Oil slides to 7-month low on renewed demand fears, rate hike expectations

SINGAPORE, Sept 7 (Reuters) – Oil prices fell more than USD 1 on Wednesday to their lowest since before Russia invaded Ukraine as COVID-19 curbs in top crude importer China and expectations of more interest rate hikes spurred worries of a global economic recession and lower fuel demand.

Brent crude futures fell USD 1.08, or 1.2%, to USD 91.75 a barrel by 0644 GMT after slipping 3% in the previous session. The contract hit a session low of USD 91.20, the lowest since Feb. 18.

US West Texas Intermediate crude futures shed $1.20, or 1.4%, to USD 85.68. The benchmark fell to a session low of USD 85.08, the lowest since Jan. 26.

Oil pared strong gains made on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, decided to cut output by 100,000 barrels per day in October.

“Fading the OPEC+ production cut bounce wasn’t that hard to do given a laundry list of global economic challenges,” said Edward Moya, a senior market analyst at OANDA, in a note.

“Despite some better-than-expected US services data, global growth isn’t looking good at all and that is trouble for crude prices.”

A strong US dollar, aggressive rate hikes, a spike in bond yields, and a slowdown in China’s growth are factors pressuring oil prices, said Tina Teng, an analyst at CMC Markets.

“In short, oil futures markets are pricing in ‘stagflation’ in the global economy,” Teng added.

China’s stringent zero-COVID policy has kept cities such as Chengdu, with 21.2 million people, under lockdown, curbing mobility and oil demand in the world’s second-largest consumer.

The country’s exports and imports lost momentum in August with growth significantly missing forecasts. Crude oil imports fell 9.4% in August from a year earlier, customs data showed on Wednesday, as outages at state-run refineries and lower operations at independent plants amid weak margins capped buying.

Investors are also watching for further interest rate hikes to curb inflation. The European Central Bank is widely expected to lift rates sharply when it meets on Thursday. After the ECB’s meeting, a US Federal Reserve meeting will follow on Sept. 21.

The dollar hit a 24-year high against the yen on Wednesday after US economic data reinforced the view that the Federal Reserve will continue aggressive policy tightening.

Lending some support to prices, however, were expectations of tighter oil inventories in the United States.

US crude stockpiles are expected to have fallen for a fourth consecutive week, declining by an estimated 733,000 barrels in the week to Sept. 2, a preliminary Reuters poll showed on Tuesday.

Crude inventories in the US Strategic Petroleum Reserve (SPR) fell 7.5 million barrels in the week to Sept. 2 to 442.5 million barrels, their lowest since November 1984, according to data from the Department of Energy.

Weekly US inventory reports from the American Petroleum Institute and Energy Information Administration will be released on Wednesday and Thursday respectively, a day later than usual, because of a public holiday on Monday.

(Reporting by Isabel Kua in Singapore; Editing by Christian Schmollinger and Kim Coghill)

Gold prices fall as US rate-hike bets lift dollar, bond yields

Sept 7 (Reuters) – Gold prices fell on Wednesday, as the US dollar and Treasury yields jumped after upbeat economic data bolstered expectations that the Federal Reserve will maintain its stance to hike interest rates aggressively.

Spot gold fell 0.2% to USD 1,698.56 per ounce by 0743 GMT, having dropped to its lowest level since Sept. 1.

US gold futures dipped 0.3% to USD 1,708.60.

“ISM services reading reminded investors that there is still some underlying momentum for this economy and it really kind of opens the door for the Fed to be even more aggressive with fighting inflation,” said Edward Moya, senior analyst with OANDA.

“The move in Treasuries is rather concerning and it could really keep the pressure on gold.”

The US services industry picked up again in August for a second straight month amid stronger order growth and employment, survey by the Institute for Supply Management showed on Tuesday.

The data boosted the greenback, with the dollar index scaling a fresh 20-year peak, making gold more expensive for overseas buyers.

Benchmark US 10-year Treasury yields rose to their highest level since June 16.

The Fed is largely expected to deliver a 75 basis point rate increase on Sept. 21. The US central bank has raised its benchmark overnight interest rate by 225 basis points in total since March to fight soaring inflation.

Higher US interest rates and yields increase the opportunity cost of holding bullion, which is also used as a hedge against inflationary pressures.

“If gold breaches USD 1,680 level we can expect a move towards $1,620… We are expecting another low for gold and silver in the coming days,” said Vandana Bharti, assistant vice-president, commodity research at SMC Global Securities.

