Daily Market Outlook by Solid Trust Markets

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Daily Market Outlook 28 March

Dollar firmed on Monday and stocks in North Asia rose after fairly strong consumer spending led to an upward revision in U.S. economic growth in the fourth quarter, helping to underpin investor sentiment. The dollar index against a basket of six major currencies rose 0.2 percent to 96.378, its highest in almost two weeks. The dollar rose 0.6 percent to 113.64 yen, keeping intact its steady recovery from a 6-1/2-month low of 110.67 hit on March 17. U.S. gross domestic product increased at a 1.4 percent annual rate in Oct-Dec, above the previously reported 1.0 percent pace, the third GDP estimate showed on Friday. In the past week, the dollar has been helped by comments from some Fed officials indicating that policymakers think they could raise interest rates as early as next month. U.S. PCE inflation data due at 1230 GMT could fan expectations of an early rate move if it shows increasing inflationary pressure. The PCE inflation has been rising of late. The Fed has said the prices will be the key in determining policy so the data should attract a lot of attention. The annual core PCE inflation rose 1.7 percent in January, the fastest pace since July 2014. The data will be followed by a speech from Federal Reserve Chair Janet Yellen on the economic outlook and monetary policy on Tuesday. A few other Fed policymakers are also due to speak on the same day, making the Fed's policy the biggest focus for now.

The dollar nudged up against the euro and yen on Monday, after rebounding last week following a series of comments from U.S. Federal Reserve officials who supported the case for more interest rate hikes. The remarks such as those from St. Louis President James Bullard raised prospects of more rate hikes than the market had anticipated. Such views helped the greenback recover from a knock earlier this month when the Fed halved its rate hike expectations to two from four this year. Major indexes remain well above their 2016 lows, thanks to evidence of a reviving U.S. economy and a sharp rebound in oil prices, even as stocks broke a five-week streak of gains on Thursday, their last trading day before a long holiday weekend. The March U.S. employment report and other key economic numbers next week could help U.S. stocks resume their recent winning path as long as that data hits the sweet spot: Not strong enough to add to worries about further interest rate hikes, yet not weak enough to cause concern about a recession. Data on Friday, a market holiday, showed the U.S. economic growth slowdown in the fourth quarter was not as sharp as previously estimated. Reports on the housing market could also draw investors' attention given recent sharp gains in homebuilder stocks. While the volatility that marked the start of the year has diminished and many strategists have adopted a cautiously optimistic outlook, the market seems to have paused. The Friday U.S. data showed that even as gross domestic product increased at a 1.4 percent annual rate instead of the previously reported 1.0 percent pace, corporate profits from current production fell $159.6 billion in the fourth quarter.

Oil prices rose in early Asian trading on Monday after a three-day break, but volumes were thin as a number of markets remain on holiday for Easter. Declining U.S. oil output and strong gasoline demand were responsible for some of that recovery, but the bulk of it was powered by major producers' plans to freeze output at January's highs. Producers are due to meet on April 17 to discuss the plan. Organization of the Petroleum Exporting Countries (OPEC)member Iraq's oil exports have held steady so far in March, according to loading data and industry sources, halting for now the rapid supply growth from the country.Baghdad has given verbal support to the initiative by OPEC and outside producers to freeze output to try to boost prices.

 

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Daily Market Outlook 30 March

Asian shares rallied on Wednesday as markets pared back expectations for how fast and how far U.S. interest rates might rise this year, bruising the dollar and boosting sovereign bonds. The shift came after Federal Reserve Chair Janet Yellen emphasised global dangers to growth and inflation, and thus the need to proceed "cautiously" on tightening policy. Fed fund futures jumped as investors priced out any a chance of a hike in April and only a slim probability of a move in June. The December contract implies a rate of just 57 basis points compared to the current 37 basis points.

Japan's factory output in February fell the most since 2011 when a devastating earthquake ruptured the supply chain, stoking fears of another recession and renewing pressure on policymakers to take evasive action. The data followed passage of the fiscal 2016 budget on Tuesday, paving the way for Prime Minister Shinzo Abe to announce a new fiscal stimulus or drop the planned 2017 hike in sales tax after first quarter economic growth data due on May 18 is published. The announcement may also be made around when Abe hosts a summit of the Group of Seven richest nations from May 26 to May 27. Analysts expect GDP to resume moderate growth in January to March although some fear a second straight quarter of contraction - the definition of a technical recession - because of weak exports and tepid consumption. With inflation stalling, consumer spending weakening and China's slowdown threatening to undermine the export-reliant economy, the Bank of Japan is also under pressure to act again after it unexpectedly adopted negative rates less than two months ago. Trade ministry data showed industrial output fell 6.2 percent month-on-month in February, largely in line with economists' median estimate. It followed a 3.7 percent rise in the prior month, which was the first gain in three months. It was the biggest drop since March 2011, when the devastating earthquake and tsunami struck Japan's northeastern coastal areas.

Federal Reserve Chair Janet Yellen said on Tuesday the U.S. central bank should proceed only cautiously as it looks to raise interest rates, pushing back on a handful of her colleagues who have suggested another move may be just around the corner. In her first comments since the Fed decided to hold rates steady two weeks ago, Yellen said inflation has not yet proven durable against the backdrop of looming global risks to the U.S economy, including still-low oil prices and concerns over China. At its March policy meeting, the Fed had nodded to an overseas slowdown and early-year market turmoil in justifying a pause to its policy tightening. At the time, Fed officials also downgraded economic expectations and predicted only about two more rate hikes this year, down from a December prediction of four. Yellen said she still expected that headwinds from weak growth abroad, low oil prices and uncertainty over China would abate and allow the U.S. recovery to continue alongside a "gradual" series of rate hikes. U.S. inflation measures have shown some recent strength, with the Fed's preferred annual measure flat at 1.7 percent in February, though still below its target of 2 percent. Another closely watched 12-month measure was up 2.3 percent from a year ago. San Francisco Fed President John Williams, a close ally of Yellen who is usually among the core of decision-makers, said earlier on Tuesday in Singapore that the U.S. central bank should stay on track with its tightening plan. That echoed public comments last week by Atlanta Fed President Dennis Lockhart, another centrist, and James Bullard of the St. Louis Fed, who has a vote on policy this year. Those so-called hawkish views had convinced some investors that the Fed was poised to raise rates at policy meetings in April or June. Oil futures rebounded in Asian trade on Wednesday, buoyed by a less than expected build in crude oil stockpiles last week. Oil prices fell about 3 percent in the previous session after Kuwait and Saudi Arabia said they would resume production at the jointly operated 300,000-barrel-per-day Khafji field even as major oil producers are considering agreeing on an output freeze. The EIA is due to release official crude inventory data later on Wednesday. That is expected to show a 3.3 million barrel build, an increase to a record high for a seventh straight week. A separate report from industry group the American Petroleum Institute late Tuesday showed U.S. crude stocks rose last week by 2.6 million barrels to 534.4 million barrels.

 

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Daily Market Outlook 1 April

U.S. employers likely stepped up hiring in February, in a sign of labor market strength that could further ease fears the economy is heading into recession and allow the Federal Reserve to gradually raise interest rates this year. Nonfarm payrolls probably increased by 190,000 jobs last month in the U.S. Labor Department's report due on Friday, with the unemployment rate holding at an eight-year low of 4.9 percent, according to a Reuters survey of economists. The labor market gained 151,000 jobs in January, after the warmest temperatures in years boosted hiring in weather-sensitive sectors like construction, helping payrolls to rise by an average 279,000 jobs per month in the fourth quarter last year. Fears of a recession in the wake of poor economic reports in December and slowing growth in China sparked a global stock market rout at the start of the year, causing financial market conditions to tighten. Financial markets have priced out bets of an interest rate rise at the Fed's March 15-16 policy meeting and the probabilities for rate increases for the rest of the year remain rather small. Significant data such as consumer and business spending improved strongly in January though, leading to predictions that economic growth in the first quarter could rise by at least a 2.5 percent at an annualized rate. The economy grew at a 1.0 percent pace in the fourth quarter of 2105. There is a risk, however, that payroll gains could come in below expectations after a survey on Thursday showed employment in the services sector fell in February for the first time in two years. Still, economists say any below-forecast number should not be interpreted as a sign of labor market weakness as companies are struggling to find qualified workers to fill open positions.

Asian shares looked set on Friday to post their strongest week in five months as global investors returned to riskier assets after a string of positive U.S. economic data and a bounce in oil and commodity prices. Globally, markets are rolling back the extreme risk-off trading they did in January and February. Chinese shares, however, failed to gain from the optimism, investors are awaiting the start of the annual meeting of China's parliament on Saturday, which will map out economic goals for the next five years. U.S. data on Thursday was positive on the whole, with factory orders rising and the service sector index showing continued expansion. Somewhat dimming the optimism, however, the services survey showed employment in the sector fell in February for the first time in two years. But that was not necessarily bad for U.S. stocks, as it helped to reduce expectations for a rate hike this month by the Federal Reserve, and pushed the dollar lower.

