Daily Market Outlook By PYX Markets

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Daily Market Outlook 7th September

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The dollar tumbled and Asian stocks rose to one-year highs on Wednesday after surprisingly weak U.S. services sector activity dashed already slim chances of an interest rate hike by the Federal Reserve as early as this month. The U.S. Institute for Supply Management's index of non-manufacturing activity fell to 51.4, its lowest level since February 2010, from 55.5 the month before and well shy of the 55 estimate. Given that strength in the service sector has been making up for softness in manufacturing in the past year or so, the data was a blow to the case for the Fed to raise interest rates as soon as this month. Comments from several Fed officials in recent weeks had boosted bets on a rate hike in coming months, but investors have had to scale back their expectations since Friday's weaker-than-expected U.S. payrolls report. San Francisco Fed president John Williams, speaking after the ISM data, said he expects the Fed will raise rates gradually over the next few years. U.S. interest rate futures price gained to indicate only about a 15 percent chance of a rate hike this month and just over 50 percent by December, compared to above 20 and 60 percent, respectively, before the data.

A top Federal Reserve official on Tuesday repeated his call for gradual interest rate hikes, evidently unfazed by a slowdown in U.S. job gains and sluggishness in the services sector that now has traders betting against any rate hike at all this year. It "makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later," San Francisco Fed President John Williams said in remarks prepared for delivery to the Hayek Group. In his prepared remarks Williams did not address the release of data on Tuesday that showed activity in the U.S. services sector had hit a six-and-a-half-year low, or government data last Friday that showed U.S. employers added fewer jobs than expected in August. Williams said the economy was in "good shape," and he forecast unemployment, now at 4.9 percent, to fall to 4.5 percent in the coming year and inflation to rise to the Fed's 2 percent target in the next year or two. Longer-term, however, Williams made it clear he is far from comfortable with the Fed's current approach to monetary policy. Targeting low inflation, as the Fed and many other central banks currently do, simply will not work well in a world where economic growth and interest rates are likely to be persistently lower than they were in the era before the Great Recession, he said. A low inflation target, he said, gives the Fed too small a buffer to fend off future shocks.

Oil prices inched lower on Wednesday as market participants remained skeptical that producers will reach an agreement to freeze output to rein in a global supply glut. Oil prices hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market, but they have since fallen due to the mounting uncertainty over a deal. The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia will hold informal talks in Algeria on Sept. 26-28, but many in the market are skeptical a deal will happen. Saudi Arabia's Foreign Minister Adel al-Jubeir said on Tuesday it would go along with a freeze in oil output if other producers agreed one but cautioned that Iran, which is aiming to raise output to pre-sanction levels, could foil any attempt to limit output. Iran, however, signaled on Tuesday it was prepared to work with Saudi Arabia and Russia to prop up oil prices as it began to bargain with OPEC on possible exemptions from output limits. On demand, traders said Genscape data showed a draw of some 700,000 barrels last week at the Cushing, Oklahoma, and delivery hub for U.S. crude futures. U.S. commercial crude inventories likely fell by 100,000 barrels last week after rising for two straight weeks, a preliminary Reuter’s poll showed on Tuesday. Gasoline stocks likely fell by 500,000 barrels, while distillate stocks are forecast to have increased by 1 million barrels, the poll showed. The American Petroleum Institute is set to release the weekly oil data on Wednesday, delayed a day from usual due to the Labor Day holiday on Monday.
 

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Daily Market Outlook 19th September

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Asian shares advanced on Monday ahead of central bank meetings in the United States and Japan this week, while oil prices bounced on talk of an OPEC deal on output and reports of fighting around Libyan oil ports. Bombings in New York City and New Jersey and a stabbing at a Minnesota shopping mall added to a general air of risk aversion. While U.S. officials are investigating the attacks as potential "acts of terrorism," they stopped short of characterizing the motivation behind any of them until more evidence is uncovered. Investors are counting down to the Federal Reserve's Open Market Committee meeting Sept. 20-21, with chair Janet Yellen holding a news conference on Wednesday. A surprisingly large rise in U.S. consumer price inflation reported on Friday seemed to add to the case for a hike and pushed the dollar higher. Assuming no move on policy, the focus will be on the FOMC's forecasts for the funds rate, which this time extends to 2019. The Bank of Japan also meets on Wednesday and could well go in the opposite direction by easing policy, though conflicting reports on what it might do have stoked much uncertainty. Sources have said the BoJ will consider making negative interest rates the centerpiece of future easing by shifting its prime policy target away from base money.

The dollar traded near a two-week high against a basket of major currencies on Monday after U.S. consumer prices rose more than expected in August, bolstering expectations that the Federal Reserve would raise interest rates this year. U.S. consumer prices rose more than expected in August, data on Friday showed, pointing to a steady build-up of inflation that could allow the Fed to raise interest rates this year. The so-called core CPI, which strips out food and energy costs, rose 0.3 percent last month, the biggest increase since February. The core CPI increased 2.3 percent in the 12 months through August. U.S. short-term interest rate futures are now implying a 55 percent chance of the Fed raising interest rates by December, compared to around 47 percent on before the CPI data, according to CME Group's FedWatch Tool. A rise in the dollar can increase disinflationary pressures on the U.S. economy, a point touched upon recently by a Fed policymaker. Fed Governor Lael Brainard had said last Monday that low interest rate policies across advanced economies could make the United States more vulnerable to spikes in the value of the dollar which could put downward pressure on inflation. The euro held steady at $1.1160 EUR=, having touched a low of $1.1149 earlier on Monday, its lowest level since Sept. 6. All eyes this week will be on the policy meetings by the Fed and Bank of Japan on Sept. 20-21. Major currencies showed little reaction to news of three attacks across the United States over the weekend, involving bombings in New York City and New Jersey and a stabbing rampage at a Minnesota shopping mall. British Prime Minister Theresa May signaled that she could be ready to launch formal Brexit negotiations in January or February, European Council President Donald Tusk has said.

Market volatility is low, U.S. census data shows income gains have reached the middle class, and workers are clawing back a larger share of national income. For now, at least, no international risk stands out and inflation may even be picking up. If Fed Chair Janet Yellen wants to prove that policymakers are not being pulled along by investors who for years have second-guessed them, this week may offer a rare moment of calm to do so. Fed funds futures trading shows that investors are even more skeptical than that, and expect the Fed to stay put until February - more than a year after the central bank raised rates and signaled more would come this year and next. Instead the central bank has been stuck at the 0.25 to 0.5 percent range set last December when it lifted rates for the first time in a decade.

Oil prices bounced on reported clashes at Libyan oil ports. Eastern Libyan forces said they had re-established control over two oil ports where an ousted faction launched a counter-attack on Sunday, briefly seizing one of the terminals. Venezuelan President Nicolas Maduro was also reported saying a deal between OPEC and non-OPEC members was "close" and he aimed to announce a deal to stabilize the market this month. Oil prices rose almost 2 percent on Monday, after Venezuela said OPEC and non-OPEC producers were close to reaching an output stabilizing deal and as clashes in Libya raised concerns that efforts to restart crude exports could be disrupted. Clashes in Libya have halted the loading of the first oil cargo from the port of Ras Lanuf in close to two years, while also raising fears of a new conflict over Libya's oil resources. Brent and WTI prices had been dragged to multi-week lows on Friday amid worries returning supplies from Libya would add to the global supply glut. Crude exports from No.3 OPEC producer Iran in August jumped 15 percent from a month ago to more than 2 million barrels per day, according to a source with knowledge of its tanker loading schedule, closing in on Tehran's pre-sanctions shipment levels of five years ago. In the United States, drillers have added oil rigs for 11 out of the past 12 weeks. Drillers added two oil rigs in the week to Sept. 16, bringing the total rig count up to 416, the most since February.
 

