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Bear market for Brent, biotech gets a Trump bump, RBNZ stays on hold. Here are some of the things people in markets are talking about.
Another Failing Grade
Front-month Brent oil futures fell below $45 per barrel on Wednesday, their lowest since November, with the retreat marking a fresh bear market for this grade of crude. The decline came in spite of a drop in U.S. stockpiles. Analysts at Barclays have mused that a slowdown in demand for oil may be linked to U.S. President Donald Trump's immigration crackdown. In addition, the specter of "peak demand" for oil may mean that $2.3 trillion of investments from energy giants will prove to be money ill spent.
Biotech Bulls Flourish
Biotech stocks are on a tear amid reports that President Trump's administration is planning relatively industry-friendly policies, with the Nasdaq Biotech Index up 8 percent so far this week. The president once said the drug industry was "getting away with murder." Traders are flocking to the options market to place bullish bets on the group at a rate not seen since July 2005. This leadership rotation to biotech helped depress measures of implied equity volatility on Wednesday despite the dip in stocks.
The Reserve Bank of New Zealand kept its policy rate unchanged at a record low and signaled an increase was far from imminent. Ahead of the decision, Bank of America Merrill Lynch strategists wrote that the RBNZ would be "reticent to signal any change in bias" before the Reserve Bank of Australia in a bid to keep the kiwi on its back foot. In May, Governor Graeme Wheeler called the currency's drop-off "encouraging," but most of those losses have since been pared. Coming up: international securities transactions from Japan and a speech from BOJ deputy governor Kikuo Iwata.
It was another down day for U.S. stocks as weakness in energy offset strength in biotech. The S&P 500 Index inched down 0.1 percent. 10-year Treasuries and the Bloomberg U.S. dollar spot index also registered modest declines. While oil's plunge has rattled the high-yield market, the damage has remained confined to this sector -- for now. Also, virtual currency Ethereum had a flash crash.
Nikkei 225 futures are flat ahead of the open while S&P/ASX 200 shares move higher. On Wednesday, Chinese stocks got a lift from MSCI's decision to include over 200 A-Shares -- a group that includes coal miners and liquor companies -- in its benchmark emerging market index. The CSI 300 booked a gain of 1.2 percent while the Shanghai Composite posted a less impressive advance and the Hang Seng Index declined.
What we’ve been reading
This is what caught our eye over the last 24 hours.
New Saudi heir has the right ties with the White House.
Sell side downgraded by banks.
MSCI decision puts ball back in Chinese reformers' court.
Queen's speech outlines Brexit legislative program.
- Russia cancels talks with U.S.
- Kalanick out as Uber CEO.
Trump now worth less than $3 billion. Sad!