Forex & Commo Market News
Feb 24 - Oil prices held gains on data showing U.S. stockpiles rose for a seventh straight week but at a pace that was well below expectations, and news of oil being sold out of storage in Southeast Asia.
- Gold prices held steady near 3-1/2-month highs hit in the previous session amid tempered expectations of a U.S. rate hike in March and as investors awaited clarity on President Donald Trump's economic policy.
- The dollar clawed back some ground after skidding to a two-week low against the yen, but was still on track for weekly losses after the Federal Reserve meeting minutes disappointed dollar bulls.
- London copper prices found modest support after a big fall overnight amid fresh doubts over Chinese demand and some upward movement in the U.S. dollar, but were still on track for a weekly decline of around 2 percent.
- U.S. soybeans edged higher after earlier hitting a six-week low as ample global supplies pushed the oilseed towards two-week losses of nearly 5 percent.
Feb 23 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ Dow Jones)
- A handful of currencies, including the South African rand, Taiwan dollar and Brazilian real, have recouped losses suffered in the wake of the US presidential election. The rand lost 10% against the dollar in the weeks following the November election, but today the rand is at its strongest level since August 2015. The Brazilian real has recently hit its highest level since mid-2015. The Mexican peso, Australian dollar and Korean won have also staged big recoveries but remain weaker than pre-election levels. Investors dumped EM assets after Trump was elected, worried about protectionism and a surging dollar. But uncertainty over tax reform and stimulus plans has weighed on the dollar this year.
- President Trump's tough stance on immigration, made more clear this week with memos suggesting undocumented workers are more likely to be deported under his administration, could be a drag of a half-percentage point or more on overall economic growth, Oxford Economics says. A crackdown on illegal immigration outlined this week could reduce growth of inflation-adjusted GDP by 0.2 or 0.3 percentage point this year due to reduced demand and significant supply chain bottlenecks, the note says. "More generally, the administration's tough stance on immigration, legal and illegal, could cut the economy off of important sources of revenues from labor, education and tourism," economist Greg Daco writes. The total drag on growth is "north of" 0.5 percentage point.
- On Thursday, President Trump reeled in one big name who had yet to join the parade of corporate executives visiting the White House: Jeff Immelt. General Electric's CEO joined a group of manufacturing leaders who met during the morning with senior administration officials to discuss issues like taxes, regulatory reform and trade. The group is scheduled to meet with Trump at 10:30am. GE is among the big corporations counting on the administration to deliver a major overhaul of corporate taxes. Immelt, who backed Sen Lindsey Graham in the Republican primary, nonetheless has a history with Trump: GE used to own NBC -- the network on which Trump rose to reality TV stardom with "The Apprentice."
- Leveraged French corporates with a high domestic exposure should be more vulnerable to a potential growth shock if far-right presidential candidate Marine Le Pen wins the elections, according to corporate credit analysts at Morgan Stanley. However, owning French bonds which are exposed to the U.S. could also mean trouble, given the Trump administration's potential protectionist bias, adds the U.S. bank.
- Treasury Secretary Steven Mnuchin says the Treasury Department should study the viability of issuing longer-dated bonds with 50-year and 100-year maturities. "Whether we can raise 50-year or 100 year-money at a very slight premium, that's something that makes sense for Treasury to look at," he tells CNBC.
- Treasury Secretary Steven Mnuchin says he expects US interest rates to remain relatively low on a historical basis even if the Federal Reserve gradually raises rates as markets currently expect. "We're in an environment where we are at historically low interest rates," he tells CNBC. "If you look at this on a historical basis, we will probably have low interest rates for a long period of time."
- Treasury Secretary Steven Mnuchin tells CNBC that the Trump administration is committed to boosting US economic growth to at least a 3% annual rate, which hasn't been reached on an annual basis in more than a decade. But he says it won't happen right away. "It's going to take time to get there," he says, adding 3% growth is a more realistic target "towards the end of next year." Mnuchin also says he expects interest rates to remain at historically low levels "for a long period of time."
- Restaurants, farmers, food companies and construction outfits worry about how the Trump administration's efforts to tighten immigration in the US could hurt their labor supply. Foreign-born workers make up about three-quarters of the roughly 1.1 million workers on US farms, and nearly half aren't legally authorized to work. In the construction industry, 13% of workers in 2014 were undocumented, along with about 9% of workers in the leisure and hospitality industry. Economists predict a massive labor shortage if millions of undocumented immigrants were deported.
- The European Central Bank's top economist says some of the noises coming from U.S. President Donald Trump's administration on international cooperation are "worrisome." Peter Praet says in remarks in London that some of Mr. Trump's complaints about international trade and multilateral institutions reflect "simplistic narratives," though he adds that economic imbalances between countries and regions are real enough. Mr. Praet says that for now, European policy makers are in wait-and-see mode. "We still have to see how this new administration is going to behave, or act."
