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Markets are light on volume but high on hope
Tom Westbrook gives us a look at what the European and global markets will be like today. The markets chose to ignore the weekend headlines and the threat of a wider Mideast conflict re-igniting,?and traded thinly on the hope of a deal that would?get? ships moving through the Strait of Hormuz. S&P 500 futures fell. The 0.6% decline - at Asia's noon - was due to tiny volumes, and it was a modest retreat from the record highs of Friday. The majority of Asian markets rose. European futures fell 1.1%. Oil futures are now around 5-6 % higher than their opening levels, but still a little shy of $100 per barrel. The U.S. announced that it had seized a cargo ship from Iran which tried to circumvent its blockade. Iran has vowed retaliation. Iran has also announced that it will not take part in the second round of talks, which the U.S. hoped to start before Tuesday's?ceasefire expires. European allies are concerned that an inexperienced U.S. negotiation team is pushing a headline-grabbing agreement with Iran, which could lead to larger problems later. Mark Carney, Canada's prime minister, said that close ties with the United States used to be a strength. But now they are a weakness. Although Iran had said that the strait was closed again, the markets were encouraged by the data from Kpler, which showed that more than 20 ships transited the strait on Saturday, the busiest since March 1. The?picture was also re-evolving around earnings, data and other market drivers. Keir starmer, the British premier, will be addressing parliament in London on Monday. He is facing calls for resignation over his handling of Peter Mandelson's appointment as U.S. Ambassador, whose ties with a convicted sex offender Jeffrey Epstein resulted in his dismissal last September. Market developments on Monday that may have a significant impact U.S.-Iran Relations Starmer's parliamentary address - Canada CPI
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Is it time for us to give up on the hope that the Strait of Hormuz might open soon? Russell
The global oil market has been predicting that the closure of the Strait of Hormuz, which was a result of Israel and the U.S. attacking Iran in early February, would be temporary. This will also affect the supply of crude oil and refined products. This expectation is reflected in the price of crude oil futures. Although they have increased sharply since February 28, the prices are still far below the highs achieved in the aftermath of Russia's invasion in Ukraine in 2022. The paper 'crude market' has essentially believed U.S. president Donald Trump since the bombing began that the conflict would be short and Iran would accept U.S. conditions for a peace agreement. The reality is not what's being said on social media, and the more the Strait of Hormuz stays closed, the worse the energy crisis becomes, particularly in Asia. Brent crude futures dropped 9.1% to $90.38 per barrel on April 17, following Trump's claim that the Strait of Hormuz is fully open. They jumped 6.9% to $96.59 in the early Asian trading on Monday when it became apparent that the waterway remained closed. Trump's April 17 social media post that the Strait of Hormuz was "fully opened and ready for passage" prompted the latest optimism. Trump's claim was backed even by some Iranian officials. However, the optimism was short-lived, as the Islamic Revolutionary guards Corps moved to keep it closed due to Trump's decision of maintaining a U.S. Naval Blockade against Iranian ports. The market should ask itself several questions about the current state of affairs. What does this mean? Does it mean that the United States has effectively closed the Strait of Hormuz? Would it reopen if Trump lifted the blockade on Iranian ports? Is there enough trust between warring parties to accept the principle that the Strait should be opened to all? Iran's leaders are willing to negotiate, but will they do so with an administration that is known for abandoning agreements and has a history of doing so? These are all valid points of debate. However, what really matters is the fact that the strait remains closed and that the threat of an attack will likely keep it so for the hundreds of vessels that wait either side. SUPPLY STRESS During the?meantime, crude oil and refined products supply chains are more stressed. This is especially true in Asia which was the final destination