Crude oil prices gained in Asia on Friday ahead of rig count data in the United States and a mixed supply picture. Overnight, crude futures remained near one-month highs, wavering during a see-saw, choppy trade on Thursday, as investors continue to gauge whether OPEC will institute a production freeze later this month in order to stem a prolonged downturn in the oil industry. Crude prices shot up in overnight, Asian trading after bullish comments from Nigeria oil minister Emmanuel Kachikwu on the increased possibility of an OPEC-Non OPEC summit in Russia at the end of this month. The participants are expected to rekindle discussion on a joint agreement to freeze production, as prices remain sharply below levels from 20 months ago when crude peaked at $115 a barrel. Speaking at a conference in Abuja, the Nigerian capital, Kachikwu indicated that the objective of the meeting could be to agree on a compromise that would help raise oil prices back to $50 a barrel. The Nigerian minister's comments come several weeks after four nations including Russia and Saudi Arabia agreed in principle on the Doha Agreement, which would require the participants to cap output at their respective levels from January. The deal has been met with resistance from Iran, which has been looking to ramp up production following the completion of its historic nuclear deal at the start of the year. Neither Iran, nor Saudi Arabia confirmed their participation in the Russia meeting. Investors continued to digest a report from Reuters on Wednesday that Saudi Arabia has looked to initiate discussions with a host of major U.S. banks in an effort to secure a loan of up to $10 billion. At the end of last year, Saudi Arabia projected an annual 2016 deficit of 326.2 billion riyals ($87 billion) due primarily to the major downturn in oil prices. Also on Wednesday, the U.S. EIA said in its Weekly Petroleum Status Report that U.S. commercial crude inventories for the week ending on February 26 increased by 10.4 million barrels from the previous week. At 518.0 million barrels, U.S. crude oil inventories are at historically high levels for this time of year.

 

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Daily Market Outlook 5 April

Asian shares and other riskier assets skidded on Tuesday, pressured by slumping crude oil prices and mixed messages from Federal Reserve policymakers on the outlook for U.S. interest rate rises. Commodity-related and industrial shares helped drag down U.S. stock indexes overnight, and U.S. economic data suggested that economic growth remained sluggish in the first quarter.

New orders for U.S. factory goods fell in February and business spending on capital goods was much weaker than initially thought, the latest indications that economic growth slowed further in the first quarter. The Commerce Department said on Monday new orders for manufactured goods declined 1.7 percent as demand fell broadly, reversing January's downwardly revised 1.2 percent increase. Orders have declined in 14 of the last 19 months. They were previously reported to have increased 1.6 percent in January. The department also said orders for non-defense capital goods excluding aircraft fell by a steeper 2.5 percent in February instead of the 1.8 percent drop reported last month. These so-called core capital goods are seen as a measure of business confidence and spending plans. That gave investors no reason to believe the U.S. Federal Reserve would raise interest rates anytime soon, in line with the cautious tone Fed chair Janet Yellen sounded last week that contrasted with more hawkish remarks from other central bank policymakers.

The dollar nursed losses against the yen and euro on Tuesday, but was firmer versus the Australian, Canadian and New Zealand currencies, which all succumbed to weakness in commodity prices. The greenback has been on the defensive as views that the U.S. central bank is in no hurry to tighten monetary policy have held sway ever since Federal Reserve Chair Janet Yellen last week expressed caution toward hiking interest rates. The dollar came under further pressure against the safe-haven yen as equities and crude oil prices fell. Perceptions that the Bank of Japan would not immediately ease monetary policy, which in theory would curb yen strength, further favored the Japanese currency. Bank of Japan Governor Haruhiko Kuroda on Tuesday stressed his readiness to expand monetary policy further, saying that market moves would be among key factors the central bank will look at in deciding when and how it will next expand stimulus. But his comments did little to stem the yen's ascent. Boston Fed Reserve President Eric Rosengren was the latest to fly into the hawkish zone on Monday, calling it "surprising" that futures markets currently price in just one or even no rate hikes this year, which he said could prove "too pessimistic." "Rosengren is usually on the dovish side of the spectrum, highlighting how out of line Fed chair Yellen sounded last week compared to her colleagues," Sean Callow, senior currency strategist at Westpac, said in a note. Minneapolis Fed President Neel Kashkari said on Monday he is "comfortable" with the current stance of U.S. monetary policy, and expects "moderate" economic growth ahead.

Oil prices fell on Tuesday on signs of weakening gasoline demand, long a pillar of support for struggling crude markets in both North America and Asia, and on concerns the global crude overhang will persist longer than expected. Tuesday's declines came after U.S. gasoline demand during January fell for the first time in 14 months. Meanwhile in Asia, oversupply and slowing economic growth is forcing some traders to store unwanted gasoline aboard tankers as onshore storage facilities in Singapore and Malaysia are filled to the rims. Growth in gasoline demand has been one of the strongest pillars of demand in the fuel complex, largely credited for preventing crude prices from tumbling even further than they have. Analysts say crude prices could fall lower again soon, as an emerging gasoline glut potentially adds to a global overhang in crude production that sees over 1 million barrels of oil produced in excess of demand every day. To address the crude overhang, major producers like Saudi Arabia and Russia have proposed a freeze in output at January levels, when both pumped at or near record levels, a move analysts have dismissed as ineffective.

 

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Daily Market Outlook 7 April

FED appears unlikely to raise interest rates before June amid widespread concern at the U.S. central bank over its limited ability to counter the blow of a global economic slowdown, minutes from the Fed's March 15-16 policy meeting suggest. The minutes released on Wednesday showed policymakers debated whether they might hike rates in April but "a number" of them argued headwinds to growth would probably persist, with many arguing they should be cautious about raising rates. "Participants generally saw global economic and financial developments as continuing to pose risks," according to the minutes. Policymakers had signaled at the close of the March meeting that they expected to raise rates twice in 2016 but the timing of the hikes still appears up in the air. According to the minutes, many Fed members said they were concerned that the central bank had limited firepower to respond to shocks from abroad because interest rates are already so close to zero. "Many participants indicated that the heightened global risks and the asymmetric ability of monetary policy to respond to them warranted caution," the minutes stated. Investors have held doubts the Fed would raise rates at all this year and the minutes did little to shift bets on the path of policy. Prices for fed futures contracts suggested investors still saw the chance of a rate hike in December as just better than even, and they saw virtually no chance of an increase at the April 26-27 policy meeting, according to the CME group. According to the minutes, several of the central bankers said elevated risks faced by the U.S. economy meant that raising rates in April "would signal a sense of urgency they did not think appropriate." A small minority indicated a rate hike might be warranted when the Fed meets at the end of April. After that meeting, policymakers next convene June 14-15. Fed chief Janet Yellen said on March 29 the U.S. central bank should "proceed cautiously" in raising rates, a view Fed Governor Lael Brainard pushed late last year which has been recently embraced by policymakers including St. Louis Fed President James Bullard, who had previously warned the Fed might hike too slowly.

The dollar slid to a 17-month low against the yen on Thursday, pressured by minutes of the U.S. Federal Reserve's meeting last month that underscored caution about future interest rate hikes. Bank of Japan policymakers will likely debate the possibility of easing further at their April 27-28 meeting, as recently downbeat economic data has failed to reinforce their expectations that a moderate economic recovery would lift inflation towards their 2 percent target, sources familiar with BOJ thinking said. A decision on whether to ease at the meeting will be a close call, as many BOJ officials are wary of using their limited policy tools again so soon after unveiling their negative interest rate policy on Jan. 29. As the buoyant yen shrugged off the divergent monetary policy outlook, the dollar got no help from Japanese Prime Minister Shinzo Abe's remarks to the Wall Street Journal this week that countries should avoid seeking to weaken their currencies with "arbitrary intervention." The yen rose despite verbal warnings from Japanese officials against its appreciation. A senior Japanese finance ministry official said on Thursday that recent currency moves have been one-sided and that the ministry would take steps in the market as needed. The market is skeptical about the chances of yen-selling intervention ahead of a G7 summit that Japan is hosting in May, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. "It may be tough for Japan's MOF to take the initiative and charge toward intervention," Okagawa said, referring to the ministry of finance, which has jurisdiction over Japan's currency policy.

Crude futures rose on a raft of supportive indicators on Thursday, although some traders warned that physical supply and demand fundamentals did not warrant a strong price recovery at this stage. U.S. crude prices were supported by an unexpected fall in crude inventories, albeit from a record high, last week as refineries continued to hike output and imports fell. U.S. crude inventories USOILC=ECI fell 4.9 million barrels in the week to April 1, compared with analysts' expectations for an increase of 3.2 million barrels, according to data from the Energy Information Administration on Wednesday. In Europe, North Sea oil field maintenance expected next month lent support to Brent futures, which are priced off North Sea supplies. Yet some traders and analysts warned that the rise in futures prices might be premature and not supported by physical market fundamentals. A planned meeting of major oil producers on April 17 to freeze output around current levels, which in most cases remains at or near record highs, would do little to reduce an overhang in production with at least 1 million barrels of crude pumped every day in excess of demand. Goldman Sachs (GS.N) said that it was "less willing to believe in a sustained OPEC production freeze or cut" and instead expected OPEC's production to rise by 600,000 barrels per day (bpd) this year and by 500,000 bpd in 2017.

 

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Daily Market Outlook 8 April

Asian shares extended losses to three-week lows on Friday, while the yen soared to a 17-month high against the dollar as investors bet Japan would be hard pressed to drive down its currency in the face of widespread foreign opposition. Bank shares led losses in Europe and the U.S. markets on Thursday, amid talk of more layoffs and cutbacks planned by Europe's major lenders as they struggle with zero rates. Federal Reserve Chair Janet Yellen, in a conversation with former Fed chairmen, said the U.S. economy is on a solid course and still on track to warrant further interest rate hikes. Despite a chorus of comments from Fed policymakers about more rate hikes, many investors think the global economy is too weak to allow the Fed to raise rates all that fast. Traders believe it would be hard for Japanese authorities to intervene to stem the yen's rise after the Group of 20 agreements in February warned countries to refrain from competitive devaluation. In Europe, rating agency Moody's said that Germany - the continent's biggest economy - expected a slight acceleration of its growth to 1.8 percent, benefiting from robust domestic demand.

