US STOCKS-Wall St set to open higher despite rising U.S. yields - Reuters News
23-Apr-2018 09:09:35 PM
Changes comment, adds details, updates prices
- Caterpillar up after Citi says stock can outperform
- Hasbro tumbles after profit misses expectations
- Futures up: Dow 0.19 pct, S&P 0.22 pct, Nasdaq 0.42 pct
By Sruthi Shankar
April 23 (Reuters) - Wall Street was set for gains on Monday as optimism about the strong earnings season helped ease concerns on rising U.S. bond yields.
The yield on 10-year U.S. Treasuries, the benchmark for global borrowing costs, hit 2.9980 percent, its highest since January 2014. The U.S. five-year inflation swap, a key market gauge of long-term U.S. inflation, hit its highest level in 3-1/2 years.
The last time 10-year Treasury yields neared 3 percent, in 2013, it rocked risk appetite and sent stocks sliding and was shortly before oil prices went on a mighty 75 percent tumble. More recently, the stock market sold off in February as inflation expectations sent treasury yields surging.
But analysts say that strong earnings could help investors overlook such concerns at least for the moment.
"Earnings are going to be the bigger factor, the increase in yields isn't too excessive just yet and investors maybe willing to take it in stride," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"We came into the earnings season with pretty lofty expectations and the earnings have been relatively strong."
The prospect of rising inflation comes as U.S. companies are reporting results for what is turning out to be a much stronger-than-expected first quarter.
Profits at S&P 500 companies are expected to have risen 20 percent in the quarter, according to Thomson Reuters I/B/E/S, making it the strongest quarter in seven years.
At 8:44 a.m. ET, Dow e-minis were up 47 points, or 0.19 percent. S&P 500 e-minis were up 5.75 points, or 0.22 percent. Nasdaq 100 e-minis were up 27.75 points, or 0.42 percent.
This week, 181 S&P 500 companies are scheduled to report including some of the technology heavy-hitters like Facebook, Microsoft, Amazon and Intel. Alphabet reports after markets close on Monday.
Shares of Hasbro fell 5.9 percent in premarket trading after the toymaker reported a bigger-than-expected drop in quarterly revenue, blaming the liquidation of Toys 'R' Us.
Caterpillar rose 1.4 percent Citigroup upgraded to "buy", saying the stock could outperform over the next six to 12 months.
In a move that could ease tensions between the United States and China, U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China to try to resolve the differences over trade.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)
Trump's revenge: U.S. oil floods Europe, hurting OPEC and Russia - Reuters News
23-Apr-2018 08:47:55 PM
- U.S. supplies to Europe set for all-time high in April
- U.S. oil output on course to overtake Russia, Saudi
- Russian, Caspian, African grades under pressure
By Olga Yagova and Libby George
MOSCOW/LONDON, April 23 (Reuters) - As OPEC's efforts to balance the oil market bear fruit, U.S. producers are reaping the benefits - and flooding Europe with a record amount of crude.
Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices close to four-year highs.
Now, the relatively high prices brought about by that pact, coupled with surging U.S. output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said.
"U.S. oil is on offer everywhere," said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. "It puts local grades under a lot of pressure."
U.S. oil output is expected to hit 10.7 million bpd this year, rivalling that of top producers Russia and Saudi Arabia.
In April, U.S. supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tonnes), according to the Thomson Reuters Eikon trade flows monitor.
In January-April, U.S. supplies jumped four-fold year-on-year to 6.8 million tonnes, or 68 large Aframax tankers, according to the same data.
Trade sources said U.S. flows to Europe would keep rising, with U.S. barrels increasingly finding homes in foreign refineries, often at the expense of oil from OPEC or Russia.
In 2017, Europe took roughly 7 percent of U.S. crude exports, Reuters data showed, but the proportion has already risen to roughly 12 percent this year.
Top destinations include Britain, Italy and the Netherlands, with traders pointing to large imports by BP, Exxon Mobil and Valero.
