Oil falls on Chinese stimulus disappointment, supply outlook

HOUSTON – Oil prices fell by more than 2% on Monday after China’s latest stimulus plan disappointed investors seeking demand growth in the world’s second-biggest oil consumer, while supply looked set to rise in 2025.

Brent crude futures settled at USD 71.83 a barrel, down USD 2.04 or 2.76%. US West Texas Intermediate crude futures finished at USD 68.04 a barrel, down USD 2.34, or 3.32%.

Both benchmarks fell more than 2% on Friday.

Donald Trump’s US election victory may continue to affect the market, said Phil Flynn, senior analyst for the Price Futures Group.

“The election with Trump’s promise to ‘drill, baby, drill’ has taken away some incentive to go long,” Flynn said.

The US dollar index, a measure of its value relative to a basket of foreign currencies, slightly overshot the highs seen right after last week’s US presidential election, with markets still waiting for clarity about future US policy.

A stronger dollar makes commodities denominated in the US currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices.

In China, consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus to support the sputtering economy.

“Chinese inflation figures were again weak, with the market fearing deflation, particularly as the yearly change in the producer price index fell further into negative territory … Chinese economic momentum remains negative,” said Achilleas Georgolopoulos, a market analyst at brokerage XM.

Bank of America Securities said in a note on Monday that non-OPEC crude supply was expected to grow by 1.4 million barrels per day (bpd) in 2025 and 900,000 bpd in 2026.

“Meaningful non-OPEC growth next year and an unconvincing Chinese stimulus package likely mean inventories will swell even without OPEC+ increases,” Bank of America noted.

In late September, OPEC+ said it would boost supply in December by 180,000 bpd, but earlier this month an agreement was reached among the member and allied countries to postpone the supply expansion until January.

The US offshore production regulator said 25.7% of crude oil production and 13% natural gas output remains shut because of Hurricane Rafael, which by Monday broke apart and was only a remnant storm in the central Gulf of Mexico.

(Reporting by Erwin Seba in Houston; Additional reporting by Arunima Kumar in Bengaluru, Robert Harvey in London, and Florence Tan in Singapore; Editing by Louise Heavens, Paul Simao, Susan Fenton, Christina Fincher, and Cynthia Osterman)

Dow Jones Industrial Average notches record high close

The Dow Jones Industrial Average notched a record high close on Monday, lifted by bank stocks that benefited from optimism about Republican President-elect Donald Trump’s expected fiscal policies.

Tesla’s stock market value surged to USD 1.1 trillion, fueled by bets that automakers would benefit from CEO Elon Musk’s close ties to Trump. Several other stocks also added to gains they have made since Trump won the election, as traders expect them to benefit from his return to the White House.

The S&P 500 financial index rallied, with banks helping lift the Dow to its highest ever.

The small-cap Russell 2000 jumped to its highest since November 2021. Smaller companies are viewed as potential beneficiaries of Trump’s proposed tax cuts and expected looser regulations.

Microsoft, Amazon, and Meta Platforms each dipped.

The S&P 500 has rallied almost 4% since Trump’s victory last Tuesday, while the Nasdaq has gained almost 5%.

The S&P 500 information technology index and the PHLX chip index both retreated, with AI heavyweight Nvidia giving back recent gains.

“It’s been a wild four days since the election and the market is taking a breath,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “But the trend is moving higher. I would not be surprised if the Trump rally bleeds into a Santa Claus rally.”

According to preliminary data, the S&P 500 gained 8.04 points, or 0.13%, to end at 6,003.58 points, while the Nasdaq Composite gained 16.07 points, or 0.08%, to 19,302.85. The Dow Jones Industrial Average rose 316.26 points, or 0.72%, to 44,305.25.

Crypto stocks rallied as bitcoin soared to a record USD 87,000. Coinbase Global jumped and bitcoin miners MARA Holdings and Riot Platforms also rallied.

Investors are watching consumer price inflation data, due Wednesday, and a raft of other key data this week for signals on the economy and monetary policy outlook.