The number of Americans filing for unemployment benefits fell more than expected last week, suggesting the labor market continued to strengthen despite tepid economic growth. Initial claims for state unemployment benefits declined 9,000 to a seasonally adjusted 267,000 for the week ended April 2, the Labor Department said on Thursday. Economists had forecast claims slipping to 270,000 in the latest week. Jobless claims have now been below 300,000, a threshold associated with healthy labor market conditions, for 57 weeks, the longest stretch since 1973. The labor market buoyancy is at odds with slowing economic growth. Recent data on consumer spending, business investment and international trade suggest growth slowed to below a 1 percent annualized rate in the first quarter after expanding at an anemic 1.4 percent pace in the fourth quarter. Government data last week showed about 2.4 million people entered or re-entered the job market between September and March, the second-largest increase in the labor force over a six-month period on record. Fed Chair Janet Yellen has argued that hidden labor market slack was restraining wage growth.

The dollar firmed a little but languished close to 17-month lows against the yen on Friday, with the Japanese currency poised for weekly gains against its major counterparts despite verbal warnings from Japanese officials. Underpinning the greenback, a less cautious tone from Federal Reserve Chair Janet Yellen reminded investors that U.S. interest rate hikes are likely still in the cards this year, and Japanese Finance Minister Taro Aso let them know direct invention is also possible. Speaking at a panel with former chiefs of the U.S. central bank, Yellen said late on Thursday that the labor market was "close" to full strength and that inflation was currently held back by temporary factors. She said the economy is on a solid course and still on track to warrant further interest rate hikes. Japanese Finance Minister Taro Aso said early on Friday that rapid foreign exchange moves were "undesirable," that the current yen moves were "one-sided," and that Japan would takes steps as needed. San Francisco Fed President John Williams said Thursday that at least two interest-rate hikes this year is the "right course" so long as the U.S. economy continues to grow, businesses add jobs, and inflation picks up as he expects. "If the U.S. economy continues to add jobs at the pace we're seeing, if inflation continues to improve, then clearly we should be raising rates gradually," Williams told Fox Business Network, according to excerpts provided to Reuters. Asked if the Fed should raise rates two times this year, he said, "I do think that's the right course," as long as data comes in as expected.

Oil prices edged up early on Friday, lifted by firm economic indicators from the United States and Germany which could support fuel demand, but analysts warned that crude markets were threatened by another downturn because of ongoing oversupply. Despite encouraging reports from two of the world's biggest economies, analysts warned that oil prices could fall again soon as there were few signs that a global overhang in production of at least 1 mn bpd would be addressed soon. Iraq said on Thursday that exports from its southern ports had hit almost 3.5 mn bpd by April, up from an average of 3.29 mn bpd in March, putting doubts on the feasibility of a planned meeting by major producers on April 17 to freeze output levels. Iran, which was relieved from crippling international sanctions in January which had cut its crude exports to little more than 1 mn bpd, has said it would only participate in a production freeze once it had regained its pre-sanctions levels of 4 mn bpd, pouring cold water on any hopes that ballooning oversupply can be reined in soon.

 

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Daily Market Outlook 11 April

Asian stocks wobbled on Monday and Japan's Nikkei index slid as the dollar notched a fresh 17-month low against the yen. Data out on Monday showed China's consumer price inflation was less than expected in March, while wholesale prices declined less than anticipated, in a sign that deflationary pressure in the industrial sector may be easing. Consumer prices in March rose 2.3 percent, below a median forecast of 2.5 percent in a Reuters poll but equal to February's increase of 2.3 percent. Although the prior month's figure represented the fastest rise in more than a year, the increase was driven largely by sharp gains in food prices following an unexpectedly harsh winter. Economists have been watching closely to see how inflation evolves in China this year following a prolonged easing campaign by the central bank beginning in late 2014, which has boosted credit, but has yet to result in substantial price increases. Producer prices fell 4.3 percent in March, extending their decline to a full four years, but at a slower rate than forecasts of a 4.6 percent decline. Falling commodity prices and overcapacity in key industrial sectors have helped mire producer prices in a lengthy slump, although declines have eased in recent months.

The greenback's recent slide against the yen prompted a chorus of warnings from officials in Tokyo and put investors on alert for direct yen-selling intervention, though many believed Japan would stay its invention hand. Japan's top government spokesman, Chief Cabinet Secretary Yoshihide Suga, said on Monday that recent currency moves were one-sided and speculative and that the government would take steps as needed. The dollar wallowed close to lows notched last week, as investors mulled the outlook for U.S. monetary policy, with the Federal Reserve seen as being more cautious on hiking interest rates than some investors had believed. Japan's top government spokesman said the Group of 20's agreement to avoid competitive currency devaluation does not mean Japan cannot intervene in response to one-sided currency moves. Yet many traders say verbal intervention would have limited impact given that the yen is hardly strong at current levels. In a reminder that many economies are still struggling with slow growth, Japan reported on Monday that its core machinery orders fell 9.2 percent in February from the previous month.

President Barack Obama will meet with U.S. Federal Reserve Chair Janet Yellen on Monday to discuss the economy and Wall Street reform, the White House said on Sunday. Vice President Joe Biden will also attend the meeting. The president and the Fed chair meet regularly to discuss economic issues. Obama has presided over a steady economic and jobs recovery since the 2008 financial crisis and is nearing the end of his term in office. The Fed has signaled it will exercise caution on interest rate increases because of concerns over the global economy, after implementing its first rate rise in almost a decade in December.

Oil prices rose on Monday, extending sharp rises from the end of last week following a decline in U.S. inventories and drilling, while outages and hopes that exporters could freeze output boosted international prices. Analysts also said that global oil demand could accelerate, helping to tighten a market that has suffered from ballooning oversupply since mid-2014, although weak Asian economic data weighed on markets. U.S. energy firms cut oil rigs for a third week in a row to the lowest level since November 2009 as energy firms slash spending. Drillers cut 8 oil rigs in the week to April 8, bringing the total rig count down to 354. Brent was lifted by production outages in the North Sea and West Africa, and by hopes that a meeting of exporters planned for April 17 would lead to an agreement to rein in ballooning overproduction that sees at least 1 million barrels per day (bpd) pumped in excess of demand. Analysts at Bernstein said on Monday they expected global oil demand to grow at a mean annual rate of 1.4 percent between 2016 and 2020, compared with annual growth of 1.1 percent over the past decade and an International Energy Agency estimate for demand to grow by 1.3 percent over the next 5 years. Bernstein said it expected the market to rebalance in the second half of 2016 due to its outlook for stronger than expected demand. Global demand would reach 101.1 million barrels per day (bpd) by 2020 from 94.6 million bpd at present, it said.

 

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Daily Market Outlook 12 April

Asian stocks rose on Tuesday, led by a rebound in Japanese shares as investors hunted for bargains, and commodities like crude oil strengthened as the weaker U.S. dollar made them cheaper for buyers using currencies other than the greenback. Still, the bullish yen remained a concern for Japanese equities. "Investors are frustrated about the lack of effective measures against the strong yen," said Hikaru Sato, senior technical analyst at Daiwa Securities in Tokyo. European stocks were seen opening slightly lower, with weak-looking results from Alcoa potentially weighing on mining stocks.

The dollar's recent depreciation has boosted commodity prices and crude was lifted by hopes that oil producers would agree at a meeting in Doha next Sunday to curb output. A weaker greenback favours non-U.S. buyers by reducing the effective cost of commodities priced in dollars. The U.S. currency has been on the back foot since Federal Reserve Chair Janet Yellen last month doused expectations for hikes in U.S. interest rates anytime soon. Risk assets made modest gains in the region as safe-haven government bonds, supported by very loose monetary policies, continued to attract demand.

President Barack Obama and Federal Reserve Chair Janet Yellen discussed risks to the economy and progress from Wall Street reform during a rare meeting in the Oval Office on Monday, the White House said. "They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally," the White House said in a statement about the meeting. "They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers."

Oil prices dipped on Tuesday, but both U.S. and international crude futures held above $40 per barrel ahead of a meeting of major producers to discuss freezing output levels to rein in ballooning oversupply. Major oil producers from the Middle East and Russia, but excluding the United States, plan to meet in Qatar's capital Doha next Sunday. They will discuss measures to rein in ballooning oversupply which sees as many as 2 million barrels of crude produced every day in excess of demand, leaving storage tanks around the world filled to the rims with unsold and unwanted fuel. Most analysts expect producers to freeze output around current levels, which being beyond consumption and close to record levels would do little to address the glut. Reflecting a widespread view that oil prices will stay low for some time, the Brent forward price curve has significantly flattened, with the time spread between front-month futures and those for delivery in December 2017 narrowing from $8.70 per barrel in early March to just $4.70 a barrel currently. Analysts at Bernstein said that they expected global oil demand to grow at a mean annual rate of 1.4 percent between 2016 and 2020, versus annual growth of 1.1 percent over the past decade, adding that global demand would reach 101.1 million barrels per day (bpd) by 2020 from 94.6 million bpd now.

