WRAPUP 1-U.S. weekly jobless claims rise; mid-Atlantic factory activity picks up - Reuters News
17-May-2018 09:13:34 PM
- Weekly jobless claims increase 11,000
- Continuing claims drop 87,000
- Mid-Atlantic factory activity accelerates
By Lucia Mutikani
WASHINGTON, May 17 (Reuters) - New applications for U.S. jobless benefits increased more than expected last week, but the number of Americans on unemployment rolls fell to its lowest level since 1973, pointing to diminishing labor market slack.
Other data on Thursday showed a pickup in factory activity in the mid-Atlantic region this month, with manufacturers saying they were asking for higher prices for their products. Tightening labor market conditions and firming inflation bolster expectations the Federal Reserve will raise interests rates next month.
Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 222,000 for the week ended May 12, the Labor Department said. Claims data for the prior week was unrevised. Economists polled by Reuters had forecast claims rising to 215,000 in the latest week.
The labor market is viewed as being close to or at full employment, with the jobless rate near a 17-1/2-year low of 3.9 percent. The unemployment rate is within striking distance of the Fed's forecast of 3.8 percent by the end of this year. The U.S. central bank raised rates in March and forecast at least two more hikes for this year.
U.S. Treasury yields were little changed after the data. U.S. stock index futures were trading lower while the dollar was slightly higher against a basket of currencies.
The four-week moving average of initial claims, viewed as a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 213,250 last week, the lowest level since December 1969.
The claims data covered the survey period for the nonfarm payrolls portion of May's employment report.
SHRINKING LABOR MARKET SLACK
The four-week average of claims fell 18,250 between the April and May survey periods, suggesting solid job growth. Nonfarm payrolls increased by 164,000 jobs in April after rising by 135,000 in March. Job gains are slowing as employers struggle to find skilled workers.
There were a record 6.6 million unfilled jobs in March, according to government data published last week.
The claims report also showed the number of people receiving benefits after an initial week of aid declined 87,000 to 1.71 million in the week ended May 5, the lowest level since December 1973. The four-week moving average of the so-called continuing claims dropped 39,750 to 1.77 million, also the lowest level since December 1973.
Declining continuing claims underscore tightening labor market conditions and support economists' expectations that wage growth will accelerate in the second half of the year.
In a separate report on Thursday, the Philadelphia Fed said its manufacturing business outlook survey's current general activity index rose about 11 points to a reading of 34.4 in May. Manufacturers in the mid-Atlantic region reported hiring more workers this month. The survey's employment index rose to a seven-month high.
A measure of prices paid by factories in the region fell, but the survey's prices received index rose to its highest reading since February 1989.
(Reporting by Lucia Mutikani
Editing by Paul Simao)
US STOCKS-Wall St set to open lower as bond yields rise, Cisco weighs - Reuters News
17-May-2018 09:08:20 PM
- 10-yr Treasury yields hit 7-yr high as oil tops $80
- Cisco drops after disappointing forecast
- Walmart rises, J.C. Penny plunges after results
- Sino-U.S. trade talks resume on Thursday
- Futures dip: Dow 0.15 pct, S&P 0.21 pct, Nasdaq 0.53 pct
Updates prices, adds investor comment
By Medha Singh
May 17 (Reuters) - Wall Street was on pace to open lower on Thursday, weighed down by U.S. Treasury yields hitting fresh seven-year highs and Cisco's disappointing forecast, while looming Sino-U.S. trade talks added to the jitters.
Ten-year U.S. government Treasury yield, a key driver of global borrowing costs, hit a high of 3.1 percent as more expensive oil pointed to faster inflation and followed some upbeat U.S. retail sales numbers.
Oil prices hit $80 per barrel for the first time since November 2014 on concerns that Iranian exports could fall due to renewed U.S. sanctions and reduce supply in an already tightening market.
"There's a lot of chatter that the 10-year is somehow going to explode to the upside, that's why its getting everybody's attention," Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.
"There is a lot of worry out there that might be reflected in the market ... and trade is the icing on the cake."
The United States and China will resume negotiations over the next two days to resolve their differences over trade, and officials from both sides have recently signaled that they are looking for a deal.
Japan is considering tariffs on U.S. exports worth $409 million in retaliation against U.S.-imposed steel and aluminum import tariffs, according to media reports.
Shares of Cisco, a component of all three major U.S. indexes, fell 3.9 percent in premarket trading after the company's disappointing forecast indicated its transition to a software-focused business was a work in progress.
