Daily Market Outlook By PYX Markets

PYX Markets London

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Daily Market Outlook 16th November

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A pause in both the sell-off in global bonds and sharp rise in the dollar following Donald Trump's election victory, together with Wall Street's record high overnight helped Asian shares steady on Wednesday from a four-month low struck a day earlier. President-elect Trump's plans to cut taxes and boost infrastructure spending would boost demand while his proposals to deport illegal immigrants and impose tariffs on cheap imports, if implemented, are seen likely to drive inflation higher. That prospect has given rise to expectations that U.S. interest rates will rise faster than earlier anticipated, making the dollar stronger, but investors are still trying to assess what opportunities a Trump presidency will bring. The dollar's strength has fanned fears investors could shift funds to the United States from emerging markets. Emerging market stocks managed to rise 0.3 percent on Tuesday after having fallen 7 percent over the previous four sessions. U.S. retail sales rose more than expected in October, pointing to sustained economic strength that could allow the Federal Reserve to raise interest rates next month.

U.S. retail sales rose more than expected in October as households bought motor vehicles and a range of other goods, pointing to sustained economic strength that could allow the Federal Reserve to raise interest rates next month. The Commerce Department said on Tuesday retail sales increased 0.8 percent last month, also boosted by demand for building materials, likely as households cleaned up and made repairs in the wake of Hurricane Matthew. Adding to the report's strong tone, September retail sales were revised up to show a 1.0 percent increase instead of the previously reported 0.6 percent rise. The combined September and October sales gain was the largest two-month rise since early 2014. Sales were up 4.3 percent from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8 percent last month after an upwardly revised 0.3 percent gain in September. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have risen 0.1 percent in September. September's upward revision to core retail sales suggests that the economy's 2.9 percent annualized growth rate in the third quarter could be raised when the government publishes its second GDP estimate later this month. The report also reinforced views that the Fed will raise interest rates at its Dec. 13-14 policy meeting. Rate hike prospects have also been boosted by a rally in U.S. stocks in the wake of the last week's election of Republican candidate Donald Trump as the next president, despite a lot of hand-wringing over his proposed policies. But inflation is creeping higher. A separate report on Tuesday from the Labor Department showed import prices increased 0.5 percent in October after gaining 0.2 percent in September. In the 12 months through October, import prices fell 0.2 percent, the smallest decrease since July 2014, after declining 1.0 percent in September.

America's manufacturers are urging President-elect Donald Trump to back off from his most threatening trade rhetoric and pursue a more nuanced approach to trade with China and Mexico, avoiding unilateral tariff actions and focusing on negotiations. Corporate lobbying groups, some chief executives and pro-trade lawmakers also say they eventually even hope to persuade Trump that free-trade agreements can help grow the U.S. economy and create jobs. For now, these groups are bracing for higher trade tensions with China and potential changes to the 22-year-old North American Free Trade agreement with Canada and Mexico.

Oil futures rose on Wednesday, shrugging off an industry report that showed an unexpected build in U.S. crude stocks, and adding to gains of nearly 6 percent from the previous session. Oil prices had surged on Tuesday as members of he Organization of the Petroleum Exporting Countries (OPEC) were set to renew efforts on concrete steps to implement a deal on cutting output in the face of a persistent global glut. Both contracts had opened lower after Asian trading started following an after-hours report on Tuesday from the U.S. industry group, the American Petroleum Institute (API), that showed crude stocks rose last week. OPEC agreed to an outline of a supply cutting deal in September but with two weeks to go before a Nov. 30 meeting, disagreements persist among members and non-OPEC Russia on crucial details. OPEC secretary-general Mohammed Barkindo will travel to member nations, including Iran and Venezuela, over the next few days to discuss the deal. Crude inventories climbed by 3.6 million barrels to 488.8 million barrels in the week ended Nov. 11, the API report showed, compared with analyst expectations for an increase of 1.5 million barrels. Official figures on stockpiles from the U.S. Energy Information Administration are due later in the day.
 

PYX Markets London

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Daily Market Outlook 21st November

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Asian shares were on the defensive on Monday, undermined by fears that the strength in the U.S. dollar and rising U.S. bond yields since Donald Trump's election to president could accelerate fund outflows from emerging markets. Trump's unexpected election victory has led to a major repricing of assets, with investors rushing to buy U.S. stocks and the dollar, while dumping bonds and emerging market assets. Carrying out even some of Trump's plans for deregulation and tax cuts would undermine assumptions investors had long held - that the U.S. economy would grow modestly and inflation would remain tame in the foreseeable future. As expectations grow that the Federal Reserve might have to raise interest rates faster than expected under Trump's reflationary policies, markets have moved towards U.S.-dollar based assets at the expense of emerging nations. Heightened uncertainty prompted investors to demand a larger premium for holding long-term U.S. debt, with the 10-year U.S. Treasuries yield US10YT=RR soaring to 2.364 percent by last week from around 1.86 percent before the elections. To be sure, investors have little idea to what extent Trump can implement his proposals, including slapping tariffs on major trading partners such as China and Mexico and going ahead with heavy tax cuts that would widen the U.S. fiscal deficit. Some investors think the market will have a reality check as soon as differences start to emerge between the new administration and Congress over some of Trump's policies. The data from the U.S. financial watchdog showed on Friday that in the first week after the U.S. elections speculators hardly increased their net long positions in the dollar. Many emerging market currencies remained under pressure on fears investors could bring their money back to the United States. The Malaysia ringgit hit 14-month low MYR= while the Philippine peso PHP= edged near its 2008 low. The Organization of the Petroleum Exporting Countries is moving closer to finalizing its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said.

