Five Things You Need to Know to Start Your Day
Want to receive this post in your inbox every morning? Sign up here.
The oil rally continues, geopolitical risk dominates market moves, and China is unlikely to be designated a currency manipulator. Here are some of the things people in markets are talking about today.
Oil extends gain
A barrel of West Texas Intermediate for May delivery was trading at $53.69 as of 5:23 a.m Eastern Time, the highest level in over a month. This marks seven straight days of rising prices. Saudi Arabia, the world's biggest producer, pared its oil output last month to its lowest level since January and is likely to support extending OPEC production cuts into the second half of the year, according to a person familiar with the kingdom's internal discussions. WTI call options volumes have been rising, signalling that traders see more to come in this rally.
U.S. Secretary of State Rex Tillerson called on Russia to abandon its support of Syria's President Bashar al-Assad ahead of meetings in Moscow. At a gathering of Group of Seven foreign ministers in Italy on Tuesday, Tillerson upset his European hosts by asking why U.S. taxpayers should care about Ukraine. Tensions in Asia continue to mount, with Chinese President Xi Jinping telling Donald Trump that talks were the only way to ease concerns over North Korea as the hermit kingdom vowed tough counteraction to any military moves following the positioning of a U.S. carrier group off the peninsula. Investors are watching the coming 13 days which host number of North Korean celebrations including Kim Il Sung's birthday.
Stephen Schwarzman, Blackstone Group chairman, and a key economic adviser to Donald Trump, has said that he doubts the U.S. will label China a currency manipulator when the administration issues a report later this month. Investors seem to be in agreement as implied and realized Chinese currency volatility continue to fall. Data released overnight showed that producer prices rose 7.6 percent from a year earlier in March, driven by higher commodity prices. With factory inflation expected to peak in June and then ease for the second half of the year, inflation remains a secondary concern for the central bank, according to Bloomberg Intelligence economists Tom Orlik and Fielding Chen.
Overnight, the MSCI AC Asia Pacific Index dropped 0.1 percent, while Japan's Topix index closed 1.0 percent lower as the yen traded below 110 to the dollar. In Europe, the Stoxx 60 Index was 0.1 percent lower at 5:55 a.m. with a rise in automakers led by strong results from Daimler AG not enough to lift the wider market. U.S. market futures were broadly unchanged.
At 6:50 a.m. OPEC is due to publish its monthly oil market report, which will be closely-watched amid the current rally in crude prices. At 10:00 a.m. the Bank of Canada is expected to keep interest rates unchanged at its policy meeting, with Governor Stephen Poloz holding a press conference at 11:15 a.m. The Brazilian central bank is expected to cut rates by 1 percent to 11.25 percent when it announces the latest Selic rate later.
What we've been reading
This is what's caught our eye over the last 24 hours.
- World's hottest funds make no money for most managers in Europe.
- The ECB guide to moving your Brexit-hit bank to the euro area.
- Tesla investors press for board members without ties to Musk.
- Swedish elk-hunt bribery case widens to Handelsbanken chairman.
- Marijuana companies, soaring in stock market, may tap bonds next.
An Asia edition of Five Things is launching soon. Sign up here to be among the first to start getting it delivered to your inbox.