Polish refiners PKN Orlen and Grupa Lotos and Norway's Statoil are sampling U.S. grades, while other new buyers are likely, David Wech of Vienna-based JBC Energy consultancy said.
"There are a number of customers who still may test U.S. crude oil," Wech said.
The gains for U.S. suppliers could come as a welcome development for U.S. President Donald Trump, who accused OPEC on Friday of "artificially" boosting oil prices.
"Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!" Trump wrote on Twitter.
'KEY SUPPLY SOURCE'
While the United States lifted its oil export ban in late 2015, the move took time to gain traction among Europe's traditional refineries, which were slow to diversify away from crude from the North Sea, West Africa and the Caspian.
"European refiners started experimenting with U.S. crude last year," said Ehsan Ul-Haq, director of London-based consultancy Resource Economics. "Now, they know more than enough to process this crude."
U.S. oil gained in popularity, sources said, in part because of the wide gap between West Texas Intermediate, the U.S. benchmark, and dated Brent, which is more expensive and sets the price for most of the world's crude grades.
This gap, known as the Brent/WTI spread, has averaged $4.46 per barrel this year, nearly twice as high as the year-earlier figure, Reuters data showed.
Wech of JBC Energy said the spread would likely persist in the near future.
The most popular U.S. grades in Europe are WTI, Light Louisiana Sweet, Eagle Ford, Bakken and Mars.
Prices for alternative local grades have been slashed as a result.
CPC Blend differentials recently hit a six-year low versus dated Brent at minus $2 a barrel. Russia's Urals also came under pressure despite the end of seasonal refinery maintenance.
WTI was available at 80-90 cent premiums delivered to Italy's Augusta, well below offers of Azeri BTC at a premium of $1.60 a barrel, according to trading sources..
U.S. oil is even edging out North Sea Forties, which is produced in the backyard of the continent's refineries.
Cargoes of WTI were offered in Rotterdam at premiums of around 50-60 cents a barrel above dated Brent, cheaper than Forties' premium of 75 cents to dated.
(Additional reporting by Julia Payne and Devika Krishna Kumar; Editing by Dale Hudson)
UPDATE 2-Iran's crude and condensate exports recover from March dip - Reuters News
23-Apr-2018 08:01:42 PM
Adds Zanganeh's quote, detail
ANKARA, April 23 (Reuters) - Iran's crude and condensate exports have recovered from a fall in March and currently stand at 2.5 million barrels per day (bpd), state TV on Monday reported Oil Minister Bijan Zanganeh as saying.
"The decline in March was a temporary issue. It has increased now and currently all together we export 2.5 million barrels of oil and gas condensates," Zanganeh told state TV.
March liftings from Iran, the third-biggest producer among the Organization of the Petroleum Exporting Countries (OPEC), were down 26 percent year on year.
Iran has been working to regain market share after Western sanctions over its disputed nuclear program were lifted in 2016 under a deal between the country and six major powers.
But U.S. President Donald Trump has warned European signatories of the accord to fix "the disastrous flaws" in the pact or face a U.S. exit.
On May 12, Trump will decide whether to restore U.S. economic sanctions on Tehran, which would be a severe blow to the pact.
"We have to wait for Trump's decision. But Iran will use all its capacity and experience to protect the country against the consequences of Trump's decision," Zanganeh said.
Iran has been striving to retain customers for its oil in Asia, hoping concessions will boost the appeal of its crude compared with other Middle Eastern suppliers, even as the threat looms of potential further U.S. sanctions on the country.
Zanganeh said Iran might offer discounts on oil sales, as the OPEC member is keen to preserve its market share.
"Iran will take all the necessary measures to keep its oil market share because of the political atmosphere and the American president's decision on the deal," Zanganeh said when asked about rumours on offering discounts to India on oil sales.
"We have not given a special discount to India but it is possible to make changes in our prices."