At 8:46 a.m. ET, Dow e-minis were down 37 points, or 0.15 percent. S&P 500 e-minis were down 5.75 points, or 0.21 percent and Nasdaq 100 e-minis were down 36.75 points, or 0.53 percent.
Walmart rose 1.7 percent after the retailer posted a rebound in its U.S. e-commerce business and beat profit and revenue expectations.
However, J.C. Penney Co tumbled 10.4 percent after its same-store sales missed estimates and the company warned its could post a loss this year.
J.C. Penney's results come a day after fellow department store operator Macy's strong report helped drive the small-cap Russell 2000 index to a record high.
Coca-Cola rose 0.8 percent after Barclays upgraded the stock to "overweight."
NetEase dropped 8.8 percent after the Chinese internet company's first-quarter profit missed Wall Street estimates.
On the economic front, data showed new applications for U.S. jobless benefits increased more than expected last week, but the number of Americans on unemployment rolls fell to the lowest since 1973, pointing to diminishing labor market slack.
(Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva)
UPDATE 6-Oil hits $80, highest since Nov 2014, on Iran concerns - Reuters News
17-May-2018 07:24:36 PM
- Brent futures at highest since November 2014
- Global inventories expected to fall further
- OPEC cuts, looming U.S. sanctions against Iran lift Brent
- Asia's oil spending has doubled since 2015/16 price lows
Updates prices
By Ron Bousso
LONDON, May 17 (Reuters) - Oil prices hit $80 a barrel on Thursday for the first time since November 2014 on concerns that Iranian exports could fall due to renewed U.S. sanctions and reduce supply in an already tightening market.
Brent crude futures reached an intraday high of $80.18. They were up 58 cents at $79.86 as of 1110 GMT.
U.S. West Texas Intermediate (WTI) crude futures were up 57 cents at $72.06 a barrel, also their highest since November 2014.
President Donald Trump's decision this month to withdraw the United States from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC's third-largest producer has given strong tailwind to oil prices.
France's Total on Wednesday warned it might abandon a multi-billion-dollar gas project in Iran if it could not secure a waiver from U.S. sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.
A rapid decline in Venezuela's crude production has further roiled markets in recent months.
"The geopolitical noise and escalation fears are here to stay," said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer. "Supply concerns are top of mind after the United States left the Iran nuclear deal."
Global inventories of crude oil and refined products dropped sharply in recent months due to robust demand and production cuts by the world's top producing countries.
Oil stocks were expected to drop further as the peak summer driving season nears, offsetting increases in U.S. shale output, said analysts at Bernstein.
"While the sharp rise in U.S. production and rig count has raised questions on the sustainability of inventory draws through 2018, we believe that inventories will continue to draw as we enter the summer driving season in 2018," they said.
Several banks have in recent days raised their oil price forecasts, citing tighter supplies and strong demand.
EVERYTHING BULLISH?
But high oil prices could hit consumption, the International Energy Agency warned on Wednesday, lowering its global oil demand growth forecast for 2018 to 1.4 million from 1.5 million barrels per day (bpd).
Asia's demand is at record highs and with rising prices its crude could cost $1 trillion this year, about twice what it paid during the market lull of 2015/2016.
The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd "this summer".
Leading production increases is the United States, where crude output has soared by 27 percent in the last two years to a record 10.72 million bpd, putting it within reach of top producer Russia's 11 million bpd.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Jason Neely)
PRECIOUS-Gold slides to fresh 2018 low as dollar strengthens - Reuters News
17-May-2018 08:02:02 PM
- U.S. 10-year Treasury yield touches seven-year high
- Further weakness in gold price likely - ABN Amro analyst
(Updates prices)
By Jan Harvey
LONDON, May 17 (Reuters) - Gold slid to a fresh low for the year on Thursday as another rise in U.S. bond yields and concerns over political risk in Italy held the dollar index near its 2018 peak.
The precious metal has fallen more than 2 percent this week on gains in the U.S. currency and a rise in U.S. 10-year Treasury yields to seven-year highs. Higher yields increase the opportunity cost of holding non-yielding assets such as bullion.
Spot gold was down 0.2 percent at $1,288.25 an ounce by 1145 GMT, off an earlier 4-1/2 month low of $1,285.41 an ounce. U.S. gold futures for June delivery were down $4.00 at $1,287.50.
