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Stocks Fall, Havens Gain as Korea Tensions FlareStocks Fall, Havens Gain as Korea Tensions Flare

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  • Stocks Fall, Havens Gain as Korea Tensions FlareStocks Fall, Havens Gain as Korea Tensions Flare

Stocks fell and gold and the yen climbed as geopolitical tensions flared up again, with U.S. president Donald Trump weighing new economic sanctions that could target China after a nuclear test Sunday by North Korea.

The Stoxx Europe 600 Index declined, with banks and technology companies bearing the brunt as all industry sectors moved into the red after a report that Pyongyang is preparing to launch an intercontinental ballistic missile heightened investors’ unease. The MSCI Asia Pacific Index was on track for the biggest drop since Trump’s vow to return nuclear threats with “fire and fury” in early August. S&P index futures also fell, while most European government bonds advanced and the yen and Swiss franc led currency gains. Industrial metals including copper and nickel extended a rally.

The White House warned any nation doing business with Kim Jong Un’s regime would be met with economic sanctions and trade embargoes, and his defense chief said the U.S. has “many military options.” North Korea said Sunday it successfully tested a hydrogen bomb with “unprecedentedly big power.” The test, the first since Trump took office, is a new hurdle for markets that have proven resilient to recent bouts of tension on the Korean peninsula.

“Expect some short-term risk-aversion trades,” Citigroup Inc. economists led by Johanna Chua wrote in a client note. “But such market moves tend to be short-lived, as typically tensions defuse quickly. So unless the global response to this test raises the probability of a military strike or North Korean regime collapse (both unlikely), this time may play out similarly.”

Some investors are choosing to hold more cash in the face of increasing geopolitical instability. Nader Naeimi, who heads a dynamic investment fund at AMP Capital in Sydney and helps manage about $110 billion, has about 30 percent of his holdings in cash, while Chicago-based Ariel Investments is holding more cash versus its target in the event a pullback creates buying opportunities.

“While today’s fall in risk assets might not be deep, the process is one of an incremental rise in market volatility,” Naeimi said. This “will culminate in a deeper-than-expected correction,” he said.

Stocks

  • The Stoxx Europe 600 Index sank 0.6 percent as of 9:40 a.m. in London.
  • The U.K.’s FTSE 100 Index dipped 0.3 percent.
  • Germany’s DAX Index fell 0.5 percent.
  • The MSCI All-Country World Index sank 0.2 percent, the largest dip in more than two weeks.
  • Futures on the S&P 500 Index declined 0.4 percent.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.2 percent.
  • The euro gained 0.5 percent to $1.1915.
  • The British pound was little changed at $1.2943.
  • The Japanese yen jumped 0.7 percent to 109.45 per dollar, the largest climb in more than three weeks.
  • The Swiss franc increased 0.8 percent to $0.9574.

Bonds

  • Germany’s 10-year yield declined two basis points to 0.36 percent.
  • Britain’s 10-year yield dipped one basis point to 1.04 percent.

Commodities

  • Gold gained 1 percent to $1,338.16 an ounce, the strongest in a year.
  • West Texas Intermediate crude decreased 0.1 percent to $47.22 a barrel.
  • Copper advanced 0.8 percent to $3.14 a pound, the highest in about three years.
  • Nickel advanced 1 percent to $12,155 per metric ton, the highest in more than two years.

Asia

  • Japan’s Topix index ended 1 percent lower, while South Korea’s Kospi index lost 1.2 percent and the S&P/ASX 200 Index in Sydney declined 0.4 percent.
  • The Hang Seng Index in Hong Kong fell 1 percent.
  • Indexes rose in China. The Philippines’ main gauge jumped 1 percent.
  • The MSCI Asia Pacific Index fell 0.6 percent, poised for its worst decline since Aug. 11.

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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