The Russian currency is on the way down after a top ratings agency cut Russia's credit rating to junk.]]> |||
Moscow - The Russian currency is on the way down after a top ratings agency cut Russia's credit rating to junk.
Standard & Poor's downgraded Russia's rating to BB-plus, a non-investment grade, for the first time since 2004, citing a slide in the ruble and weakening revenue from oil exports.
Russia's economy has been hit by the double impact of weaker energy prices as well as Western sanctions over its role in Ukraine.
The ruble was 1.2 percent lower in early trading on Tuesday while the MICEX benchmark was 0.3 percent higher. The ruble now costs half as much as a year ago.
The Russian economy is expected to contract by 4 to 5 percent this year for the first time since President Vladimir Putin took the helm in 2000.
World oil prices have fallen too far, the president of state-owned energy giant Saudi Aramco says.]]> |||
World oil prices have fallen too far, the president of state-owned energy giant Saudi Aramco said Tuesday, stressing it was for the market not OPEC producers to shore them up.
“It's too low for everybody,” Khalid al-Falih told a conference.
“I think even consumers start to suffer in the long term.”
Falih also said American shale oil production is important for the world's long-term energy future and Saudi Aramco has marked an additional $7 billion for its own shale projects.
Saudi Aramco is the world's largest oil company in terms of crude production and exports.
The kingdom is the leading exporter and top producer in the Organization of the Petroleum Exporting Countries (OPEC).
In November, the cartel decided to maintain its output ceiling at 30 million barrels per day, deepening the global price drop which began in June.
Oil was then trading at more than $100 a barrel but on Tuesday international benchmark Brent crude for March delivery was fetching just $48.28 in Asian trade.
Saudi Oil Minister Ali al-Naimi has been quoted as saying it is unfair to expect the cartel to reduce output if non-members, who account for most of the world's crude production, do not.
Falih reiterated that policy, saying: “Saudi Arabia will not singlehandedly balance the market on a downturn.”
The company's production has been steady over the past few years, while domestic demand rose and exports gradually declined, he said.
“So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia,” Falih told the Global Competitiveness Forum.
The annual event, organised by the kingdom, brings together senior Saudi officials and world business leaders.
Falih said “it will take time” for the current excess supply to be removed.
He declined to speculate on the price at which the market will ultimately settle.
“It will be the price that will balance supply and demand. I think we're going to just wait for the forces of supply and demand,” he said.
Saudi Arabia, the only producer with significant spare capacity, had traditionally acted to stabilise the market by adjusting output.
Technological innovations have unlocked shale resources in North America and raised US oil output by more than 40 percent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil.
In an increasingly competitive market, analysts have said the kingdom is content to see shale oil producers suffer from low prices.
But Falih said: “US shale is needed, is welcome, on the global scene,” because the world will require more energy resources for a growing population.
The economy is still going to be driven by oil and gas for generations, he said.
Falih added that US shale innovation had led the way for Saudi Arabia to pursue similar techniques.
“Saudi Aramco has invested already $3 billion in developing our unconventional gas. We just earmarked an additional seven (billion). This is the first time I share this publicly,” he told the forum.
“Saudi Arabia will be the next frontier after the US where shale and unconventional will make a contribution to our energy mix, especially gas.”
Oil prices on Tuesday edged up slightly after nearing six-year lows - but gains were capped owing to lingering concern about a global supply glut.]]> |||
Tokyo - Oil prices on Tuesday edged up slightly after nearing six-year lows, but gains were capped owing to lingering concern about a global supply glut, weak demand and Greece's political future, analysts said.
The US benchmark, West Texas Intermediate (WTI) for March delivery, gained 10 cents to $45.25 while Brent crude for March rose 14 cents to $48.30 in late-morning trade.
WTI on Monday fell 44 cents to $45.15 and Brent slipped 63 cents to $48.16 - their lowest closes since early 2009 - as markets largely ignored a warning from the Opec oil cartel that prices could surge to $200 owing to shrinking investment in exploration.
Oil has lost more than half its value since June last year when the commodity was sitting at more than $100 a barrel due to a supply glut, boosted largely by robust US shale oil production, and weak global demand.
Shailaja Nair, associate editorial director at energy information provider Platts, said the comments by Opec Secretary General Abdullah El-Badri did not alter “market fundamentals”.
“There is still oversupply in the market, global demand is on a fall and the eurozone is suffering after the recent (Greek) election results,” Nair told AFP.
A weekend general election in Greece was won by the Syriza Party, whose anti-austerity policies have sparked fears the country could exit the eurozone. The news initially sent the euro plunging to a more than 11-year low against the dollar Monday, although it recovered later in the day.
