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Emerging-Market Shares Extend Gains, Dollar Steady

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Emerging Markets
  • Emerging-Market Shares Extend Gains, Dollar Steady

Emerging-market stocks extended their longest winning streak since August while the dollar was steady after a four-day drop as Federal Reserve officials reignited the debate on the timing of further policy tightening.

The MSCI Emerging Markets Index rose for an eighth straight day as Chinese shares traded in Hong Kong advanced and South Korea’s Kospi headed toward the highest close in almost six years. Japan’s Topix index declined after Monday’s holiday. The Bloomberg Dollar Spot Index was slightly higher, halting a string of losses. Oil regained some of its declines from the previous session while gold fell and copper led a retreat in basic metals.

The Fed could raise interest rates two, three or four times this year, said Chicago Fed President Charles Evans, though his Minneapolis colleague Neel Kashkari argued that there was no need to rush. In France, presidential candidates squared off in a TV debate Monday night ahead of the upcoming closely watched election.

Emerging-market stocks are trading at the highest levels since June 2015 while the dollar has slumped as much as 1.7 percent after the Fed raised interest rates on March 15 yet didn’t accelerate the timeline for future tightening. Volatility remains low across markets from equities to currencies and fixed-income as investors strive to assess how sustainable the nascent global economic recovery is.

Here are the main moves in markets:

Stocks

  • The MSCI Emerging Markets gauge rose 0.4 percent as of 3:12 p.m. in Tokyo.
  • South Korea’s Kospi jumped 1 percent, poised for the highest close since July 2011. The Hang Seng China Enterprises Index climbed 0.6 percent to the highest since November 2015. Taiwan’s Taiex increased 0.6 percent.
  • Japan’s Topix index declined 0.2 percent. New Zealand’s S&P/NZX 50 Index added 0.4 percent, recovering some of Monday’s 1.4 percent decline.
  • Futures on the S&P 500 were up 0.1 percent. The benchmark gauge and the Stoxx Europe 600 Index both fell 0.2 percent on Monday.

Currencies

  • The Bloomberg Dollar Spot Index rose less than 0.1 percent. The gauge fell in the previous four sessions, the longest losing streak since November.
  • The yen weakened for the first time in six days, down 0.2 percent to 112.75 per dollar. The Australian dollar fell 0.3 percent.
  • The euro climbed 0.2 percent to $1.0763.

Bonds

  • The yield on 10-year Australian government bonds fell two basis points to 2.81 percent.
  • Treasury yields with a similar maturity added two basis point to 2.48 percent after losing four basis points in each of the previous two sessions.

Commodities

  • Gold dropped 0.4 percent to $1,229.30 an ounce, after four days of gains.
  • Oil climbed 0.4 percent to $48.39 before U.S. inventory data and as Libya prepared to restart crude shipments from major ports. WTI slumped 1.2 percent in the previous session.
  • Copper slumped 1.3 percent, after a 0.9 percent drop on Monday, amid signs of returning supplies after disruptions caused the metal to surge last month to the highest level since 2015.

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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Gold

Gold Steadies After Initial Gains on Reports of Israel’s Strikes in Iran

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Gold, often viewed as a haven during times of geopolitical uncertainty, exhibited a characteristic surge in response to reports of Israel’s alleged strikes in Iran, only to stabilize later as tensions simmered.

The yellow metal’s initial rally came on the heels of escalating tensions in the Middle East, with concerns mounting over a potential wider conflict.

Spot gold soared as much as 1.6% in early trading as news circulated regarding Israel’s purported strikes on targets in Iran.

This surge, reaching a high of $2,400 a ton, reflected the nervousness pervading global markets amidst the saber-rattling between the two nations.

However, as the day progressed, media reports from both countries appeared to downplay the impact and severity of the alleged strikes, contributing to a moderation in gold’s gains.

Analysts noted that while the initial spike was fueled by fears of heightened conflict, subsequent assessments suggesting a less severe outcome helped calm investor nerves, leading to a stabilization in gold prices.

Traders had been bracing for a potential Israeli response following Iran’s missile and drone attack over the weekend, raising concerns about a retaliatory spiral between the two adversaries.

