Latest news with #marketreaction
The National
2 days ago
- Business
- The National
There's a less popular reason why Opec+ is unwinding oil cuts - and it's not the US
At the weekend the group of eight Opec+ oil producers decided to continue their sped-up path towards unwinding their so called 'voluntary cuts' in July by adding another 411,000 barrels per day of output. The result: oil prices rose by about 3 per cent when markets opened on Monday. So, what led to this contradictory reaction and what does it mean for the group's policy in the months to come? This seemingly counterintuitive price reaction, which saw Brent trade above $65 a barrel, was partly driven by earlier market speculation that the group might opt for a more aggressive production hike. This led to a brief sell-off before the weekend. Once the expected 411,000 bpd increase was confirmed, market sentiment shifted positively. Additionally, concerns over potential supply disruptions from Canadian wildfires added upward pressure to prices. According to delegates, the price surge was well-received within the group, particularly by members wary of further declines. However, the direction of future policy remains uncertain. Opec+ has emphasised that its August strategy will be shaped by evolving market conditions, with all options – ranging from continuing the current path to more conservative adjustments – on the table. Opec+ policy Given that this is the third accelerated increase by Opec+ to unwind the 2.2 million bpd voluntary cuts, there's misconception over why the group is doing this. Common reasons cited include the need for Saudi Arabia and other Gulf states to appease US President Donald Trump and his call for $50 oil, or the shift in policy from defending prices to going after market. Both these explanations receive pushback from officials. The driver behind the policy, which often doesn't gain traction due to its less glamorous appeal compared to a US political dynamic, is keeping cohesion within the group. Leading members within that Opec+ eight realised that lack of compliance from Russia, Iraq and Kazakhstan to their production quotas was starting to contribute to a stock build. So, for the other members to sit on their laurels and do nothing was no longer an option. To restore a sense of fairness, an orderly plan to return the barrels gradually was needed to avoid a free-for-all situation that would drown the market in supply. Historical precedent supports this approach. The 2020 oil price war, which started when Russia declined a proposed production cut, ultimately led to the largest cut in Opec+ history – 10 million bpd – and a renewed commitment to group co-operation. Ensuring compliance is also essential to preserving Opec+'s market credibility, particularly if future conditions necessitate a pause or new round of cuts. This weekend's discussions underscored this point, as Russia and Oman advocated for pausing the planned increases. However, consensus was quickly reached to proceed with the 411,000 bpd surge, which was the only formal alternative discussed. Production outlook At present, there appears to be limited support for pausing or deepening production cuts. However, if rising inventories or weakening demand become evident, a smaller increase or even a temporary pause could be considered. Contrary to the misconception by many traders and observers in the market, oil prices dropping to $40 or $50 a barrel is not a level that would please any of the Opec+ producers, let alone the wider industry. Therefore, this idea that the alliance supports a crash in oil prices does not hold. Looking at the here and now of the current policy, which involves increments of 411,000 bpd for the months of May, June and July, it presents a good window for the group to reinstate output as demand during these hot summer months rises − which in turn would buffer the impact of the increase. Summer driving season in the northern hemisphere and Hajj season in Saudi Arabia are further demand pockets that would absorb the additional barrels. Looking ahead, Moscow's influence may play a larger role in shaping decisions. Still, for now, all members appear committed to preserving the alliance, recognising its value in maintaining market stability. The late Opec secretary general Mohammed Barkindo once described members of Opec+ being in a 'catholic marriage'--binding and enduring. Another Opec+ official once openly told me that many marriages are not perfect, but the spouses stay 'because of the kids … and in Opec's case it's because of the oil.'
Free Malaysia Today
3 days ago
- Business
- Free Malaysia Today
Asian stocks rally as Trump's ‘Liberation Day' tariffs hit court hurdle
Investors reacted to the US court blocking tariffs by moving to safe havens, lifting the dollar, S&P 500, and Nasdaq futures. (AP pic) SYDNEY : Asian shares and Wall Street futures climbed in Asia on Thursday after a US federal court blocked President Donald Trump's 'Liberation Day' tariffs from going into effect, sending the dollar up on safe haven currencies. The Manhattan-based Court of International Trade ruled that Trump overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the US than they buy. The White House quickly appealed the decision, and could take it all the way to the Supreme Court if needed, but in the meantime it offered some hope that Trump might back away from the highest tariff levels he had threatened. 'We're just trying to work out what it might mean basically but obviously the market is doing a knee-jerk reaction,' said Ray Attrill, head of FX strategy at NAB. 'So this may be an absolute storm in a teacup or potentially something more significant.' Investors reacted by embracing risk assets and Japan's Nikkei quickly rose 1%, while South Korea's shares added 0.8%. MSCI's broadest index of Asia-Pacific shares outside Japan edged up, awaiting the opening of Chinese markets. S&P 500 futures climbed 1.5%, while Nasdaq futures rose 1.8%. The latter had already been lifted by relief over earnings from Nvidia, which beat sales estimates. The chipmaker and AI darling also projected strong revenues for the current quarter, sending its shares up 4.4% after hours. That news helped offset a Financial Times report that the White House had ordered US firms that offer software used to design semiconductors to stop selling their services to Chinese groups. The New York Times separately reported the US had suspended some sales to China of critical US technologies, including those related to jet engines, semiconductors and certain chemicals. Pushing out rate cuts The news of the court decision hit traditional safe havens, lifting the dollar 0.8% on the Swiss franc to 0.336. It gained 0.6% on the Japanese yen to 145.76 yen, while the euro dipped 0.5% to US$1.1230. Yields on 10-year Treasuries rose 3 basis points to 4.51% and markets further shaved the chance of a Federal Reserve rate cut anytime soon. Minutes of the last Fed meeting showed 'almost all participants commented on the risk that inflation could prove to be more persistent than expected' due to Trump's tariffs. A rate cut in July is now seen as just a 22% chance, while September has come into around 60% having been more than fully priced a month ago. In commodity markets, gold slipped 0.9% to US$3,259 an ounce. Oil prices extended a rally begun on supply concerns as Opec+ agreed to leave their output policy unchanged and as the US barred Chevron from exporting Venezuelan crude.