The dollar nudged up to a six-month high in early Asian trading on Monday, as investors continued to back bets that the administration of President-elect Donald Trump would embark on expansionary fiscal policies and boost growth. Data from the Commodity Futures Trading Commission released on Friday showed that speculators trimmed their dollar bets in the week through Nov. 15, as profit taking reduced net long positions after they had risen seven straight weeks. Japanese yen net longs, meanwhile, posted their lowest level since early June, the data showed, with the yen a casualty of the dollar's strong rally. And expectations that a Trump presidency will usher in higher growth and lead to faster-than-expected Fed hikes have helped power the dollar to 13-1/2-year highs against a basket of currencies. James Bullard, a voting member of the U.S. central bank's rate-setting committee, said last week that the Fed will raise U.S. interest rates in December barring a major shock, such as global market volatility or bad U.S. jobs data.

Oil prices rose around 1 percent on Monday as producer cartel OPEC moved closer to an output cut to rein oversupply that has kept prices low for over two years. Traders said that markets were being supported by advancing plans by the OPEC to cut production in a bid to prop up the market following over two years of low prices as a result of output exceeding demand. Such a deal has proved tricky to agree as some producers, most notably Iran, have been reluctant to cut output. But an agreement has become more likely as Iran, keen to increase output after international sanctions against it were lifted last January, was expected to be given an exemption if it agrees to cap its production rather than cutting it, leaving the onus of a an outright reduction on other OPEC-members, including its political rival and de-facto OPEC-leader Saudi Arabia. As a result, Barclays said that some form of production cut deal was likely, but the bank added that any such agreement might have little impact on markets. Beyond the talk of a potential production cut, there were also signs of ongoing market weakness. Japan on Monday reported a fall of 9.5 percent in crude oil imports in October from the same month a year earlier, to 2.78 million barrels per day.
 

PYX Markets London

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Daily Market Outlook 24th November

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Most Asian stock markets fell on Thursday as upbeat economic data strengthened the prospect for higher U.S. interest rates, while the dollar's bull run continued with U.S. bond yields propelled to multi-year highs. Such a view - which has also lifted expectations for more U.S. rate hikes next year - was reinforced on Wednesday after new orders of U.S. manufactured capital goods rebounded in October. Consumer sentiment also jumped in November. he common currency has dropped nearly 4 percent in November. State banks or foreign exchange authorities in China, India, Indonesia and the Philippines were all suspected of intervening to slow the slide in their currencies on Thursday.

The dollar was hovering at a fresh 14-year peak against the other majors currencies on Wednesday, after the release of mixed U.S. data failed to dampen optimism over the strength of the economy. The Universtity of Michigan said its consumer sentiment index rose to 93.8 in November from 91.6 the previous month, beating expectations for an unchanged reading. In addition, the U.S. Commerce Department said durable goods orders climbed 4.8% last month, compared to expectations for a gain of 1.5%. Core durable goods orders, which exclude volatile transportation items, rose 1% last month, compared to a forecast increase of 0.2%. On a less positive note, the U.S. Department of Labor said initial jobless claims in the week ending November 19 increased by 18,000 to251,000 from the previous week’s total of 233,000 (initially 235,000). Analysts had expected jobless claims to rise by 15,000 to 250,000 last week. Another report showed that U.S. new home sales fell by 1.9% to 563,000 units last month, disappointing expectations for a 0.3% increase. The greenback has remained supported amid expectations that President-elect Donald Trump’s plans to ramp up fiscal spending and cut taxes will spur economic growth and inflation. Faster growth would spark inflation, which in turn would prompt the Fed to tighten monetary policy a faster rate than had previously been expected. The U.S. dollar has also been boosted by bets that the U.S. central bank will almost certainly raise interest rates next month. Fed Chair Janet Yellen on Thursday reiterated that a rate hike “could well become appropriate relatively soon.” Research group Markit earlier reported that its euro zone composite purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, increased to 54.1 November from the prior month’s reading of 53.3 and above forecasts for no change. The German manufacturing PMI slipped to 54.9 this month from 55.0, while the services PMI climbed to a six-month high of 55.0 from 54.2. Markit also said its French manufacturing PMI declined to a two-month low of 51.5 in November from 51.8 the previous month, while the services PMI rose to a two-month high of 52.6 from 51.4.

Nov 23 Federal Reserve policymakers appeared confident on the eve of the U.S. presidential election that the economy was strengthening enough to warrant interest rate increases soon, minutes from the Fed's Nov. 1-2 meeting showed. The minutes released on Wednesday back the consensus view on Wall Street that the Fed is poised to raise rates in December. Policymakers left borrowing costs unchanged earlier this month, just days before Republican Donald Trump triumphed in the Nov. 8 presidential contest. Voting members of the Fed's rate-setting committee saw equal risks the economy would overshoot or undershoot their forecasts for continued growth and a tightening labor market. "Almost all of them continued to judge that near-term risks to the economic outlook were roughly balanced," according to the minutes. Seventeen policymakers participated at the November policy meeting, of whom 10 had a vote. Among the wider group of participants, most said it "could well become appropriate" to raise rates "relatively soon," according to the minutes. Fed Chair Janet Yellen said last week in congressional testimony that Trump's election did nothing to change the Fed's plans for a rate increase "relatively soon." Oil prices were little changed on Thursday as uncertainty ahead of a planned OPEC-led crude production cut and thin liquidity due to the U.S. Thanksgiving holiday kept traders from making big new bets on markets. Traders said market activity was low due to the U.S. holiday, and there was a reluctance to take on big price directional bets due to uncertainty about a planned oil production cut, led by the OPEC. OPEC is due to meet on Nov. 30 to coordinate a cut, potentially together with non-OPEC member Russia, but there is also disagreement within the producer cartel as to which member states should cut and by how much. Most analysts believe some form of production cut will be agreed, but it is uncertain whether it will be enough to prop up a market that has been dogged by a fuel supply overhang for over two years, resulting in a record three years of falling investments into the sector, according to IEA. Beyond OPEC, traders said the strong U.S.-dollar, which is at levels last seen in 2003 against a basket of other leading currencies .DXY, was influencing oil prices. A strong dollar, in which oil is traded, makes fuel purchases more expensive for countries using other currencies at home, potentially crimping demand.
 