- German consumers look less optimistic for March than they did for February as they seem to take to heart a change of power in the US and higher inflation in January, the GfK market-research group says in its monthly survey. The forward-looking indicator is set to decline to 10 from this month's 10.2. That's slightly below economists' forecast for 10.1, according to a WSJ survey.
- Oil futures climbed nearly 1 percent after data showed a surprise decline in U.S. crude stocks as imports fell, supporting the view that a global glut is ending.
- Gold prices were steady, supported by uncertainty surrounding U.S. President Donald Trump's economic policy after Wednesday's Federal Reserve minutes failed to give the market much direction, despite its support for interest rate hikes.
- The dollar drifted as impact from the Federal Reserve's policy meeting minutes and supportive comments from a top U.S. official faded, while the Australian dollar slipped in the wake of downbeat economic data.
- London copper prices drifted lower, with the U.S. dollar firming as the market reassessed minutes from the Federal Reserve's last policy meeting that kept the prospect of a March rate hike in play.
- U.S. soybeans edged up from a three-week low, but were capped by plentiful global supplies and an expected forecast for increased plantings in a widely watched U.S. government report.
Feb 22 - Market Talk Roundup: Latest on Trump, U.S. Politics (WSJ Dow Jones)
- It is still too early to forecast the effect the Donald Trump presidency will have on the U.S. oil
sector, according to Sarah Emerson from U.S.-based consultancy ESAI Energy. Speaking as part of a panel discussion at International Petroleum Week being held in London, the executive said that Mr. Trump's economic policies, specifically in terms of tax reform, were still up in the air and until this was in place there is no way of knowing how it will affect oil production. However, the streamlining of permitting for oil and gas licences and a roll-back of regulations on climate change policy by Mr. Trump was almost certain to have a swift impact she added.
- The Mexican peso soars by more than 2% against the dollar to its highest level since November after Mexico's central bank announced new moves to stem volatility in the currency. The peso fell to record lows after the November election amid Trump's protectionist and anti-immigration rhetoric. The volatility prompted the Bank of Mexico to step in multiple times to prop up the currency. The central bank now plans to implement a currency hedge program of up to $20B in the coming months. One dollar recently bought 20.03 pesos, the weakest level for the dollar since Nov. 10. Still, the peso remains down about 8% since the Nov. 8 election.
- Commodities, which are generally seen as a way to diversify holdings in a portfolio, are once again beingput to use by bullish investors now that correlations across asset classes are breaking down, say Citi analysts. Major commodities are no longer closely tethered to equities, bonds and the US dollar, making them a better investment for those looking for diversification tools. "Lack of intra-market cross-correlations among commodities are another signal for making commodities a more attractive portfolio diversifier, with rebalancing commodity structures periodically or by fostering long-short positioning," analysts say. Enthusiasm following Trump's election and the OPEC deal are also driving investors into commodities, Citi says, with about $10B in inflows to passive commodity indexes and related ETF products, leading holdings this quarter to the highest since June 2014.
- Canadian Foreign Minister Chrystia Freeland says trilateral negotiations between the US, Canada and Mexico to revamp Nafta haven't started and are "quite far" from beginning. Freeland, who spoke at a conference on the future of North America in Toronto alongside her Mexican counterpart Luis Videgaray, added any talks on Nafta would involve all three member nations at the same table. Freeland's comments come a week after Trump said the US would be "tweaking" its trade relationship with Canada during his first official meeting with Prime Minister Justin Trudeau. Freeland declined to comment further, as Wilbur Ross, the nominated Commerce Secretary, has yet to be confirmed by the Senate. She added the Trump Administration would likely need some time to discuss internally its plans to change Nafta.
- A 2007 Supreme Court case gave the Environmental Protection Agency the legal authority to address greenhouse gas emissions. President Donald Trump's EPA chief, Scott Pruitt, danced around the legality of this in his first interview since being nominated. He said to a Wall Street Journal editorial writer last week that he will conduct a "very careful review of a fundamental question: Does EPA even possess the tools, under the Clean Air Act, to address this? It's a fair question to ask if we do, or whether there in fact needs to be a congressional response to the
climate issue." He didn't question whether EPA had the legal right to but instead the logistical manner in which the federal government may go about addressing it.
- Chief executives of US exporters including Caterpillar, Boeing, General Electric and Dow
Chemical are lining up to support the US House Republican tax overhaul plan, which includes a tax on imports known as a border adjustment tax. "Our tax code also penalizes American workers who make products or provide services sold abroad, while favoring their international competitors," the CEOs wrote in a letter to congressional leaders, on behalf of a group of companies calling themselves the American Made Coalition. The letter affirms support among major US exporters for the plan pushed by House Speaker Paul Ryan. Major importers, including retailers and energy firms, have expressed opposition to the border adjustment tax.