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Daily Market Outlook 22nd September

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Asian shares rallied on Thursday, taking their cue from Wall Street, after the Federal Reserve left U.S. interest rates unchanged and slowed the pace of future hikes, knocking the dollar and lifting commodity prices. The Fed did signal it could hike rates by year-end as the labor market improved further, but cut the number of rate increases expected in 2017 and 2018. It also reduced its longer-run interest rate forecast to 2.9 percent from 3 percent. The Bank of Japan made an abrupt shift on Wednesday to targeting interest rates on government bonds to achieve its elusive inflation target, after years of massive money printing failed to jolt the economy out of decades-long stagnation. While the BOJ reassured markets it would continue to buy large amounts of bonds and riskier assets, the policy reboot appeared to open the door for an eventual winding down of its huge asset purchases, and tried to repair some of the damage caused by its shock move to negative rates early this year. "The impression is that the BOJ is starting to pull back some of its troops from the battlefront," said Katsutoshi Inadome, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. The BOJ's increasingly radical stimulus efforts are being closed watched by other global central banks which are also struggling to revive growth, such as the European Central Bank. Many investors fear central banks have nearly exhausted the limits of what monetary policy can do, putting pressure back on governments to step up spending. Japan's Prime Minister Shinzo Abe welcomed the BOJ's shift and said the government would work with the central bank to boost his "Abenomics" economic growth program.

The U.S. Federal Reserve left interest rates unchanged on Wednesday but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. Fed Chair Janet Yellen, speaking after the central bank's latest policy statement, said U.S. growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation. "We judged that the case for an increase has strengthened but decided for the time being to wait," Yellen told a news conference. "The economy has a little more room to run." Yellen said she expected one rate increase this year if the job market continued to improve and major new risks did not arise. The central bank has appeared increasingly divided over the urgency of raising rates. On Wednesday, Kansas City Fed President Esther George, Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren dissented on the policy statement, saying they favored raising rates this week. At the same time, policymakers cut the number of rate increases they expect this year to one from two previously, according to the median projection of forecasts released with the statement. Three of the 17 policymakers said rates should remain steady for the rest of the year. Investors did not appear to significantly shift their bets on the timing of the next rate hike. Prices for fed funds futures contracts suggested investors continued to see just better-than-even odds of a hike at the December policy meeting, and almost no chance of an increase in November. U.S. stock prices rose after the Fed released its statement. The central bank appeared more confident on Wednesday, saying in its statement that near-term risks for the economic outlook "appear roughly balanced." That means policymakers think the economy is about as likely to outperform forecasts as to underperform them. The economy expanded sluggishly in the second quarter and added fewer jobs than expected in August. Inflation also showed signs of stirring last month. The Fed's decision, which came the same day that Japan's central bank added a long-term interest rate target to its massive asset-buying program in an overhaul of its policy framework, was widely anticipated by economists.

Oil prices rose on Thursday, lifted by a weaker dollar and extending gains from the previous session when a surprise third consecutive weekly U.S. crude inventory draw tightened supply. Jeffrey Halley of Singapore-based brokerage Oanda said that "the oil comeback continued overnight, helped by a number of tailwinds" that included "the U.S.-dollar (is) being sold against everything, including oil" as well as a "another huge fall in EIA crude inventories." The U.S. EIA on Wednesday reported a 6.2 million-barrel drop in crude oil inventories last week to 504.6 million barrels. Forecasters in a Reuters poll had expected a 3.4 million-barrel build. The dollar stumbled to a near 4-week low against the yen JPY= on Thursday, after the U.S. Federal Reserve kept monetary policy steady and projected a less aggressive path for interest rates hikes in coming years. A weak greenback makes dollar-traded fuel imports cheaper for countries using other currencies, potentially spurring demand. Brent was lifted by an oil workers' strike in Norway, which threatened to cut North Sea crude output. Additionally, Iraq's OPEC governor Falah Alamri said on Thursday that oil market circumstances were now more favorable for producers to reach a deal to support prices when they meet next week in Algeria. Analysts, however, said they expect oil prices to remain range-bound at relatively low levels with global output near record highs and surpassing consumption, adding that producer talks in Algeria next week were likely to change little. In a clear illustration of the impact on the ground of the oil market downturn, the waters around Singapore have become the dumping ground for hundreds of drilling and offshore oil support vessels that have become surplus to requirement in the current era of cheap crude.
 

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Daily Market Outlook 3rd October

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Asian shares got the new quarter off to a firm start on Monday, while sterling tumbled as Britain set a March deadline to start divorce proceedings from the European Union. Risk sentiment had benefited on Friday from reports Deutsche Bank was negotiating a much smaller fine with the U.S. Department of Justice, though the Wall Street Journal reported on Sunday that the talks were still in flux. Japanese data showed confidence at big manufacturers was static in September amid a strong yen and sluggish demand at home and overseas. The mood was supported by a survey showing activity in China's manufacturing sector expanded again in September, which may indicate that recent positive momentum can be sustained. The official PMI stood at 50.4 in September, identical with the previous month's level. A reading above 50.0 shows growth on a monthly basis. Chinese markets are on holiday for the entire week. Sterling shed half a U.S. cent after British Prime Minister Theresa May said she would trigger the process for the UK to leave the European Union by the end of March. The pound was last quoted at $1.2931 having been down as far as $1.2902 at one point, its lowest since mid-August. May on Sunday told the ruling Conservative party's annual conference that she was determined to move on with the process and win the "right deal". Deutsche has significant trading relationships with all of the world's largest finance houses and the IMF has identified it as a bigger potential risk to the wider financial system than any other global bank.

The dollar started off the week on a firmer footing on Monday as fears about Deutshe Bank receded and investors looked ahead to this week's U.S. jobs data, while sterling hit seven-week lows after Britain set a March deadline to begin its exit from the European Union. May on Sunday told the ruling Conservative party's annual conference that she was determined to move on with the process and win the "right deal". Risk sentiment benefited from news that Deutsche Bank was attempting to negotiate a much smaller fine with the U.S. Department of Justice, though no formal settlement has been announced yet. The DOJ fined Germany's largest bank $14 billion earlier in September for what it alleged were sales of toxic mortgage-backed securities. The Bank of Japan's quarterly tankan survey of business sentiment, released early on Monday, showed that Japan's large manufacturers expect the dollar to average 107.92 yen for the fiscal year through March 2017. According to Friday's data from the Commodity Futures Trading Commission and Reuters calculations speculators boosted net longs on the U.S. dollar to their highest in six weeks in the week ended Sept. 27. A key focus for the dollar this week will be the U.S. nonfarm payrolls report on Friday, which could cement expectations that the U.S. Federal Reserve is on track to raise interest rates by the end of this year.

