Oil slips as US crude stockpiles rise

KUALA LUMPUR, Aug 10 (Reuters) – Oil prices eased on Wednesday after industry data showed US crude inventories unexpectedly rose last week, signaling a potential hiccup in demand, though concerns over supply kept losses in check.

Brent crude futures fell 23 cents, or 0.2%, to USD 96.08 a barrel at 0323 GMT.

US West Texas Intermediate crude futures declined 28 cents, or 0.3%, to USD 90.22 a barrel.

US crude stocks rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute figures.

Analysts polled by Reuters had forecast that crude inventories would rise by around 100,000 barrels.

Official government data is due on Wednesday at 10:30 a.m. EDT.

“Whatever crude demand destruction that occurs from a weakening global economy won’t be able to drag down oil prices much lower given how low the supply outlook remains,” said Edward Moya, senior market analyst at OANDA.

“Much attention is falling on Iran nuclear deal talks and that could be a wildcard in providing much needed supplies.”

The European Union on Monday put forward a “final” text to revive the 2015 Iran nuclear deal which would boost Iran’s crude exports. A senior EU official said he expected a final decision on the proposal within “very, very few weeks”.

Both oil benchmarks were volatile on Tuesday, both rising and falling by more than USD 1 a barrel during the session, but they settled slightly lower as investors weighed recessionary concerns with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine.

Ukraine halted oil flows on the Druzhba oil pipeline to parts of central Europe because Western sanctions had prevented a payment from Moscow for transit fees from going through.

Flows along the southern route of the Druzhba pipeline have been affected while the northern route serving Poland and Germany was uninterrupted.

The Czech Republic’s pipeline company MERO said it expected Russian oil supplies through the Druzhba pipeline to the Czech Republic to restart within several days.

Adding to supplies, the operator of the giant Kashagan oilfield in Kazakhstan has started gradually restoring output after an emergency shutdown last week caused by a gas leak. The Kashagan oilfield produces about 300,000 barrels per day.

Though concerns over a potential global recession have weighed on oil futures recently, US oil refiners and pipeline operators expect energy consumption to be strong for the second half of 2022, according to a Reuters review of company earnings calls.

(Reporting by Emily Chow in Kuala Lumpur and Stephanie Kelly in New York; Editing by Shri Navaratnam and Kim Coghill)

Gold eases from one-month peak as focus turns to US inflation

Aug 10 (Reuters) – Gold prices slipped on Wednesday from a more than one-month high due to an uptick in bond yields, while investors awaited US inflation data which is expected to influence the pace of Federal Reserve rate hikes.

Spot gold was down 0.3% at USD 1,789.29 per ounce, as of 0512 GMT, after hitting its highest since July 5 at USD 1,800.29 on Tuesday. US gold futures fell 0.3% at USD 1,806.10.

Benchmark US 10-year Treasury yields edged higher to 2.7990%, increasing the opportunity cost of holding non-interest-bearing gold.

“Clearly the focus is on US inflation data. Also, what’s really important is that where prices are currently trading with USD 1,800 being the very important level here,” said Ilya Spivak, a currency strategist at DailyFX.

“If the inflation number come in stronger than expected, following last week’s solid jobs report, we could see some of rate cut expectations for next year leave the forecast, which would be gold negative.”

Economists polled by Reuters expect US annual inflation to have eased to 8.7% last month from 9.1% in June. Core inflation is expected at 0.5% month-on-month. The data is due at 1230 GMT.

The Fed hiked rates by 75 basis points each in June and July to rein in soaring inflation. Although gold is seen as a hedge against inflation, higher US interest rates dull non-yielding bullion’s appeal.

Fed funds futures traders are now pricing for a 69.5% chance of another 75-basis-point rate increase at the US central bank’s next policy meeting in September.

“Central banks have warned that further rate hikes will be required to tame persistently high inflation. Investors expect July’s consumer price index to cool a bit,” ANZ analysts said in a note.

“However, strong wage growth and higher labour costs could undermine this.”

Spot silver fell 0.5% to USD 20.40 per ounce, platinum dipped 0.8% to USD 926.48, and palladium slipped 0.5% to USD 2,204.55.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Uttaresh.V)

Dollar edges higher as traders await US inflation report

NEW YORK, Aug 9 (Reuters) – The safe-haven dollar edged higher on Tuesday, erasing earlier losses as risk appetite dwindled ahead of key inflation figures that could offer clues on how aggressive the Federal Reserve will be in its expected interest rate hike in September.

