GLOBAL MARKETS-Asia shares stricken by trade tension, dollar holds gains - Reuters News
03-May-2018 11:43:59 AM
• Most Asia share markets slip before Sino-US trade discussions
• Dollar just off multi-month highs as Fed stays the course
• Oil prices ease as inventories swell, Iran decision looms
By Wayne Cole
SYDNEY, May 3 (Reuters) - Asian shares slipped on Thursday as hopes waned for real progress in Sino-U.S. trade talks, while the U.S. dollar consolidated recent bumper gains after the Federal Reserve reaffirmed the outlook for more rate hikes.
Souring the mood were reports the Trump administration is considering executive action to restrict some Chinese companies' ability to sell telecoms equipment in the United States.
Talks between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are due to kick off later on Thursday.
However, a breakthrough was viewed as highly unlikely, especially as the U.S. embassy said their delegation would leave as early as Friday evening.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, while South Korean stocks eased 0.4 percent.
Chinese blue chips lost 0.1 percent to be not far from an eight-month low hit in April. Japan's Nikkei was closed for a holiday, while E-Mini futures for the S&P 500 barely budged.
Wall Street had wobbled on Wednesday as the threat of U.S. restrictions on Chinese telecom companies fuelled investor concerns about worsening trade relations.
The Dow ended down 0.72 percent. The S&P 500 also lost 0.72 percent and the Nasdaq 0.42 percent.
The Fed policy meeting ended with no change, as expected, while the central bank expressed confidence a recent rise in inflation to near target would be sustained, leaving it on track to raise borrowing costs in June.
"The statement carried only modest changes in wording, but they were meaningful nonetheless, highlighting that the Fed is optimistic on the outlook and intent on continuing to raise rates at a gradual pace," said Westpac analyst Elliot Clarke.
Yet the Fed also emphasised the inflation target was "symmetric", suggesting it was not inclined to speed up its tightening plans.
"The Fed sees little reason to be concerned with inflation marginally above its 2.0 percent target, particularly after such a long period of underperformance," Clarke said.
Westpac, like the market, expects two more hikes this year.
TRUMP TO END IRAN DEAL?
The Fed statement was not quite as hawkish as some had wagered on and caused a dip in the dollar, though sentiment remained bullish given U.S. rates were still clearly heading higher while those in Europe and Japan lagged far behind.
The euro was last at $1.1979 having hit a 15-week trough at $1.1936 on Wednesday, uncomfortably close to the low for the year at $1.1915.
The dollar also scored a three-month peak on the yen at 110.05 overnight, before edging back to 109.66.
Against a basket of currencies, the dollar index was trading at 92.542, after reaching the highest since late December at 92.834.
In the Treasury market, yields dipped slightly as a quarterly refunding programme of $73 billion came in short of expectations, reducing the pressure on prices from the torrent of supply.
Oil prices slipped on swelling U.S. crude inventories and as investors remained cautious ahead of the May 12 deadline for the U.S. to ratify the Iran nuclear deal.
Reuters reported President Donald Trump has all but decided to withdraw from the 2015 Iran nuclear accord but exactly how he will do so remains unclear.
Brent crude futures fell 16 cents to $73.20 a barrel, while U.S. crude dropped 9 cents to $67.84.
(Editing by Shri Navaratnam and Richard Borsuk)
UPDATE 3-Oil prices dip on rising U.S. crude inventories, record production - Reuters News
03-May-2018 03:07:36 PM
• U.S. crude inventories rise to 2018 high of 436 mln barrels
• U.S. crude oil production hits record high of 10.62 mln bpd
• Analysts expect U.S. oil production to rise further still
• OPEC output broadly inline with production cut targets
• Potential of new U.S. sanctions against Iran keep market on edge
Adds U.S./Iran dispute, graphic, updates prices
By Henning Gloystein
SINGAPORE, May 3 (Reuters) - Oil dipped on Thursday, weighed down by swelling U.S. crude inventories and record weekly U.S. production that undermined efforts by OPEC to cut supplies, although potential new U.S. sanctions against Iran kept markets on the edge.
Brent crude oil futures were at $73.31 per barrel at 0654 GMT, down 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were down just 1 cent at $67.92 per barrel.