- A muddy outlook on French election continues to drive investors to cut exposure to French government debt and embrace German bunds and US Treasurys. The bond market continues to recover from earlier selling as latest polls show right-wing presidential candidate Le Pen extends lead in the first round of voting. Many analysts see her odds of winning the second round as less likely, but any news that clouds the election outlook led investors to cut exposure. Investors are demanding the highest premium to hold the two-year French bond relative to the two-year bund since 2012. John Stopford, co-head of multi-asset at Investec Asset Management, says he expects the yield premium still has room to rise given the uncertainty, and that this factor is likely to bolster demand for Treasurys. After hitting 2.461%
earlier, the 10-year Treasury yield is now at 2.418% vs 2.425% Friday.
- With stocks trading at all-time highs and higher-than-historical valuations, investors must find a way to reconcile the S&P 500's performance with corporate earnings, Goldman Sachs says. The S&P 500 has climbed 10% since Election Day, but sell-side analysts have cut adjusted EPS forecasts for 2017 by 1%. "We are approaching the point of maximum optimism regarding policy initiatives," the firm says. "The tailwind to corporate earnings from tax reform will be constrained by the unwillingness of certain Congressional Republicans to significantly expand the federal budget deficit."
- Gold has been a "star performer" this year, according to JPMorgan analysts, surpassing all other major asset classes since the beginning of the year, including emerging markets indices and the S&P 500 through Feb. 14. The precious metal has been boosted by a weaker US dollar this year and some unwinding of "Trump trade" that drove risky assets higher following the US election. Meanwhile, expectations for rate increases this year remain largely unchanged compared to December. Analysts expect Trump's policies will keep real yields low, supporting attractiveness for holding gold as an asset. "Western investors have been ramping up exposure to the metal through increased futures length as well as a build-up in ETF holdings," analysts write. However, physical demand from key consumers India and China remain weak.
- China could become the U.S.'s largest customer for oil and gas in the future and solve one of Donald Trump's major problems, the growing trade gap between the two countries according to a senior Chinese oil executive speaking under Chatham House rules at the International Petroleum Week. The official told delegates that it would be the logical move for the two countries to cooperate. U.S. oil and gas production is growing, but it is still not at the stage where large-scale exports are possible. However, he added that he was convinced this would change in the next 10 years and the increased flow of U.S. oil and gas in China's direction would bring trading relations to a more equal footing.
- Oil prices held near multi-week highs after OPEC signalled optimism over its deal with other producers to curb output to clear a glut that has weighed on markets since 2014.
- Gold slipped as the dollar firmed, with investors looking to minutes from the U.S. Federal Reserve's latest meeting for clues on the timing of interest rate hikes.
- Copper prices slipped as some traders took profits and reduced their positions ahead of the release of U.S. Federal Reserve minutes that could push the dollar higher.
- U.S. soybeans edged up for the first time in four sessions to move away from a three-week low, though ample global supply capped gains.
Feb 21 - Market Talk Roundup: Latest on Trump, U.S. Politics (Dow Jones)
- German government bonds, a safe-haven asset as European political risks rise, now seem to be at the mercy of potentially hawkish comments by Philadelphia Fed President Patrick Harker, says Commerzbank. Analysts at the German bank recommend tactical short positions in Bunds Tuesday, as Harker could add to his recent hawkish comments in a speech this afternoon. A hawkish view should weigh on Treasurys and impact Bunds accordingly.
- HSBC notes that as the bank has recently boosted its economic-growth forecasts, the move is "largely the partial reversal of downgrades made last year, when uncertainty was elevated" in the wake of political events including Brexit and Trump's win. The lender, in its just-issued 2016 report, adds its latest growth views remain "slightly lower than [the] long-term trend, with risks largely to the downside." HSBC adds while there's many political uncertainties for 2017, especially with European elections looming and potential protectionism out of the US,
"countering these factors are signs of a cyclical upturn."
- There's been plenty to unsettle nervous travelers over the past few months, particularly Brexit and a change in the White House. But there were reassuring noises from Tourism Holdings, a New Zealand-based provider of rental vehicles to tourists, when unveiling its 1H result on Tuesday. "To date we have seen no discernible change in short or long term bookings due to Brexit in any of our businesses," Tourism Holdings says. That's significant because tourists from the U.K. and Europe are traditionally most sensitive to FX changes. While U.S. inbound travel from Europe, U.K. has been more volatile week-to-week recently, it's not been materially so, management adds. "New Zealand continues to experience high tourism demand and Australia is showing higher demand growth in recent months," Tourism Holdings says. "Our forward plans currently conservatively understate this experience." THL last traded at NZ$3.88.
- U.S. crude futures rose for a second day, with data showing hedge funds are betting big across oil markets following OPEC production cuts agreed last year.