of about 80% of the shipments that went through the Strait of Hormuz before the conflict. The crude futures market has largely been driven by the daily news and the underlying belief that the conflict would be short-lived. However, the physical oil and refinery products have shown a more serious supply issue in the near term. Singapore, the Asian trading center, has seen extreme levels of refined products. Jet fuel is also at an all-time high. The price of a barrel ended at $204.13 on April 17. This was more than twice the close of $93.45 on February 27, just one day before the start date of the war. Gasoil (the building block of diesel) ended the day at $145.27 per barrel on 17th April, up 59% from when the conflict began, but down from the $199.89 record set on 30th March. The biggest problem for Asia, however, is that the worst is yet to come as crude shipments in the region are falling sharply. According to Kpler, data from commodity analysts, Asia's seaborne oil imports were estimated at 20,62 million barrels a day (bpd), down from 22,36 million bpd a month earlier. The average of 26.76 millions bpd for the three months before the attack on Iran is now only about 26.2 million bpd in March and April. This is a particularly worrying situation for countries which are important refining and fuel exporting centres in the region. Singapore's crude oil imports will be?388,000 per day in April. This is down from?715,000 per day in March and?980,000 bpd?in January. South Korea's crude oil imports were estimated at 1,68 million barrels per day (bpd) in April. This is down from 2,24 million in March and 2,74 million in January. Japan's imports in April are expected to drop to 921,000 bpd from 1.63m bpd and 2.16m bpd?in March. India is the only country that has bucked this trend. Kpler estimates April imports at 4,67 million bpd. This is up from March's 4.45 million, but still below January's 5,15 million. India was able to secure Russian crude oil to offset the loss in barrels from the Middle East. 1.64 million bpd arrived in April, compared to 1.06 million in February. The problem with Asia's crude oil is that it's under pressure and that's why refineries will likely have to reduce their processing rates in the coming weeks. The real impact of Trump's war will only be felt when supply of refined products is more restricted. How long can the crude oil paper market maintain its hope that the conflict is going to end soon when reality appears to be moving in the opposite direction? You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist who writes for.
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Gold drops on stronger dollar amid renewed US/Iran tensions
Gold prices fell Monday as the dollar strengthened. Meanwhile, news that 'the Strait of Hormuz was closed again' pushed up oil prices and rekindled inflation fears. As of 0351 GMT spot gold was down by 0.7% to $4,793.98 an ounce after reaching its lowest level since the previous session. U.S. Gold Futures for June Delivery fell 1.4% to $ 4,813.60. Ilya Spirak, global macro head at Tastylive, said that gold prices were lower today because the U.S./Iran ceasefire that was celebrated by markets last week appears to have broken down. "This has brought back the familiar 'war-trade' dynamics that we have seen since the beginning of the conflict. Crude oil prices rose, which led to an increase in inflation expectations and drove both yields and?the U.S. dollar up. dollar." Dollar index increased, making greenback priced bullion expensive for holders of other currencies. Benchmark 10-year U.S. Treasury Yields increased by?0.5%. As tensions in the Middle East increased, shipping into and out of Gulf was kept to a minimum. The U.S. seized an Iranian ship that was trying to circumvent its blockade, and Iran has said that it will retaliate. This raises the possibility that even the two-day ceasefire that is supposed to be in place between the two countries may not last. Tehran has said that it will not take part in the'second round of talks' the U.S. hoped to start 'before the ceasefire expires on Tuesday. Since the U.S. launched its strikes against Iran in late-February, gold prices have dropped about 8%. This is due to a concern that rising energy prices would stoke inflation. Gold is considered a hedge against inflation, but higher interest rates reduce demand for this non-yielding investment. Gold demand at one of India's key buying festivals was muted Sunday as record prices curbed jewellery sales, which offset a modest increase in investment demand. (Reporting by Noel John in Bengaluru; Editing by Subhranshu Sahu) (Reporting by Noel John in Bengaluru; Editing by Subhranshu Sahu)