The US Federal Reserve cut interest rates by 25 basis points last week, and interest rate futures imply traders see a 65% chance of another 25 basis point cut at the central bank’s December meeting, according to CME FedWatch.

“With policymakers already so cautious about the risk of renewed price pressures, particularly amid the continued strength of the US economy, the Fed will need to tread a cautious path,” warned Seema Shah, chief global strategist at Principal Asset Management.

(Reporting by Lisa Pauline Mattackal and Purvi Agarwal in Bengaluru and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio)

Gold drops over 2% as dollar strengthens; investors await Fed policy cues

Gold prices slipped more than 2% on Monday, weighed down by the greenback’s continued rise and broader implications of Donald Trump’s victory in the US presidential election on fiscal policy and interest rate cuts.

Spot gold fell 2.5% to USD 2,617.96 per ounce, as of 1:54 p.m. ET (1854 GMT). US gold futures settled 2.9% lower at USD 2,617.70.

With the dollar index rising 0.5% to its highest level since early July, gold became less attractive to non-dollar buyers. Last week, the index surged more than 1.5% to 105.44 following the announcement of Trump’s victory.

“The market’s attention has focused to the second-order effect since the red wave,” said Daniel Ghali, commodity strategist at TD Securities.

“The likelihood of tariffs being imposed relatively early on into Trump’s presidency and the resulting strong demand for dollar that is creating. Stronger dollar is weighing on gold prices for the first time in months because it’s also associated with increasing odds that the Federal Reserve might delay its easing cycle.”

Bullion logged its worst week in over five months following Trump’s election last Tuesday to a second four-year term. His victory poses new uncertainties for the US central bank as it continues to consider interest rate cuts now that inflation is nearing the Fed’s 2% target.

The Fed cut the benchmark rate a quarter of a percentage point last week to a range between 4.5% and 4.75%.

Traders now see a 65% chance of a 25 basis-point Fed rate cut in December, versus around 80% chance before Trump’s victory.

Meanwhile, Fed officials, including Chair Jerome Powell, are scheduled to speak this week, while US consumer and producer price index data, weekly jobless claims, and retail sales figures are also due this week.

Spot silver fell 2.2% to USD 30.60 per ounce.

Despite efforts to use less silver and replace it with cheaper metals, the rapid increase in installations and the growing use of N-type cells are likely to keep silver demand strong in 2024, Heraeus analysts said in a note.

Platinum lost 0.7% to USD 961.55, and palladium dropped 0.9% to USD 979.96.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Vijay Kishore and Maju Samuel)

Hedge funds pile into banks, dump green energy post US election, Goldman Sachs says

LONDON – Hedge funds snapped up bank stocks at the quickest clip in three years while taking bets against renewable electricity producers last week, a Goldman Sachs note showed, as investors reacted to Donald Trump’s win in the US presidential election.

Financial stocks, such as banks and trading companies, were the most popular and most net bought sector on Goldman Sachs’ prime brokerage trading desk last week, the note from Friday and seen by Reuters on Monday showed.

While the note did not specify which region’s banks attracted the most attention, a second note also sent from Goldman Sachs’ prime brokerage the same day said US banks would benefit.

Financial stocks are expected to get a boost from a lighter regulatory touch which many believe will come with the new Trump term, the second note said.

Finance companies were also seen benefiting from expected tax reform, it added.

“There is scope for US Financials positioning to rise further,” the second Goldman note said, adding that current hedge fund positioning in this stock sector remained on the lower side, historically.

US bank stocks rose as much as 11.1% on Nov. 6, from the previous day’s close after the news of Trump’s election win.

Prime brokerage desks lend to and arrange trades for hedge funds.

Long stock bets, expecting rising prices, were led by banks as well as companies offering consumer finance, capital markets, and financial services, the first note said.

Bullish bets centered on US stocks but included equities in developing markets in Asia. In Europe, hedge funds exited short positions and added long ones. A short bet anticipates the value of an asset price will fall.

Utilities companies were net sold for the first time in four weeks, “driven almost entirely by short sales,” Goldman Sachs’ first note said.

