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Business

Asia stocks spooked by sudden slide in gold

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  • Asian stock markets : https://tmsnrt.rs/2zpUAr4
  • Gold drops more than 4% at one stage, oil prices slide
  • Strong U.S. jobs report brings Fed tapering nearer
  • Rising Treasury yields lift dollar to 4mth high on euro

SYDNEY, Aug 9 (Reuters) – Asian shares wobbled on Monday amid sharp losses in gold and oil prices, while the dollar held near four-month highs after an upbeat U.S. jobs report lifted bond yields.

Sentiment was shaken by a sudden dive in gold as a break of $1,750 triggered stop loss sales taking it as low as $1,684 an ounce . It was last down 2.2% at $1,723.

Brent sank almost 2% on concerns the spread of the Delta variant would temper travel demand.

Holidays in Tokyo and Singapore made for thin trading conditions, leaving MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down 0.1%.

Japan’s Nikkei (.N225) was shut but futures were trading just below Friday’s close. Nasdaq futures slipped 0.5% and S&P 500 futures 0.3%.

Chinese trade data out over the weekend undershot forecasts, though figures due later Monday should show inflation is no barrier to more policy stimulus. read more

The U.S. Senate was closer to passing a $1 trillion infrastructure package, though a single Republican lawmaker was holding up a vote on Sunday. read more

Investors were still assessing whether Friday’s strong U.S. payrolls report would take the Federal Reserve a step nearer to winding back its stimulus.

“There is not a lot of disagreement on a taper announcement coming sometime between September-December followed by actual tapering sometime between November and January,” said Rodrigo Catril, a senior FX strategist at NAB.

However, the pace of tapering was still up in the air and would decide when an actual rate hike came, he said. The Fed is currently buying $120 billion of assets a month, so a $20 billion taper would end the programme in six months whilst a $10 billion tapering approach would take a year.

The spread of the Delta variant could argue for a longer taper with U.S. cases back to levels seen in last winter’s surge with more than 66,000 people hospitalised.

Figures for July CPI due this week are also expected to confirm inflation has peaked, with prices for second hand vehicles finally easing back after huge gains.

There are four Fed officials speaking this week and will no doubt offer their own take on tapering.

In the meantime, stocks have been mostly underpinned by a robust U.S. earnings season. BofA analysts noted S&P 500 companies were tracking a 15% beat on second quarter earnings with 90% having reported.

“However, companies with earnings beats have seen muted reactions on their stock price the day following earnings releases, and misses have been penalized,” they wrote in a note.

“Guidance is stronger than average but consensus estimates for two-year growth suggest a slowdown amid macro concerns.”

Financials firmed on Friday as a steeper yield curve is seen benefiting bank earnings, while also penalising the tech sector where valuations are sky high.

Yields on U.S. 10-year notes were up at 1.30% in the wake of the jobs report, having hit their lowest since February last week at 1.177%.

That jump gave the dollar a broad lift and knocked the euro back to $1.1744 , its lowest since April. The dollar likewise climbed to 110.28 yen and away from last week’s trough of 108.71.

That took the U.S. currency index up to 92.882 and nearer to the July peak of 93.194.

Oil prices eased further after suffering their largest weekly drop in four months amid worries coronavirus travel restrictions would threaten bullish expectations for demand.

Brent fell $1.30 to $69.40 a barrel, while U.S. crude lost $1.29 to $66.99.

Editing by Shri Navaratnam

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Business

Oil prices fall on worries over China economy and higher crude output

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A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi/File Photo

  • China July factory activity grows at slowest pace since Feb 2020
  • OPEC July oil output hits 15-month high -survey
  • U.S. will not lock down despite coronavirus surge, Fauci says

SINGAPORE, Aug 2 (Reuters) – Oil prices fell on Monday on worries over China’s economy after a survey showed growth in factory activity slipped sharply in the world’s second-largest oil consumer, with concerns compounded by a rise in oil output from OPEC producers.

Brent crude oil futures slid by 74 cents, or 1%, to $74.67 a barrel by 0653 GMT, after dropping to a low of $74.10 earlier in the day.

U.S. West Texas Intermediate (WTI) crude futures dropped 70 cents, or 1%, to $73.25 a barrel after slipping to a session low of $72.77.

“China’s been leading economic recovery in Asia and if the pullback deepens, concerns will grow that the global outlook will see a significant decline,” said Edward Moya, senior analyst at OANDA.

“The crude demand outlook is on shaky ground and that probably will not improve until global vaccinations improve.”

China’s factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, in part on high product prices, a business survey showed on Monday, underscoring challenges facing the world’s manufacturing hub.

