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Asian Stock Markets Rise on U.S. Debt Ceiling Optimism, Sony’s Spin-off Plans Boost Nikkei

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3 weeks ago

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Asian

Asian stock markets opened higher on Thursday following a strong close in the United States after reports pointed to a possible increase in U.S. debt ceiling.

In Japan, the Nikkei reached a 20-month high, driven by a surge in shares of Sony Corporation after conglomerate announced its consideration of spinning off and listing its financial services unit, a move that could occur within the next three years.

This development contributed to the Nikkei’s robust performance, which has outpaced its Asian counterparts due to strong earnings, a resilient Japanese economy and dovish signals from the Bank of Japan.

Nikkei Soars with Sony’s Growth Prospects

The Nikkei demonstrated a substantial increase of 1.5%, primarily propelled by a nearly 6% surge in Sony Corp’s shares. Sony’s announcement of potentially spinning off and listing its financial services unit boosted investor confidence. The company plans to distribute shares of the new firm as a dividend, creating excitement and optimism among market participants. Sony’s promising growth prospects, coupled with a larger-than-expected drop in Japan’s trade deficit, extended the Nikkei’s winning streak for a sixth consecutive session.

Broader Asian Markets Follow Wall Street’s Lead

Asian markets as a whole reflected the gains observed on Wall Street, buoyed by the Biden Administration’s indication that a deal on raising the U.S. debt ceiling could be reached soon. This positive development alleviated concerns surrounding a potential U.S. debt default, especially with the approaching June 1 deadline for policymakers to reach an agreement. However, despite the overall market optimism, caution prevailed due to apprehensions about slowing economic growth, particularly in China.

Mixed Sentiment in China’s Market

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rebounded with gains of 0.4% and 0.8%, respectively, breaking a two-day streak of losses. This recovery followed a series of weak economic readings from the country, which raised concerns about a potential slowdown. Recent data suggested that China’s post-COVID economic rebound was losing momentum, negatively impacting Asian markets with significant trade exposure to the country.

Technology Stocks Drive Market Growth

Technology stocks played a crucial role in driving the growth of Asian markets. Hong Kong’s Hang Seng index recorded a notable increase of 1.2%, supported by a 3.2% surge in shares of Alibaba Group Holding Ltd. Investors eagerly anticipated Alibaba’s first-quarter earnings announcement later in the day. The stock’s positive performance was further strengthened by Michael Burry, known for his role in “The Big Short,” doubling his stake in the Chinese e-commerce giant. Burry’s move reflected his belief that Alibaba would greatly benefit from China’s reopening in the current year.

Other technology-heavy indexes across Asia also experienced gains. South Korea’s KOSPI rose by 0.5%, while Taiwan’s Weighted index climbed by 1.1%. These increases in technology-focused sectors underscored the importance of the industry in driving market growth and investor sentiment.

Australia’s Optimism Amid Soft Labor Market Reading: Australia’s ASX 200 index recorded a gain of 0.5% following a labor market reading that was softer than expected. This result fueled hopes that the Reserve Bank would pause future interest rate hikes, further boosting market optimism.

Asian stock markets rode the wave of optimism from Wall Street, with the Nikkei reaching a 20-month high driven by Sony’s potential spin-off plans. The positive sentiment was further supported by prospects of a resolution on the U.S. debt ceiling issue. However, concerns over slowing

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Markets

Weak Global Trade Weighs on Chinese Exports, Australian Growth Slows, Oil Slips Further

European indices and US futures look a little flat following a mixed session in Asia overnight, as Chinese trade data failed to inspire while Australian GDP pointed to further pain as the RBA continues raising rates.

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2 hours ago

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June 7, 2023

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Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

European indices and US futures look a little flat following a mixed session in Asia overnight, as Chinese trade data failed to inspire while Australian GDP pointed to further pain as the RBA continues raising rates.

Disappointing trade figures increase calls for stimulus

Chinese trade data offered further evidence of weakening demand both domestically and abroad, with exports falling particularly hard last month. A 7.5% decline far exceeded the -0.4% expected, while imports actually beat forecasts, albeit while also falling 4.5% in May.

Weaker global trade is not a new story but it is surprising how quickly China’s reopening boost has faded, with backlogs of work supporting export numbers until now even as other countries have continued to see demand for their goods wane.

With China’s reopening boom flagging so quickly, pressure is set to intensify on the leadership to announce new stimulus measures in a bid to revitalize the economy again and achieve its 5% growth target. That may initially come in the form of rate cuts, perhaps targeted to those sectors under the most pressure with authorities so far reluctant to engage in broad-based easing.

Australian growth slows as high interest rates bite

The Australian economy is slowing amid cost-of-living pressures, weaker household spending, and higher interest rates. GDP in the first quarter slipped to 0.2%, down from 0.6% in the final quarter of last year and below expectations. High-interest rates and inflation are hurting household finances and the economy is now suffering. This week’s RBA hike is going to compound this and unless we see signs of price pressures easing, there may be more to come.

