Oil prices edge higher on falling US inventories, China data

April 19 (Reuters) – Oil prices rose in early Asian trade on Wednesday as US crude inventories were seen falling and on strong Chinese economic data, signaling strengthening fuel demand.

Brent crude futures gained 7 cents to USD 84.84 a barrel at 0020 GMT. West Texas Intermediate US crude was up 3 cents to USD 80.89 a barrel.

Keeping prices from moving higher were concerns that potential increases in US interest rates could dampen growth in the top oil-consuming country.

The US Federal Reserve likely has one more interest rate rise in store to fight inflation, Atlanta Fed President Raphael Bostic said.

Prices got a lift from an industry report showing that US crude stocks fell by about 2.68 million barrels in the week ended April 14, according to market sources citing American Petroleum Institute figures on Tuesday.

Gasoline inventories fell by about 1.02 million barrels, while distillate stocks fell by about 1.9 million barrels, according to the sources, who spoke on condition of anonymity because they were not authorized to speak to media.

The official inventory report by the Energy Information Administration, the statistical arm of the US Department of Energy, is due at 1430 GMT on Wednesday.

Meanwhile, the economy of top crude oil importer China grew by a faster-than-expected 4.5% in the first quarter, while the country’s oil refinery throughput rose to record levels in March, data showed.

(Reporting by Laila Kearney in New York; Editing by Kenneth Maxwell)

Central banks on pause patrol

April 19 (Reuters) – Whisper it, but Wednesday could be a pretty quiet day in Asia after Wall Street closed little changed on Tuesday and with Malaysian trade and Australian leading indicators the only potential market-moving releases on the regional data calendar.

In fact, the main cue could come late in the session from Europe – UK and euro zone consumer price inflation figures for March could go a long way to molding Bank of England and European Central Bank rate expectations for the coming months.

Unlike a growing number of central banks in Asia who have pressed the pause button or are close to doing so, the BoE and ECB are both expected to continue raising rates in their battle to get inflation back down towards target.

The Fed is also close to the end of its cycle if you believe current market pricing, with one more quarter point hike expected next month. St Louis Fed president James Bullard is much more hawkish though, as he confirmed in an interview with Reuters.

Having marched up the hill last year, some policymakers in Asia are taking a breather. The central banks of Australia, Indonesia, India, Singapore, and South Korea have all paused, and the Philippine central bank governor signaled a pause in May.

Research from the Bank for International Settlements shows that the global tightening cycle since the start of last year is the most synchronized and strongest over the past 50 years, with more than 95% of central banks raising their policy rates.

Historically, this share rarely exceeded 50%.

One notable absentee from that band is the People’s Bank of China (PBOC). It cut rates in 2020, 2021 and 2022, and is expected to maintain a supportive stance this year even though the economy grew at a faster-than-expected pace in the first quarter.

Figures on Tuesday showed that GDP grew 4.5% in Jan-March year-on-year, the strongest in a year, faster than 2.9% the prior quarter, and comfortably above consensus 4.0% forecasts.

But the road ahead looks bumpy, and other indicators for March were mixed – retail sales smashed forecasts, but investment fell short.

The PBOC sets its one- and five-year loan prime rates on Thursday. They have been anchored at 3.65% and 4.30%, respectively, since last August.

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

– Malaysia trade (March)

– Australia composite leading indicator index (March)

– UK inflation, euro zone revised inflation (March)

(By Jamie McGeever)

S&P 500 ekes out gain as tech supports, J&J, Goldman disappoint

April 18 (Reuters) – The S&P 500 eked out a slim gain on Tuesday after strength in some big technology stocks countered disappointing quarterly reports from Johnson & Johnson and Goldman Sachs as first-quarter earnings season kicked into gear.

The Dow and Nasdaq ended with fractional declines on the day.

J&J (JNJ) shares fell 2.8% after the healthcare conglomerate cautioned investors over the lingering impact of inflation-driven costs this year. Goldman (GS) shares dropped 1.7% after the Wall Street firm’s profit fell 19% as deal making and bond trading slumped.

The early quarterly results from S&P 500 companies come as investors have been bracing for a gloomy reporting season, fearing the economy may be on the cusp of a downturn.

“What we are seeing here is the calm before the storm as far as earnings go,” said Brad McMillan, chief investment officer of Commonwealth Financial Network. “The market is just trying to see, do we have some upside here or not, and I think it is really going to come down to earnings over the next couple of weeks.”

