Oil prices settle steady on higher US demand, weaker dollar

BENGALURU, Jan 31 (Reuters) – Oil prices closed steady on Tuesday after recovering from a near three-week low, drawing support from a weakening dollar and on data showing that demand for US crude and petroleum products rose in November.

The more active second-month Brent contract settled at USD 85.46 a barrel, up 96 cents or 1%, while the US West Texas Intermediate crude futures settled at USD 78.87 a barrel, up 97 cents or 1.3%.

More volatility on the day of expiration kept the front-month contract under pressure as traders closed positions, said Mizuho analyst Robert Yawger. The front-month contract settled at USD 84.49 a barrel, down 41 cents.

During the session, front-month Brent and WTI futures touched their lowest in almost three weeks as traders worried about prospects for further interest rate increases and abundant flows of Russian crude.

The Brent April futures and US front-month WTI gained after the US Energy Information Administration reported that demand for US crude and petroleum products rose 178,000 barrels per day (bpd) in November to 20.59 million bpd, the highest since August.

Crude benchmarks were also supported by a weaker US dollar, UBS analyst Giovanni Staunovo said. This makes dollar-denominated crude cheaper for foreign buyers.

The dollar index turned negative after US data showed labor costs increased at their slowest pace in a year in the fourth quarter as wage growth slowed, bolstering expectations of the Fed slowing its interest rate increases.

Investors expect the Fed to raise rates by 25 basis points on Wednesday, with increases of half a percentage point by the Bank of England and European Central Bank the following day.

An OPEC panel is likely to recommend keeping the group’s output policy unchanged when it meets on Wednesday, delegates told Reuters on Monday.

However, Tuesday’s weakness in front-month Brent prices may cause concern in the group, Yawger said. This widened the contango in the market, which occurs when futures prices show a commodity’s price is expected to be much higher in the future.

A Reuters survey shows 49 economists and analysts expect Brent crude to average more than USD 90 a barrel this year, the first upward revision since a poll in October, with gains likely driven by demand from top consumer China.

After settlement, market sources said the American Petroleum Institute reported that US crude oil and fuel inventories rose last week. The US Energy Information Administration will release official stockpiles data on Wednesday.

Preliminary numbers by the API indicated a 6.3 million-barrel increase in crude stocks, which if confirmed by the EIA would be much higher than the 400,000-barrel rise forecast by analysts in a Reuters poll.

(Reporting by Shariq Khan; Additional reporting by Rowena Edwards, Swati Verma, Trixie Yap; Editing by David Goodman, Will Dunham and David Gregorio)

Gold edges higher, on track for third straight monthly gain

Jan 31 (Reuters) – Gold prices edged up on Tuesday, en route to their third straight month of gains, as the dollar weakened, while market participants awaited the US Federal Reserve policy decision later this week amid hopes of a less-aggressive rate hike.

Spot gold rose 0.2% to USD 1,925.39 per ounce as of 0257 GMT and was headed for a monthly gain of more than 5%.

US gold futures were up 0.1% at USD 1,940.30.

The dollar index was down 0.1% and was set for a fourth straight monthly drop. A weaker greenback tends to make dollar-priced bullion an attractive bet.

Traders mostly expect the Fed to scale back rate hikes to 25 basis points (bps) at its two-day policy meeting that ends on Wednesday. The US central bank slowed its tightening pace to 50 bps in December after four straight 75-bp hikes.

“The market is trading in a narrow range ahead of the Fed meet. The gold market has already priced in a 25-bps hike, if the Fed strikes a dovish tone, then it will be positive for gold,” said Ajay Kedia, director at Kedia Commodities, Mumbai.

A low interest-rate environment decreases the opportunity cost of holding non-yielding bullion.

Top gold consumer China’s economic activity swung back to growth in January, official data showed, after a wave of COVID-19 infections passed through the country faster than expected following the dismantling of its pandemic controls.

“With the Chinese economy recovering, physical gold demand in China will improve. Also, there will be support for other precious metals, which are industrial in nature,” Kedia added.

Elsewhere, spot silver rose 0.4% to USD 23.67 per ounce, platinum gained 0.1% at USD 1,009.76, and palladium inched up 0.4% to USD 1,635.48. But all three metals were headed for a monthly decline.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips and Savio D’Souza)

Asian stocks slip as investors eye central bank hikes

Jan 31 (Reuters) – Asian shares traded cautiously and bonds nursed small losses on Tuesday as investors braced for an eventful week that includes central bank meetings, a slew of earnings reports and key US economic data.