Indicative of sentiment, holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.21% to 971.05 tonnes on Tuesday from Friday.

Spot silver fell 0.2% to USD 18.02 per ounce, platinum rose 0.4% to USD 856.21 and palladium was 0.4% lower at USD 1,998.06.

(Reporting by Eileen Soreng and Arundhati Sarkar in Bengaluru; editing by Uttaresh.V and Jason Neely)

Stocks fall, yields rise as investors weigh rate hike expectations

NEW YORK, Sept 6 (Reuters) – Global stock markets were mostly lower on Tuesday while benchmark US Treasury yields jumped to their highest levels since June as a US services industry report underscored expectations the Federal Reserve will need to keep hiking interest rates.

The US dollar strengthened, while the Japanese yen hit a fresh 24-year low.

Wall Street’s three major indexes ended lower, led by losses in the Nasdaq, in the market’s first session after the US Labor Day holiday.

A survey from the Institute for Supply Management (ISM) showed the US services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.

The ISM non-manufacturing PMI edged up to a reading of 56.9 last month, beating economists’ expectations.

The European Central Bank is widely expected to lift rates sharply when it meets later this week. The next US Fed rate decision comes on Sept. 21.

The Fed is expected to raise the fed funds rate by another 75 basis points then, which would bring the range to between 3.0% and 3.25%. That is up from the zero to 0.25% band in March.

Benchmark 10-year note yields were last at 3.336%, the highest since June 16. They have risen from a four-month low of 2.516% on Aug. 2.

“You have all this fear that more rate increases are going to happen at the central bank level, inflation is not going to dissipate and then you’ve got the quantitative tightening that’s coming pretty rapidly,” said Tom di Galoma, managing director at Seaport Global Holdings in New York.

The Dow Jones Industrial Average fell 173.14 points, or 0.55%, to 31,145.3; the S&P 500 lost 16.07 points, or 0.41%, to 3,908; and the Nasdaq Composite dropped 85.96 points, or 0.74%, to 11,544.91.

The pan-European STOXX 600 index rose 0.24% and MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.47%.

The dollar index rose 0.6%, while the euro was sliding again, having failed to get back above parity against the dollar /FRX. The euro was last down 0.27% to USD 0.9899.

The Japanese yen weakened 1.53% versus the greenback to 142.80 per dollar. JPY=

Sterling, which has been one of the world’s weakest major currencies over the last month, edged up as Liz Truss’s installation as new UK prime minister fed expectations of a big energy relief package there.

Sterling was last trading at USD 1.1516, up 0.03% on the day.

In energy, oil prices fell as concerns resumed about the prospect of more rate hikes.

Brent crude settled at USD 92.83 a barrel, losing USD 2.91, or 3%. US West Texas Intermediate (WTI) fell from Monday’s trading to settle at USD 86.88 a barrel, up 1 cent from Friday’s close.

Spot gold dropped 0.6% to USD 1,700.37 an ounce.

(Additional reporting by Marc Jones in London and Karen Brettell in New York; Editing by Susan Fenton, Tomasz Janowski, Andrea Ricci and Jonathan Oatis)

US recap: ISM, Fed outlook drive EUR/USD to lowest since late-2002

Sept 6 (Reuters) – The dollar index gained 0.6%, led by a 1.7% surge in USD/JPY to new 24-year highs and helped by solid U.S. ISM services data in the wake last week’s strong jobs data, which argue for continued Fed hikes.

The unexpectedly strong ISM contrasted with worse-than-expected July German industrial orders, producing session highs for the dollar on the coattails of Treasury yields and the dollar to session highs.

Similar to Friday’s non-farm payrolls report, the ISM data suggested slightly less supply-side tightness, allowing dollar consolidation to set in.

EUR/USD was down 0.22% after recovering slightly from its low of 0.9864 on EBS, near December 2002’s lows at 0.9860 nL1N30D19C and still shaking off an MNI report suggesting that a 50bp hike by the ECB remained on the table at Thursday’s meeting even though the market expects 75bp.

Markets expect the Fed to hike on Sept. 21 by 75bp for a third meeting, lifting rates up to 3.25%, while a three-quarter-point ECB hike would merely increase its rate to 0.75%, even as euro zone inflation has overtaken U.S. price growth and Europe faces much greater energy insecurity.

Dutch natgas prices and Brent crude fell sharply after a short-lived surge higher on confirmation Russia stopped all Nord Stream 1 pipeline flows on Friday, and as western nations attempt to build price caps on Russia oil.