The Dow Jones Industrial Average fell 10.55 points, or 0.03%, to 33,976.63, the S&P 500 gained 3.55 points, or 0.09%, to 4,154.87 and the Nasdaq Composite dropped 4.31 points, or 0.04%, to 12,153.41.

The CBOE Volatility index, also known as Wall Street’s fear gauge, fell to its lowest point since January 2022 during the session.

The heavyweight technology sector rose 0.4%, helped by a 2.5% increase in shares of Nvidia Corp (NVDA) after HSBC raised its recommendation on the graphics chipmaker to “buy” from “reduce.”

The healthcare sector dropped 0.7%, weighed down by J&J shares.

S&P 500 company earnings are expected to have declined 4.8% in the first quarter from a year earlier, according to Refinitiv IBES data as of Friday. Investors have zeroed in on bank results after the failure of Silicon Valley Bank last month set off concerns about potential systemic risks.

“While the big money center banks did very well as a whole, the focus I think is going to be on the regional banks because that is really where the center of the fallout was,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.

Shares of Netflix Inc (NFLX) fell in initial after-hours trading on Tuesday following the company’s quarterly report.

The S&P 500 is trading near two-month highs as investors await a deluge of earnings and assess the interest rate path ahead of an expected 25 basis point increase at the Federal Reserve’s meeting early next month.

St. Louis Federal Reserve President James Bullard told Reuters on Tuesday the US central bank should continue raising rates on the back of recent data showing persistent inflation. Separately, Atlanta Fed President Raphael Bostic said the Fed most likely has one more rate hike ahead.

In other earnings news, Lockheed Martin Corp’s (LMT) shares rose 2.4% after the US weapons maker’s first-quarter results surpassed Wall Street targets despite parts and labor shortages.

Advancing issues outnumbered decliners on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.29-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 66 new highs and 143 new lows.

About 9.8 billion shares changed hands in US exchanges, compared with the 10.7 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf in New York, Sruthi Shankar, Ankika Biswas and Vansh Agarwal in Bengaluru; Editing by Sriraj Kalluvila, Vinay Dwivedi and Richard Chang)

Dollar slips after upbeat China data; euro, pound rise

NEW YORK/LONDON, April 18 (Reuters) – The US dollar fell against most major currencies on Tuesday after better-than-forecast growth data from China, while strong pay figures from Britain supported the pound.

China’s gross domestic product (GDP) grew 4.5% year on year in the first three months of the year, data showed, beating analyst forecasts for a 4% expansion as the end of COVID-19 curbs lifted the world’s second-largest economy.

Separate data on March activity in China also showed retail sales growth quickened to 10.6%, beating expectations and hitting a near two-year high, while factory output growth also sped up but was just below expectations.

“The view on the dollar getting a bit weaker from here against the majors is predicated on a strong China,” said Thierry Wizman, Macquarie global FX & rates strategist in New York. “When you have the rest of the world doing well or better than US in terms of activity… that’s usually bad for the dollar.”

Also driving dollar weakness is that there is likely US disinflation at the moment, a reason the Federal Reserve is going to pause hiking interest rates, Wizman said.

“There’s a good chance that the euro and sterling continue to do well,” he said. “It starts with the disinflation story in the US, which is something that people are not really latching on to.”

The euro rose 0.37% to USD 1.0966 after two consecutive daily declines of more than 0.5%, while the dollar index, a measure of the greenback against six major currencies,
slid 0.372%. The index rose over 1% in the last two trading sessions.

China’s offshore yuan fell 0.02% at USD 6.8799 per dollar.

Britain’s pound jumped despite an unexpected rise in the unemployment rate in the three months to February as pay growth stayed higher than forecast, which could prompt the Bank of England to hike its interest rate again in May.

“The surprise this year has been how strong the Euro has been and Sterling, especially, given that we were coming out of the second half of last year with a multitude of crises in Europe,” Wizman said.

Sterling was last trading at USD 1.2433, up 0.48% on the day.

Futures traders are pricing in an 87.4% chance of the Fed raising rates by 25 basis points at its next meeting in May, with traders still expecting rate cuts towards the end of the year.

US single-family homebuilding increased for a second straight month in March, while permits for future construction surged, offering a bit of hope for the depressed housing market ahead of the busy spring selling season.

