GLOBAL MARKETS-Asian stocks near 3-week high, eyes on upcoming U.S.-Korea summit - Reuters News
11-May-2018 03:07:33 PM
Updates levels throughout, adds Europe futures
- MSCI ex-Japan climbs 0.9 pct, Nikkei jumps 1 pct
- U.S. April consumer price index rises slower than expected
- Traders trim expectations of faster U.S. rate hikes in 2018
- Risk appetite whetted on U.S.-Korea summit talks in Singapore
By Swati Pandey
SYDNEY, May 11 (Reuters) - Asian shares rallied on Friday as investors' appetite for riskier assets got a boost from soft U.S. inflation, which helped alleviate worries of faster rate hikes by the Federal Reserve.
Markets were also cheered by a further easing in tensions on the Korean Peninsula, after U.S. President Donald Trump said he would meet North Korean leader Kim Jong Un in Singapore on June 12 for talks on its nuclear weapons programme.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent to near three-week highs with broad-based gains across all sectors. Japan's Nikkei climbed 1.2 percent.
But spreadbetters indicated the upbeat mood was unlikely to last, with FTSE futures down a bit and E-Minis for the S&P500 a touch softer.
Most emerging Asian currencies were buoyant as the dollar eased after Thursday's slower-than-expected April consumer price gain.
The soft figures followed payrolls numbers last week which pointed to sluggish wage growth.
The two data sets meant "inflation may be rising but not so rapidly that the Fed would have to take aggressive actions to keep the economy from overheating," said James McGlew, analyst at Perth-based stock broker Argonaut.
A recent shakeout in global markets, partly stoked by Sino-U.S. trade tensions, has also eased, while money managers expect the relatively low global rates that have fuelled a 'Goldilocks' boom in stock markets will remain in place for some time.
"While inflation is continuing to trend up, it's only happening slowly. So Goldilocks continues," Shane Oliver, chief investment manager at AMP, said in a note.
Indeed, a key measure of expected market swings, the Cboe Volatility Index, or VIX, has fallen very close to levels last seen in early January when stock markets were buoyant.
GEOPOLITICS
While North Korea has come off the boil for now, geopolitical concerns still remain as the U.S. and China continue skirmishing over trade and tensions rise in the Middle East.
"Trump still needs President Xi (Jinping) and China's support in dealing with North Korea and this will be his priority in the short term," economists at JPMorgan wrote in a note to clients.
"Once the meeting is finished, trade may return to the fore."
The United States and China have locked horns over import tariffs after Trump announced hefty duties on Chinese goods, provoking a tit-for-tat response from Beijing.
"It is notable that in line with this view, the U.S. has extended hearings over China tariffs, drawing out the process," they added.
U.S. and Chinese officials will meet in Washington for a second round of trade talks next week, after apparently making little progress in discussions in Beijing earlier this month.
Currency markets were largely muted during Asian trading.
The dollar index was up 0.2 percent after falling the most since late March on Thursday.
Investors trimmed their expectations for four Fed rate hikes after inflation data showed U.S. price pressures remained weak. The Fed has already raised rates once this year and is widely expected to go two more times in 2018.
The British pound inched above a four-month low of $1.3457 touched on Thursday after the BoE held key borrowing costs. It was last at $1.3505.
The recent slowing in price growth in major economies has boosted expectations that most central banks except the Fed will continue their massive bond-buying programmes to keep policy stimulatory.
The euro was a tad lower at $1.1893. The Japanese yen gained mildly to be last at 109.29 per dollar.
Malaysian markets were closed Friday but its newly appointed Prime Minister Mahathir Mohamad emerged with key election pledges including repealing an unpopular goods and services tax and restoring a petrol subsidy.
Ratings agency Moody's said some campaign promises would be "credit negative" for Malaysia.
Such concerns pushed up the cost of insuring against a Malaysia default, with the country's 5-year credit default swap price at its highest since early June 2017 at 95.090 basis points.