USD/JPY surged 1.65% from 140.25 to 143.085 on EBS, extending a run driven by accommodative BOJ policy and Japan’s dependence on energy imports at a time of soaring prices.

There’s scant Japanese core inflation or wage pressure, so rising Treasury yields widen the gap over JGB yields out to the 10-year tenor, which the BOJ’s yield curve control policy caps at 25bp.

USD/JPY’s rally to new 24-year highs has it near the next technical targets at 143.97 nL1N30D1DD, and it could eventually reach 1998’s 147.63 peak and nearby technical targets.

Sterling swung from early gains on hope the new UK PM will usher in major fiscal support to blunt the trauma of stratospheric energy prices, with the BoE obliged to hike rates even harder, to losses down to 1.1492 after the potential cost of energy cushioning and decent U.S data were factored in nL1N30D15J.

The RBA’s hawkish 50bp rate hike Tuesday nL1N30D087 failed to stop AUD/USD’s 1% fall.

And China’s 2% RRR cut couldn’t keep USD/CNH from rising 0.3% to new 2-year highs.

Wednesday features U.S. trade data, the Fed’s beige book and Fed speakers, while Chair Jerome Powell is scheduled to speak on Thursday, after the ECB meeting.

(Editing by Burton Frierson Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold slips as dollar resumes rally, bond yields rise

Sept 6 (Reuters) – Gold prices on Tuesday slipped from a one-week high hit earlier in the session as the dollar and Treasury yields climbed amid expectations for aggressive monetary policy tightening by major central banks.

Spot gold fell 0.6% to USD 1,699.70 per ounce by 3:02 p.m. ET (1902 GMT), after hitting its highest since Aug. 30 at USD 1,726.49 in the Asia trading session.

US gold futures settled down 0.6% at USD 1,712.9.

Focus this week will be on the European Central Bank meeting on Thursday, where it is expected to deliver a 75-basis-point interest rate hike.

Fed fund futures are now pricing in a 73% chance of a 75-basis-point rate hike by the US Federal Reserve at its Sept. 20-21 policy meeting.

“Few forces pressuring the market, all of which have to do with the outlook for monetary policy across the world over the next year,” said Daniel Ghali, commodity strategist at TD Securities.

The dollar jumped to a two-decade high after data showed the US services industry picked up again in August, making gold more expensive for overseas buyers.

Benchmark US Treasury yields rose to their highest levels since June on expectations that the Fed will keep hiking interest rates. Higher yields raise the opportunity cost of holding non-yielding gold.

“Gold has been dragged lower by the dollar and rising bond yields. In this environment with those two outside markets doing what they’re doing, it’s pretty hard for gold to sustain any kind of rally,” said Bob Haberkorn, senior market strategist at RJO Futures.

“We could see some bargain hunting that comes in here at these levels. That should keep a floor on this market. However, don’t see substantial upside move here that sometimes people are looking for in times of uncertainty.”

Spot silver fell 1.2% to USD 17.95 per ounce, platinum rose 0.5% to USD 850.21 while palladium dropped 2% to USD 1,992.95.

(Reporting by Brijesh Patel in Bengaluru; Editing by Vinay Dwivedi and Shounak Dasgupta)

Euro, sterling bounce on energy policy hopes, climb all over tumbling yen

SINGAPORE/LONDON, Sept 6 (Reuters) – The euro and sterling were on Tuesday trying to recover from multi-year lows against the dollar hit the day before, as policy makers tried to get a grip on the energy crisis, though the rate sensitive Japanese yen slipped to a new 24 year-low.

The pound and euro both gained over 0.6% with the pound reaching as high as USD 1.19609, and the euro USD 0.9987 up from its 20-year low hit on Monday.

“That governments are working on price caps, support for the consumer and really trying to get a grip on the energy crisis helps set a floor on those two pairs,” said Samy Chaar, chief economist Lombard Odier.

“Also, on the other side we have better news for the euro and cable from looking at the US dollar. Maybe there is a bit less inflation pressure in the US and so maybe we are at the start of the beginning of the Fed adjusting its strategy to stay at a restrictive level rather than hiking ever more.”

Britain’s incoming Prime Minister Liz Truss is considering a freeze on household energy bills to try to avert a winter cost-of-living crisis for millions of households, Reuters reported on Monday.

EU ministers will meet on Sept. 9 to discuss urgent bloc-wide measures to respond to a surge in gas and power prices that is hammering Europe’s industry and hiking household bills, after Russia curbed gas deliveries to the bloc.