Investors broadly expect the US Federal Reserve will raise interest rates by 25 basis points (bps) on Wednesday. Rate announcements are due on Thursday from both the Bank of England and the European Central Bank – and both are expected to hike rates by 50 bps.

Meanwhile, more than 100 S&P 500 companies including Apple (AAPL), Amazon.com (AMZN) and Google parent Alphabet (GOOGL) are expected to report results this week, which also will see the publication of closely watched US employment numbers.

“It’s a big week for both central banks and US equities, with … some of the household names due to make earnings announcements that will provide a micro overview of the macro economy,” ANZ analysts said in a note.

“We expect a 25 bps (US) rate rise and anticipate that the Fed will caution against an early pause in the tightening cycle … Risk appetite could be vulnerable to a correction.”

Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1%. US stock futures, the S&P 500 e-minis ESc1, rose 0.1%.

Japan’s Nikkei stock index .N225 slid 0.1% while Australian shares were up 0.2%.

China’s blue-chip CSI300 index .CSI300 remained flat in early trade. Hong Kong’s Hang Seng index opened up 0.4%.

On Monday, US stocks lost ground with the major indexes sinking, weighed down by declines in technology and other giant corporations’ shares.

The Dow Jones Industrial Average fell 0.8% to 33,717.09, the S&P 500 lost 1.3% to 4,017.77 and the Nasdaq Composite dropped 2.0% to 11,393.81.

Despite Monday’s declines, the S&P 500 remained on track to post its biggest January gain since 2019.

At the end of the Fed’s two-day policy meeting on Wednesday investors will be glued to Chair Jerome Powell’s news conference for clues on whether the rate-hiking cycle may be coming to a close, and for signs of how long rates could stay elevated.

Markets will also grapple with a flood of US economic data, culminating in Friday’s payrolls report for January. Investors see signs of weakening in the labour market as a key factor in bringing down high inflation.

US Treasury yields remained firm ahead of the central bank meetings and economic data, with the yield on benchmark 10-year Treasury notes standing at 3.5384% compared with its US close of 3.551% on Monday.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.2402% compared with a US close of 4.261%.

In currencies, the US dollar, which was poised for its fourth month of declines, was down at 102.19 against a basket of other major currencies.

The European single currency was up 0.1% on the day at USD 1.0852, having gained 1.4% in a month.

In the energy market, oil prices fell on Monday ahead of the expected hikes by central banks and signals of strong Russian exports.

US crude ticked up 0.2% to USD 78.02 a barrel while Brent crude settled at USD 84.9 per barrel early in the Asia session.

Gold was slightly higher. Spot gold was traded at USD 1922.91 per ounce.

(Editing by Kenneth Maxwell)

Tech, megacaps drag Wall St to lower close as big market week kicks off

NEW YORK, Jan 30 (Reuters) – Major U.S. stock indexes sank on Monday, weighed down by declines in technology and other megacap shares, as investors looked toward a major week of events including central bank meetings and a slew of earnings reports.

The heavyweight tech sector dropped 1.9% while energy shed 2.3%, the biggest drop among the S&P 500 sectors. Shares of Apple Inc (AAPL), Amazon.com Inc (AMZN) and Google parent Alphabet Inc (GOOGL), which are due to post results later this week, all slumped.

More than 100 S&P 500 companies are expected to report results this week, which also includes central bank meetings in the United States and Europe and closely watched U.S. employment data.

“The market has had a big run and the trading is a bit more cautious heading into a week which likely will be an inflection point for the overall market,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.

The Dow Jones Industrial Average fell 260.99 points, or 0.77%, to 33,717.09, the S&P 500 lost 52.79 points, or 1.30%, to 4,017.77 and the Nasdaq Composite dropped 227.90 points, or 1.96%, to 11,393.81.

U.S. Treasury yields rose, providing another pressure point for tech shares that have otherwise rebounded to start the year after a rough 2022.

Despite Monday’s declines, the S&P 500 remained on track to post its biggest January gain since 2019.

The U.S. central bank is seen hiking the Fed funds rate by 25 basis points at the end of its two-day policy meeting on Wednesday, following a 2022 in which the Fed aggressively boosted rates to control soaring inflation.

Fed Chair Jerome Powell’s news conference will be scrutinized for whether the rate-hiking cycle may be coming to a close and for signs of how long rates could stay elevated.

“It’s probably one of the most important meetings since the whole thing began,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “Unless the Fed extends that timeline meaningfully from what the market expects, which is that the Fed will be done in the next meeting or two, this may end up marking the pause, so to speak.”