Iran used to be the second-biggest oil supplier to India before crippling oil-related sanctions were imposed by the United States and the European Union on Tehran in 2012.
Tehran is gradually raising its market share in the world's third-biggest oil consuming nation.
(Writing by Parisa Hafezi; Editing by Jason Neely and Mark Potter)
UPDATE 5-Oil dips as rising U.S. yields steer bulls - Reuters News
23-Apr-2018 08:11:31 PM
- U.S. rig count rises to 820, highest since March 2015
- But strong demand, OPEC cuts still support prices overall
Updates prices
By Amanda Cooper
LONDON, April 23 (Reuters) - Oil prices were little changed at around $74 a barrel on Monday on rising U.S. borrowing costs and the prospect of further output rises after another increase in the weekly rig count, although the overall picture for crude remained bullish.
Brent crude futures were down 1 cent at $74.05 a barrel by 1145 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down 11 cents at $68.29 a barrel.
Prices were supported by nervousness over the decision President Donald Trump must take by May 12 on whether to restore U.S. economic sanctions on Iran.
"Underlying sentiment is bullish ... we've got an important decision from Trump coming up in May and we have OPEC potentially trying to 'overtighten' the market," Saxo Bank senior manager Ole Hansen said.
"(Fund managers) need a continuous flow of bullish news for their position to be maintained and this week, it's not a matter of just watching the oil market."
Broader financial markets were under pressure from the rise in U.S. government yields towards 3 percent, a level that in the past has triggered aggressive sell-offs in stocks, bonds and commodities.
"Whether a break above 3 percent will have an impact on currencies remains to be seen, but to have an overall rising cost of finance at a time when Saudi Arabia is aiming at $100, something is going to give. Last time we were at $100, interest rates were rock-bottom and that wasn't a concern to anyone. This time around, it's a different story," Hansen said.
Despite slipping on Monday, the oil market remains well supported, especially by strong demand in Asia.
Prices have risen by 25 percent in the last year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that were introduced in 2017 to prop up the market.
"Added price pressure comes from U.S. sanctions against the key oil exporting nations of Venezuela, Russia and Iran," said Kerry Craig, global market strategist at J.P. Morgan Asset Management.
He was referring to action the U.S. government has taken on Russian companies and individuals, as well as on potential new measures against struggling Venezuela and especially OPEC-member Iran.
"Stay long oil," J.P. Morgan said in a separate note.
The United States has until May 12 to decide whether it will leave a nuclear deal with Iran and impose new sanctions against Tehran, including potentially on its oil exports, which would further tighten global supplies.
That said, U.S. drilling activity is now at its highest in three years and a rising weekly rig count points to further increases in U.S. crude production, which is already up by a quarter since mid-2016 to a record 10.54 million barrels per day (bpd).
Only Russia produces more, at almost 11 million bpd.
(Additional reporting by Henning Gloystein in SINGAPORE; Editing by Alexander Smith and Adrian Croft)
COLUMN-Hedge fund oil bulls on the rampage as bears vanish: Kemp - Reuters News
23-Apr-2018 08:31:11 PM
John Kemp is a Reuters market analyst. The views expressed are is his own
By John Kemp
LONDON, April 23 (Reuters) - Hedge fund managers have never seemed so convinced that oil prices are set to rise rather than fall in the near term, according to the latest positioning data published by regulators and exchanges.
Fund managers remain super-bullish even though benchmark Brent prices have almost tripled over the last two years and are now trading at the highest level since November 2014.
Hedge funds and other money managers raised their net bullish position in the six most important futures and options contracts linked to the price of crude and fuels by 45 million barrels in the week to April 20.
The net bullish position was equivalent to 1.411 billion barrels of crude and fuels - enough to satisfy global oil consumption for more than two weeks.
The net long position was still below the record 1.484 billion barrels set back on Jan. 23.
But hedge fund managers have never been so overwhelmingly convinced prices are set to rise further rather than fall back.