PYX Markets London

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Daily Market Outlook 30th November

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Asian stocks tried to stabilize after a rocky November month drew to a close, but Wednesday's session brought new anxieties as Chinese equities and commodities tanked amid worries that Beijing's efforts to support its currency could squeeze liquidity. Analysts said moves by China's central bank in recent days to shore up a sliding yuan were sucking additional funds from the banking system, which is pushing up domestic borrowing costs. While it held near its highest levels since Nov. 11, the index was set for a second consecutive monthly drop in a sign of the uncertainty around U.S. President-elect Donald Trump's administration and the outlook for global growth. A six percent rise in the dollar since Trump's upset U.S. election win has hammered emerging markets, as investors pulled money out in favor of U.S. dollar-based assets on bets Trump will boost fiscal spending, growth and inflation. More than $16 billion have been sucked out of emerging markets in the two weeks following the Nov. 8 vote but stock exchange data in India, Indonesia, Philippines, Taiwan, Thailand and South Korea indicate the outflows may be slowing. The dollar's recent gains - 7 percent versus the yen and 3 percent against the euro - has come on the back of expectations of stepped up fiscal spending, higher inflation and a faster pace of monetary tightening by the Federal Reserve. However, market watchers say further dollar gains will be hard fought.

The U.S. economy grew faster than initially estimated in the third quarter, notching its best performance in two years, buoyed by strong consumer spending and a surge in soybean exports. In a separate report, U.S. home prices rose 5.5% in the year to September, meaning house prices overall have now fully recovered from their plunge during the 2008 financial crisis. A third report showed U.S. consumer confidence rebounded in November to its highest level in nine years despite uncertainty surrounding the policies of President-elect Trump. U.S. gross domestic product increased at a 3.2% annual rate instead of the previously reported 2.9 percent pace, the Commerce Department said in its second GDP estimate on Tuesday. Economists had forecast third-quarter GDP growth being revised up to a 3.0% rate.. Data ranging from housing to retail sales and manufacturing output also suggest the economy retained its momentum early in the fourth quarter even as exports appear to be faltering amid a reversal of the boost to growth provided by soybean exports in the third quarter. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.8 percent rate in the third quarter and not the 2.1 percent pace reported last month. That was still a slowdown from the second quarter's robust 4.3 percent pace. A separate report from the Conference Board showed its consumer confidence index surged in November, climbing back to levels seen before the 2008 recession. Consumers were upbeat about the labor market and current business conditions. Spending on non-residential structures, which include oil and gas wells, was revised sharply higher to show it increasing at its fastest pace since the first quarter of 2014.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail oil production, making it hard for the Organization of the Petroleum Exporting Countries to reach a deal to limit output and boost the price of crude when it meets on Wednesday. OPEC sources told a meeting of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts. On Tuesday, tensions rose further after Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by as much as 1 million bpd, much more than Riyadh is willing to offer, OPEC sources who saw the letter told Reuters. OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up oil prices, which have halved since mid-2014. OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions. The deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival Saudi Arabia increased output. Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 min bpd. Iran's letter to OPEC suggested Saudi Arabia should cut output to 9.5 mn bpd. The headquarters of the OPEC is seen in Vienna, Austria, November 29, 2016. Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State. Iran and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd. As tensions within OPEC mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that oil markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal. One of Saudi Arabia's main allies, UAE Energy Minister Suhail bin Mohammed al-Mazroui, said on Tuesday the market would indeed rebalance itself within six months although an output deal would help speed the process. The papers also propose Saudi Arabia reduce production to 10.07 mn bpd from 10.54 million bpd in October and that Iran freeze output at 3.797 million bpd, according to the source.
 

PYX Markets London

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Daily Market Outlook 31st January

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Asian shares slipped on Tuesday as stringent curbs on travel to the U.S. ordered by President Donald Trump brought home to investors that he is serious about putting his controversial campaign pledges into action. Global stocks posted their biggest loss in six weeks after Trump signed an executive order on Friday to bar Syrian refugees indefinitely and suspend travel to the United States from seven Muslim-majority countries, sparking widespread protests. The mood soured further after Trump fired the federal government's top lawyer after she took the extraordinarily rare step of defying the White House. Still, most share prices were up on the month, supported by signs of accelerating momentum in the global economy and hopes of large fiscal stimulus from Trump. The Japanese currency showed no reaction after the Bank of Japan kept its policy on hold, as expected. Recent data has suggested the economy is slowly regaining traction. Worries are also growing about a political shift to populist leaders in Europe. Conservative leader Francois Fillon, seen as the front-runner, is now battling to contain a scandal over allegedly unlawful payments to his wife while the Socialists on Sunday picked a hard-left candidate, possibly helping popular far-right leader Marine Le Pen. News that Germany posted a national inflation rate of 1.9 percent stoked talk of an unwinding of monetary stimulus by the European Central Bank, even though the inflation outcome was below expectations. Data on Monday showed U.S. consumer spending accelerated in December while inflation showed some signs of picking up last month.

