Oil lifted by upbeat readings on manufacturing activity, but jitters remain over coronavirus, OPEC+ output boost


Oil futures moved higher Monday following a round of upbeat readings on manufacturing activity, but traders see upside limited as OPEC and its allies relax curbs on output and the number of COVID-19 cases continue to rise.

West Texas Intermediate crude for September delivery
CL.1,
+2.03%

added 83 cents, or 2.1%, to $41.10 a barrel on the New York Mercantile Exchange, while October Brent crude
BRN00,
+1.56%

rose 64 cents, or 1.5%, to $44.16 a barrel.

Oil added to early gains after the Institute for Supply Management said its manufacturing index rose to 54.2 in July from 52.6 a month earlier, its highest level in 15 months and above the consensus forecast of 53.6. A reading above 50 indicates an expansion in activity, but senior executives warned that production remains well below pre-pandemic levels and that many jobs won’t be coming back soon.

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed in early July to relax output curbs beginning in August. OPEC+ agreed to cut output by 9.7 million barrels a day beginning in May, easing to 7.7 million barrels a day this month and running through the end of the year. Countries that exceeded the earlier curb are supposed to further restrain output, which means output is targeted to rise by around 1.5 million barrels a day beginning this month, though skeptics doubt that past curb violators will fully comply.

“Investors are worried that the production increase will reverse the recent price recovery in oil, especially as coronavirus cases continue to rise world-wide and energy demand remains subdued,” said Mihir Kapadia, chief executive of Sun Global Investments, in a note.

Oil ended last week on a positive note, leaving WTI with a monthly rise of around 2.6% for July, while Brent rose more than 5% for the month.

Coronavirus infections in the U.S. reached a record in July, with more than 1.9 million new cases. The U.S. now has nearly 4.7 million confirmed COVID-19 cases and about 155,000 deaths, while the global tally for infections stands at more than 18 million and almost 690,000 deaths, according to data compiled by Johns Hopkins University.

In other energy trading, September natural-gas futures
RBU20,
+3.77%

surged 16% to $2.089 per million British thermal units. Natural gas jumped after forecasts pointed to warmer weather than previously indicated for mid-August, wrote analysts at Tradition Energy, in a Monday note.

“Weather forecasts, after the next five days of below-normal temperatures across a large swath of the central U.S. and above-normal temps across the Northeast and Texas, have shifted warmer to above-normal temperatures across much of the country in both the six-to-ten and 11-15 day forecast periods,” they noted.

September gasoline
RBU20,
+3.77%

was up 3.7% at $1.2145 a gallon, while September heating oil
HOU20,
+1.92%

was 1.9% higher at $1.247 a gallon.



Original source link

Market jitters over second COVID-19 wave are an overdue pullback By Reuters


© Reuters. FILE PHOTO: A man crosses a nearly deserted Fulton Street in the financial district of lower Manhattan in New York

SINGAPORE (Reuters) – A second straight day of record new coronavirus cases in Beijing and a spike in infections across a swathe of the United States has dented investor sentiment and sent stocks sharply lower on Monday.

Here are analyst views on the shifting mood related to the COVID-19 pandemic and the outlook from here:

HAO HONG, HEAD OF RESEARCH, BOCOM INTERNATIONAL, HONG KONG:

“You basically now have a situation where, as the countries ease the lockdown, the number of cases will go up. In a market, which was already in the over-bought zone, any news on that front can trigger a sell-off.

“It’s unrealistic for the markets to factor in a V-shaped recovery, look at the Chinese numbers today … retail sales are still down.”

LEE WON, ANALYST, BOOKOOK SECURITIES, SEOUL:

“The fall is heavier in South Korea today because second-wave concerns added to the escalating of tensions with North Korea. North Korea made it clear its next step will be taken by the military, so there’s certainly heightened geopolitical risks.

“More may dump shares in the coming days as second-wave fears in China and the U.S. are clouding the outlook. South Korea may or may not prove resilient again, but certainly more and more are bracing for longer-term uncertainties.”

JAMES MCGLEW, EXECUTIVE DIRECTOR OF CORPORATE STOCKBROKING, ARGONAUT, PERTH:

“This is a healthy correction, but I feel there is some way to go as investors try and quantify what lies ahead.

“The market had run up sharply since hitting a low in March and that was based on a lot of optimism about the economy. But now investors are getting a reality check. Markets are now realising the COVID situation is not under control yet.”

MASARU ISHIBASHI, JOINT GENERAL MANAGER OF TRADING, SUMITOMO MITSUI BANK, TOKYO:

“Markets have ignored the number of new cases and rallied until now because everyone jumped on the economic recovery bandwagon. Now positions are so long that people are more likely to react to negative news, like what is happening in Beijing.

“Another factor to consider is volatility has been rising in some markets, which supports risk-off trades. This means sell currencies, sell stocks and buy bonds. In addition, worries about Brexit are starting to return, and this is not fully priced in. There are more downside risks for financial markets.”