- Gold prices fell as the dollar gained, with investors waiting for clues on the timing of any increase in U.S. interest rates from minutes of a Federal Reserve meeting and in a series of speeches by Fed officials this week.
- London copper held its ground, trading near its highest levels in a week amid ongoing supply concerns from industrial action in Chile and an Indonesian export permit dispute.
- Chicago soybean futures gained almost 1 percent as the market recovered from its lowest in more than two weeks with rains in Argentina raising concerns over potential decline in yields.
Feb 20 - Oil prices rose but the gains were limited as investors gauged whether an increase in U.S. drilling rigs and record stockpiles would undermine efforts by producers to cut output and bring the market into balance.
- Gold prices held steady, with investors looking ahead to a clutch of speeches from U.S. Federal Reserve officials later in the week for clues on the timing of possible interest rate hikes.
- A slide in U.S. bond yields pressured the dollar against the yen, while the euro struggled for traction after suffering significant losses at the end of last week on renewed concerns about the upcoming French elections.
- London copper climbed above the key level of $6,000 per tonne, buoyed by supply worries after the world's second-biggest copper mine in Indonesia said it could not deliver promised shipments due to export permit issues.
- U.S. wheat and corn futures fell on Friday for a second straight session as traders liquidated long positions ahead of a U.S. holiday weekend, and following a fund-driven rally seen as lacking fundamental drivers, analysts said.
Feb 20 - Market Talk Roundup: Latest on Trump, U.S. Politics (Dow Jones)
- US shale gas exports begin to enter the Japanese market at a politically convenient time for Tokyo, which has been nervously watching President Donald Trump's trade policy following his criticism of nations running trade surpluses with America. Japan buys 211,000 tons of liquid natural gas from the US in January, worth 15.9 billion. About two-thirds of them is Japan's first imports ever of US shale gas, says the Ministry of Finance. The amount may be small, but it is among the reasons behind a 26.6% narrowing in Japan's trade surplus with the US in that month to Y399.3 billion.
- Japanese stocks may be weighed down by uncertainty over the French presidential election and U.S. President Donald Trump's promised tax cuts and infrastructure projects. Safe-haven demand amid economic uncertainty has pushed up U.S. Treasurys and the yen, factors that will likely weigh on Japanese financial and exporter stocks. The USD/JPY is at 112.87, down from 113.38 at Friday's Tokyo stock market close. Nikkei futures ended Friday's Chicago trading at 19130, compared with the earlier close in Osaka at 19200. Nikkei ended down 0.6% on Friday at 19234.62.
- The month ahead could see NZD/USD (Now 0.7192) extending beyond 0.7500 if the US dollar continues to register disappointment in the Trump Administration's policies, says Westpac. Further ahead, though, the Fed's tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD lower to 0.7000. Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar's trend, Westpac adds.
Feb 17 - Oil prices edged up, lifted by a report that producer club OPEC could extend an output cut aimed at reining in a global fuel supply overhang.
- Gold prices held firm as the dollar hovered near one-week lows, keeping the metal on track for a third week of gains amid political uncertainties in the United States and Europe.
- Copper prices climbed following overnight losses, supported above the key $6,000-mark by major supply restrictions at the world's two biggest mines in Chile and Indonesia.
- Chicago wheat slid 1.1 percent, falling for a second day and set for its first weekly loss in three as abundant global supplies weighed on the market.
Feb 16 - Oil held steady, supported by ongoing supply cuts led by producer group OPEC, while rising fuel inventories and crude production in the United States dragged on prices.
- Gold prices rose as the dollar drifted down from one-month highs hit in the previous session on upbeat U.S. economic data that boosted the prospects of an interest rate hike by the Federal Reserve next month.
- London copper held gains as the prospect of lengthy supply disruptions in Chile and Indonesia underpinned prices, but ample stockpiles in Asia contained consumer buying.
- Chicago wheat futures edged lower, as the market took a breather after a rally in the previous session that was triggered by fund-buying and strong demand.
Feb 15 - Oil prices dipped over concerns that OPEC producers would not be able to maintain their high compliance so far with output cuts aimed at reining in a global fuel supply overhang.
- Gold prices edged lower after U.S. Federal Reserve Chair Janet Yellen hinted at a hike in interest rates in an upcoming meeting of the central bank.
- London copper prices steadied as support from supply disruptions at the world's two biggest mines held prices above the $6,000-mark.
- Chicago soybeans edged higher with the market recovering after two days of falls but the harvest of an all-time high crop in Brazil capped gains in the market.
- The dollar held gains near a 3-1/2-week high after Federal Reserve Chair Janet Yellen signalled a faster pace of U.S. interest rate hikes.
Feb 14 - Oil prices were stable, supported by an OPEC-led effort to cut output while rising production elsewhere kept crude futures within the narrow range that has contained them so far this year.