The yen traded weaker in Asia on Tuesday with investors at attention for any remarks on the currency by policymakers. Dollar dropped to eight-month lows against the other major currencies in subdued trade on Monday, as the Federal Reserve’s persistently cautious stance on rate hikes continued to weigh on the greenback. Japan’s Chief Cabinet Secretary Yoshihide Suga said Monday the government was closely monitoring the foreign exchange market and added that the moves in the yen were one-sided and speculative. But investors stuck to the view that Japan will refrain from any direct action to stem the yen’s gains until at least after this week's G20 meetings in Washington. Separately, the dollar remained weaker against the yen on the view that the Federal Reserve will stick to a cautious approach on hiking interest rates this year amid concerns over the outlook for the global economy. Lower interest rates make the dollar less attractive to yield seeking investors.

 

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Daily Market Outlook 13 April

Asian shares came close to their highs for the year on Wednesday after surprisingly upbeat Chinese trade data offered hope the Asian giant was finally stabilising, underpinning both risk sentiment and commodity prices. China reported exports jumped 11.5 percent in March compared to a year earlier, the first increase since June and well above market forecasts. That was a huge improvement on February, even though data at this time of year tends to be distorted by the Lunar New Year holidays.

The heads of two regional Federal Reserve banks supported a rate hike ahead of the Fed's March meeting as an improving economy added to sentiment to tighten monetary policy. The heads of the Richmond and Kansas City Fed branches supported a quarter point hike in the main lending rates for banks "in light of continued improvements in labor market conditions and expectations that inflation would rise," according to minutes of the Fed's March discount rate meeting. The discussion over discount rates preceded the Fed's policy meeting held last month. The target federal funds rate was held steady at that session. Kansas City Federal Reserve Bank president Esther George dissented, preferring to raise rates. Richmond Federal Reserve Bank president Jeffrey Lacker does not vote on the Fed's main rate-setting committee this year. Minutes of the last Fed policy meeting showed a broadening debate over when to hike rates next. Though an increase is considered unlikely when the Fed meets in April, steady progress on jobs and growth could set the stage for a hike in June.

The safe-haven Japanese yen slid from recent peaks against the greenback on Wednesday as solid gains in oil prices helped underpin risk appetite. With hopes of a production cap agreed by top producers Russia and Saudi Arabia back in play, global oil prices climbed to four-month highs overnight. "The dollar gained along with the Australian dollar as risk appetite improved in the broader financial markets. What was eye-catching was that the dollar rose without support from Japanese officials' jawboning," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo. The yen has mostly brushed off recent comments by Japanese officials warning that a rapid appreciation by the currency was unwelcome.

Oil futures fell in Asian trade on Wednesday as profit-taking and concern over a larger-than-expected build in U.S. crude stocks outweighed a report that Russia and Saudi Arabia had reached consensus on an oil output cap. A firmer U.S. dollar, which makes dollar-denominated commodities more expensive for holders of other currencies, also pressured prices. U.S. crude stocks rose by a larger-than-expected 6.2 million barrels to 536.3 million last week, data from industry group the American Petroleum Institute showed late Tuesday. That compared with analyst expectations for a 1.9 mn bbl increase. Official inventory data from the EIA is due later on Wednesday. Investors are also wary of the outcome of a producer meeting in Doha on April 17 that may lead to an oil output cap. But, Russia and Saudi Arabia were reported to have reached a consensus on Tuesday about an oil output freeze, ahead of Sunday's meeting. But any upside should be limited at current price levels by producer hedging, bank analysts added. Still, some signs of improving crude demand have appeared as China's crude imports, buoyed by strong demand from independent refiners and better refining margins, rose 13.4% in the first quarter from a year ago, customs data showed on Wednesday. Global oil demand will grow by 1.16 million barrels per day this year, a 10,000-barrel rise compared with earlier estimates, the EIA said in its monthly forecast on Tuesday. The agency raised its oil demand growth estimate for 2017 by 120,000 bpd to 1.33 million bpd.

U.S. government posted a $108 billion budget deficit in March, more than double the amount from the same period last year, the Treasury Department said on Tuesday. The government had a deficit of $53 billion in March of 2015. Analysts polled by Reuters had expected a $104 billion deficit for last month. Accounting for calendar adjustments, March would have shown a $102 billion deficit compared with an adjusted $89 billion deficit in March 2015. The current fiscal year-to-date deficit was $461 billion, up 5 percent from a $439 billion deficit this time last year. Receipts last month totaled $228 billion, while outlays stood at $336 billion.

 

[SolidTrustMarket]

Daily Market Outlook 14 April

Asian stocks rose to their highest levels in more than four months on Thursday and regional currencies weakened led by the Singapore dollar as hopes grew that more central banks will join the city state in easing monetary policy in the comiing months. Singapore's central bank on Thursday surprised markets by setting the rate of appreciation of the Singapore dollar policy band at zero percent after data previously showed economic growth stalled in the first quarter. Notwithstanding the optimistic trade data out of China on Wednesday, Singapore's policy decision is yet another reminder of the headwinds facing the global economy. Earlier this week, the IMF cut its global growth forecast for the fourth time in the past year, citing a bunch of factors including chronic weakness in advanced economies. Stock markets across the region were a sea of green led by Japan and Hong Kong as investors interpreted this as sign of more policy easing by the trade-dependent economies of South East Asia and a shallower trajectory of interest rate increases by the U.S. Federal Reserve in the coming months. That came after bank shares in Europe .SX7P did even better, surging 6.3 percent, as investors scooped up Italian banks, re-evaluating a state-orchestrated plan to set up a 5 billion euro ($5.7 billion) fund to shore up weaker banks.

The dollar was broadly firmer on Thursday, having posted its biggest one-day gain in more than a month as an improvement in global sentiment led investors to trim bearish dollar positions. The yen got no help from Bank of Japan Governor Haruhiko Kuroda, who said overnight in a speech in New York that the central bank was ready to expand monetary stimulus again if recent weaknesses in inflation expectations persist, stressing that there are "many ways" to do so to achieve his ambitious price target. Kuroda made the remarks ahead of a meeting of Group of 20 financial leaders in Washington this week, where currency policy is seen high on the agenda in the face of subdued global growth. The Federal Reserve has highlighted global uncertainty as the major bar to another hike in interest rates. So, when upbeat trade data out of China and a pick-up in commodity prices seemed to lessen the risk of a deeper world downturn, dollar bulls figured there was now more chance of a move. Just this week, Richmond Fed President Jeffrey Lacker, San Francisco Fed President John Williams and Philadelphia Fed President Patrick Harker all suggested that several hikes were possible this year. Fed funds are barely pricing in one hike this year, let alone multiple tightenings after recent dovish comments from core Fed members led by Chair Janet Yellen. In an interview with Time magazine published on Wednesday, Yellen again highlighted a cautious approach to monetary policy, saying the U.S. central bank must try to avoid making "big mistakes". An unexpected fall in U.S. retail sales in March supported Yellen's cautious approach. The disappointing data contributed to a fall in U.S. yields, yet it failed to dent the rallying dollar.

Oil prices fell on Thursday as OPEC warned of slowing demand and Russia hinted that there would only be a loose agreement with little commitments at the upcoming exporter meeting to rein in ballooning oversupply. Meanwhile, Goldman Sachs said that productivity gains by U.S. shale producers were keeping alive its "deflationary outlook" for oil prices as drillers manage to adjust to lower prices instead of going out of business. Russian oil minister Alexander Novak told a briefing that a deal on an output freeze scheduled this weekend will be loosely-framed with few detailed commitments. This would make it unlikely that the meeting by top exporters in Qatar on Sunday will successfully rein in production of around 2 million barrels per day (bpd) of crude in excess of demand. Morgan Stanley said in a note that "we think any agreement actually sets up bearish catalysts for the months ahead." With the likelihood of a binding freeze by the Organization of the Petroleum Exporting Countries (OPEC) and Russia fading, analysts will look to the U.S. oil industry to see if lower drilling will result in falling production. Here too, the outlook is for production to remain higher than many expected. "Shale productivity gains remain a key driver of our long-term deflationary outlook for oil prices," said Goldman Sachs. With no end in sight to the supply glut, much will depend on demand to determine the size of the market's oversupply. OPEC on Wednesday cut its 2016 forecast for global demand growth and warned of further reductions. World demand will grow by 1.20 million bpd in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously. Morgan Stanley pointed to several bearish risks for oil, including "significant selling pressure from producer hedging if prices rise... (and) reemerging macro headwinds." The bank said it was "bearish oil prices into 2H16" and that "sustaining a price above $45 WTI in the front will be difficult... into 2017."

 

[SolidTrustMarket]

Daily Market Outlook 15 April

Asian stocks were subdued on Friday as caution over a weekend meeting of oil producers tempered risk sentiment, while the region's markets took China's relatively upbeat GDP data in stride. China's economy grew at its slowest pace in seven years in the first quarter, however, indicators from the country's consumer, investment and factory sectors point to nascent signs the slowdown in the world's second largest economy may be bottoming out. Official data on Friday showed gross domestic product (GDP) grew 6.7 percent in the first quarter from the previous year, in line with analyst forecasts and easing slightly from 6.8 percent in the fourth quarter. Chinese banks extended 1,370 billion yuan ($211.23 billion) in net new yuan loans in March, exceeding analyst expectations and nearly double the previous month's lending of 726.6 billion yuan, suggesting renewed appetite for investment among wary Chinese corporates. China's fixed-asset investment growth quickened to 10.7 percent year-on-year in the Jan-March period, beating market expectations for 10.3 percent, and industrial output growth leapt to 6.8 percent, surprising analysts who expected it to rise 5.9 percent. Retail sales rose 10.5 percent, slightly above forecasts of 10.4 percent.

