Markets

Global Stocks Drop and Gold Gains on Trump Concern

Published

7 years ago

January 31, 2017

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.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

Published

2 days ago

May 16, 2024

Samed Olukoya

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

Published

2 days ago

May 16, 2024

Samed Olukoya

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

Crude Oil

Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

Published

2 days ago

May 16, 2024

Samed Olukoya

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.