- Gold prices edged up as the dollar crept lower, with investors turning their attention to testimony from U.S. Federal Reserve Chair Janet Yellen later in the day for hints on the central bank's interest rate strategy.
- Copper held on to hefty overnight gains amid supply concerns from two of the world's biggest sources of the metal.
- Chicago soybean futures slid for a second session with the rapidly advancing harvest of a record crop in Brazil and much-needed rains in Argentina weighing on the market.
Feb 13 - Oil prices dipped on signs that global fuel markets remained bloated despite OPEC-led crude production cuts that have been more successful than most initially expected.
- Gold slipped as the dollar strengthened against the yen, with the greenback buoyed by a smooth meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe that saw no mention of currency policy.
- London copper extended gains to hit its highest in 20 months in heavy trade, driven up by supply worries after shipments were shut off from the world's two biggest copper mines.
- Chicago wheat lost ground, snapping four sessions of gains and falling from its highest in seven months as ample world supplies weighed on the market.
Feb 10 - Oil prices were stable, supported by strong Chinese crude imports and OPEC-led production cuts, although ample U.S. fuel inventories weighed on the market.
- Gold fell on a firmer dollar after U.S. President Donald Trump promised a major tax announcement and as economic data boosted expectations of a U.S. rate hike.
- London copper edged up and was set for a weekly gain, buoyed by simmering supply concerns and Chinese trade data that underscored stronger demand prospects for the metal.
- Chicago wheat futures were poised to post a second week of gains with the grain trading at its highest in seven months on a U.S. forecast for lower global supplies.
Feb 09 - Oil prices rose, boosted by an unexpected draw in U.S. gasoline inventories, although bloated crude supplies meant that fuel markets remain under pressure.
- Gold held near 3-month highs as political risks from elections in Europe and worries over U.S. President Donald Trump's policies buoyed safe haven demand for the bullion.
- London copper hovered near its highest since late November as niggling supply risks threatened to corrode what is expected to be a modest surplus this year.
- Chicago soybean futures lost ground, snapping three sessions of gains and falling from a two-week high as the market took a breather ahead of a key U.S. global supply and demand report.
- The dollar managed to stabilise after the previous session's slide, although lingering risk aversion pinned Treasury yields near multi-week lows and restrained the greenback's bounce.
Feb 08 - Oil prices dropped to extend falls from the previous day, as a massive increase in U.S. fuel inventories and a slump in Chinese demand implied that global crude markets remain oversupplied despite OPEC-led efforts to cut output.
- Gold held near three-month highs hit the session before, buoyed as political and economic uncertainty in the United States and Europe stoked safe-haven demand.
- London copper climbed, boosted by supply concerns after miner BHP Billiton said it would halt output at the world's biggest copper mine during a strike set to begin this week.
- U.S. soybean prices rose for a third session to hit their highest in 12 days, supported by strong demand for U.S. supplies.
- The euro nursed losses in Asian trading, pressured by political woes in Europe ahead of elections that checked its recent ascent against the dollar.
Feb 07 - Oil firmed after falls the previous session, with markets torn between mixed price indicators that have kept crude range-bound for much of the year.
- Gold held slightly below a near three-month high hit in the previous session and the yellow metal was supported by safe-haven demand on the back of rising global political uncertainty.
- London copper drifted as the dollar edged higher after a Federal Reserve official offered support for a March rate rise, while supply concerns underpinned prices.
- Chicago soybeans gained more ground with prices underpinned by strong demand for U.S. shipments although gains were curbed as record Brazilian crop hits the market.
- The yen held large gains against a number of peers as investors sought refuge in the safe-haven Japanese currency amid a latest rise in European political concerns.
Feb 06 - Oil prices rose, with traders shifting money into crude futures as the dollar weakened, and on concerns that new U.S. sanctions against Iran could be extended to affect crude supplies.
- Gold prices edged up, gaining for a third day, on technical buying and a weaker dollar after mixed U.S. jobs data late last week muted expectations for near-term interest rate hikes.
- London copper edged up on supply concerns, steadying after its biggest daily fall so far this year in the previous session in the wake of surprise economic tightening in top consumer China.
- Chicago soybeans bounced back, rising 1.1 percent as a a weaker dollar supported prices, although the rapidly advancing harvest of a record Brazilian crop kept a lid on the market.
- The dollar started the week on the back foot, after U.S. data showed a smaller-than-expected rise in wages in January that reinforced expectations the Federal Reserve will refrain from raising interest rates next month.
Feb 02 - Oil prices edged up on news that U.S. President Donald Trump could be set to impose new sanctions on multiple Iranian entities, firing geopolitical tensions between the two nations.
- Gold prices slipped on a firmer dollar and as investors booked profits after the metal hit 11-week highs in the previous session, with attention shifting to key U.S. jobs data later in the day.
