Connect with us

Markets

Asian Stocks Gain on Move by China’s Central Bank, but Trade War Weighs

Published

on

Asian stocks
  • Asian Stocks Gain on Move by China’s Central Bank, but Trade War Weighs

Asian stocks rose on Monday after China’s central bank took steps to try to drag the yuan away from 14-month lows, but the tit-for-tat conflict over Sino-U.S. trade hung heavily on markets.

The People’s Bank of China late on Friday raised the reserve requirement on foreign exchange forward positions, making it more expensive to bet against the Chinese currency.

The move boosted the Australian dollar, which is often played as a liquid proxy for the yuan. The Aussie came off two-week lows to climb as high as $0.7412 after the announcement, and was last at $0.7396.

Analysts say the step by the PBOC will be generally positive for Asian assets.

“Leaning against bearish CNY sentiment is important because a rapidly weakening currency risks triggering residential outflows and destabilizing domestic asset prices,” JPMorgan analysts said in a note.

“Our economists think that PBOC likely will take further action if CNY depreciation continues or capital outflow pressure increases.”

On Monday, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.2 percent for a second straight session of gains.

Japan’s Nikkei edged up 0.1 percent, while Australian shares added 0.5 percent. South Korea’s KOSPI index rose 0.4 percent.

On Wall Street, the Dow climbed 0.54 percent, the S&P 500 gained 0.46 percent and the Nasdaq Composite added 0.12 percent. They were helped by strong corporate earnings, although gains were capped by worries over the escalating trade tensions.

China’s finance ministry proposed tariffs on $60 billion worth of U.S. goods on Friday, while a senior Chinese diplomat cast doubt on prospects of talks with Washington to resolve the bitter trade conflict.

That was followed by a report in China’s state media saying Friday’s retaliatory tariffs were “rational” while accusing the United States of blackmail.

At the same time, U.S. President Donald Trump said his strategy of placing steep tariffs on Chinese imports is “working far better than anyone ever anticipated”, citing losses in China’s stock market. He predicted the U.S. market could “go up dramatically” once trade deals were renegotiated.

“Our economists consider that escalation in tension may bring the U.S. and China back to the negotiation table, but that even if negotiations are resumed, a bumpy and lengthy process is likely to ensue as the two sides remain very far apart,” JPMorgan added.

According to Bespoke Investment Group, mentions of tariffs in S&P 500 company earnings reports for the second quarter have more than doubled from the first quarter of this year.

In currencies, the dollar index, which measures the greenback against a basket of six other currencies, was up 0.1 percent at 95.259.

Traders see further upside in the dollar as they maintained a significantly large long position on the currency, while net short bets on the Aussie were their largest since November 2015.

The British pound held at $1.30 after falling to an 11-day low of $1.2975 following remarks by Bank of England Governor Mark Carney that Britain faced an “uncomfortably high” risk of a “no deal” Brexit.

The euro inched down to more than 5-week lows of $1.1573.

Gold bounced from near 17-month lows after weaker-than-expected U.S. jobs data, and was last up 0.1 percent at $1,213.70.

Meanwhile, Brent crude futures were off 2 cents at $73.19, while U.S. crude oil futures were up 9 cents at $68.58 a barrel.

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

Published

on

Oil

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.

Continue Reading

Markets

Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

Published

on

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.”

Continue Reading

Markets

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

Published

on

oil-rig

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.”

Continue Reading

Trending