Markets

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

Published

6 years ago

November 10, 2017

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.”

Stocks

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.

Currencies

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.

Bonds

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.

Commodities

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.

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Samed Olukoya

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 Decline for Third Consecutive Day on Weaker Economic Data and Inventory Concerns

Published

1 day ago

April 17, 2024

Samed Olukoya

Oil prices extended their decline for the third consecutive day on Wednesday as concerns over weaker economic data and increasing commercial inventories in the United States weighed on oil outlook.

Brent oil, against which Nigerian oil is priced, dropped by 51 cents to $89.51 per barrel, while U.S. West Texas Intermediate crude oil fell by 41 cents to $84.95 a barrel.

The softening of oil prices this week reflects the impact of economic headwinds on global demand, dampening the gains typically seen from geopolitical tensions.

Market observers are closely monitoring how Israel might respond to Iran’s recent attack, though analysts suggest that this event may not significantly affect Iran’s oil exports.

John Evans, an oil broker at PVM, remarked on the situation, noting that oil prices are readjusting after factoring in a “war premium” and facing setbacks in hopes for interest rate cuts.

The anticipation for interest rate cuts received a blow as top U.S. Federal Reserve officials, including Chair Jerome Powell, refrained from providing guidance on the timing of such cuts. This dashed investors’ expectations for significant reductions in borrowing costs this year.

Similarly, Britain’s slower-than-expected inflation rate in March hinted at a delay in the Bank of England’s rate cut, while inflation across the euro zone suggested a potential rate cut by the European Central Bank in June.

Meanwhile, concerns about U.S. crude inventories persist, with a Reuters poll indicating a rise of about 1.4 million barrels last week. Official data from the Energy Information Administration is awaited, scheduled for release on Wednesday.

Adding to the mix, Tengizchevroil announced plans for maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May, further influencing market sentiment.

As the oil market navigates through a landscape of economic indicators and geopolitical events, investors remain vigilant for cues that could dictate future price movements.

Commodities

Dangote Refinery Cuts Diesel Price to ₦1,000 Amid Economic Boost

Published

1 day ago

April 17, 2024

Samed Olukoya

Dangote Petroleum Refinery has reduced the price of diesel from ₦1200 to ₦1,000 per litre.

This price adjustment is in response to the demand of oil marketers, who last week clamoured for a lower price.

Just three weeks ago, the refinery had already made waves by lowering the price of diesel to ₦1,200 per litre, a 30% reduction from the previous market price of around ₦1,600 per litre.

Now, with the latest reduction to ₦1,000 per litre, Dangote Refinery is demonstrating its commitment to providing accessible and affordable fuel to consumers across the country.

This move is expected to have far-reaching implications for Nigeria’s economy, particularly in tackling high inflation rates and promoting economic stability.

Aliko Dangote, Africa’s richest man and the owner of the refinery, expressed confidence that the reduction in diesel prices would contribute to a drop in inflation, offering hope for improved economic conditions.

Dangote stated that the Nigerian people have demonstrated patience amidst economic challenges, and he believes that this reduction in diesel prices is a step in the right direction.

He pointed out the aggressive devaluation of the naira, which has significantly impacted the country’s economy, and sees the price reduction as a positive development that will benefit Nigerians.

With this latest move, Dangote Refinery is not only reshaping the fuel market but also reaffirming its commitment to driving positive change and progress in Nigeria.

The reduction in diesel prices is expected to provide relief to consumers, businesses, and various sectors of the economy, paving the way for a brighter and more prosperous future.

Crude Oil

IEA Cuts 2024 Oil Demand Growth Forecast by 100,000 Barrels per Day

Published

2 days ago

April 16, 2024

Samed Olukoya

The International Energy Agency (IEA) has reduced its forecast for global oil demand growth in 2024 by 100,000 barrels per day (bpd).

The agency cited a sluggish start to the year in developed economies as a key factor contributing to the downward revision.

According to the latest Oil Market Report released by the IEA, global oil consumption has continued to experience a slowdown in growth momentum with first-quarter growth estimated at 1.6 million bpd.

This figure falls short of the IEA’s previous forecast by 120,000 bpd, indicating a more sluggish demand recovery than anticipated.

With much of the post-Covid rebound already realized, the IEA now projects global oil demand to grow by 1.2 million bpd in 2024.

Furthermore, growth is expected to decelerate further to 1.1 million bpd in the following year, reflecting ongoing challenges in the market.

This revision comes just a month after the IEA had raised its outlook for 2024 oil demand growth by 110,000 bpd from its February report.

At that time, the agency had expected demand growth to reach 1.3 million bpd for 2024, indicating a more optimistic outlook compared to the current revision.

The IEA’s latest demand growth estimates diverge significantly from those of the Organization of the Petroleum Exporting Countries (OPEC). While the IEA projects modest growth, OPEC maintains its forecast of robust global oil demand growth of 2.2 million bpd for 2024, consistent with its previous assessment.

However, uncertainties loom over the global oil market, particularly due to geopolitical tensions and supply disruptions.

The IEA has highlighted the impact of drone attacks from Ukraine on Russian refineries, which could potentially disrupt fuel markets globally.

Up to 600,000 bpd of Russia’s refinery capacity could be offline in the second quarter due to these attacks, according to the IEA’s assessment.

Furthermore, unplanned outages in Europe and tepid Chinese activity have contributed to a lowered forecast of global refinery throughputs for 2024.

The IEA now anticipates refinery throughputs to rise by 1 million bpd to 83.3 million bpd, reflecting the challenges facing the refining sector.

The situation has raised concerns among policymakers, with the United States expressing worries over the impact of Ukrainian drone strikes on Russian oil refineries.

There are fears that these attacks could lead to retaliatory measures from Russia and result in higher international oil prices.

As the global oil market navigates through these challenges, stakeholders will closely monitor developments and adjust their strategies accordingly to adapt to the evolving landscape.