- London nickel prices slipped, but were still on track for a 7 percent weekly gain on prospects of tighter supply after the Philippines said it would permanently close half its nickel production.
- Chicago wheat was poised for a weekly gain as short-covering drove prices higher, although plentiful global supplies kept a lid on the market.
Feb 01 - Oil prices fell after official data showed U.S. crude and gasoline stockpiles rose sharply, although signs that OPEC and other producers are holding the line on output cuts are helping support prices.
- Gold edged up, as the dollar weakened after the U.S. Federal Reserve kept interest rates unchanged at its first meeting since President Donald Trump's inauguration.
- London copper hovered below three-month highs hit the session before on prospects of supply disruptions after workers at the world's biggest copper mine voted to strike.
- Chicago wheat futures eased as the market took a breather following its biggest one-day rally in a month, driven by short-covering and technical buying.
Jan 31 - Oil dipped, weighed down by ongoing high supplies despite an OPEC-led production cut, but prices remained within a narrow trading band that has been in place since late January.
- Gold held steady after hitting a one-week high in the previous session, as traders waited to see if the U.S. Federal Reserve will keep its interest rates unchanged amid uncertainty over the policies of President Donald Trump.
- London copper eased in light trade on profit taking following hefty overnight gains, with losses held in check by concerns about a potential strike at the world's biggest copper mine.
- Chicago soybean futures edged lower, giving up the previous session's gains as record Brazilian production and improving weather in Argentina boosted world supply prospects.
- The dollar sagged against its major peers after U.S. President Donald Trump and his top economics adviser took aim at the currency policies of key U.S. trade partners, further raising concern that Washington was poised to actively weaken the greenback.
Jan 30 - Oil prices fell as rising U.S. drilling activity offset efforts by OPEC and other producers to cut output in a move to prop up the market.
- Gold rose on increased safe haven demand as U.S. President Donald Trump's tough stance on immigration rattled global markets, with prices finding further support from a weaker dollar.
- London copper climbed as the dollar weakened, with trading light due to the Lunar New Year break in top metals consumer China.
- Chicago soybean futures lost more ground, trading near last session's weakest in more than two weeks with an improving crop outlook in Brazil and Argentina weighing on the market.
Jan 28 - Oil prices extended declines, dragged down by signs of growing output in the United States that could partly offset output cuts by OPEC and other producers.
- Gold prices edged up on a weaker dollar and as uncertainty over U.S. policy under President Donald Trump stoked safe-haven demand, although gains were curbed with many in Asia on holiday for the Lunar New Year.
- London copper traded little changed below recent eight-week peaks as China's week-long Lunar New Year holiday drained the markets of liquidity and direction.
- U.S. wheat fell to an 18-day low as ample global supplies pushed two-day losses to more than 2 percent.
Jan 27 - Straight Talk About Inflation, Markets (WSJ)
Inflation is on the up, and shareholders are delighted. The postelection reflation rally was predicated on the new president's promise to reflate the U.S. economy with big fiscal spending, putting a booster under expectations for inflation that were already moving skyward. So far the "Trumpflation" trade has run exactly as would be expected: Shares have risen, bond prices have tumbled (as yields have increased) and the values of the longest-dated bonds have been eviscerated. Investors have waved goodbye to deflation fears and embraced higher inflation.
For the moment, that looks like a rational response to the assumption that President Donald Trump's policies herald higher inflation. But shareholders should be keeping a watchful eye on consumer prices, as they often rise much faster than anticipated. Like alcoholic drinks (prices of which are up just 1.4% in the U.S. in the year to December,) too much of a good thing can have nasty aftereffects.
The basic effects of inflation are well-established: Higher inflation means weaker real, or inflation-adjusted, returns from shares. Put another way, as inflation accelerates, share price gains don't keep pace. The ideal for investors is steady, reasonably low inflation; just enough to keep deflation worries away, but not so rapidly that the central banks will have to jack up interest rates quickly.
Richard Turnill, chief investment strategist at BlackRock Investment Institute, says higher inflation is supportive of corporate earnings despite higher wages, because those wages are spent. But he says it can push down the valuation of those earnings, and since share prices are the result of the earnings times the valuation multiple, that can offset the higher profits. "This tips from good reflation to bad reflation when the central banks really have to tighten and you start to worry about how far away the next recession is," he said.
Every cycle is different, but in the past there often has been a break in markets when inflation hits 4%. "If inflation gets to 4% the Fed's really behind the curve," says Jason Trennert, chief investment strategist at Strategas Research Partners. "The good news is that we probably have some time before we get to 4%."
It would be misleading to say 4% inflation is guaranteed to be the point where the market going gets rough. Yet, that level has often been a decent warning signal. In 1987, for example, inflation hit 4% in August and the market crashed in October. In 2000, the dot-com bubble burst with inflation at 3.75%, while stocks hit their precrisis peak in October 2007, the month before inflation broke through 4%.