The dollar slipped against the yen on Tuesday, as the Japanese currency benefited from its safe-haven status, with the appetite for risk curbed by U.S. President Donald Trump's hardening defence over his immigration policies. The latest blow against the dollar was initiated after Trump ordered a temporary ban over the weekend on the entry of refugees and people from seven Muslim-majority countries. On Monday, the president fired acting U.S. Attorney General Sally Yates after she refused to defend Trump's new travel restrictions. Selling of the dollar appeared to have briefly gained momentum after Trump's move, said a dealer at a Japanese bank. The Bank of Japan's well-anticipated decision to stand pat on monetary policy on Tuesday had little lasting impact, although the dollar did briefly rise above 113.700 following the announcement before drifting lower again. While the BOJ on Tuesday maintained a pledge to guide short-term interest rates at minus 0.1 percent and the 10-year government bond yield to around zero percent, the financial markets have begun to speculate about when the central bank might allow long-term rates to drift higher. U.S. consumer spending accelerated in December as households bought motor vehicles and cold weather boosted demand for utilities amid a rise in wages, pointing to sustained domestic demand that could spur economic growth in early 2017. There are also signs that inflation firmed last month. The growth outlook was further bolstered by other data on Monday showing a jump in contracts to buy previously owned homes. A strengthening economy, rising price pressures and tightening labor market could allow the Federal Reserve to raise interest rates at least three times this year. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.5 percent after gaining 0.2 percent in November. The rise was the biggest in three months and in line with economists' expectations. Consumer spending increased 3.8 percent in 2016 after a 3.5 percent rise in 2015. With domestic demand firming, inflation showed some signs of picking up last month. The PCE price index rose 0.2 percent after edging up 0.1 percent in November. The economy grew at a 1.9 percent annual rate in the fourth quarter, restrained by a wider trade deficit. Private domestic demand, however, increased at a solid 2.8 percent rate. The economy expanded at a 3.5 percent rate in the third quarter.

Oil prices dipped on Tuesday as rising U.S. drilling activity offset efforts by OPEC and other producers to cut output in a move to prop up the market. The falls reflect a sentiment that efforts led by the OPEC to cut output by almost 1.8 bpd in order to end overproduction were so far not big enough to offset rising U.S. drilling. Following months of rising drilling activity, U.S. oil production has risen by 6.3 percent since July last year to almost 9 million bpd, according to data from the U.S. EIA. U.S. bank Goldman Sachs estimates that year-on-year U.S. oil "production will rise by 290,000 bpd in 2017" if a backlog on rigs that are still to become operational is accounted for. With the differing outlook between global oil markets and that in the United States, traders said a renewed focus on the spread between Brent and WTI futures has emerged.
 

PYX Markets London

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Daily Market Outlook 6st February

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Asian shares crept up on Monday as Wall Street gathered momentum into a busy week of earnings with more than 100 major companies due to report, while the dollar was again hobbled by a lack of progress on U.S. fiscal stimulus. A private survey out of China showed activity in the services sector remained strong in January as companies reported a solid increase in orders, though the pace of growth eased. Local markets seemed unimpressed and Shanghai stocks were barely changed .SSEC. Dealers are still absorbing Friday's surprise move by China's central bank to raise short-term interest rates and whether its attempts to reduce leverage in the system this year will dampen growth. While the rate increases were modest, they suggested Beijing was intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fueled stimulus. Growth in China's services sector remained robust in January as companies reported a solid increase in orders, though the pace of expansion eased from the previous month, a private business survey showed. The services PMI fell marginally to 53.1 in January on a seasonally adjusted basis, from 53.4 in December, the Markit/Caixin services PMI showed. Though activity in services slowed slightly from December, strong growth looks set to continue, in line with policymakers efforts to rebalance the economy toward services and consumption, which are the biggest drivers of growth in the world's second-largest economy. Expansion in new business for services firms slowed slightly from December but remained robust. Caixin's composite PMI covering both the manufacturing and services sectors showed a similar pattern of solid but slightly easing growth, falling to 52.2 in January from the previous month's near 4-year high of 53.5.On Wall Street, banks had ended Friday strongly as President Donald Trump moved to roll back regulations intended to prevent a repeat of the global financial crisis. Friday's payrolls data also showed U.S. jobs jumped more than expected in January as construction firms and retailers ramped up hiring, but wages growth still slowed.

The dollar started the week on the back foot on Monday, after U.S. data showed a smaller-than-expected rise in wages in January that reinforced expectations the Federal Reserve will refrain from raising interest rates next month. While the headline figure of Friday's nonfarm payrolls report for January showed a greater-than-expected rise in job growth, the unemployment rate edged up and wage growth was disappointing. That implied inflation would not attain a pace that would prompt the U.S. central bank to raise interest rates soon. The chance of a June increase was seen at more than 60 percent. The Fed, which raised rates in December, has forecast three rate increases this year. Whether it sticks to that pace depends on labour market strength as well as if President Donald Trump's stimulus steps succeed in boosting growth and inflation Still, San Francisco Fed President John Williams said on Friday that the Fed can prepare to raise interest rates this year without knowing details of any new U.S. fiscal policies because inflation is firming and the labour market looks good. While Trump's immigration curbs and renewed sanctions on Iran grabbed most attention, he also on Friday ordered reviews of major banking rules that were put in place after the 2008 financial crisis. Adding to the smaller-than-expected rise in U.S. wage growth, concerns about the potential impact of Trump's policies also dampened the dollar's outlook. Investors fretted that his protectionist trade policies and statements about other countries' currency manipulations would offset any dollar lift from his stimulus policies and deregulation.