The dollar, which had gained broadly this week as risk appetite improved, stalled against the euro after Thursday's data showed U.S. consumer prices rose less than expected in March. The dollar shrugged off U.S. inflation data overnight that might make the Fed more cautious about interest rate hikes. U.S. consumer prices rose less than expected in March and underlying inflation slowed. The consumer price index gained just 0.1 percent last month, which offset an upbeat labor market report showing a drop in U.S. jobless claims. The smaller-than-expected rise in prices last month affirmed Federal Reserve Chair Janet Yellen's recent warnings about the pace of U.S. growth and inflation. After their March meeting, Fed policy makers on average halved their outlook on the number of rate increases this year to two from four.

World financial leaders sounded a sour note on the global economy on Thursday, pointing to Britain's possible exit from the European Union as a serious threat alongside China's bumpy growth path and dissent over interest rates in the euro zone. Concern that British voters are edging closer to leaving the EU in a June 23 referendum has spooked finance ministers, central bankers and other officials gathered here for the International Monetary Fund and World Bank spring meetings. IMF Managing Director Christine Lagarde signaled policymakers' heightened fears that a "Brexit" could derail Europe's shaky economic recovery and reverberate further afield. Lagarde, who said it was her personal hope that Britain remain in the EU, predicted a divorce would lead to years of financial uncertainty.

Sterling was steady at $1.4146/GBP, moving away from an overnight low of $1.4091 after Bank of England policymakers voted 9-0 to keep interest rates at a record low of 0.5 percent, quashing speculation that one or more members could vote to cut rates. The pound was also pressured earlier on Thursday after a YouGov poll was the latest to show Britain split down the middle on June's referendum on whether to leave the European Union.

Crude futures edged up on Friday in thin business as traders were reluctant to take on new positions ahead of a planned meeting at the weekend of major oil exporters who want to rein in ballooning global over-production. A group of oil producers, lead by top exporters Saudi Arabia and Russia, plan to meet in Qatar's capital Doha on Sunday to discuss measures to freeze output around current levels in an effort to contain a global supply glut that is seeing some 2 million barrels of crude produced every day in excess of demand. Traders said they were reluctant to take on new positions ahead of the meeting, which takes place outside of market hours, and that as a result of low volumes, prices were little moved. With discussions focusing around freezing output at or near current record levels, most analysts said they have little hope that a potential Doha deal will reduce the glut that has pulled down crude prices by as much as 70 percent since 2014. Energy consultancy Wood Mackenzie said that "even if an output freeze is announced, we do not expect a genuine one to occur during the remainder of 2016." Instead, Wood Mackenzie said it expected "OPEC output to rise 0.5 million barrels per day year-on-year in 2016, with most of that growth coming from Iran and Iraq, both of whom have indicated plans to grow output in 2016."

 

[SolidTrustMarket]

Daily Market Outlook 19 April

Asian share markets rose to five-month highs on Tuesday, taking their cue from gains on Wall Street after a strike in Kuwait helped pull crude oil prices above their prior-session lows. Against the dollar, the euro edged up about 0.1 percent to $1.1322 EUR=, as investors looked ahead to the European Central Bank's policy meeting on Thursday. While no change is expected, investors are awaiting Mario Draghi's news conference for clues on the central bank's thinking. The U.S. Federal Reserve will meet next week, and is also expected to hold pat on policy, though any suggestion that more hikes are on the way sooner rather than later would lift the greenback. New York Fed President William Dudley said in a speech on Monday that economic conditions are "mostly favorable" yet the central bank remains cautious in raising interest rates because threats loom.

Minneapolis Federal Reserve Bank President Neel lKashkari on Monday doubled down on his call for reforms to the U.S. banking system, saying that failing to make changes could leave taxpayers on the hook for big bank bailouts in any future financial crisis. "I agree that many current reform efforts are headed in the right direction, particularly those that make banks stronger with additional capital, deeper liquidity and stress testing," Kashkari said. "But I am not sure those measures go far enough." Kashkari, who during the financial crisis ran the government's $700 billion bank bailout program, has been campaigning for solutions to the nation's "too big to fail" big bank problem since shortly after taking his post at the Fed's smallest regional bank in January. His efforts have been applauded by some fellow policymakers, but Fed leaders in Washington and some regional Fed bank presidents have not signed on to his ideas, saying that current efforts are already getting results. Last week, for instance, U.S. regulators rejected the wind-down plans of five of eight large U.S. banks, saying the plans need revisions or the banks will face sanctions.

The Federal Reserve is set to hike interest rates more rapidly than investors currently expect, a top Fed official said on Monday, again pushing back on what he said was investors' too pessimistic view of the U.S. economy and monetary policy. It was the second time in as many weeks that Boston Fed President Eric Rosengren warned that futures markets, which see only one modest rate hike in each of the next few years, are off the mark. He said U.S. inflation was now "much closer" to the Fed's goal, downplayed weak growth in the first quarter, and said the economy is "fundamentally sound." The comments suggest that even the Fed's dovish wing is uncomfortable with deep skepticism in markets that the central bank will be able pull off its planned tightening cycle, in the face of an overseas slowdown and paltry global demand. The Fed raised rates modestly from near zero in December, its first policy tightening in nearly a decade. While futures markets imply no further hikes until December, economists polled by Reuters see June as the most likely time for a second move. Fed projections imply about two more hikes before year end. While Rosengren did not say when he expects the Fed to move, his confident speech appeared meant to keep the door open to a June hike. He said that strong jobs growth and more labor market participation offset what will likely turn out to be less than 1 percent gross domestic product growth in the first quarter. He also noted the Fed's preferred price measure, at 1.7 percent, is headed toward the central bank's 2-percent goal.

 

[SolidTrustMarket]

Daily Market Outlook 25 April

Asian shares dropped on Monday while the dollar slipped as investors took profits from the currency's recent gains ahead of central bank meetings in the United States and Japan this week. Japan's Nikkei stock index .N225 shed about 0.8 percent as the yen pulled off its lows. Investors also locked in gains after the index soared to an 11-1/2 week high following a report the Bank of Japan will mull another easing step at its two-day policy review that ends on Wednesday. "We are also seeing the yen recapitulate against the U.S. dollar following word of the Bank of Japan's consideration of offering bank loans with negative rates similar to the ECB in the Euro zone," he said. Bloomberg reported on Friday that the BOJ is considering applying negative rates to its lending program for financial institutions. But some investors still believe the central bank might opt to hold steady as it assesses the impact of its negative interest rate policy unveiled on Jan. 29. A semi-annual report on the country's banking system issued on Friday by the central bank said the policy has caused some disruption in fund flows and will hurt financial institutions' profits for the time being. Underpinning sentiment, Prime Minister Shinzo Abe ordered his government on Sunday to compile an extra budget package to fund reconstruction from recent earthquakes that hit Kumamoto prefecture in southwestern Japan, with an aim to put it into effect by June 1. The Fed, which lifted its benchmark overnight interest rate in December for the first time in nearly a decade, meets on Wednesday. Policymakers are expected to hold interest rates steady when they meet this week, but may tweak their description of the economic outlook to reflect more benign conditions, leaving the path open for future rate rises.

U.S. Federal Reserve policymakers are expected to hold interest rates steady when they meet this week, but may tweak their description of the economic outlook to reflect more benign conditions, leaving the path open for future rate rises. The Fed raised its policy interest rate last December for the first time in a decade when market volatility finally subsided in the wake of a scare over China's economy. Similarly early this year markets wobbled on worries about a slowdown in global economic growth and weak U.S. corporate earnings, leading to expectations for further Fed rates rises to be revised down, so Fed policymakers may be wary of this week sending too strong a message of an imminent policy tightening. Many Fed officials remain spooked by the steep stock market drop earlier this year and by weak first-quarter U.S. economic data. Concrete signs of higher inflation and growth may be needed before the FOMC, the Fed's policy committee, continues with the projected gradual path toward more normal levels of interest rates. Though the U.S. economy is generating jobs and consumer prices have risen, providing support for a Fed interest rate rise, weakness in retail sales and international trade, as well as concern about China's economy, are among reasons Fed Chair Janet Yellen will stay cautious about further rate hikes before the second half of the year. Markets have already anticipated such an approach, seeing no chance of a rate increase at this week's meeting on April 26-27 of the Federal Open Market Committee (FOMC), and are pricing in just a one in five chance of a move at the next meeting on June 14-15. Reuters polling of market participants sees two rate hikes this year. While Fed officials want to keep the path clear to a rate rise in June, repeating their aggressive pitch for a rate rise of last October will likely be a bridge too far, given that a rise in inflation back to the Fed's 2.0-percent target is seen unlikely. The reading on first-quarter U.S. gross domestic product growth will be published the day after the Fed meeting this week. The Fed's so-called "hawks" typically prefer higher rates while "doves", like Yellen of late, are more cautious.

