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Bloomberg News reports that China has asked banks to stop new loans to US sanctioned refineries.
Bloomberg News reported Wednesday that China's financial regulator had advised the country's biggest lenders to temporarily suspend new loan to five refineries sanctioned by the U.S. for their ties with Iranian 'oil'. Could not verify immediately the report. In a verbal directive, the National Financial Regulatory Administration asked banks not to cancel existing credit, but to refrain from extending any new loans in yuan. According to the sources quoted in the report, the banks were instructed to review their business dealings including with China's largest private refining company Hengli Petrochemical Refinery (Dalian). Hengli and the NFRA did not immediately respond to a request for comment. The official directive was given before May 1. This is in contrast to a?notice from China's Ministry of Commerce, issued on May 2 in which the government requested firms to ignore U.S. Sanctions. China has now resorted for the first time to the blocking measures introduced in 2021 to protect Chinese companies from foreign interference that is deemed 'unwarranted. The U.S. Treasury announced sanctions against Hengli Petrochemical in April. Washington accused the company of purchasing Iranian oil worth billions of dollars, a move that accelerated its long-standing effort to curb Tehran's oil revenue. U.S. Treasury secretary Scott Bessent stated last month that the U.S. warned the two Chinese banks that they would be subjected to secondary sanctions if it was found out that the Chinese banks were processing transactions with Iran. The sanctions created a number of hurdles for refiners. These included difficulties in receiving crude and the need to sell refined products under different names. Reporting by Fabiola Arambo in Mexico City; Selena Li in Hong Kong; Liu Siyi and Li Qiaoyi, in Singapore; Jacqueline Wong, Kim Coghill.
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ASEAN leaders begin summit with energy crisis at the forefront
Leaders of the ASEAN bloc will be discussing conflicts beyond Southeast Asia at the meeting in the Philippines. The Middle East crisis is a major challenge for the economies of countries that depend on fuel imports. Leaders, foreign and economic ministers from the 11 member grouping will attend the?meetings in Cebu on Friday and Thursday. Energy and food security are top priorities for this region of 700 million people. Many Asian countries are scrambling to find alternative oil supplies due to the Middle East conflict. ASEAN ministers have convened special meetings in advance of the summit and the Philippines is hopeful that an oil-sharing agreement will be ratified. Ma, Philippine Secretary of Foreign Affairs, said: "The current crisis in the Middle East, and its wide-ranging repercussions including disruptions in energy flows, trade routes and food supply chains, as well as the welfare and wellbeing of our citizens, reminds us that?developments outside our region can have an immediate and profound effect on ASEAN." Theresa Lazaro opened a meeting with her counterparts in the Philippines on Thursday. Lazaro stated that "ASEAN must strengthen our crisis coordination and institutional preparedness in times of crises". Action BEYOND RHETORIC Analysts and diplomats say that the issue will put the Philippines in a difficult position as it forces them to coordinate regional responses while also preventing ASEAN conflicts such as the civil war in Myanmar and the deadly border dispute between Thailand & Cambodia last year from falling off the agenda. Don McLain Gill is a geopolitical expert and lecturer at Manila’s De La Salle University. He said that planning to cushion the fallout of economic issues could ultimately outweigh immediate regional concerns. He added that while the South China Sea and Myanmar's crisis would be discussed, it was unlikely to result in any significant progress. ASEAN has struggled for years to coordinate its response to crises. Meetings usually result in an agreement to cooperate, but without a clear plan or commitment. Laura del Rosario said that the size of the energy shock is an issue that no ASEAN nation can escape. It will likely go beyond mere rhetoric. Analysts say that the conflict has also heightened rivalry between China and the United States in Southeast Asia. Washington is preoccupied with wars elsewhere, while Beijing positions itself as a more reliable partner. Collin Koh of Singapore's S. Rajaratnam School of International Studies said that the U.S. would be viewed as a power destabilizing, whereas China?would be viewed as one stabilising. He said that as a major supplier of raw materials and energy inputs, China is "holding some of the most significant cards at this time". MYANMAR SEEKS RESEARCH Also to be addressed will be the?crisis in Myanmar. This issue has divided ASEAN and its new, nominally civil government is keen to reengage with this bloc. The military-backed party that had been in power since the coup of 2021 won the?election. ASEAN has yet to recognise the election, or indicate when the Myanmar leadership, led by former junta leader Min Aung Hlaing, now president, will be able to'return' to their summits, after spending five years in the background. After recent steps toward reconciliation, including two amnesties, a reduced sentence, and the transfer of Aung San Suu Kyi to house arrest, it may be necessary for the military-backed government to convince ASEAN that they are sincere in their desire to halt fighting and seek dialogue with rebels. ASEAN leaders are likely to renew their?calls for the completion of a long-running code of conduct?between ASEAN & Beijing for the South China Sea. The 2026 'target date' is a challenge due to competing interests and lingering fears about vital economic ties between China and ASEAN. Beijing, which claims sovereignty in almost all of the South China Sea, including portions of the exclusive economic zone of several ASEAN countries, was not invited to the meeting. However, it is an important external partner of the bloc.