The dollar index , which measures the currency’s value against a basket of peers, was up 0.047% at 106.38 at 3:15 p.m. Eastern time (1915 GMT).

The greenback had drifted lower in thin summer trading from the start of the session, but then reversed course as US stock markets slid on profit warnings, global inflationary concerns, and data that showed US worker productivity fell sharply in the second quarter.

“There’s a lot of global issues and we cannot ignore them and that puts a lot of downward pressure on global growth,” Juan Perez, director of trading at Monex USA said of the dollar’s safe haven appeal.

The big focus for traders is on Wednesday’s US Consumer Price Index report, which is expected to show that decades-high inflation eased in July following back-to-back 75-basis point hikes by the Fed in June and July.

But data on Friday showed that US employers hired far more workers than expected last month, with wages still rising at a strong clip, boosting bets for another mammoth rate hike by the Fed at its Sept. 20-21 meeting.

Money-market futures 0#FF: show traders see about a two-thirds chance of a 75 bps hike next month.

“We’ve been getting consistently hotter-than-expected inflation reports and if that happens again, the market is not prepared for that,” said Edward Moya, senior market analyst at Oanda. “If that happens, we’re testing parity again against the euro,” he said of the potential for more dollar strength.

The euro was up 0.2% at USD 1.0204, sterling dipped 0.12% to USD 1.2065. Versus the yen, the dollar was fell 0.14 at 135.195 yen.

Economists polled by Reuters see year-on-year headline inflation at 8.7% – relatively high, but below last month’s 9.1% figure. The Fed targets inflation at 2%.

Heightened expectations for aggressive near-term hikes, have pushed short-dated Treasury yields further above long-term peers.

The gap between two and 10-year Treasury yields, a reliable recession indicator, has grown to its largest in two decades. US/

“The US yield curve is inverted, suggesting recession down the line. But equity markets look as if they believe the Fed is going to stop soon and start cutting in 2023,” said Mizuho senior economist Colin Asher.

“I think tomorrow’s CPI data will suggest the Fed is not going to stop, which to me suggests weaker equity markets ahead which will limit any dip in the dollar in the next few months.”

The dollar’s safe haven status, though, makes the greenback’s reaction a little harder to predict, especially as growth and geopolitical worries swirl.

China extended military drills near Taiwan, and the self-ruled island’s foreign minister said China was using the drills launched in protest against US House Speaker Nancy Pelosi’s visit as an excuse to prepare for an invasion.

Elsewhere, Australia’s dollar, viewed as a barometer of market risk, dropped 0.41% to USD 0.6955 and New Zealand’s dollar slid 0.14% to USD 0.62765.

(Reporting by John McCrank in New York; additional reporting by Dhara Ranasinghe in London; Editing by Susan Fenton and Alistair Bell)

Dreaded ‘down rounds’ shave billions off startup valuations

Aug 9 (Reuters) – Several high-flying startups are being brought down to earth, as a recent carnage in global equity markets and lackluster demand for new listings force companies to raise funds at a substantial discount to their sky-high valuations.

Easy money from venture capital dealmaking is fast evaporating in an inflation-induced high interest-rate environment as many private investors take a hard look at funding startups, many of which could be years away from turning a profit.

Already high-profile companies such as payments firm Stripe, Swedish buy-now-pay-later firm Klarna and delivery startup Instacart have seen their valuations get knocked down by a peg or two this year.

In the United States alone, 81 US companies had to take a hair cut to their valuation during their funding rounds, in what venture capital firms call a ‘down round’, data from PitchBook showed.

Companies that are looking for seed money, or early-stage funding, are also seeing their valuations questioned.

“Without an open IPO market, and a much lower late-stage capital availability now than during the past year, opens up the probability of these companies taking down rounds,” said Kyle Stanford, senior venture capital analyst at PitchBook.

After a stellar run marked by record multi-billion dollar listings, the US IPO market has grounded to a halt, with only eight companies managing a successful floatation this year – a 13-year low, according to reports from PitchBook and the National Venture Capital Association (NVCA).

That gives little room for private investors, including venture capitalists firms, to plan their exits and cash in on their investments, prompting companies to opt for even lower valuations in order to attract fresh funds.

Instacart has cut its valuation by 40%, citing market turbulence due to red-hot inflation and fears of a looming recession.

Cryptocurrency lender BlockFi and payments giant Stripe have reportedly seen a drop of 67% and 28%, respectively, in their valuations.

In July, Klarna raised capital in a down round that cut its valuation by over 80% to USD 6.7 billion, a far cry from the USD 46 billion price tag the fintech attracted last year.

