Markets

Asia Emerging-Market Stocks Gain While Topix Slips

Published

7 years ago

March 17, 2017

Asia Emerging-Market Stocks Gain While Topix Slips

An equities rally spurred by the Federal Reserve’s outlook found some life in Asian emerging markets, even amid a slump in Japanese and U.S. shares. The dollar was steady after a two-day decline.

Stocks in Indonesia reached a record and markets from Malaysia to South Korea climbed, helped by a weaker U.S. currency. Shares in Tokyo slumped, weighing down the MSCI Asia Pacific Index after its biggest gain since November. The S&P 500 Index’s post-Fed rally ran out of steam after the gauge climbed to within 0.5 percent of an all-time high. Treasuries maintained Thursday’s declines, while the dollar was poised for its biggest weekly loss in more than a month.

Global stocks are on course for the best week since January after the Fed raised its benchmark lending rate a quarter point without accelerating the timetable for future hikes. Investors largely anticipated the tightening and Treasury yields had climbed with the dollar on speculation the central bank might signal a faster pace of tightening.

“A less hawkish monetary policy in the U.S. is more likely to push assets outside of the U.S. into higher-risk, higher-return markets,” James Woods, a Sydney-based investment analyst at Rivkin Securities, said in a phone interview. “A weaker dollar is supportive of those emerging markets generally. I’m not sure whether its going to be long-lived though. People are going to get back to focusing on the next Fed hike, and also Trump’s policies which would be dollar supportive.”

China’s central bank also raised borrowing costs this week and the Bank of Japan left its monetary policy setting unchanged. The pound gained Thursday as some Bank of England policy makers said they may not be far behind Kristin Forbes who’s leaning toward raising interest rates.

Volatility is retreating across the globe after the central bank policy decisions. At the same time, the defeat in this week’s Dutch elections of anti-immigration candidate Geert Wilders is being seen as a blow to populist political leaders, easing concerns ahead of French elections. A gauge of volatility on the Euro Stoxx 50 Index plunged 26 percent on Thursday, the most on record.

“Volatility is scarily low and there’s just a lot of complacency out there,” James Audiss, a senior wealth manager at Shaw and Partners in Sydney, said in a phone interview. “After we get through the big macro events with governments and elections, we have to start to look to corporate earnings. That’s where it becomes not so much a systemic stock market move as stock selection.”

Here are the main moves in markets:

Stocks

The MSCI Asia Pacific Index retreated 0.2 percent as of 1:12 p.m. in Tokyo, after closing Thursday at the highest level since June 2015. Japan’s Topix fell 0.5 percent, heading for a weekly decline.
The MSCI Emerging Markets Index rose 0.2 percent. The Jakarta Composite Index gained 0.4 percent to a record, after a 1.6 percent surge on Thursday. Malaysia’s benchmark jumped 0.6 percent. Both markets are up more than 1.8 percent for the week.
New Zealand’s S&P/NZX 50 Index increased 0.1 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent. South Korea’s Kospi gained 0.4 percent.
Hong Kong’s Hang Seng and the Hang Seng China Enterprises Index added at least 0.2 percent, after soaring the most since May on Thursday.
The S&P 500 slipped 0.2 percent Thursday, while the Stoxx Europe 600 Index rose 0.7 percent.

Currencies

The Bloomberg Dollar Spot Index was little changed after dropping 0.2 percent on Thursday on top of a 1.3 percent post-FOMC drop. The gauge is down 1.2 percent for the week, the most since the period ended Feb. 3.
The yen edged lower to 113.46 per dollar, down 0.1 percent to pare is biggest weekly gain in more than a month.
The pound slipped less than 0.1 percent to $1.2351. The currency is up 1.5 percent for the week, its biggest gain since January.

Bonds

The yield on 10-year Treasuries fell less than one basis point to 2.54 percent, after rising five basis points on Thursday. The rate dipped below 2.50 percent following the Fed decision. It traded above 2.60 percent earlier in the week.
Australian 10-year yields rose for the first time in five days, climbing five basis points to 2.86 percent. The rate tumbled 10 basis points on Thursday.
The yield on New Zealand’s benchmark advanced three basis points to 3.28 percent, after also dropping 10 basis points in the previous session.

Commodities

Oil advanced 0.2 percent to $48.85, heading toward its first weekly gain in three weeks.
Gold was steady after a two-day gain, trading at $1,226.94 an ounce and poised for a 1.9 percent increase for the week.

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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.