In commodities markets, spot gold slipped 0.1 percent to $1,319.33 an ounce.
Oil prices eased but stayed near multi-year peaks amid supply concerns after Trump withdrew from an Iranian nuclear deal and reinstated sanctions.
U.S. crude futures were last down 10 cents at $71.26 a barrel. Brent crude futures fell 18 cents to $77.29 a barrel, after hitting $78 earlier in the day, their highest since November 2014.
(Editing by Sam Holmes, Shri Navaratnam & Kim Coghill)
European shares head for longest winning streak in three years, M&A in focus - Reuters News
11-May-2018 03:28:27 PM
For a live blog on European stocks, type LIVE/ in an Eikon news window
LONDON, May 11 (Reuters) - European stocks edged higher in early trading on Friday, set to seal their longest winning streak in over three years as fresh deal-making stole the spotlight from the tail-end of a busy earnings season.
The pan-European STOXX 600 index was up 0.1 percent by 0724 GMT, set for its seventh straight week of gains - its longest winning streak since March 2015. Germany's DAX and Britain's FTSE 100 were both flat in percentage terms.
Though moves at the index level were muted, M&A news livened up early trading. Shares in Sika soared nearly 11 percent to the top of the STOXX after the Swiss chemicals company reached an agreement with French building materials firm Saint-Gobain to end a long-standing legal dispute.
Saint-Gobain, whose shares rose 2.2 percent, is to take a large stake in Sika, but not majority control.
Shares in Daily Mail and General Trust (DMGT) were also big movers, up nearly 9 percent, after U.S.-based private equity firm Silver Lake Management Company agreed to acquire ZPG, the owner of British property websites Zoopla and PrimeLocation, for 2.2 billion pounds ($3 billion).
DMGT is the biggest shareholder in ZPG, whose shares rocketed around 30 percent to a record high. Shares in fellow British classifieds websites Rightmove and Auto Trader both gained around 4.5 percent.
While the first quarter earnings was winding down in Europe, basic resources was the best-performing sector after shares in ArcelorMittal rose 3.6 percent. The world's biggest steelmaker beat earnings forecasts and gave an upbeat outlook for 2018.
So far blended year-on-year earnings growth for the first quarter has come in at 16 percent for MSCI EMU, in dollar terms, compared with 26 percent for the S&P 500, according to Thomson Reuters I/B/E/S.
(Reporting by Kit Rees, Editing by Helen Reid)
FOREX-Dollar steps back from 2018 peak on softer US inflation - Reuters News
11-May-2018 11:17:11 AM
- U.S. inflation falls short of expectations
- Pound weak after BoE revises down economic outlook
- Weaker dollar blessing for some emerging market currencies
By Hideyuki Sano
TOKYO, May 11 (Reuters) - The dollar hovered below a 4-1/2-month high against a basket of major currencies on Friday after tepid U.S. inflation data prompted traders to pare bets of faster rate hikes.
U.S. consumer prices rose less than expected in April, which would support gradual, rather than more aggressive, rate increases by the Federal Reserve.
"Given recent rises in oil prices, a weaker dollar earlier this year, and U.S. tax cuts, markets were clearly worried more about upside risks in inflation," said Minori Uchida, chief currency strategist at MUFG Bank.
The so-called core CPI, which strips out the volatile food and energy components, rose 0.1 percent from previous month, compared to economists' median forecast of 0.2 percent rise.
It lodged a year-on-year rise of 2.1 percent, matching March's increase.
The dollar's index against a basket of six major currencies, USD stepped back to 92.71 from Wednesday's 4-1/2-month high of 93.42.
On the week, it was up 0.1 percent, the fourth straight week of gains if sustained by the end of the day.
While dollar bulls expect U.S. yield advantages to underpin the dollar in the near term, others say its rally appeared to be running out of steam.
The euro jumped back to $1.1915 from Wednesday's 4- 1/2-month low of $1.1823.