Oil prices fell over 1 percent on Monday as traders took profits after three weeks of gains and as a jump in the dollar late last week was priced into fuel markets. Analysts said the price drops were a result of cashing in after three weeks of rising prices. A jump in the dollar on Friday against a basket of other leading currencies on expectations that Japan will further extend its aggressive monetary easing through negative interest rates, also dented oil, traders said. A stronger dollar, in which oil is traded, makes fuel imports for countries using other currencies more expensive, potentially hitting demand. Monday's oil price drops came despite another cut in the U.S. rig-count that brings activity down for a fifth straight week and to levels last seen in November 2009. A total of 343 rigs were drilling for new oil last week. That compares to over 700 this time last year, according to oil services company Baker Hughes on Friday. Energy firms have sharply reduced oil and gas drilling since the collapse in crude markets that cut prices by as much as 70 percent to 13-year lows earlier this year.

 

[SolidTrustMarket]

Daily Market Outlook 26 April

Asian stocks retreated on Tuesday as investors braced for central bank policy meetings in the United States and Japan this week. Investors are cautious about buying riskier assets ahead of the U.S. Federal Reserve's two-day policy meeting starting later on Tuesday. A surprise drop in new U.S. home sales data for March supported a view of anemic U.S. economic growth, which may keep the Fed from raising interest rates. In fact, markets see no chance of a rate increase at this week's meeting and are pricing in just about a one in five chance of a move at the next meeting on June 14-15. Yet, Fed officials have repeatedly said a hike in June is on the cards. Ahead of the Fed's meeting, the 10-year U.S. Treasuries yield US10YT=RR stood at 1.8986 percent, easing from a four-week high of 1.914 percent seen on Monday.

In the currency market, the dollar retreated against many major currencies while keeping its upper hand against emerging economy currencies. The dollar index, which tracks the greenback against a basket of six major currencies, slid 0.1 percent to 94.74, extending a 0.3 percent loss in the previous session. The yen weakened sharply on Friday on a report that the BOJ is considering cutting rates at which the central bank lends money to banks. But doubts are growing about how effective such a measure would be in lifting the moribund economy. The Bank of Japan will make its policy announcement on Thursday. The British pound held near a 10-week high as bets on a Brexit eased after U.S. President Barack Obama voiced his support for Britain's staying in the European Union.

New U.S. single-family home sales unexpectedly fell in March, but the decline was concentrated in the West region, suggesting that the housing market continued to steadily improve. The Commerce Department said on Monday new home sales decreased 1.5 percent to a seasonally adjusted annual rate of 511,000 units. February's sales pace was revised up to 519,000 units from the previously reported 512,000 units. New home sales are volatile month-to-month because they are drawn from a small sample. While sales have now declined for three straight months, this likely does not signal a slowdown in the housing market given a buoyant labor market. Economists had forecast new home sales, which account for about 8.7 percent of the housing market, rising to a 520,000 unit-rate in March. New home sales surged 18.5 percent in the Midwest and climbed 5.0 percent in the populous South. But sales plunged 23.6 percent in the West, reversing February's 21.7 percent jump, and were flat in the Northeast.

Americans with a high school education or less are returning to the labor force in larger numbers, a trend that points to a broadening of economic growth, but could also keep wage growth subdued and stay the Federal Reserve's hand in its hiking cycle. The Federal Reserve meets this week and is expected to leave rates on hold. One factor it watches is slack in the labor market to see how much room the economy has to grow without triggering inflation. Yet a Reuters analysis of Labor Department data suggests there could be more labor market slack than the unemployment rate of 5 percent may suggest because the improving economy has been spurring less-skilled workers to look for jobs again.

Crude oil futures rose on Tuesday, pushed up by a weaker dollar and a flood of new cash into the market, but analysts warned that fundamentals remain weak as a producer race for customers heats up in the Middle East. Futures traders said prices had been lifted by a weaker dollar overnight .DXY, which potentially spurs demand from fuel importers using other currencies than the greenback, in which crude is traded. A rush of new investment into crude futures was also pushing up prices as speculators raised their holdings of Brent futures to a record high. Yet other analysts warned of more supply as Saudi Arabia and Iran seemingly ramp up output in a race for customers, further flooding the market with excess supplies. Iran wants to get back to pre-sanction production of 4 million bpd. The cargo will be lifted in June from Aramco's storage in Japan's Okinawa prefecture and shipped to China's eastern province of Shandong, Reuters reported on Monday. Citi said it was likely that Saudi Arabia was targeting a 0.5 million bpd in sales to bring its production up to 11 million bpd or higher. Traders said that a looming gasoline glut in Asia also threatened the recent rise in prices as refiners flood the market with unwanted products.

 

[SolidTrustMarket]

Daily Market Outlook 27 April

Asian stocks were mostly lower on Wednesday, as investors stayed cautious ahead of U.S. and Japanese central bank policy decisions, while crude oil prices hovered near 2016 highs. The Bank of Japan makes its policy decision on Thursday amid some speculation it could ramp up its already extensive monetary stimulus scheme, which includes negative interest rates on some deposits at the BOJ. While the U.S. Federal Reserve is expected to hold interest rates steady later in the day when a two-day Federal Open Market Committee (FOMC) meeting ends, it could also take a more upbeat view on the economy, keeping the way open for future rate rises. With volatility back to more normal levels, equities again pushing their highs, (European Central Bank President Mario) Draghi indicating they need time to assess existing policy, and Chinese and Asian data showing some signs of picking up, the door is open for the Fed to again signal gradual normalization. Sterling was near a 12-week high of $1.4640 GBP=D4 probed overnight as investors bet more heavily that Britons would vote in a June referendum to stay in the European Union, following an intervention from U.S. President Barack Obama on the side of the "In" campaign.

The U.S. dollar wobbled against the euro after being hit by Tuesday's weaker than expected U.S. durable goods orders data. Orders for long-lasting U.S. manufactured goods rebounded far less than expected in March as demand for automobiles, computers and electrical goods slumped, suggesting the downturn in the factory sector was far from over. Tuesday's report from the Commerce Department also implied that business spending and economic growth were weak in the first quarter. Prospects for the second quarter darkened after another report showed ebb in consumer confidence in April. The data came as Federal Reserve officials started a two-day policy meeting. The U.S. central bank is expected to leave its benchmark overnight interest rate unchanged on Wednesday. The Fed raised rates in December for the first time in nearly a decade. The Commerce Department said orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, increased 0.8 percent last month after declining 3.1 percent in February. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged after a downwardly revised 2.7 percent decrease in the prior month. These so-called core capital goods orders were previously reported to have decreased 2.5 percent in February. Economists had forecast durable goods orders advancing 1.8 percent last month and core capital goods increasing 0.8 percent. Shipments of core capital goods - used to calculate equipment spending in the gross domestic product report – rose 0.3 percent after slumping 1.8 percent in February.

U.S economy grew at an anemic 1.4 percent annualized rate in the fourth quarter. First-quarter GDP growth estimates are as low as a 0.3% rate. The government will publish its advance first-quarter GDP growth estimate on Thursday. A second report on Tuesday from the Conference Board showed its consumer confidence index fell 1.9 points to a reading of 94.2 in April. Consumers were a bit pessimistic on the economy's short-term prospects, implying they did not expect a pick-up in activity. Households' views of the labor market were mixed this month. The share of consumers who believed jobs were "plentiful" slipped, while those who said employment was "hard to get" fell. While most manufacturing surveys have painted a fairly upbeat picture of the sector in recent months as a dollar rally fizzled, so-called hard data such as industrial production and factory orders have remained depressed. There had been hope that manufacturing was regaining its footing as the dollar weakened, oil prices stabilized and the inventory drawdown drew to close.

Crude oil futures rose half a dollar in early Asian trading on Wednesday and remained near 2016 highs on the back of strong investor sentiment and a weak dollar, although analysts warned this month's bull-run could soon run out of steam. WTI was further lifted after the API reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a Reuters poll. Beyond strong investment appetite from financial traders, analysts said crude was receiving support from a falling dollar, which has shed 5 percent in value against a basket of other leading currencies since the beginning of the year. A weak dollar, in which crude is traded, makes fuel imports cheaper for countries using other currencies at home, potentially spurring demand.

 

[SolidTrustMarket]

Daily Market Outlook 28 April

Asian stocks edged higher on Thursday as the U.S. Federal Reserve appeared to be in no hurry to raise interest rates, while oil consolidated gains after hitting a 2016 peak. In its statement issued after its meeting on Wednesday, the Fed left interest rates unchanged on Wednesday, but kept the door open to a hike in June while showing little sign it was in a hurry to tighten. Scotia Bank currency strategist Gao Qi said while a 25 basis point increase is likely in the coming months, the timing still remained uncertain, indicating the Fed was in no rush to lift interest rates again soon after a December rise. Led by the New Zealand dollar, Asian currencies rallied against the greenback as investors took the Fed statement as a sign to head for relatively higher yielding currencies.

Only the Japanese yen JPY= was trading weaker against the dollar ahead of a BOJ's policy decision, which is often announced around noon in Tokyo, or 0300 GMT, will be a close call. Policymakers may be hesitant to take further steps after unveiling their negative interest rate policy in January, though a strong yen and receding inflation expectations could prompt them to ease further. Data issued early on Thursday showed Japan's core consumer price index fell 0.3 percent from the year-ago period, compared with economists' median estimate for a 0.2 percent gain. The Bank of Japan held off from expanding monetary stimulus on Thursday, defying market expectations for action even as soft global demand, an unwelcome yen rise and weak consumption threatened to derail a fragile economic recovery. The BOJ decided to maintain its pledge to increase base money at an annual pace of 80 trillion yen ($732 billion) via aggressive asset purchases. It also left unchanged a 0.1 percent negative interest rate it applies to some of the excess reserves that financial institutions park at the BOJ. In a separate move, the BOJ created a 300 billion yen loan program offering funds at zero interest to financial institutions in areas hit by this month's earthquake in southern Japan. In a quarterly review of its projections, the BOJ cut its inflation forecasts. It also pushed back the timing for hitting its 2 percent price target by six months, saying it may not happen until March 2018 at the latest.