Russia has halted gas flow along the Nord Stream 1 pipeline to Germany indefinitely, at first blaming an oil leak at a compressor station but since linking the stoppage to sanctions imposed by the west.

Gazprom’s deputy chief executive Vitaly Markelov told Reuters on Tuesday that the pipeline will not resume shipments until Siemens Energy repairs faulty equipment.

Elsewhere, the yen continued to tumble, with the dollar gaining 0.7% on the Japanese currency to 141.56 yen a new 24-year peak.

Moves in other crosses were even more stark. The euro climbed a stonking 1.2% to 141.2 yen and sterling gained 1.4% to 163.92 yen.

“After we saw the break of 140 (for dollar/yen) … the momentum definitely was skewed for yen weakness,” said Galvin Chia, an emerging markets strategist at NatWest Markets.

“So long as (yield curve control) is in play, and so long as interest rate divergence is in place, one of those side effects would be a weaker yen.”

The Bank of Japan is intervening in markets to keep yields on government bonds pinned down, which means the yen is sensitive to gains in yields elsewhere.

The US benchmark 10-year yield was last at 3.2576% up from Friday’s close of 3.191%. US markets were closed on Monday for a holiday.

The Aussie was little changed after the Reserve Bank of Australia raised its cash rate by 50 basis points and was last down a touch at USD 0.6782.

The RBA board signalled further rate hikes to come but noted that it is not on a pre-set path.

Elsewhere in Asia, Chinese authorities have sought to slow the yuan’s recent depreciation and late on Monday cut the foreign exchange reserve requirement ratio (RRR), freeing up dollars for banks to sell.

The move had only a limited effect on the exchange rate, with the yuan slipping to a fresh two-year low of 6.9590 in offshore trade.

(Reporting by Rae Wee, Editing by Shri Navaratnam, Sam Holmes and Ed Osmond)

Euro zone bonds yields higher again as rate hike unease lingers

LONDON, Sept 6 (Reuters) – Euro zone government bond yields rose on Tuesday, with sentiment staying bearish against a backdrop of uncomfortably high inflation that increases the prospects for another aggressive rate hike from the European Central Bank this week.

There was little in the way of key data on Tuesday, so the focus remains on the energy crisis and Thursday’s ECB meeting.

Money markets have priced in an almost 90% chance of a supersized 75 basis-point hike from policymakers trying to get on top of soaring inflation.

Markets also anticipate a further hike worth at least 50 bps at the ECB’s October meeting as investors position for front-loaded rate increases before the economic outlook deteriorates further due to the energy shock.

Bond yields jumped on Monday, led by a rise in the Italian 10-yield towards 4%, after Russia’s decision to keep its main gas pipeline to Germany shut exacerbated inflation and ECB rate-hike fears.

In early Tuesday trade, the Italian 10-year yield was 3 bps higher at 3.97%, while the German 10-year yield climbed 4 basis points to 1.60% holding near recent highs.

“There is definitely an expectation for a 75 bps rate hike from the ECB week and also in the UK, we have BoE (Bank of England) members reinforcing the need to fight inflation,” said Pooja Kumra, senior European rates strategist at TD Securities, explaining the selloff in bond markets.

The Bank of England should be prepared to raise rates rapidly to reduce the likelihood that it will need to squeeze the economy for an extended period to bring down inflation, BoE policymaker Catherine Mann said late on Monday.

“We also have supply, so there’s not much in favour of rates right now,” added Kumra.

Italy’s Treasury started marketing a new green government bond via a syndicate of banks on Tuesday, in a deal closely watched by the market against a backdrop of a looming snap election and new ECB tightening.

France, meanwhile, started the sale of a 20-year syndicated bond, according to a lead manager memo seen by Reuters.

US markets reopen after Monday’s public holiday, with a rise in US Treasury yields pushing higher in London trade.

(Reporting by Tommy Reggiori Wilkes; additional reporting by Dhara Ranasinghe and Yoruk Bahceli, editing by Ed Osmond)

Asian stocks flat as investors await more rate action

HONG KONG, Sept 6 (Reuters) – Asian shares largely wiped out morning gains on Tuesday afternoon, as investors remained cautious ahead of a European Central Bank meeting this week while also watching out for fallout from Russia’s gas cut.

US stocks are set to open higher on Tuesday after Monday’s Labor Day recess, with E-mini futures for the S&P 500 index ESc1 up 0.31%.

FTSE futures however were down 0.2%, indicating a choppy start in London. European stock indexes fell on Monday, the euro dropped below 99 cents for the first time in twenty years and European gas prices surged after Russia said its main gas supply pipeline to Europe would stay shut.

