GLOBAL MARKETS-Oil hovers near 3 1/2-yr peak, Asia shares up ahead of Trump announcement - Reuters News
08-May-2018 02:33:11 PM
- U.S. crude stays near $70 on worries U.S. may exit nuclear deal
- Dollar near 2018 high on relative strength of US growth
- Resilient tech sector underpins Asian shares
- China shares rise as U.S.-China trade talks set to resume
- European stocks seen up 0.1-0.2 pct
By Hideyuki Sano and Andrew Galbraith
TOKYO/SHANGHAI, May 8 (Reuters) - Oil prices eased slightly on Tuesday, a day after hitting 3-1/2 year highs, as investors braced for President Donald Trump's decision on whether to withdraw the United States from the Iran nuclear deal, a move that could disrupt global oil supply.
European shares are seen steady to slightly firmer after Asian shares picked up, helped by technology stocks as generally upbeat earnings overcame weakness in the global smartphone market and concerns about more regulation.
Spread-betters expect Britain's FTSE to rise 0.2 percent and Germany's Dax to inch up 0.1 percent.
U.S. West Texas Intermediate (WTI) crude futures on Monday rose above $70 for the first time since November 2014, putting it more than 18 percent above this year's low touched in February.
On Tuesday, some of those oil-price gains were pared as traders took profit after Trump said in a tweet he would announce his decision on the nuclear deal at 1800 GMT Tuesday.
"The oil market has priced in the high likelihood of Trump withdrawing from the nuclear deal with Iran. If he is going to impose sanctions similar to those the U.S. had in 2012, that would likely cause a shortage in oil," said Tatsufumi Okoshi, senior commodity economist at Nomura Securities.
Adding to market pressures, falls in Venezuelan oil production due to problems at the country's oil company PDVSA also added to the rally.
U.S. crude futures last traded at $70.11 per barrel, down 0.9 percent from Monday's settlement price.
Global benchmark Brent crude futures stood at $75.64 per barrel, down 0.7 percent, having risen as high as $76.34 on Monday.
While caution on Trump's statement kept investors edgy in early trade, technology firms helped to generate gains for Asian equities.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 percent, with information technology shares rising 1.3 percent. Japan's Nikkei was 0.2 percent higher.
SOARING VALUATIONS
Some analysts cautioned that the rally in technology shares could face a short-term correction as valuations soar.
Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo, noted that technology shares have been moving higher, taking up a larger share of indices as more money flows into the exchange trade funds (ETF) market.
There is currently a "positive feedback loop", but if some sort of unforeseen negative event takes place, it "may turn into a negative feedback loop," he said.
China's blue-chip CSI300 index rose 1.3 percent after the White House said on Monday that U.S.-China trade talks would resume next week.
On Tuesday, China reported exports and imports jumped in April, beating forecasts, but the news did not impact markets.
On Wall Street on Monday, the S&P 500 gained 0.35 percent, boosted by Apple's sixth straight day of gains.
In currency markets, the dollar broadly held firm on the prospect of solid U.S. economic growth, helped partly by Trump's tax cuts and spending, pointed to further rises in U.S. interest rates down the road.
That prompted investors to buy back dollars they had sold earlier this year on worries about Trump's protectionist trade policies.
The euro hit a four-month low of $1.1897 on Monday and last stood at $1.1930.
Against the yen, the dollar stood little changed at 108.93 yen, off its three-month high of 110.05 yen.
The combination of higher oil prices, a strong dollar and higher U.S. rates is risky for some emerging market assets as it could significantly worsen their trade balance and also encourage investors to shift funds to higher-yielding U.S. assets.
"The emerging market currencies are now playing catch up with some of the excessive losses seen in developed currencies ... Asian currencies have also fallen victim to the latest round of USD buying momentum," Jameel Ahmad, Global Head of Currency Strategy & Market Research at FXTM wrote in a note.
JPMorgan's emerging market bond index hit its lowest level in more than a year.
The Indian rupee hit a 15-month low while the Indonesian rupiah hit its lowest level since December 2015 on Tuesday.
Dhian Karyantono, fixed income analyst at Mirae Asset Sekuritas Indonesia, said that the rupiah had weakened after weaker-than-expected first-quarter growth data.
Indonesia's economy grew at 5.06 percent in January-March, down from 5.19 percent in the previous quarter.
The divergence between developed and emerging markets was also visible in equity prices. Brazil's Bovespa hit three-month lows on Monday, when Germany's Dax hit three-month highs and Italian shares hit 8-1/2-year highs.
