Asian markets mixed but little joy as traders eye more Fed hikes

HONG KONG - Markets were mixed Thursday, with little buying enthusiasm after minutes from a Federal Reserve policy meeting indicated interest rates will likely keep rising longer than previously feared.

A blockbuster jobs report and sticky inflation data this month have dealt a hammer blow to earlier expectations the US central bank could soon pause its monetary tightening campaign or even cut borrowing costs before year's end.

Several Fed officials have lined up to warn traders they were too optimistic and that with the labour market still strong, rates would need to keep rising until it had weakened and prices were under control.

Minutes from the Fed's February 1 decision reinforced that broad agreement as policymakers try to get inflation down to their target of two percent.

"Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to two percent, which was likely to take some time," the minutes said.

"Almost all participants agreed that it was appropriate to raise the target rate for the federal funds rate 25 basis points at this meeting."

And it noted that "a few participants" were in favour of a 50-point increase.

Analysts pointed out that the minutes came before the latest jobs and inflation figures.

National Australia Bank's Taylor Nugent, meanwhile, noted "the absence of any mention of 'disinflation' in the minutes, which contrasts (bank boss Jerome) Powell's press conference where he noted many times that the disinflationary process was underway".

After a healthy rally through January, global markets have rowed back this month as investors come to terms with the higher-for-longer rates narrative and recession fears return.

After Wednesday's sell-off, Asian markets were mixed.

Hong Kong, Shanghai, Sydney, Singapore, Mumbai Bangkok and Manila all fell, though Seoul, Wellington, Taipei and Jakarta edged up.

London dipped at the open, though Frankfurt and Paris edged higher.

"One of our big concerns coming into this year was the market was anticipating an event that wasn't likely to occur, that being a dovish Fed pivot," Oaktree Capital Management's Danielle Poli told Bloomberg Television.

"The market has woken back up a little bit in these last two weeks."

Investors are now awaiting the release of US jobless claims later in the day, which could provide a fresh idea about the strength of the labour market.

Crude prices edged up slightly Thursday but made only a small dent in the losses of at least three percent suffered the day before as the prospect of higher rates and a possible recession drags on demand expectations.

Agence France-Presse

Major oil producers to consider cuts after price slide

DUBAI - Major oil producers meet in Abu Dhabi on Sunday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash.

Oil prices shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centered on higher supply and fears of sluggish demand.

Brent crude dropped below $70 a barrel on Friday for the first time since April while the New York's West Texas Intermediate (WTI) sank below $60 a barrel, a nine-month low.

The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand.

The slide also comes during signs of a softer-than-expected impact from US sanctions on Iran oil exports.

"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the US, more than compensating for lost Iranian barrels," Forex.com analyst Fawad Razaqzada told AFP.

"With the Iranian sanctions not being as severe as initially feared, officials from the OPEC and non-OPEC producers may discuss at the weekend the need to bring compliance back down towards the 100-percent level or risk another 2014-style slide in prices," he said.

Energy ministers of top producers Russia and Saudi Arabia will join other OPEC and non-OPEC officials for the meeting of the Joint Ministerial Monitoring Committee, which oversees production levels.

The world's second and third crude producers -- after they were overtaken by the United States thanks to shale oil -- Russia and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash.

Through large production cuts starting at the beginning of 2017, they managed to push up oil prices from below $30 a barrel to over $85 a barrel in October, strongly improving their revenues.

But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.

Saudi Arabia raised its production from around 9.9 million barrels per day in May to around 10.7 million bpd in October, according to Energy Minister Khalid al-Falih.

Kuwait, Iraq, Russia and the United Arab Emirates also boosted their output. 

Cailin Birch, analyst at the Economist Intelligence Unit, said a slowing oil demand is beginning to appear in China, the world's largest importer of crude oil. 

"The recent drop in oil prices reflects a combination of factors. For one, signs of slowing oil demand are beginning to appear; the rate of GDP growth in China is beginning to ease," Birch told AFP. 

The meeting, which will also be attended by the oil ministers of Kuwait, Venezuela and host nation the UAE, is not due to make decisions but will most likely send signals.

The JMMC, a technical committee, is expected to make important recommendations on production cuts to a key ministerial meeting in Vienna next month for the OPEC and non-OPEC producers.

