World stocks in third day of gains as Omicron fears ease

LONDON - A rebound in market sentiment continued in early European trading on Wednesday, with world shares set for their biggest two-day jump since November last year as investors became less concerned about the Omicron variant.

World shares plunged at the end of last month when the discovery of a new COVID-19 variant spooked investors. But sentiment has rebounded sharply this week in the absence of indications that the variant would derail the economic recovery.

The STOXX 600 had its biggest daily jump since November 2020 on Tuesday and, despite European stock index futures initially being in the red on Wednesday, at 0901 GMT the STOXX 600 was up 0.4 percent, set for its third consecutive day of gains.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2 percent - its highest since Nov. 26, when Omicron fears first hit markets.

"To be honest, it was more the absence of bad news rather than any concrete good news helping to drive sentiment," wrote Deutsche Bank strategist Jim Reid in a note to clients.

"Every day that passes without a wave of severe cases driven by Omicron is offering more hope that this won't be the curveball to throw the recovery off course."

British drugmaker GSK said on Tuesday its antibody-based COVID-19 therapy with US partner Vir Biotechnology was effective against all mutations of Omicron.

But a study in South Africa suggested that the Pfizer vaccine may only partly protect against Omicron.

"Clearly in the very short term uncertainty has risen over the Omicron virus... but overall at this stage we do not believe it will derail the macro picture in the medium-term," said Jeremy Gatto, multi-asset portfolio manager at Unigestion.

OUTLOOK FOR RATES

Oil prices eased as investors waited for more information about the extent to which the variant would impact demand. At 0911 GMT, Brent crude futures were down 0.4 percent and US West Texas Intermediate crude was down 0.5 percent on the day.

The dollar index was steady around 96.233, while the euro was up 0.1 percent at $1.1283.

The euro-dollar pair has struggled to recover from the 2021 lows it reached in November, hurt by expectations that the US Federal Reserve will tighten monetary policy more quickly than the dovish European Central Bank.

Last week, Fed Chair Jerome Powell said it might be time to stop seeing inflation as transitory, suggesting the central bank could speed up tapering.

"The market is pricing between two to three hikes next year now. We think that that pricing is too optimistic. We believe that the Fed will actually be slower to deliver on these rate hikes," said Unigestion's Gatto, adding that this would be supportive for equities.

The US 10-year Treasury yield, which had its biggest weekly drop since June 2020 last week due to a combination of Powell's hawkish comments and fears over Omicron, was a touch lower on Wednesday at 1.4597 percent.

US inflation data is due on Friday.

Meanwhile, shares in China's Evergrande Group hit a record low, after a missed debt payment deadline put the developer at risk of becoming the country's biggest defaulter - but the news had limited global market impact because it is already "well-priced" by the market, Unigestion's Gatto said.

In virtual talks, President Joe Biden warned Russian President Vladimir Putin that the West would impose "strong economic and other measures" on Russia if it invaded Ukraine, while Putin demanded guarantees that NATO would not expand farther eastward.

(Reporting by Elizabeth Howcroft; Editing by Alex Richardson)

-reuters- 

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

World markets end volatile year mostly in the black

Most world stocks markets finished 2016 in positive territory despite shock votes in Britain and the United States, but the outlook for 2017 is clouded by looming European elections and Brexit.

The year witnessed a wave of anti-establishment populism, which saw Britain vote to leave the EU and maverick billionaire businessman Donald Trump elected as US president.

Both unexpected outcomes sparked a brief tumble on global equity markets, but many have since staged a stunning recovery to finish 2016 in the black.

London's FTSE 100 gained 14.3 percent over the year, while Frankfurt's DAX 30 added about 6.9 percent and the Paris CAC 40 won 4.9 percent.

In the US, all three major indices enjoyed robust gains, with the Dow Jones Industrial Average jumping 13.4 percent, the S&P 500 9.5 percent and the Nasdaq 7.5 percent.

Japan's Nikkei rose 0.4 percent in 2016, marking the fifth consecutive annual increase and registering its highest year-end close in two decades on optimism over the incoming US government.

Shanghai slumped more than 12 percent on the back of massive capital flight and a languishing yuan currency.

Equities continued to receive support from robust central bank stimulus programs in Europe, Japan and elsewhere, although the US Federal Reserve raised interest rates in December and signaled it plans more tightening in 2017.

A 50 percent jump in oil prices -- fueled in part by the decision of the Organization of the Petroleum Exporting Countries to cut production -- also supported stocks.

That helped boost the Bovespa in Sao Paolo, which jumped nearly 40 percent on strength in commodity prices and the resolution of an impeachment drama involving former president Dilma Rousseff, which ended with the installation of center-right President Michel Temer in August.