(Additional reporting by Gayatri Suroyo in JAKARTA; Editing by Richard Borsuk and Sam Holmes)
UPDATE 2-Oil prices fall as market awaits Trump decision on Iran - Reuters News
08-May-2018 01:58:44 PM
- Trump decision on Iran nuclear deal expected 1800 GMT on Tues
- Iran crude exports could be hit if U.S. pulls out of deal
- U.S. crude back below $70 per barrel
Adds comment, graphic; updates prices
By Aaron Sheldrick
TOKYO, May 8 (Reuters) - Oil prices retreated from 3-1/2 year highs on Tuesday as investors waited on an announcement by President Donald Trump on whether the United States will reimpose sanctions on Iran.
Should Trump pull the United States out of a multi-nation agreement on Tehran's nuclear programme, Iranian crude exports could be hit, adding to tightness in the oil market, which is coming back into balance after years of glut.
U.S. West Texas Intermediate (WTI) crude futures had dropped 78 cents, or 1.1 percent, to $69.95 a barrel by 0550 GMT. They settled above $70 for the first time since November 2014 on Monday.
Brent crude futures were down 67 cents, or 0.9 percent, at $75.50, having jumped 1.7 percent to settle at $76.17 a barrel in the previous session.
Trump said on Monday that a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced at 2:00 p.m. EDT (1800 GMT) on Tuesday, four days earlier than expected.
"Until we get more clarity on Trump's intentions, we are unlikely to get further upside on crude," said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.
"If we assume he goes back to 2012 sanctions, we estimate a loss of 0.4 million barrels a day of Iranian supply based on recent Iranian export numbers. Anything larger than this will be bullish," he added.
Trump is likely to either announce he will not be renewing a waiver on sanctions or will restate his opposition to the nuclear agreement, Barclays Research analysts said in a report.
"Regardless, his foreign policy continues to ignite tensions in the main oil-exporting centre and is, thus, price supportive," they said.
If Trump restores core U.S. sanctions, under U.S. law he must wait at least 180 days before imposing their furthest-reaching measure, which is to target banks of nations that fail to significantly cut their purchases of Iranian oil.
Under the deal to limit Iran's nuclear pogramme, formally known as the Joint Comprehensive Plan of Action, the U.S. agreed to ease a series of sanctions on Iran and has done so under a string of "waivers" that effectively suspend them.
Trump has repeatedly threatened to withdraw from the deal, unless France, Germany and Britain - which also signed the agreement - fix what he has called its flaws.
(Reporting by Aaron Sheldrick; Editing by Richard Pullin and Joseph Radford)
FOREX-Dollar cements gains after scaling 2018 peak; euro struggles - Reuters News
08-May-2018 03:57:13 PM
- Trump announcement on Iran nuclear deal key event risk
By Saikat Chatterjee
LONDON, May 8 (Reuters) - The dollar consolidated gains on Tuesday after scaling a 2018 peak in the previous session as investors focused their attention on U.S. President Donald Trump's decision about the future of an international nuclear agreement with Iran.
Trump is expected to make an announcement on the nuclear deal at 1800 GMT. A U.S. withdrawal from the deal, which eased economic sanctions in exchange for Tehran limiting its nuclear programme, would impact risk sentiment in the broader markets.
"It is an event risk and has the potential to make risk sentiment which is already cautious more unstable," said Manuel Oliveri, a currency strategist at Credit Agricole in London.
While global attention has been focused on the recent rally in the dollar -- the greenback has rallied around 4 percent in the last three weeks -- the Japanese yen has held its own against its higher yielding rivals such as the Australian dollar and the Canadian dollar.
On Tuesday, the dollar was broadly steady after rising above 92.97 on Monday as markets further unwound short bets against the greenback built up in recent months pushing the dollar up for three consecutive weeks.
Some analysts such as Commerzbank say a U.S. withdrawal from the deal with Iran could have considerable consequences for the dollar beyond an initial dollar-positive risk-off movement.
"In that case it would become increasingly more attractive to use the U.S. dollar only for direct US deals and to use another currency for other transactions, which could undermine the status of the US dollar as a dominant reserve currency longer term," they wrote in a note.
Conversely, the euro remained under pressure, stabilising around the $1.19 line as recent data have suggested the stellar growth seen in Europe last year is losing momentum.
But the Japanese yen's rise against its rivals, particularly the greenback, was checked by the widening interest rate differentials between U.S. yields and most of its rivals. For example, the gap between U.S. yields and German debt remained near three-decade highs of more than 242 basis points.
Elsewhere, the Australian dollar was down a quarter of a percent at $0.7498 following the release of soft domestic retail sales data for March.
Upbeat China trade figures for April helped limit losses for the Aussie, often used as a proxy for China-related trades.
The New Zealand dollar was little changed at $0.7017.