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Investors weigh Middle East peace prospects as they raise oil prices by $1
Early trade on Thursday saw oil prices rise by about $1, recovering from the sharp losses of the previous day as investors assessed the chances that a Middle East Peace Deal would be successful. Brent crude futures rose 88 cents or 0.9% to $102.15 per barrel at 0032 GMT. U.S. West Texas Intermediate rose $1.12 or 1.2% to $96.20 per barrel. Both benchmarks fell more than 7% Wednesday, reaching two-week lows amid optimism about a possible ending to the Middle East conflict. They pared their losses however after U.S. president Donald Trump said that it was "too early" to have face-to-face discussions with Tehran, and a senior Iranian lawmaker said that the U.S. proposition was more like a wish-list than a real reality. The outlook for the future is uncertain, according to Hiroyuki Kikukawa. He is chief strategist at Nissan Securities Investment. Next week, Trump and Chinese president Xi Jinping will meet. Kikukawa stated that the main scenario was "that oil prices would remain elevated." Iran said Wednesday that it was reviewing an American peace proposal, which sources say would end the war formally while leaving unresolved U.S. key demands that Iran suspends its nuclear program and opens the Strait of Hormuz. According to a spokesperson for the Iranian Foreign Ministry quoted by ISNA, Tehran will convey its response. Trump stated that he believes Iran wants an agreement. According to a Pakistani mediation source and another person who was briefed about the talks, an agreement on a 1-page memorandum would end the conflict. Axios, a U.S.-based media outlet, reported that the U.S. Expect Iranian responses to several key issues in the next 48-hours, citing sources who said?this was the?closest that the parties have come to an accord since the beginning of the war. Even if there is a peace agreement, oil supplies will be tighter in the coming weeks. It will take weeks to get oil from the Middle East Gulf to refiners around world. Oil companies will therefore continue to deplete their storage tanks to meet summer peak demand. Energy Information Administration reported on Wednesday that U.S. crude and fuel inventories decreased last week as countries tried to offset supply disruptions caused by the Iran Crisis. Last week, crude oil stocks dropped by 2.3m barrels. This was compared to analyst expectations of a 3.3m barrel draw. (Reporting and editing by Cynthia Osterman, Tom Hogue, and Yuka Obayashi)
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US oil prices rise as investors evaluate prospects for a Middle East Peace Deal
U.S. Crude Futures rose by a little over $1 on Thursday morning, reversing the day before's losses, as investors assessed prospects for a Middle East Peace Deal. U.S. West Texas Intermediate Crude Futures rose 80 cents or 0.8% to $95.88 per barrel at 2223 GMT, after reaching as high as $96.33 during the previous session. The benchmark 'contract' fell about 7% Wednesday, on the back of optimism that a possible 'end to the Middle East war could be near. Sources from the mediator Pakistan and a second source who was briefed about the mediation both said that an agreement had been reached on a memorandum of one page, which would officially end "the conflict". Iran said Wednesday that it was reviewing a U.S. Peace proposal which?sources? said would formally conclude the?war?while?leaving unresolved?the key U.S. requirements that Iran suspend its?nuclear program?and reopen?the Strait?of Hormuz. According to a spokesperson for the Iranian Foreign Ministry cited by ISNA, Tehran would?transmit its response. Donald Trump, the U.S. president, said that he thought Iran wanted to reach an agreement. (Reporting and editing by Yuka Obaashi)
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Utility Eversource reduces annual profit forecast based on lower rates