MSCI’s gauge of Asia-Pacific stocks outside Japan was up 0.02% at 0532 GMT. Japan’s Nikkei 225 was 0.03% higher.

China’s benchmark CSI300 Index rose 0.58%, after the country’s policymakers pledged on Monday to make renewed efforts to boost the COVID-hit economy. Hong Kong’s benchmark Hang Seng Index, however, slid 0.07%.

The yuan also rebounded from a more than two-year low against the US dollar, after the central bank said it would cut the foreign exchange reserves ratio to support the currency.

“Bulk commodities will be dependent on the impact of Chinese stimulus and the success of this will be reflected in the major miners,” said John Milroy, an investment adviser at Ord Minnett.

Australia’s S&P/ASX 200 fell 0.36%, after the Reserve Bank of Australia (RBA) expectedly increased the cash rate by 50 basis points.

The European Central Bank will meet on Thursday to discuss interest rate actions. A US Federal Reserve meeting will follow on Sept. 21.

“Soaring inflation will likely see the ECB deliver another outsized rate hike this Thursday,” said analysts from the Commonwealth Bank of Australia.

European energy ministers are set to discuss measures to curb power prices when they hold an emergency meeting on Friday.

“There is a feeling that the next 75 bp hike in September will see a deceleration afterwards,” said Sean Darby, Hong Kong-based global head of equity strategy for Jefferies.

Oil prices slipped on Tuesday, paring the previous session’s 3% gain, as a deal among members of the OPEC+ group to cut output by 100,000 barrels per day in October was seen as a largely symbolic move to stem the market’s recent slide.

Brent crude futures fell 0.7% to USD 95.07 a barrel, widening morning losses. US crude futures however were still up 2.12% at USD 88.71 a barrel.

Spot gold rose 0.49% to USD 1,718.2 an ounce.

The dollar index inched down 0.06% after touching a 20-year peak in the previous session.

(Reporting by Kane Wu in Hong Kong; Editing by Bradley Perrett)

Philippines rejects all bids for 2026 T-bond re-issue

MANILA, Sept 6 (Reuters) – The Philippines’ Bureau of the Treasury rejected all bids for its offer of 35 billion pesos ($615 million) worth of 2026 T-bonds at an auction on Tuesday.

* Tenders total 40.732 billion pesos

* Details on the BTr’s website www.treasury.gov.ph

($1 = 56.9300 Philippine pesos)

(Reporting by Enrico Dela Cruz; Editing by Kim Coghill)

Gold firms as dollar rally pauses, safe-haven demand rises

Sept 6 (Reuters) – Gold prices rose on Tuesday as a pause in the US dollar rally and energy crisis in Europe drove some investors towards the safe-haven bullion.

Spot goldrose 0.5% to USD 1,718.30 per ounce as of 648 GMT. Prices earlier rose nearly 1% to a one-week high.

US gold futures GCv1 gained 0.4% to USD 1,729.40.

The dollar index inched 0.1% lower but was not far from a 20-year peak scaled in the previous session.

“There’s been a bit of a safe-haven buying emanating out of this sort of burgeoning energy crisis in Europe,” said ANZ senior commodity strategist Daniel Hynes.

However, “it’s probably going to be a struggle to maintain any upward move considering the hawkish Fed (Federal Reserve) that we’ve got.”

An indefinite halt of the Nord Stream 1 gas pipeline, Europe’s major supply route, has intensified fears of a recession in the region, with consumers hurt by soaring energy prices.

A survey on Monday also showed the euro zone is almost certainly entering a recession with a deepening cost-of-living crisis and a gloomy outlook.

Investors now eye the European Central Bank’s rate action when it meets on Thursday, while a hefty interest rate hike is also expected from Fed’s Sept. 20-21 policy meet.

Even though gold is seen as a hedge against inflation and economic uncertainties, higher US interest rates increase the opportunity cost of holding the non-yielding bullion and boosts the dollar.

“What could come to its (gold’s) rescue is weaker macro data (the August jobs number helped) and lower inflation readings… But until that happens, rallies remain vulnerable,” Edward Meir, an analyst with ED&F Man Capital Markets said in a note.

“We see a USD 1,650-USD 1,775 trading range prevailing.”

Meanwhile, a government source told Reuters, India’s gold imports in August halved from a year ago.

Spot silver jumped 1.1% to USD 18.36 per ounce, platinum was 0.7% higher at USD 851.25 and palladium gained 1.6% to USD 2,065.96.

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)

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