STEVEN LEUNG, EXECUTIVE DIRECTOR FOR INSTITUTIONAL SALES, UOB KAY HIAN, HONG KONG:

“The market was pricing in a V-shape recovery. This can’t be the case if there is indeed a second wave, the best scenario is U-shaped. There will be a bigger impact this time on all those stocks tied to the expected economic recovery such as travel, hotel, if we see a second wave.

“These past few trading days, when there were uncertainties around the epidemic, the has been bouncing back. That means pressure on the Asian currencies. Capital may leave Asia for the U.S., that is negative for Asian markets.”

MOH SIONG SIM, FX ANALYST, BANK OF SINGAPORE:

“Usually after such a long run, there’s a pause. There’s a lot we don’t know about the virus itself, and the market is grappling with that uncertainty. But we are now better prepared. We know what sensible things to do.

“So do we get a double dip? I’m not so sure. I tend to think its a more of a scenario where the recovery might not be as strong as what is hoped for. The market is saying a V-shape, the economy is saying a U and the market is beginning to think it’s not a V, it’s more of a U.”

(This story refiles to fix typographical error in reporting credits)





Original source link

Stocks run out of steam on U.S. job jitters, yen gains By Reuters


© Reuters. A currency dealer works in front of electronic boards showing the Korea Composite Stock Price Index (KOSPI) and the exchange rate between the U.S. dollar and South Korean won, in Seoul

By Tom Westbrook

SINGAPORE (Reuters) – A two-day equities rally lost momentum on Thursday, and investors sold riskier currencies, as stimulus negotiations dragged on in Washington and investors fretted over a likely spike in U.S. jobless claims.

MSCI’s broadest index of Asia-Pacific shares outside Japan wobbled either side of flat. slumped 4% and U.S. stock futures fell 1%.

The dollar climbed around 1% against the Australian and New Zealand dollars and the yen rose 0.4% against the dollar as investors sought shelter.

“We are not out of the woods just yet,” said Stephen Daghlian, at brokerage CommSec in Sydney. “There are plenty of risks in the next couple of weeks.”

First among them are initial jobless claims in the United States due at 1230 GMT, with forecasts in a Reuters poll ranging from 250,000 claims all the way up to 4 million.

U.S. Federal Reserve Chairman Jerome Powell is also due to appear on NBC television around 1100 GMT.

The Fed’s promise of unlimited bond buying has eased some of the virus-driven financial stress this week. But Powell is also likely to be asked about the real economy, and the apparent divide between health officials and President Donald Trump as to how quickly the country can return to work.

Meanwhile, as Senate leaders in United States hoped to vote on the stimulus package late in the Washington night, markets’ patience and optimism are beginning to waver.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“But the positivity related to it is really just sentiment,” she said. “A lot of companies have withdrawn earnings guidance…these are still ahead of us. We don’t know how bad it could be.”

Hong Kong’s was down 0.5% by mid-morning while regional trade was mixed. Indexes in China posted meager gains and Australia, Indonesia and Thailand advanced.

JOBLESS CLAIMS TO TEST BOUNCE

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and more signs of economic damage.

Singapore’s economy suffered its biggest contraction in a decade in the first quarter, data showed on Thursday, as the coronavirus pandemic prompted the city-state to cut its full-year GDP forecast and plan for a deep recession.

Spain’s coronavirus death toll has overtaken China’s and a total of 21,221 people have died globally.

California Governor Gavin Newsom told reporters on Wednesday that a million Californians had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for even worse to come.

RBC Capital Markets economists had expected a national figure over 1 million in Thursday’s data, but say “it is now poised to be many multiples of that,” as reduced hours across the country drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note. That compares to a 695,000 peak in 1982.

Citi Private Bank said the peak could reach 15-18% of the total U.S. workforce, some 25 million people.

In currencies, the mood was to duck and cover. The Australian dollar fell 1.3% to $0.5879 and the pound fell half a percent to $1.1833.

The safe haven yen rose to 110.70 per dollar.

Oil steadied with stimulus hopes offsetting fears of plunging demand. futures slipped 35 cents to$24.14 per barrel and futures fell 0.9% to $27.15.

Gold fell 1% to $1,597.91 per ounce.





Original source link

Wall Street Breakfast: Downturn Jitters Abound


Emergency stimulus

Markets rebounded from their deepest rout since 1987 on Tuesday as the White House weighed a fiscal package of more than $1T that includes helicopter cash for Americans and financial relief to small businesses and the airline industry. Treasury Secretary Steven Mnuchin also said corporations will be able to defer tax payments of up to $10M, while individuals could defer up to $1M in payments to the IRS. Adding to the sentiment, the Fed announced it would reopen the so-called Commercial Paper Funding Facility, a key market backstop first set up during the last financial crisis.
Go deeper: Philip Davis lists 10 more ‘buying the dip’ ideas.

Global recession is here

Economists at Morgan Stanley and Goldman Sachs have joined the chorus of other Wall Street prognosticators to declare that COVID-19 has pushed the global economy into recession. It won’t be as steep as the 0.8% contraction of 2009, according to the IMF’s measure, but would be worse than the 2001 and early 1990s recessions. In related news, Mnuchin warned of 20% American unemployment without federal action, while today’s Fed meeting was canceled following the central bank’s emergency actions.
Go deeper: ‘Beware False Prophets Who Never See Bear Markets Coming’ by Danielle Park.

