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Archives: Reuters Articles

Oil prices rise on supply deficit concerns

Sept 19 – Oil prices rose on Tuesday for a fourth consecutive session as weak US shale output spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.

Global oil benchmark Brent crude futures were up 41 cents, or 0.43%, to USD 94.84 a barrel by 0751 GMT. After breaching USD 1 gains, US West Texas Intermediate crude futures were up 92 cents, or 1.01%, to USD 92.40.

Prices have gained for three consfecutive weeks, and both benchmarks are around 10-month highs.

US oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023, the US Energy Information Administration (EIA) said on Monday. It will have fallen for three months in a row.

Those estimates come after Saudi Arabia and Russia this month extended a combined supply cuts of 1.3 million bpd to the end of the year.

Prices are being supported by concerns over supply tightness and technical factors, said Kelvin Wong, a senior market analyst at OANDA in Singapore.

“(There has been) a persistent short-term uptrend seen in the WTI crude oil futures where prior dips had been held by its 5-day moving average since 29 August…(which is) now acting as a key short-term support at around USD 89.90 per barrel,” Wong noted.

“Oil’s ascent into overbought territory leaves the market vulnerable to a correction,” analysts from National Australia Bank wrote in a client note, pointing to volatility after speeches from Saudi Aramco CEO Amin Nasser and Saudi Arabia’s energy minister on Monday.

The Aramco CEO lowered the company’s long-term outlook for demand, now forecasting global demand to reach 110 million bpd by 2030, down from a previous estimate of 125 million bpd.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman on Monday defended OPEC+ cuts to oil supply, saying international energy markets need light-handed regulation to limit volatility, while also warning of uncertainty about Chinese demand, European growth and central bank action to tackle inflation.

Interest rate decisions are due this week from the central banks of the US, Britain, Japan, Sweden, Switzerland and Norway.

This “will do nothing to calm nerves as the clash between considerably reduced supply and less than reassuring economic outlook continues,” said PVM Energy’s Tamas Varga.

(Reporting by Paul Carsten, Stephanie Kelly in New York and Andrew Hayley in Beijing; editing by Kirsten Donovan and Jason Neely)

Oil prices rise on supply deficit concerns

Sept 19 – Oil prices rose in early trade on Tuesday for the fourth consecutive session, as weak shale output in the US spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.

US West Texas Intermediate crude futures rose 90 cents, or 1%, to USD 92.38, by 0018 GMT, just under a 10-month high reached on Monday, while global oil benchmark Brent crude futures rose 27 cents, or 0.3%, to USD 94.70 a barrel.

Prices have gained for three consecutive weeks.

US oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023, the US Energy Information Administration (EIA) said on Monday. It will have fallen for three months in a row.

Those estimates come after Saudi Arabia and Russia this month extended a combined 1.3 million barrels per day (bpd) of supply cuts to the end of the year.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman on Monday defended OPEC+ cuts to oil market supply, saying international energy markets need light-handed regulation to limit volatility, while also warning of uncertainty about Chinese demand, European growth, and central bank action to tackle inflation.

(Reporting by Stephanie Kelly; Editing by Sonali Paul)

 

More SE Asia firms consider US IPOs, filling void left by China peers

SINGAPORE/SYDNEY, Sept 19 – Several Southeast Asian companies are considering listing in the United States, banking on strong investor appetite for emerging market growth in the absence of Chinese stock offerings.

Senior executives in leading SME digital financing platform Funding Societies, Singapore-based entertainment firm Gushcloud International, and Thai insurance technology firm Sunday told Reuters they were looking into New York as one of their initial public offering (IPO) venues.

This comes on top of recently announced plans by Vietnamese internet company VNG Corp (VNZ) and Philippine real estate company DoubleDragon Corp’s (DD) Hotel101 Global to list in the US, filling a void left by Chinese companies that hit the pause button on US IPOs after political tensions with Washington intensified, Beijing tightened scrutiny of domestic firms seeking overseas listings and China’s own economy slowed.

“China’s shadow in the ASEAN region has shrunk since the world reopened after the pandemic,” said Leif Schneider, senior legal adviser at law firm DFDL Vietnam.

“Chinese competitors have gradually been pushed to the sidelines due to homemade restrictions and the ensuing domestic economic fallout,” he added. “These factors have enabled some of their ASEAN rivals to step out into the spotlight.”