The single currency has so far weathered the impact from rises in Italian bond yields on signs the country's two anti-establishment parties could sweep into power as they made "significant steps" towards forming a government.
While that would end almost 10 weeks of political stalemate after an inconclusive election on March 4, investors cast a wary eye on a coalition of the 5-Star Movement and far-right League, which are hostile to European Union budget restrictions.
Against the yen, the common currency rose to 130.38 yen, extending its recovery from its six-week low of 129.24 yen set on Tuesday.
The dollar eased to 109.40 yen from Thursday's high of 110.02 yen and off its three-month top of 110.05 yen touched on May 2.
The Australian dollar, which had been hit by the loss of its long-cherished status as the highest yielding currency in the developed world as U.S. rates have risen, bounced back to $0.7532 from Wednesday's 11-month low of $0.7413
The New Zealand dollar also bounced back from Thursday's five-month low of $0.6903 following a dovish tone from the country's central bank. It last stood at $0.6962.
The British pound had less luck, falling to $1.3460 on Thursday, its lowest levels in four months, after the Bank of England reduced its growth and inflation outlook for 2018 and 2019 while keeping rates steady as expected.
It was last fetching $1.3528.
The dollar's retreat should take the heat off some of emerging market currencies, which have been hit by worries about capital outflows to U.S, where yields are increasingly becoming attractive.
The Turkish lira stood at 4.2360 to the dollar, off its record low of 4.3780 hit on Wednesday.
The Malaysian ringgit steadied at around 4.0600 per dollar in the offshore forward market, off a near six-month low of 4.1350 touched on Thursday.
The initial ringgit losses came amid some uncertainty after Mahathir Mohamad scored a stunning election win, defeating the coalition that has ruled the nation for six decades since independence from Britain.
The Argentine peso, the most battered currency among all, as the country seeks financial help from International Monetary Fund, also stablised on Thursday.
(Editing by Shri Navaratnam & Kim Coghill)
UPDATE 3-Oil dips from recent highs on hopes of alternatives to Iran supply - Reuters News
11-May-2018 03:18:04 PM
- U.S. this week announced re-introduction of Iran sanctions
- Iran oil exports expected to drop amid new sanctions
- But other producers may step up output to meet shortfall
Updates prices
By Henning Gloystein
SINGAPORE, May 11 (Reuters) - Oil prices dipped on Friday, easing from multi-year highs in the previous session on hopes that alternative supplies could replace a looming drop in Iranian exports from U.S. sanctions.
The United States plans to re-introduce sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 that limited Tehran's nuclear ambitions in exchange for removing U.S.-Europe sanctions.
The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.
Brent crude futures were at $77.23 per barrel at 0705 GMT, down 24 cents, or 0.3 percent, from their last close. Brent the previous day hit its highest since November 2014 at $78 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were down 15 cents, or 0.2 percent, at $71.21 a barrel after hitting a November 2014 high of $71.89 per barrel on Thursday.
Many analysts expect oil prices to rise significantly, as the market adjusts to looming U.S. sanctions and Iran's exports sink amid strong demand.
"We expect that Iranian exports will fall well before the 180-day period until oil sanctions will be in effect, similar to the 2012 sanctions. We expect that around October Iranian exports will be down by 500,000 barrels per day (bpd) and eventually fall by 1 million bpd in 1H19," U.S. investment bank Jefferies said in a note on Friday.
There are, however, signs that other suppliers from within the Organization of the Petroleum Exporting Countries (OPEC) will step up output to counter the Iran disruption.
"The market is now focused on OPEC and other producers' ability to react to this potential supply disruption," ANZ bank said on Friday.
"Investors are increasingly viewing Kuwait and Iraq as the producers with the best ability to raise output quickly in response to any fall in Iranian exports," it added.
Jefferies said OPEC "has the capacity to replace the Iranian losses" but warned that "even if physical supply is held constant... the market will still be faced with a precariously low level of spare capacity."