The dollar has climbed nearly 4 percent this quarter on expectations that the Federal Reserve will lift U.S. interest rates further this year to curb inflation, at a time when other central banks are still keeping monetary policy loose.
"I expect further weakness in gold prices because I think the dollar can rise a bit further," ABN Amro analyst Georgette Boele said.
"Gold prices are mainly driven by the U.S. dollar and then U.S. yields ... our year-end 10-year U.S. Treasury forecast stands at 3.2 percent, with three more Fed rate hikes."
The euro remains under pressure, hovering near a five-month low on concerns that political developments in Italy could cause wider disruption in the common currency bloc.
Political uncertainty arising out of North Korea after Pyongyang threatened to pull out of a meeting with the United States was likely to limit downside for gold, analysts said. But that was not enough to offset dollar strength.
From a technical perspective, gold prices were looking vulnerable to further losses after breaking below key chart levels this week, according to analysts who study past price moves to determine the future direction of trade.
"Gold has eroded key support, namely the 200-day moving average, the $1,302.74 March low and the 50 percent retracement (of the December-to-January rally)," Commerzbank said in a note on technicals. "We have been forced to neutralise our outlook as the market is now on the defensive."
Among other precious metals, silver was up 0.3 percent at $16.40 an ounce, having touched its lowest in two weeks at $16.17 in the previous session.
Platinum was down 0.2 percent at $885.60 an ounce, off an earlier five-month low of $880.50, while palladium was 0.2 percent lower at $981.80 an ounce.
(Additional reporting by Apeksha Nair in Bengaluru Editing by David Goodman and Edmund Blair)
VEGOILS-Palm rises on bargain-hunting, weaker ringgit - Reuters News
17-May-2018 08:49:36 PM
- Palm earlier fell to 2,399 rgt/tonne, lowest in over one week
- Soyoil gains added to palm's rise - trader
Updates with closing prices, quote
By Emily Chow
KUALA LUMPUR, May 17 (Reuters) - Malaysian palm oil futures recovered from a one-week low on Thursday and ended trading higher on the back of bargain-buying and a weaker ringgit, its currency of trade.
Gains in the Chicago Board of Trade soyoil also lent support to the market, said traders.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.8 percent at 2,432 ringgit ($613.06) a tonne at the close of trade. Earlier in the session, it hit the lowest since May 8 at 2,399 ringgit.
Trading volume stood at 45,537 lots of 25 tonnes each at the on Thursday evening.
"A weaker ringgit is seen supporting the market," said a Kuala Lumpur based trader, as a weaker ringgit typically makes palm oil cheaper for holders of foreign currencies.
The ringgit fell 0.1 percent on Thursday evening to 3.9670 per dollar. It has lost 0.5 percent since the start of the week.
Traders said the market rose earlier on bargain hunting gains in U.S. soyoil but lacked bullish news for long-term support.
"We're seeing some bargain-hunting, but it seems like the market has no supportive news to push it higher," said a futures trader in Kuala Lumpur.
Demand for Malaysian palm oil has waned in recent weeks, according to export data from industry players.
Exports in the first half of May fell 13.7 percent-14.9 percent from a month earlier, showed data from inspection company AmSpec Agri Malaysia and cargo surveyor Societe Generale de Surveillance.
The demand slowdown could be attributed to Malaysia's resumption of a crude palm oil export tax, which was set at 5 percent for May following four months of suspension, said traders.
In related oils, the Chicago July soybean oil contract was up 0.5 percent on Thursday.
Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
CBOT Trends-Wheat up 7 to 10 cents, corn up 1-2, soybeans up 4-5 - Reuters News
17-May-2018 09:25:58 PM
CHICAGO, May 17 (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 Thursday.
WHEAT - Up 7 to 10 cents per bushel
- Wheat heading higher for a third session on technical buying including short-covering, along with concerns about dry weather curbing yields in North America, Australia and Russia. Traders also noting damage from wind and hail storms this week in parts of Kansas.
- The USDA reported export sales of U.S. wheat in the week to May 10 at 194,800 tonnes (old and new crop combined), in line with trade expectations for 100,000 to 500,000 tonnes.
- CBOT July soft red winter wheat last up 9-1/2 cents at $5.03-3/4 per bushel. K.C. July hard red winter wheat last traded up 8-3/4 cents at $5.22-3/4 and MGEX July spring wheat was up 7-1/4 cents at $6.18-1/2 a bushel.