ASEAN, the 10-member Association of Southeast Asian Nations, includes Thailand, Singapore, Malaysia and Vietnam. The bloc’s biggest car e-commerce platform Carsome Group has also said it was considering various global exchanges, including those in the US, for a potential listing.

Southeast Asian firms have raised about USD 101 million via IPOs in the US so far this year, way below last year’s USD 919 million, but bankers expect the pace to pick up over the next 12 months as companies hunt for new sources of capital after relying on private funds for the last few years.

In contrast, Chinese firms have raised USD 463.7 million via U.S listings so far this year, slightly above 2022 levels but a fraction of the USD 12.96 billion and USD 12.48 billion raised in 2021 and 2020, respectively, according to LSEG data.

For investors seeking emerging market exposure, Southeast Asia fits the bill, because of the region’s strong economic growth and increasing population, analysts say.

For example, growth in Indonesia, Southeast Asia’s biggest economy, accelerated at its highest rate in three quarters in the latest April-June period, boosted by strong household and government spending, data showed.

Some Southeast Asia companies seeking listings in the US look to raise between USD 300 million and USD 1 billion, with valuations ranging from USD 1.5 billion to USD 8 billion, bankers said, without naming any firms.

The plans by Southeast Asian firms to list in the US should also cheer Wall Street banks in Asia, who generate about a third of their revenues from equity capital market (ECM) deals which all but dried up with Chinese IPOs.

“For some of the US investors who were focused on emerging markets, their tech exposure largely came from Chinese companies because they were the biggest names listed in the US,” said Sunil Khaitan, Bank of America’s ECM head for Southeast Asia.

“With the current cautious stance around China, these investors are on the lookout for some of the other emerging markets names,” he added.

DIVERSE RETURNS

For companies, the US offers several advantages.

Funding Societies’ co-founder and group CEO Kelvin Teo told Reuters the US was one of the company’s preferred options because it would provide a deep pool of capital and global investor base.

Andrew Lim, Gushcloud’s chief financial officer, also said a US listing would expose the company to “investor familiarity with fast-growing new economy companies”.

Companies in sectors including logistics, technology, mining, electric vehicles, and renewable energy are most likely to seek IPOs both locally and abroad, said Deloitte Southeast Asia Disruptive Events Advisory Leader Tay Hwee Ling.

“International investors are seeing the value of portfolio diversification that Southeast Asia provides,” Tay added.

The expected pickup in Southeast Asian listings, however, could get derailed by share volatility and stringent investor scrutiny, analysts say.

Shares of Vietnamese electric vehicle maker VinFast (VFS) have jumped some 75% since its debut in August, but not without strong volatility in thin trade.

Most US investors, however, are savvy enough when it comes to due diligence.

“US investors are generally proficient and experienced in evaluating opportunities across different sectors, but it is usually helpful for Southeast Asia companies to educate investors on any country-specific factors that may affect their business,” said Art Anuruk Karoonyavanich, head of capital markets at DBS based in Singapore.

(Reporting by Yantoultra Ngui in Singapore and Scott Murdoch in Sydney; Editing by Sumeet Chatterjee and Miral Fahmy)

 

Yields hold near August highs; Fed meeting in focus

NEW YORK, Sept 18 – Benchmark 10-year yields on Monday held just below 16-year highs reached last month before the Federal Reserve on Wednesday is expected to leave rates unchanged but could signal that it is open to further increases.

Rising oil prices have raised concerns that inflation could remain stubbornly elevated, and make the US central bank more likely to keep tightening.

Data last week showed that US consumer prices increased by the most in 14 months in August as the cost of gasoline surged.

“The narrative is – is inflation increasing? Does that necessarily keep the Fed on the sidelines if these numbers continue to show strength,” said Tom di Galoma, managing director and co-head of global rates trading at BTIG in New York.

The 10-year yields were little changed on the day at 4.317%, and were holding just below the 4.366% level reached on Aug. 22, which was the highest since 2007.

“Right now, the market is teetering on the high yields of the year, and I think that it’ll be make-or-break depending on what the Fed does and what their rhetoric is,” di Galoma said.

Fed officials will also release their latest predictions on the economy and where rates are likely to be over the coming quarters when it concludes its two-day meeting on Wednesday.

Fed funds futures traders are pricing in a 31% chance that the Fed hikes in November, and see a 42% chance of a hike by December, according to the CME Group’s FedWatch Tool.

Two-year yields rose three basis points to 5.062%. The yield curve between two-year and 10-year notes was last at minus 75 basis points.

