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Asia Stocks Look Past Russia Probe to U.S. Jobs

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Asian Stocks
  • Asia Stocks Look Past Russia Probe to U.S. Jobs

Asian equity markets were mixed on Friday as investors awaiting the monthly U.S. jobs report for clues on interest rates largely shrugged off news that Special Counsel Robert Mueller was said to have impaneled a grand jury in the ongoing Russia probe. The euro maintained gains against the dollar.

Benchmark gauges fell in Japan and Australia, while South Korea’s Kospi index rose after plunging on Thursday. Australian government bonds yields slid in line with the slump in Treasury and bund yields on the news out of Washington where Mueller is probing Russia’s interference in 2016 U.S. elections as well as possible collusion with the Trump campaign. The yen held gains, weighing on stocks in Tokyo.

Geopolitics took center stage again ahead of the closely watched U.S. employment report that may provide clues on the strength of the world’s largest economy and the Federal Reserve’s next policy move.

A largely expectation-topping earnings seasons rolls on. Toyota Motor Corp., among the largest companies to update investors, raised its profit forecast after the Tokyo market closed as the yen weakened and on a rebound in U.S. sales.

The U.S. jobs report for July may show the economy is on a steady trajectory and the labor market is staying tight, according to Bloomberg Intelligence. Consensus expects an increase of 180,000 in non-farm payrolls, after a gain of 222,000 in June, and a decline in unemployment to 4.3 percent from 4.4 percent. The data will also signal if income gains are enough to keep consumer spending ticking.

The Australian dollar tested the session’s low after the country’s central bank cut its growth forecast. The Reserve Bank of Australia lowered its forecast for economic growth by half a percentage point this year to 2 percent to 3 percent, and a quarter-point in the first half of next to 2.5 percent to 3.5 percent, saying in its quarterly monetary-policy statement that the Aussie dollar “had a modest dampening effect” on GDP growth.

Here are the main moves in markets:

Stocks

  • Japan’s Topix index slid 0.2 percent and Australia’s S&P/ASX 200 Index lost 0.3 percent. South Korea’s Kospi was up 0.5 percent after sliding 1.7 percent on Thursday. Hong Kong’s Hang Seng Index was little changed, while the Shanghai Composite Index swung between gains and losses.
  • Contracts on the Euro Stoxx 50 fell 0.2 percent as of 7:30 a.m. in London.
  • Futures contracts on the S&P 500 Index were little changed. The main gauge lost 0.2 percent on Thursday.

Currencies

  • The euro traded at $1.1878, on course for a fourth week of gains. The European currency has advanced as the dollar has come under pressure amid concerns about the Trump administration’s ability to carry out its economic policy agenda. Meanwhile,
    German factory orders jumped in June, indicating a pickup in momentum in Europe’s largest economy.
  • The Aussie fell as low as 79.34 U.S. cents before shrugging off the RBA report to rise 0.2 percent to 79.67. It’s set for its first weekly decline since the start of July. The central bank said the recent appreciation of the exchange rate has had a “modest dampening effect” on growth forecasts.
  • The yen was little changed against the dollar to 110.13.
  • The Bloomberg Dollar Spot Index was steady.

Bonds

  • The yield on 10-year Treasuries held at 2.22 percent after declining five basis points on Thursday.
  • Yields on 10-year bunds were steady at 0.46 percent.
  • Ten-year yield on Australian government notes fell four basis points to 2.63 percent.

Commodities

  • West Texas Intermediate crude extended losses, falling 0.4 percent to $48.84 after losing 1.1 percent in the previous session.
  • Gold was steady at $1,269.59 an ounce.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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