Thread for News on International Markets

Oil prices gain on US-Iran tensions, mixed day for global stocks

AFP – Oil prices jumped again Thursday on rising US-Iran tensions, lending support to equity markets despite another round of dreary economic data in the US, Europe and elsewhere.

Iran’s Revolutionary Guards warned the US of a “decisive response” after President Donald Trump said Wednesday he ordered the US Navy to destroy Iranian boats that harass American ships in the Gulf.

The back-and-forth led to a second straight big increase for benchmark US crude contract West Texas Intermediate, which gained 20 percent to end at $16.50 a barrel.

The benchmark crude collapsed Monday to an unprecedented low of minus $40.32, reflecting a supply glut that has left the US with little remaining empty crude storage capacity.

Short of halting the world’s oil production there is little producers can do to help the price, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

One other option is to fuel geopolitical tensions in the Middle East to threaten supply and support prices. This is what Donald Trump is doing right now,” she said.

Higher oil prices gave a boost to European equity market and played a role in early gains on Wall Street.

Investors largely shrugged off US data showing another 4.4 million workers filed new claims for jobless benefits last week, bringing the total to 26.4 million since mid-March.

And analysis firm IHS Markit said earlier that the eurozone economy has suffered an “unprecedented collapse” as European governments struggled to reach agreement on an economic recovery plan to address the virus damage.

“The ferocity of the slump has… surpassed that thought imaginable by most economists,” IHS Markit chief economist Chris Williamson said.

There also were weak economic reports in Korea and Japan, while the Bank of England warned that Britain was heading for a recession that could be the worst in centuries.

Still, US stocks were strongly positive through late morning, but pulled back following reports that a closely-watched coronavirus drug being developed by Gilead Sciences failed in its first randomized clinical trial.

Gilead fell 4.3 percent following reports that use of antiviral drug remdesivir to treat coronavirus failed in a key clinical trial. Gilead said it is still awaiting data from multiple studies of the drug, which has shown promise in some analyses.

Target fell 2.8 percent after the retail chain cautioned that first-quarter profits would be dented by additional spending on wages, a shift in consumption to lower-profit items and the need to write down the value of apparel and other goods that have not sold well.
– Key figures around 2100 GMT –

West Texas Intermediate: UP 20 percent at $16.50 per barrel

Brent North Sea crude: UP 4.7 percent at $21.33 per barrel

New York – Dow: UP 0.2 percent at 23,515.26 (close)

New York – S&P 500: DOWN 0.1 percent at 2,797.80 (close)

New York – Nasdaq: FLAT at 8,494.75 (close)

London – FTSE 100: UP 1.0 percent at 5,826.61 (close)

Frankfurt – DAX 30: UP 1.0 percent at 10,513.79 (close)

Paris – CAC 40: UP 0.9 percent at 4,451.00 (close)

EURO STOXX 50: UP 0.6 percent at 2,852.46 (close)

Tokyo – Nikkei 225: UP 1.5 percent at 19,429.44 (close)

Hong Kong – Hang Seng: UP 0.4 percent at 23,977.32 (close)

Shanghai – Composite: DOWN 0.2 at 2,838.50 (close)

Euro/dollar: DOWN at $1.0775 from $1.0823 at 2100 GMT

Dollar/yen: DOWN at 107.62 yen from 107.75

Pound/dollar: UP at $1.2344 from $1.2334

Euro/pound: DOWN at 87.29 pence from 87.75

Equities tumble in Asia as Trump revives trade war fears

AFP – Asian markets suffered steep losses Monday, tracking a selloff in New York after Donald Trump sparked fears of a renewed trade war with China over its role in the coronavirus pandemic.

Claims by the US president and Secretary of State Mike Pompeo that the disease started in a lab in Wuhan, and that those responsible would be held to account, overshadowed a further slowing of infections and deaths from COVID-19.

The losses across the region come as investors returned from an extended weekend break and after all three main indexes on Wall Street tanked between 2.6 and 3.2 percent, having enjoyed their best month in decades in April.

Trump suggested he could lump new tariffs on China over its handling of the virus outbreak, claiming he had seen evidence linking a Wuhan lab to the contagion.

The warning fanned worries of a return to the trade standoff between the world’s top two economies that battered global markets last year until a partial agreement was reached in December.





It also comes as Trump faces a tough fight to be re-elected in November with the economy tanking and millions of Americans losing their jobs because of the virus crisis.

“President Trump is back beating the trade war drums… and increasing the odds of a significant volatility risk event as all roads lead back to trade and tariff,” said AxiCorp’s Stephen Innes.