Treasury trading volumes in August, meanwhile, were up 19% over the previous year with USD 744 billion in average daily notional volume, Kevin McPartland, head of research – market structure & technology at Coalition Greenwich, noted on Monday in a report.

“The increase was driven by the now standard string of inflation and jobs reports, with an additional shot in the arm provided by recent research presented at Jackson Hole,” McPartland said.

This data includes coupon Treasury debt and Treasury bills, but not Treasury Inflation-Protected Securities (TIPS).

The US Treasury Department will sell USD 13 billion in 20-year bonds on Tuesday and USD 15 billion in 10-year TIPS on Thursday.

Yields on 10-year TIPS, or so-called real yields, reached 2.021% on Monday and are up from a low of 1.357% in July.

 

September 18 Monday 3:00PM New York / 1900 GMT

  Price Current Yield % Net Change (bps)
Three-month bills 5.3075 5.4653 -0.001
Six-month bills 5.2975 5.5298 0.005
Two-year note 99-226/256 5.0624 0.029
Three-year note 99-176/256 4.7381 0.023
Five-year note 99-160/256 4.4598 0.007
Seven-year note 98-80/256 4.4093 0.000
10-year note 96-120/256 4.3165 -0.005
20-year bond 97-88/256 4.5795 -0.012
30-year bond 95-132/256 4.3957 -0.015

 

(Reporting by Karen Brettell; Editing by Kirsten Donovan and Will Dunham)

 

Gold prices firm as US dollar eases, Fed meeting looms

Sept 18 – Gold prices gained on Monday, helped by a slight pullback in the dollar as investors awaited a series of key central bank policy meetings this week, with the US Federal Reserve widely expected to hit pause on interest rate hikes.

Spot gold was up 0.5% to USD 1,932.49 per ounce by 1:42 p.m. ET (1742 GMT). US gold futures settled 0.4% higher at USD 1,953.40.

The US dollar slipped 0.3% against its rivals, making gold less expensive for other currency holders.

“The market is becoming very focused on central bank requisitions … the expectations are that they (Fed) will push the higher for longer narrative and that should keep investors concerned,” said Edward Moya, senior market analyst at OANDA.

The Fed’s policy decision is due on Wednesday, with traders pricing in a 99% chance of the central bank keeping interest rates steady in the 5.25% to 5.5% range, according to CME’s FedWatch Tool.

The Bank of England is seen raising rates by 25 basis points to 5.5% on Thursday. The Bank of Japan’s meeting is on Friday, with investors seeking more cues on outlook from Governor Kazuo Ueda after recent comments on ending negative rates.

Non-yielding gold tends to fall out of favour among investors when interest rates rise.

Chinese gold prices hit record highs last week, extending a months-long rally as consumers snap up the safe-haven asset to offset a depreciating yuan. Physical gold premiums also soared to new highs.

“While the developments in China are worth watching, we currently do not believe that this will change the outlook for the gold market,” said Julius Baer analyst Carsten Menke.

Spot silver rose 0.9% to USD 23.21 per ounce, platinum gained 0.9% to USD 932.89, while palladium slipped 0.4% to USD 1,243.83.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Krishna Chandra Eluri and David Evans)

 

Clarion call for Bank of Japan clarity

Sept 18 – The Bank of Japan’s policy meeting on Friday is the highlight of the week in Asia, with speculation rising that policymakers may be much closer to moving away from ultra-loose policy and negative interest rates than previously thought.

Rate decisions and guidance from Taiwan, the Philippines, and Indonesia on Thursday will also be closely scrutinized, while the latest inflation figures from Japan, Malaysia, and Hong Kong are on tap this week too.

Wall Street’s gloomy end to last week – the three main indexes fell between 0.83% and 1.56% on Friday – will cast a shadow over the Asia open on Monday, even though Asian markets ended the week on a far more positive note.

The MSCI Asia ex-Japan Index rose on Friday, lifted by surprisingly strong Chinese retail sales and industrial production figures, ensuring a decent 1.2% rise on the week. That is the third weekly rise in four.

But the steady grind higher in oil prices to new highs for the year is stoking inflation concerns, just as central banks in most developed economies are at or approaching the end of their tightening cycles. Stagflation fears are rising.

After the European Central Bank’s fireworks last week, the euro will be closely watched as a signal for whether the backlash from more hawkish ECB members is gaining any traction with traders and investors.