The weaker results in the private survey, mostly covering export-oriented and small manufacturers, broadly aligned with those in an official survey released on Saturday that showed activity growing at the slowest pace in 17 months. read more

Also weighing on prices, a Reuters survey found that oil output from the Organization of the Petroleum Exporting Countries (OPEC) rose in July to its highest since April 2020, as the group further eased production curbs under a pact with its allies while top exporter Saudi Arabia phased out a voluntary supply cut. read more

While coronavirus cases continue to climb globally, analysts said higher vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.

The United States will not lock down again to curb COVID-19 but “things are going to get worse” as the Delta variant fuels a surge in cases, mostly among the unvaccinated, top U.S. infectious disease expert Dr. Anthony Fauci said on Sunday. read more

India’s daily gasoline consumption exceeded pre-pandemic levels last month as states relaxed COVID-19 lockdowns while gasoil sales were low, signalling subdued industrial activity in July. read more

The United States and Britain said on Sunday they believed Iran carried out an attack on an Israeli-managed petroleum product tanker off the coast of Oman on Thursday that killed a Briton and a Romanian, and pledged to work with partners to respond. read more

Reporting by Jessica Jaganathan; Editing by Kenneth Maxwell and Edmund Klamann

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World

Turkey says part of Cyprus ghost town to reopen; EU, UK object

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  • Greek Cypriots say any reopening of Varosha unacceptable
  • Turkish Cypriots mark anniversary of 1974 Turkish invasion
  • Erdogan urges international recognition of Turkish Cypriots

NICOSIA, July 20 (Reuters) – Turkish Cypriot authorities announced on Tuesday a partial reopening of an abandoned town for potential resettlement, drawing a strong rebuke from rival Greek Cypriots of orchestrating a land-grab by stealth.

Varosha, an eerie collection of derelict high-rise hotels and residences, has been deserted since a 1974 war which split the island, a military zone nobody has been allowed to enter.

Turkish Cypriot authorities opened a small area for day visits in November 2020, and on Tuesday said a part of it would be converted to civilian use with a mechanism in place for people to potentially reclaim their properties.

“A new era will begin in Maras which will benefit everyone,” said Turkish President Tayyip Erdogan, who was visiting breakaway north Cyprus on Tuesday. Maras is the Turkish name for Varosha.

Greek Cypriots fear a change to the area’s status displays a clear intent of Turkey to appropriate it. Cypriot President Nicos Anastasiades described the move as “illegal and unacceptable”.

“I want to send the strongest message to Mr Erdogan and his local proxies that the unacceptable actions and demands of Turkey will not be accepted,” Anastasiades said.

Greece’s foreign ministry said it condemned the move “in the strongest terms”, while the United Kingdom, a permanent member of the U.N. Security Council, said it would be discussing the issue as a matter of urgency with other Council members, saying it was “deeply concerned”.

“The UK calls on all parties not to take any actions which undermine the Cyprus settlement process or increase tensions on the island,” a Foreign Office spokesperson said.

EU foreign policy chief Josep Borrell also expressed concern. “(The) unilateral decision announced today by President Erdogan and (Turkish Cypriot leader Ersin) Tatar risks raising tensions on the island & compromising return to talks on a comprehensive settlement of the Cyprus issue,” he said on Twitter.

United Nations resolutions call for Varosha to be handed over to U.N. administration and to allow people to return to their homes.

Anastasiades said that if Turkey’s “real concern was returning properties to their legal owners … they should have adopted U.N. resolutions and hand the city over to the U.N., allowing them to return in conditions of safety.”

Tuesday marked the 47th anniversary of a Turkish invasion mounted in 1974 after a Greek Cypriot coup engineered by the military then ruling Greece. Peace efforts have repeatedly floundered, and a new Turkish Cypriot leadership, backed by Turkey, says a peace accord between two sovereign states is the only viable option.

Greek Cypriots, who represent Cyprus internationally and are backed by the European Union, reject a two-state deal for the island which would accord sovereign status to the breakaway Turkish Cypriot state that only Ankara recognises.

“A new negotiation process (to heal Cyprus’ division) can only be carried out between the two states. We are right and we will defend our right to the end,” Erdogan said in a speech in the divided Cypriot capital of Nicosia.

Varosha has always been regarded as a bargaining chip for Ankara in any future peace deal, and one of the areas widely expected to have been returned to Greek Cypriot administration under a settlement. The Turkish Cypriot move renders that assumption more uncertain.

Reporting by Michele Kambas in Nicosia; Additional reporting by Jonathan Spicer in Istanbul and William Schomberg in London, Editing by Gareth Jones and Grant McCool

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Business

Saudi Arabia pushes back on UAE opposition to OPEC+ deal

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DUBAI, July 4 (Reuters) – Saudi Arabia’s energy minister pushed back on Sunday against opposition by fellow Gulf producer the United Arab Emirates to a proposed OPEC+ deal and called for “compromise and rationality” to secure agreement when the group reconvenes on Monday.