Dealers will next focus on US durable goods and consumer confidence data to be released later on Tuesday, said Daniel Ang, investment analyst at Phillip Futures in Singapore.
“Figures today would likely serve to emphasise the healthy growth that the US is experiencing,” Ang said.
American stocks edged higher on Monday as investors brushed off fears that a leftist victory in Greece would bring fresh crisis to the eurozone.]]> |||
New York - US stocks edged higher on Monday as investors brushed off fears that a leftist victory in Greece would bring fresh crisis to the Eurozone and energy stocks advanced.
The leftist, anti-bailout Syriza party won decisively in Greek parliamentary elections on Sunday, after running a campaign promising to take on Greece's international lenders and bring about an end to austerity measures.
While the United States has limited direct exposure to Greece's relatively small economy, extended volatility in the region could hurt multinational companies.
“There was a lot of trepidation in the market going into the Greek election... but by this morning the Syriza win was priced into the market already,” said Robert Francello, head of equity trading for Apex Capital in San Francisco.
Energy stocks led gains on major US indices after Abdulla al-Badri, Opec’s secretary-general, told Reuters on Monday that oil prices may have reached a floor and could move higher very soon.
Chevron added 1.9 percent to $108.88 while Exxon Mobil gained 1 percent to $91.76 as the biggest lifts to the S&P 500. The S&P energy index rose 1.4 percent.
The Dow Jones industrial average rose 6.1 points, or 0.03 percent, to 17,678.7, the S&P 500 gained 5.27 points, or 0.26 percent, to 2,057.09 and the Nasdaq Composite added 13.88 points, or 0.29 percent, to 4,771.76.
In deal news, Rock-Tenn and MeadWestvaco Corporation said they would combine to form a packaging company worth $16 billion, with MeadWestvaco shareholders owning a majority stake.
Rock-Tenn shares jumped 6.1 percent to $66.85 while MeadWestvaco surged 14 percent to $51.35 as the S&P 500's biggest percentage gainer.
D.R. Horton climbed 5.5 percent to $24.38 after the homebuilder's revenue growth beat expectations, boosted by home deliveries. An index of homebuilder stocks rose 1.9 percent.
With 19 percent of S&P 500 companies having reported earnings, 71.6 percent have topped expectations, while 54.7 percent have beaten revenue forecasts, according to Thomson Reuters data. That compares with the long-term average of 63 percent for earnings and 61 percent for revenue.
Ocwen Financial Corporation jumped 8.8 percent to $6.91 after the company paid $2.5 million in penalties to the California Department of Business Oversight, which had threatened to suspend Ocwen's licence to operate in the state. About 32 million Ocwen shares exchanged hands, making it one of the New York Stock Exchange's most active.
After the closing bell, Microsoft shares lost 3 percent to $45.60 while United Technologies fell 2.5 percent to $115.80 after their quarterly results.
NYSE advancers outnumbered decliners 2,111 to 952, for a 2.22-to-1 ratio; on the Nasdaq, 1,785 issues rose and 987 fell, for a 1.81-to-1 ratio.
The S&P 500 posted 38 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 80 new highs and 58 new lows.
Volume was light, with many market participants leaving early due to a massive snowstorm hitting the US Northeast. About 6.27 billion shares traded on U.S. exchanges, below the 7.26 billion average this month, according to BATS Global Markets.
Asian share markets were mostly firmer on Tuesday and the euro clung to rare gains.]]> |||
Sydney - Asian share markets were mostly firmer on Tuesday and the euro clung to rare gains, relieved that European equities had weathered Greece's election outcome without much disruption.
Bad weather in the United States curbed activity on Wall Street in a busy week for earnings, while investors had reason for caution as the Federal Reserve holds its first policy meeting of the year.
Japan's Nikkei gained 1.4 percent, while Australia's main index added 0.5 percent. Moves were mostly modest and MSCI's broadest index of Asia-Pacific shares outside Japan was flat on the day.
China went its own way and the Shanghai index slipped 0.5 percent.
On Wall Street, the Dow had ended on Monday up a bare 0.03 percent, while the S&P 500 gained 0.26 percent and the Nasdaq 0.29 percent.
A blizzard engulfing New York is expected to keep many investment banks and fund managers on skeleton staff, though the main exchanges all plan to open as usual on Tuesday.
Around 30 percent of S&P500 companies report earnings this week, including tech heavyweights Microsoft, Apple, and Google.
Of the 96 companies that have reported so far, 66 have topped forecasts, 18 disappointed and 12 were in line with estimates.
