An unexpected drop in consumer morale in the United Kingdom prompted investors to trim their trading positions.]]> |||
London - Britain's top share index fell on Friday, with an unexpected drop in consumer morale in the United Kingdom and uncertainty regarding Greece's debt situation prompting investors to trim their trading positions.
The head of the International Monetary Fund, Christine Lagarde, was quoted as saying that a Greek exit from the euro zone was possible, according to an advance extract of an interview in a German newspaper. However, analysts were wary of the comments after Frankfurter Allgemeine Zeitung did not include the quote in Friday's printed edition.
A Greek government spokesman said on Thursday that it intends to reach an agreement with its lenders on a cash-for-reforms deal by Sunday, brushing off comments from euro zone officials suggesting a deal was far from imminent.
“There is growing uncertainty about how Greece is going to manage its debt repayment, and with time running out, investors are getting concerned about a possible Greek exit,” Securequity trader Jawaid Afsar said. “The British Gfk survey further dampened investor sentiment.”
A survey from market research company GfK showed optimism about the British economic situation over the next 12 months fell to its lowest level since January, while Britons also become less upbeat about their personal financial prospects.
The blue-chip FTSE 100 index was down 0.3 percent at 08h31 GMT. The index, however, was up about 1 percent this month, on track for a second straight month of gains.
Shares bucking Friday's fall included Associated British Foods, owner of British Sugar and budget fashion retailer Primark, which gained 2.4 percent to 3,022 pence. Traders attributed the rise to Goldman Sachs lifting its rating on the share to “buy” from “sell” and increasing its price target to 3,120 pence from 2,755 pence.
“Our analysis of the US market suggests that Primark's launch (due Autumn 2015) will be a success, particularly with the millennial consumer cohort, which is large and growing, has more value-oriented shopping habits, and prefers fast fashion to traditional department stores,” Goldman Sachs said in a note.
Hong Kong stocks dipped on Friday, with investors staying cautious after the previous session's slide.]]> |||
Hong Kong - Hong Kong stocks dipped on Friday, with investors staying cautious after the previous session's slide triggered by a tumble in mainland markets.
The Hang Seng index fell 0.1 percent, to 27,424.19, while the China Enterprises Index lost 0.6 percent, to 14,103.81 points.
For the month of May, the Hang Seng was down 2.5 percent.
On Thursday, Hong Kong stocks suffered their biggest one-day decline since December, tracking steep losses in Chinese markets, which dropped more than 7 percent after several major brokerages tightened requirements on margin financing.
Sentiment in Hong Kong calmed on Friday, with financial shares firmer, but energy and telecom stocks remained weak.
Conflicting signals from Greece’s debt talks unnerved European shares on Friday.]]> |||
London - European shares fell on Friday, setting them on course for a weekly loss, as investors were unnerved by conflicting signals from Greece's debt talks and data showing private loan growth in the euro zone stalled last month.
Athens' benchmark share index fell 1.8 percent while the pan-European FTSEurofirst 300 shed 0.8 percent to 1,602.48 points by 0808 GMT.
The FTSEurofirst was down 0.9 percent for the week so far, which has been marked by uncertainty surrounding Greece's negotiations with its international lenders ahead of a payment deadline for Athens looming next week. The index is still up around 1.7 percent for the month.
Greece's government intends to reach an agreement on a cash-for-reforms deal by Sunday, its spokesman said on Thursday, even as euro zone officials suggested a deal was far from imminent and the head of the International Monetary Fund was quoted as saying the country could leave the currency bloc.
The lack of clarity on the outcome meant some traders were reluctant to make strong bets on future market directions.
“It's just Greece, Greece and Greece,” David Madden, a market analyst at IG, said. “The lack of news in either direction tells you why traders are sitting on their hands.”
European indexes extended losses after data showed euro zone private sector loans stopped rising in April.
Mergers & acquisition speculation boosted Swiss agrochemicals company Syngenta, which was building up defenses for a possible higher bid from US peer Monsanto , according to a Bloomberg report. Syngenta shares were up 2.3 percent.
Swedish builder Skanska rose 2 percent after it said its LaGuardia Gateway Partners consortium had been selected as preferred bidder in a $3.6 billion project to build a new terminal at New York's LaGuardia Airport.
