Dollar jumps on yen, gives Japanese stocks a lift

Wednesday, 10 September 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The U.S. dollar was holding broad-based gains in Asia on Tuesday in a boon for shares of Japanese exporters but a burden for oil, gold and stocks in the energy majors. As the dollar finally broke to a six-year peak on the yen and a one-year top on the euro, Brent oil sank to 16-month lows while gold carved out a three-month trough. A falling yen tends to be viewed as positive for Japanese exporters and corporate profits, and helped lift the Topix 0.5% to 1,305. That put the index within a whisker of this year’s peak at 1,308.08 and a break there would put it on ground last trod in July 2008. Markets elsewhere in the region were steady with MSCI’s broadest index of Asia-Pacific shares outside Japan down a slight 0.1%. Despite market concerns over China’s economy, stocks there have been buoyed by talk of more stimulus and reform measures. The CSI300 of the leading Shanghai and Shenzhen A-share listings put in its best performance in a year last week with gains of almost 5%. On Wall Street, the Dow closed down 0.15%, while the S&P 500 fell 0.31% but the Nasdaq eked out a 0.2% gain. Energy led the decline, with the S&P energy index off 1.6% and Exxon Mobil down 1.5%. Investors were now eagerly awaiting the launch of new products by Apple later on Tuesday in a much-hyped event at Cupertino, California. Apple has fed high expectations, with promises by executives that the company’s best product pipeline in 25 years is being readied inside its secretive facilities. In currencies, the dollar index climbed as far as 84.349, bringing into view the July 2013 peak of 84.753. A break there will take it to highs not seen since July 2010. Giving bulls a boost, a research from the San Francisco Fed noted that investors are pricing in a lower trajectory for interest rates rises than members of the Fed itself are.

Brent slips but holds above $100 on OPEC output cut hopes

REUTERS: Brent crude eased for a fourth straight session on Tuesday but held above $ 100 a barrel after dropping below that level on the previous day for the first time in 16 months, with prices supported by hopes of production cuts by OPEC. Continued output from strife-torn countries such as Iraq and Libya and the shale oil boom in the United States have lessened supply side risks, while slowing growth in western economies and China have raised demand concerns, said Tetsu Emori, a commodity fund manager at Japan’s Astmax Co Ltd. “Oil at below a $ 100 a barrel is a little bit risky in the current market - $ 100 per barrel is really a central point for oil countries,” Emori said. Brent was trading 14 cents lower at $ 100.06 as of 0330 GMT after ending the previous session 62 cents down. It had earlier on Monday slumped to $ 99.36, the lowest since 1 May, 2013, before rebounding into three-digit territory. US crude was 28 cents higher at $ 92.94 after falling 63 cents on Monday when it dropped for the third straight session. But there was potential for Brent to trade at around $ 120 per barrel by the end of this year, while US crude could hover around $ 110-$ 115 per barrel, on the back of rising winter demand and possible geopolitical concerns, Emori said. Expectations of production cuts by the Organization of the Petroleum Exporting Countries come as Gulf Arab oil ministers gather on Thursday in Kuwait for an annual meeting which could include discussion about price levels. Top OPEC exporter Saudi Arabia and other OPEC countries favour oil at $ 100 per barrel and prices are under pressure due ample supply even as some OPEC delegates saw the lower prices as short-lived. US oil prices were also supported by a forecast decline in US commercial crude oil and gasoline inventories last week, which raised hopes of improving seasonal demand. Crude oil stocks fell by 1.5 million barrels in the week to 5 September, according to a preliminary Reuters analysts’ survey on Monday. The poll was released ahead of weekly inventory reports from industry group the American Petroleum Institute (API) on Tuesday and from the US Department of Energy’s Energy Information Administration (EIA) on Wednesday. Investors were also eyeing developments in the Middle East. Iraq’s parliament approved a new government headed by Prime Minister Haider al-Abadi on Monday in a move to save Iraq from collapse and in what US Secretary of State John Kerry said was a “major milestone”. Libya’s oil output has risen to 740,000 barrels per day, the National Oil Corp said on Monday, an increase from 725,000 bpd that has been fuelled by the reopening of several oil export ports. Elsewhere, the European Union adopted new sanctions on Monday against Russia over the Ukraine crisis, but enforcement will be delayed while an assessment is being done on whether a ceasefire in Ukraine is holding. The measures will target the ability of Russia’s top oil producers to raise capital in Europe.