Commerzbank, Germany's second-largest lender, said Friday oil producers must act to prevent a free fall of prices.

"If they fail to signal any intention to reverse the latest increase in production, oil prices threaten to slide further," the bank said in a note.

source: news.abs-cbn.com

Trade fears hit stocks, commodities as investors eye safety

NEW YORK -- Global stock markets fell with U.S. bond yields and agricultural commodities on Tuesday, while the dollar rose and investors flocked to safety in the face of a rapidly escalating US-China trade conflict.

US soybean futures were among the biggest casualties after President Donald Trump threatened to impose a 10 percent tariff on another $200 billion of Chinese goods, a threat that China's commerce ministry described as "blackmailing," vowing to retaliate.

Government bonds and the Japanese yen rallied as investors sought protection. Oil futures pulled back as the dollar rose, with US crude seeing the deepest declines.

Wall Street's 3 major indexes closed lower, though the S&P 500's 0.4 percent drop was much more measured than that of overseas markets such as China's.

A preference for more domestically-focused US sectors such as utilities and telecommunications showed investors trying to insulate themselves from a trade war, according to Jack Ablin, chief investment officer at Cresset Wealth in Chicago.

Stocks were vulnerable to a sell-off on trade headlines because some are overvalued at a time when the US Federal Reserve is raising rates, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis

"Trade is not as big an issue for us as overseas economies and it's easy to believe Trump is bluffing because he does a lot of it." said Paulsen. "It's starting to feel more like a true trade war. I think people still don't think we'll blow up into a full global trade war that'll cause a recession."

The Dow Jones Industrial Average fell 287.12 points, or 1.15 percent, to 24,700.35, the S&P 500 lost 11.18 points, or 0.40 percent, to 2,762.57 and the Nasdaq Composite dropped 21.44 points, or 0.28 percent, to 7,725.59.

While the strong dollar affected commodities across the board, investors in US agricultural commodities appeared particularly worried. Cresset's Ablin said Trump may be willing to suffer near-term pain in commodities in a spat that is "less about soybeans and more about intellectual property."

Chicago Board of Trade front month soybean futures settled down 2.1 percent after falling as much as 7.3 percent, to the lowest spot price on a continuous chart since December 2008.

"When you get in a fight with your biggest buyer of agriculture, and the world's largest soybean buyer (China), even if (it) were to buy 20 percent less, it's a big deal," said Dan Basse, president of Chicago-based consultancy AgResource Co.

He estimated that US crop farmers have lost $100 per acre in revenue over the past two weeks in the most rapid erosion of US farm profit since at least 1979 due to the administration's battle with China.

In US Treasuries, US 10-year and 30-year yields fell to three-week lows, while two-year yields slid to two-week troughs.

Benchmark 10-year notes last rose 10/32 in price to yield 2.8894 percent, from 2.926 percent late on Monday.

The 30-year bond last rose 21/32 in price to yield 3.0228 percent, from 3.055 percent late on Monday.

In currencies the dollar and the yen rose as investors piled in to currencies that are perceived less risky.

The dollar index, which tracks the greenback against a basket of major currencies, was last up 0.24 percent at 95.02 after earlier reaching 95.296, its highest since last July. The euro was down 0.37 percent at $1.1579.

The Japanese yen strengthened 0.45 percent versus the greenback at 110.07 per dollar.

CHINA STOCKS, YUAN FALL

Earlier, the Shanghai Composite Index ended 3.8 percent lower after slumping nearly 5 percent at one point to its lowest level since mid-2016.

A skid by China's yuan to a five-month low, meanwhile, was its biggest fall in roughly a year and a half.

The pan-European FTSEurofirst 300 index lost 0.72 percent and MSCI's gauge of stocks across the globe shed 0.81 percent its emerging market index fell 1.9 percent.

Oil fell ahead of a possible increase in OPEC crude supply and due to the trade dispute, as it was hurt by the rising dollar and China has threatened to impose tariffs on US crude exports.

US crude fell 1.15 percent to $65.09 per barrel and Brent was last at $75.10, down 0.32 percent.

Gold fell to a near six-month low and platinum hit its lowest since February 2016 due to the stronger dollar even as investors looked for safe havens.

Spot gold dropped 0.3 percent to $1,274.66 an ounce. U.S. gold futures fell 0.22 percent to $1,277.30 an ounce. Copper lost 1.99 percent to $6,825.50 a tonne.