Independent power and renewable electricity producers were the most sold, with hedge fund bets against US utilities companies numbered at two shorts for every long position, the bank said.

(Reporting by Nell Mackenzie; editing by Dhara Ranasinghe and Andrew Heavens)

Tesla options draw ‘euphoric’ trading as Trump win fires up stock

NEW YORK- Investors are piling into bullish options bets on Tesla TSLA.O shares, with the stock hitting its highest level in more than two years on bets that CEO Elon Musk’s close ties to President-elect Donald Trump may benefit the electric car maker.

Tesla’s shares were up about 8% to USD 346.12 on Monday and have rallied more than 35% since the Nov. 5 election. They now stand at their highest level since April 2022.

Tesla’s contracts were the most heavily traded options on individual stocks on Monday, with some 2.5 million contracts changing hands by noon – more than twice the usual pace, according to Trade Alert.

“It’s euphoric,” said Steve Sosnick, chief strategist at Interactive Brokers. “Tesla is by far the most active option at our shop.”

He noted a heavy concentration of call contracts at the USD 400 level, some 13% above the stock’s current price. Trade Alert data showed much of the trading concentrated in near-term contracts, with options expiring by Friday making up about 56% of the total trading volume.

Musk has supported Trump for months and contributed at least USD 119 million to a pro-Trump spending group, federal records show. The billionaire’s business ventures, which in addition to Tesla EVs range from SpaceX rockets to Neuralink brain chips, depend heavily on regulation, subsidies and policy, and analysts said they could benefit from a friendly administration.

On Monday, Wedbush Securities raised its target price on Tesla shares to USD 400 from USD 300, saying they see the Trump White House win as a “gamechanger for the autonomous and AI (artificial intelligence) story for Tesla and Musk over the coming years.”

Tesla options struck at USD 350 and USD 400, and set to expire by Friday, were the two most actively traded contracts with a combined volume of about 180,000 contracts.

The bullish options action was also likely helping to push the stock higher, as options dealers who sold upside contracts reacted to the soaring stock by buying more of the shares to cover their own risk.

“If enough people speculate on certain strikes, the stock can have a tendency to move toward those strikes,” Sosnick said.

The big jump in the stock price and massive options interest also means Tesla call options are growing pricey and could draw sellers, said Brent Kochuba, founder of financial insights company SpotGamma.

Should the stock fail to keep up with its recent moves, it might lead to a drop in the price of those calls, he said.

“That can pressure the stock down,” Kochuba said.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Leslie Adler)

US high-grade corporate bond spreads lowest since 1998 after Trump election

NEW YORK – US investment-grade corporate credit spreads hit their lowest since 1998 this week in a sign of growing investor confidence in the US economy and in line with a surge in other risk assets such as stocks after Republican Donald Trump’s election as US president.

The spread on the ICE BofA US Corporate Index, a commonly used benchmark for high-grade debt, declined to 78 basis points on Thursday, its lowest since 1998. Spreads were at 86 bps at the end of last month.

Meanwhile, spreads in the ICE BofA US High Yield Index, which tracks so-called junk bonds, dipped to 273 basis points on Thursday, their lowest since 2007, down from 288 bps at the end of October, LSEG data on Friday showed.

The moves come amid a sharp rally in equities markets after Trump won a second term as US president in Tuesday’s election. His policies are largely expected to benefit corporations due to lower taxes and looser regulation.

The S&P 500 briefly touched the psychologically significant 6,000 mark for the first time on Friday.

Investment-grade credit index spreads narrowed 8 basis points over the week, which was the largest weekly narrowing for the index since June 2023, Daniel Krieter, director of fixed income strategy at BMO Capital Markets, said in a note on Friday.

(Reporting by Davide Barbuscia and Alden Bentley; Editing by Will Dunham)

US long-dated yields dip as investors consolidate positions ahead of long weekend

NEW YORK – US Treasury yields fell on the long end of the curve on Friday as investors, ahead of a long weekend, paused selling government debt and consolidated positions to book profits after Republican Donald Trump’s victory in Tuesday’s presidential election.

