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U.S. Stocks Head for Weekly Drop Amid Tax Debate



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  • U.S. Stocks Head for Weekly Drop Amid Tax Debate

Treasuries fell for a third day and U.S. stocks limped to the end of a week that saw a bout of volatility return to global financial markets.

The S&P 500 Index slumped, led in part by health-care shares, which dropped by 1 percent. Energy stocks also struggled as WTI crude fell below $57 a barrel. The yield on 10-year Treasuries punched through 2.37 percent, joining a spike in European sovereign rates as inflation worries ratchet up. The dollar was little changed as President Donald Trump’s Asia trip winds down. High-yield debt steadied as the largest junk bond exchange-traded fund rose after three days of declines.

“A bit of a theme has been Amazon getting into the health-care channel and the distribution space, that’s definitely been weighing on shares in the last few days,” Mike Bailey, director of research at FBB Capital Partners in Bethesda, Maryland, said by phone. “Citigroup did a pretty big report about Amazon getting into the space that came out last night. They were hinting that Amazon may at some point get into selling medical devices as opposed to just getting into distribution.”

Carmakers led the Stoxx Europe 600 Index to its biggest two-day drop since August, with most industry sectors declining. Stocks in Asia fell after a rally earlier in the week that saw them touch record highs. Yields on 10-year Treasuries rose a third day, and core European bond yields followed suit.

Global equities hit historic highs during the week as investors were encouraged by solid earnings and synchronized global economic growth. But they sold off sharply on Thursday as the U.S. Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. The move fed growing pessimism about the prospects for meaningful U.S. fiscal reform, which had buoyed share prices in the U.S.

In addition, traders have begun preparing for a series of potential interest rate increases by the Federal Reserve over the next 12 months.

“You have a Fed that with a 4.1 percent unemployment rate appears to be on cruise control for three or four hikes over the next year,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “In the context of there being very little inflation, if they do that it implies tighter financial conditions which will help flatten yield curves and increase risk premiums a bit. That has a lot to do with what’s going on right now.”


  • The S&P 500 fell 0.2 percent to 2,580.10 of 12:49 p.m. in New York.
  • The Stoxx Europe 600 Index slid 0.4 percent to the lowest in more than two weeks.
  • The U.K.’s FTSE 100 Index dropped 0.7 percent.
  • Germany’s DAX Index dipped 0.4 percent.
  • The MSCI Emerging Market Index declined 0.6 percent, the biggest drop in more than three weeks.


  • The Bloomberg Dollar Spot Index was little changed.
  • The euro gained 0.1 percent to $1.1658.
  • The British pound climbed 0.4 percent to $1.3197.
  • The Japanese yen dropped less than 0.1 percent to 113.53 per dollar.
  • South Africa’s rand sank 0.9 percent to 14.3802 per dollar, the weakest in a year.


  • The yield on 10-year Treasuries increased six basis points to 2.3966 percent, the largest climb in three weeks.
  • Germany’s 10-year yield increased four basis points to 0.41 percent, the highest in more than two weeks.
  • Britain’s 10-year yield increased eight basis points to 1.342 percent, the largest increase since September.


  • West Texas Intermediate crude slipped 0.7 percent to $56.78 a barrel.
  • Gold dropped 0.7 percent to $1,275.61 an ounce.
  • Copper fell 0.3 percent to $3.08 a pound.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, 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




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.


  • 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



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




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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