The US Federal Reserve starts a two-day policy meeting on Tuesday and investors are keen to hear its take on the rash of policy easings from the euro zone to Canada and Switzerland.
The general assumption is the Fed will acknowledge the uncertain global outlook and stick to its promise to be patient on tightening. Yet its timetable remains for lift-off on rates by mid-year, a trajectory that presages further broad-based gains for the dollar.
The dollar was near an 11-year peak against a basket of major currencies at 94.909 having risen 11 percent in only the past three months.
It softened a shade on the yen to 118.22 yen, while the euro pared a little of its recent heavy losses to stand at $1.1245.
The Fed is hardly alone in meeting this week, with policy decisions awaited from Hungary, Thailand, Malaysia, New Zealand, South Africa, Mexico, Colombia and Russia.
In Europe, Greek left-wing leader Alexis Tsipras was sworn in on Monday as the prime minister of a new hardline, anti-bailout government determined to face down international lenders and end nearly five years of austerity.
Tsipras quickly sealed a coalition deal with the Independent Greeks party which also opposes Greece's EU/IMF aid programme.
The initial reaction in markets was modest by recent standards. Greek stocks fell 3 percent, led lower by bank stocks including Piraeus Bank which fell 17.6 percent. Greek 10-year bond yields rose, but stayed below the levels seen in the run-up to the vote.
The FTSEurofirst 300 index of top European shares ended 0.13 percent higher and close to a seven-year high.
In commodity markets, US crude was quoted 10 cents firmer at $45.25. Brent edged up 12 cents to $48.28, but that followed a 1.3 percent drop on Monday.
The euro inched higher on Tuesday after plunging in the wake of the leftist Syriza party’s victory in Greek elections.]]> |||
Tokyo - The euro inched higher on Tuesday after plunging in the wake of the leftist Syriza party's victory in Greek elections, while the ruble dropped after Standard & Poor's cut Russia's debt rating to junk.
In Tokyo, the common currency bought $1.1251 and 133.31 yen, up from $1.1234 and 133.12 yen in New York.
The unit had briefly tumbled to $1.1098 - its lowest level since September 2003 - in Asia on Monday, owing to fears the poll result could usher in a Greek exit from the eurozone.
The choice of Syriza leader Alexis Tsipras as prime minister following the weekend polls has raised the prospect of tough talks with Greece's creditors over easing rescue terms, if not more debt restructuring, and likely greater turbulence in the markets.
But “they don't seem to have what I'd view as a far-left goal - it's not like they're going to come out and default on all their debt”, Matt Derr, a foreign-exchange strategist at Credit Suisse Group AG, told Bloomberg News.
“The euro is getting a bit of a relief rally.”
National Bank of Australia added: “Perhaps the market rightly or wrongly is pinning some hopes on Mr Tsipras being more conciliatory. In any case, the market will be paying close attention to news that could well see more euro volatility for now at least.”
The euro also won a measure of support from a new poll on Monday that showed German businesses were confident about the outlook for Europe's biggest economy.
In other trading, the dollar slipped to 118.21 yen from 118.49 yen as traders await the start of a two-day Federal Reserve policy meeting later in the day.
Markets are keen for clues about any change in the timeline for an interest rate hike, currently expected around the middle of the year.
The ruble, meanwhile, sank after a deadly rocket attack on Mariupol, Ukraine, by pro-Russian rebels raised the prospect of more Western sanctions on Moscow while ratings agency Standard & Poor's cut Russia's debt rating to junk level.
On Tuesday, the dollar bought 68.27 rubles, up from 67.18 rubles the previous day.
Britain's top share index fell from a four-month high on Monday after Greek election results heightened uncertainty in the euro zone.]]> |||
London - Britain's top share index fell from a four-month high on Monday, led lower by commodity stocks, after Greek election results heightened uncertainty in the euro zone and raised the prospect of conflict between Greece and its international lenders.
The leader of the Syriza party, Alexis Tsipras, promised on Sunday that five years of austerity, “humiliation and suffering” imposed by international creditors were over after his party swept to victory in a snap election.
“...The implications of a 'Grexit' will continue to linger and may hamper further moves higher in the market,” said Tom Robertson, a senior trader at Accendo Markets, referring to Greece's possible exit from the euro zone.
The FTSE 100, which hit a four-month high on Friday, was down 0.3 percent at 6,810.58 points by 08h58 GMT. The index recorded its biggest weekly gain in three years last week, after the ECB announced a programme to buy government bonds and pump hundreds of billions into the stagnant euro zone economy.