It is easy to forget inflation can be that high. Consumer-price inflation in the U.S. is just above 2% at the moment and hasn't been above 4% since 2008, while the Federal Reserve's preferred personal consumption expenditure (PCE) measure is a little below its 2% target. Friday will bring figures for the fourth-quarter PCE which aren't expected to rise much, and investors are now pricing in U.S. inflation being broadly on target in the long run.
The inflation rate implied by Treasury bonds for the five years starting in five years' time -- a gauge designed to strip out near-term fluctuations -- is up from a postrecession low of 1.4% in July to 2.2%. That would equate to PCE inflation almost exactly on target, suggesting few concerns about an overshoot.
Yet, in the past, inflation has rarely paused at 2%. Since Paul Volcker's Fed tamed the monster inflation of the 1970s, it has risen back through 2% a dozen times, including in December. A year after each of the previous 11 instances it had jumped to 4% twice, and above 3% four times. Maybe this year will be like October 2002, the only time inflation was still at 2% a year later (although it did briefly jump to 3% in between.) But there has to be at least a decent chance that inflation overshoots.
If inflation does carry on up, history suggests that the price/earnings ratio will suffer, as the sweet spot for valuations has been with inflation in the range of 1% to 3%, and they have on average fallen sharply with inflation above 4%. Given that the market starts out already very highly valued compared with the past, the danger is that a sharp drop in valuation will more than offset the rise in earnings from a stronger economy.
This time might be different, if Mr. Trump's plans for corporate tax cuts and a bonfire of red tape boost earnings enough to mean that any drop in valuation doesn't matter. After a seven-year bull market and with valuations high, many fear the end can't be far away, but the rosy scenario is that Mr. Trump can take us back to 2005. A year after the Fed started raising rates, inflation broke 4% and the valuation of the S&P 500 began to drop. But earnings rose quickly enough to allow shares to carry on up for months before a brief pullback in 2006 -- and then, as inflation dropped, to have a final run that took them up another 25% before the credit crunch hit in 2007. Just hope that we have learned enough to avoid a repeat of what followed.
Jan 26 - Oil prices were stable, with rising crude output from the United States offsetting efforts by OPEC and other producers to prop up the market by cutting supplies.
- Gold held near two-week lows hit in the previous session as the dollar regained ground, with selling ahead of the Lunar New Year holidays adding pressure and leaving the metal on track to record its first weekly loss since late December.
- London copper futures edged down, pulling back from a two-month high as the dollar strengthened, with trading volumes lean as the week-long Lunar New Year holiday kicks off in top metals consumer China.
- U.S. soybeans fell to a two-week low as prospects for higher supply of the crop improved in South America, leaving the oilseed poised to record a weekly loss of 2 percent.
Jan 25 - Oil prices rose, driven up by a weakening dollar, but gains were capped by plentiful supplies and inventories despite an effort by OPEC and other producers to cut output and prop up the market.
- Gold prices steadied near 1-1/2-week lows, as a U.S. equities rally offset support from uncertainty over U.S. government policies and a weaker dollar.
- London copper futures steadied near a two-month high amid worries over potentially tighter supply while the dollar wilted on concerns over U.S. President Donald Trump's protectionist policies.
- Chicago corn futures lost ground, giving up some of the last session's gains on concerns over changes in trade policies under new U.S. President Donald Trump
Jan 24 - Oil edged lower as expectations of an increase in U.S. inventories weighed on the market, offsetting bullish momentum from output cuts announced by OPEC and other producers.
- Gold slipped in a technical correction following an 8 percent rally since mid-December that was stoked by fear about U.S. President Donald Trump's protectionist trade policies.
- London aluminium futures held close to 20-month highs in Asia, buoyed by reports of possible capacity cuts in China, while copper steadied near its highest in almost two months.
- Chicago corn futures slid for a third session to touch a one-week low, dragged down by ample world stocks and concerns over U.S. trade policy under President Donald Trump.
- The dollar drifted lower against the yen and euro, as lingering concerns about U.S. President Donald Trump's protectionist stance undermined the greenback's earlier rebound.
Jan 23 - Oil climbed as a weaker U.S. dollar and production cuts announced by OPEC and other producers buoyed the market, but an increase in drilling activity in the United States is likely to keep a lid on prices.
- Gold prices were steady as the dollar remained under pressure on signs that United States President Donald Trump would adopt a protectionist stance on trade.
- Copper led most base metals higher as the dollar struggled amid concerns of U.S. protectionism under the newly-formed administration of U.S. President Donald Trump.
- Chicago soybean prices rose for the first time in four sessions as the dollar weakened, but forecasts of much-needed dry weather in Argentina's flooded crop-belt trimmed gains.
