US stocks gain, Treasury yields hit multi-year highs ahead of expected Fed rate hike: Reuters

Update US stocks gain, Treasury yields hit multi-year highs ahead of expected Fed rate hike: Reuters
About 20 minutes into trading, the Dow Jones Industrial Average was flat (Shutterstock)
Short Url
Updated 02 May 2022

US stocks gain, Treasury yields hit multi-year highs ahead of expected Fed rate hike: Reuters

US stocks gain, Treasury yields hit multi-year highs ahead of expected Fed rate hike: Reuters

NEW YORK: Wall Street recovered some lost ground on Monday and benchmark US Treasury yields hit a 3-1/2-year high at the start of an eventful week of corporate earnings, economic data, and an expected interest rate hike from the US Federal Reserve, according to Reuters.

All three major US stock indexes were last modestly green as the 10-year Treasury yield crept closer to the 3 percent mark and touched its highest level since December 2018.

US stocks’ modest rebound comes in the wake of the S&P 500’s fourth straight weekly decline which capped its worst January-April percentage drop since 1932, as market participants girded their loins for an expected 50-basis-point interest rate rise at the conclusion of the Fed’s two-day monetary policy meeting on Wednesday.

“There are several crosswinds right now,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “The first is the Fed, the second is the war (in Ukraine) and the third is inflation.”

“Most economies are headed for a hard landing – a recession — and that’s what the market is discounting now,” Cardillo added.

A report from the Institute for Supply Management showed US factory activity losing steam, its purchasing managers’ index coming in well below consensus.

This followed a PMI report from China which showed factory activity contracting for the second straight month as widespread COVID-19 shutdowns disrupted production and supply chains.

The Dow Jones Industrial Average rose 188.63 points, or 0.57 percent, to 33,165.84, the S&P 500 gained 31.09 points, or 0.75 percent, to 4,163.02 and the Nasdaq Composite added 153.37 points, or 1.24 percent, to 12,488.01.

The glum China factory data dragged European stocks sharply lower, although the STOXX 600 had partly recovered from a sudden 3 percent plunge earlier in the session, what some brokers called a “flash crash” caused by an erroneous trade.

The pan-European STOXX 600 index lost 1.05 percent and MSCI’s gauge of stocks across the globe gained 0.18 percent.

Emerging market stocks lost 0.40 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.46 percent lower, while Japan’s Nikkei lost 0.11 percent.

US Treasury yields gained ground, with long-dated debt hitting multi-year highs.

Benchmark 10-year notes last fell 24/32 in price to yield 2.9768 percent, from 2.885 percent late on Friday.

The 30-year bond last fell 52/32 in price to yield 3.038 percent, from 2.946 percent late on Friday.

Crude prices plunged over demand worries driven by the bleak factory data from China, the world’s largest oil importer.

US crude fell 2.73 percent to $101.83 per barrel and Brent was last at $104.35, down 2.6 percent on the day.

The dollar hovered just below a 20-year high against a basket of currencies ahead of the Fed’s expected rate hike as investors focused on the possibility that the FOMC could adopt an even more hawkish stance than expected.

The dollar index rose 0.48 percent, with the euro down 0.05 percent to $1.0536.

The Japanese yen weakened 0.19 percent to 130.10 per dollar, while Sterling was last trading at $1.2531, down 0.32 percent on the day.

Gold prices slipped, edging closer to 2-1/2-month lows as investors anticipated a hefty interest rate hike from the Fed aimed at cooling inflation.

Spot gold dropped 1.8 percent to $1,863.24 an ounce.

— Reuters


Saudi authorities taking steps to prevent artificial price hike, says minister

Saudi authorities taking steps to prevent artificial price hike, says minister
Updated 22 sec ago

Saudi authorities taking steps to prevent artificial price hike, says minister

Saudi authorities taking steps to prevent artificial price hike, says minister

RIYADH: Saudi Commerce Minister Majid Al-Qasabi on Tuesday said the authorities are monitoring prices of 217 commodities and taking necessary measures to prevent any price manipulation.

Speaking at a press conference in Riyadh, the minister said special teams have so far carried out 640,000 inspection tours across the Kingdom to ensure availability of essential commodities at government rates.

Al-Qasabi said during the inspection tours 27,000 violations were reported and necessary actions were taken against violators.

As the world was reeling from the impacts of the coronavirus disease pandemic, the Russian invasion of Ukraine further strained the global supply chain.
Al-Qasabi said the high costs of imported goods have jacked up prices of local commodities due to the rising shipping and transportation costs. 