The South African rand was a tad weaker against the dollar early on Friday.]]> |||
Johannesburg - South Africa's rand was a tad weaker against the dollar early on Friday, hovering near a five-week low ahead of local trade numbers due out later in the day and a slew of data next week.
At 07h05 GMT the rand was trading 0.24 percent weaker at 12.1595 to the versus its closing level on Thursday.
The rand touched a five-week low of 12.2055 per dollar on Thursday, according to Thomson Reuters data, after the Institute of International Finance said capital flows to emerging economies were projected to fall.
“Local event risk is elevated today, with credit data in the morning and trade and budget figures in the afternoon,” John Cairns of Rand Merchant Bank said in a note.
“Next week includes elevated event risk. Not only is there the usual first week of the month data, which includes PMI figures and US non-farm payrolls, but we also expect a Fitch rating downgrade of South Africa.”
South Africa's April credit growth quickened to 9.35 percent year-on-year, while the broadly defined M3 measure of money supply rose by 8.38 percent, central bank data showed.
Fitch issues its ratings update on South Africa next Friday. The ratings agency maintained its BBB rating for South Africa in December last year.
In fixed income, the yield for the 2026 benchmark was down 1.5 basis points to 8.165 percent.
South Africa's private sector credit demand increased to 9.35 percent year-on-year in April from a revised 8.75 percent in March.]]> |||
Johannesburg - South Africa's private sector credit demand increased to 9.35 percent year-on-year in April from a revised 8.75 percent in March, central bank data showed on Friday.
The broadly defined M3 measure of money supply rose by 8.38 percent year-on-year in April compared with March's unrevised figure of 7.42 percent.
Oil prices edged higher on Friday following a mixed US petroleum report that showed a healthy decline in crude and gasoline reserves.]]> |||
Tokyo - Oil prices edged higher on Friday following a mixed US petroleum report that showed a healthy decline in crude and gasoline reserves but a rise in oil production that could aggravate the global supply glut.
The US benchmark, West Texas Intermediate (WTI) for July, rose 66 cents to $58.34 and Brent crude for July gained 48 cents to $63.06 in late-morning trade.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said in a commentary that Thursday's US Department of Energy petroleum report “showed a mixed sentiment as the bearish production increase was offset by a bullish inventory decrease”.
“As a result of this, we were seeing the bulls and the bears fighting fiercely.”
The report showed US commercial crude inventories fell 2.8 million barrels to 479.4 million in the week through May 22, while gasoline stockpiles fell 3.3 million barrels.
The DoE also reported a rise in US crude production last week, by 304 000 barrels per day to 9.57 million.
Dealers have been hoping a slowdown in US output, and increased demand during the summer driving season, could whittle down the huge global supplies that were a key reason for the collapse in prices of more than 50 percent between June and January.
Ang said investors are awaiting the release of the second reading of US first-quarter gross domestic product later on Friday for clues about demand in the world's biggest economy.
Chinese share markets extended a bruising selloff on Friday after the previous day’s plunge.]]> |||
Tokyo - Chinese share markets extended a bruising selloff on Friday after the previous day's plunge, while the dollar took a breather from a sharp run up this week.
The slide in China forced Asian markets off earlier gains, with the MSCI's broadest index of Asia-Pacific shares outside Japan flat. It shed more than 1 percent on Thursday. South Korean share gained 0.4 percent and Australian stocks rose 1.2 percent. Japan's Nikkei was flat.
In choppy trade, the Shanghai Composite Index was down 3.9 percent after diving nearly 7 percent on Thursday, when investors dumped stocks after more brokers tightened margin trading requirements and the central bank drained money to reduce flush liquidity in the financial system.
“Although numerous triggers have been proposed for Thursday's nearly 7 percent fall in the Shanghai Composite, none of these seem likely to have had a large enough impact on fundamentals to explain such a sizable move,” economists at Capital Economics wrote.
“Instead, it was probably driven by a wild swing in sentiment. With valuations divorced from economic fundamentals, the heightened volatility we have seen is likely to continue.”
Mixed signals from the ongoing Greek debt talks were another signal to investors to remain cautious.
Cash-strapped Athens said it aims to reach an agreement with lenders by Sunday, but its creditors did not share its optimism. Euro zone official said Greece won't receive any money if it does not agree on an outline of a reforms deal.