“The dollar can remain sensitive to the strength, or not, of the economic data as the Fed likely nears the end of their tightening cycle,” said Kristina Clifton, an economist at Commonwealth Bank of Australia (CBA).

The Australian dollar rose 0.34% versus the greenback at USD 0.672 after Reserve Bank of Australia (RBA) minutes showed the central bank considered an 11th-consecutive rate hike in April before deciding to pause.

The RBA, however, said it was ready to tighten further if inflation and demand failed to cool.

The yen strengthened 0.38% at 133.99 per dollar.

The Mexican peso lost 0.33% versus the dollar at 18.07.

(Reporting by Herbert Lash, additional reporting by Samuel Indyk in London and Ankur Banerjee in Singapore; Editing by Marguerita Choy and Mark Potter)

European shares rise on strong China recovery, US bank results on tap

April 18 (Reuters) – European shares rose on Tuesday, as investors awaited more US bank earnings to gauge the health of the sector, while China’s stronger-than-expected economic recovery boosted sentiment.

The pan-European STOXX 600 index edged up 0.2%, after the week started with a pullback from one-year highs, ending a five-day winning run.

Bank stocks rose 0.8%, recovering from losses across the sector on Monday.

China’s economy grew 4.5% year-on-year for the first quarter, eclipsing the expectations of most economists.

Markets will now watch out for reports from Goldman Sachs Group Inc and Bank of America Corp later in the day, while Morgan Stanley is due on Wednesday, after stellar results from the other big US banks last week.

UBS Group AG added 1.1% as the Swiss bank was making changes to its USD 6 billion share buyback program following its takeover of Credit Suisse Group.

EasyJet Plc rose 3.0% as the airline said it expects full-year profit to beat market forecasts, encouraged by summer bookings and strong demand over Easter despite French strikes.

Investors will also monitor Germany’s ZEW survey, due at 0900 GMT, expected to show that economic conditions in region’s largest economy improved in April from the previous month.

(Reporting by Shubham Batra in Bengaluru; Editing by Varun H K)

Japan’s 10-year JGB yield inches down; caution prevails ahead of BOJ meet

TOKYO, April 18 (Reuters) – Japan’s 10-year government bond yield inched lower on Tuesday after hitting over a month-high in the previous session, though caution prevailed ahead of the Bank of Japan’s (BOJ) policy meeting due next week.

The 10-year JGB yield fell 1 basis point (bp) to 0.470%, slipping from 0.480%, its highest level since March 10.

The 20-year JGB yield fell 1 basis point to 1.080%, while the 30-year JGB yield was flat at 1.335%. The 40-year JGB yield rose 0.5 bp to 1.525%.

“In the run-up to the BOJ meeting, it is hard to take positions,” said a fund manager at a domestic asset management firm.

Many market participants speculate the BOJ will tweak its yield curve control policy or abolish by June the latest, which could help yields to rise.

But investors’ ability to hedge against rising yields is limited because of the BOJ’s huge ownership in some lines of 10-year JGBs. The central bank raised costs for bond lending, which has also made it costly for investor short on JGBs.

The BOJ Governor Kazuo Ueda has consistently stressed the need to maintain the stimulus until a more durable rise in wages and inflation can be foreseen.

The two-year JGB yield was flat at -0.040% and the five-year yield was flat at 0.165%.

Benchmark 10-year JGB futures 2JGBv1 rose 0.09 yen to 147.44, with a trading volume of 13,627 lots.

(Reporting by Junko Fujita; Editing by Nivedita Bhattacharjee)

Japan’s Nikkei rises for eighth day on earnings optimism, weaker yen

TOKYO, April 18 (Reuters) – Japan’s Nikkei share average climbed for an eighth straight session on Tuesday, boosted by gains in banks on positive US data and as a weaker yen lifted exporters.

The Nikkei rose 0.51% to close at 28,658.83, nearing the highest level so far this year and marking its longest winning streak since March 2022. The broader Topix climbed 0.69% to 2,040.89.

Chiba Bank Ltd led gains on the Nikkei, jumping 3.38%, while lender Resona Holdings Inc added 2.08%. Mazda Motor Corp climbed 1.87% after the yen held a two-day decline to trade near its weakest in a month.

US shares rose on Monday after several banks kicked off first-quarter reports with strong results and a positive reading from the New York Fed’s barometer of manufacturing activity.