Outside OPEC, soaring U.S. crude oil production may help fill Iran's supply gap, hitting another record last week by climbing to 10.7 million barrels per day (bpd).
That's up 27 percent since mid-2016 and means U.S. output is creeping ever closer to that of top producer Russia, which pumps around 11 million bpd.
(Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin)
PRECIOUS-Gold eases on firmer dollar; but eyes first weekly gain in four - Reuters News
11-May-2018 03:16:10 PM
- Spot gold up about 0.4 percent for the week
- Silver, platinum and palladium back off 2-wk highs
(Updates prices)
By Apeksha Nair
BENGALURU, May 11 (Reuters) - Gold prices slipped in range-bound trading on Friday as the dollar firmed slightly, with investors mostly brushing off a potential broadening of conflict in the Middle East.
Spot gold was down 0.1 percent at $1,319.61 per ounce as of 0656 GMT, after rising to the highest since end-April at $1,322.76 in the previous session. The metal was, however, still on track to register a first weekly rise in four.
U.S. gold futures for June delivery were nearly 0.2 percent lower at $1,320.20 per ounce.
"I think geopolitical concerns (with respect to recent attacks on Syria) are still a concern but investors aren't paying significant attention to these," said Naeem Aslam, chief markets analyst, Think Markets.
"The dollar story is more prominent."
Israel said it attacked nearly all of Iran's military infrastructure in Syria on Thursday, after Iranian forces fired rockets at Israeli-held territory for the first time in the most extensive military exchange ever between the two adversaries.
Gold is traditionally seen as a safe place to park assets in times of uncertainty or conflict.
Meanwhile, the dollar index on Friday edged slightly higher, but still held below a 4-1/2-month high hit on Wednesday, with tepid U.S. inflation data for April prompting traders to pare bets of faster rate hikes by the Federal Reserve.
Fed funds futures, however, rose on Thursday, indicating some traders continued to expect the U.S. central bank to raise key interest rates at its next policy meeting in June.
A stronger dollar makes gold more expensive for holders of other currencies, while higher U.S. rates tend to boost the greenback.
Elsewhere, the Bank of England held its interest rates steady on Thursday, while European Central Bank Governing Council member Philip Lane said interest rates are unlikely to move dramatically in the coming years.
"Obviously we have to be cognizant to dollar risk but (tensions) in the Middle East doesn't look like it's going to settle anytime soon so I feel confident buying gold on the dips," said Stephen Innes, APAC trading head at OANDA said.
Asian shares rose on Friday as risk appetite got a boost after U.S. President Donald Trump said he had hopes of "doing something very meaningful" to curtail North Korea's nuclear ambitions at a summit in Singapore next month.
Among other precious metals, silver rose 0.1 percent to $16.70 an ounce, having hit its highest in more than two weeks at $16.75 in the previous session.
Platinum fell 0.5 percent at $919 per ounce, having hit its highest since April 25 at $927.20 on Thursday.
Palladium was 0.5 percent lower at $994 an ounce, having marked a more than two-week high at $1,002.10 in the previous session.
(Reporting by Apeksha Nair in BENGALURU; Editing by Tom Hogue and Subhranshu Sahu)
TECHNICALS-CBOT soybeans may revisit May 7 low of $10.10-3/4 - Reuters News
11-May-2018 02:09:56 PM
SINGAPORE, May 11 (Reuters) - The CBOT soybeans July contract may revisit its May 7 low of $10.10-3/4 per bushel, as it has completed a bounce from this level.
The completion has been confirmed by the three-wave structure of the bounce and a long-shadowed shooting star. Further indication is given by the failure of the contract to break a falling trendline.
Wave pattern shows that the downtrend is driven by a wave C, which was disrupted by the support at $10.09-3/4, its 114.6 percent projection level.
A drop to $10.10-3/4 could confirm the extension of the wave c towards $9.98. A further bounce may be limited to $10.24.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **
(Reporting by Wang Tao; Editing by Vyas Mohan)
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