The bond market is closed on Monday for Veterans Day.

The benchmark US 10-year yield posted its largest weekly drop since early September. It was last down 2.7 basis points (bps) at 4.316%.

US 30-year yields were down 5.7 bps at 4.486%. On the week, it slid 5.8 bps, its biggest weekly fall since early September as well.

Going into the election, bond investors sold Treasuries, pushing their yields to multi-month highs, as they priced in a Trump victory. His re-emergence suggests more government borrowings due to expected higher fiscal deficits under his administration with lower taxes and higher tariffs.

“It’s definitely very much like the classic ‘buy the rumor, sell the fact’ event,” said Brendan Murphy, head of fixed income, North America, at Insight Investment in Boston, which oversees USD 838.1 billion in assets.

“The market has done a very good job of anticipating the outcome and pricing them in. And then you get position-squaring in the aftermath of it, causing a near-term reversal,” Murphy added.

Treasury yields also fell after the cooler-than-expected one-year inflation print, as indicated in the University of Michigan’s consumer sentiment report for November, analysts said. Year-ahead inflation expectations of 2.6% in November ticked down from October’s reading of 2.7% and were the lowest since December 2020.

The Michigan inflation print has gained more attention from the Fed, with Chair Jerome Powell mentioning it in one of his press conferences.

The Consumer Sentiment Index, however, climbed to 73.0 this month, the highest since April, from 70.5 in October. The result exceeded the median estimate among economists polled by Reuters for a reading of 71.0. I

The Fed on Thursday gave markets a chance to take some profits, when it lowered its fed funds target rate to 4.50%-4.75%, as expected. With inflation coming down and signs of labor market loosening, the central bank eased by an aggressive 50 basis points in September after holding rates at 5.25-5.50% since July 2023.

The US rate futures market has priced in an 85% chance of a another 25-bp easing at next month’s policy meeting, and a 15% probability of a pause in cuts, according to LSEG calculations. For next year, rate futures have implied just two rate reductions of 25 bps each.

Policymakers are preparing for what could be a more complex economic picture after Trump takes office in January.

Kim Rupert, managing director of fixed income at Action Economics in San Francisco, said Treasuries were digesting recent movements and trying to find a course from here.

“The Trump trade has been a big factor,” Rupert said. “The Fed really didn’t tell us much yesterday (Thursday). It wasn’t expected to. So now we’re going to have to hang around these levels to try to figure out the path ahead, but that’s going to require more data.”

Next week, markets will be watching for the October Consumer Price Index report on Wednesday, followed by producer prices on Thursday.

In other maturities, the two-year yield, which typically tracks interest rate expectations, rose 3.8 bps to 4.258%.

The yield curve, meanwhile, flattened on Friday, with the gap between two-year and 10-year yields hitting 4.2 bps late Friday, the lowest in a month. It was at 19.5 bps on Nov. 6, a day after the election.

Investors have been putting on trades that steepen the yield curve, a popular bet when the Fed is in the midst of an easing cycle. Friday’s sharp decline in the curve suggested a bit of position-squaring as well in line with other parts of the bond market.

(Reporting by Alden Bentley and Gertrude Chavez-Dreyfuss; Editing by Frances Kerry and Will Dunham)

After Trump win, investors savor ‘red sweep’ possibilities

NEW YORK – Investors are increasingly factoring what potential Republican control of government could mean for stocks, bonds, and currencies, even as the first feverish market reactions to Donald Trump’s presidential victory begin to settle.

A so-called red sweep scenario, in which Republicans control the White House and both houses of Congress, could clear the way for Trump to implement his economic proposals with a freer hand. Many, such as tax cuts, are seen as being growth-friendly but also driving up inflation risks.

Republicans held a narrow edge on Friday as election officials tallied the final votes that will determine control of the US House of Representatives, though Democrats succeeded in flipping a pair of New York state seats.