Meanwhile, the European Central Bank is expected to deliver another large rate hike on Thursday.

Investors are also focused on earnings reports, amid concerns the economy may be facing a recession. With more than 140 companies having reported so far, S&P 500 earnings are expected to have fallen 3% in the fourth quarter compared with the prior-year period, according to Refinitiv IBES.

In company news, shares of Johnson & Johnson (JNJ) fell 3.7% after the healthcare giant’s strategy to use bankruptcy to resolve the multibillion-dollar litigation over claims its talc products cause cancer was rejected by a federal appeals court.

Declining issues outnumbered advancing ones on the NYSE by a 2.40-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.

The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq Composite recorded 67 new highs and 20 new lows.

About 10.6 billion shares changed hands in U.S. exchanges, compared with the 11.2 billion daily average over the last 20 sessions.

(Reporting by Lewis Krauskopf in New York, and Shreyashi Sanyal and Johann M Cherian in Bengaluru; Editing by Anil D’Silva and Matthew Lewis)

Yields tick higher as Fed hike, jobs report loom in week ahead

NEW YORK, Jan 30 (Reuters) – US Treasury yields edged higher on Monday at the start of a busy week of economic data and a widely anticipated interest rate hike by the Federal Reserve.

Investors have priced in a near-certainty that the Fed would raise benchmark rates by 25 basis points at the end of its meeting on Wednesday, the smallest increase since the central bank began its rate-hike cycle 10 months ago.

Economic data scheduled to be released this week, which includes readings on consumer confidence, construction spending, and unemployment, are expected to factor into whether the Fed will conclude its rate hikes in March.

“We anticipate the price action itself will be the most relevant takeaway from the session [today] as investors seek to setup for this week’s array of fundamental and policy developments,” said Ian Lyngen, head of US Rates Strategy at BMO Capital Markets.

The yield on 10-year Treasury notes was up 3.5 basis points to 3.553%, bringing it close to its highest level since Jan. 11.

The yield on the 30-year Treasury bond was up 2.8 basis points to 3.662%.

Rising concerns about the possibility of a default if Congress does not raise the debt ceiling helped propel greater demand for 6-month bills than for 3-month bills in separate auctions held Monday, said Thomas Simons, money market economist at Jefferies LLC.

“It is possible that the buyside is steering clear of the 3-month because of an expected paydown in bills that will be ongoing when this bill matures,” he said.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at -70.6 basis points.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 5 basis points at 4.257%.

January 30 Monday 1:21PM New York / 1821 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	4.5525	4.6665	-0.010
Six-month bills	4.63	4.8037	-0.035
Two-year note	99-193/256	4.2547	0.048
Three-year note	99-194/256	3.9621	0.054
Five-year note	99-48/256	3.6794	0.058
Seven-year note	99-60/256	3.6248	0.046
10-year note	104-176/256	3.5532	0.035
20-year bond	102-224/256	3.7918	0.027
30-year bond	106-24/256	3.662	0.028

DOLLAR SWAP SPREADS
	Last (bps)	Net Change (bps)
U.S. 2-year dollar swap spread	27.75	-0.25
U.S. 3-year dollar swap spread	14.75	0.50
U.S. 5-year dollar swap spread	5.75	-0.25
U.S. 10-year dollar swap spread	-2.00	0.25
U.S. 30-year dollar swap spread	-37.50	0.00

(Reporting by David Randall; Editing by Arun Koyyur and Andrea Ricci)

Japan’s Nikkei tracks Wall Street gains to end at over 1-month high

TOKYO, Jan 30 (Reuters) – Japan’s Nikkei index ended at a more than one-month high on Monday, tracking Wall Street gains in the last session, although the gains were capped by caution ahead of the U.S. Federal Reserve’s meeting and domestic corporate earnings announcements.

The Nikkei share average .N225 gained 0.19% to close at 27,433.40, its highest close since Dec. 16, after briefly slipping in the negative territory. The broader Topix .TOPX was marginally down 0.01% at 1,982.40.

The week is filled with market-moving events, so investors are being more cautious, said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

“I am unsure if this (upbeat) momentum will continue this week. Investors are cautious and could sell stocks to book profits ahead of the Fed meeting, U.S. employment data as well as domestic corporate results.”

