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Dollar Drops, Asia Shares Jump While Europe Swings

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Dollar
  • Dollar Drops, Asia Shares Jump While Europe Swings

The dollar sank and Treasuries climbed after the Federal Reserve signaled that inflation remains persistently below its target even as the economy picks up steam. Asian stocks jumped on optimism about corporate earnings, while European equities fluctuated.

The Bloomberg Dollar Spot Index touched the lowest in more than a year, while the 10-year Treasury yield extended losses after the Fed held rates steady and indicated it would start unwinding its balance sheet “relatively soon.” The MSCI Asia Pacific Index reached the highest since December 2007 after earnings from Samsung Electronics Co. and Nintendo Co. beat analysts’ estimates, while the Stoxx Europe 600 Index swung between gains and losses amid results from a load of heavyweight companies.

The Fed said inflation remains below the central bank’s 2 percent target even as near-term risks to the economic outlook appear balanced, signaling it intends to kick off the long-awaited reduction in its $4.5 trillion balance sheet in September and fueling speculation the central bank won’t rush to raise rates.

With the central bank’s announcement out of the way, investors can return to a corporate earnings season that’s seen more than 80 percent of S&P 500 companies deliver higher than-expected profit. Thursday is one of the busiest for Europe, with companies worth more than $3 trillion reporting their accounts.

Deutsche Bank AG, Europe’s largest investment bank, disappointed after reporting a 10 percent decline in second-quarter revenue, while Nestle SA warned that sales growth this year will be the weakest in at least two decades. The outlook was better in Asia, as Samsung Electronics earnings beat analysts’ estimates on the success of its new Galaxy S8 smartphones and surging prices of semiconductors, while Nintendo surprised investors with a big jump in quarterly profit.

Here are the main moves in markets:

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent as of 8:12 a.m. in London, after falling 0.6 percent on Wednesday. The yen traded at 111.24 per dollar, down 0.1 percent after erasing an earlier gain. The South Korean won jumped 0.8 percent.
  • The euro fell 0.1 percent to $1.1723 after a 0.8 percent advance on Wednesday sent the currency to a 30-month high. The British pound rose 0.1 percent after climbing 0.7 percent in the previous session.
  • The Aussie extended gains above 80 U.S. cents, rising 0.4 percent to the highest since May 2015 after jumping 0.9 percent Wednesday. It slid below 79 cents during local trading on Wednesday following weaker-than-expected Australian inflation data and a speech by the nation’s central bank governor.

Stocks

  • The Stoxx Europe 600 was flat. Nestle slumped 1.8 percent and Deutsche Bank lost 2.9 percent. AstraZeneca Plc tumbled 15 percent after the drugmaker suffered a blowto its next-generation cancer therapy.
  • Japan’s Topix index rose 0.4 percent, while Australia’s S&P/ASX 200 Index added 0.2 percent. South Korea’s Kospi index climbed 0.4 percent. In Hong Kong, the Hang Seng Index added 0.8 percent, while the Shanghai Composite Index increased 0.1 percent.
  • The Dow Jones Industrial Average rose above 21,700 for the first time on Wednesday.
  • Futures on the Nasdaq 100 Index climbed 0.6 percent. Facebook Inc. rose 3.4 percent in after-hours U.S. trading after the company reported faster-than-expected sales growth.

Bonds

  • The yield on 10-year Treasuries was at 2.28 percent, down less than one basis point after declining five basis points in the wake of the Fed statement from the previous session.
  • French, German and U.K. 10-year yields lost four basis points.
  • Australian government notes with a similar maturity saw yields fall four basis points to 2.69 percent, erasing Thursday’s gain of four basis points.

Commodities

  • Gold rose 0.1 percent to $1,262.19 an ounce after climbing 0.8 percent in the prior session.
  • West Texas Intermediate crude rose 0.3 percent to $48.91 a barrel, heading for a fourth day of gains.
  • The Bloomberg Commodity Index advanced 0.4 percent, after climbing 0.7 percent on Wednesday.

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

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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