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Global Stocks Hold Near One-Year High as Crude Rallies; Yen Strengthens

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Global stocks held near a one-year high as rising oil prices bolstered investor sentiment following disappointing data in the world’s three largest economies.

U.S. equity index futures advanced, after retreating from a record in the last session as a report showed American retail sales stopped expanding in July. The Topix index fell and the yen strengthened after Japan announced slower economic growth than analysts forecast. The Shanghai Composite Index jumped by the most since May as takeover speculation outweighed Chinese figures showing a slump in new lending. The yuan fell for the first time in a week and U.S. crude climbed for a third day.

Global equities are trading near a one-year high as evidence of uneven growth in the world’s biggest economies both unnerves traders and fuels optimism that central banks will come to the rescue by way of stimulus. The probability that the Federal Reserve will increase interest rates this year eased to 42 percent in the futures market on Friday following the release of the U.S. retail sales figures, from 49 percent a day earlier.

“The U.S. economy may have lost a bit of momentum on its way up,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center. “Still, weak numbers mean concern over tightening recedes.”

Stocks

The Stoxx Europe 600 Index was up 0.1 percent as of 8:24 a.m. London time. William Hill Plc declined 1.3 percent after the U.K.’s biggest bookmaker rejected an increased offer from 888 Holdings Plc and Rank Group Plc. The bidders were down 2.2 percent and up 2.8 percent, respectively.

The MSCI Asia Pacific Index fell less than 0.1 percent, after rallying 3.1 percent last week. Markets in South Korea and India were shut Monday for holidays.

The Topix index lost 0.5 percent as Japan posted an annualized expansion for the second quarter of 0.2 percent, below the 0.7 percent projected by economists.

Officials in Asia’s second-largest economy are struggling to ignite price growth, with the central bank running negative interest rates and an unprecedented asset-purchase program, and the government also bolstering fiscal stimulus.

Hong Kong’s Hang Seng Index climbed 0.8 percent to a nine-month high after government data showed the economy expanded in the second quarter at the fastest pace since 2001. The Shanghai Composite Index advanced 2.4 percent to its highest since January after stake purchases by China Evergrande Group spurred takeover bets among property developers. The Shenzhen Composite Index climbed by the most since June after the Hong Kong Economic Journal reported that a proposed exchange link with Hong Kong will be announced as soon as this week and start in December.

“The road ahead may be bumpy but Asian equities ex-Japan are relatively undervalued, under-owned and under-appreciated,” said Vasu Menon, vice president for wealth management research at Oversea-Chinese Banking Corp. in Singapore. “It could do better than other regions over the next few years once we see greater stability in China and greater clarity with Fed policy.”

Futures on the S&P 500 Index added 0.2 percent, after the U.S. benchmark slipped 0.1 percent in the last session.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback’s strength, retreated 0.2 percent to levels last seen in June. The yen advanced 0.2 percent, reversing an earlier loss. Russia’s ruble climbed 1.1 percent, leading gains among the currencies of oil-exporting nations.

The yuan weakened 0.14 percent to 6.6425 per dollar in Shanghai, after gaining 0.4 percent over the last four trading days. China’s broadest measure of new credit increased in July by the least in two years, a report showed late Friday. Data earlier that day showed factory output, retail sales and fixed-asset investment all slowed in Asia’s biggest economy.

Thailand’s baht reversed earlier losses to trade 0.5 percent stronger after the government reported better-than-expected economic growth. Gross domestic product expanded 3.5 percent in the three months through June from a year earlier, more than the 3.3 percent increase forecast in a Bloomberg survey.

West Texas Intermediate crude climbed as much as 1.2 percent to $45.02 a barrel. It jumped 6.4 percent last week, its best performance since April, as Saudi Arabia signaled that it’s prepared to discuss stabilizing markets at informal discussions being held by the Organization of Petroleum Exporting Countries in September. Venezuela’s oil and foreign ministers will visit producer countries to lobby for price increases ahead of the talks, President Nicolas Maduro said.

Gold rose for the first time in three days, gaining 0.4 percent. The reduced likelihood of a Fed rate hike is a positive for precious metals as they don’t pay interest.

Bonds

The yield on U.S. Treasuries due in a decade fell one basis point to 1.50 percent, after dropping by five basis points on Friday. The rate on similar-maturity Chinese debt dropped was steady at 2.66 percent, the lowest in China Bond data going back to 2006.

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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