Three-month aluminum on the London Metal Exchange lost 1.82 percent to $2,179.00 a tonne.

source: news.abs-cbn.com

Saudi oil minister makes high profile Iraq visit, calls for economic cooperation

BAGHDAD - Saudi Oil Minister Khalid al-Falih made a high profile visit to Iraq on Saturday, calling for increased economic cooperation and praising existing coordination to boost crude oil prices.

In a speech at the opening of the Baghdad International Exhibition, Falih said cooperation between Iraq and Saudi Arabia contributed to “the improvement and stability we are seeing in the oil market”

Falih is the first Saudi official to make a public speech in Baghdad for decades. The two countries began taking steps towards detente in 2015 after 25 years of troubled relations starting with the Iraqi invasion of Kuwait in 1990.

Tension remained high after the 2003 U.S.-led invasion of Iraq, which toppled Saddam Hussein. The American occupation of Iraq empowered political parties representing Iraq’s Shi‘ite majority, close to Saudi Arabia’s regional rival Iran.

With a thaw in relations, Falih said a joint committee is “working on measures to speed up the establishment of an economic partnership and to reactivate cooperation and economic complementarity.”

Iraq is seeking economic benefits from closer ties with Riyadh while Saudi Arabia hopes a stronger relationship with Baghdad would help rollback Iran’s influence in the region.

Iraq lies on the fault line between Shi‘ite Muslim power Iran and the Sunni-ruled countries that are its regional arch-rivals, chief among them Saudi Arabia.

Iraqi Prime Minister Haider al-Abadi left Baghdad on Saturday for a visit to Saudi Arabia, his second to the kingdom this year, his office said in a statement.

His talks with Saudi officials will focus on efforts to rebuild Iraq after the war on Islamic State and fostering economic and trade cooperation, the statement said. Abadi will visit other Middle Eastern countries after the kingdom, it said.

“The best example of the importance of cooperation between our two countries is the improvement and stability trend seen in the oil market,” said Falih, to applause from the audience of Iraqi ministers, senior officials and businessmen.

Saudi Arabia and Iraq are respectively the biggest and second biggest producers of the Organization of the Petroleum Exporting Countries (OPEC).

The Iraqi oil ministry said Falih and his Iraqi counterpart, Jabar al-Luaibi, would cooperate in implementing decisions by oil exporting countries to curb global supply in order to lift crude prices.

OPEC, Russia and several other producers agreed a pact at the start of 2017 to cut production in order to boost oil prices. The cutbacks should continue until March 2018.

Falih called for increased economic cooperation between the two countries at all levels, saying Saudi Arabia is implementing measures to facilitate the flow of goods and services between the neighbors.

A Saudi commercial airplane, operated by Flynas, arrived in Baghdad on Wednesday for the first time in 27 years.

In August, the two countries said they planned to open the Arar land border crossing for trade for the first time since 1990.

source: news.abs-cbn.com

Wall Street loses oomph but Apple crosses $800-billion mark

The S&P 500 fell on Tuesday after edging up to an intra-day record high for the second straight session, while Apple became the first U.S. company to close with a market capitalization above $800 billion.

Better-than-expected quarterly earnings from US companies and Emmanuel Macron's victory in the French presidential election on Sunday have given investors confidence, but valuations for US stocks are already higher than average.

The hope that US President Donald Trump will cut corporate and personal taxes remained in focus for investors.

"Earnings are improving and the potential for tax reform plays a big role. Why would you want to sell stocks here when you might get a tax break later on?" said Bruce Bittles, chief investment strategist for Robert W. Baird & Co.

Apple rose 0.64 percent to end at $153.99, giving it a market valuation of $802.9 billion, a first for a U.S. company. Investors are optimistic the Cupertino, California company will mark the 10th anniversary of the iPhone by launching a model with suped-up features.

"It's a real testament to what they've accomplished," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. However, he said Apple's massive size could hamper it's ability to keep growing.

The Dow Jones Industrial Average declined 0.17 percent to end at 20,975.78 points and the S&P 500 lost 0.10 percent to 2,396.92 points.

The Nasdaq Composite added 0.29 percent to close at a record high of 6,120.59, helped by Apple.