Oil prices fell away from $50 per barrel on Monday despite an agreement last week by exporters to cut output, with traders doubting the step was enough to rein in production that has exceeded consumption for the better part of three years. The dips follow fresh production highs from the Organization of the Petroleum Exporting Countries (OPEC) as rival members like Saudi Arabia, Iran and Iraq are reluctant to give away market share. OPEC's oil output is likely to reach 33.60 million bpd in September from a revised 33.53 million bpd in August, its highest in recent history, a Reuters survey found on Friday. The price falls came despite last week's agreement by OPEC members to cut output to between 32.5 million barrels per day (bpd) and 33.0 million bpd from about 33.5 million bpd, with details to be finalised at OPEC's policy meeting in November. Traders said there was more downside risk to oil prices if the planned cut wasn't deep enough to bring production back in line with consumption. "OPEC has created its own Q4 risk to oil prices ... In raising expectations of a November deal to cut production, it also risks a steep price decline should it fail to achieve its goal of cutting output back to less than 33 million bpd," Barclays said in a note to clients. Despite that, the British bank said it did not expect a repeat of the price crash seen late last year after a rally earlier in 2015. Trading activity will be limited on Monday as public holidays in China and Germany mean Asia's and Europe's biggest markets are shut.
 

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Daily Market Outlook 6th October

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Asian shares firmed on Thursday thanks to stronger U.S. economic data, while growing prospects of a near-term U.S. rate hike and possible tapering of stimulus in Europe hit gold and lifted the dollar to one-month highs versus the yen. U.S. services sector activity recovered sharply in September from six-year low hit in August, following similarly upbeat news from U.S. factories on Monday. Growing optimism on the U.S. economy boosted bets that the U.S. Federal Reserve will raise interest rates in December. A strong U.S. payrolls report on Friday could cement expectations of a rate hike. The median forecast of economists polled by Reuters is for non-farm payroll to rise 175,000. The rise in bond yields partly stemmed from speculation the European Central Bank may eventually taper its bond buying after Bloomberg reported on Tuesday the bank would probably wind down the monthly 80-billion euro ($90 billion) scheme. The specter of tighter monetary policy in the U.S. and Europe hit precious metals hard. The dollar stuck to narrow ranges against its major rivals in Asian trade on Thursday, ahead of this week's nonfarm payrolls report that could reinforce expectations that the U.S. Federal Reserve will hike interest rates by December. Underpinning the dollar, Chicago Fed President Charles Evans said he would be "fine" with raising U.S. interest rates by year-end if U.S. economic data remained firm. On the economic data front on Wednesday, upbeat U.S. services sector activity offset a weaker-than-expected print on private-sector job growth ahead of Friday's jobs report. The monthly employment figures are expected to show 175,000 jobs were added in September, according to the median estimate of 100 economists polled by Reuters. Market participants will also look for any upward revision to August's weaker-than-expected gain of 151,000 jobs. A strong U.S. payrolls report on Friday could see the market price in a 70 percent chance of a December hike, according to Chris Weston, chief market strategist at IG in Melbourne.

Evidence that the so-called natural rate of interest has fallen to low levels could mean the economy is stuck in a low-growth rut that could prove hard to escape, Federal Reserve Vice Chair Stanley Fischer said on Wednesday. Speaking to a central banking seminar in New York, the Fed's second-in-command said he was concerned that the changes in world savings and investment patterns that may have driven down the natural rate could "prove to be quite persistent...We could be stuck in a new longer-run equilibrium characterized by sluggish growth." As a result, he said, central bankers may face a future where the short-term interest rates set by policymakers never get far above zero, and the unconventional tools used during the financial crisis become a "recurrent" fact of life. "Ultralow interest rates may reflect more than just cyclical forces," Fischer said, but "be yet another indication that the economy's growth potential may have dimmed considerably." Fischer's remarks did not address current Fed policy or interest rate plans. Fischer said the "silver lining" was the possibility that better policy could lift the natural rate along with U.S. potential. It would take more than monetary policy, however, and would require "some combination of improved public infrastructure, better education, more improvement for private investment, and more effective regulation."

Oil futures dipped on Thursday after Saudi Arabia trimmed the price of its flagship crude to Asia, but were still near more than three-month highs following a drop in U.S. crude inventories. Both contracts hit their highest levels since June on Wednesday after the U.S. Energy Information Administration (EIA) said crude stockpiles fell 3 million barrels last week to 499.74 million barrels. Despite the drawdowns, stocks were still close to all-time highs. Traders pointed to profit taking following recent price rises and said Thursday's fall also reflected weaker physical crude after top exporter Saudi Arabia cut the price of its Arab Light crude to Asian customers for November in a sign that the global fuel supply overhang persists. Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore, said that at around $50 a barrel for WTI, U.S. shale drillers, who have spent much of the year cutting back unprofitable production amid low prices, may start bringing back mothballed rigs. Overall, however, most analysts said that the market was well supported at current levels, especially because of a planned output cut by the Organization of the Petroleum Exporting Countries (OPEC). There were also risks of forced supply disruptions, especially in North Africa, Nigeria, and Venezuela Barring such a disuption, most analysts did not expect prices to shoot up much further as production will remain high even with an OPEC cut, and plenty of fuel remains in stock. "Resilient production in the U.S. and Russia will postpone crude market rebalancing and keep the market in surplus into 2017," BMI Research said in a note to clients, even cutting its price forecast for next year. "With an insufficient demand response to counteract strong supply, the result is a downward revision of our 2017 Brent forecast to $55 per barrel from $57 per barrel," BMI said.
 

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Daily Market Outlook 10th October

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The Mexican peso climbed and U.S. stock futures crept higher on Monday as markets saw less chance of a victory by Republican nominee Donald Trump in his U.S. presidential bid amid a scandal over comments he made about women. Trump faces the biggest crisis of his 16-month-old campaign after a tape of him making vulgar comments about women deepened fissures with establishment Republicans. A second debate with Democrat Hillary Clinton came and went with little immediate impact on investor thinking. Presidential betting markets had lengthened the odds on a Trump victory, while the FiveThirtyEight site of well-regarded forecaster Nate Silver put the probability of a Clinton win at over 81 percent. Markets generally see Clinton as a known factor with middle of the road policies. There is far more uncertainty about what a Trump administration would mean for U.S. foreign policy, trade, the economy and even governance at the Federal Reserve. A survey out on Monday showed key measures of UK business investment and turnover confidence hit four-year lows in the third quarter. There was relief that U.S. payrolls data last Friday were solid enough but not so hot as to add to the risk of a rate hike from the Federal Reserve.

Job gains in the United States remain solid and growth should pick up in the second half of the year, Fed Vice Chair Stanley Fischer said on Sunday in remarks that indicate the central bank remains on track for a December rate increase. The United States is "close to full employment," Fischer said in remarks prepared for delivery to the Group of 30, a panel of current and former central bankers, regulators and academic economists, during the annual meetings of the International Monetary Fund and World Bank. "With solid gains in employment and household income and upbeat consumer sentiment," Fischer said, consumption spending "should continue to support growth over the second half of the year." The session was closed to the press, but Fischer's prepared remarks were released by the Fed ahead of his scheduled address. Fischer said the decision not to increase rates in September was a "close call" done largely to allow further progress on jobs. At this point, he said, "there appears little risk of falling behind the curve in the near future," on inflation, allowing the Fed to raise rates slowly. "Gradual increases in the federal funds rate will likely be sufficient to get monetary policy to a neutral stance over the next few years," Fischer said.

China's official unemployment rate has been around 4 percent for years, despite the rapid slowdown in the economy from double-digit growth to quarter-century lows last year of less than 7 percent. But the real level of unemployment or underemployment is masked by the fact that the official data does not include China's 277 million migrant workers, such as Zhang Sihu and his wife from Bianqiang in Yulin, a region rich in coal, oil and natural gas in northwestern Shaanxi province. At the height of China's real estate boom in Yulin a few years ago, they made 10,000 yuan a month, running a canteen for construction workers. That was double the average migrant wage, but the boom is now over.