(Reporting by Saikat Chatterjee
Editing by Keith Weir)
PRECIOUS-Gold prices subdued as dollar hovers around 4-mth peak - Reuters News
08-May-2018 02:52:43 PM
- Dollar index marks highest since Dec. 28 overnight
- Market awaits Trump decision on Iran nuclear deal
- Spot gold may revisit May 1 low of $1,301.51/oz -technicals
(Adds MKS trader comment, updates prices)
By Apeksha Nair
BENGALURU, May 8 (Reuters) - Gold prices remained subdued on Tuesday as the dollar held steady near its 2018-high on the relative strength of the U.S. economy.
Spot gold was down about 0.1 percent at $1,313.20 per ounce at 0635 GMT, after closing marginally lower in the previous session.
U.S. gold futures for June delivery were unchanged at $1,314.10 per ounce.
The dollar index hovered near a four-month high on Tuesday, continuing to draw support from higher Treasury yields and upbeat prospects for the U.S. economy, leaving its major rivals such as the euro struggling.
"While seeing some support from stronger oil prices and uncertainty over the U.S. position on Iran, gold continues to trade in-line with dollar flows, which are restricting any sustained top-side moves," MKS PAMP Group trader Sam Laughlin said in a note.
A stronger dollar makes gold and other greenback-denominated commodities more expensive for holders of other currencies.
Oil prices retreated from 3-1/2-year highs on Tuesday as investors waited for an announcement by U.S. President Donald Trump on whether the United States will reimpose sanctions on Iran.
"I think the Iran deal is probably something that could turn things around. Oil might spike and gold could go with it," said a Hong Kong-based trader.
As benchmark oil prices touched $70 a barrel, U.S. Federal Reserve officials said on Monday that rising inflation and wage pressures are not enough yet to prompt a change in the central bank's rate outlook.
The market is awaiting Trump's decision on Iran and the U.S. Consumer Price Index (CPI) data for a move in gold prices, the trader said, adding that the Producer Price Index (PPI) numbers coming out this week might be something to look at to see "if there's more hawkishness going down to the end of the year".
Spot gold may revisit its May 1 low of $1,301.51 per ounce as it twice failed to break resistance at $1,317, Reuters technical analyst Wang Tao said.
Meanwhile, silver gained 0.2 percent to $16.48 an ounce, while platinum rose 0.2 percent to $909.65 an ounce, having hit its highest since April 25 in the last session.
Palladium slipped 0.3 percent to $969 an ounce, after hitting its highest since April 27 on Monday.
(Reporting by Apeksha Nair in Bengaluru; Editing by Subhranshu Sahu and Joseph Radford)
TECHNICALS-CBOT soybeans may fall more to $10.04-3/4 - Reuters News
08-May-2018 02:10:31 PM
SINGAPORE, May 8 (Reuters) - The CBOT soybeans July contract may fall more to $10.04-3/4 per bushel, as it has broken a support at $10.18-3/4.
The support was provided by 61.8 percent Fibonacci projection level of a downward wave C from $10.78. The next support will be at $10.04-3/4.
The wave C consists of three small waves. A projection analysis on the target of the third wave, labelled c, reveals an immediate support at $10.09-3/4, the 114.6 percent level, which temporarily held the fall and triggered a moderate bounce.
The bounce may end in the narrow resistance zone of $10.17-1/4 to $10.18-3/4.
** 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 fall more to $3.96 - Reuters News
08-May-2018 02:29:41 PM
SINGAPORE, May 8 (Reuters) - CBOT corn may fall more to $3.96 per bushel, as it has cleared a support at $4.01.
The support is identified as the 50 percent projection level of an upward wave C from $3.81. The next support will be at $3.96, a break below which could cause a further loss to $3.90.
The current correction was regarded as a pullback towards the wedge. However, the pullback looks too deep. It makes the pattern invalid.
A target at $4.16 based on the wedge has been aborted. It will be resumed, should corn stand firm above $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 Sherry Jacob-Phillips)
TECHNICALS-CBOT wheat may start bounce around $5.06-1/4 - Reuters News
08-May-2018 03:10:53 PM
SINGAPORE, May 8 (Reuters) - CBOT July wheat may seek a support at $5.06-1/4 per bushel and then bounce towards a resistance at $5.17-1/2, as suggested by a projection analysis.
The support and the resistance are identified respectively as the 50 percent and the 61.8 percent projection levels of the wave C from $4.59.
There has not been any bounce to disrupt the drop from the May 3 high of $5.38-1/2. Such a bounce may occur around the support at $5.06-1/4.
A break below $5.06-1/4 could cause a loss to $4.95.
** 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)
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