“It will be very difficult for startups to maintain their high-valuations in the current market, and a down round may be better to level-set with founders and investors the reality of the situation,” said Miguel Fernandez, co-founder and CEO of Capchase, a New York-based investor.

US companies have raised USD 4.3 billion in IPOs in the first seven months of the year, a fraction of the record USD 102 billion raised in the same period in 2021, according to data from Refinitiv.

Even if the IPO market stabilizes in 2023, startups, especially those that are struggling to break even or are known for massive cash burn, may have to face tough investor scrutiny on profits and valuations.

“As such, we expect to see a wave of IPO down rounds when they do come to market,” said Matthew Kennedy, senior strategist at IPO research firm Renaissance Capital.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Anil D’Silva)

Gold ticks up on softer dollar, spotlight on US inflation data

Aug 9 (Reuters) – Gold prices gained on Tuesday supported by a softer dollar, while market participants awaited US inflation data for cues on the Federal Reserve’s policy tightening path.

Spot gold rose 0.4% to USD 1,794.64 per ounce by 2:11 p.m. ET (1811 GMT), while US gold futures also settled up 0.4% at USD 1,812.3.

A weaker greenback makes gold less expensive for overseas buyers. The dollar index was down 0.1%.

Gold is currently benefiting from a softer dollar and the Russia-Ukraine situation, while the focus is on what happens with CPI on Wednesday, said Daniel Pavilonis, senior market strategist at RJO Futures.

The US consumer price report for July is due at 8:30 a.m. ET (1230 GMT) on Wednesday. A New York Federal Reserve survey showed on Monday that US consumers’ expectations for where inflation will be in a year and three years dropped sharply in July.

Lately, gold has been facing pressure as various central banks have been hiking interest rates to tame surging inflation. The precious metal is considered a hedge against inflation and political uncertainties, but higher rates make non-yielding bullion less attractive.

“A softer inflation number tomorrow, particularly on the core side, could be the catalyst (for gold prices) for a breakout to the upside, while a stronger number could put USD 1,800 out of reach for the foreseeable future,” OANDA analyst Craig Erlam said in a note.

Ahead of the inflation report, analysts polled by Reuters expect annual inflation to have eased to 8.7% from 9.1% in June.

Meanwhile, the Bank of England will probably have to raise interest rates further to tackle inflation pressures that are gaining a foothold in Britain’s economy, BoE Deputy Governor Dave Ramsden said.

Spot silver fell 0.8% to USD 20.49 per ounce, platinum XPT= was down 0.9% at USD 931.50 and palladium inched 0.2% lower to USD 2,226.19.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta)

Stocks stumble as caution reigns ahead of US inflation data

LONDON, Aug 9 (Reuters) – Shares slipped and the dollar hung off recent highs on Tuesday as investors eyed US inflation data due a day later that will likely yield clues to any further aggressive Federal Reserve rate hikes.

The stakes are high for the July US consumer prices report on Wednesday after an unexpectedly strong US jobs data last week boosted expectations of a sharp interest rate increase to tackle soaring inflation.

The broader Euro STOXX 600 fell 0.6%, after logging its best session in nearly two weeks on Monday, with German stocks down 0.7%. Miners and autos, among top gainers a day earlier, led declines on Tuesday.

Wall Street futures pointed to slim gains.

“The focus is on tomorrow’s US inflation numbers and whether or not they are likely to show any indication of a softening of inflationary pressures,” said Michael Hewson, chief market analyst at CMC Markets.

“Are we near the peak, and will tomorrow’s CPI numbers reflect that?”

On Monday, Wall Street closed mostly flat after blockbuster jobs data last week reinforced expectations the Federal Reserve will crack down on inflation, while a revenue warning from chipmaker Nvidia reminded investors of a slowing US economy.

Investors are now awaiting the consumer price data to gauge whether the Fed might ease slightly in its inflation fight and provide a better footing for the economy to grow.

The dollar also held just below its recent top, with traders wary of a surprise that could heap more upward pressure on interest rates. Against a basket of currencies, the dollar was down a fraction at 106.14.

The MSCI world equity index, which tracks shares in 47 countries, fell 0.1%.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, after giving up modest gains. Japan’s Nikkei .N225 slid 0.95%, hit by weak quarterly earnings by corporate heavyweights and lowered expectations for the video game market.

Caution abounded in bond markets, too, with euro zone bond yields steady. Germany’s 10-year yield, the benchmark for the bloc, was unchanged at 0.90%.