Oil prices fell on Monday over doubts that an OPEC-led plan to cut output would rein in a global oversupply that has dogged markets for over two years. The OPEC plans to agree on an output cut by the time it meets in late November. The targeted range is to cut production to a range of 32.50 mn bpd to 33.0 million bpd. OPEC's current output PRODN-TOTAL stands at a record 33.6 million bpd. To achieve such an agreement among its members, some of which like Saudi Arabia and Iran are political rivals, OPEC officials are embarking on a flurry of meetings in the next six weeks, starting in Istanbul this week. However, ANZ bank said on Monday that prices were pulled down by a statement by Russia's energy minister, Alexander Novak, who said "he was not expecting to sign a production deal with OPEC at the World Energy Conference, which starts this week in Istanbul," although the minister did say that an agreement including non-OPEC member Russia might be possible by the time OPEC officially meets on November 30. Even if a deal is reached, analysts are unconvinced it would result in much higher prices, as doubts run high over the feasibility of a cut among rivaling members, a Reuters poll showed on Friday. Traders said prices were also under pressure from a rise in the U.S. rig count, which implies that American producers are keen to increase production at prices around $50 per barrel. Noble Group agrees $1.05 billion sale of U.S. unit in planned move to cut debt. Despite Monday's dip, analysts said they expected slightly higher prices for the rest of the year and into 2017. Barclays bank said that it expected "stockdraws during the upcoming winter season will support physical oil market fundamentals, irrespective of any decision in November in Vienna. We expect that prices will rise to the low $50 per barrel range in Q4. The British bank said that prices would receive support into next year in part from firm U.S. gasoline demand.
 

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Daily Market Outlook 11th October

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Asian shares were mostly lower on Tuesday, while oil prices hovered near one-year highs on growing expectations of an output cut by OPEC producers. The overnight gains came after Russia said it was ready to join the OPEC in limiting crude output and Algeria called for similar commitments from other non-OPEC producers. OPEC aims for agreements to cut about 700,000 bpd in its first reduction in eight years. "OPEC needs to make sure we don't crimp too tightly and create a shock to the market. We are going to be very responsible," Saudi Arabia's Energy Minister Khalid al-Falih told the World Energy Congress in Istanbul, adding that OPEC needed to behave in a balanced and responsible manner. Last month in Algiers, OPEC agreed modest oil output cuts. The goal is to cut production to a range of 32.50-33.0 million bpd. OPEC's current output PRODN-TOTAL is a record 33.6 million bpd. Non-OPEC oil producer Russia's President Vladimir Putin welcomed the global cut invitation, saying Moscow was ready to join the proposed cap on oil output by OPEC members. Putin said low oil prices had led to underinvestment in the global energy sector which would turn into a deficit at some point and trigger new "unpredictable jumps" in prices.

The dollar extended overnight gains on growing expectations that the Federal Reserve will raise interest rates this year. Investors are looking to Wednesday's release of minutes of the latest Federal Reserve Open Market Committee meeting to see how close the Fed was to hiking rates last month. The dollar firmed on Tuesday, while the beleaguered sterling wallowed near recent lows on lingering fears about the impact on Britain from exiting the European Union and the kiwi tumbled on dovish comments from a New Zealand central bank official. Japanese, Canadian and some U.S. markets were closed on Monday for holidays. Investors awaited Wednesday's release of minutes of the Federal Reserve Open Market Committee's September meeting for clues as to how close the Fed is to hiking interest rates. Speaking to reporters after a speech in Sydney, Chicago Fed President Charles Evans said on Tuesday that he "could be fine" with the Fed raising rates in December, but he wanted to see how the economy and inflation progressed before deciding. Evans does not have a vote this year on Fed policy but participates fully in deliberations and will become a voting member in 2017. Japanese current account data released earlier on Tuesday showed the nation's surplus stood at 2.0 trillion yen ($19.3 billion) in August as the trade balance swung to a surplus due to falling imports.

BoJ is expected to wait until next year before easing policy further unless any sharp spikes in the yen undermine the economy significantly in the meantime, a Reuters poll found. Last month the central bank switched the focus of its stimulus program to targeting market interest rates after years of massive asset buying failed to push up inflation. About 70 percent of the analysts who answered an extra question said the BOJ would add more stimuli at its January meeting or later, while a handful of analysts predicted the central bank would ease further at its Oct. 30-Nov. 1 meeting when it releases its long-term growth and inflation outlook. But several analysts said the central bank would keep to its current pace of stimulus, saying they had no specific forecast of when it would next take action. The BOJ dropped its explicit target of increasing base money by an annual 80 trillion yen ($777.45 billion), in what some analysts said was a tacit admission its aggressive asset-buying was becoming unsustainable. Kuroda said the central bank will deepen negative interest rates or expand asset purchases if external shocks hit the economy but he also said he saw no immediate need to top up stimulus. Oil prices on Tuesday fell from one-year highs touched the previous day as there were doubts that a planned production cut would have the desired effect of reining in over two years of global oversupply. Oil prices jumped as much as 3 percent on Monday, with Brent hitting a one-year peak, after Russia and Saudi Arabia both said a deal between the OPEC and non-OPEC members like Russia in curbing crude output was possible. However, Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a "greater possibility", markets were unlikely to rebalance in 2017. "Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," the U.S. bank said, and added that even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output. Fritsch said he had "significant doubts whether they (production cut targets) will actually be fulfilled" as the rivalry between OPEC members, who are fighting aggressively for global markets share, could prevent an effective deal. And for now, supplies keep flowing, with top exporter Saudi Arabia planning to send full contracted crude volumes to key Asian buyers in November, unchanged from October levels, industry sources familiar with the matter said on Tuesday.
 

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Daily Market Outlook 14th October

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Asian stocks and the dollar bounced on Friday, erasing some losses from the previous day, as stronger-than-expected Chinese inflation data eased some concerns about the health of the world's second-biggest economy. Chinese data again set the tone on Friday, with September producer prices unexpectedly rising for the first time in nearly five years, while consumer inflation also beat expectations. The producer price increase will be good news for profits and for Beijing as the government struggles to reduce a mountain of corporate debt. Dollar had climbed to a seven-week high against a basket of other major currencies earlier in the week on growing expectations of a December interest rate hike by the Federal Reserve. Investors will have another chance to gauge whether the world's biggest economy is ready for tighter monetary policy through U.S. indicators due later, including September retail sales and the University of Michigan consumer sentiment report. The markets will also tune into speeches by Fed Chair Janet Yellen and Boston Federal Reserve President Eric Rosengren for hints about the timing of the next interest rate hike. Crude oil extended gains after bouncing overnight on a U.S. government report showing hefty draws in diesel and gasoline.

The Federal Reserve may want to hold off on monetary policy changes until after the U.S. presidential election on Nov. 8, Philadelphia Fed President Patrick Harker said on Thursday. Fed officials normally take pains to distance themselves from electoral politics, and Harker's comments were an unusual admission that the Fed might need to craft policy based on who wins the White House. Harker will not vote at the Fed's Nov. 1-2 policy meeting but will participate in its discussions. His comments on Thursday could draw the ire of Republican presidential candidate Donald Trump, who has accused the Fed of playing politics by keeping interest rates low. Harker said he had been in favor of a rate increase at the Fed's September policy meeting and he insisted politics never play a role in the Fed's internal debate. Investors see little chance of an interest rate increase in November given the proximity of the election. Fed Chair Janet Yellen has repeatedly denied politics will play a role in Fed decisions. While Democratic candidate Hillary Clinton has a lead in public opinion polls, some economists think Trump, if elected, could disrupt the economy by following through on promises to throw up barriers to foreign trade. Harker said the Fed should raise rates once by the end of this year. He will have a vote on rate policy at the Fed's 2017 meetings. "Despite frequent talk about a sub-par economy, we're actually doing pretty well," Harker told the World Affairs Council earlier in Philadelphia, adding that he expects the economy will need "at least two" rate increases next year. His comments on the timing of rate increases put him in line with the Fed's signaling last month that the economy was on track to need one rate increase this year and two in 2017.

