Developing-nation stocks gained, adding to their best quarterly performance since 2012, after a report that Deutsche Bank AG may settle with U.S. regulators for less than half the amount investors spurred demand for higher-yielding assets.
The MSCI Emerging Markets Index rose 0.5 percent as of 12:06 p.m. in Hong Kong, extending its 8.3 percent advance since June. Ten of 11 industry groups climbed, led by telecommunications, information technology and health care shares. Markets were closed Monday in China, South Korea and Malaysia for public holidays. Indonesia’s rupiah and the Philippines peso paced gains among developing-nation currencies.
Deutsche Bank shares surged Friday after Agence France-Presse reported that the lender was nearing a $5.4 billion settlement with the U.S. Department of Justice, less than half an initial request, that stemmed from a probe tied to residential mortgage-backed securities.
“A lot of the market sentiment has improved because obviously people were worried that Deutsche Bank might be going to recreate the Lehman moment,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. “The fact that actually Deutsche Bank came out and said it’s well capitalized and that it’s close to securing a deal with U.S. Department of Justice over that fine has just given the market more confidence that we’re not going to have another breakdown in the global banking system.”
Emerging-market equities have risen as near-zero rates in Japan and Europe boosted demand for riskier assets and the Federal Reserve refrained from tightening policy so far this year. The benchmark gauge is valued at 12.4 times the projected 12-month earnings if its members. That compares with a multiple of 16.2 for the MSCI World Index of developed-nation stocks, which has increased 4.5 percent since the end of June.
China Mobile Ltd. climbed 1.9 percent in Hong Kong as the Hang Seng China Enterprises Index advanced 1.2 percent. Sinopharm Group Co. gained 2.3 percent. The Jakarta Composite Index rose 1.1 percent, while equity gauges in Taiwan and the Philippines gained at least 0.4 percent.
The MSCI Emerging Markets Currency Index was little changed after completing a third straight quarterly advance on Friday. The rupiah was the best performer Monday, strengthening 0.5 percent. The Philippines peso gained 0.4 percent after the finance department said in an e-mailed statement the nation can ride out any financial market volatility.
Colombia’s peso is likely to be sold following the unexpected rejection in a referendum of a peace deal between the government and Marxist guerrillas, according to Goldman Sachs Group Inc.
“The rejection of the proposed peace deal was not expected nor discounted by the market,” analyst Alberto Ramos wrote in a report. “We expect financial markets to react negatively on Monday with the COP and local interest rates likely to sell off.”
The peso closed at 2,882.06 per dollar on Friday and has strengthened 10 percent this year after climbing by more than 3 percent in each of the two previous months.
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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