INFLATION EXPECTATIONS

There were some encouraging signs for the Fed on the prices front, with a New York Fed survey on Monday showing consumers’ inflation expectations fell sharply in July.

“That’ll be music to the Fed’s ears, since if that trend continues then it means that the Fed may not have to be so aggressive in hiking rates,” Deutsche Bank analysts wrote.

“One of their big fears is that higher inflation expectations will lead to a self-fulfilling prophecy of higher actual inflation.”

Soaring prices across the globe are likely to be top of the agenda at the Jackson Hole central banking symposium later this month.

The Bank of England (BoE) will probably have to raise interest rates further from their current 14-year high to tackle inflation pressures that are gaining a foothold in Britain’s economy, BoE Deputy Governor Dave Ramsden said.

Sterling was up 0.4% versus the dollar at USD 1.2128. It is down more than 10% this year versus the greenback.

Brent crude reversed earlier losses to rise USD 1 a barrel to USD 97.41 after reports Russia had suspended oil exports via the southern leg of the Druzhba pipeline.

Oil prices had earlier continued their recent retreat after suffering their biggest weekly drop since April 2020 on worries about stalling global demand as central banks tighten policy.

(Reporting by Tom Wilson in London Additional reporting by Julie Zhu in Hong Kong; Editing by Jan Harvey and Mark Potter)

European shares slip with US inflation data in focus

Aug 9 (Reuters) – European shares dipped on Tuesday as investors cautiously waited for key US inflation data later in the week for hints on the Federal Reserve’s next move on interest rate increases.

The pan-European STOXX 600 index fell 0.3%, retreating after logging its best session in nearly two weeks on Monday.

Declines on Tuesday were led by economically sensitive sectors such as miners and autos, among top gainers in the previous session.

The STOXX 600 has floundered this month after climbing 7% in July on worries over dour economic data, rising geopolitical tensions and fears that higher interest rates could tip the economy into a recession.

“Investor sentiment has improved with the strong rally in July. But for the rally to continue, economic and earnings outlooks will need to stabilize – which is not likely,” said Patrick Armstrong, chief investment officer at Plurimi Wealth LLP in London.

“Risk assets will become more dependent on economic data now that the oversold conditions have dissipated.”

Investors now await an inflation reading from the world’s biggest economy on Wednesday after a surprisingly strong employment data dented hopes that the Fed might go easy in its series of rate hikes aimed at tackling surging inflation.

Swiss duty-free retailer Dufry (DUFN) rose 2.9% to the top of the STOXX 600, as it said it saw strong sales momentum continue in July despite the soaring inflation.

Germany’s Continental (CONG) said it expects a rise in auto production in the second half of the year as supply chains stabilise and availability of semiconductors improves, but shares of the company slipped 0.8%.

Sanofi (SASY) slipped 1.2% to the bottom of France’s CAC 40 as the drugmaker paused its recruitment globally for late-stage studies of its multiple sclerosis drug.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila)

Dollar stuck ahead of key US inflation print

LONDON, Aug 9 (Reuters) – The dollar lurked below recent highs on Tuesday as traders awaited this week’s key US inflation print for any signs that price pressures are finally abating and that the need for further aggressive US interest rate hikes is easing.

Unexpectedly strong US jobs data on Friday had boosted the greenback, which posted its biggest daily percentage gain since mid-June against the yen that day as investors ramped up bets on a 75 basis point (bps) rate rise in September.

But the currency has pulled back since then as focus shifted to Wednesday’s July consumer price index (CPI).

The dollar index, which measures the currency’s value against a basket of other peers, was marginally lower at 106.23. It held below a more than one-week peak hit on Friday at 106.93.

Sterling was little changed at around USD 1.2055 and the euro was 0.2% firmer at USD 1.0213. The dollar was also flat around 134.90 yen.

“I’m a bit concerned about inflation tomorrow. The market has been wrong-footed all year and if we get a strong core inflation print that will nail expectations for a 75 bps rate hike in September,” said Kenneth Broux, a currency strategist at Societe Generale in London.

“It’s too soon to say it’s time to short the dollar as the Fed may have to do more.”

The US Federal Reserve hiked rates by a hefty 75 bps in June and July. Money-market futures show traders see about a two-thirds chance of a 75 bps hike next month and have started pushing expectations for rate cuts deeper into 2023.

Economists polled by Reuters see year-on-year headline inflation at 8.7% – incredibly high, but below last month’s 9.1% figure. The Fed targets inflation at 2%.

Last week’s strong labour data stoked expectations of aggressive near-term hikes, pushing short-dated Treasury yields further above long-term peers.