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Iron ore companies on inventory destocking and steady hot metal production
Prices of iron ore futures rose on Monday, as China destocked from high portside inventories, which indicated a steady demand for feedstock. As of 0325 GMT, the?most-traded?September iron ore contract at China's Dalian Commodity Exchange traded 0.58% higher. It was 782 yuan (114.66 dollars) per metric ton. The benchmark iron ore for May on the Singapore Exchange rose 0.38% to $106.2 per tonne. Data from Steelhome showed that iron ore 'inventory' at major Chinese port cities fell by 0.65%. However, the stocks of portside ore are still higher than seasonal norms. Mysteel, a consultancy, reported that the average daily hot metal production of 247 steelmills was 2.395 millions tons, up 0.12 million tonnes from the previous week. Mysteel data revealed that?both blast-furnace operating rates and capacity utilization rate increased week-on-week. According to a report by Shanghai Metals Markets, iron ore prices are supported by inventory destocking and the fact that end-use steel demands have room to increase, along with modest steel mill profits. The price of oil rebounded Monday after falling on Friday due to the news that the Strait of Hormuz was re-closed after the U.S., Iran and both said that the other party had violated their ceasefire agreement by attacking ships at the weekend. Iron ore prices are also supported by the firm oil prices. Coking coal and coke, which are used to make steel, have risen by 2.89% and 2.244% respectively. This is in line with the rise of energy costs. The benchmarks for steel on the Shanghai Futures Exchange were mostly in positive territory. Rebar rose 0.83%. Hot-rolled coil climbed 0.81%. Wire rod gained 0.15%. Stainless steel fell 0.23%. ($1 = 6.8199 Yuan) (Reporting and editing by Ronojojo Mazumdar).
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Gold drops on stronger dollar amid renewed US/Iran tensions
The 'dollar strengthened on Monday, and gold prices fell. Meanwhile, news that the 'Strait of Hormuz was closed again drove oil prices up. Inflation fears were revived by the news that the Strait of Hormuz would be closed once more. As of 0155 GMT spot gold was down 0.4% to $4,809.71 an ounce after reaching its lowest level since the April 13 session earlier in this session. U.S. Gold Futures for June Delivery fell 1% to $ 4,829.40. Ilya 'Spivak is the head of global macro at Tastylive. He said that gold prices were lower today after the U.S. - Iran war ceasefire, which markets celebrated last Monday, appeared to have broken down. "This has brought back the familiar 'war-trade' dynamics that we have seen since the start of the conflict. Crude oil prices rose, which led to an increase in inflation expectations and drove both yields and U.S. dollar. dollar." Dollar?index increased, making bullion priced in greenbacks more expensive for holders of other currencies. Benchmark 10-year U.S. Treasury yields increased by 0.5%. As tensions in the Middle East increased, shipping into and out of Gulf was kept to a minimum. The U.S. seized a cargo ship from Iran that was trying to circumvent its blockade, and Iran has said that it will retaliate. This raises the possibility that the ceasefire agreement between the two nations may not last the full two days that it is supposed to be in place. Tehran has said that it will not take part in the second round of talks, which was to be held by the United States. The United States had hoped that the second round of negotiations would begin before Tuesday's ceasefire expired. Since the U.S. launched its strikes against Iran in late-February, gold prices have fallen by about 8%. This is due to fears that higher energy costs could cause inflation and raise global interest rates. Gold is considered an inflation hedge. However, rising interest rates reduce the demand for this non-yielding investment. Christopher Wong is a strategist with OCBC. He said: "In the meantime, we expect gold's direction to be influenced by broader risk sentiment, and that this will depend on how ceasefire talks go." Silver spot fell by 0.5%, to $80.36 an ounce. Platinum was unchanged at $2,103.38 and palladium dropped 0.1%, to $1,556.45.