Eversource Energy cut its annual profit forecast on Wednesday. This was due to lower electricity rates in New England, and the final approval of the sale of their 'water utility business. After the bell, shares of 'the company' fell by 1.6%. The Federal Energy Regulatory Commission has decided to lower electricity rates in New England. This will have a negative impact on the company's annual earnings. Joe Nolan, CEO of New England Power Generation, said that the decision was "arbitrary" and "flawed", and came at a time when New England needs to make significant investments in order to increase its power generation. Eversource, for example, has filed requests to increase their rates citing the need to spend on infrastructure due to extreme weather conditions and the growing demand of industry electrification as well as data center expansion. Electricity prices have risen across the country due to the rapid growth of data centers. Nolan stated that Eversource would "continue to vigorously pursue" all actions to combat punitive decisions made by our regulators which jeopardize the ability of Eversource to finish this important work for its customers. After the approval of the $2.4 billion water utility sale, announced in 2025, it was necessary to revise this forecast. The transaction was subject to regulatory hurdles until it was finally cleared this year. Eversource provides electricity to 4.6 million customers in the Northeast of the United States. According to LSEG data, the utility expects its annual adjusted profit will?range from $4.57 to $4.72, but that's still below analysts' expectations, which were $4.68. The company had forecasted earnings between $4.80 and $4.95 per share. In the first quarter of this year, its net profit was $606.8?millions, or $1.61 per share. This compares to $550.8?millions,?or $1.50 a share?a year earlier. The increase in earnings quarter-on-quarter was largely due to higher distribution rates for its electric and gas segments. Reporting by Arunima and Vallari Srivastava from Bengaluru, editing by Sahal Muhammad
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Kentucky Governor to reduce gasoline tax in the face of war-driven price hike
Kentucky Governor Andy Beshear reduced 'the state’s gasoline tax by ten cents' as residents continued to struggle with rising prices due to the U.S. - Israeli conflict with Iran. The Democratic Governor also announced that he would delay a 0.6-cent increase per gallon in the current state tax of 26.4-cents, which was due to go into effect on July 1. Together, the two moves will save residents $1.7 million each month. Beshear announced in the emergency regulation that "oil prices will continue to rise until April 30th 2026 when they reach a four-year high." This emergency administrative regulation will remain in effect until the end of the Iran war or when gas prices fall below $3.00 per gallon. According to the American Automobile Association, Kentucky residents spend an average of $4.317 at the gas pump. In the beginning of the Iran conflict a month ago, Kentucky residents paid $3.910 for regular gasoline. GasBuddy data showed that the national average retail gasoline price surpassed $4.50 per gallon for the first time since July 2022 on Tuesday. Beshear called on Congress to suspend federal gas taxes. Since the start of the war on February 28, oil?prices are volatile. The Strait of Hormuz has been closed, which is a crucial transit point where about a fifth of daily world oil supply used to travel. Even if U.S. and Iran reach a peace deal, oil prices will continue to be under pressure as it will take many months for Middle East production to return to pre-war levels. (Reporting and editing by Scott Malone in Washington, Jasper Ward from Washington)
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Fed officials are concerned about inflation rising because of the risks associated with supply chains