It was a rare public spat between allies whose national interests have increasingly diverged, spilling over into OPEC+ policy setting at a time consumers want more crude to aid a global recovery from the COVID-19 pandemic.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and its allies, voted on Friday to raise output by some 2 million barrels per day from August to December 2021 and to extend remaining cuts to the end of 2022, but UAE objections prevented agreement, sources had said. read more

“The extension is the basis and not a secondary issue,” Saudi Energy Minister Prince Abdulaziz bin Salman told Saudi-owned Al Arabiya television channel.

“You have to balance addressing the current market situation with maintaining the ability to react to future developments … if everyone wants to raise production then there has to be an extension,” he said, noting uncertainty about the course of the pandemic and output from Iran and Venezuela.

The UAE said on Sunday it backs an output increase from August but suggested deferring to another meeting the decision on extending the supply pact. It said baseline production references – the level from which any cuts are calculated – should be reviewed for any extension. read more

The standoff could delay plans to pump more oil through to the end of the year to cool oil prices.

“Big efforts were made over the past 14 months that provided fantastic results and it would be a shame not to maintain those achievements. … Some compromise and some rationality is what will save us,” the Saudi energy minister said.

“We are looking for a way to balance the interests of producer and consumer countries and for market stability in general, especially when shortages are expected due to the decrease in stockpiles,” he added.

Responding to oil demand destruction caused by the COVID-19 pandemic, OPEC+ agreed last year to cut output by almost 10 million bpd from May 2020, with plans to phase out the curbs by the end of April 2022. Cuts now stand at about 5.8 million bpd.

OPEC+ sources said the UAE contended its baseline was originally set too low, but was ready to tolerate if the deal ended in April 2022. The UAE has ambitious production plans and has invested billions of dollars to boost capacity.

Prince Abdulaziz, who stressed Riyadh’s “sacrifice” in making voluntary cuts, said no country should use a single month as a baseline reference, adding there was a mechanism to file objections and that “selectivity is difficult”.

The regional alliance that saw Saudi Arabia and the UAE join forces to project power in the Middle East and beyond — coordinating use of financial clout and, in Yemen, military force — has loosened as national interests came to the fore.

Abu Dhabi extricated itself from the Yemen war in 2019, saddling Riyadh. Saudi Arabia this year took the lead to end a row with Qatar despite reluctance from its Arab allies.

The kingdom has also moved to challenge the UAE’s dominance as the region’s business and tourism hub as Riyadh vies for foreign capital to diversify its economy away from oil.

Reporting by Marwa Rashad in London, Ghaida Ghantous in Dubai and Alaa Swilam in Cairo; Writing by Ghaida Ghantous; Editing by Hugh Lawson, Peter Cooney and Daniel Wallis

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World

‘Eye of fire’ in Mexican waters snuffed out, says national oil company

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MEXICO CITY, July 2 (Reuters) – A fire on the ocean surface west of Mexico’s Yucatan peninsula early on Friday has been extinguished, state oil company Pemex said, blaming a gas leak from an underwater pipeline for sparking the blaze captured in videos that went viral.

Bright orange flames jumping out of water resembling molten lava was dubbed an “eye of fire” on social media due to the blaze’s circular shape, as it raged a short distance from a Pemex oil platform.

The fire took more than five hours to fully put out, according to Pemex.

The fire began in an underwater pipeline that connects to a platform at Pemex’s flagship Ku Maloob Zaap oil development, the company’s most important, four sources told Reuters earlier.

Ku Maloob Zaap is located just up from the southern rim of the Gulf of Mexico.

Pemex said no injuries were reported, and production from the project was not affected after the gas leak ignited around 5:15 a.m. local time. It was completely extinguished by 10:30 a.m.

The company added it would investigate the cause of the fire.

Pemex, which has a long record of major industrial accidents at its facilities, added it also shut the valves of the 12-inch-diameter pipeline.

Angel Carrizales, head of Mexico’s oil safety regulator ASEA, wrote on Twitter that the incident “did not generate any spill.” He did not explain what was burning on the water’s surface.

Ku Maloob Zaap is Pemex’s biggest crude oil producer, accounting for more than 40% of its nearly 1.7 million barrels of daily output.

“The turbomachinery of Ku Maloob Zaap’s active production facilities were affected by an electrical storm and heavy rains,” according to a Pemex incident report shared by one of Reuters’ sources.

Company workers used nitrogen to control the fire, the report added.

Details from the incident report were not mentioned in Pemex’s brief press statement and the company did not immediately respond to a request for comment.

Reporting by Adriana Barrera and Marianna Parraga; Additional reporting by David Alire Garcia; Writing by Anthony Esposito; Editing by Daina Beth Solomon, Philippa Fletcher and David Gregorio

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