“With many of Trump’s policies geared to support stocks, particularly small caps, markets are likely to respond well to a red sweep,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

Expectations that such policies will be pushed through under Trump to some degree have helped lift corners of the stock market higher, boost the dollar, and weigh on Treasuries, as investors recalibrated their portfolios for stronger growth, looser regulations, and the possibility that inflation worries could keep the Federal Reserve from cutting rates too deeply next year.

One notable move has been in small cap stocks, with the Russell 2000 index up about 8% this week.

While some of those moves have lost steam in recent days, investors are still gaming out how Trump’s policies could affect markets and the economy over the long-term, especially under a red-sweep scenario.

Trump has promised to slash federal regulations that he says limit job creation. He has pledged to keep in place a 2017 tax cut he signed while in office, and Trump’s economic team has discussed a further round of individual and corporate tax cuts beyond those enacted in his first term.

Strategists at Goldman Sachs said their earnings per share estimates for the S&P 500 would rise by about 4% if Trump reduced the statutory domestic corporate tax from 21% to 15%.

Deutsche Bank analysts said they would upgrade their 2025 US growth forecast to 2.5-2.75% from 2.2% in the event of a red sweep. However, they expect to reduce their 2026 growth forecast in anticipation of economic uncertainty associated with an intensifying trade war.

Republican control of government could also provide a longer-term boost for the dollar, which has already risen to its highest level in four months against a basket of its peers following a post-election surge this week.

Strategists at JP Morgan see the euro sinking to USD 1.00-USD 1.02, down about 6% from its current level, if there is a sweep, as opposed to a drop to USD 1.05 in the case of a split Congress.

History may also be on the side of continued strong stock performance if a red sweep comes to pass.

The S&P 500 rose an average of 9.1% in years of such unified control against a 6.7% average annual return for divided government, in which the opposing party holds at least one of the Senate or House of Representatives, according to an analysis by Evercore ISI of data since 1928. The index is up 26% this year and hit 6,000 points for the first time ever on Friday.

To be sure, even with the Republican Congressional majority, some investors believe the narrow margins faced in both the House and Senate may still present challenges to implementing fiscal and regulatory changes.

“We may not get everything that has been promised. The discussion on the campaign trail is always very different than the legislation that gets passed,” said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest. “I think a lot of that is already in the pricing for stocks today.”

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Chuck Mikolajczak; Editing by Ira Iosebashvili and Marguerita Choy)

Southeast Asia prepares for factories fleeing Trump tariffs on China

BANGKOK – Companies have been moving factories from China to Southeast Asia, anticipating Donald Trump would slap high tariffs on Beijing if he regained the White House, a move set to accelerate with his election win, industrial park developers in the region say.

Trump, who won a resounding victory on Tuesday, has threatened 60% tariffs on goods coming into the US from China, much higher than the levies of 7.5% to 25% he imposed in his first term, a major risk for the world’s second-largest economy.

Southeast Asia – with auto and electronics factories from Thailand to Vietnam and Malaysia – will likely benefit at China’s expense, said two executives, two business groups, a lawyer and an analyst in the region.

Developers of industrial parks are adding Chinese speakers and preparing land tracts for factories, a sign of how Trump, who takes office in January, could reshuffle global supply chains.

As Trump geared up his campaign to retake the presidency earlier this year, calls from Chinese customers flooded WHA Group, one of Thailand’s largest industrial estate developers, said CEO Jareeporn Jarukornsakul.

“There was (already) a relocation to Southeast Asia, but this round is going to be more intense,” she said, referring to Trump’s 2017-2021 first term.

WHA is expanding its sales force and adding Chinese speakers to teams overseeing maintenance and administration of industrial parks spanning more than 12,000 hectares (30,000 acres) in Thailand and Vietnam, Jareeporn said.

Of the 90 factories that have opened this year in industrial parks run across Southeast Asia by Thailand’s Amata Corp, some two-thirds have been companies relocating facilities from China, said Vikrom Kromadit, the developer’s founder and chairman.

TRUMP ‘NEEDS SOME FRIENDS’

Trump will be a “big punch” to China, potentially doubling the number of firms looking to move from there into Amata’s 150 square km (60 square miles) of industrial estates in four Southeast Asian countries, Vikrom said.