Jan 20 - Oil ticked lower, falling for the first time in three sessions as prospects of rising U.S. production weighed on the market.
- Gold prices rose to the highest in two months as investors sought safer assets amid uncertainty around the economic policies of new U.S. President Donald Trump and as the dollar declined against other major currencies.
- London copper climbed to a six-day high, buoyed by a weaker dollar and as U.S President Donald Trump reiterated plans to spend big on infrastructure.
- Chicago soybeans slid for a third session, with forecasts of dry weather in Argentina's flooded crop areas easing concerns over yield losses.
- The pound rose to its highest against the dollar in a month, as the greenback sold off broadly.
Jan 19 - Oil climbed for a second day underpinned by expectations of tighter supply and on reports of record Chinese demand, but prices remained under pressure from rising U.S. crude and gasoline inventories.
- Gold prices held steady and were on track for their fourth weekly gain in a row, buoyed by a weaker dollar ahead of the inauguration of U.S. President-elect Donald Trump later in the day.
- London copper futures edged higher after China's economy grew slightly faster than expected in the last quarter of 2016, but caution among investors ahead of U.S. President-elect Donald Trump's inauguration capped gains.
- Chicago soybeans slid for a second session with a strong dollar weighing on prices, although crop-damaging floods in Argentina kept a floor under the market.
Jan 18 - U.S. oil moved away from one-week lows touched the session before, with investors turning their attention to upcoming government data on U.S. inventories.
- Gold prices were down on a strong dollar after Federal Reserve Chair Janet Yellen advocated lifting U.S. interest rates gradually.
- London copper reversed early losses to follow Shanghai futures higher as expectations of steady growth in China helped the red metal along with positive U.S. economic signals.
- Chicago soybeans eased from a six-month high with the market snapping four sessions of gains on a stronger dollar although losses were limited by concerns that floods could crimp output in Argentina, the world's third-biggest producer.
Jan 17 - Oil markets were mixed, supported by growth in U.S. crude production and Saudi Arabia saying it would strictly adhere to a commitment to cut output, but held back by scepticism in financial markets that oversupply would be curbed.
- Gold prices rose to hover near seven-week highs hit the day before, with safe-haven demand boosted ahead of a speech in which British Prime Minister Theresa May is expected to discuss plans for a "hard Brexit".
- LME copper slid for a second session, as a firmer U.S. dollar pressured the market, but expectations of strong demand in top consumer China put a floor under prices.
- Chicago soybean futures rose for a third consecutive session on Tuesday, climbing to a seven-week top as heavy rains across Argentina's central crop belt raised concerns over yield losses.
- The British pound flirted with a three-month low, hit by fears that Prime Minister Theresa May's speech later in the day is likely to set Britain on a course that would end its access to the lucrative European Union single market.
Jan 16 - Oil prices inched up, supported by a weaker dollar and expectations that OPEC and other producers will cut output as part of a deal to curb global oversupply.
- Gold rose, buoyed by safe-haven demand due to uncertainty over U.S. policy ahead of President-elect Donald Trump's inauguration and amid concerns over Britain's exit from the European Union.
- Copper prices rose, extending hefty gains from last week on the back of strong economic data from the United States and China.
- U.S. soybean futures rose on Friday on follow-through buying on the U.S. Agriculture Department's surprise cut to its domestic production estimate and ending stocks on Thursday, traders said.
- Sterling wallowed at three-month lows in Asian trade after media reports that the British government is prepared to make a "hard" exit from the European Union rekindled investors' fears about the impact of the impending move.
Jan 13 - Oil prices edged up, supported by reports on details of OPEC output cuts, although lingering doubts over producer compliance with supply reduction targets weighed on the market.
- Gold fell after hitting a seven-week high in the previous session as the dollar edged up and a technical correction set in, but the yellow metal was still on track to end higher for a third straight week.
- London copper edged up, putting it on track for a weekly gain of about 5 percent, its biggest weekly advance since late November after data showed China imported more copper last year and a weaker dollar boosted industrial metals.
- Chicago soybean futures were on track for their biggest weekly gain since late November, with prices underpinned by the U.S. government reducing its estimate for yields and stockpiles.
Jan 12 - Oil prices dipped on the back of rising U.S. crude inventories and plentiful supplies, despite emerging output cuts from OPEC and other producers.
- Gold rose to a 7-week high on a weaker dollar after U.S. President-elect Donald Trump provided little clarity on future fiscal policies at a press briefing.
- Shanghai copper traded little changed in low volumes, while most other Shanghai contracts fell after U.S. President-elect Donald Trump failed to offer concrete stimulus plans.
- Chicago wheat futures slid for a third session, trading near one-week lows as the market faced pressure from forecasts of favourable weather in the U.S. Plains and the Black Sea region.