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Oil prices soar, while stocks sway as the Mideast ceasefire is in doubt
The U.S. Dollar climbed from its lows, and the stock markets wobbled as tensions in the Middle East reduced the number of shipments into and out of Gulf. Traders were still holding on to hope that a solution would be found. The Iran war ceasefire, which was supposed to last until Tuesday, is now in doubt, after the U.S. seizes an Iranian cargo vessel and the top military command of Tehran vows to retaliate. Iran has reinstated its de facto closing of the Strait of Hormuz despite Kpler data showing that over 20 vessels carrying metals, oil products, gas, and fertilisers passed through the Strait on Saturday. This was the busiest time for the chokepoint since March 1. Brent crude futures rose about 6% in the early Asia trading to $96 per barrel. The dollar rose slightly after it fell sharply Friday, when the'strait briefly opened. S&P futures dropped around 0.7%. This is a modest movement considering that the index reached a new record high on Friday. Asia-Pacific markets were mixed with Australia's S&P/ASX200 down 0.5%, and Japan's Nikkei benchmark up 0.7%. The bond markets have retreated after Friday's rally. Damien Boey is a portfolio strategist with Wilson Asset Management, Sydney. "But,?I believe, ultimately, both parties want to be able to?do a deal. That's part the reason why the markets are optimistic and not selling too much." Iran's state news agency reported that it rejected new peace negotiations with the U.S. on Sunday. This was hours after U.S. president Donald Trump announced he would send envoys to Pakistan for talks and launch new attacks on Iran if they did not accept his terms. Focus on HORMUZ The euro fell by 0.1% to $1.1735, and the yen slipped around 0.3%, down to?159 for the dollar. Meanwhile, the Australian and New Zealand Dollars also declined. Bonds also partially reversed Friday's moves. Benchmark 10-year U.S. Treasury Yields, which fell 6.5 basis points Friday, rose by 3.2 basis points?to 4,276%. Investors have sold fixed income assets in March, anticipating higher oil prices to drive inflation. They've tempered this a bit in recent weeks. "Our base-case (AKA guess) still remains a resolution of the war. Trump's attention is still on the November midterm elections," Paul Chew, Singapore-based Phillip Securities' head of research said in a client note. Wall Street indexes reached record highs Friday, boosted by expectations for robust first-quarter earnings, which will be released largely this week. China will likely hold its benchmark lending rates at the same level on Monday. The British inflation figures, U.S. Retail Sales and European Purchasing Managers' Index figures are due in the coming week. However, most of the focus on markets will be on Gulf Shipping. Bob Savage is the head of BNY's markets macro strategy. He said that "the critical barometer of geopolitical risks has been reduced to one data point, which is the number of ships passing through Strait of Hormuz". The immediate focus of the talks is oil and other shortages that are driving inflation.
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Viva Energy expects lower Geelong production in the short term following fire and share slide
Viva Energy, Australia's largest refinery operator, said that it expected its Geelong facility to produce diesel fuel and jet fuel around 80% and petrol around 60% of its capacity in the near future after a fire last week at the complex. The fuel retailer's shares fell 9.5% to A$2,29, the lowest level since March 19. Trading resumed on Thursday after a stoppage. The fire that broke out at Australia's largest refinery on April 15, has affected petrol production as the nation is under pressure to ensure fuel security due to the Iran war, which is disrupting global supply. Viva reported that the firm's residue catalyst cracking unit (RCCU), which is currently offline, will be taken off line until operations are stabilized. The company expects the RCCU to be restarted in the coming weeks, and production of diesel, petrol, and jet fuel will reach over 90% capacity. It is also investigating the cause of this 'incident. The company did not provide any further details on the timeline. Separately the fuel retailer reported that its 'Geelong refinery margin' jumped?nearly a three-fold during the first quarter. It also reported a 5.1% increase in the total sales volume of the group. The firm said that it had signed agreements with the federal government to purchase additional cargoes above and beyond its normal needs. Viva Energy stated that Geelong doesn't?typically" use Middle Eastern crude and that supplies from?Americas?, Southeast Asia? and Australia?remained unaffected.