Oil remains under pressure after Saudi cut

Oil prices are falling again today as Saudi Arabia’s attempt to dress up a unilateral move as a group cut fails to have the desired impact. Crude is now trading below the level it ended at Friday which suggests that, despite the knee-jerk reaction on Monday, traders were hedging against broader action from OPEC+ and got a light version of the deal they feared.

While Saudi Arabia remains price driven, the market is more concerned with the economic outlook, and the rest of the alliance seemingly isn’t interested in taking more action in anticipation of what may come. The commitment from the start of the next year could easily change depending on what unfolds whereas markets are forced to respond to current risks and as far as the economy is concerned, they are tilted to the downside.

Gold awaiting further data following inconclusive reports

Gold is treading water again this morning, sitting right in the middle of the roughly $1,940-$1,980 range it found itself in these past weeks. The economic data we’ve had recently has been far from conclusive and that creates a lot of uncertainty around the policy path for interest rates and therefore appetite for the yellow metal.

Inflation has proven to be more stubborn than hoped while the labour market remains resilient, a combination that doesn’t point to US rate cuts later this year as traders currently hope. This is a big summer and all of that may soon change but for now, that uncertainty is creating this choppiness and range trading we’re seeing in gold.

Will the Binance and Coinbase sagas bring regulatory clarity to the space?

It’s been an explosive couple of days in the crypto space, with the SEC targeting Binance and Coinbase with lawsuits containing various allegations that have rattled the industry. Bitcoin initially fell more than 5% on Monday before recovering largely on Tuesday and now it’s trading only marginally lower, just below $27,000. While the initial response to the action was negative, it didn’t exactly come as a shock and the companies will have been preparing for such a move for some time.

Given the size of the two exchanges and the recent scarring from the FTX scandal, there will obviously be some concern about what comes next. But one good thing that will hopefully come from this is regulatory clarity which has been lacking for years now.

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Crude Oil

Global Oil Prices Appreciate to $77.85 After Saudi Announces Plan to Cut Production

Global oil prices appreciated on Monday morning following Saudi Arabia’s announcement that it will cut crude oil production by 1 million barrels per day (bpd) from the month of July to curb global economic headwinds weighing on the market.

Published

2 days ago

on

June 5, 2023

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Crude Oil - Investors King

Global oil prices appreciated on Monday morning following Saudi Arabia’s announcement that it will cut crude oil production by 1 million barrels per day (bpd) from the month of July to curb global economic headwinds weighing on the market.

Brent crude oil, against which Nigerian oil is priced, rose by $1.72, or 2.3%, to $77.85 a barrel by 10:48 am Nigerian time while the U.S. West Texas Intermediate crude also climbed by $1.72, or 2.4%, to $73.46.

Both crude oils gained more than 2% on Friday after the Saudi energy ministry announced that the top exporter would reduce output from 10 million bpd in July to 9 million bpd in May 2024. The biggest of such reduction in years.

The voluntary cut is on top of a broader deal by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia to limit supply into 2024 as the OPEC+ producer group seeks to boost flagging oil prices.

OPEC+ pumps about 40% of the world’s crude and has cut its output target by a total of 3.66 million bpd, amounting to 3.6% of global demand.

“Saudi remains keener than most other members in terms of ensuring oil prices above $80 per barrel, which is essential for balancing its own fiscal budget for the year,” said Suvro Sarkar, leader of the energy sector team at DBS Bank.

“Saudi will probably continue doing whatever it takes to keep oil prices elevated … and take calculated pre-emptive steps to ensure the macro concerns potentially affecting demand are negated.”

Consultancy Rystad Energy said the additional Saudi cut is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.

Goldman Sachs analysts said the meeting was “moderately bullish” for oil markets and could boost December 2023 Brent prices by between $1 and $6 a barrel depending on how long Saudi Arabia maintains output at 9 million bpd over the next six months.

“The immediate market impact of this Saudi cut is likely lower, as drawing inventories takes time, and the market likely already put some meaningful probability on a cut today,” the bank’s analysts added.

Many of the OPEC+ reductions will have little real impact, however, as the lower targets for Russia, Nigeria and Angola bring them into line with their actual production levels.

In contrast, the United Arab Emirates (UAE) was allowed to raise output targets by 200,000 bpd to 3.22 million bpd to reflect its larger production capacity.

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Crude Oil

Global Oil Prices Surge as US Lawmakers Suspend Debt Ceiling

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years.

Published

5 days ago

on

June 2, 2023

By

crude-oil-production

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

Brent crude oil, against which Nigerian oil is priced, rose by 77 cents, or 1% to $75.05 a barrel by 9 am while U.S. West Texas Intermediate crude (WTI) was up 69 cents, or 1%, at $70.79.

Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar , making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

OPEC+ in April announced a surprise cut of 1.16 million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

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