After the bell, video game maker Electronic Arts jumped 3.9 percent following its fiscal fourth-quarter report.

Four of the 11 major S&P sectors rose during Tuesday's session, led by consumer discretionary, while the typically defensive plays such as utilities and telecom services fell.

Energy dropped 0.86 percent on the back of falling oil prices.

Shares of Valeant Pharmaceuticals jumped 24 percent after the company posted its first profit in six quarters.

Sturm Ruger & Compan jumped 9.85 percent, leading other gun makers higher after its quarterly report suggested a drop in demand after Trump's election may be bottoming out.

Endo International, Office Depot and Marriott also rose after reporting better-than-expected quarterly earnings.

Wayfair surged 20.73 percent to an all-time high after the online furniture retailer revenue beat analysts' expectations.

Declining issues outnumbered advancing ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.

The S&P 500 posted 42 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 120 new highs and 59 new lows.

About 6.7 billion shares changed hands on US exchanges, in line with the daily average over the last 20 sessions.

(Additional reporting by Yashaswini Swamynathan in Bengaluru and Caroline Valetkevitch in New York; Editing by Nick Zieminski and Alistair Bell)

source: news.abs-cbn.com

India gold recycling plan fails to tempt households

MUMBAI - India's ambitious plan to recycle thousands of tonnes of gold lying idle in temples and households looks to have foundered on concerns over high costs and slight returns, in a blow to government hopes of cutting imports of the metal.

After 16 months, temples and households have turned over just seven tonnes of gold out of the 24,000 tonnes believed to be in private hands, two industry sources and a government official said, with almost all the gold coming from temples.

Families that hold about 80 percent of the idle gold have largely shunned the scheme, with some four dozen government-approved centers that opened to test purity still to process a single gram of household gold, said Harshad Ajmera, president of the Indian Association of Hallmarking Centers.

"You hardly earn anything but you have to do so many things to deposit gold under the scheme. Why should I take all this pain?" said 54-year-old clerk Ganpat Shelke, who considered depositing 50 grams of gold.

The struggling scheme was launched with much fanfare by Prime Minister Narendra Modi in November 2015, with India seeking ways to stem the spending of billions of dollars on a non-essential commodity that accounted for 27 percent of its trade deficit in the year to March, 2016.

The country is the world's second-biggest gold importer behind China, buying about 800 tonnes a year for wedding gifts, religious donations and as an investment.

The plan was for holders of idle gold to lodge it with banks in return for interest and cash at redemption. The government would melt the gold and auction or rent it to jewelers, reducing the need for imports.

But the scheme logistics mean the owners of the gold must shoulder the cost of testing its purity and melting it down, while the interest rate on offer of just 2.5 percent compares with 7-8 percent that banks offer for cash deposit rates.

"If a consumer wants to have 25 grams jewelry converted the cost of converting and purity testing takes 3-4 percent of total value away," said Shekhar Bhandari, executive vice-president of Kotak Mahindra Bank.

RELUCTANT BANKS

Even when holders of the precious metal want to take part in the scheme they have run into hurdles.

"I visited four banks several times to deposit gold but they could not accept it," said Kushal Chatterjee, a businessmen from the eastern city of Kolkata. "They said they did not know the process."

At least five bank branches visited by Reuters this week in Mumbai said they could not accept gold under the scheme as they had not been given directions by their head offices.

A senior official with the Indian Banks' Association said the current scheme offered banks little or no profit.

"There should be an incentive for banks," said the official, who declined to be named when commenting on a sensitive issue.

Banks are also concerned that provisions allowing gold to be deposited for up to 15 years will raise currency and liquidity risks, the India Gold Policy Center in a recent report.

A finance ministry spokesperson declined to comment on the gold program.

Gold refiners, who more than doubled capacity in recent years in anticipation of higher scrap supplies, are operating at well below capacity, said James Jose, secretary of the Association of Gold Refineries and Mints.

"Except for the banks, all other stakeholders like purity centers, refiners are ready, but they are helpless without banks' participation," he said.

The India Bullion and Jewelers Association urged the government to revisit the scheme, clearing doubts for consumers and putting pressure on banks to participate.

"Otherwise Indian imports will not fall," said Association secretary Surendra Mehta.

(Reporting by Rajendra Jadhav; Editing by Richard Pullin)

source: news.abs-cbn.com