European shares dropped overnight, with Germany's DAX , France's CAC and Greek stocks falling, while periphery euro zone bond yields rose. The negative sentiment spilled over into North America, with the Dow and S&P edging lower.
The euro took a slightly more positive view of the Greek debt talks, and was up 0.1 percent at $1.0960 after pulling away from a one-month low of $1.0819.
The dollar retreated against the yen, fetching 123.75 yen after scaling 124.46 overnight, its highest since 2002. The greenback was knocked off the peak as Japanese government officials used stronger language to describe recent moves, with Finance Minister Taro Aso saying the yen's recent drop had been “rough”.
The dollar index stood little changed at 96.918, pulling back from a one-month high of 97.775 struck on Wednesday.
In commodities crude oil extended gains after rebounding overnight thanks to data showing a fourth weekly drawdown in US crude stocks.
US crude was up 67 cents at $58.35 a barrel and Brent gained 55 cents to $63.13 a barrel.
In Tokyo late morning trade, the greenback bought 123.72 yen.]]> |||
Tokyo - The dollar took a breather Friday, after a sharp run-up fuelled by expectations for a US interest rate hike this year pushed it to a 12-year high against the yen.
In Tokyo late morning trade, the greenback bought 123.72 yen, from 123.96 yen in New York where it briefly touched a 124.46 yen, its highest level since December 2002.
The surge against the yen underscores growing expectations for the Federal Reserve to raise rates this year, while Japan's central bank considers further easing monetary policy to prop up a faltering economy.
“The fact that the Fed has shown an intention to raise rates within the year has been behind the weakening of the yen,” Juichi Wako, a senior strategist at Nomura, said.
The chances of a rate hike - which tends to boost demand for dollar-denominated assets - have increased following positive US economic data and comments from Fed chief Janet Yellen last week that rates would go up “at some point this year”.
In Japan, data on Friday showed household spending unexpectedly fell in April while inflation and factory output were also lacklustre - disappointing figures likely to fuel talk that the Bank of Japan (BoJ) will announce more stimulus this year.
“The BoJ will be forced to take additional easing at some point this year,” Enrique Diaz-Alvarez, chief risk officer financial services firm Ebury, said.
“We see the selloff (in the yen) picking up steam in the fourth quarter because markets don't really react to Federal Reserve hikes until they actually happen,” he added.
The euro bought $1.0958 and 135.57 yen, against $1.0947 and 135.70 yen in New York.
Investors are tracking talks between heavily indebted Greece and its creditors, which hung over a meeting of finance ministers from the Group of Seven leading industrialised nations in Germany.
International Monetary Fund chief Christine Lagarde, who was attending the G7 meeting, reportedly warned of the potential for a Greek exit from the 19-nation eurozone and said such a scenario would not be “a walk in the park” for the bloc.
Investors are growing nervous as Greece approaches a deadline next week to repay some of its debts but with no cash in the bank and a bailout reform deal no closer there are fears it will default, which in turn could see it leave the eurozone.
“Greece news and chatter continues to permeate markets as Greece gets closer to the first payment to the IMF due June 5,” National Australia Bank said in a commentary.
* Bloomberg News contributed to this story
American stocks eased on Thursday as mixed messages about Greece’s debt talks kept investor uncertainty high.]]> |||
New York - US stocks eased on Thursday as mixed messages about Greece's debt talks kept investor uncertainty high along with a sharp drop in Chinese shares after brokers tightened margin rules.
Seven of the 10 major S&P 500 sectors were lower, with the industrials sector falling the most, 0.4 percent, a day after the Nasdaq closed at a record high.
International Monetary Fund Managing Director Christine Lagarde said there was still a lot of work to do before Greece and its international lenders could clinch a cash-for-reforms deal.
Greece's government said it aims to reach an agreement with lenders by Sunday. A euro zone official said Greece will not be able to get the money still available under its current bailout plan if it does not agree to the outline of a such a deal by the end of the week.
“Everybody is coming out with a different story. I'm looking for an EU-endorsed comment rather than something coming from Greece to be sort of the final arbiter on what the sentiment really is with regard to a resolution,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, which manages about $67 billion in assets.
Shares of Caterpillar fell 2.2 percent to $86.01 and helped to drag down the S&P 500 and Dow, while shares of transportation companies extended recent losses. The Dow Jones transportaion average was down 0.9 percent.