Oil prices rose on Monday, with traders shifting money into crude futures as the dollar weakened, and on concerns that new U.S. sanctions against Iran could be extended to affect crude supplies. Traders said the rising prices were a result of cash being poured into crude futures due to a weakening dollar and because of a generally firm outlook thanks to producer efforts to cut output. Investors raised their net long U.S. crude futures and options positions in the week to Jan. 31 to a record 412,380 lots, the U.S. Commodity Futures Trading Commission said on Friday. The dollar has lost almost 4 percent in value against a basket of other currencies since early January, making investments into other products, including crude futures, more attractive. Traders said that tensions between Tehran and Washington were also supporting oil as a recent Iranian ballistic missile test prompted U.S. President Donald Trump to impose sanctions on individuals and entities linked to Iran's elite Revolutionary Guards military unit. On the supply-side, the OPEC and other producers like Russia are trying to reduce a global fuel supply overhang by cutting their output by a planned average of almost 1.8 million barrels per day (bpd) during the first half of the year. Despite this, crude was held back by rising U.S. drilling activity, where 17 oil rigs were added in the week to Feb. 3, bringing the total up to 583, the most since October 2015, according to Baker Hughes on Friday. BMI Research said that around 6 percent of Chinese refining capacity would shut down at some point during the first half of the year, equivalent to around 900,000 bpd of capacity. A 6.7-percent reduction to 68.81 million tonnes between 2016 and 2017 crude import quotas for China's independent refiners will also weigh on the overall import demand, said BMI.
 

PYX Markets London

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Daily Market Outlook 8th February

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Asian share markets retreated on Wednesday and the euro was pressured as doubts over the policies of U.S. President Donald Trump and an election looming in France sapped investor confidence. A raft of strong global economic data and hopes that Trump's talk of economic stimulus measures had helped to support world share markets, and the dollar, since late last year. But the lack of detail on Trump's stimulus plans and some other policy stances taken after he was sworn in on Jan. 20 have unsettled investors. Trump's protectionist leanings on international trade and controversy over his move to temporarily ban the entry of immigrants from seven Muslim-majority countries have caused alarm. Uncertainty on the new administration's currency policy is also keeping foreign exchange markets on edge. The pair may see limited moves for now as traders look to a meeting between Trump and Japanese Prime Minister Shinzo Abe on Friday. The euro EUR=, on the other hand, shed 0.6 percent on Tuesday and last stood at $1.0682, hit by rising concerns that the far right could win France's presidential vote and take the country out of the euro. While most investors expect Le Pen to be defeated in the run-off by a more moderate candidate, markets are nervous after last years’ experience of the Brexit referendum and Trump's victory. In addition, wrangling over Greece's bailout are starting to haunt the market ahead of the euro group meeting on Feb. 20, with two-year Greek debt GR2YT=RR yield soaring to near 10 percent on Tuesday, compared to around six percent just about two weeks ago. Elsewhere, the Chinese yuan dipped slightly following Tuesday's data that showed China's foreign exchange reserves unexpectedly fell below the closely watched $3 trillion level in January for the first time in nearly six years. Still, the market impact was limited as the fall in the reserves, of $12.3 billion to $2.998 trillion, was the smallest in seven months, indicating China's renewed crackdown on outflows appears to be working, at least for now.

The U.S. trade deficit fell in December as exports hit their highest level in more than 1-1/2 years amid record shipments of technology products, but strengthening domestic demand points to further rises in imports, which could constrain economic growth. The Commerce Department said on Tuesday the trade gap dropped 3.2 percent to $44.3 billion, ending two straight months of increases. The trade deficit rose 0.4 percent to a four-year high of $502.3 billion in 2016. That represented 2.7 percent of gross domestic product, down from 2.8 percent in 2015. President Donald Trump has blamed U.S. trade policy for the loss of American factory jobs and has vowed to make sweeping changes, starting with pulling out of the 12-nation Trans-Pacific Partnership trade pact Trump also wants to renegotiate the North American Free Trade Agreement, which was signed in 1994 by the United States, Canada and Mexico. But economists do not believe these protectionist measures will eliminate the deficit. U.S. financial markets were little moved by the report as the government published an estimate of the goods deficit last month. Trade slashed 1.7 percentage points from gross domestic product in the fourth quarter, leaving output rising at a 1.9 percent annualized rate. The economy grew at a 3.5 percent pace in the third quarter. The improvement in the deficit at the end of the year could set up trade to be a modest drag on growth in the first quarter. In December, exports of goods and services increased 2.7 percent to $190.7 billion, the highest since April 2015, as shipments of advanced technology goods such as aerospace, biotechnology and electronics, hit a record high.

Oil prices dropped on Wednesday to extend falls from the previous day, as a massive increase in U.S. fuel inventories and a slump in Chinese demand implied that global crude markets remain oversupplied despite OPEC-led efforts to cut output. The sharp declines came on the back of unexpectedly big increases in U.S. fuel inventories, as reported by the API on Tuesday. Gasoline stocks rose by 2.9 million barrels, compared with expectations for a 1.1-million barrel gain. Despite this, the U.S. bank said "this data vastly overstates a likely modest year-on-year decline in gasoline demand," and that its "outlook for global strong demand growth (remains) unchanged". Outside the United States, there were other signs of market weakness. China's 2016 oil demand grew at the slowest pace in at least three years, Reuters calculations based on official data showed. China's implied oil demand growth eased to 2.5 percent in 2016, down from 3.1 percent in 2015 and 3.8 percent in 2014, led by a sharp drop in diesel consumption and as gasoline usage eased from double-digit growth. The slowing occurred as the economy expanded by only 6.7 percent in 2016, the slowest pace in 26 years. Slowing demand and ongoing high inventories undermine efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to cut output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market. Despite this, both Brent and WTI are down over 6 percent since early January, when the cuts started to be implemented.
 

