This page has been archived and commenting is disabled.
Overnight Sentiment Down On Chinese Growth Concerns, Crude Down As Saudi Promises More Oil
There are two main news updates dominating early newsflow: the first comes from BHP Billiton, after the world's largest miner raised concerns about the possibility of a sharp slowdown in demand from top metals consumer China. Per Reuters: "There is a slowing trend in China ... moving increasingly away from the growth model that they have had, which may be a little less metals intensive. This is not new, but recognition by big mining companies would have had an effect." Australian iron ore miners, key beneficiaries of China's modern-day industrial revolution, signaled on Tuesday demand growth was finally slowing in response to Beijing's moves to cool its economy. BHP Billiton said it was seeing signs of "flattening" iron ore demand from China, though for now it was pushing ahead with ambitious plans to expand production." That this comes just on the tail of JP Morgan warning of a hard landing in China is curious, and one wonder if the Federal Reserve Bank of JP Morgan is not fully intent on telegraphing that the next big center of QE will be the PBOC. The other news is that the perpetual crude "upside capacity" strawman Saudi Arabia 'has pledged to take action to lower the high price of oil, which has risen to around $125 a barrel, with laden supertankers set to arrive in the US in the coming weeks. ... Saudi Arabia said yesterday it will work "individually" and with the other petrol-rich Gulf states to return prices to "fair" levels. The country indicated earlier this year that $100 a barrel was the ideal oil price." There is one problem with this as expected Saudi attempt to help Obama's reelection campaign: as pointed out yesterday, it is very unlikely that Saudi Arabia has any realistic ability to do much if anything to push the price of crude lower, especially if and when the middle east hostilities flare up.
More on overnight market action below, from BofA ML.
Market action
Most Asian equity markets sold off overnight as investors' fears rose that the Chinese economy would slow more than expected this year. Investors were spooked by a report that said that new home prices dropped in 45 Chinese cities in February. That comes on the heels of the government implementing measures to cool property speculation. That sent the Shanghai Composite down 1.4%, while the Hang Seng lost 1.1%. The Korean Kospi finished 0.2% lower. On the flip side, the Indian Sensex actually managed to finish 0.3% higher, while the Japanese equity market was closed for a national holiday.
In Europe, equity markets are selling off sharply, down 1.1% in the aggregate. Shares in London are down 1.1%, matching the broader European aggregate, while in Germany, shares are 1.3% lower, and in France, equities are selling off 1.4%. At home, futures are pointing to a large sell-off as well. The S&P 500 is set to open 0.6% lower.
In the bond markets, US Treasuries are rallying across the curve. The 10-year yield is down 4bp, to 2.34%. Despite the rally, the 10-year yield is well above its recent range of 1.90% to 2.10%, where it had drifted between November 2011 and early March.
The flight-to-safety trade is benefiting the US dollar. The DXY index is up 0.3% in early trading. The strong dollar is putting some downward pressure on commodity prices. WTI crude oil is 89 cents lower, to $107.20 a barrel, and gold is off $13.84, to $1,650.68 an ounce.
Overseas data wrap-up
Taiwan's export orders, an indication of shipments in the next one-to-three months, rebounded sharply in February, growing by 17.6% yoy in February. The strong February figure was due to the seasonal distortions following this year's Chinese New Year holiday. Looking ahead, our economists following emerging Asia believe that Taiwan's economy should pick up steam as long as the global economic outlook remains stable.
The UK's consumer price inflation rate slowed to 3.4% yoy in February from last month's 3.6% yoy growth rate. This month's slowdown was marginally less than market expectations of a drop to 3.3% yoy. Part of this month's slowdown in inflation was due to the rolling off of the VAT rise in early 2011, which was spread out over both January and February. Looking ahead, the inflation rate should continue to moderate over the course of the year. Our forecast assumes that inflation slows to 2.1% yoy by the fourth quarter. However, the risk is that oil prices continue to rise, biasing inflation rates higher.
Today's events
The only thing on the economic calendar today is the February housing starts and building permits report. We expect housing starts to inch up to 710,000 in February, a monthly increase of about 1.5%. This will match the gain in January. Building permits advanced modestly in January, but after slipping lower in December. We will be examining the report for possible seasonal distortions, given the warmer-than-normal weather in the month.
»
- 5468 reads
- Printer-friendly version
- Send to friend
- advertisements -
Saudi Arabia sells US oil cheap.....US sells China precious metals cheap......all is well.
We might have some volume today. I am so excited; battle bots is so 2000.
We have month/quarter end window dressing next week, still good enough for a quick trade(short) this week, but be on your toes...so i've been told, I have no other interest then PHYZZZ :))!
Bring it on!
Great article today by Chris Cook in Asia Times Online, on how Saudi Arabia has been secretly working in partnership with the US on oil price and dollar manipulation:
http://atimes.com/atimes/Global_Economy/NC21Dj03.html
jawboning from the desert, Saudi oil reserve numbers never change...the magic of islam, lies are one of the 1000 commandments in the qu'ran
"within Islam there are certain provisions under which lying and deceiving is not simply tolerated, but actually encouraged. In his book “The spirit of Islam,” Afif A. Tabbarah writes in page 247, “Lying is not always bad, to be sure; there are times when telling a lie is more profitable and better for the general welfare, and for the settlement of conciliation among people, than telling the truth. “
Everyone all freaked out about some stupid rumor about a coup in China.
http://www.theepochtimes.com/n2/china-news/coup-in-beijing-says-chinese-internet-rumor-mill-207993.html
Yes, I received a 1/2 dozen frantic e-mails from friends in China last night seeking offshore news....
And if you think that the media here would run the story with out official sanctions...then read this...If the white house says "no story"...they pull the story
http://www.theblaze.com/stories/why-is-the-story-about-malia-obama-vacat...
Blah... Blah...Well supplied.... Blah... Blah.. no buyers for vanadium laced crude... blah blah... fair price range.... blah... blah...
And in the mean time how many articles about the loss of ~300,000 bpd from Sudan and a similar (undetermined) amount cut off from Nigerian production?...
The crude oil market is "tighter than a bulls ass in fly-time"...
Early Morning Dip, Can Markets Recover Again? http://www.traddr.com/video/early-morning-dip-can-markets-recover-again
i expect the People's Bank of China to do exactly what the BOJ and Japan, Inc have been doing.
Meet the new boss!
It will be interesting to see if the Saudis can actually increase production. I don't think they can.
US gasoline demand hit a 3-yr low, crude a FIFTEEN YEAR LOW, THIS IS ALL BULLSHIT, refiners are shutting-in production, what the hell do they do with more? Export it?
Prep work for Iran.
Maybe we should find something that the Saudi's really need... Like medicine for their children, and other handouts I'm sure we're giving this bunch of 8th century nomads, (but the lib's are loathe to admit to) and jack the price up, right after we promise to provide for a "fair" price.
Me an' my big mouth.
Did I just say that out loud.
I'll just sit here and hold my breath, waiting for that increase in supply and a "fair" price.
$4+ a gallon is baked in folks.
Because they can.
Thanks for coming out.
•J•
V-V