- Dollar, S&P 500 Futures Drop on Health-Care Flop
The dollar and U.S. equity futures built on Friday’s declines and gold climbed with bonds as investors shunned risk assets amid increased skepticism of U.S. President Donald Trump’s ability to implement his economic agenda after last week’s failed U.S. health-care deal.
The yen strengthened, while benchmark gauges from Japan to Singapore fell with S&P 500 Index futures. The dollar was on the verge of erasing the rally spurred by Trump’s election victory. Australian government bonds rose with Treasuries. Oil slipped, giving up earlier gains on a pledge by producers to consider extending their pact limiting supply.
“Markets are likely to start the week in a cautious mode,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “This was the first major attempt by the administration to reform the government and its miserable failure exposes the limits of President Trump.”
Reflation trades sparked by Trump’s election are faltering in March, with the dollar retreating and the S&P 500 Index headed for its worst month since October. Meanwhile, emerging-market assets are climbing, with the global equities gauge for developing nations on course for a third monthly gain in March.
Volatility is climbing, after a measure for the S&P 500 had its biggest weekly jump of the year and touched the highest level since December. Gauges of price swings from Hong Kong to India rose on Monday, with the volatility measure for the Nikkei 225 Stock Average climbing 9.7 percent.
“The test for markets comes tonight, as American investors face the first full session of trading,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “A significantly weaker U.S. dollar suggests the news is not fully priced into shares.”
Here are the main moves in markets:
- Futures on the S&P 500 lost 0.7 percent as of 12:58 p.m. in Tokyo. The underlying gauge last week tumbled 1.4 percent.
- The MSCI Asia Pacific Index fell 0.3 percent, with almost three shares falling for every one advancing. Raw-material and financial shares led declines.
- Japan’s Topix lost 1.2 percent, poised for the lowest close since Feb. 9. Australia’s S&P/ASX 200 Index retreated 0.2 percent and South Korea’s Kospi declined 0.6 percent. Singapore’s Straits Times Index retreated 0.5 percent.
- Hong Kong’s Hang Seng dropped 0.3 percent and the Shanghai Composite Index rose 0.1 percent.
- The MSCI Emerging Markets index gained 0.1 percent, with benchmark indexes in Malaysia and Vietnam advancing.
- The yen rose 0.9 percent to 110.34 per dollar, bringing its monthly gain to 2.2 percent so far.
- The Bloomberg Dollar Spot Index fell 0.4 percent. It’s down more than 4 percent for the year.
- The euro gained 0.5 percent to $1.0848 and the British pound added 0.5 percent.
- The Australian dollar rose 0.1 percent.
- The yield on 10-year Australian government bonds slid six basis points to 2.69 percent.
- Yields on 10-year Treasuries dropped five basis points to 2.37 percent, after giving up one basis point on Friday.
- Gold rose 1 percent to $1,256.53, the highest since February. The metal is up 0.7 percent for March.
- Oil slipped 0.3 percent to $47.84 a barrel, erasing an earlier gain of as much as 0.7 percent. Crude producers pledged to consider extending their pact limiting supply, as half a dozen nations said more time was needed to drain swollen stockpiles.
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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