Across the six major contracts, portfolio managers hold almost 14 long positions for every short one, compared with a ratio of less than 12:1 back on Jan. 23.
In total, funds hold 1.520 billion barrels of long positions across Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil.
The number of short positions has fallen to just 109 million barrels, down from 141 million in January, and the lowest number for at least five years.
There are plenty of reasons to be bullish about oil, including rapid growth in global oil consumption, continued supply restraint by OPEC, falling output in Venezuela and the possible re-imposition of sanctions on Iran.
OECD oil inventories have fallen back in line with the five-year average and are now below the average if adjusted for increased consumption.
Senior OPEC leaders have indicated they see room for prices to rise further and have no intention of boosting output before the end of 2018.
Nonetheless, the hedge fund community's positioning has become exceptionally lopsided, which could herald a sharp correction in prices if and when fund managers try to close some of their open positions.
Portfolio managers now have record or near-record ratios of long to short positions in WTI (11:1), Brent (15:1), U.S. gasoline (24:1) and European gasoil (45:1).
In the past, such lopsided positioning has often heralded a sharp reversal in prices when fund managers have attempted to exit from their positions.
But this time around few portfolio managers seem to be worried. Most seem convinced fundamentals will drive prices higher and eventually allow them to liquidate their long positions into a rising rather than a falling market.
The calculation could be right, but there are still reasons to be concerned by the sheer concentration of long positions.
Rising oil prices are filtering through into more drilling activity in the United States, which will support even faster growth in production by the end of 2018.
The number of rigs drilling for oil in the United States has risen in each of the last three weeks, in response to rising prices, after hitting a plateau during the previous seven weeks.
With oil prices now above the long-term average, oil consumption is no longer getting a boost from low prices and is increasingly reliant on strong economic growth around the world.
But the economic outlook is clouded by rising trade tensions, as well as late-cycle increases in interest rates in the United States and the other major economies.
Hedge fund managers have gambled everything on a goldilocks scenario in which oil prices rise without damaging demand or spurring too much shale drilling.
They also need the global economic expansion to continue without interruption throughout the rest of 2018 and 2019 to continue boosting oil consumption at record rates.
Perhaps this Panglossian scenario will come to pass, but if it does not, lopsided hedge fund positioning could be setting the oil market up for some sharp price movements ahead.
(Editing by Edmund Blair)
PRECIOUS-Gold slips to 2-wk low as rising bond yields support dollar - Reuters News
23-Apr-2018 02:59:03 PM
- Spot gold may test support at $1,326/oz -technicals
- Speculators raise net long positions in gold- CFTC
(Updates prices)
By Apeksha Nair
BENGALURU, April 23 (Reuters) - Gold prices slipped to their lowest level in nearly two weeks in range-bound trade on Monday, as the dollar rose on the back of climbing U.S. Treasury yields and as global political concerns eased.
Spot gold was down about 0.1 percent at $1,334.11 per ounce at 0649 GMT, after earlier touching its lowest since April 10 at $1,331.70.
U.S. gold futures fell 0.2 percent to $1,336.30 per ounce.
"Gold prices dropped back to the levels of around a week ago, with easing geopolitical tensions, the stronger USD and gains in U.S. rates affecting the market," ANZ analysts said in a note.
The dollar traded near a two-week high against a basket of major currencies on Monday, bolstered by rising U.S. bond yields and as concerns eased over global political risks after North Korea said it would suspend nuclear and missile tests, scrap its nuclear test site and pursue economic growth and peace.
"We're on another high for the year for dollar yields and it's not boding well for gold," a Hong Kong-based trader said.
Yields on benchmark 10-year Treasuries climbed to the highest level since January 2014 on Friday. Higher U.S. bond yields tend to boost the dollar and weigh on greenback-denominated gold.
Expectations that the Federal Reserve would raise interest rates three more times in 2018 after strong U.S. data last week, were also supporting the dollar.