Wall Street rose on Friday, marking the end of a rocky week in which economic data and corporate earnings guidance hinted at softening demand but also economic resiliency ahead of the U.S. Federal Open Market Committee this week. .N

A string of high profile earnings reports are on tap globally, notably from Apple Inc AAPL.O, Amazon.com AMZN.O, Alphabet Inc GOOGL.O and Meta Platforms META.O, among others.

Investors are also reacting to Japan’s corporate outlook, as the earnings season reaches its peak this week.

Fanuc 6954.T jumped 3.58% after the robot maker raised its annual operating profit outlook and announced a 5-for-1 stock split. nFWN34B2WO

Shin-Etsu Chemical 4063.T, up 5.08%, posted a fourth straight session of gains as the silicon wafter maker raised its annual operating profit outlook.

Japanese semiconductor equipment makers showed muted reaction to news that Washington had made progress towards a deal to curb exports of some advanced chip-making equipment to China with several governments.

Tokyo Electron 8035.T rose 0.68% and Advantest 6857.T lost 0.32%, while Nikon 7731.T inched up 0.16%.

(Reporting by Junko Fujita; editing by Uttaresh.V and Rashmi Aich)

((junko.fujita@thomsonreuters.com;))

Oil falls 2% as rate hikes loom and Russian flows stay strong

HOUSTON, Jan 30 (Reuters) – Oil prices dipped 2% on Monday, extending losses as looming increases to interest rates by major central banks weighed on demand and Russian exports remained strong.

Investors expect the US Federal Reserve to raise rates by 25 basis points on Wednesday, followed the day after by half-point increases by the Bank of England and European Central Bank. Any deviation from that script would be a shock.

“We’re seeing a ‘risk back off’ sentiment from the past two weeks’ rally on ideas that higher interest rates may slow demand more quickly,” said Dennis Kissler, senior vice president of trading at BOK Financial.

Brent futures for March delivery fell USD 1.76, or 2.03%, to USD 84.90 a barrel. US crude fell USD 1.78 to USD 77.90 per barrel, a decline of 2.23% – its steepest decline in nearly four weeks.

The market also came under pressure from indications of strong Russian supply despite a European Union ban and G7 price cap imposed over its invasion of Ukraine. Both oil benchmarks last week registered their first weekly loss in three.

Besides the central bank meetings, a gathering on Wednesday of key ministers from the OPEC+ group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia will also be in focus.

The OPEC+ panel meeting is unlikely to tweak output policy, three OPEC+ delegates told Reuters on Monday.

“The boat is not really in stormy seas right now. So why rock something that’s not moving about as it is,” said Ole Hansen, head of commodity strategy at Saxo Bank.

OPEC+ could “surprise markets with a small cut”, oil broker PVM said, adding it was unlikely to tweak policy.

Earlier on Monday, oil prices rose on tensions in the Middle East after a drone attack in Iran and hopes for higher Chinese demand.

While it is not clear yet what’s happening in Iran, any escalation there has the potential to disrupt crude flow, said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.

Hopes for a rise in Chinese demand have boosted oil in 2023. The world’s biggest crude importer pledged over the weekend to promote a consumption recovery that would support demand.

“Markets have priced-in rising demand mostly from China so traders are taking a wait and see attitude for clear signs of a demand pull,” Kissler added.

Traders also remained cautious on a hit to oil production and transportation in Texas after the state oil regulator advised pipeline operators to secure equipment and facilities after forecasts for severe weather over the next several days.

US crude oil inventories are expected to have dipped by about 1 million barrels in the week to Jan. 27, a preliminary Reuters poll showed, while gasoline inventories were expected to have gone up.

(Reporting by Alex Lawler; Additional reporting by Swati Verma, Florence Tan and Emily Chow; Editing by Emelia Sithole-Matarise, Bernadette Baum, Philippa Fletcher)

Gold steady, spotlight on Fed rate-hike meeting outcome

Jan 30 (Reuters) – Gold prices held steady in early Asian hours on Monday, with investors awaiting the US Federal Reserve’s rate-hike verdict due this week.

FUNDAMENTALS

* Spot gold was little changed at USD 1,928.32 per ounce, as of 0013 GMT. US gold futures were down 0.1% at USD 1,928.70.

* Traders are eyeing the Fed’s policy meeting scheduled on Jan. 31-Feb. 1. The market broadly expects the US central bank to scale back rate hikes to 25 basis points (bps) from 50 bps announced in December.

* Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

* On Friday, data showed that US consumer spending fell in December, while inflation continued to subside, which could give the Fed room to further slow the pace of its rate hikes.