Construction begins this month on an Amata industrial park in Laos, where China has built a high-speed rail line connecting Kunming in southwestern China to the Laotian capital Vientiane, he said.

Thailand, a regional automobile manufacturing hub, has drawn over USD 1.4 billion in investment from Chinese automakers into its fast-expanding electric vehicle industry.

“We want a lot of investment from China so we can sell to America,” said Thai Commerce Minister Pichai Naripthaphan.

“I believe this will happen,” told reporters on Thursday. “The Americans love us, the Chinese love us – we don’t have to choose sides.”

Malaysia, hoping to draw over USD 100 billion in new investments to its semiconductor sector, could benefit from a realignment of supply chains, said leaders of two business groups.

“This shift could provide Malaysia with new opportunities to capture a larger share of exports to the United States and other key markets,” said Soh Thian Lai, president of the Federation of Malaysian Manufacturers.

But risks persist, particularly with some indications that Trump may consider tariffs on imports from countries across the region, said Leif Schneider, head of international law firm Luther in Vietnam.

Vietnam, a major exporter to the US with USD 90 billion bilateral trade surplus between January and September, is bracing for volatility under Trump.

“Trump will have to choose – you can be anti-China, but you’ll need to have some friends in Southeast Asia,” said WHA’s Jareeporn. “He is a negotiator, so we will negotiate.”

(Reporting by Devjyot Ghoshal and Chayut Setboonsarng in BANGKOK, Additional reporting by Ashley Tang in KUALA LUMPUR, and Francesco Guarascio and Phuong Nguyen in HANOI)

US recap: Dollar slides as Fed delivers rate cut

The dollar fell on Thursday, holding on to broad earlier losses after the Fed cut rates by 25 basis points to 4.50-4.75%, as expected, while noting that inflation is somewhat elevated.

Federal Reserve Chair Jerome Powell said risks were balanced and will adjust policy meeting by meeting. He added that some downside risks to the economy have diminished, that recent data has been strong and that policy is still restrictive.

The dollar index pulled back from a four-month high and erased half of Wednesday’s post-election surge as long positions were trimmed before the Fed decision.

CNN reported that US President-elect Donald Trump is likely to allow Powell to serve the remainder of his term as the Federal Reserve chair, citing a senior adviser to Trump.

Other central bank policy moves on Thursday were as expected. The Bank of England cut 25bps to 4.75%, Sweden’s Riksbank cut 50bsp to 2.75% and Norway Norges bank left rates unchanged at 4.5%.

The pound gained after BoE Governor Andrew Bailey said future reductions were likely to be gradual as it predicted the British government’s first budget would lead to higher inflation and economic growth.

China will continue to implement a supportive monetary policy, according to the central bank.

The euro rose though lagged most other peers amid concerns about regional growth, security, and a fractured political coalition in Germany.

The European economy would suffer if Donald Trump enacted his pledges on tariffs and trade barriers, and this could impact European Central Bank policy, Greek Central Bank chief Yannis Stournaras said.

German opposition parties and business groups on Thursday urged Chancellor Olaf Scholz to trigger a new election quickly after his rocky three-way coalition collapsed.

The Aussie dollar led G10 gainers amid surging metal prices.

Treasury yields were down 4 to 7 basis points across tenors. The 2s-10s curve fell about 4 basis points to +12.0bp.

The S&P 500 rose 0.60% amid gains in tech and consumer shares.

WTI oil was up 0.9% as President-elect Trump’s policies are weighed and helped by a favorable risk tone.

Gold rose 1.27% amid share gains and a weaker dollar.

Copper soared 4.47% as investors took another look at the impact of Donald Trump’s US election victory and hoped for more stimulus from China.

Heading toward the close: EUR/USD +0.67%, USD/JPY -1.18%, GBP/USD +0.83%, AUD/USD +1.69%, DXY -0.73%, EUR/JPY -0.47%, GBP/JPY -0.32%, AUD/JPY +0.50%.

(Editing by Burton Frierson; reporting by Robert Fullem)

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