China's producer prices unexpectedly rose in September for the first time in nearly five years thanks to higher commodity prices, welcome news for the government as it struggles to whittle down a growing mountain of corporate debt. Official inflation data on Friday also showed a pickup in consumer prices, helping to ease investors' concerns about the health of the world's second-largest economy after disappointing trade numbers on Thursday rattled global markets. Corporate China sits on $18 trillion in debt, equivalent to about 169 percent of gross domestic product (GDP), according to the most recent figures from the Bank for International Settlements. Most of it is held by state-owned companies. The producer price index (PPI) rose 0.1 percent in September from a year earlier, the National Bureau of Statistics said. Oil prices edged up on Friday, pushed by a tighter U.S. fuel market and as technical indicators attracted buying from financial players. The U.S. EIA reported a drop of 3.7 million barrels for distillates late on Thursday, which include diesel and heating oil, and a 1.9-million barrel decline for gasoline. Outside the United States, traders said that Brent prices were being supported by technical indicators, which had attracted investment from financial market participants. Despite the slightly higher prices on Friday, there were still factors weighing on oil markets, especially doubts that a planned oil output cut by the Organization of the Petroleum Exporting Countries (OPEC) and potentially non-OPEC member Russia would be sufficient to rein in a global production overhang standing at around half a million barrels per day (bpd) in excess of consumption. "Talk of cutting output in some quarters appears to be morphing into talks of a freeze in supply. We are doubtful that OPEC's efforts, even if successful in achieving a targeted 32.5 million bpd in collective output, will prove sufficient to materially alter the global oil balance and deliver a substantial reduction in oil inventories," French bank BNP Paribas said in a note to clients. OPEC's crude oil production stood at a record 33.6 million bpd in September.
 

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Daily Market Outlook 17th October

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Asian shares fell on Monday while the dollar held firm near seven-month high against a basket of major currencies after comments from Federal Reserve Chair Janet Yellen boosted long-dated U.S. bond yields. Yellen said on Friday the Fed may need to run a "high-pressure" economy in order to reverse damage from the global financial crisis that depressed output. Her remarks were not addressing immediate policy concerns directly and did not change prevailing view that the Fed is likely to raise interest rates in December. There is a reason for investors to be concerned about inflation as recovery in oil prices has lifted inflation in some countries. The U.S. producer price index for final demand increased 0.3 percent last month. In the 12 months through September, the PPI jumped 0.7 percent, the biggest increase since December 2014. On Friday, China also reported higher than-expected inflation in September for consumers and producers alike, with producer prices rising for the first time since January 2012. In the US, a gauge of investors' inflation expectations, the breakeven inflation rate based on inflation-linked bonds, rose to its highest level in about five months. Chinese economic data on Wednesday, including third-quarter GDP, will be a key focus of this week. China's economy likely grew by a steady 6.7 percent in the third quarter from a year earlier, the same pace as in the previous quarter, as increased government spending and a property boom offset stubbornly weak exports, according to a Reuters poll of 58 economists. But the expected rate of expansion would still be near the weakest since the global crisis, and analysts are increasingly worried that growth is becoming too reliant on government spending, ballooning debt levels and a housing market that is showing signs of overheating.

The yen weakened on Monday in Asia after remarks from the central bank governor updating on economic growth and inflation. BoJ Governor Haruhiko Kuroda said the economy is on a likely moderate expanding trend with core consumer prices slightly negative to flat, adding that the central bank will take further action to boost growth if needed. This week will see the European Central Bank’s post policy meeting press conference on Thursday amid speculation over whether it will further expand its stimulus program in the face of sluggish growth and inflation. Also on the watchlist are Chinese figures on third quarter GDP, due for release on Wednesday, with the rate of growth expected to ease again. On Monday, the euro zone is to publish revised data on inflation and the U.S. will report industrial production and manufacturing activity in the New York region. Dollar gained ground on Friday as solid data on U.S. retail sales and producer prices bolstered expectations that the Federal Reserve could raise interest rates in the coming months. U.S. retail sales rose 0.6% in September after declining 0.2% the previous month, data from the Commerce Department showed Friday. Another report showing that U.S. producer prices picked up broadly last month added to the view that the economy is on a strong enough footing for a rate hike by the Fed before the year’s end. The reports came after the minutes of the Fed’s September meeting, published on Wednesday, showed several officials believed it would be appropriate to raise interest rates "relatively soon" if the economy continued to improve. The Fed’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely. Expectations for higher rates typically boost the dollar by making it more attractive to yield seeking investors.

Crude oil prices held weaker in Asia on Monday as investors noted more drilling activity in the U.S. and other downbeat supply signals from top producers. Last week, oil futures slipped on Friday, but still scored their fourth weekly gain in a row as market players awaited details of a planned output cut by the OPEC. The OPEC reached an agreement to limit production to a range of 32.5 million to 33.0 million barrels per day in talks held on the sidelines of an energy conference in Algeria late last month. However, market analysts remained skeptical of the deal, pondering how such a plan would be implemented. The 14-member oil group said it won’t finalize details or complete its production agreement until the group’s next official meeting in Vienna on November 30. Brent gave back some gains after OPEC's monthly report published Wednesday revealed that its oil production rose in September to the highest level in eight years. The producer cartel pumped 33.39 million barrels per day last month, up 220,000 barrels per day from August. Market players continued to focus on U.S. drilling prospects, amid indications of an ongoing recovery in drilling activity. Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. last week rose by 4 to 432, marking the 15th increase in 16 weeks. Some analysts have warned that the recent rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, underlining concerns over a global supply glut. Weekly government data showing sizable drawdowns in domestic gasoline and distillate stockpiles, which include heating oil, provided support, although inventories of crude oil rose for the first time in six weeks, according to the U.S. EIA
 

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Daily Market Outlook 24th October

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Asian stocks drifted without clear direction on Monday after Wall Street's sluggish performance late last week, while the dollar hovered near nine-month highs as fresh comments from a Federal Reserve official boosted bets of a rate hike by year-end. Global markets are bracing for a slew of data this week including consumer price data from Japan and some euro zone countries, third quarter U.S. GDP and a number of purchasing managers' index (PMI) data from developed economies. The U.S. currency received a boost last week as the euro slid after the European Central Bank doused talk it was contemplating tapering its monetary easing. The dollar was also supported by hawkish comments from Fed officials including New York Fed President William Dudley and higher expectations that Hillary Clinton will win the U.S. presidential election, which have increased bets that the Fed will raise rates in December.