FED left interest rates unchanged on Wednesday, but kept the door open to a hike in June while showing little sign it was in a hurry to tighten monetary policy amid an apparent slowdown in the U.S. economy. In a statement that largely mirrored the one issued after its last policy meeting in March, the U.S. central bank's rate-setting committee described an improving labor market but acknowledged that economic growth seemed to have slowed. It also said it was closely watching inflation and noted that global economic headwinds remained on its radar, though it made no mention of the risks they posed, as it had last month. The Fed kept the target range for its overnight lending rate in a range of 0.25 percent to 0.50 percent, in line with expectations in a Reuters poll. The central bank raised rates in December for the first time in nearly a decade. The Fed, which has tried to move away from issuing forward guidance since embarking on a rate hike path it has described as gradual, made no mention of how it viewed the balance of risks to the economic outlook. It was the third straight policy statement in which policymakers had kept mum on that detail. The Fed acknowledged that growth in household spending had moderated, but said households' real income had risen at a "solid rate" and consumer sentiment remained high. Despite strong job gains and a national unemployment rate of 4.9 percent, Fed policymakers have previously said they would proceed cautiously in raising rates again due to the uncertainty in the world economy and a lack of inflation pressures at home.

Crude futures pulled back from 2016 highs early on Thursday as traders locked in profits after April's sharp rally, but analysts said falling U.S. production and strong investor appetite could push prices higher soon. The dips came after both benchmarks rose on Wednesday to their highest levels for 2016 in what has been one of the steepest price increases in recent years. Record crude storage figures may have spurred some investors to take profits on Thursday by closing long positions, traders said, and government data on Wednesday showed that U.S. crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 mn bbl. Despite the price falls, analysts said that sentiment had clearly turned bullish, and that further price rises were likely. Analysts said that further bullish momentum could emerge due to ongoing weakness in the dollar, which is down over 5% this year against a basket of other leading currencies, as a weaker greenback makes dollar-traded crude cheaper to buy for countries using other currencies at home.

 

[SolidTrustMarket]

Daily Market Outlook 29 April

U.S. economic growth braked sharply in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labor market. Gross domestic product increased at a 0.5 percent annual rate, the weakest since the first quarter of 2014, the Labor Department said on Thursday in its advance estimate. Growth was also held back by businesses stepping up efforts to reduce unwanted merchandise clogging up warehouses. Almost all sectors of the economy weakened in the first quarter, with housing the lone star. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 1.9 percent rate. That was the slowest in a year and marked a deceleration from the fourth quarter's 2.4 percent rate.

The dollar's rally is largely over, oil prices appear to be stabilizing and the bulk of the inventory liquidation is out of the way. In addition, the jobs market remains fairly robust. A separate report from the Labor Department showed first-time applications for unemployment benefits rose less than expected last week and the four-week average of initial claims fell to its lowest level since 1973. Employment gains averaged 209,000 jobs per month in the first quarter. The disconnect between GDP growth and employment implies productivity remained weak in the first quarter after sinking in the final three months of 2015. Also hinting at a pickup in growth in the second quarter, the Institute for Supply Management's manufacturing and nonmanufacturing surveys, which are closely correlated to economic activity, rebounded in recent months./li>

While the Federal Reserve on Wednesday acknowledged economic activity had "slowed," it also said labor market conditions had "improved further." The U.S. central bank appeared to view the threats from the global economy and financial markets as having diminished. The Fed left its benchmark overnight interest rate unchanged and suggested it was in no hurry to tighten monetary policy further. It hiked rates in December for the first time in nearly a decade. Economists had forecast the economy expanding at a 0.7 percent rate in the January-March period after growing at a 1.4 percent pace in the fourth quarter.

The yen surged to an 18-month peak on Friday as investors wagered the Bank of Japan might be done adding fresh stimulus to the economy, hurting prospects for Japanese exporters with a move that rippled through share markets across the Asian region. The sheer speed of the move stirred speculation the Japanese authorities might intervene to restrain the yen. Japanese officials on Thursday warned markets that they would be on guard even over the Golden Week holidays on Friday and next week. Some analysts, however, seemed unconvinced over how much Japan would do to rein in the yen.

The European Central Bank would need the inflation outlook to worsen significantly for another rate cut, but pushing rates deeper into negative territory remains an option, Peter Praet, the bank's chief economist told a Spanish newspaper. "Deploying negative rates again in the future would require a distinct worsening of the inflation outlook," Praet told Expansión in an interview. "I don’t think we’re going to see these conditions materializing in the near future." "Since negative rates were introduced in 2014, they have been very effective," said Praet, who also sits on the ECB's executive board. "So far, the positive effect of an improvement in financial conditions outweighs any negative effects that may be associated with banks’ earnings capacity or other financial stability risks." Struggling with ultra-low inflation, the ECB cut its deposit rate to -0.4 percent in March to force cash parked with the bank into the real economy to generate growth and inflation.

Crude oil prices fell in early trading on Friday as a looming rise in Middle East output may drag on the stronger markets seen in April, although falling U.S. production and a weakening dollar are still offering support. But Deutsche Bank said that a looming rise in production by members of the Organization of the Petroleum Exporting Countries (OPEC) - with climbing Iranian output and following outages in Iraq, Nigeria and the United Arab Emirates - could cap recent oil price rises. For 2017, the bank said it expected to be around 33.1 million bpd, "with upside risks originating from Libya and Saudi Arabia, and downside risks from unplanned outages and spending cuts in Iraq". ne of the main repercussions of the global oil price rout between 2014 and early 2016 has been a deep economic crisis in crude export-reliant Venezuela, where political risk consultancy Eurasia Group said the government faces default as the state runs out of cash to keep the oil pumps running.

 

[SolidTrustMarket]

Daily Market Outlook 2 May

Japanese manufacturing activity shrank in April at the fastest pace in more than three years as deadly earthquakes disrupted production, while output in China and the rest of Asia remained lukewarm at best. Even the former bright spot of India took a turn for the worse as both domestic and foreign orders dwindled, pulling its industry barometer to a four-month trough. Surveys due later on Monday are expected to show only sluggish activity in Europe and the United States as the world's factories are dogged by insufficient demand and excess supply. That is exactly why the U.S. Federal Reserve has been dragging its feet on a follow-up to its December rate hike, leaving the markets in a sweat in case they move in June. Doubts about policy ammunition mounted last week when the Bank of Japan refrained from offering any hint of more stimulus, sending stocks reeling as the yen surged to 18-month highs. Industry was already struggling to recover from the April earthquakes that halted production in the southern manufacturing hub of Kumamoto. The impact was all too clear in the Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) which fell to a seasonally adjusted 48.2 in April, from 49.1 in March.

The news was only a little better in China where the official PMI was barely positive at 50.1 in April, a cold shower for those hoping fresh fiscal and monetary stimulus from Beijing would enable a speedy pick up. Yet it also reported demand from China was the worst in three months, with exports to its biggest market tumbling 18.4 percent on-year. Likewise, weakness in new orders and exports dragged on Taiwanese activity in April. Analysts polled by Reuters had predicted the reading would improve to 50.4, after upbeat March data fueled hopes that the country's prolonged economic slowdown was easing.

The U.S. Federal Reserve may need more powers to provide emergency funding to securities firms in times of extreme stress in order to deal with a liquidity crunch, New York Federal Reserve President William Dudley said on Sunday. The discount window is a credit facility through which banks borrow directly from the U.S. central bank in order to cope with liquidity shortages. The Fed currently has limited ability to provide funding to securities firms in such situations, with the discount window only available to depository institutions. But the transformation of securities firms since the financial crisis, Dudley said, with the major ones now part of bank holding companies and subject to capital and liquidity stress tests, meant the environment has now changed. Dudley did not mention monetary policy or the U.S. economic outlook in his remarks. Other "significant gaps" remain in the lender-of-last-resort function, Dudley added. Dudley called for greater attention in order to determine which country would be the lender-of-last-resort for such companies during another crisis.

Oil prices fell on Monday as rising production in the Middle East outweighed a decline in U.S. output and a recent slide in the dollar, which has been supporting crude. Analysts said rising output from the Organization of the Petroleum Exporting Countries (OPEC) was outweighing supportive factors such as a decline in U.S. output and a sliding dollar, which makes it cheaper for countries using other currencies to import dollar-traded fuel. The dollar has fallen more than 6 percent this year against a basket of other leading currencies (DXY), but traders said the weak greenback and falling U.S. output had been priced into the market during April's price rally. The recent oil rally, which saw prices run up by nearly a third in just four weeks, was largely driven by sentiment, BNP Paribas (PA:BNPP) said. OPEC supplies rose to 32.64 million barrels per day (bpd) in April, from 32.47 million bpd in March, according to a Reuters survey. That almost matches January's 32.65 million bpd, when Indonesia's return to OPEC boosted production to the highest since at least 1997. Despite Monday's lower prices, other analysts are confident that a near-two-year rout in oil has ended, and many have raised their price forecasts. The chief of the International Energy Agency (IEA) said oil prices may have bottomed out, providing the health of the global economy does not pose a concern. "In a normal economic environment, we will see the price direction is rather upwards than downwards," IEA Executive Director Fatih Birol said on Sunday during a G7 meeting of energy ministers in Japan.Non-OPEC output is set to fall by more than 700,000 bpd this year, the biggest decline in around 20 years, he said.