Greece's ATG share index fell 3.7 percent. However, some analysts expected the events in Greece would have limited effect on equity markets overall.
“We think that it will have minimal impact,” Gerard Lane, equity strategist at Shore Capital, said. “Longer term, debt restructurings will need to take place with haircuts imposed on those lenders that had exposure to the borrower.”
Commodity shares dropped as prices of industrial metals and crude oil fell as the dollar strengthened in response to the Greek election. A stronger US currency tends to make dollar-priced commodities expensive for other currency holders and generally reduces demand for them.
The UK Mining index fell 2.4 percent and the Oil and Gas index 1.6 percent. Shares in Tullow Oil, BG Group, BHP Billiton and Rio Tinto fell 2.3 to 3.9 percent.
Glencore fell 2.5 percent. Its Japanese peer Marubeni on Monday halved its net profit projection for this business year, booking losses on resource assets caused by falling prices for oil, copper and coal.
International Consolidated Airlines Group rose 3.3 percent to lead gains on the FTSE 100. The British Airways owner confirmed it had submitted an improved proposal to make an offer for Aer Lingus.
Oil output from Libya has fallen to 363 000 barrels a day, according to the oil minister appointed by forces in control of Tripoli.]]> |||
Tripoli - Oil output from Libya, where ports and oilfields have been shut due to fighting, has fallen to 363 000 barrels a day with exports at about 200 000, the oil minister appointed by forces in control of the capital Tripoli told Reuters.
Two governments allied to armed factions are vying for control of Libya four years after the toppling of leader Muammar Gaddafi.
The United Nations and Western powers do not recognise the administration which controls ministries in Tripoli.
Its oil minister, Mashallah Zwai, told Reuters in an interview that Libya is producing 362,780 bpd of oil, showing a report from the National Oil Corporation.
That is down by half from November, when Opec member Libya was producing around 750 000 barrels a day, and well below the 1.6 million which the North African country produced in 2010.
Zwai said oil revenues would fall to between $10 billion and $12 billion this year after slumping to $15 billion in 2014 when Libya suffered a budget deficit of $19 billion.
Output has fallen since facilities such as the El Sharara oilfield and the ports of Ras Lanuf and Es Sider were shut down due to nearby clashes or pipeline blockages.
Foreign oil buyers have been confused over who is in charge since a faction called Libya Dawn took over the capital in August, forcing Libya's recognised prime minister and elected assembly to move to the east of the country.
Zwai works in the old minister's Tripoli office in a building which also houses the NOC.
He said some 150 000 bpd of crude was being used for domestic refineries and that the biggest one in Zawiya was producing 110 000 bpd, just 10 000 short of its maximum capacity.
He said the biggest contributors were Arabian Gulf Company (AGOCO) which was producing 131 547 bpd from fields in Libya's far east and the Hariga port which has largely escaped the violence gripping other parts of the country.
The Sirte Oil Company is producing 54 000 bpd through the eastern port of Brega to supply the Zawiya refinery, the NOC figures showed.
Libya's conflict also involves tribal loyalties, federalist movements and rival political groups often allied to their cities or regions.
That has complicated UN efforts to bring the recognised government of Prime Minister Abdullah al-Thinni and Libya Dawn fully into negotiations in Geneva over a unity government. Talks are due to restart on Monday.
Zwai said his government wanted to keep the conflict out of state firm NOC by retaining a decades-old payment system through the country's Tripoli-based central bank. All contracts with oil firms would be honoured, he said.
The Thinni government has announced plans to set up new bank accounts in the eastern region in a bid to control the flow of oil revenues.
Zwai said such a move risked breaking up Libya.
“If they want partition we are ready for this, but we don't want partition because we are thinking of Libya's interest,” he said.
The minister also warned that his tribe, the Zwaiya, was in control of major oilfields in the east should a federalist movement allied to Thinni's government push for partition of that region.
“If they want partition I have a clear message: we the Zwaiya tribe own all oil ports and resources (in the east) which we won't allow to get broken up,” he said.
Zwai said 500 000 barrels of oil was destroyed after a rocket struck storage tanks at Es Sider in December, leaving three millions of barrels still stored there.
That is lower than a loss of up to 1.5 million barrels estimated by eastern officials.
Oil guards loyal to Thinni have prevented the administration in Tripoli from lifting the two million barrels ready for shipment from the tanks.
Each side has blamed the other for the rocket strike.
South Africa’s rand was stable against the dollar early on Monday while bond yields hovered near 20-month lows.]]> |||
Johannesburg - South Africa's rand was stable against the dollar early on Monday while bond yields hovered near 20-month lows, as emerging markets continued to benefit from the European Central Bank's larger-than-expected stimulus package.