CNA
7 days ago
- Business
- CNA
US appeals court reinstates Trump tariffs, sowing market confusion
NEW YORK :A U.S. appeals court reinstated President Donald Trump's sweeping tariffs on Thursday, leaving Wall Street with no clear direction a day after most of the tariffs were blocked by a trade court, a move that had given markets a brief boost. Chaotic U.S. trade policy has sent global markets on a roller coaster in recent months. Equity markets were rattled by Trump's April 2 "Liberation Day" tariff announcements, which have since been repeatedly delayed and adjusted. Following a market revolt after the April 2 tariff shock, Trump paused most import duties for 90 days and vowed to hammer out bilateral deals with trade partners. Markets have swung wildly through Trump's on-and-off tariff changes. The S&P 500 index is up 4.1 per cent since duties were announced while European stocks have gained 2.0 per cent. Gold is up 5.9 per cent from April 2, and the U.S. dollar index is down 4.4 per cent. Ten-year Treasury yields have climbed 23 basis points to around 4.4 per cent. But U.S. stocks showed little reaction to the appeals court decision, having already pulled back from the rally sparked by Wednesday's trade court ruling. Markets have grown accustomed to the president announcing steep tariffs only to postpone them soon afterward, giving rise to the acronym TACO (Trump Always Chickens Out), coined by the Financial Times. Asked on Wednesday by a reporter for his response to the term TACO, Trump said the question was "nasty" and in his defense of tariff changes, said: "It's called negotiation." "Trump has already rolled back most of these tariffs anyway, so these court rulings are just headlines," said Adam Sarhan, chief executive of 50 Park Investments in New York. "As far as I'm concerned, as long as the market doesn't tank on the news, it's just a secondary byproduct," Sarhan added. The Dow Jones Industrial Average rose 117.03 points, or 0.28 per cent, to 42,215.73, the S&P 500 gained 23.62 points, or 0.40 per cent, to 5,912.17, and the Nasdaq Composite gained 74.93 points, or 0.40 per cent, to 19,175.87.
Bloomberg
29-05-2025
- Business
- Bloomberg
Positive Returns Possible, But Volatile: Shah
Seema Shah, chief global strategist at Principal Asset Management, discusses the market reaction after a US court blocked the bulk of President Donald Trump's import tariffs. "I don't think this is the end of the tariff story," she tells Bloomberg Television. Shah says she expects "an economic slowdown" but not a recession. "You can still get positive returns this year. It's just going to be something which is fairly volatile, very erratic, but it will be an upward-sloping move in the end." (Source: Bloomberg)
Reuters
29-05-2025
- Business
- Reuters
Stocks rally in Asia as Trump tariffs hit court hurdle
SYDNEY, May 29 (Reuters) - Asian shares and Wall Street futures climbed in Asia on Thursday after a U.S. federal court blocked President Donald Trump's "Liberation Day" tariffs from going into effect, sending the dollar up on safe haven currencies. The Manhattan-based Court of International Trade ruled that Trump overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy. The White House quickly appealed the decision, and could take it all the way to the Supreme Court if needed, but in the meantime it offered some hope that Trump might back away from the highest tariff levels he had threatened. "We're just trying to work out what it might mean basically but obviously the market is doing a knee-jerk reaction," said Ray Attrill, head of FX strategy at NAB. "So this may be an absolute storm in a teacup or potentially something more significant." Investors reacted by embracing risk assets and Japan's Nikkei (.N225), opens new tab quickly rose 1%, while South Korea's shares (.KS11), opens new tab added 0.8%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab edged up, awaiting the opening of Chinese markets. S&P 500 futures climbed 1.5%, while Nasdaq futures rose 1.8%. The latter had already been lifted by relief over earnings from Nvidia (.NVDA.O), opens new tab, which beat sales estimates. The chipmaker and AI darling also projected strong revenues for the current quarter, sending its shares up 4.4% after hours. That news helped offset a Financial Times report that the White House had ordered U.S. firms that offer software used to design semiconductors to stop selling their services to Chinese groups. The New York Times separately reported the United States had suspended some sales to China of critical U.S. technologies, including those related to jet engines, semiconductors and certain chemicals. The news of the court decision hit traditional safe havens, lifting the dollar 0.8% on the Swiss franc to 0.336 . It gained 0.6% on the Japanese yen to 145.76 yen , while the euro dipped 0.5% to $1.1230 . Yields on 10-year Treasuries rose 3 basis points to 4.51% and markets further shaved the chance of a Federal Reserve rate cut anytime soon. Minutes of the last Fed meeting showed "almost all participants commented on the risk that inflation could prove to be more persistent than expected" due to Trump's tariffs. A rate cut in July is now seen as just a 22% chance, while September has come into around 60% having been more than fully priced a month ago. In commodity markets, gold slipped 0.9% to $3,259 an ounce . Oil prices extended a rally begun on supply concerns as OPEC+ agreed to leave their output policy unchanged and as the U.S. barred Chevron (CVX.N), opens new tab from exporting Venezuelan crude. U.S. crude firmed 47 cents to $62.31 per barrel.