The euro has weakened for the last nine weeks, its longest losing streak ever. The 5% decline over that period is modest relative to other multi-week spells of depreciation, but nine weeks is still record-breaking. A period of consolidation and reversal is surely imminent.

The flip side of that run – which has more far-reaching implications and affects Asia more – is the dollar has strengthened nine weeks in a row, its longest-best run since 2014.

Again, time for a snap back?

Attention this week turns to the Federal Reserve and Bank of England policy meetings, and in Asia, the BOJ on Friday.

BOJ Governor Kazuo Ueda’s hawkish remarks last weekend seem like a long time ago now. The yen has surrendered all its gains and on Friday slid to a new low for the year at almost 148.00 per dollar.

The 10-year Japanese Government Bond yield, on the other hand, closed on Friday around 0.72%, its highest close since December 2013. The currency and JGB markets are sending different signals, and both will be seeking more clarity from the BOJ on Friday.

Here are key developments that could provide more direction to markets on Monday:

– Singapore exports (August)

– China foreign minister Li visits Moscow

– ECB’s de Guindos and Panetta speak

(By Jamie McGeever; Editing by Diane Craft)

 

Dollar down after data but set for ninth straight weekly climb

NEW YORK, Sept 15 – The US dollar was lower on Friday, after data showed a dip in consumer sentiment, but the greenback was still poised for a ninth straight week of gains, while the yen weakened to a 10-month low.

The University of Michigan’s preliminary reading of its Consumer Sentiment Index dropped to 67.7 this month from a final reading of 69.5 in August and below the forecast of 69.1 among economists polled by Reuters. However, consumers saw inflation lower on both a one-year and five-year basis.

Earlier data from the Labor Department showed import prices increased 0.5% last month as fuel prices jumped, but underlying price pressures stayed subdued while a separate report from the New York Fed showed factory activity picked up in the state in September.

“None of the data currently points to a recession. Nevertheless, the fed futures still point to the end of next year, a lower rate,” said Joseph Trevisani, senior analyst at FXStreet.com.

“If the credit markets are still convinced that when you increase rates as much as the Fed has, you eventually get a recession … where do people go? They go to the dollar.”

The Federal Reserve will hold a policy meeting next week on Sept. 19-20 and the central bank is largely viewed as keeping interest rates unchanged, with a 97% expectation for no action, according to CME’s FedWatch Tool.

After edging higher earlier in the week, expectations for a 25 basis-point hike at the November meeting have declined to 30.6% from 43.6% a week ago, with a small chance of a cut being priced in as early as January.

The US dollar index was down 0.08% at 105.32, but was still poised for its ninth straight weekly gain, which would mark its longest weekly run since a 12-week streak of gains in 2014.

The greenback continued to strengthen against the yen, after the Japanese currency had a sharp move higher versus the dollar earlier in the week. The dollar was last up 0.25% at 147.84 yen after hitting a 10-month high of 147.96.

The euro was up 0.2% at USD 1.0666, having recovered slightly from Thursday’s six-month low of USD 1.0629 following the European Central Bank’s (ECB) policy announcement, in which the central bank raised rates to a record-high 4% but signaled it was likely done with hikes.

However, ECB policymakers pushed back on the idea the central bank was done with rate hikes, saying rates would be kept high for an extended period and could even be raised again if needed.

The euro was on track for a ninth straight weekly fall against the dollar.

The sterling declined 0.2% to USD 1.2386. Along with the Fed, the Bank of England will also make a policy announcement next week.

(Reporting by Chuck Mikolajczak in New York; Editing by Matthew Lewis and Hugh Lawson)

 

Gold rises 1% on US dollar weakness, safe-haven demand

Sept 15 – Gold jumped 1% on Friday, helped by a weaker dollar and safe-haven buying after the United Auto Workers union kicked off strikes at three automakers in Detroit, while hopes around a likely pause in US interest-rate hikes lent further support.

Spot gold was up 0.7% at USD 1,924.27 per ounce by 1:56 p.m. EDT (1756 GMT). Bullion has risen 0.3% so far this week.

US gold futures settled 0.7% higher at USD 1,946.2 per ounce.

The dollar USD slipped 0.2% against its rivals following US data earlier in the day, making gold less expensive for other currency holders.

“Gold and silver are rallying on a wall of worry,” said Tai Wong, a New York-based independent metals trader.