The Dow Jones industrial average fell 36.87 points, or 0.2 percent, to 18,126.12, the S&P 500 lost 2.69 points, or 0.13 percent, to 2,120.79 and the Nasdaq Composite dropped 8.62 points, or 0.17 percent, to 5,097.98.
In China, indexes plummeted 6 percent after more brokerages tightened margin trading requirements in a move seen aimed at curbing risks in a red-hot market.
Investors also were cautious ahead of Friday's reading on US gross domestic product.
Among gainers, action camera maker GoPro rose 6.6 percent to $56.81 after GoPro and Google introduced a virtual reality system using 16 cameras and Google software. Google shares were near flat at $554.18.
Declining issues outnumbered advancing ones on the NYSE by 1,756 to 1,282, for a 1.37-to-1 ratio on the downside; on the Nasdaq, 1,468 issues fell and 1,277 advanced for a 1.15-to-1 ratio favouring decliners.
The S&P 500 posted 16 new 52-week highs and seven new lows; the Nasdaq Composite recorded 85 new highs and 45 new lows.
About 5.7 billion shares changed hands on US exchanges, below the 6.2 billion daily average for the month to date, according to BATS Global Markets.
The North American oil boom is proving resilient despite low oil prices, according to Opec.]]> |||
London - The North American oil boom is proving resilient despite low oil prices, producer group Opec said in its biggest and most detailed report this year, suggesting the global oil glut could persist for another two years.
A draft report of Opec’s long-term strategy, seen by Reuters ahead of the cartel's policy meeting in Vienna next week, forecast crude supply from rival non-Opec producers would grow at least until 2017.
Sluggish global demand for oil means the call on Opec's crude will fall from 30 million barrels per day (bpd) in 2014 to 28.2 million in 2017, effectively leaving the group with two options - cut output from current levels of 31 million bpd or be prepared to tolerate depressed oil prices for much longer.
“Since June 2014, oil prices have experienced a significant reduction, reaching levels even lower than the crisis experienced in 2008, yet non-Opec supply is still showing some growth,” the Opec report said.
Brent crude has collapsed from $115 a barrel in June 2014 due to ample supplies amid a US shale oil boom and a decision by Opec last November not to cut output.
Instead the group chose to increase supply in a bid to win back market share and slow higher-cost competing producers.
But shale oil production has proved to be more resilient than many had originally thought.
“Generally speaking, for non-Opec fields already in production, even a severe low price environment will not result in production cuts, since high-cost producers will always seek to cover a part of their operating costs,” the Opec report said.
“For future non-Opec production, only expectations of an oil price environment in the long-term below the marginal cost of production may deter substantial non-Opec developments. Over the very long term, the economic threshold at which oil companies invest in upstream projects likely reflects their long-term oil price expectations.”
It also said that since 1990, most of the forecasts concerning future non-Opec oil supply have been pessimistic and often erroneous: “For example, non-Opec production was once projected to peak in the early 1990s and decline thereafter.”
Opec publishes long-term strategy reports every five years. Its 2010 report did not mention shale oil as a serious competitor, highlighting the dramatic change the oil markets have undergone in the past few years.
The long-term report is prepared by Opec's research team in Vienna and traditionally cautions that it does not articulate the final position of Opec or any member country on any proposed conclusions it contains.
Opec's ability to cut and raise production over the past decades to balance demand has earned it a reputation of being a swing producer. But the long-term report suggested it is tight shale oil that is now playing this role.
“Recent structural changes in the growth patterns of non-Opec supply as a result of the substantial contributions from North American shale plays might prove to be a turning point (e.g. short lead times of the projects and higher short-term price elasticity),” the report noted.
It said new and cheaper technologies in extraction of tight crude, shale gas, and oil sands would guarantee aggregate growth at 6 percent per year and contribute 45 percent of the growth in energy production to 2035.
“Improved technology, successful exploration and enhanced recovery from existing fields have enabled the world to increase its resource base to levels well above the expectations of the past... The world's liquids resources are sufficient to meet any expected increase in demand over the next few decades,” it said.
“With plenty of oil still left in familiar locations, forecasts that the world's reserves are drying out have given way to predictions that more oil than ever before can be found,” the report said.
By 2019, Opec crude supply at 28.7 million bpd will still be lower than in 2014, the report said, and demand for its oil will start rising only after 2018-2019, reaching almost 40 million bpd by 2040.