Reports of an explosion in Iran’s central city of Isfahan further added to the atmosphere of uncertainty, prompting flight suspensions and exacerbating market jitters.

In addition to geopolitical tensions, gold’s rally in recent months has been underpinned by other factors, including expectations of US interest rate cuts, sustained central bank buying, and robust consumer demand, particularly in China.

Despite the initial surge followed by stabilization, gold remains sensitive to developments in the Middle East and broader geopolitical dynamics.

Investors continue to monitor the situation closely for any signs of escalation or de-escalation, recognizing gold’s role as a traditional safe haven in times of uncertainty.

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Commodities

Global Cocoa Prices Surge to Record Levels, Processing Remains Steady

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Cocoa futures in New York have reached a historic pinnacle with the most-active contract hitting an all-time high of $11,578 a metric ton in early trading on Friday.

This surge comes amidst a backdrop of challenges in the cocoa industry, including supply chain disruptions, adverse weather conditions, and rising production costs.

Despite these hurdles, the pace of processing in chocolate factories has remained constant, providing a glimmer of hope for chocolate lovers worldwide.

Data released after market close on Thursday revealed that cocoa processing, known as “grinds,” was up in North America during the first quarter, appreciating by 4% compared to the same period last year.

Meanwhile, processing in Europe only saw a modest decline of about 2%, and Asia experienced a slight decrease.

These processing figures are particularly noteworthy given the current landscape of cocoa prices. Since the beginning of 2024, cocoa futures have more than doubled, reflecting the immense pressure on the cocoa market.

Yet, despite these soaring prices, chocolate manufacturers have managed to maintain their production levels, indicating resilience in the face of adversity.

The surge in cocoa prices can be attributed to a variety of factors, including supply shortages caused by adverse weather conditions in key cocoa-producing regions such as West Africa.

Also, rising demand for chocolate products, particularly premium and artisanal varieties, has contributed to the upward pressure on prices.

While the spike in cocoa prices presents challenges for chocolate manufacturers and consumers alike, industry experts remain cautiously optimistic about the resilience of the cocoa market.

Despite the record-breaking prices, the steady pace of cocoa processing suggests that chocolate lovers can still expect to indulge in their favorite treats, albeit at a higher cost.

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Crude Oil

Dangote Refinery Leverages Cheaper US Oil Imports to Boost Production

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Crude Oil

The Dangote Petroleum Refinery is capitalizing on the availability of cheaper oil imports from the United States.

Recent reports indicate that the refinery with a capacity of 650,000 barrels per day has begun leveraging US-grade oil to power its operations in Nigeria.

According to insights from industry analysts, the refinery has commenced shipping various products, including jet fuel, gasoil, and naphtha, as it gradually ramps up its production capacity.

The utilization of US oil imports, particularly the WTI Midland grade, has provided Dangote Refinery with a cost-effective solution for its feedstock requirements.

Experts anticipate that the refinery’s gasoline-focused units, expected to come online in the summer months will further bolster its influence in the Atlantic Basin gasoline markets.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, noted that Dangote’s entry into the gasoline market is poised to reshape the West African gasoline supply dynamics.

Despite operating at approximately half its nameplate capacity, Dangote Refinery’s impact on regional fuel markets is already being felt. The refinery’s recent announcement of a reduction in diesel prices from N1,200/litre to N1,000/litre has generated excitement within Nigeria’s downstream oil sector.

This move is expected to positively affect various sectors of the economy and contribute to reducing the country’s high inflation rate.

Furthermore, the refinery’s utilization of US oil imports shows its commitment to exploring cost-effective solutions while striving to meet Nigeria’s domestic fuel demand. As the refinery continues to optimize its production processes, it is poised to play a pivotal role in Nigeria’s energy landscape and contribute to the country’s quest for self-sufficiency in refined petroleum products.

Moreover, the Nigerian government’s recent directive to compel oil producers to prioritize domestic refineries for crude supply aligns with Dangote Refinery’s objectives of reducing reliance on imported refined products.

With the flexibility to purchase crude using either the local currency or the US dollar, the refinery is well-positioned to capitalize on these policy reforms and further enhance its operational efficiency.

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