He said price control measures have been intensified across Saudi Arabia to meet the challenges of surging prices. 

On Monday, Saudi Arabia’s King Salman issued a royal order approving allocation of SR20 billion ($5.32 billion) to help citizens mitigate the impacts of rising global prices. 

Half of the allocated money will go to social insurance beneficiaries and the Citizen Account Program.


NRG Matters: QatarEnergy signs deal with Shell for $30bn North Field East project; Germany’s renewable energy consumption up

NRG Matters: QatarEnergy signs deal with Shell for $30bn North Field East project; Germany’s renewable energy consumption up
Updated 28 min 37 sec ago

NRG Matters: QatarEnergy signs deal with Shell for $30bn North Field East project; Germany’s renewable energy consumption up

NRG Matters: QatarEnergy signs deal with Shell for $30bn North Field East project; Germany’s renewable energy consumption up

RIYADH: On a macro level, the Dubai Supreme Council of Energy has discussed measures for monitoring petroleum product trading in the emirate. Zooming in, QatarEnergy has signed a deal with Shell for the Gulf state’s $30 billion North Field East expansion. 

Looking at the bigger picture

  •  Dubai Supreme Council of Energy has discussed measures for monitoring petroleum product trading in the emirate, according to WAM.
  • Renewable energy accounted for 49 percent of the total German power consumption in the first half of 2022, up 6 percent from a year earlier, Reuters reported. 

Industry groups have attributed this increase to favorable weather conditions. 

Through a micro lens:

  • QatarEnergy has signed a deal with Shell for the Gulf state’s North Field East expansion, the first phase of the world's largest liquefied natural gas project, according to Reuters.

This happens as the country partners with international companies in the first and largest phase of the nearly $30 billion expansion that will boost Qatar’s position as the world’s top LNG exporter.

  • Siemens Gamesa and Germany’s renewables developer wpd have signed a supply agreement for  a 927-megawatt Gennaker offshore wind power plant, according to Trade Arabia.

Located 15 kilometers off the German coast, the project will feature 103 Siemens Gamesa Direct Drive offshore wind turbines each with a 167-meter rotor.


Gas consumption set to contract due to Russia: IEA

Gas consumption set to contract due to Russia: IEA
Updated 46 min 21 sec ago

Gas consumption set to contract due to Russia: IEA

Gas consumption set to contract due to Russia: IEA

Gas consumption will contract slightly this year due to high prices and Russian cuts to Europe, with only slow growth over coming years as consumers switch to alternatives, the International Energy Agency said on Tuesday.

The IEA chopped its forecast for global gas demand by more than half in its latest quarterly report on gas markets.

It now expects growth of just 3.4 percent by 2025, an increase of 140 billion cubic meters from 2021 levels, which is less than the 175 bcm jump in demand registered in 2021 alone.

“The consequences of Russia’s invasion of Ukraine on global gas prices and supply tensions, as well as its repercussions on the longer-term economic outlook, are reshaping the outlook for natural gas,” said the IEA.

HIGHLIGHTS

The IEA chopped its forecast for global gas demand by more than half in its latest quarterly report on gas markets.

It now expects growth of just 3.4 percent by 2025, an increase of 140 billion cubic meters from 2021 levels, which is less than the 175 bcm jump in demand registered in 2021 alone.

“Today’s record prices and supply disruptions are damaging the reputation of natural gas as a reliable and affordable energy source, casting uncertainty on its prospects, particularly in developing countries where it had been expected to play a growing role in meeting rising energy demand and energy transition goals,” it added.

While Russia has cut supplies to Europe and European nations have pledged to wean themselves off Russian gas, the impact quickly rippled throughout the world.

European nations are trying to make up the shortfall by importing more liquefied natural gas shipped by tanker, which the IEA said is creating supply tensions and leading to demand destruction in other markets.

It warned that the scramble for LNG risked not only causing economic harm to other more price sensitive importers, but pushing up prices and thus contributing to additional revenues for Russia.

“In this context, an accelerated phase-out of Russian gas should primarily focus on reducing gas demand and scaling up domestically produced low-carbon gase” such as biogas, biomethane, and green hydrogen, said the IEA.

The IEA, which advises energy importing nations on policy, said in its new forecast for lower gas demand growth that only a fifth of the reduction came from expected efficiency gains and substituting renewables for gas.

