a senior economist in Auckland at ANZ Bank of New Zealand Ltd., said in a note to clients. “The reality is that interest rates remain at record-low levels and, in an environment of moderate growth and low inflation, that is supportive of higher-yielding assets and Asia-Pacific markets should continue to benefit, as long as the growth picture holds together.”
The European index rose 0.5 percent as of 8:07 a.m. in London. The MSCI Asia Pacific Index gained 0.6 percent, following last session’s 1.9 percent slide. The index, which jumped 5.8 percent in July, is down about 1 percent this week.
The Topix index climbed 0.9 percent as the yen reversed some of its recent advance. The stocks gauge had also dropped by the most in more than five weeks on Wednesday.
India’s benchmark S&P BSE Sensex advanced 0.2 percent, led by automakers and logistics companies that benefit from the passage of a national sales tax bill on Wednesday. Tata Motors Ltd., owner of Jaguar Land Rover, jumped 4 percent to be the strongest performer.
Futures on the S&P 500 were little changed, following a 0.3 percent increase in the underlying index on Wednesday. The U.S. benchmark had fallen 0.8 percent over the previous two sessions.
“There’s slow movement in a market that’s looking for a reason to go up or go down — it just hasn’t found any,” said Jeff Carbone, managing partner of Cornerstone Financial Partners, which oversees almost $1.1 billion in assets in Charlotte, North Carolina. “We haven’t seen that breakout that would suggest the market is based on fundamentals, it’s still very tied to central banks.”
The yen weakened 0.3 percent to 101.54 per dollar, adding to its 0.4 percent slide on Wednesday.
Japan’s currency has gained about 0.5 percent this week, as traders weigh the BOJ’s decision last Friday to only bolster purchases of exchange-traded funds, as well as a fiscal package flagged Tuesday by Prime Minister Shinzo Abe.
The Aussie added 0.1 percent and Malaysia’s ringgit bounced with oil, climbing 0.3 percent from a four-day low. The rupee rose 0.1 percent.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was up 0.1 percent after rising 0.3 percent on Wednesday, when emerging-market currencies led declines.
Chicago Fed President Charles Evans told reporters Wednesday that a rate hike “could be appropriate this year.” Odds on the Fed boosting benchmark borrowing costs in 2016 have dropped to 39 percent, with last week’s weaker-than-expected U.S. growth data damping expectations of tightening.
Sterling declined 0.2 percent to $1.3295. The BOE is expected to cut its benchmark from a record low of 0.5 percent and may boost an asset purchase program that stands at 375 billion pounds ($500 billion).
Australian sovereign bonds retreated, with 10-year yields rising two basis points, or 0.02 percentage point, to 1.95 percent, building on Wednesday’s 11 basis-point jump. Similar maturity Japanese debt yielded minus 0.08 percent, up 1 1/2 basis points.
Treasuries were little changed, with yields on notes due in a decade steady at 1.55 percent. Ten-year rates jumped at the start of this week, as the record-setting rally in global bonds appeared to falter. Yields on German 10-year bunds were also steady, at minus 0.04 percent.
West Texas Intermediate crude was little changed at $40.84 per barrel, after Wednesday’s 3.3 percent rebound that came when U.S. government data showed gasoline stockpiles fell by 3.26 million barrels last week, the most since April. Brent crude fell 0.2 percent to $43 a barrel.
WTI is still down more than 1 percent this week, after the commodity sold off on Monday and Tuesday amid resurgent concern over a global glut. Citigroup Inc. to Bank of America Merrill Lynch predicted the slump would be short-lived, while Societe Generale SA said the price correction would be limited due to a better balance between supply and demand.
“We’re seeing rebalancing,” Scott Darling, regional head of oil and gas at JPMorgan Chase & Co., said in a Bloomberg TV interview. “We think in the near-term, oil will be under pressure because demand is moderating.”
Gold for immediate delivery dropped 0.5 percent to $1,351.59 an ounce, after declining 0.4 percent on Wednesday. Last session’s retreat halted the precious metal’s longest rally in a month.
Copper dropped 2 percent to $10,525 a metric ton on the London Metal Exchange. Nickel also fell 2 percent, while Aluminum was down 0.4 percent.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
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