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Commodities Extend Gains,Global Stocks Rise, Dollar Down

 

The Fed official’s comments supported emerging markets and currencies. The regulator’s statements are one of the key market drivers again.

The US employment increased in January by 205k that is higher than expected by the market. At the same time, despite strong economic data on the US labor market, Fed officials noted they would be more patient in their tightening policy due to global turmoil. Some of them pointed to the recent developments that reinforce the case for watchful waiting. As a result of a shift in Fed rhetoric investors reduced their interest rate hike expectations in March to 12% from 50%. Such a dynamics positively affected emerging markets and currencies. It looks like the regulator’s statements are one of the key market drivers again.

According to the Energy International Agency (EIA), US oil inventories increased almost 8 mln bbl. The total amount of reserves rose above 500 mln bbl to 502.7 mln bbl that is the highest level since 1930. Despite signs of continued oversupply in the global market, oil prices rebounded on speculations from Venezuela. According to the country’s officials, 6 OPEC members and two non-OPEC states would be open to attending an extraordinary meeting if one is called.

European Commission Cuts Euro Area Growth Forecasts
The Euro Area is expected to expand 1.7% in 2016, higher than 1.6% in 2015 but lower than 1.8% estimated in November, according to the European Commission Winter forecasts. Policymakers said factors supporting growth are now expected to be stronger, including low oil prices, favourable financing conditions and a weaker Euro while downside risks such as slower growth in China and other emerging market economies, weak global trade and geopolitical and policy-related uncertainty increased. Growth forecasts for Germany, France and Italy were downgraded by 0.1% each to 1.8%, 1.3% and 1.4% respectively. GDP growth rates for Estonia, Portugal, Slovenia and Finland were also lowered. In contrast, forecasts for Spain, Cyprus, Latvia, Luxembourg, Malta, Austria and Slovakia were revised upwards. Greece is the only country expected to shrink this year although the contraction was revised down to -0.7% from -1.3%. By 2017, all Member States are expected to be expanding.

Brent Crude at 4-Week High
Brent crude futures were up 1% to $35.38 a barrel around 9:30 AM London time on Thursday, extending Wednesday’s gains after the USD posted its biggest fall in seven years against its major counterparts. Meanwhile, WTI crude futures increased 1.24% to $32.71 a barrel.

Most European Stocks Trade Higher on Thursday
Most European equitites traded higher on Thursday morning, after three days of losses and following gains in both US and Asian markets, with banks and miners performing the best while investors wait to hear the Bank of England’s latest decision on interest rates. The FTSE 100 was 0.67% higher, the Dax gained 0.35%, the CAC 40 was up 0.12% and the Ibex 35 rose 0.28% while the FTSE MIB dropped slightly by 0.07% around 9:20 AM London time.

Iceland Trade Balance Swings to Deficit
Iceland recorded a trade deficit of 1200 ISK million in January of 2016, compared to a 6523 ISK million surplus a year earlier, as exports shrank 8.8 percent while imports went up 7.5 percent.

Most Asian Stocks Close Higher, Nikkei Falls 0.9%
Most Asian markets ended in the green on Thursday as oil prices continued their upward trend during the session after a USD decline overnight.

The Shanghai Composite Index went up 1.53%, the Hang Seng finished 1.01% higher, the Kospi closed up 1.35% and the S&P/ASX 200 jumped 2.12%. In contrast, the Nikkei 225 extended recent losses by 0.85% as the yen continued to strengthen against the greenback.

China Current Account Surplus Widens in Q4, 2015
The current account surplus in China increased to $84.3 billion in the fourth quarter of 2015 from $60.3 billion in the previous period, mainly due to a goods trade surplus of $161.6 billion. Meanwhile, the services trade deficit was recorded at $48.6 billion, the primary income gap at $21.3 billion and the second income deficit at $7.3 billion. Considering full 2015, China’s current account surplus rose 33 percent compared to 2014 to $293.2 billion, or 2.7 percent of GDP, as the goods trade surplus went up 33 percent hitting a record high of $578.1 billion. In contrast, the services trade gap went up 39 percent to $209.4 billion, the primary income deficit jumped 74 percent to $59.2 billion while the secondary income deficit fell 46 percent $16.3 billion.

European earnings roundup:

Credit Suisse (NYSE:CS) reported its first annual loss since 2008 as it wrote off billions of dollars in goodwill, set aside litigation provisions and suffered a trading downturn.

Statoil (NYSE:STO) slashed its capital spending budget but said it would keep its dividend steady after topping fourth quarter expectations.

Driven by a robust performance in its retail and wholesale divisions, ING posted a better-than-expected Q4 and announced a full-year dividend of €0.65 per share.

Astrazeneca (NYSE:AZN) expects low to mid-single digit percentage drops in earnings this year, in part due to a flood of generic cholesterol drugs.

Vodafone (NASDAQ:VOD) met expectations with a 1.4% rise in revenue during FQ3, its sixth consecutive quarter of growth, as a recovery in Europe gained pace.

Royal Dutch Shell shares rose after it confirmed it would cut 10,000 jobs and a sharp fall in annual profits. Shell rose 4% as it said it made $1.8bn (£1.23bn)for the fourth quarter of the year, compared with a $4.2bn profit for the same period the year before.

Full-year earnings have seen their steepest fall in 13 years, from $19bn in 2014 to $3.8bn last year.

Oil prices have fallen steadily, from more than $100 a barrel 18 months ago to around $30 a barrel now.

Dollar 1.7% depreciation on Wednesday

The dollar’s retreat was sparked by data showing the U.S. services sector grew at the slowest pace in nearly two years, underscoring the vulnerability of the American economy to unsteadiness abroad. The report tipped the fixed-income market’s balance closer toward zero rate hikes by the Federal Reserve this year, amid prospects central banks from Asia to Europe will act to quell the turmoil that’s roiled markets in 2016. The greenback’s drop helped boost the price of crude oil, along with speculation OPEC and other oil producing nations have agreed to an emergency meeting on market volatility.

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