Prices were pulled down by a report from the U.S. Energy Information Administration (EIA) on Wednesday showing U.S. crude inventories jumped by 6.2 million barrels to 435.96 million barrels in the week to April 27, the highest level in 2018.
"The (EIA) report showed a much larger than expected crude build for last week as well as an unexpected build in gasoline inventories," said William O'Loughlin, investment analyst at Australia's Rivkin Securities.
U.S. oil production also rose to a record of 10.62 million barrels per day (bpd), a jump of more than a quarter since mid-2016.
The United States now produces more crude than top exporter and Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC).
Only Russia pumps more, at around 11 million bpd.
The United States could surpass that level soon too, as oil firms have ramped up January to May production faster than at any other time in at least half a decade, Thomson Reuters Eikon data shows.
U.S. drilling for new production is increasing, encouraged by rising prices following OPEC's production curbs.
State-owned producer Saudi Aramco said on Wednesday it has raised the June price for its Arab Light grade for Asian customers by 70 cents a barrel versus May to a premium of $1.90 a barrel to the Oman/Dubai average, the highest since August 2014.
Overall, OPEC produced around 32 million bpd of crude in April, according to a Reuters survey, implying that its production is slightly below its target of 32.5 million bpd, due largely to plunging output in Venezuela.
BMI Research said it expects OPEC's output to remain stable around or slightly above 32 million bpd for the rest of the year.
Looming over markets, however, is the May 12 deadline by when U.S. President Donald Trump is due to decide whether or not to continue waiving U.S. sanctions against Iran.
Trump has all but decided to withdraw from the 2015 Iran nuclear accord by May 12 but exactly how he will do so remains unclear, two White House officials and a source familiar with the administration's internal debate said on Wednesday.
OPEC-member Iran re-emerged as a major oil exporter in January 2016 when international sanctions against Tehran were suspended in return for curbs on Iran's nuclear programme.
(Reporting by Henning Gloystein; Editing Christian Schmollinger and Richard Pullin)
Gold demand posts weakest start to the year since 2008 -WGC - Reuters News
03-May-2018 12:00:00 PM
• Global gold demand falls 7 pct in Q1 to 973.5 T
• Buying of gold exchange-traded funds down 66 pct
• Chinese coin, bar demand slides by a quarter
By Jan Harvey
LONDON, May 3 (Reuters) - Gold demand posted its weakest start to the year in a decade, the World Gold Council said on Thursday, as prices of the metal stagnated and the threat of rising interest rates led investors to seek better returns elsewhere.
Global gold demand totalled 973.5 tonnes in the January to March period, down 7 percent year on year and the weakest first quarter since 2008. That coincided with a period of calm in the gold market, which saw prices hold within their narrowest range of any quarter in more than a decade.
"The rangebound gold price has certainly had an effect on investor sentiment," the WGC's head of market intelligence Alistair Hewitt said.
"It works both ways - for people in the retail space, a price drop can be an entry point, and if the price is rising, people want to take advantage of that momentum."
The biggest drop in demand came from the investment sector, with bar and coin consumption down by 15 percent and buying of gold-backed exchange-traded funds two-thirds lower year on year.
Jewellery consumption was also soft, edging down 1 percent. Buying in India, the second biggest gold jewellery consumer after China, posted its third weakest quarter in a decade, falling 12 percent year on year to just under 88 tonnes.
"A weakening rupee really pushed up the local gold price," Hewitt said. "You also had far fewer auspicious days. In Q1 last year, you had 22, and in Q1 2018 you just had seven. Auspicious days are important for weddings, and weddings are important for jewellery demand."
Chinese jewellery demand rose 7 percent to 188 tonnes, which Hewitt attributed to strong seasonal buying and a better product range. "It really stems from (jewellers) becoming better at meeting the needs of the Chinese millennials," he said. "We're seeing more 18 carat jewellery, more 22 carat jewellery, better designs, better products."
Coin and bar demand in China was down 26 percent, however.
Central bank demand was 42 percent higher, and close to its quarterly average over the previous seven years. Russia was the biggest official sector buyer, responsible for just over a third of central bank demand. Turkey and Kazakhstan also added to reserves.