He added that “while the market is already factoring in a less globalised world during the initial phase of the post-pandemic recovery as economies internalise, rekindling a dormant US-China trade war will likely make any economic improvement exponentially more difficult. And ripping up the trade agreement will trigger a global equity market rout.”

– ‘Challenges and setbacks’ –

Hong Kong led the selloff, dropping more than three percent, while Seoul, Taipei, Singapore, Manila and Jakarta were all down more than two percent, with Wellington off 0.7 percent. However, Sydney edged up slightly.

Analysts warned that after a strong April — fuelled by optimism the worst of the disease has passed — equities could suffer a tumultuous May as corporate earnings and other indicators reveal the extent of the damage inflicted.

My concern is that the market has priced in all that optimism before we have confronted the worst of the bad news on the economy and on some industries and earnings,” Michael Jones at Caravel Concepts LLC told Bloomberg TV.

“There are some challenges and setbacks that are going to be hitting us in the face over the next four weeks and we are no longer priced cheaply enough to just look past all that bad news.”

The downbeat mood sent the dollar rallying against higher-yielding, riskier currencies including the Australian dollar, South Korean won and Mexican peso.

Oil prices dropped after surging last week as top producers began to ease up on the pumps as part of a deal agreed last month to slash output by 10 million barrels a day.

– Key figures around 0230 GMT –

Hong Kong – Hang Seng: DOWN 3.6 percent at 23,747.20

Shanghai – Composite: Closed for a holiday

Tokyo – Nikkei 225: Closed for a holiday

West Texas Intermediate: DOWN 7.4 percent at $18.31 per barrel

Brent North Sea crude: DOWN 2.7 at $25.73 per barrel

Euro/dollar: DOWN at $1.0955 from $1.0978 at 2040 GMT

Dollar/yen: DOWN at 106.76 yen from 106.93 yen

Pound/dollar: DOWN at $1.2462 from $1.2494

Euro/pound: UP at 87.91 pence from 87.86 pence

New York – Dow: DOWN 2.6 percent at 23,723.69 (close)

London – FTSE 100: DOWN 2.3 percent at 5,763.06 (close)

Asian markets swing as uncertainty tempers reopenings

AFP – Asian markets fluctuated Thursday after rallying for much of the week, with any gains dragged by profit-taking while concerns over the long-term impact of the virus and worsening China-US relations added to the selling pressure.

Equities have enjoyed weeks of gains thanks to signs of an easing in the disease in major economies and the gradual lifting of lockdown measures that are expected to have sent the world into a deep recession.

But that optimism has been tempered by uncertainty about the future, while Donald Trump has continued to target China over the outbreak and threatened fresh tariffs on the country, fuelling worries of another painful trade war between the superpowers.

In his latest volley, on Wednesday night he tweeted that “It was the ‘incompetence of China’, and nothing else, that did this mass Worldwide killing”.

He later accused counterpart Xi Jinping of being behind a “disinformation and propaganda attack on the United States and Europe”.

He added: “It all comes from the top”, adding that China was “desperate” to have former vice president Joe Biden win November’s presidential election.

Stephen Innes, of AxiCorp, warned that investors might not be taking the simmering tensions seriously enough.

“Markets may be pricing in far too much complacency as the US-China ‘phase one’ trade deal could be at risk, as the pandemic and resulting acute economic downturn have made China’s trade commitment to the US much more challenging to fulfil,” he said in a note.

Minutes from the Federal Reserve highlighted its concerns about the impact of the outbreak.

Policymakers were worried that “even after social-distancing requirements were eased, some business models may no longer be economically viable”.

This would be the case especially if consumers decide to “avoid participating in particular forms of economic activity”, the minutes said.

– Europe back in the air? –

The World Health Organization said 106,662 virus cases were reported Tuesday, the biggest daily jump since the disease broke out in December, with Latin America now of particular concern.

In early trade, Hong Kong and Shanghai were in negative territory, Tokyo finished the morning slightly lower, while Wellington and Singapore also dropped.

Sydney rose 0.2 percent, while there were also small gains in Seoul, Taipei and Manila.

But while uncertainty reigns, traders continue to take heart from the good news, with European Union tourism ministers holding a virtual meeting, while Greece unveiled plans to let seasonal hotels reopen from June 15 and international flights resume on July 1.

And Italian airports were given the go-ahead to reopen from June 3, including for international flights.

Meanwhile, researchers reported progress from a study involving monkeys that looked at a prototype vaccine and another on whether infection with COVID-19 provides immunity against re-exposure.

That came days after US firm Moderna said early tests of a possible vaccine had been successful.

“Rollback continues to support risk sentiment with markets optimistic that economic activity will rebound sharply,” said National Australia Bank’s Tapas Strickland.

