- Asian Shares Rise as Upbeat U.S. Jobs Data Offsets Trade Worries
Asian shares rose to their highest in two-and-a-half-weeks on Monday as strong U.S. jobs data offset worries that tariff wars between the United States and the rest of the world could retard global economic growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0 percent to a high last seen on May 17, while Japan’s Nikkei rose 1.3 percent.
Tech names such as Tencent and Taiwan Semiconductor Manufacturing were among the biggest gainers.
European stocks are seen rising, with spread-betters expecting Britain’s FTSE and Germany’s Dax to gain 0.3 percent and France’s Cac 0.4 percent.
On Wall Street on Friday, U.S. tech shares soared, pushing up the Nasdaq Composite 1.51 percent to 7,554 points, near its record closing high of 7,588 struck in March.
In contrast, the S&P 500, which rose 1.08 percent on Friday, was still about 140 points off a record peak of 2,872 set in January due to concerns over trade frictions.
Finance leaders of the closest U.S. allies vented anger over the Trump administration’s metal import tariffs on Saturday, setting the tone for a heated G7 summit next week in Quebec.
In a rare show of division among the normally harmonious club of wealthy nations, six G7 member countries issued a statement asking U.S. Treasury Secretary Steven Mnuchin to convey their “unanimous concern and disappointment” to President Donald Trump.
“The G7 is showing more divisions than unity, to the point where one has to wonder whether it is worth holding meetings,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“The G7 summit this weekend could be equally terrible. There’s even talk that Trump may not go. Concerns on trade frictions are likely to continue to weigh on markets,” he added.
There appears to have been no major break-through on trade disputes after U.S. Commerce Secretary Wilbur Ross met Chinese Vice Premier Liu He, either.
China warned the United States on Sunday that any agreements reached on trade and business between the two countries will be void if Washington implements tariffs and other trade measures, as the two ended their latest round of talks in Beijing.
Still, the U.S. economy’s current strength kept bears at bay for the moment.
Data released on Friday showed U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, indicating a rapidly tightening labour market, which could eventually fuel inflation.
“We had strong headline figures on employment but rise in wages was still well-contained and did not point to a sharp acceleration in inflation,” Hirokazu Kabeya, chief global strategist at Daiwa Securities.
Average hourly earnings rose eight cents, or 0.3 percent last month after edging up 0.1 percent in April. That pushed the annual increase in average hourly earnings to 2.7 percent from 2.6 percent in April.
The strong employment report added to a string of upbeat economic data, including consumer spending, industrial production and construction spending.
They have suggested economic growth was regaining speed early in the second quarter after expanding at a moderate 2.2 percent annualised rate in the January-March period.
Given the strength, the Federal Reserve is all but certain to raise interest rates at its policy meeting next week.
That supported the dollar against other currencies.
The U.S. currency traded at 109.50 yen, having gained 0.6 percent on Friday, extending its rebound from Tuesday’s low of 108.115, its lowest level in over five weeks.
The euro traded at $1.1665, off Thursday’s high of $1.1725. Still, it kept some distance from Tuesday’s 10-month low of $1.1510 as concerns over Italy’s political crisis have eased.
U.S. crude futures fell as low as $65.51 per barrel on Friday, touching their lowest level in almost two months. Rising U.S. crude production and a glut trapped inland due to a lack of pipeline capacity have pressured prices.
U.S. crude futures last traded at $65.71, down 0.15 percent. Global benchmark Brent was down 0.44 percent, at $76.45.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
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.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
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.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
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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