On the other side of the market, mine supply grew 1 percent year on year to 770 tonnes. Added to a return of producer hedging - which sees mining companies selling production forward to lock in prices - that helped lift overall supply by 3 percent to 1,063.5 tonnes.
GOLD DEMAND (T)*
Q1 2018 Q1 2017
Jewellery 487.7 491.6
Technology 82.1 78.9
Investment 287.3 394.2
- Bar and coin) (254.9) (298.2)
- ETFs and similar) (32.4) (96.0)
Central banks 116.5 82.2
TOTAL 973.5 1,046.8
* World Gold Council, Gold Demand Trends Q1 2018
(Reporting by Jan Harvey; editing by David Evans)
PRECIOUS-Gold extends gains; all eyes on U.S.-China trade talks - Reuters News
03-May-2018 03:24:02 PM
• Spot gold may bounce again towards $1,317/oz - Technicals
• U.S. delegation in Beijing on Thursday and Friday
(Updates prices)
By Eileen Soreng
BENGALURU, May 3(Reuters) - Gold prices rose for a second session on Thursday after the U.S. Federal Reserve held interest rates steady as expected at the end of a two-day policy meeting, while investors awaited U.S.-China trade talks.
Spot gold rose 0.2 percent to $1,307.05 per ounce at 0705 GMT. U.S. gold futures for June delivery rose 0.2 percent to $1,307.60 per ounce.
"The inflation numbers this week did point to a potential acceleration in those (interest) rate hikes... But after the FOMC meeting yesterday that appears to be less likely and so we're seeing assets such as gold being bought at the back of that," said ANZ analyst Daniel Hynes.
Non-yielding gold is highly sensitive to rising U.S. interest rates as it becomes less attractive compared with assets that bear interest.
The Fed left its benchmark interest rates unchanged in a target range of between 1.50 percent and 1.75 percent. The central bank raised rates in March and forecasts another two increases this year.
Investors also awaited the U.S.-China trade talks between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He due on Thursday.
"Safe-haven buying has been absent, of late... But there have been some signals for the past few days that the negotiations won't be as smooth as expected so that would definitely be a focus, particularly now that we have gotten past the FOMC meeting," Hynes added.
A breakthrough deal to fundamentally change China's economic policies is viewed as highly unlikely during the two-day meet, though a package of short-term Chinese measures could delay a U.S. decision to impose tariffs on $50 billion worth of Chinese exports.
Asian shares slipped on Thursday as hopes waned for real progress in U.S.-China trade talks, while the U.S. dollar consolidated recent bumper gains after the Federal Reserve reaffirmed the outlook for more rate hikes this year.
Spot gold may bounce again towards a resistance at $1,317 per ounce as it has found a strong support at $1,302, according to Reuters technical analyst Wang Tao.
Meanwhile, gold demand posted its weakest start to the year in a decade, the World Gold Council said on Thursday, as prices of the metal stagnated and the threat of rising interest rates led investors to seek better returns elsewhere.
Among other precious metals, spot silver rose 0.2 percent to $16.38 per ounce.
Platinum climbed 0.4 percent to $893.74 per ounce, while palladium was up 0.5 percent to $964.50 per ounce.
(Reporting by Eileen Soreng in Bengaluru; Editing Sherry Jacob-Phillips and Sunil Nair)
TECHNICALS-CBOT wheat may test support at $5.17-1/2 - Reuters News
03-May-2018 03:13:02 PM
SINGAPORE, May 3 (Reuters) - CBOT July wheat may test a support at $5.17-1/2 per bushel, as it has failed to break a resistance at $5.31-1/4.
The resistance is provided by the 76.4 percent projection level of an upward wave C from $4.59. Working together with the resistance is another one at $5.31-3/4, the March 2 high.
It is not very clear how deep the current correction will be, while a break below $5.17-1/2 could confirm that it would extend towards $5.06-1/4.
A break above $5.31-1/4 could open the way towards the range of $5.40-3/4 to $5.53-3/4.