United Auto Workers union launched simultaneous strikes at three factories owned by the “Detroit Three”, including Chrysler-owner Stellantis (STLAM), marking the most ambitious US industrial labor action in decades.

“The UAW strike looks like it could last some time given what the union is demanding. And the possible govt. shutdown at the end of the month is getting more press,” Wong said.

Gold is often used as a safe store of value during times of political and financial uncertainty.

Market participants now look forward to more clarity on the interest rate outlook from the US Federal Reserve at their policy meeting next week, in which the central bank is widely expected to leave interest rates unchanged.

“If the Fed leans a little bit more dovish next week, that would be significant and cause a rally in the gold market,” said Jim Wyckoff, senior market analyst at Kitco.

Meanwhile, China’s physical gold premiums soared to a new high this week, amid strong demand to shore up a depreciating yuan and a lack of fresh import quotas.

Elsewhere, silver rose 1.9% to USD 23.07 per ounce, platinum gained 2.2% to USD 926.55 and palladium eased 0.3% at USD 1,247.35. All three metals were heading for weekly gains.

(Reporting by Harshit Verma and Brijesh Patel in Bengaluru; Editing by Krishna Chandra Eluri)

Global equity funds draw big inflows as inflationary pressures ease

Sept 15 – Global equity funds attracted substantial inflows in the week ending Sept. 13, buoyed by hopes the Federal Reserve might halt its rate increases amidst easing inflationary concerns, potentially boosting risk assets.

According to LSEG data, investors channeled approximately USD 9.95 billion into global equity funds, marking the most substantial net weekly acquisition since June 14.

Breaking it down regionally, US and Asian equity funds had inflows of roughly USD 9.7 billion and USD 1.62 billion, respectively. However, European funds were hit with outflows, shedding USD 662 million.

By sector, consumer discretionary funds saw an influx of about USD 867 million, and tech sector funds garnered around USD 474 million. Other sector-focused funds remained out of favor.

Last month’s US consumer prices saw their steepest rise in 14 months due to escalating gasoline costs, yet the year-on-year core inflation increase was the smallest in almost two years, which could potentially provide some leeway for the Federal Reserve to keep interest rates unchanged at its upcoming Wednesday meeting.

Contrastingly, the allure of global money market funds appeared to wane. They registered a net intake of USD 10.65 billion, a sharp decline from the USD 60.5 billion in the preceding week.

Global bond funds recorded USD 531 million in outflows, a reversal from the inflows seen over the past three weeks. High-yield funds reported around USD 899 million in outflows, breaking their two-week buying streak. But both corporate and government bond funds observed inflows, netting USD 1.09 billion and USD 831 million, respectively.

Among commodities, precious metal funds continued their selling trend into a 16th week with USD 454 million in outflows. Energy funds also experienced a dip, registering USD 128 million in outflows, marking a shift from the previous two weeks of net purchases.

Data covering 28,218 emerging market funds highlighted a net exit of USD 1.95 billion from equity funds. Bond funds in these markets also faced headwinds, with a disposal of approximately USD 795 million, marking their seventh consecutive week of net selling.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Andrew Heavens)

China adds fuel to global equity rally

The markets will have plenty of impetus for an equity rally at the European open, after better-than-consensus China data added to the optimism already in place from expectations for a peak in rates at the biggest central banks.

Signs that the recent flurry of support measures from Beijing are working to stabilise the economy showed up in August retail sales and factory production data released this morning.

But China’s embattled real-estate sector continued to send worrying signals, with the latest data also showing a deepening slump in property investment, a day after Moody’s cut the sector’s outlook to negative.

That couldn’t dampen the feel-good mood, which had already been emanating from Goldilocks U.S. macro indicators: Retail sales and producer prices are suggesting a robust economy, but are not hot enough to require more Fed rate hikes.

With traders all but certain the Fed will stay on pause next week, and following the ECB’s dovish hike yesterday, the narrative is building for looser global financial conditions.

The dollar remains king, with the euro swooning in the course of a very eventful few days. That sets the stage for another pivotal week ahead, featuring policy decisions from not just the Fed, but the Bank of England and the Bank of Japan.

There will be plenty of opportunity to hear from ECB officials today, with the Eurogroup convening in Spain.

Boss Christine Lagarde is of course at the meeting, where the agenda includes updating the bloc’s finance ministers on goings-on at the central bank. The group will also discuss a replacement for outgoing ECB board member Fabio Panetta, who will take the helm at the Bank of Italy in November.

(Kevin Buckland)

 

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