PYX Markets London

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Daily Market Outlook 22nd February

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Asian stocks rose on Wednesday, joining a record-setting session for global markets as investors cheered upbeat factory activity in Europe and solid earnings on Wall Street. The euro, however, has not followed suit as the currency markets focused more on potential political turbulence in the euro zone. The common currency was up a modest 0.1 percent at $1.0544 after losing more than 0.7 percent the previous day. Polls suggesting improving support for far-right French presidential candidate Marine Le Pen have undermined sentiment and weighed on the common currency. The dollar had risen overnight following hawkish comments from Cleveland and Philadelphia Fed Presidents Loretta Mester and Patrick Harker. Mester expressed comfort at raising rates at this point, while Harker reportedly said a March rate hike was on the table. Financial markets are waiting on the Fed's Jan. 31-Feb. 1 policy meeting minutes due later in the day for fresh hints on the central bank's stance toward interest rates. The focus will be on the Fed's economic assessment in the minutes, which should emphasize a recent uptick in economic data, although the market may still remain skeptical about the chances of a near-term rate hike, said Christopher Wong, senior FX strategist for Maybank. The Mexican currency surged 1.7 percent against the dollar overnight, breaking the psychological level of 20 per dollar or the first time since Donald Trump's November U.S. election victory. Hurt by Trump's threats to impose trade barriers on Mexico and hit by the prospect of higher U.S. rates, the peso weakened to a record low of roughly 22 per dollar in January.
The dollar lost ground in Asian trading on Wednesday as investors awaited the minutes of the Federal Reserve's latest meeting for clues as to the pace of interest rate hikes, while Europe's political woes kept a bruised euro under pressure. The Fed minutes due to be released later on Wednesday could either reinforce or undermine recent hawkish comments from central bank policy makers. Cleveland Fed President Loretta Mester said late on Monday in a speech in Singapore that she would be comfortable raising rates at this point if the economy maintained its current performance. Philadelphia Fed President Patrick Harker also told reporters on Monday that he would support an interest rate increase at a mid-March policy meeting as long as inflation, output and other data until then continue to show the U.S. economy is growing. Bank of Japan Governor Haruhiko Kuroda said the chance of the central bank lowering interest rates deeper into negative territory was low for now, backing market expectations that no additional monetary easing would be forthcoming in the near future. Japanese Finance Minister Taro Aso said that Japan was not thinking now of issuing negative rate Japanese government bonds. An Elabe poll showed the lead of centrist Emmanuel Macron and conservative rival Francois Fillon over Le Pen falling to 18 and 12 points respectively, suggesting Le Pen may have more chance of springing a surprise if she can make it through to the second round of the elections in May. But underpinning the single currency, purchasing manager index (PMI) reports showed the euro zone economy expanded much faster and more smoothly than expected. The dollar retreated later during the U.S. session, after market research group Markit said that its flash services Purchasing Managers’ Index (PMI) eased to 53.9 in February, falling short of analysts’ expectation of an increase to 55.8. Despite a strong round of Eurozone manufacturing data, the euro struggled for upside momentum, as concerns over upcoming elections in France and the Netherlands continued to weigh on the single currency.
Oil prices held near multi-week highs on Wednesday after OPEC signaled optimism over its deal with other producers to curb output to clear a glut that has weighed on markets since 2014. The data is set to be released on Thursday, a day later than normal, following a U.S. public holiday on Monday. Last week's numbers showed U.S. output helped boost crude and gasoline inventories to record highs, amid faltering demand growth for the motor fuel. That has kept a lid on prices after they climbed following an agreement by the OPEC and other producers to cut output by about 1.8 million bpd. Mohammad Barkindo, OPEC secretary general, told an industry conference in London on Tuesday that January data showed conformity from member countries participating in the output cut had been above 90 percent. Oil inventories would decline further this year, he added. Goldman Sachs, however, noted that a rebound in U.S. drilling activity had exceeded even its own above-consensus expectations.
 

PYX Markets London

Junior member
41 0
Daily Market Outlook 3rd March

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U.S. stock futures dropped and Asian shares were on the defensive on Monday as investors weighed the near-certain prospect of an interest rate hike in the United States this month against news of slower growth in China this year. Risk appetite also took a hit on rising geopolitical tensions in East Asia, as North Korea fired four ballistic missiles early in the day, while a spat between China and South Korea over missile defense deepened. Federal Reserve Chair Janet Yellen on Friday all but confirmed market expectations for an interest rate rise in March barring any sharp deterioration in economic conditions. In the United States, President Donald Trump accused predecessor Barack Obama on Saturday of wiretapping him during the late stages of the 2016 election campaign, an accusation rejected by both Obama and former top U.S. intelligence official. Keeping risk appetite in check was rising tensions over North Korea, which on Monday fired four ballistic missiles, three of which landed in Japan's exclusive economic zone, Japanese Prime Minister Shinzo Abe said, the latest in a series of provocative tests by the reclusive state. The move came just after Japanese media reported on Saturday U.S. Secretary of State Rex Tillerson is due to visit Japan, South Korea and China this month to discuss North Korea on his first trip to the region since he took up his post. Adding to the tensions in the region, South Korea's trade minister said on Sunday Seoul's responses against discriminating action by China towards South Korean companies will be strengthened. South Korean media said last week Chinese government officials had given verbal guidance to tour operators in China, to stop selling trips to South Korea days after the Seoul government secured land for a U.S. missile-defense system.

