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Global Stocks Drop and Gold Gains on Trump Concern

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  • Global Stocks Drop and Gold Gains on Trump Concern

Global stocks slumped and gold advanced as Donald Trump’s firing of the U.S. acting attorney general added to concern over the unpredictability of decisions in the new administration.

The MSCI All-Country World Index headed for a fourth straight loss and gold rose for a third day as turmoil from Trump’s Friday immigration order continued to unsettle markets. S&P 500 Index futures declined, after the biggest intraday loss for the benchmark gauge since the November election. Shares in Tokyo maintained losses after the Bank of Japan left monetary policy unchanged. Oil headed toward its first monthly decline since October.

The firing of Sally Yates added to jitters among investors sparked by Trump’s imposition of a ban on U.S. entry for passport holders from a number of Muslim-majority nations. Along with protectionist moves on the trade front, the news raises the risk of foreign investors diminishing their appetite for American assets. Trump dismissed Yates after she said his order wasn’t consistent with the Justice Department’s “solemn obligation to always seek justice and stand for what is right.”

“Trump’s isolationist policies mean increasing risks associated with U.S. assets,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington. The firing “certainly adds to the case for higher U.S. risks,” he said.

The equity market moves represent the biggest investor rebuke yet to the new administration’s preferences, after U.S. stocks had staged one of the best-ever post-election rallies on speculation Trump’s policies would stoke the economy. Meantime, the BOJ’s decision to keep its key policy tools unchanged came as little surprise, with all 42 economists surveyed by Bloomberg this month having predicted no change.

What’s coming up in the markets:

  • The Federal Reserve announces its policy decision on Wednesday. Like the BOJ, it is expected to leave lending rates where they are, though the Fed’s statement will be parsed for any reading on Trump’s impact on the world’s largest economy.
  • Trump plans to announce his nomination to the Supreme Court Tuesday, a move likely to dominate headlines and perhaps delay the presentation of further details on spending policies.
  • Apple Inc., Facebook Inc. and Amazon.com Inc. are among the major U.S. companies due to report results this week. Of the S&P 500 names to report so far, 73 percent have topped profit estimates.

Here are the main moves in markets on Tuesday:

Stocks

  • Futures on the S&P 500 dropped 0.3 percent as of 8:11 a.m. in London. The benchmark gauge fell 0.6 percent on Monday, declining as much as 1.2 percent for the biggest intraday drop since Nov. 1, before staging a late-day comeback. It’s still up 1.9 percent for January and is higher by 6.6 percent since Trump’s election.
  • The Stoxx Europe 600 index was little changed, with banks and insurers posting the biggest declines while retailers gained.
  • Japan’s Topix fell 1.4 percent, with almost all its losses coming before the BOJ decision. NEC Corp. tumbled 17 percent, the most ever, after cutting its full-year profit forecast. Sony Corp. lost 2.3 percent after taking a $1 billion writedown in its movie business.
  • The MSCI All-Country World Index is headed toward a fourth straight drop, its longest losing streak since November. The MSCI Asia Pacific Index fell 0.8 percent, poised for the biggest retreat since Dec. 15, after reaching the highest level since September on Monday.
  • China, Hong Kong and Vietnam markets remained closed for the Lunar New Year holiday.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent. The gauge is trading near the lowest level in two months, and is down 2 percent for the year.
  • The euro climbed 0.2 percent to $1.0713.
  • The yen rose 0.1 percent to 113.65 per dollar, paring an earlier advance of 0.5 percent. The currency jumped 1.2 percent in the previous session. The BOJ left its inflation forecasts largely untouched as it waits to see the impacts of a recent decline in the yen and the policies of Trump’s administration.

Commodities

  • West Texas Intermediate crude slipped 0.5 percent to $52.38 a barrel, after losing more than 1 percent during each of the previous two sessions. Crude is heading for a monthly drop of 2.7 percent as signs that U.S. supply is expanding offset OPEC’s production curbs.
  • Gold added 0.4 percent to $1,200.59 an ounce, after rising 0.4 percent the previous session.

Bonds

  • The yield on 10-year Treasuries dropped one basis point to 2.48 percent.

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.

Crude Oil

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

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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.

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Commodities

Crude Oil, Other Commodities Closing Price for Monday

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Crude oil

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.

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

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.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

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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