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Oil recovers losses after Strait of Hormuz closed again
The oil prices rose more than 6% Monday after falling more than 9% on Friday. This was due to the news that the Strait of Hormuz has been closed once again. Both the U.S. Brent crude futures rose $6.11 or 6.76% to $96.49 per barrel at 2327 GMT. U.S. West Texas Intermediate is now $90.38 per barrel, an increase of $6.53 or 7.79%. U.S. president Donald Trump said on Sunday that the U.S. military had seized an Iranian ship which tried to break its blockade. Iran, however, refused to participate in the second round of talks despite Trump’s threat of resuming airstrikes. The United States maintains a blockade on Iranian ports.?Iran lifted its blockade and then reimposed it, affecting the Strait which, before the start of the war, handled about one-fifth the world's supply of oil. Saul Kavonic is the head of research at MST Marquee. He said that oil markets are gyrating in response to the fluctuating social media posts from the U.S. The two contracts experienced their biggest daily declines on Friday since April 18, after Iran announced that passage for all commercial vessels through the Strait of Hormuz would be open during the remaining ceasefire period. Trump also said Iran had agreed to never again close the strait. Kavonic stated that the announcement of opening the Strait was premature. "Ship owners won't be as confident about announcing a passage through the Strait to ship owners again." Kpler data revealed that more than 20 ships crossed the strait Saturday, carrying metals, liquefied gas, and fertilizers. This was the most vessels to cross the waterway since the beginning of March.
Oil prices soar, while stocks sway as the Mideast ceasefire is in doubt
Stock?futures dropped and oil prices rose on Monday, as tensions in the Middle East prevented shipping into and out of the Gulf. Traders held out hope that a solution would be found and the?Asian stock markets soared to record highs.
Brent crude futures increased by about 5%, to $95.16 per barrel. S&P 500 Futures dropped around 0.6%, and European Futures dropped 1.1%. Equity benchmarks in Seoul and Taipei, as well as Tokyo, shrugged off the risks and advanced, with Taiwan shares reaching a new record high, and the others not far behind.
Iran has reinstated its de facto closing of the Strait of Hormuz despite Kpler data showing that over?20 vessels with oil products, metals and gas, as well as fertiliser, passed through the chokepoint on Saturday. This was the busiest time for the chokepoint in March.
The ceasefire in the Iran War, which was supposed to last until Tuesday, is now under question after the U.S. seizes an Iranian cargo vessel and the top military command of Tehran vows?to retaliate.
Damien Boey is a portfolio strategist with Wilson Asset Management in Sydney.
"But, I think, in the end, both sides are looking to make a deal. That's why the market is optimistic and hasn't?sold off too much."
Hong Kong's Hang Seng climbed 0.8%. Japan's Nikkei rose 1%. South Korea's KOSPI grew 1.4%.
National Australia Bank, Australia's biggest business lender, warned that the war would increase bad debts. It announced a $500-million impairment charge.
PACE TALKS IN QUESTION, FOCUS ON HORMUZ
Iran's state news agency reported that Iran had rejected any new peace talks after Donald Trump, the U.S. president, said he would send envoys to Pakistan for talks and launch new attacks on Iran if it did not accept his terms.
"Our base-case (AKA guess) still remains a resolution of the war. Trump remains 'focused' on the November midterm elections, said Paul Chew in a note to clients from Phillip Securities.
Bonds that had rallied on Friday have retreated, and the yield of benchmark 10-year Treasuries has risen 2.2 basis points, to 4.266%.
The dollar, which has been sold over the last two weeks, is now steady at 158.8 yen per euro and buying 158.8 dollars.
Wall Street indexes reached record highs last Friday, fueled by expectations for robust first-quarter results, with the majority of them coming this week.
The week will also bring British inflation, U.S. retail and purchasing managers' index data. However, the markets' main focus is on Gulf shipping.
Bob Savage is the head of BNY's markets macro strategy. He said that "the critical barometer of risk?has been reduced to one data point, which is the number of ships passing through Strait of Hormuz".
The immediate focus of the talks is oil and other shortages that are driving inflation.
(source: Reuters)