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Asia Extends Global Equity Rally as Bonds Slide

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  • Asia Extends Global Equity Rally as Bonds Slide

Asian equities took another leg higher after the S&P 500 Index rose to a record high and Treasuries tumbled, with less damage than originally feared from Hurricane Irma supporting the case for a gradually improving U.S. economy.

Japan’s Topix index added to Monday’s rally, the biggest in three months, while South Korean and Australia equities climbed. European stock-index futures also pointed higher. The S&P 500 jumped the most since April to close at its first record in a month. Bloomberg’s dollar index steadied after recouping some of last week’s slump on Monday, though was pulling back in early European trading. Oil also held gains triggered by signs that predictions about Irma’s wrath were overdone.

Moves in favor of risk assets that began Monday were built on throughout the day and into Asian trading on Tuesday morning, supported also by a lack of further provocative developments from North Korea. The UN Security Council on Monday approved a watered-down proposal to punish the nation for its latest missile and nuclear tests, omitting an oil embargo and a freeze of Kim Jong Un’s assets.

“What road seems to be traveled now is one of negotiation rather than provocation. There has been a reversal of the tactics over the last week and I think that’s what the markets are seeing,” Jefferies Chief Global Strategist Sean Darby told Bloomberg Television, referring to the UN vote. “The irony at the moment is that for risk-takers the environment is very good. The inflation data is nowhere near as strong to force the hand of the central banks and economic data is actually getting better.”

Markets in the Philippines are shut as heavy rain and flooding from tropical depression Maring descends on the country.

Here are the main moves in markets:

Stocks

  • Japan’s Topix index advanced 0.9 percent at the close in Tokyo.
  • Australia’s S&P/ASX 200 Index added 0.6 percent.
  • South Korea’s Kospi index rose 0.3 percent.
  • The Hang Seng Index in Hong Kong and gauges in China fluctuated.
  • Futures on the S&P 500 Index were flat in early European trading after the underlying gauge added 1.1 percent on Monday.
  • The Euro Stoxx 50 futures contract rose 0.4 percent as of 7:31 a.m. in London.
  • The MSCI Asia Pacific Index climbed 0.4 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent after being mostly flat in Asia and gaining 0.6 percent for the first advance in more than a week on Monday. U.S. consumer inflation data on Thursday may add to concerns inflation remains benign.
  • The yen was at 109.38 per dollar after sinking 1.4 percent on Monday, its steepest decline since January.
  • The Aussie bought 80.24 U.S. cents.
  • The euro was up 0.1 percent at $1.1968.

Bonds

  • The yield on 10-year Treasuries held at 2.13 percent after rising eight basis points on Monday.
  • The yield on Australian government notes with a similar maturity added more than three basis points to 2.64 percent.
  • 10-year German bund yields climbed about one basis point at 0.35 percent.

Commodities

  • Gold was little changed at $1,326.57 an ounce after sinking 1.4 percent on Monday.
  • West Texas Intermediate crude was steady at $48.07 following a 1.2 percent gain on Monday.

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.

Markets

Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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