With global oil demand seen growing by 1.2 million bpd this year, the draw in global stockpiles will start soon, helping push up prices, he said. U.S. energy secretary Ernest Moniz said on Monday at the same event in Japan that U.S. oil production would likely fall 600,000 bpd this year, compared with 2015 when output peaked around 9.6 million bpd.

 

[SolidTrustMarket]

Daily Market Outlook 3 May

Asian stocks erased earlier gains and the Japanese yen rallied to a fresh eighteen-month high on Tuesday as investors grew doubtful about global central banks' ability to boost growth through aggressive policy easing. Financial spread betters expect stock markets in Britain, Germany and France to open broadly steady to slightly higher on Tuesday. BOJ stunned markets last week by keeping monetary policy unchanged in the face of growing headwinds for its economy while the ECB has recently struck a more guarded stance on the question of adding more stimulus. Australia's central bank on Tuesday joined a growing line of central banks in adding more stimuli, cutting its cash rate to a record low of 1.75% to head off deflationary risks. The majority of economists surveyed by Reuters had expected no change at the meeting. While a firm finish in U.S. stocks, thanks to a rebound in financials led by Berkshire Hathaway, offered some hope to Asian investors, the sharp gains in the Japanese yen against the dollar deflated optimism.

The dollar set a fresh 18-month low versus the yen on Tuesday, as the yen pushed higher in a holiday-thinned market with one Singapore-based trader saying there appeared to some speculative yen buying. Japan is in the middle of its Golden Week series of holidays. Markets were closed on Friday and will be closed on Tuesday to Thursday this week. After raising interest rates in December for the first time in nearly a decade, the Federal Reserve held monetary policy steady last week. While it kept the door open to a hike in June, it gave no signal that it was in a hurry to tighten further given the economy's slowdown, even as the labor market has improved.

U.S. factory activity expanded at a more moderate pace in April due in part to a slowdown in new orders, but a rise in export orders to a near 1-1/2-year high and signs an inventory overhang drag was fading offered hope for the manufacturing sector. Another report on Monday showed construction spending rose to an 8-1/2-year high in March and the prior month's outlays were revised higher, implying a small upward revision to the first quarter's pedestrian growth rate. The Institute for Supply Management (ISM) said its index of national factory activity slipped to 50.8 last month from a reading of 51.8 in March. Despite the fall, April marked the second straight month of expansion and was also the second highest reading in the last eight months. Manufacturing has been hurt by weak export growth stemming from a strong dollar and soft global demand. Manufacturing last month was held back by a drop in the gauge of orders received by factories, which fell 2.5 points to 55.8 percent. Factory production also fell last month.

Economic growth slowed to a 0.5 percent annualized rate in the first quarter. Given a fairly robust labor market, which is expected to boost sluggish consumer spending, economists expect gross domestic product growth to rebound in the second quarter. The economy grew at a 1.4 percent rate in the fourth quarter. In a separate report, the Commerce Department said construction spending increased 0.3 percent in March to its highest level since October 2007, following an upwardly revised 1.0 percent jump in February. Construction outlays were previously reported to have declined 0.5 percent in February. Economists expect GDP growth for the first three months of the year will be revised up to a 0.7 percent rate. Construction spending in March was supported by a 1.1 percent surge in private construction, which hit its highest level since October 2007. Public construction spending fell 1.9 percent in March.

Oil prices rose on Tuesday as the dollar slipped to an 18-month low against the yen, potentially spurring fuel demand, but gains were restricted by rising Middle East output that renewed concerns of a global supply overhang. Higher oil came on the back of a slumping dollar, which makes purchases of dollar-traded fuel cheaper for countries using other currencies, potentially spurring demand, as well as strong investor interest in oil. Energy Aspects' oil analyst Virendra Chauhan said the weak U.S. dollar was a factor in rising oil prices, but also pointed to a "sentiment shift", with significant passive and commodity trading advisor (CTA) money flows back into energy after two years out. However, traders said the gains were capped by rising output in the Middle East as well as fears over China's economic health after factory activity shrank for a 14th straight month in April. Iraq, the second biggest exporter within the Organization of the Petroleum Exporting Countries (OPEC), was the latest OPEC-member to announce its exports were rising, reporting oil shipments from southern fields at an average rate of 3.364 million barrels per day (bpd) in April. That was higher than the March average of 3.286 million and close to its November record of 3.37 million bpd. Production in OPEC's biggest exporter, Saudi Arabia, was 10.15 million bpd in April, but sources have said it may rise to near-records of 10.5 million bpd in coming weeks. Iran is also adding to surging Middle East output following an end to crippling sanctions in January. The producer has increased its exports to almost 2 million bpd from a little over 1 million bpd at the start of the year, with sales to South Korea in particular soaring. The Middle East supply jump counters falling output in the United States, where production has declined from a peak of around 9.6 million bpd in June 2015, to below 9 million bpd now, according to U.S. EIA data. This helped lift crude futures by almost a third in April, and they have recovered over 70 percent from decade lows reached in early 2016.

 

[SolidTrustMarket]

Daily Market Outlook 4 May

The yen and the euro both retreated from long-term highs against the dollar on Wednesday as markets looked to sentiment surveys in Europe and a series of U.S. jobs releases due by the end of the week for fresh direction. There was talk in the market of the euro reaching levels beyond those assumed by the European Central Bank in forecasts for the euro zone economy, spurring speculation officials may seek to talk to the currency down. A U.S. Treasury report on Friday sent a warning shot by saying that "persistent one-sided" intervention to weaken the currency could see countries with big trade surpluses classified as currency manipulators and demand action. No one expects it to come to that. But the report was taken as another sign that U.S. officials are not comfortable with more dollar gains. Against that were comments by San Francisco Federal Reserve President John Williams that he would vote for a rise in interest rates in June if economic growth was on track with his forecast and jobs gains continue. "We have ADP jobs numbers today and then obviously we are thinking about payrolls on Friday. If they are strong again, does that push expectations for a rate rise higher again, does it create more dollar strength? It will be interesting to see." The gains against the yen came in thin market conditions, with Japanese markets closed on Wednesday and Thursday for public holidays. The yen last week saw its biggest weekly gain since 2008 - more than 5 percent against the dollar - as the Bank of Japan held off from expanding its stimulus.

Detroit automakers reported another month of strong demand from U.S. consumers for trucks and sport utility vehicles on Tuesday, but their shares dropped as analysts focused on signs the world's second-largest auto market has little room to grow. U.S. light vehicle sales in April totaled 1.51 million, up 3.6 percent from a year earlier, for a seasonally adjusted annualized rate of 17.42 million vehicles, according to Autodata Corp. WardsAuto said annualized sales were 17.32 million vehicles. U.S. auto sales in 2015 hit a record 17.4 million vehicles.

Gold is sensitive to moves in U.S. interest rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion. Investors looked ahead to key U.S. data later in the day to gauge if the world's largest economy is strong enough to withstand further rate hikes this year. The U.S. was to release the ADP jobs report for April at 12:15GMT, or 8:15AM ET, followed by the Institute of Supply Management’s report on service sector growth for April at 14:00GMT, or 10:00AM ET. Market players are also focusing on Friday's U.S. nonfarm payrolls report. The consensus forecast is that the data will show jobs growth of 200,000 last month, following an increase of 215,000 in March, the unemployment rate is forecast to hold steady at 5.0%, while average hourly earnings are expected to rise 0.3% after gaining 0.3% a month earlier. An upbeat employment report would help support the case for the Federal Reserve to gradually tighten monetary policy this year. Prices of the yellow metal are up nearly 21% so far this year as expectations faded that the Fed would move to normalize interest rates due to fears over a global economic slowdown. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

Oil prices edged up on Wednesday as an uncontrolled wildfire near Canada's oil sands region reduced production there, but overall markets were weighed down by slowing economic growth in Asia and the United States. Barclays said that "unplanned outages look unlikely to abate in the next couple of months, which have contributed to a tighter 1H16 oil market" and that "lower spare capacity, heightened disruption risk in Iraq and Venezuela, and lower supply ex-U.S. mean prices will likely average higher in Q4 than previously forecast." The bank said that it expected Brent to average $44 per barrel this year, an upward revision of $5 from its previous outlook, and U.S. crude to average $42 a barrel this year. In oil production, U.S. output has fallen from a peak of over 9.6 million barrels per day (bpd) in summer last year to just over 8.9 million bpd currently, triggering one of the biggest wave of bankruptcies in American corporate history. Despite falling output, U.S. crude inventories rose by 1.3 million barrels in the week to April 29 to 539.7 million barrels, according to data from the American Petroleum Institute, enough to meet global demand for almost a week. Still, strong demand ahead of the summer driving season reduced stockpiles of gasoline and diesel. In the Middle East, Iraqi exports are expected to rise in April to 3.4 million bpd, while Saudi Arabian production could return to 10.5 million bpd. Iranian exports have nearly doubled since the start of the year to almost 2 million bpd.