The dollar edged up to a fresh eight-month high against a basket of currencies in Asian trade on Monday, buoyed by expectations that the U.S. Federal Reserve will raise interest rates this year. On Friday, San Francisco Fed President John Williams said at a mortgage conference that "it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later." His comments followed recent hawkish talk from central bank officials including New York Fed President William Dudley and Fed Vice Chair Stanley Fischer, which prompted investors to price in an interest rate increase this year. Speculators raised their bets on the U.S. dollar for a fourth straight week, with net long positions hitting their highest since late January, Reuters calculations and data from the Commodity Futures Trading Commission showed on Friday. The value of the dollar's net long position rose to $18.44 billion in the week ended Oct. 18, from $14.72 billion the previous week. Another factor underpinning the dollar was recent opinion polling that favored Democratic candidate Hillary Clinton to win the Nov. 8 U.S. presidential election, defeating Republican Donald Trump. Dramatic news about either candidate could lead to foreign exchange market swings, said Shinichi Kashiwagi, head of market sales for Japan at National Australia Bank in Tokyo, and otherwise, "we need to wait until U.S. GDP on Friday." Disappointing U.S. growth figures might lead investors to pare their expectations of a December hike. The European Central Bank kept interest rates at historic lows last Thursday and ECB President Mario Draghi kept the door open for more stimulus, quashing speculation that the bank was poised to taper its 1.7 trillion euro asset-buying program. Data issued early on Monday showed Japan's trade balance at a surplus of 498.3 billion yen ($4.8 billion), versus the median estimate of a 341.8 billion yen surplus. But the yen's recent relative strength took a toll on exports, which fell for a 12th straight month.

Crude oil prices slipped on concerns supply will outweigh demand, with U.S. crude CLc1 down 0.5 percent at $50.62 a barrel. The contracts had risen about 0.8 percent on Friday on hopes that Russia and OPEC would reach a price agreement, but worries of oversupply have been a persistent drag on the market. But oil fell Monday after Iraq said it wanted to be exempt from any deal by OPEC to cut production. Latest data also showed that U.S. oil rig count posted the first double-digit rise since August to weigh on the market. Oil prices fell early on Monday as Iraq said it wanted to be exempt from any deal by producer cartel OPEC to cut production to prop up the market, and as U.S. drillers stepped up work. Traders said the price falls followed comments from Iraq, which said it wanted to be exempt from a production cut by the OPEC that the group plans to decide at its Nov. 30 meeting. OPEC plans to reduce production to a range of 32.50 million to 33.0 million barrels per day (bpd), down from 33.39 million bpd in September. That would be harder to achieve if Iraq, which is OPEC's second-biggest producer after Saudi Arabia, didn't participate. Iraq said on Sunday that its oil production stood at 4.774 million bpd, with exports standing at 3.87 million bpd. Also pressuring the market, U.S. oil rigs rose by 11 last week, the first double-digit increase since August. "We should see rig counts continue to increase in the wake of the recent price rally," Morgan Stanley said. Ongoing strength in the dollar .DXY, which can crimp demand as it makes fuel purchases more expensive for countries using other currencies at home, also weighed on oil. On the demand side, Japan's crude imports fell 4.6 percent in September from the same month a year earlier, to 3.27 million bpd, official data showed on Monday. Despite Monday's lower prices, analysts said that oil markets, which have been dogged by two years of oversupply, might be rebalancing in terms of production and consumption.
 

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Daily Market Outlook 27th October

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Asian shares extended losses on Thursday after disappointing earnings from technology giant Apple dragged on Wall Street, while the dollar remained shy of this week's nearly nine-month highs. Adding to the already subdued mood, data showed profit growth in China's industrial firms slowed last month from the previous month's rapid pace as several sectors showed weak activity, suggesting the world's second-biggest economy remains underpowered. Later on Thursday, market participants will parse the latest data on U.S. durable goods, jobless claims and pending home sales. Expectations for a year-end rate hike by the Federal Reserve remained intact, and have bolstered the greenback. In recent weeks, market participants have been pricing in more than a 70 percent chance that the U.S. central bank would hike interest rates in December, according to CME Group's FedWatch program. U.S. growth figures scheduled for release on Friday could reinforce or temper Fed hike expectations.

New U.S. single-family home sales unexpectedly rose in September, pointing to sustained demand for housing even as data for the prior three months were revised lower. Other reports on Wednesday suggested a stronger pickup in economic growth in the third quarter than is currently anticipated. The goods trade deficit narrowed sharply, while both wholesale and retail inventories increased in September. The Commerce Department said new home sales increased 3.1 percent to a seasonally adjusted annual rate of 593,000 units last month, pulling them close to a nine-year high touched in July. However, the pace for the prior three months was revised down by a total of 85,000 units from previous estimates. New home sales, which are derived from building permits, are volatile on a month-to-month basis and subject to large revisions. Sales increased 29.8 percent from a year ago. Economists had forecast single-family home sales, which account for about 9.8 percent of overall home sales, falling to a rate of 600,000 units last month. Despite the downward revisions, new home sales rose in the third quarter compared to the April-June period. Residential construction, however, likely remained a mild drag on gross domestic product for a second straight quarter. GDP probably increased at a 2.5 percent rate in the third quarter, quickening from the second-quarter's tepid 1.4% pace.

Profit growth in China's industrial firms slowed sharply as some key manufacturing sectors stumbled on weak activity and rising debt, suggesting the world's second-biggest economy remains underpowered despite emerging signs of stability. The September data from National Bureau of Statistics (NBS) underlined the daunting task facing policy makers as the nation's vast manufacturing industry grapples with slack demand, overcapacity and ballooning debt. Industrial sector profits last month rose 7.7 percent to 577.1 billion yuan, slowing markedly after surging 19.5 percent in August, NBS figures released on its website showed on Thursday. The official also cautioned about rising debt levels in the coal and steel sectors, stressing the importance of controlling debt risks as capacity cuts and structural reforms get implemented. Recent data showed some signs of stability, with annual economic growth of 6.7 percent in the third quarter matching the previous quarter, as increased government spending and a property boom offset stubbornly weak exports. China's producer prices rose in September for the first time in nearly five years, thanks to higher commodity prices.

Oil prices were stable on Thursday, lingering around $50 a barrel, as doubts over OPEC's ability to organize a coordinated production cut weighed on markets, while firm demand and concerns over Venezuela's stability offered support. Traders said Brent was struggling on doubts that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers like Russia will be able to effectively coordinate curbs in output to prop up prices.

"Investors remain uncertain as to whether OPEC can implement the tentative agreement to cut production," ANZ bank said on Thursday. A cut is being pushed by Saudi Arabia, OPEC's biggest producer, and it is being supported - at least by word - by Russia, not a member of the cartel but the world's biggest oil producer. However, OPEC's No.2 producer, Iraq, has said it would not cut output, arguing it needs the revenue to fight Islamic State, and the government is trying to lure investors to boost output further from its current record 4.43 million barrels per day. In U.S. crude markets, West Texas Intermediate (WTI) futures CLc1 received support from a 553,000-barrel draw in crude inventories to 468.16 million barrels. But some analysts said that the drop in stocks was misleading. In OPEC-member Venezuela, spreading and increasingly violent protests against the government sparked fear in the oil industry that the country's oil production could be affected. As crude is the main feedstock for oil refineries, strong refining activity tends to be price supportive of crude.
 

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Daily Market Outlook 4th November

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Asian shares slipped on Friday and the dollar nursed losses in a week marked by growing uncertainty about the outcome of the U.S. presidential election. Investors have been unnerved in recent days by signs that the presidential race between Democrat Hillary Clinton and Republican Donald Trump may be tightening just days before Tuesday's vote. That anxiety has rippled across global financial markets as investors ponder hedging the possible ramifications of a Trump presidency, overshadowing other events including Friday's U.S. employment report for October. According to the latest Reuters/Ipsos States of the Nation project, Clinton, who is seen as the status quo candidate by markets, maintained her narrow lead over Trump. But several swing states that the Republican challenger must win shifted from favoring Clinton to toss-ups, offering Trump a possible route to victory. Trump, a political novice, has campaigned to clamp down on immigration, rethink trade relations and slap high tariffs on imported goods. Some fear his election would pose risks for global trade and growth. The pound was a stand-out performer overnight, rising to a nearly one-month high of on Thursday after a British court ruled that the government needs parliamentary approval to start the process of leaving the European Union. That could potentially delay Prime Minister Theresa May's Brexit plans. The pound also got a boost from the Bank of England, which scrapped its plan to cut interest rates and ramped up its forecasts for growth.