Federal Reserve officials warned on Wednesday that the U.S.-backed conflict with Iran could lead to a sustained shock in inflation, given the high price of oil and the growing concern about global supply chain problems. Chicago Fed President Austan G. Goolsbee stated that business executives had told him, shortly after the conflict began, that a brief rise in oil prices would not cause a problem. However, "if it was to be?month after?month of really high oil prices?, they would begin to feel intense pressures on their supply chain", similar to what drove the COVID-19 inflation spike. Goolsbee told journalists in a video conference after attending a Milken Institute Conference in Los Angeles that "you're beginning to see these problems develop." The longer this goes on, the worse it will get, as they are using up their stock of industrial chemicals and inputs, whose distribution was disrupted. Meanwhile, high fuel prices and sustained shipping costs are also contributing to these problems. While there was initial ?concern the war would hurt U.S. job growth and demand while also leading to higher prices, "It has not yet been a stagflationary-direction shock," Goolsbee said. "It's just an inflationary shock." The longer this continues, the more nervous I become. Investors see few chances of the U.S. Central Bank cutting rates in the near future. With inflation hovering around a percentage-point above the Fed’s 2% target, and the expectation that it will move higher. Separately, St. Louis Fed president Alberto Musalem stated that the risks of monetary policy had shifted to higher inflation. This could require interest rates to be held "for some time" and possibly even moved up. Musalem stated that "inflation is significantly above our target" at a Mississippi Bankers Association meeting in Fairhope (Alabama). We have risks on both the inflation and employment sides. My understanding is that risks are shifting to the inflation side, adding weight to expectations that the Fed will at least hold its policy rate. Musalem stated that there are "possible scenarios" where the Fed can cut rates if the demand slows and the unemployment rate rises. However, Musalem also said it was possible for the central bank to increase borrowing costs at this time. Musalem said that the inflation pressures had risen beyond the impact of high oil prices and tariffs due to the Middle East war. MOVEMENT WITHIN THE FED IN DIRECTION OF POSSIBLE RATE INCREASES The oil prices have fluctuated, rising and falling in response to news reports on progress or lack thereof towards settling the dispute. Global benchmark prices dropped overnight as news spread of a possible agreement, but then climbed back to $100 per barrel. According to AAA, the average price of gasoline in the U.S. has increased from $3 to $4.50 per gallon. The New York Fed's measure of global supply-chain pressure has risen to its highest level since July 2022 when manufacturing chains still were clogged by the pandemic. Musalem added that "this is also the underlying inflation we should be concerned about," adding that executives told him that higher prices of?aluminum and helium as well as diesel fuel, among other industrial inputs, "will all cause disruption..." The confidence effect may lead to a reduction in hiring, even though it could result in higher prices. The Fed could face a prolonged pause on any changes to its policy rate, which has been in the range of 3.50% to 3.75% since December. This would stall the anticipated continuation of monetary policy ease and make it difficult for Kevin Warsh to achieve the 'rate cuts' that President Donald Trump had said he expected. Musalem, Goolsbee and Powell are not voting members on the policy-setting committee. However, their comments show that the Fed is moving towards the idea of rate increases to combat inflation. The Personal Consumption Spending?Price index, which is used by the Fed in setting its inflation target, increased to 3.5% in March from 2.8% the previous month. Meanwhile, the underlying "core inflation" that excludes recent fluctuations in energy prices rose to 3,2% from 3.0% the previous month. Next week the Consumer Price Index (CPI) for April will be released. It is expected that it will show an acceleration. According to economists polled, the U.S. Employment report for April is scheduled to be released on Friday and will likely show that the unemployment rate has remained at 4.3%. Howard Schneider is reporting; Chizu Nomiyama, Paul Simao and Chizu Nomiyama are editing.