** 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)
TECHNICALS-CBOT corn may hover below $4.06 - Reuters News
03-May-2018 02:54:33 PM
SINGAPORE, May 3 (Reuters) - CBOT July corn faces a resistance at $4.06 per bushel. It may hover below this level or retrace towards a support at $4.01.
The resistance is identified as the 61.8 percent projection level of an upward wave C from $3.81. A break above this level could lead to a gain to $4.12.
A wedge developing from the March 13 high of $4.03 has been confirmed, suggesting a target around $4.16. The resistance at $4.06 may have triggered the second pullback towards the upper trendline of the pattern. This pullback could end around $4.01.
** 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 Biju Dwarakanath)
TECHNICALS-CBOT soybeans may hover above $10.36-1/4 - Reuters News
03-May-2018 02:39:53 PM
SINGAPORE, May 3 (Reuters) - CBOT soybeans July contract found a support around $10.36-1/4 per bushel. It may hover above this level for one or two days or bounce towards a resistance at $10.55-1/2.
The support and the resistance are identified respectively as the 61.8 percent and the 23.6 percent Fibonacci projection levels of downward wave c from $10.67-1/2.
Working together with this support is another similar one established by a rising trendline. The longer the contract hovers above $10.36-1/4, the more unlikely it will break this level.
A break could cause a loss into the range of $10.17-1/4 to $10.29.
** 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 Sherry Jacob-Phillips)
FOREX-Euro bounces off 4-month low, dollar bulls pause after Fed meeting - Reuters News
03-May-2018 03:41:35 PM
Adds additional subscribers
• Euro rises back towards $1.20
• Dollar slips slightly after Fed policy decision
• Commodity-linked currencies recover
By Tommy Wilkes
LONDON, May 3 (Reuters) - The euro rose off four-month lows on Thursday as the dollar's recent rally came to a halt after the Federal Reserve did little to alter market expectations for further interest rate rises this year.
Expectations of faster-than-expected rate rises in the U.S., as well as a rapid covering of positions by investors short on the dollar, has sent the greenback to its strongest level since mid-January.
But the Fed left its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75 percent as had been widely expected on Wednesday.
Analysts interpreted its comments on inflation as a signal the Fed may allow prices rises beyond its target, a stance that would limit the need for the central bank to embark on a more aggressive path of monetary tightening in response to recent rises in inflation.
On Thursday the dollar index, measured against a basket of currencies, was flat was the euro rose 0.3 percent to $1.1983, off the low of $1.1938 it fell to on Wednesday.
"In the end it was not a major surprise for the market that the Fed left the key rate unchanged at the meeting without a press conference but made positive comments on the outlook and further rate hikes," Commerzbank analysts said in a note.
"The market will have to get used to the fact that in order to prevent an economic overheating interest rates in the U.S. will continue to rise," they said, predicting that rate differentials between countries would have an increased bearing on currencies and could cement euro/dollar at around $1.20.
With the Fed's meeting out of the way, focus is shifting to U.S. jobs data due on Friday for further indications of the strength of the economy and inflation pressures.
A near-term focus for the common currency is euro zone inflation data due later on Thursday, said Mitul Kotecha, senior EM strategist for TD Securities in Singapore.
The euro could come under pressure if the data shows a slowdown in core inflation in the euro zone, Kotecha said, adding that the dollar could see further gains, at least in the near term.
The dollar has been buoyed in recent weeks by the strong U.S. economic outlook and rising Treasury yields amid signs of a relative slowdown in some other developed economies, such as those in Europe.
The dollar eased 0.1 percent to 109.68 yen, inching away from a three-month peak of 110.05 yen set on Wednesday.
Elsewhere, Norway's central bank gives its policy decision at 0800 BST, with any sign of hawkishness from the central bank set to push the crown higher. The crown has benefited from rising oil prices this year.
Commodity-linked currencies like the Canadian and Australian dollars gained sharply, with the latter rising 0.4 percent to $0.7523 cents after data showing a better-than-expected jump in the country's trade surplus for March.
The Aussie dropped to as week as $0.7473 earlier this week to hit its lowest since mid-2017.
(Additional reporting by Masayuki Kitano in SINGAPORE
Editing by Raissa Kasolowsky)
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