“Earnings expectations have been OK. The yen has settled down, at a level weaker than last year,” said Quiddity Advisors analyst Travis Lundy, who publishes on Smartkarma.

Comments by billionaire investor Warren Buffett last week that he was adding to investments in Japan, along with regulatory pressure on companies with low price-to-book (PBR) ratios, are adding to buying cues, he said.

“There are expectations that lower PBR stocks being ‘forced’ to become higher PBR stocks will mean cross-holding unwinds and buybacks,” he said.

The Nikkei is trading more than 3% over its 25-day moving average, which may be a sign of volatility ahead, Nomura Securities strategist Kazuo Kamitani said.

“It’s too early to say the market is overheating, but it could be a warning sign for high values,” he said.

There were 175 gainers on the Nikkei against 43 that fell. Inpex Corp dropped 2.13%, pacing declines among energy shares after oil prices LCOc1 slid in US. trading.

Sega Sammy Holdings Inc slipped 2.78% after announcing on Monday it planned to acquire Angry Birds game maker Rovio Entertainment Oyj for 706 million euros (USD 776 million).

(Reporting by Rocky Swift; Editing by Sonia Cheema and Subhranshu Sahu)

Gold rises on dollar pullback; clarity on Fed policy awaited

April 18 (Reuters) – Gold prices rose on Tuesday after two sessions of losses as the dollar eased, while investors sought more clarity on the U.S. Federal Reserve’s monetary policy stance.

Spot gold was up 0.3% at USD 2,000.09 per ounce, as of 0642 GMT. US gold futures rose 0.2% to USD 2,010.20.

“Given the sharp moves of late and little tier-1 economic data to guide this week, we should expect gold to consolidate in the USD 1,980-USD 2,020 range,” said OCBC FX strategist Christopher Wong.

The US dollar index was 0.2% lower and made bullion cheaper for overseas buyers.

Gold prices fell to nearly a two-week low on Monday after data showed manufacturing activity in New York state increased for the first time in five months, and confidence among U.S. single-family homebuilders improved for a fourth straight month in April. The data added to bets of an interest rate hike by the Fed at its May meeting.

The CME FedWatch tool shows that markets are pricing in a 87.4% chance of a 25 basis point hike in May.

Gold is considered a hedge against inflation and economic uncertainties, but higher interest rates dim the non-yielding bullion’s appeal.

Focus will now be on comments from Fed officials this week before they enter a blackout period from April 22, ahead of the central bank’s May 2-3 meeting.

“There is too much earnings, political, geopolitical and central bank risk on the table,” Edward Moya, senior market analyst at OANDA, said in a note, adding that only a couple of risks need to rattle markets to trigger safe haven flows towards gold with the metal’s path towards record territory still present.

Meanwhile, top bullion consumer China’s economic recovery gathered pace in the first quarter as the country’s gross domestic product grew 4.5% year-on-year, beating expectations.

Spot silver was flat at USD 25.10 per ounce, platinum edged up 0.1% to USD 1,049.05 and palladium gained 0.9% to USD 1,573.75.

(Reporting by Kavya Guduru in Bengaluru; editing by Uttaresh Venkateshwaran, Sohini Goswami and Sonia Cheema)

Wall Street ends higher; investors await earnings, Fed cues

April 17 (Reuters) – Major US stock indexes posted modest gains on Monday, helped by financial and industrial shares, while investors braced for a heavy week of corporate results and comments from Federal Reserve officials that could give more insight into the path of interest rates.

Markets are gauging the health of corporate profits and the economy after several banks kicked off first-quarter reports with strong results last week.

Meanwhile, the New York Fed said on Monday its barometer of manufacturing activity in New York State increased for the first time in five months in April, helping solidify the case for the US central bank to raise rates at its meeting next month.

“Markets are in a bit of a wait-and-see mode,” said Angelo Kourkafas, an investment strategist at Edward Jones. “We have a lot of corporate earnings ahead of us and the Fed rate decision in a couple of weeks.”

The Dow Jones Industrial Average rose 100.71 points, or 0.3%, to 33,987.18; the S&P 500 gained 13.68 points, or 0.33%, at 4,151.32; and the Nasdaq Composite .IXIC added 34.26 points, or 0.28%, at 12,157.72.