“Our forecast’s lower gas demand growth compared to last year does not guarantee an accelerated transition to net-zero emissions, as the bulk of the revision comes from lower gross domestic product and fuel switching rather than by faster gas-to-electricity conversion and efficiency gains,” said the report.

The IEA said additional green energy transition measures would, in additional to their long-term impact in reducing emissions, ease pressure on gas prices globally by reducing supply tensions while also delivering short-term improvements in air quality by quickening the move away from coal.

“The most sustainable response to today’s global energy crisis is stronger efforts and policies to use energy more efficiently and to accelerate clean energy transitions,” Keisuke Sadamori, IEA director for energy markets and security, said in a statement.


Oil slumps $10 per barrel as recession fears darken demand outlook

Oil slumps $10 per barrel as recession fears darken demand outlook
Updated 05 July 2022

Oil slumps $10 per barrel as recession fears darken demand outlook

Oil slumps $10 per barrel as recession fears darken demand outlook

NEW YORK: Oil plummeted by about $10 a barrel on Tuesday on concerns of a looming global recession curtailing demand, even with expected supply disruptions as oil and gas workers in Norway began to strike.

Global benchmark Brent crude was down $10.77, or 9.5 percent, at $102.73 a barrel by 11:43 a.m. EDT (1543 GMT). US West Texas Intermediate crude fell $9.30, or 8.6 percent, to $99.13 a barrel from Friday’s close. There was no WTI settlement on Monday because of a US holiday.

“The market is getting tight, but still we're getting creamed and the only way you can explain that away is fear of recession in every risk asset,” said Robert Yawger, director, energy futures at Mizuho, New York. “You’re feeling the pressure.”

Oil futures sank along with equities, which often serve as demand indicator for crude, as investors fretted about the possibility of an economic downturn as central banks across the world take aggressive actions to limit inflation.

Supply concerns still linger, initially lifting WTI and Brent earlier in the session, due to potential output disruption in Norway, where offshore workers began a strike.

The strike is expected to reduce oil and gas output by 89,000 barrels per day, of which gas output makes up 27,500 bpd, Norwegian producer Equinor has said.

Saudi Arabia, the world’s top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand.

Meanwhile, Russia’s former President Dmitry Medvedev said a reported proposal from Japan to cap the price of Russian oil at about half its current level would mean less oil on the market and could push prices above $300-$400 a barrel.

G7 leaders agreed last week to explore the feasibility of introducing temporary import price caps on Russian fossil fuels, including oil, in an attempt to limit resources to finance Moscow’s “special military operation” in Ukraine.


Oil sector under siege due to underivestment, says OPEC secretary-general

Oil sector under siege due to underivestment, says OPEC secretary-general
Updated 05 July 2022

Oil sector under siege due to underivestment, says OPEC secretary-general

Oil sector under siege due to underivestment, says OPEC secretary-general

ABUJA: The oil and gas industry is facing huge challenges on multiple fronts and is “under siege” due to years of underinvestment globally that has led to market tightness, Mohammad Barkindo, the OPEC secretary-general,  said on Tuesday.

“Our industry is now facing huge challenges along multiple fronts,” he told delegates at an energy conference in Nigeria’s capital.

“And these threaten our investment potential now and in the long term, to put it bluntly, my dear friends, the oil and gas industry is under siege,” he said, citing geopolitical developments in Europe.

The fallout from the war in Ukraine has left many countries globally vulnerable to soaring energy prices. 

He said the supply shortage could be eased if extra supplies from Iran and Venezuela were allowed to flow.

Years of sanctions have limited supplies from Iran and Venezuela.

In addition, the West has imposed sanctions on Russia, a member of OPEC+ that groups the Organization of the Petroleum Exporting Countries and allies, following Moscow’s invasion of Ukraine on Feb. 24, tightening oil markets further.

“We could, however, unlock resources and strengthen capacity if the oil produced by the Islamic Republic of Iran and Venezuela were allowed to return to the market,” Barkindo said.

Strain on the industry has been increased by some countries' efforts to divest from hydrocarbons, he said.

While they are seeking to limit global warming, he said oil demand was growing even as investment in capacity falls and prices surge.

Nigeria’s Oil Minister Timipre Sylva said Africa’s top oil producer would not abandon fossil fuels.

“For us in Nigeria, fossil fuel will always have a share in our energy mix, for the foreseeable future. We will not at this time abandon fossil fuels. We have adopted ... gas as a transition fuel,” he said.