Saturday, 24 March, 2018

Brent hits $70 per barrel before retreating; equities rise with energy

A container is loaded onto a cargo ship at the Tianjin port in China. The US government owes China US$1.2 trillion A container is loaded onto a cargo ship at the Tianjin port in China. The US government owes China US$1.2 trillion
Nellie Chapman | 13 January, 2018, 05:26

LONDON, Jan 11 (Reuters) - The euro jumped nearly a cent on Thursday after the European Central Bank said it could revisit its communication stance in early 2018, boosting expectations that policymakers are getting ready to reduce their vast monetary stimulus programme.

Current range: 1.1961 to 1.2165.

Economists forecast that USA inflation will have retreated from 2.2% to 2.1% last month. Against the pound the euro rose 0.7 percent, hitting a one-week high of 89.11 pence.

The US currency slipped to a six-week low of 111.05 yen on Thursday and last stood at 111.21 yen.

"Looking ahead, the view was widely shared among members that the Governing Council's communication would need to evolve gradually, without a change in sequencing, if the economy continued to expand and inflation converged further towards the Governing Council's aim", the central bank said in the summary, which it calls "account", of the December 13-14 policy session.

The underlying pace of USA inflation unexpectedly accelerated in December amid increased housing costs, reinforcing the outlook for the Fed to raise interest rates several times in 2018.

The euro jumped against the dollar as the European Central Bank signaled it could begin to wind down its 2.5-trillion euro stimulus program this year.

Investors warned that while rising oil prices were supportive, they could weigh negatively especially on crude-consuming regions.

UK's benchmark FTSE 100 closed up by 0.2 percent, the pan-European FTSEurofirst 300 ended the day down by 0.23 percent, Germany's Dax ended down by 0.6 percent, France's CAC finished the day down by 0.3 percent.

Bonds recovered somewhat this morning after Chinese officials backtracked on suggestions that the state planned to slow its purchases of U.S. Treasurys.

US stocks rose to records as retail sales sparked optimism in the economy and JPMorgan Chase & Co. signaled tax cuts will bolster profits.

The Dow Jones Industrial Average rose 106.63 points, or 0.42 percent, to 25,475.76, the S&P 500 gained 9.1 points, or 0.33 percent, to 2,757.33 and the Nasdaq Composite added 26.87 points, or 0.38 percent, to 7,180.44.

US West Texas Intermediate (WTI) crude futures changed hands at Dollars 63.55, down 0.4 percent on the day.

Spot gold was up 0.5 percent at $1,322.74 an ounce by 1:37 p.m. EST (1837 GMT) after touching $1,326.56 on Wednesday, the highest since September 15. This has meant that the European Union has, in large part, played a "helper" role in USA financial hegemony throughout the postwar era to today.

In other commodities, the Brent crude oil spot price was up by 0.2% to $69.26 per barrel as of 11:10 am Shanghai time.

Amundi's Defend said the gradual removal of liquidity from central banks would drive volatility higher across asset classes this year.

Treasuries pared losses that sent the two-year yield over 2 percent for the first time since 2008 as investors assessed an unexpected acceleration in core inflation that likely boosts the Federal Reserve's case for higher rates.

"Our target for USA 10-year treasuries is 2.8 - and we might afford up to 3 percent - but going beyond that it's becoming an alert signal", said Amundi's Defend.