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Russia warns diplomatic missions in Kyiv to evacuate staff if Moscow launches mass strikes
The Russian Foreign Ministry announced on Wednesday that it had warned diplomatic missions to evacuate their staff from Kyiv immediately in the event of a massive?strike in response to any attempts by Ukraine?to disrupt Russia's Victory Day celebrations on May 9. In a video on Telegram posted by Spokesperson Maria Zakharova she urged diplomats in the event that an attack was made in connection with the commemorations or a military parade at Red Square. Zakharova stated that "the Russian Ministry of Foreign Affairs urges your government to treat this statement with utmost care and ensure a timely evacuation of all diplomatic and other representatives from the city of Kyiv in light of the inevitable retaliatory attack on Kyiv, by the Russian Armed Forces." Zakharova stated that Ukrainian President Volodymyr Zelenskiy made "aggressive, threatening statements" regarding disrupting the remembrances during remarks he had made on Monday in Armenia at a meeting of?the European Political Community. She said that "several EU countries were in attendance." "None of them reprimanded?the ringleader of Kyiv's regime." In his remarks to the Armenian people,?Zelenskiy cited a Russian statement that the commemorations were being'scaled back and held without military hardware due to security reasons. Zelenskiy added: "It's the first time in many years that they can't afford military equipment, and they are afraid drones will buzz over Red Square. This is telling." This is telling."
Dollar wobbles as Asian stocks reach record highs
Asian stocks reached record highs Thursday, while the U.S. Dollar slid and oil suffered steep losses. Traders were encouraged by the prospect of a?Middle East peace deal. However, the fate of?the Strait of Hormuz - a critical strait - remains unclear.
After a robust earnings report, the Nikkei 225 returned to Japan from its 'long holiday' to surpass 62,000 for a first time.
The broadest MSCI index of Asia-Pacific stocks outside Japan rose 1% and reached a new record high. The index has risen 7% this week.
Kyle Rodda said that the market movements on Thursday were justified because a deal was a breakthrough.
We've heard this story before and the rug can be pulled from the market very quickly. If we continue to see progress in the talks, Asian stocks will keep rising."
Iran announced that it was reviewing a?proposal for peace that would end the war formally, but leave unresolved U.S. key demands that Iran suspends its nuclear program and opens the Strait of Hormuz. The closure of the Strait of Hormuz has sent oil prices soaring.
Oil prices fell by nearly 8% Wednesday due to a potential agreement that could end the war which began at the end February. Brent crude oil was slightly higher on Thursday morning at $102,11 per barrel.
Oil prices are still around 40% higher today than when the conflict started, and 10-year Treasury yields have risen by?around 40 basis points, highlighting the challenges?facing the world economy due to higher energy prices.
OCBC analysts said in a report that "even if the strait opens in the coming weeks, oil will likely remain high and slowly ease due to damage to energy infrastructure as well as precautionary stockpiling."
Federal Reserve officials have said that the war raises the risk of an inflation shock due to the high oil prices, and the growing concern about global supply chain problems.
YEN STAYS IN THE SPOTLIGHT
The euro has held its overnight gains, which were around 0.5%. It was last trading at $1.1747. The pound was trading at $1.3591, after rising 0.4% on Wednesday. The dollar index (which measures the U.S. money against six other currencies) was 98.032.
After a series of spikes over the last few sessions, speculation has been rife that Tokyo is stepping in to help?the battered yen. The yen was trading at 156.29 to the dollar last, with little change on the day. It had hit a 10-week-high of 155 in the previous session.
OCBC analysts say the key question to ask is whether or not the Ministry of Finance has deployed enough firepower in order to continue defending the yen.
They said that "intervention alone will not be able to change the trend until it is backed by stronger policies like a more assertive BOJ hike cycle or better alignment with other external drivers, such as lower oil prices and U.S. Yields", in a statement.
A fragile ceasefire, and the prospect of a deal have fueled a risk-on rally that has continued since April. This rally is further fueled by the strong earnings reports released by technology companies.
The S&P 500 and Nasdaq closed at record highs in earnings overnight. S&P 500 firms are on course for their highest profit growth in over four years.
According to a survey, investors were waiting for the non-farm payrolls data on Friday. The U.S. economy was expected to grow by 62,000 jobs in April, after rebounding by 178,000 in March. Reporting by Ankur Banerjee, Singapore; Editing and proofreading by Muralikumar Anantharaman
(source: Reuters)