Among S&P 500 sectors, financials rose 1.1%, industrials .SPLRCI gained 0.8% while the lower-weighted real estate group increased 2.2%. Energy fell 1.3%.

Shares of Google parent Alphabet Inc (GOOGL) dropped 2.7%, weighing on the S&P 500 and Nasdaq, after a report that South Korea’s Samsung Electronics 005930.KS was considering replacing Google with Microsoft-owned (MSFT) Bing as the default search engine on its devices.

Investors are awaiting more reports from major US banks this week, including Goldman Sachs Group Inc (GS), Bank of America Corp (BAC) and Morgan Stanley (MS), after heavyweights including JP Morgan Chase & Co (JPM) reaped windfalls from higher interest payments last week.

Other companies due to report this week include Johnson & Johnson (JNJ), Tesla Inc (TSLA) and Netflix Inc (NFLX).

S&P 500 company earnings are expected to have declined 4.8% in the first quarter from the year-earlier period, according to Refinitiv IBES data.

“Corporate profits are emerging as the big driver of what the market is likely to do in the near term and investors want to see what those look like here before they place bets,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Investors are also seeking to gauge the outlooks from executives following a banking crisis last month that some expect could hasten an economic downturn.

US Treasury yields rose on Monday, with a slew of Fed speakers due later in the week. The US central bank is widely seen raising rates by 25 basis points to the 5%-5.25% range next month.

In company news, State Street Corp (STT) shares fell 9.2% after the financial services provider’s quarterly profit missed analysts’ estimates, hurt by a fall in fee income.

Advancing issues outnumbered decliners on the NYSE by a 1.42-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored advancers.

The S&P 500 posted 15 new 52-week highs and one new low; the Nasdaq Composite recorded 70 new highs and 158 new lows.

About 10 billion shares changed hands in US exchanges, compared with the 10.8 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf in New York, Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang)

Dollar gains after strong New York factory survey

NEW YORK/LONDON, April 17 (Reuters) – The dollar rose on Monday after New York state factory activity in April increased for the first time in five months, helping bolster expectations the Federal Reserve will raise interest rates in May.

Also bolstering the dollar was a report showing confidence among US single-family homebuilders improved for a fourth straight month in April.

The dollar index, a measures of the currency against six major peers, rose 0.413% after the Empire State Manufacturing index shot to 10.8 from -24.6 in March, far higher than expectations of -18 in a Reuters poll of 35 economists.

The new orders index rose 47 points to 25.1, while the shipments index added 37 points to 23.9, substantial increases after they had declined in recent months, the New York Fed said.

“It’s the best reading since last July with a big jump in orders and has taken the dollar higher on this,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

“The economy still looks like it’s growing above what the Fed says is its speed limit,” he said. “The market is under-estimating chances of another hike after May. Now the market says the Fed is going to cut later, but I think that the economy is showing itself to be resilient.”

Futures trading showed the probability of the Fed raising its lending rate to a range of 5.00%-5.25% when policymakers conclude a two-day meeting on May 3 rose to 88.7% from 78% on Friday, CME Group’s FedWatch Tool showed.

Fed funds futures also showed that expectations the Fed will start cutting rates later this year were pushed back to November from September, with a smaller cut now anticipated.

The outlook of US interest rates relative to the monetary policies and economies of other countries can boost or erode the dollar’s value.

The euro slid 0.66% to USD 1.0926 after hitting a one-year high of USD 1.108 on Friday. Traders expect further interest rate hikes from the European Central Bank as last month’s banking crisis fears have faded.

The yen weakened 0.45% at 134.40 per dollar as the Bank of Japan stuck to its easy-money policies, helping the greenback rise to its highest level since March 15.

“The dollar has bounced back but also we’ve had comments from the Bank of Japan indicating that there is no real reason for them to pull back from their ultra easy policy,” said Jane Foley, head of FX strategy at Rabobank.

New Bank of Japan Governor Kazuo Ueda last week made clear that the country would remain a “dovish” outlier by keeping interest rates at ultra-low levels for the time being.

Sterling was last trading at USD 1.2374, down 0.31% on the day.

The Mexican peso lost 0.11% versus the dollar to trade at 18.04, while the Canadian dollar fell 0.25% versus the greenback to 1.34 per dollar.

(Reporting by Herbert Lash, additional reporting by Harry Robertson in London; Editing by Muralikumar Anantharaman, Mark Potter and Andrea Ricci)

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