“Vaccine hopes also continue… The developments again reinforce for markets it’s a matter of when, rather than if for a vaccine.”

– Key figures around 0230 GMT –


Tokyo – Nikkei 225: DOWN 0.1 percent at 20,583.95 (break)

Hong Kong – Hang Seng: DOWN 0.4 percent at 29,293.91

Shanghai – Composite: FLAT at 2,883.23

West Texas Intermediate: UP 0.2 percent at $33.55 per barrel

Brent North Sea crude: UP 0.4 percent at $35.90 per barrel

Euro/dollar: DOWN at $1.0958 from $1.0983 at 2050 GMT

Dollar/yen: UP at 107.65 yen from 107.55 yen

Pound/dollar: DOWN at $1.2196 from $1.2233


Euro/pound: UP at 89.85 pence from 89.74 pence

New York – Dow: UP 1.5 percent at 24,575.90 (close)

London – FTSE 100: UP 1.1 percent at 6,067.16 (close)

US stocks sag on China tensions, Europe up, Oil at US$35

AFP – Wall Street stocks stumbled in late afternoon trading Thursday on rising tensions between Washington and Beijing, after European bourses advanced as more of the continent took steps to end coronavirus shutdowns.

US stocks had been in positive territory most of the day despite poor economic data, but finally pulled back after US President Donald Trump announced he would hold a press conference on China on Friday.

The announcement follows strong US criticism of a security law allowing China to tighten its grip on Hong Kong.

Trump has also blamed Beijing for the coronavirus outbreak that has killed 100,000 Americans and added new uncertainty to his re-election prospects.

The twin developments have investors fearing the return of a revived US-China trade war.

“At the moment, it’s just talk, primarily, but you can’t ignore it completely because, as we’ve seen in the past with this kind of thing, once it escalates, it escalates very quickly,” said JJ Kinahan, chief market strategist at TD Ameritrade.

Labor Department data showed another 2.12 million people filed for unemployment in the United States last week, pushing total layoffs since the start of the coronavirus crisis to more than 40 million.

New orders for US manufactured goods also plunged 17.2 percent in April after a similar steep decline in March, the Commerce Department reported.

Though terrible, the data was not significantly worse than expected and investors shrugged it off for most of the day.

– Paris cafes to reopen –


Earlier, major European bourses gained more than one percent as Italy set June 20 as the date for the Serie A football league to resume, while France announced the long-awaited nationwide reopening of bars, restaurants and cafes from June 2, albeit with restrictions.

“Equity markets in Europe are set to finish the day in positive territory as traders are hoping that governments will continue to loosen their lockdown restrictions,” said CMC Markets analyst David Madden.

“The reopening of economies has been a common theme across the markets in recent weeks, and it’s the reason why stocks have been bullish lately.”

Europe’s bourses had vaulted higher on Wednesday after EU leaders unveiled a vast 750 billion euro ($825-billion) proposal to the European Parliament and member states.

If passed, the deal — which aims to help the worst-affected countries with a mix of grants and loans — would be the biggest EU stimulus package ever.

In Asia, Tokyo’s Nikkei jumped 2.3 percent, ending at a three-month high on optimism over the gradual reopening of virus-hit economies worldwide, even as investors kept a close eye on the acrimony between Beijing and Washington.

Hong Kong stocks shed 0.7 percent after China’s parliament pushed ahead with the new security law.

– Key figures around 2050 GMT –

New York – Dow: DOWN 0.6 percent at 25,400.64 (close)

New York – S&P 500: DOWN 0.2 percent at 3,029.73 (close)

New York – Nasdaq: DOWN 0.5 percent at 9,368.99 (close)

London – FTSE 100: UP 1.2 percent at 6,218.79 (close)






Frankfurt – DAX 30: UP 1.1 percent at 11,781.13 (close)

Paris – CAC 40: UP 1.8 percent at 4,771.39 (close)

EURO STOXX 50: UP 1.4 percent at 3,094.47 (close)

Tokyo – Nikkei 225: UP 2.3 percent at 21,916.31 (close)

Hong Kong – Hang Seng: DOWN 0.7 percent at 23,132.76 (close)

Shanghai – Composite: UP 0.3 percent at 2,846.22 (close)

Brent North Sea crude: UP 1.6 percent at $35.29 per barrel

West Texas Intermediate: DOWN 2.7 percent at $33.71 per barrel


Euro/dollar: UP at $1.1077 from $1.1006 at 2100 GMT

Dollar/yen: DOWN at 107.59 yen from 107.72

Pound/dollar: UP at $1.2319 from $1.2261

Euro/pound: UP at 89.92 pence from 89.77 pence