The gap between two and 10-year Treasury yields, a reliable recession indicator, has grown to its largest in two decades.

On Monday, a New York Fed survey showed consumers’ inflation expectations fell sharply in July, perhaps offering a sliver of hope that the CPI release brings relief.

“The market understandably is waiting for the numbers to then reprice, rather than moving in anticipation of them,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.

The dollar’s haven status, though, makes the greenback’s reaction a little harder to predict, especially as growth and geopolitical worries swirl.

Consumer confidence slid in Australia for a ninth straight month and the Australian and New Zealand dollars edged lower as London trade got under way.

(Reporting by Dhara Ranasinghe; Additional reporting by Tom Westbrook in Singapore, Editing by Alex Richardson)

Oil slips amid chance of Iran nuclear deal supply boost

LONDON, Aug 9 (Reuters) – Oil dropped over USD 1 a barrel on Tuesday, approaching a multi-month low hit last week, pressured by the latest progress in talks to revive the 2015 Iran nuclear accord, which would eventually allow Tehran to boost exports in a tight market.

The European Union on Monday put forward a “final” text to revive the deal. A senior EU official said a final decision on the proposal, which needs US and Iranian approval, was expected within “very, very few weeks”.

Brent crude 1fell USD 1.34, or 1.4%, to USD 95.31 a barrel at 0815 GMT. US West Texas Intermediate (WTI) crude dropped USD 1.25, or 1.4%, to USD 89.51.

“I’m not sure traders are particularly hopeful considering how long it’s taken to get to this point and with there still reportedly being points of contention,” said Craig Erlam of brokerage OANDA.

Talks have dragged on for months without a deal. Still, Iran’s crude exports, according to tanker trackers, are at least 1 million barrels per day below their rate in 2018 when then US President Donald Trump exited the nuclear agreement, so an agreement could allow a sizeable boost in supply.

Oil soared earlier in the year as Russia’s invasion of Ukraine added to supply concerns, with Brent hitting USD 139 in March, close to its all-time high, in March. Concern of economic slowdown have since weighed.

Brent fell as low as USD 92.78 on Friday, its lowest since February, as the Bank of England’s warning on Thursday of a drawn-out downturn intensified fears of slowing fuel use.

In another bearish sign, China’s crude oil imports in July fell 9.5% from a year earlier, customs data showed. China is the world’s largest crude importer.

Coming into view is the latest round of weekly US oil supply reports, firstly from the American Petroleum Institute at 2030 GMT. Analysts expect a small 400,000-barrel drop in crude inventories.

(Additional reporting by Sonali Paul and Emily Chow, Editing by Louise Heavens)

Gold subdued as investors focus on US inflation data

Aug 9 (Reuters) – Gold prices inched lower on Tuesday as investors awaited U.S. inflation data due later in the week that could offer more clarity on the Federal Reserve’s rate-hike plans to combat rising pricing pressures.

Spot gold was down 0.2% at $1,785.89 per ounce, as of 0710 GMT. U.S. gold futures eased 0.2% to $1,801.90.

On Monday, gold prices rose towards a one-month high scaled last week, as the dollar and Treasury yields pulled back after a rally driven by Friday’s blockbuster U.S. jobs report.

Markets are looking ahead to the U.S. consumer price report for July, which will be released on Wednesday. Analysts polled by Reuters expect annual inflation to have eased to 8.7% from 9.1% in June.

“Investors understand that both the U.S. and global economies are facing significant challenges, but the emphasis will be on the question for how long higher rates will be a weight on the market,” said Clifford Bennett, chief economist at ACY Securities.

“Any surprise softening in the U.S. inflation number could well be the catalyst for a tremendous surge in the gold price.”

Fed funds futures traders are now pricing for a 64.5% chance of another 75-basis-point rate hike at the U.S. central bank’s next policy meeting in September to combat soaring inflation.

Although gold is seen as a hedge against inflation, higher U.S. interest rates dull non-yielding bullion’s appeal.

U.S. consumers’ expectations for where inflation will be in a year and three years dropped sharply in July, a New York Federal Reserve survey showed on Monday, indicating U.S. central bankers are winning the fight.

Meanwhile, Taiwan’s foreign minister said that China was using the military drills it launched in protest against U.S. House Speaker Nancy Pelosi’s visit as an excuse to prepare for an invasion of the self-ruled island.

Spot silver was down 0.2% at $20.60 per ounce, platinum XPT= fell 0.3% to $936.76, and palladium slipped 1.8% to $2,190.13.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)

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