Inflating the life jacket

Boeing (NYSE:BA) is calling for a $60B lifeline for the U.S. aerospace industry, which faces enormous losses from the coronavirus crisis. “Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain,” according to the company. Earlier on Tuesday, President Trump signaled his support for the planemaker, saying at a press conference: “We have to protect Boeing.”
Go deeper: Airlines feel pressure as U.S. raises tariffs on Airbus.

Hotel industry next to make bailout case

Executives from companies such as Marriott (NASDAQ:MAR) and Hilton (NYSE:HLT) convened at the White House on Tuesday to discuss a bailout, consisting of $150B in direct aid for the hotel sector and $100B for related travel companies. They warned that half of the hotels in the country could close this year and the sudden cratering of demand would cause the loss of 4.6M jobs. Chip Rogers, CEO of the American Hotels and Lodging Association, said the economic impact of the pandemic on the hotel industry was already bigger than “September 11th and the 2008 recession combined.”

Keeping plants running

Following hours of talks that extended well into the night, GM (NYSE:GM), Ford (NYSE:F), and Fiat Chrysler (NYSE:FCAU) negotiated “extensive plans” with the United Auto Workers union to prevent America’s auto industry from coming to a standstill. “They will be working on shift rotation to minimize risk,” according to a statement. The ‘Big Three’ “agreed to review and implement the rotating partial shutdown of facilities, extensive deep cleaning of facility and equipment between shifts, extended periods between shifts, and extensive plans to avoid member contact.”
Go deeper: Plan to keep Tesla production humming quashed by sheriff.

Harnessing location data

The U.S. government is in active talks with Facebook (NASDAQ:FB), Google (GOOG, GOOGL) and a wide array of tech companies and health experts about how they can use location data gleaned from Americans’ phones to combat the novel coronavirus. The data could help officials predict the next hotspot or decide where to allocate overstretched health resources, The Washington Post reports. Privacy concerns? Recent news about Israel’s plans to use location data to help track COVID-19 already sparked intense discussions about legal and ethical implications.

China moves to expel American journalists

Echoing the NBA-China controversy that blew up last October, Beijing said it would expel American journalists working in the country for The New York Times (NYSE:NYT), The Wall Street Journal (NASDAQ:NWS) and The Washington Post. It continues a tit-for-tat fight that began in February after the Journal ran an opinion article entitled, China Is the Real Sick Man of Asia. In response, Secretary of State Mike Pompeo imposed a cap on the number of employees permitted to work for Chinese government-controlled media organizations in the U.S. (down to 100, from 160).

Everyone-must-eat rally

Grocery store stocks raced higher on Tuesday as traffic accelerated with the number of coronavirus cases growing and dining out no longer an option in some parts of the country. Kroger (NYSE:KR), the largest supermarket chain in the U.S., has even hired more than 2,000 people in the last week to keep up with increased demand. “We’re hiring every day,” CEO Rodney McMullen told CNBC, adding that the company, which also owns Harris Teeter and Fred Meyer, has more than 10,000 openings.

Prioritizing essentials, medical supplies

Independent sellers, as well as vendors who supply items for Amazon (NASDAQ:AMZN) to resell, will be unable to ship products other than such high-demand items to company warehouses until April 5. “As COVID-19 has spread, we’ve recently seen an increase in people shopping online,” reads a memo. “So in the short term, we are temporarily prioritizing household staples, medical supplies, and other important products coming into Amazon fulfillment centers so we can more quickly receive, restock, and deliver these products to customers.”





Original source link

Dow Enters Bear Market as Coronavirus Jitters Trigger Bloodbath By Investing.com


© Reuters.

By Yasin Ebrahim 

Investing.com – U.S. stocks extended losses Wednesday, pushing the Dow into bear-market territory on signs the novel coronavirus is gathering pace in the U.S. after both Washington and San Francisco banned large gatherings to curb the virus outbreak, which has become a pandemic according to the World Health Organization.  

The slipped 4.97%, lost 4.78% and the fell 5.55%, or nearly 1,400 points, taking its losses to 20% from all-time highs. 

Boeing (NYSE:) was a big drag on the blue-chip index, falling 15% on reports its would tap its entire loan facility of $13.8 billion. Its declines accounted for about 240 points off the Dow.

After weeks of downplaying the potential effects of the virus, President Donald Trump has called an emerging meeting of top U.S. health officials.

Washington state Gov. Jay Inslee placed a ban on large gatherings in several counties across the state to limit the spread of Covid-19.. San Francisco health officials, meanwhile, announced that they are also banning gatherings of 1,000 or more to contain the virus.

The World Health Organization declared Covid-19 a global pandemic as the virus has spread globally, with infections now topping 120,000.

Investor hopes of U.S. stimulus measures to boost economic growth, meanwhile, were given a boost amid reports that White House is in favor of declaring a national disaster under the Stafford Act to free up to $40 billion in immediate aid, Politico reported. 

Trump a day earlier floated the idea of temporarily suspending payroll taxes to cushion the economic blow from the virus outbreak. 

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Original source link