On the local front, traders and investors awaited Thursday's interest rate decision, with all 37 economists surveyed by Reuters last week predicting the Reserve Bank would hold interest rates at 5.75 percent.
On Monday, the yield on the 2026 benchmark revisited last week's low of 7.135 percent, a level last seen in late May 2013, and was down 3 basis points at 7.14 percent at 06h55 GMT compared to Friday's close.
The rand was changing hands at 11.4210 to the greenback, where it ended the previous session in New York.
The currency had rallied to seven-week highs last week after the ECB said it buy 60 billion euro ($67.28 billion) worth of assets each month to try and stimulate growth in the euro zone.
While there was little expectation that South Africa's own central bank would change policy on Thursday, the market would be on the look out for downward adjustments to inflation forecasts, Standard Bank dealer Warrick Butler said.
“This will be a solid indication that they believe the hiking cycle they embarked on last year has ended and that the next move in the local repo rate could in fact be lower,” he said.
The euro skidded to an 11-year low as Greece’s Syriza party put Athens on a collision course with international lenders.]]> |||
Tokyo - The euro skidded to an 11-year low and stock prices fell on Monday as Greece's Syriza party promised to roll back austerity measures after sweeping to victory in a snap election, putting Athens on a collision course with international lenders.
The euro fell to an 11-year low of $1.1098 on the vote outcome before recovering to $1.1186, still down 0.2 percent from last week.
The election was the second blow since last week for the euro, still smarting after the European Central Bank unveiled a huge bond-buying stimulus programme.
European shares are expected to take a beating, with spreadbetters seeing a fall of 1.0-1.1 percent in Germany's DAX and other core countries. Southern European countries could see a fall of almost 2 percent.
As concerns grew that the Greek election results could lead to renewed instability in Europe, US stock futures fell 0.5 percent in Asia. Japan's Nikkei closed down 0.3 percent, and MSCI's broadest index of Asia-Pacific shares outside Japan was also off 0.3 percent
Safe-haven assets were in favour, with the 30-year US bonds yield hitting a record low of 2.336 percent. The 10-year notes yield fell 5 basis points to 1.759 percent.
The Swiss franc rose 0.4 percent to 0.87684 to the dollar while the yen edged up to 117.60 to the dollar.
Syriza leader Alexis Tsipras is set to form the first euro zone government that is openly opposed to bailout conditions imposed by the European Union and International Monetary Fund during the economic crisis.
Renegotiating with other euro zone governments could even raise the risk of Greece eventually leaving the currency union, though most market players expect Tsipras to eventually make compromises to avoid the so-called “Grexit”.
Indeed, the broad consensus in the markets is that any renewed tensions over Greece are unlikely to hurt broader investor sentiment much beyond an initial shock.
Unlike at the height of the debt crisis in 2011-12, European banks now have limited exposure to Greece, and European policymakers have frameworks to deal with indebted countries, analysts say.
“At the moment, the market believes that if there is any (debt) restructuring it would only involve the official sector and for now, the possibility of Greece leaving the euro zone even with the incoming government is small,” said Sebastien Galy, senior foreign exchange analyst at Societe Generale in New York.
The ECB's plan to pump more than a trillion euro into the banking system in the coming year and a half is underpinning risk sentiment, which boosted European share prices to seven-year highs on Friday.
On the other hand, US stocks slipped on Friday, partly because strength of the dollar dented the allure of the relatively sound US economy.
“Economic data out of the US seems to have lost a little bit of momentum lately. Quietly the impact of a strong dollar is starting to appear,” said Tohru Yamamoto, chief strategist at Daiwa Securities.
The dollar rose more than 5 percent so far this year against a basket of major currencies, hitting the highest level since 2003.
That could encourage the Federal Reserve to remain “patient” in raising interest rates, when it holds a policy meeting on Tuesday and Wednesday.
Elsewhere, oil prices also started the week weaker, with US crude futures falling 0.9 percent to $45.17 per barrel , near 5 1-2/year low of $44.20 hit earlier this month.
Oil prices blipped up briefly on Friday after the death of Saudi Arabia's King Abdullah sparked speculation that the world's biggest crude exporter could change its policy not to slash output despite relentless price falls.
But the rises were short-lived as new King Salman was quick to keep veteran oil minister Ali al-Naimi on Friday, pledging continuity in energy policy.
Copper dropped below its trough hit on January 14, slipping to as low as $5,345 per ton, its lowest level in 5 1/2 years.