Gold prices were slightly supported by the arbitrage in Asia and as it held its 50-day moving average around $1,332 an ounce, the trader said.
"But I think Europe will look for the bigger picture which is dollar strength and I think they'll look to sell into this rally."
Speculators raised their net long positions in COMEX gold by 5,382 contracts to 143,594 contracts in the week to April 17, U.S. Commodity Futures Trading Commission data showed on Friday.)
Spot gold may test support at $1,326 per ounce, following its failure to break resistance at $1,354, Reuters technical analyst Wang Tao said.
Among other precious metals, spot silver fell 0.1 percent to $17.09 per ounce.
Platinum was about 0.5 percent higher at $926.70 an ounce, while palladium rose 0.1 percent to $1,031.22 an ounce.
CBOT Trends-Wheat up 2-4 cents; corn, soy steady-up 2 cents - Reuters News
23-Apr-2018 09:07:39 PM
CHICAGO, April 23 (Reuters) - Following are U.S. trade expectations for the resumption of grain and soy complex trading at the Chicago Board of Trade at 8:30 a.m. CDT (1330 GMT) on Monday.
WHEAT - Up 2 to 4 cents per bushel
- Prices firm after weekend rains in U.S. Plains fell below market expectations. K.C. hard red winter wheat leading soft red winter wheat contracts higher. K.C. May hard red winter wheat found technical support at 200-day moving average and resistance at 30-day moving average.
- CBOT May soft red winter wheat last traded 2-3/4 cents higher at $4.66 per bushel. K.C. May hard red winter wheat was last up 4-1/2 cents at $4.87-1/4 and MGEX May spring wheat was last up 1/2 cent at $6.00-1/2 a bushel.
CORN - Steady to up 2 cents per bushel
- Gains in wheat pull corn futures higher. Slow pace of seeding underpins market but forecasts for warm-up in U.S. Midwest limit buying. Technical support for May corn contract noted at 200-day moving average during overnight trading.
- CBOT May corn last traded up 1 cent at $3.77-1/2 a bushel.
SOYBEANS - Steady to up 2 cents per bushel
- Mild bargain-buying bounce expected after prices fell to two-week low on Friday. But concerns about trade war with China limit upside potential for soybean market.
- CBOT May soybeans last traded up 1-3/4 cents at $10.30-1/2 per bushel.
(Reporting by Mark Weinraub)
VEGOILS-Palm oil dips on weaker demand and U.S. soyoil losses - Reuters News
23-Apr-2018 07:09:12 PM
- Market also seen range-trading -trader
- Palm could retest resistance at 2,434 rgt/T -techs
Updates with closing prices
By Emily Chow
KUALA LUMPUR, April 23 (Reuters) - Malaysian palm oil futures declined on Monday evening, charting a second session of decline in three, as the market was pulled down by weaker demand and overnight losses in U.S. soyoil.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 0.3 percent to 2,408 ringgit ($617.99) a tonne at the end of the trading day.
Trading volumes stood at 22,803 lots of 25 tonnes each at the close.
"The market is reacting towards a weaker exports pace," said a futures trader in Kuala Lumpur, referring to Malaysia palm oil shipment data released last week.
Malaysia's palm oil exports rose 2 percent month on month for April 1-20, according to inspection company AmSpec Agri Malaysia.
Cargo surveyor Societe Generale de Surveillance, meanwhile, pegged the period's exports decline at 1.8 percent.
The export figures showed overall slowing demand growth from a month ago, when shipments for the full month of March were up 19.4 percent and 21.6 percent, according to SGS and AmSpec respectively.
Another futures trader said palm oil was still trading in a tight range, though overnight soyoil losses on the Chicago Board of Trade weighed on the market on Monday.
Palm oil is affected by movements in rival edible oils that compete for a share in the global vegetable oils market.
Chicago's July soybean oil contract was down 0.3 percent on Friday, but was last up 0.1 percent on Monday.