Dollar slipped in Asian trading on Monday, as investors locked in gains after its rise last week on growing expectations of a U.S. interest rate hike later this month. Market participants also kept a wary eye on developments in North Korea, which fired four ballistic missiles early on Monday, three of which landed in Japan's exclusive economic zone. Federal Reserve Chair Janet Yellen said on Friday that the central bank is set to raise its benchmark interest rate later this month as long as economic data on jobs and inflation holds up, in comments that likely cement a rate hike at the Fed's next meeting on March 14-15. In addition to Yellen, four other top U.S. central bank officials spoke at various times during the day. Fed funds futures prices show traders see more than an 85 percent chance of a rate increase this month, up from just a one in three chance early last week, according to CME Group's Fed Watch tool. Still, speculators reduced bullish bets on the U.S. dollar in the week ended Feb. 28, pushing net longs to their lowest since early October, according to Commodity Futures Trading Commission data released on Friday and calculations by Reuters. U.S. political developments also weighed on the dollar. Trump on Saturday accused his predecessor Barack Obama of wiretapping him during the 2016 election campaign, an accusation rejected by Obama and a top former intelligence official. The controversy distracts from policy issues on which investors are still waiting for details, said Masashi Murata, senior currency strategist at Brown Brothers Harriman. South Korea special prosecutor: President Park colluded with friend to receive Samsung bribe. Kazakhstan parliament passes reforms reducing presidential powers Scandal-hit French presidential candidate Francois Fillon said on Sunday he was staying in the race but left the door open to talks with senior members of his party who are increasingly anxious about his candidacy. Fillon's fellow conservative Alain Juppe would reach the second round should he replace him, an opinion poll said on Sunday.

Oil prices fell in Asian trade on Monday, wiping out some of the gains of the previous session amid worries lower growth targets in China could cut oil demand and ongoing concern over Russia's compliance with a global deal to cut oil output. But worries over escalating violence in the Middle East put a floor under prices. China aims to expand its economy by around 6.5 percent this year, Premier Li Keqiang said in his work report at the opening of the annual meeting of parliament on Sunday. China also plans to cut steel and coal output this year in an effort to tackle pollution, its top economic planner said on Sunday, while China's newly appointed banking regulator vowed on to strengthen supervision of the lending sector. Meanwhile, figures by Russia's energy ministry released last week showed February oil output was unchanged from January at 11.11 million barrels per day (bpd), casting doubt on Russia's moves to rein in output as part of a pact with oil producers last year. That came as oil prices rose on Friday as the dollar weakened modestly after a speech by U.S. Federal Reserve Chair Janet Yellen, which suggested a rate increase would come at the end of its two-day meeting on March 15. A weaker dollar bolsters commodity prices, including oil. While a rate hike would be supportive for the U.S. dollar, analysts said a near-term hike was already largely priced in. Crude oil prices were also supported by news of increasing supply disruptions in the Middle East, ANZ said in a note on Monday. That followed new doubts over Libya's attempts to revive its oil production after an armed faction entered two major oil ports on Friday, pushing back forces that captured and reopened the terminals in September.
 

PYX Markets London

Junior member
41 0
Daily Market Outlook 10th March

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Asian stocks edged up and the dollar rose to 1-1/2-month highs versus the yen on Friday, ahead of the closely-watched U.S. non-farm payrolls report due later in the day. Wall Street was marginally higher the day before, underpinned by speculation the widely-anticipated labor market report on Friday would show U.S. payrolls growth in February was far more than economist forecast. The employment figures are drawing particular interest as chances of the Federal Reserve raising interest rates several times this year could improve if the data underlines U.S. economic strength. Cementing views of tighter U.S. policy was also a report on Thursday that showed the number of Americans applying for unemployment benefits rose to 243,000 last week, rebounding from a near 44-year low, but continuing to point to a tightening labor market. The dollar did not fare as well against the euro after the common currency enjoyed a lift the previous day on European Central Bank head Mario Draghi's suggestion on Thursday it was less necessary to prop up the market through ultra-loose monetary policy. German, British and Italian bond yields extended their rise in Asia as the region's investors reacted to Draghi's comments, traders said.

While an imminent hike in U.S. interest rates is putting a downdraft on gold prices, bullion's allure as a safe haven is likely to limit the downside, traders and analysts say, owing to uncertainties in the United States and Europe. Gold slumped to a 10-month low in mid-December after rates were increased for the first time in a year, but gold investors don't appear to be as jittery ahead of the next Fed meeting and a near-certain rate rise on March 14-15. The previous slide came also as equity investors cheered the election of U.S. President Donald Trump, but gold has since recovered about 7 percent on a lack of clarity on Trump's policies and worries about upcoming elections in Europe. Higher interest rates make it less attractive to hold non-interest bearing gold, while a firmer U.S. dollar also makes gold more expensive for buyers in other currencies. However, the 121,720 lots at Feb. 28 were still less than half of the 286,921 contracts held in July 2016, when speculative fever was at its peak as gold prices hit over 2-year highs at $1,374.91 an ounce. Meanwhile, gold is expected to be boosted by political risks stemming from Britain's exit from the EU and upcoming contentious elections elsewhere in Europe. Investors are also focused on softer than expected initial jobless claims data that came a day ahead of a key nonfarm payrolls report for February due to be released on Friday, with a gain of 190,000 jobs expected and seen as key to cement widespread expectations of a Fed rate hike. Gold struggled to take advantage of a pull-back in the dollar, after initial jobless claims missed analysts’ forecasts while investors’ expectations of a March rate hike grew ahead of key non-farm payrolls report due to be released on Friday. U.S. Department of Labor said Thursday, initial jobless claims increased by 20,000 to 243,000 in the week ending March 4 from the previous week’s total of 223,000. Analysts expected jobless claims to rise by 12,000 to 235,000 last week.

