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Global Equities Soar to Record High; Dollar Slides

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Europe stocks
  • Global Equities Soar to Record High; Dollar Slides

Global stocks hit a record high after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy, while a gauge of the dollar fell to a 10-month low.

Standout markets included the MSCI ACWI Index and Seoul’s Kospi Index, both at all-time highs. Hong Kong’s Hang Seng Index was the strongest in two years after the Dow Jones Industrial Average closed at a record. European stocks opened higher and U.S. index futures rose. Chinese exports grew more than forecast as global demand proved resilient. Australian sovereign debt followed gains in Treasuries after Yellen expressed confidence in the U.S. economy and signaled monetary tightening would be gradual. Oil held above $45 a barrel. Canada’s dollar gained after the first rate hike there in seven years.

“The market is upbeat as Yellen’s comments suggest a slower pace of rate increases and that bodes well for liquidity conditions and stocks,” said Banny Lam, head of research at CEB International Investment Corp. in Hong Kong.

Yellen’s testimony diverted attention from Donald Trump Jr.’s emails about his meeting with a Russian lawyer, though concern remains that the latest saga in Washington may waylay efforts to reform taxes and boost spending. The Fed chair’s gradualist tone on policy came after signals from central banks around the world that accommodative policies may no longer be needed as the global economy strengthens.

These are the main moves in markets:

Stocks

  • The Euro Stoxx 50 Index rose 0.1 percent as of 8:16 a.m. in London, building on Wednesday’s 1.5 percent gain. The FTSE 100 was down 0.1 percent after rising 1.2 percent the previous day, the most since April 24.
  • S&P 500 futures were up 0.2. The underlying index advanced Wednesday to just 0.4 percent shy of its closing record. The Dow Jones Industrial Average rose 123 points to a record 21,532.
  • The MSCI ACWI Index, which includes emerging and developed world markets, rose 0.2 percent to a record high.
  • Hong Kong’s Hang Seng Index climbed 1.1 percent to its highest since July 2015. A gauge of Chinese companies listed in Hong Kong jumped 1.5 percent, while the Shanghai Composite Index gained 0.6 percent.
  • Japan’s Topix index was steady after fluctuating. Australia’s S&P/ASX 200 Index strengthened 1.1 percent and the Kospi in Seoul rose 0.7 percent. South Korea’s central bank held its benchmark rate, as expected.

Currencies

  • The yen was up less than 0.1 percent at 113.12 per dollar, after climbing 0.7 percent Wednesday in its biggest gain for more than a month. The won rose 0.8 percent, the most since May 25, to 1,136.35 per dollar.
  • The U.S. dollar was down against all G-10 peers. The Bloomberg Dollar Spot Index fell 0.2 percent to its lowest since September 2016. The gauge has lost 0.8 percent this week.
  • The pound and euro both climbed 0.4 percent. The Canadian dollar rose 0.1 percent after jumping 1.3 percent Wednesday.
  • The Brazilian real jumped 1.4 percent Wednesday after former President Luiz Inacio Lula da Silva was convicted of graft and money-laundering.

Commodities

  • Wheat for September delivery on the Chicago Board of Trade dropped 1.5 percent to $5.29 a bushel, down a second day. The U.S. Department of Agriculture said domestic production will be greater than analysts expected.
  • West Texas Intermediate crude was down 0.5 percent at $45.29 a barrel. It climbed 1 percent the previous session after data showed crude inventories fell 7.56 million barrels last week.
  • Gold added 0.2 percent to $1,222.99 an ounce, a fourth day of gains.

Rates

  • The 10-year U.S. Treasury yield was down less than one basis point at 2.32 percent. The yield on Australian government notes with a similar maturity dropped three basis points to 2.69 percent.

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

Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Crude Oil

Oil Prices Steady Amid Mixed Signals on Crude Demand

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Crude oil

Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Crude Oil

Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73

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Crude Oil - Investors King

Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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