-- FTSE sparkles --

Since Brexit, London's FTSE 100 blue-chip index has soared to end the year in record-breaking form, as the British economy shrugged off the impact of the impending divorce from the EU.

"Fears of an imminent UK recession following Brexit proved wide of the mark thanks largely to the resilience of consumer spending," NFS Macro analyst Nick Stamenkovic told AFP.

"Indeed, Brexit was viewed as a local rather than global issue, prompting a sharp turnaround in the fortunes of world stock markets."

Markets also briefly tanked on November 9 after Republican Trump defeated Democrat and market favorite Hillary Clinton to capture the White House.

Yet Wall Street has since enjoyed a blockbuster run with the Dow Jones Industrial Average making a push towards 20,000 points. In the end, the blue-chip index finished at 19,762.60, logging its best year since 2013.

New York has been boosted by expectations that Trump -- who will be inaugurated on January 20 -- will honour election pledges to ramp up infrastructure spending, cut taxes and streamline regulations.

Markets are pricing in "all the good stuff while ignoring for now potential consequences for the dollar, deficits, interest rates, trade, inflation and the uncertainty principle," JPMorgan Asset Management strategist Michael Cembalest said in a research note.

"Whether this benign view is accurate or not will be a major driver of markets next year."

-- Rise of populism --

Looking ahead to 2017, the spotlight is now on upcoming European elections.

The Netherlands heads to the polls in March, followed by France in May, and Germany in the autumn.

Further gains by populist candidates would reverberate through Europe as Brussels moves into the thick of negotiations with Britain over Brexit.

VTB Capital analyst Neil MacKinnon also highlighted the region's banking problem after the European Central Bank called for Italian lender Monte dei Paschi di Siena (BMPS) to receive a bailout of 8.8 billion euros.

Italy's stock market shed 10 percent over the year.

In the US, investors largely have disregarded worries about the unpredictable Trump, including fears his tough posture towards China could lead to a trade war and that his embrace of Russian President Vladimir Putin could roil international alliances.

But reality could trump expectations.

And expectations are high for Trump's first 100 days, which are anticipated to include progress on these key policies, said Sandy Sanders, a senior portfolio manager at Manulife Asset Management.

"Everyone is going to be laser-like focused on what's going through Congress and the Senate and then to the president's desk and they're going to want to see deliverables on that tax reform," Sanders said.

In foreign exchange, many economists predict the euro could slump to parity against the dollar next year, aided by the Federal Reserve's hawkish stance on interest rates.

The Fed's bullish outlook this month pushed the dollar to 10-month yen highs and sent it heading towards parity with the euro for the first time since 2002.

- Key figures around 1630 GMT -

New York - Dow: DOWN 0.3 percent at 19,762.60 (close)

New York - S&P 500: DOWN 0.5 percent at 2,238.83 (close)

New York - Nasdaq: DOWN 0.9 percent at 5,383.12 (close)

London - FTSE 100: UP 0.3 percent at 7,142.83 (close)

Frankfurt - DAX 30: UP 0.3 percent at 11,481.06 (close)

Paris - CAC 40: UP 0.5 percent at 4,862.31 (close)

EURO STOXX 50: UP 0.3 percent at 3,282.94

Tokyo - Nikkei 225: DOWN 0.2 percent at 19,114.37 (close)

Hong Kong - Hang Seng: UP one percent at 22,000.56 (close)

Shanghai - Composite: UP 0.2 percent at 3,103.64 (close)

Euro/dollar: UP at $1.0515 from $1.0484

Dollar/yen: UP at 1.1698 yen from 116.63 yen

Pound/dollar: UP at $1.2322 from $1.2265

source: news.abs-cbn.com

As world prices slide, another rollback seen next week

MANILA, Philippines – With oil prices continuing their decline in the world market, a second rollback locally is possible, emergy officials said Friday.

The Department of Energy monitored global prices sliding steadily from Monday to Thursday, according to Director Zenaida Monsada of the DOE Oil Industry Management Bureau.

Monitoring showed MOPS prices declined by as much as $1 to $2 per barrel as the market remained stable and results of elections in Europe were being awaited.

"We are expecting some rollback next week, though not as big as [what we had] this week," Monsada said.

Some industry sources estimate that the price of gasoline in the market has since declined by an equivalent of 56 centavos per liter since the rollback; and 33 centavos for diesel.

"Definitely next week we will not see any price increase. The rollback may be minimal or there may be products where there won’t be any price movement; but definitely these won’t rise," said Monsada.

source: interaksyon.com