* Physical gold dealers in India offered the steepest discounts in 10 months last week to lure customers, as a sharp rally in local prices squeezed demand in the world’s second-biggest bullion consumer.

* Spot silver gained 0.3% to USD 23.63 per ounce, platinum rose 0.2% to USD 1,014.08, and palladium climbed 0.8% to USD 1,631.64.

(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Uttaresh.V)

Philippines to offer value-added tax refund to foreign tourists by 2024

MANILA, Jan 29 (Reuters) – Philippines President Ferdinand Marcos has approved a value-added tax refund programme for foreign tourists by 2024 to attract more visitors, the Presidential Communications Office (PCO) said on Sunday.

The government collects a 12% VAT on goods consumed within the Southeast Asian country. The plan is to allow foreigners to get a VAT refund on items they are taking out of the Philippines, similar to what many other countries offer.

The measure is among the proposals a private sector advisory council presented to Marcos recently to boost the tourism industry, including improving airport infrastructure and operations and promoting tourism investment, the PCO said in a statement.

Marcos has also approved the launch of an online visa this year for Chinese, Indian, South Korean and Japanese tourists, it said.

The Philippines recorded 2.65 million international visitors last year, who brought in an estimated $3.68 billion in revenue, exceeding its 2022 target of 1.7 million tourists, according to the Department of Tourism.

Last year’s total comprised of 2.02 million foreign nationals and 628,445 Filipinos based abroad, which compared with only 163,879 tourists recorded in 2021 and was still significantly lower than the pre-pandemic annual level of 8.26 million.

The government aims to boost visitor arrivals this year to 4.8 million tourists.

(Reporting by Enrico Dela Cruz; Editing by Robert Birsel)

US Senate Republicans put Biden on notice over debt ceiling

WASHINGTON, Jan 27 (Reuters) – Two dozen US Senate Republicans warned Democratic President Joe Biden on Friday that they would not support increasing the federal debt ceiling without at least an equal amount of spending cuts to government programs or structural reform.

In a Jan. 27 letter, lawmakers supported legislation to require the US Treasury to prioritize payments for the public debt, Social Security, Medicare, veterans benefits and military pay, if the government were to breach the current USD 31.4 trillion borrowing limit in coming months.

The lawmakers represent nearly half of the Senate’s 49 Republicans. A debt ceiling increase would require support from nine Republicans, 48 Democrats and three independents who caucus with Democrats to meet the Senate’s 60-vote filibuster rule for most legislation.

The one-page letter surfaced a day after Biden characterized Republicans as a party of “chaos and catastrophe” while criticizing their refusal to approve a debt ceiling increase without spending cuts.

The White House, which has repeatedly voiced opposition to debt ceiling negotiations, was not immediately available for comment.

The federal government neared its congressionally imposed USD 31.4 trillion borrowing limit on Jan. 19, and the Treasury Department warned it may not be able to pay bills past early June, at which point the world’s biggest economy could be at risk for default.

“It is the policy of the Senate Republican conference that any increase in the debt ceiling must be accompanied by cuts in federal spending of an equal or greater amount as the debt ceiling increase, or meaningful structural reform,” said the letter led by staunch conservative Senator Mike Lee of Utah.

“We do not intend to vote for a debt-ceiling increase without structural reforms,” added the lawmakers, who included Senate Republican Conference Chairman John Barrasso.

Lawmakers often use the term structural reform to refer to changes in Social Security and Medicare, respectively the US retirement and healthcare programs for the elderly.

But the senators cited debt prioritization legislation as an acceptable reform. Such legislation, which hardline Republicans in the House of Representatives support, would direct the Treasury to make debt payments to avoid default and maintain benefits for the elderly, veterans, and the military. Other federal programs could shut down.

The policy language used in the letter was part of a Senate Republican rules package adopted during the last Congress, according to a party conference spokesperson.

Brinkmanship could panic investors, potentially sending markets slumping and shaking the global economy. In 2011, a protracted debt-ceiling battle led to a downgrading of US creditworthiness and years of forced domestic and military spending cuts.

On Tuesday, Senate Republican leader Mitch McConnell said any solution to the debt ceiling debate would have to come from talks between Biden and House of Representatives Speaker Kevin McCarthy. Republicans control the House by a narrow margin, while the Senate is led by Democrats.

Biden and McCarthy have agreed to meet but nothing has been scheduled.

It was not clear whether the Senate Republicans notified McCarthy about their letter ahead of time. Neither McCarthy’s office nor Lee’s was immediately available for comment.

(Reporting by David Morgan; Editing by Josie Kao)

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