Crude held gains in Asia on Friday after another sharp drop overnight after Saudi Arabia warned that an extension of a coordinated oil output cut beyond June 30 is not guaranteed with investors turning attention to weekly rig count data in the U.S. Ahead, investors are awaiting an update after the number of active U.S. rigs drilling for oil. Laswt week, figures showed oil rigs rose by 7 for the seventh weekly increase in a row. That brought the total count to 609, the most since October 2015, showing the sustained strength of a supply response as crude stays above $50 a barrel in a narrow range since the end of November when an output cut pact was announced. Overnight, Saudi sources reportedly told a meeting of U.S. shale oil firms that an extension of a pact by OPEC and non-OPEC nations to trim almost 1.8 million barrels per day (bpd) from global markets in the first half of the year is not a good assumption to make for drilling plans. The supply response by shale drillers will again be in sharp focus on Friday when figures on U.S. rig drilling from oilfield services firm Baker Hughes are due. However, the issues and the overall effect of higher production as oil prices held steadily above $50 a barrel had already hit the market this week as Brent and West Texas Intermediate took a more than 5% tumble. Trading volumes on exchanges reach the highest since early December, with over 430K contracts in Brent crude for May delivery and more than 911,000 contracts of WTI for delivery in April changing hands. As well, crude oil inventories in the U.S. rose more than quadruple the forecasts by 8.21 mn barrels at the end of last week, the EIA said on Wednesday, marking nine straight weeks of gains and taking the total to 528.4 million barrels. The market had forecast a gain of around 2 mn barrels. Gasoline stocks however dropped a much sharper than expected 6.6 million barrels, while distillate supplies dropped 2.7 mn barrels, also more than seen. The data offset a report that showed crude imports by China, the world's second largest buyer, rose to the second-highest level on record in February, reaching 8.286 mn bpd, up 3.5% from a year ago, according to trade data released on Wednesday, just shy of December's record 8.57 mn bpd and up on 8.01 mn bpd in January.
 

PYX Markets London

Junior member
41 0
Daily Market Outlook 29th March

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Asian shares inched ahead on Wednesday while the dollar and commodities held gains as investors shook off disappointment about U.S. President Donald Trump's failed healthcare bill and focused on an improving outlook for global growth. The good cheer did not extend to the pound which was on the skids as the British government sent a letter to Brussels formally starting the country's exit from the European Union. The dollar bounced from 4-month lows as a top Federal Reserve official talked of more rate hikes to come while political uncertainties surrounding Britain's exit from the EU pressured European currencies. Fed Vice Chairman Stanley Fischer, one of the more influential policymakers with markets, said two more rate increases this year seemed "about right". The Brexit letter is due to be delivered to Brussels later on Wednesday, triggering years of uncertain negotiations that will test the endurance of the European Union. That came a day after the Scottish Parliament voted in favor of a second independence referendum that would break up the UK. The biggest loser overnight was the South African rand which has shed almost five percent in two sessions on speculation well-respected Finance Minister Pravin Gordhan might lose his job. The dollar pulled away from 4-1/2-month lows against a currency basket on Wednesday after solid data backed expectations for more U.S. interest rate hikes this year, while sterling was knocked by Britain triggering its exit from the European Union. U.S. Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to U.S. overnight interest rates this year seemed "about right." The Fed raised rates in March, and a majority of the central bank's policymakers foresee at least two more increases this year. Fed Governor Jerome Powell said on Tuesday that the collapse of the healthcare reform bill had made the U.S. central bank's job harder as it tried to anticipate which set of policies would pass. Sterling, meanwhile, wallowed at one-week lows, down 0.3 percent at $1.2412 GBP= as investors braced for British Prime Minister Theresa May's move later on Wednesday to formally file paperwork to leave the European Union. Investors were also assessing news that Scotland's parliament had backed a vote for independence even though the British government said it would not enter independence negotiations with Scotland. Further weighing on the pound, Bank of England interest rate-setter Ian McCafferty highlighted a weak outlook for the economy on Tuesday, and said he did not know if he would vote to increase borrowing costs at the next BoE meeting in May.

U.S. consumer confidence surged to a more than 16-year high in March amid growing labor market optimism while the goods trade deficit narrowed sharply in February, indicating the economy was regaining momentum after faltering at the start of the year. The economy's strengthening fundamentals were underscored by other data on Tuesday showing further increases in house prices in January. Robust consumer confidence and rising household wealth from the home price gains suggest a recent slowdown in consumer spending, which has hurt growth, is likely temporary. They also anticipated an increase in their incomes. The survey's so-called labor market differential, derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful, was the strongest since 2001. This measure closely correlates to the unemployment rate in the Labor Department's employment report. It is consistent with continued reduction in slack in the labor market, which is near full employment. The Conference Board said the cutoff date for the survey results was March 16. This was a week before Republicans in the House of Representatives failed to pass health legislation to repeal the Affordable Care Act, a stunning political setback for Trump. The Fed raised rates a quarter percentage point at two of its last three meetings, most recently earlier in March. Oil prices on Wednesday extended gains from the previous session, lifted by supply disruptions in Libya and expectations that an OPEC-led output reduction will be extended into the second half of the year. Oil production from the western Libyan fields of Sharara and Wafa has been blocked by armed protesters, reducing output by 252,000 bpd, a source at the National Oil Corporation. The OPEC along with some other producers including Russia, have agreed to cut production by almost 1.8 million bpd during the first half of the year in order to rein in a global fuel supply overhang and prop up prices. But as markets remain bloated halfway into the cuts, there is a broad expectation that the supply cuts will be extended into the second half of the year. Despite the rising consensus of extended cuts, the OPEC-led strategy to re-balance oil markets is not without controversy. As OPEC and especially Saudi Arabia cut their production, other producers not participating in the cuts have been quick to fill the supply gap and gain market share. In the USA in particular, shale oil drillers have seized the opportunity to ramp up output and exports. As a result, China became the third biggest overseas destination for U.S. crude oil in 2016, according to data from the EIA, up from ninth position the previous year.
 
 
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