In other oils, September soybean oil on China's Dalian Commodity Exchange was down 0.03 percent while the Dalian September palm oil contract dipped 0.1 percent.
Palm oil could retest a resistance at 2,434 ringgit a tonne, a break above which could lead to a gain to the next resistance at 2,476 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
FOREX-Dollar bounces across the board as U.S. bond yields rise - Reuters News
23-Apr-2018 07:47:16 PM
- U.S. 10-year Treasury yield approaches 3 percent
- Euro, down half a percent, faces big week with ECB meeting
- Dollar helped by bond yields, North Korea promise on peace
By Tommy Wilkes
LONDON, April 23 (Reuters) - The U.S. dollar rallied to a seven-week high on Monday after a rise in the 10-year U.S. Treasury yield to within a whisker of the psychologically important 3-percent level prompted buying of the greenback, leaving the euro and yen sharply lower.
Rising U.S. bond yields have not always fed through to a higher dollar in 2018 as U.S. political uncertainty and geopolitical tensions have sometimes caused a breakdown between interest rates and currency performance.
But with the 10-year Treasury yield closing in on 3 percent and the gap between U.S. and German government bond rates at a 29-year high, the dollar was bought across the board.
Analysts and investors say that should Treasury yields push past 3 percent, that would signal the start of a bear mearket for bonds and produce levels which have triggered market spasms in the past.)
"Finally rising U.S. yields are having at least some effect on the dollar. Investors could not ignore this indefinitely," Commerzbank currencies strategist Ulrich Leuchtmann said.
"If you believe that the Fed (Federal Reserve) will do what it has done for the last 30 to 40 years, then you will have to come to the conclusion that this will be positive for the dollar," he said, predicting that the U.S. central bank would tighten policy further to curb inflation.
The rise in yields was spurred by worries about further inflationary pressures, but also by increases in U.S. debt issuance, signs of a thawing of relations between the United States and China, and North Korea promising to suspend nuclear missile tests and instead pursue peace.
Against a basket of currencies the dollar index rose 0.5 percent to 90.728, its highest level since March 1.
The euro fell half a percent to a 2-1/2 week low of $1.2226, not helped by a survey showing business activity in April stabilising across the euro zone.
The euro had enjoyed a strong rally until February before finding itself stuck in a trading range with the dollar after the European Central Bank cautioned investors expecting it to raise rates sooner than expected.
Not all analysts are convinced the greenback can sustainably strengthen much from here, and many still back the euro to gain once there is clarity about euro zone monetary policy.
"There is a little bit of a notion that the ECB could sound a bit more cautious. We don't think so. We think that the ECB will keep its policy normalisation stable," Credit Agricole FX strategist Manuel Oliveri said. He predicted the euro-dollar exchange rate would remain stuck in its recent range and noted that recent positioning data suggested investors were not bullish on the dollar.
The ECB holds its monetary policy meeting on Thursday.
ASIAN CURRENCIES SLIDE
The rise in bond yields also weakened Asian emerging market currencies versus the dollar, with the Chinese yuan and Korean won down and the Indonesian rupiah hitting a two-year low of 13,895 per dollar.
The Australian dollar skidded to its weakest since Dec. 14, falling to as low as $0.7634 before recovering slightly to $0.7643, while sterling and the Canadian and New Zealand dollars also dropped.
The yen slumped 0.6 percent to 108.28 yen per dollar, its weakest since Feb. 13.
Easing concerns over global political risks weighed on the Japanese currency, market participants said, as the yen tends to attract demand in times of market uncertainty and weaken when confidence returns.
North Korea said on Saturday it would immediately suspend nuclear and missile tests, scrap its nuclear test site and pursue economic growth and peace instead. It made these comments ahead of planned summits with South Korea and the United States.
U.S. Treasury Secretary Steven Mnuchin said he may travel to China, a move that could ease tensions between the world's two largest economies.
(Editing by Louise Ireland)
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