U.S. employers likely stepped up hiring in October and boosted wages for workers, which could effectively seal the case for a December interest rate increase from the Federal Reserve. The nonfarm payrolls report due later Friday is expected to show employers added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters. U.S. data on Thursday showed that services industry activity cooled last month amid a slowdown in new orders and hiring, while planned job cuts by U.S.-based employers dropped 31 percent to a five-month low. That underscored the labor market's healthy fundamentals, though more Americans filed for unemployment benefits last week. The report will come on the heels of data last week showing acceleration in economic growth in the third quarter. But economists see little impact from the report on an increasingly bitter and divisive campaign. The Fed on Wednesday left interest rates unchanged but said its monetary policy-setting committee "judges that the case for an increase in the federal funds rate has continued to strengthen." It lifted its benchmark overnight interest rate last December for the first time in nearly a decade. Employment growth so far this year has averaged 178,000 jobs per month, down from an average gain of 229,000 per month in 2015. Still, the monthly job gains are more than enough to absorb new entrants into the labor market. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the work-age population. The prospects of an interest rate hike next month could also be bolstered by an anticipated solid rise in wages. Average hourly earnings are expected to have increased 0.3 percent in October after advancing 0.2 percent in September.

Oil prices edged up on Friday, stabilizing after five straight days of falls triggered by a surge in U.S. crude inventories and doubts over the ability of producers to coordinate output cuts. Despite the slight increases, traders said sentiment was bearish. Brent fell for the past five straight trading sessions and is down over 13 percent since its recent peak in mid-October. Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential elections, which are seen as a risk to markets. Beyond concerns ahead of the elections, traders said oil fundamentals were also weak, with U.S. crude stocks surging, demand growth low, and doubts that the OPEC and non-OPEC producer Russia can agree on a meaningful output cut this month. U.S. crude oil stockpiles soared more than 14 million barrels last week, the largest weekly build since the U.S. Energy Department started keeping records in 1982, highlighting that a global fuel supply overhang is far from over. While oil production remains near records and inventories are high, British bank Barclays said demand growth was timid."Q3 16 demand growth rate is less than one-third that of the same quarter last year," Barclays bank said in a note to clients, estimating last quarter's growth below 1 million bpd. It said consumption increases for the last quarter of the year would not be much higher, before averaging 1.3 million bpd in 2017.
 

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Daily Market Outlook 8th November

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Most Asian stock markets rose on Tuesday ahead of the U.S. presidential election, with investors optimistic but cautious over improving prospects for a win by Democrat Hillary Clinton. The Mexican peso, which strengthens as the perceived chances of an election victory by Republican Donald Trump fall, retained its strong gains from Monday. Boosting Clinton's chances of winning, and markets globally, was a statement by the U.S. Federal Bureau of Investigation on Sunday standing by its July finding that Clinton was not guilty of criminal wrongdoing in her use of a private email server. That came after the FBI announced on Oct. 28 it was reviewing additional emails relating to the server while Clinton was secretary of state, sending markets around the world tumbling. Clinton is seen by investors as offering greater certainty and stability, and, until last week's stumble, had been seen as the likely victor in Tuesday's presidential vote. While polls last week showed Trump closing in on Clinton's lead, at least five major polls on Monday showed Clinton still ahead. But investors remained wary, noting Britain's shock vote in June to leave the European Union had defied most polls and bookmakers' odds.

The most prominent hawk on the European Central Bank's board defended the bank's ultra-loose monetary policy on Monday, but added that she was skeptical of further interest rate cuts or other forms of easing. Sabine Lautenschlaeger's comments were likely to be read as an indication she might oppose extending the ECB's monthly bond-buying program much beyond its March deadline - a decision the ECB will make at its meeting in a month's time. The former head of Germany's financial regulatory agency defended the ECB from criticism in her home country that ultra-low rates have hurt banks and savers, arguing its policy was well-suited to current economic conditions. But she opposed any further easing. She spoke hours after a top Bank of Italy official said the ECB was not considering reducing the 80 billion-euro ($88.28 billion) monthly pace of the program and was looking instead at how far to extend it after March. Central bank sources told Reuters late last month that the ECB is nearly certain to continue buying bonds beyond March and to relax its constraints on the purchases to ensure it finds enough paper to buy.

The dollar steadied in Asia on Tuesday, keeping previous session gains as markets wagered on a victory for Hillary Clinton in the U.S. presidential election after the FBI cleared her of any wrongdoing in its latest probe of her use of a private email server. With hours to go before Americans vote, Democratic candidate Clinton has about a 90 percent chance of defeating Republican Donald Trump in the race for the White House, according to the final Reuters/Ipsos States of the Nation project. Federal Bureau of Investigation Director James Comey said in a letter to Congress on Sunday that the agency's review of newly discovered emails did not find anything to warrant any criminal charges against Clinton. Finance Minister Taro Aso said on Tuesday that Japan would need to respond to currency market moves if results of the U.S. presidential election were to cause a sudden spike in the yen, when asked about market speculation that the safe-haven currency might spike on a Trump victory. The dollar struck recent lows on signs of a tightening race between Clinton - viewed as the status quo candidate by most investors - and Trump, whose stated views on foreign policy, trade and immigration have raised fears about their potential impact on global growth.

Oil prices were stable on Tuesday as financial investors and traders were cautiously positioning themselves for a win by Hillary Clinton in the U.S. presidential elections. China, which vies with the United States for top spot as the biggest crude importer, bought 6.78 million barrels of oil from abroad in October, down 12.9 percent from the previous month and one of the lowest volume this year on a daily basis. The country's refined oil product exports jumped 24 percent on a year earlier, as the nation produced more fuel than it could absorb. Crude prices were held back by lingering doubts over the ability of oil producers to agree on a planned output cut to prop up a market which has been dogged by two years of oversupply. The chief executive of U.S. oil giant Exxon Mobil, Rex Tillerson said on Monday that global oil supplies have exceeded demand by 1 million to 2 million barrels per day since the start of 2015. In physical oil markets, U.S. pipeline companies with operations at the heart of the country's commercial oil industry at Cushing, Oklahoma, restarted on Monday after an earthquake late on Sunday triggered safety shutdowns. China's exports and imports fell more than expected in October, with weak domestic and global demand adding to doubts that a pick-up in economic activity in the world's largest trading nation can be sustained. October exports fell 7.3 percent from a year earlier, while imports shrank 1.4 percent, official data showed on Tuesday, raising fears that a broader recovery seen in recent months could falter.
 

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Daily Market Outlook 10th November

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Asian shares rallied on Thursday and the dollar firmed in a remarkable snapback from the shock of Republican Donald Trump's presidential victory, though the speed of the reversal left some market watchers scratching their heads. Despite the initial sharp recoil in global markets, U.S. investors opted to focus instead on Trump's key policy priorities, which include generous tax cuts and higher infrastructure and defense spending, along with deregulation for banks. Helping boost the dollar, investors again revised the outlook for U.S. interest rates in the wake of Trump's victory, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 80 percent. Ratings agency S&P Global later affirmed the AA+ rating of the United States, but noted uncertainty over the future path of government debt would prevent any upgrade. There were also lingering concerns about whether Trump would follow through with threatened punitive tariffs on Chinese and Mexican exports, potentially triggering a global trade war. Among Asia's trade-reliant economies, China and South Korea are particularly exposed to any hostile U.S. measures as they run large trade surpluses with the United States, Credit Suisse said in a research note.