CORN - Up 1 to 2 cents per bushel
- Corn higher in rangebound trade, led by strength in wheat. The CBOT July contract stayed inside of Wednesday's trading range.
- The USDA reported export sales of U.S. corn in the week to May 10 at 1,114,900 tonnes (old and new crop combined), in line with trade expectations for 750,000 to 1,200,000 tonnes.
- CBOT July corn last up 2 cents at $4.01-1/4 a bushel.
SOYBEANS - Up 4 to 5 cents per bushel
- Soybeans higher in a technical bounce after the CBOT July contract dipped to $9.98, its lowest since April 4, after closing below $10 on Wednesday. Traders await news about U.S. trade negotiations with China, the world's biggest soybean buyer.
- The USDA reported export sales of U.S. soybeans in the week to May 10 at 506,600 tonnes (old and new crop combined), in line with trade expectations for 400,000 to 1,000,000 tonnes.
- The USDA reported weekly export sales of soymeal at 421,700 tonnes, topping trade expectations.
- Through its daily reporting system, the USDA said private exporters sold 132,000 tonnes of U.S. soybeans to unknown destinations for 2017/18 delivery.
- CBOT July soybeans last up 5-1/4 cents at $10.05 per bushel.
(Reporting by Julie Ingwersen)
FOREX-Euro falls towards 5-month lows on Italian concerns and U.S. bond yield rise - Reuters News
17-May-2018 07:52:39 PM
- Euro struggles near $1.18 mark
- Dollar rise leaves Yen at weakest since January
- Emerging market currencies suffer more falls overnight
By Tommy Wilkes
LONDON, May 17 (Reuters) - The euro fell towards a five-month low on Thursday as investors fretted about the demands of populist parties likely to form Italy's next government and as a fresh rise in U.S. Treasury bond yields underpinned demand for the dollar.
The euro has slumped six cents from more than $1.24 in the space of three weeks after a huge dollar rally. Investors are betting that U.S. interest rates will need to rise further to curb inflation while other central banks are postponing monetary tightening.
That has forced investors who took big positions against the dollar anticipating it would fall in 2018 to rush to unwind and cover their positions, pushing the greenback even higher.
Some analysts say the market remains complacent about the possibility of a rising dollar, which also notched up a four-month high against the Japanese yen on Thursday as 10-year Treasury yields approached their highest since 2011.
The euro slid 0.2 percent to $1.1787, slightly above the $1.1763 2018 low it hit on Wednesday.
"This sense of a market that is not particularly well prepared for a euro decline is supported by the benign valuations still evident in the pricing of six-month and 12-month implied volatility," BNY Mellon analysts said in a note, referring to prices of a measure of expected swings in the value of the euro.
The dollar index rose 0.1 percent to 93.502, below its 2018 high of 93.632.
The euro is also suffering from reports Italy's anti-establishment 5-Star Movement and the anti-immigrant League, which are working to draft a coalition programme, may ask the European Central Bank to forgive 250 billion euros of debt.
But broader Italian markets held up better on Thursday as investors played down the broader impact on euro zone political stability and questioned whether the Italian parties would really follow through on such plans.
"The sheer outlandishness of some leaked plans helped ease investor concerns a bit. The would-be coalition's denials that leaked draft policies were ever concrete plans also helped smooth markets," said Ken Odeluga, an analyst at City Index.
Sterling gave up earlier gains after the UK government dismissed a media report that Britain wanted to stay in the European Union's customs union after Brexit.
The dollar rose to its strongest versus the Japanese yen since Jan. 23, up 0.3 percent on the day at 110.70 yen.
The Australian dollar added 0.1 percent to $0.7524 after gaining 0.6 percent overnight, buoyed by a rise in prices of commodities such as copper. Other commodity-linked currencies like the Canadian dollar also advanced.
Volatile emerging market currencies, the biggest losers from the dollar's recovery, took another beating.
Rising Treasury yields have enhanced the dollar's appeal and raised global borrowing costs. For emerging markets with current account deficits that means higher costs and the risk of fund outflows and their currencies declining further, analysts say.
The Indonesian rupiah recovered from its weakest since October 2015 after the central bank raised its interest rate for the first time since 2015 to boost the fragile currency.
Brazil's real dropped to a two-year low against the dollar overnight
The Turkish lira and Argentine peso, which have been at the heart of the emerging market selloff, both slumped again but traded above record lows hit earlier in the week.
(Editing by Catherine Evans)
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