Ratings agency Standard & Poor's affirmed the United States' investment-grade 'AA+/A-1+' rating on Wednesday, a day after the presidential election, while maintaining its stable outlook. Donald Trump won the U.S. presidential election in a stunning upset, and will take office in January, with the Republicans maintaining majority control of the House of Representatives and the Senate. But S&P added that the United States' high general government debt and increased uncertainty over its trajectory constrain the ratings of the world's largest economy. There is a risk of policy uncertainty and potential missteps given the untested nature of the incoming Trump administration. If these risks eventuate, there could be downward pressure on the rating, S&P said. S&P said it would raise the rating if it saw evidence that efforts point to more proactive fiscal and public policies that result in a lower debt burden. Fitch Ratings said on Wednesday that Trump's victory does not have near-term implications for the United States' AAA/stable rating.

A day after Republican Donald Trump was elected as the next U.S. president, San Francisco Federal Reserve Bank President John Williams said that the U.S. central bank is nerdy, geeky, but above all apolitical, and will remain so. During his campaign Trump repeatedly accused the Fed of keeping rates low for political reasons, and said he would replace Fed Chair Janet Yellen, who ran the San Francisco Fed before Williams, once her term ends in 2018. Speaking at the University of San Francisco, Williams said the U.S. economy is close to maximum employment and inflation is poised to rise back to the Fed's 2-percent target, and that therefore it is time for the central bank to increase rates gradually. Rate increases have been much slower than the Fed expected last year, when most policymakers thought they would raise borrowing costs four times in 2016. Williams said the Fed did not raise rates as fast as expected because most policymakers over the course of the year changed their estimate of the neutral level of interest rates, and now believe that level is much lower because of factors like an aging population and slow productivity growth. Fed's Williams says gradual rate rises still make sense. The Fed is widely expected to raise one time this year, at next month's policy meeting, a move that Williams supports.

Oil prices dipped on Thursday, pulled down by rising U.S. crude inventories and as markets tried to interpret U.S. President-elect Donald Trump's surprise victory. U.S. crude stocks rose by 2.4 million barrels to 485 million barrels last week even though refineries hiked output and imports fell, the U.S. Energy Information Administration said on Wednesday. Markets still shook off deep post-election losses and recovered. BMI Research said Trump's expected pro oil and gas industry policies might mean that U.S. "production of oil and gas could recover at a faster rate in 2017 as developers grow more encouraged." Goldman Sachs said a Trump presidency would likely result in higher investment and, in time, increased U.S. oil output as the new president-elect has said he would de-regulate fossil fuel production. Internationally, the bank said Trump's threat of renewed U.S. sanctions against OPEC-member Iran would, in the short-term, lead to higher production as it "would further incentivize Iran to maximize production in the short term rather than comply to an OPEC freeze." This confirmed traders' doubts over the ability of the Organization of the Petroleum Exporting Countries (OPEC) and other producers, especially Russia, to coordinate a planned output cut in order to prop up prices. In physical oil markets, the Niger Delta Avengers (NDA) militant group said it had attacked the Forcados crude export line operated by oil major Royal Dutch Shell. Shell said that it had also shut down an Escravos crude oil flow station in Nigeria's Niger Delta after villagers staged a protest demanding aid.
 

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Daily Market Outlook 15th November

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The U.S. dollar held near a 14-year high on Tuesday and Treasury yields extended their rise as investors braced for stronger inflation in the United States amid expectations of expansionary fiscal polices under Donald Trump's presidency. The combination of the two have derailed Asian currencies and equities, particularly in South Korea, Taiwan and Indonesia, which have seen big inflows this year, especially after the shock referendum vote by Britain to exit the European Union in June. Despite the general air of caution over Asian markets, investors are eyeing some opportunities such as banking stocks in Hong Kong which would benefit from any Trump-led deregulation in the financial sector. Some investors were also considering the Indian rupee, which is relatively less exposed to any flare-up in global trade protectionism than others. The large moves in markets has been stoked by expectation that Trump's promised infrastructure spending and tax cuts will spur higher U.S. growth, pushing up inflation as well as borrowing costs.

U.S. President-elect Donald Trump's administration should consider supporting a Beijing-backed free trade deal in the Asia-Pacific, state media said on Tuesday, adding that China would be relieved to see a rival U.S.-led trade deal wither under Trump. During his election campaign, Trump took a protectionist stance on trade issues and labeled the Trans-Pacific Partnership (TPP) championed by President Barack Obama a "disaster". There is now little chance of it coming up for vote in Washington before his inauguration in January. Obama had framed the TPP, which excludes China, as part of his "pivot to Asia" and as an effort to write Asia's trade rules before Beijing could. China had feared the United States would use the TPP to either force it to open markets by signing up or else to isolate it from other regional economies. The Regional Comprehensive Economic Partnership (RCEP) trade talks, which are supported by Beijing but to which the United States is not party, are viewed by some observers as a competitor to U.S. economic leadership in the region. Such editorials in state-run media do not represent Chinese government policy but they are indicative of official thinking.

The dollar extended gains to hit an eleven-month high against the other majors currencies on Monday, as optimism over the economic implications of a Trump presidency continued to boost demand for the greenback. The dollar continued to strengthen amid hopes that increased fiscal spending and tax cuts under a Trump administration will bolster economic growth and inflation. Expectations for higher U.S. interest rates also remained intact amid optimism that a pick-up in growth will allow the Federal Reserve to tighten borrowing costs. In Japan, data overnight showed that the economy grew at a faster than expected pace in the third quarter, with GDP expanding by 2.2% on a year-over-year basis, but the report also indicated that domestic demand remained weak.

Oil prices rose around 2 percent on Tuesday to move away from multi-month lows struck the day before, pushed higher by expectations of falling shale output and renewed optimism that OPEC will deliver on touted production cuts. Prices were buoyed by expectations that U.S. shale oil production will in December fall to its lowest since April 2014 at 4.5 million barrels per day (bpd). Saudi Arabia's energy minister said it was imperative for the Organization of the Petroleum Exporting Countries to reach a consensus on activating a deal made in September to curb production, according to Algeria's state news agency APS on Sunday. OPEC members are due to meet later this month. Also supporting oil markets was news that Harold Hamm, chief executive at U.S. independent oil producer Continental Resources, could serve as energy secretary when Donald Trump becomes U.S. president. Hamm, if nominated, would be the first U.S. energy secretary drawn directly from the industry, a move that would jolt environmental advocates but bolster Trump's pro-drilling energy platform. U.S. crude prices are also likely to be supported by short-covering, said Philips Futures' investment analyst Jonathan Chan. Elsewhere, Iraq will cut exports of Basra crude from its southern ports to 3.16 million bpd in December, compared with 3.24 million bpd in November. The allocated December volume will be the lowest in four months. Meanwhile, returning Libyan crude oil production could cap market gains. A tanker carrying the first freshly produced cargo of Libyan crude to be exported since the Ras Lanuf terminal reopened in September left the port on Monday. The reopening of the eastern ports has helped Libya's national production double to around 600,000 bpd.
 
 
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