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MORNING BID EUROPE-April fools rush in
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets. Stocks and bonds are gaining momentum as investors hope for a de-escalation of the 'Iran War. But, if we pay attention to the date today, will the market fool itself again? Stocks are soaring after U.S. President Donald Trump stated that the United States could halt its military strikes on Iran in two to three weeks, and that Tehran was not required to reach a settlement as a condition for the conflict to end. MSCI's broadest Asia-Pacific share index outside Japan soared by 4.3% to snap a four-day loss streak. The benchmark is now on track to achieve its best single-day return since the post-Liberation Day recovery on April 10. South Korea's Kospi index is the leader, surging up to 7.7% after?Korean Exports surged in March, slamming expectations. Separate PMI data showed that the country's factory activities expanded at its fastest pace in more than four year in March. This was largely due to semiconductor demand and the launch of new products. Japan and Taiwan, two other export-oriented markets within the tech supply chain, are also not far behind. The data showed that the sentiment of Japanese companies heated up in March. The rally has ignored a Wall Street Journal report that suggested the UAE could enter the conflict. It is also lobbying the UN Security Council to authorize it to participate in military action in order to force open Strait of Hormuz. Marco Rubio, the U.S. Secretary of State, said that Washington would have to reexamine their relationship with NATO once the war is over. Trump will give an update about Iran in his address to the nation on Wednesday at 9 pm. S&P 500 futures have risen 0.2% on Wednesday. Wall Street stocks surged on Tuesday as traders bet on a possible exit from the war. Oil markets, however, were subdued, as trading resumed in Asia. Brent crude futures rose 1.2%, reversing the day's losses. Early European trades saw pan-regional futures up 1.8%. German DAX futures grew 1.8% and FTSE Futures grew 0.9%. Greece, meanwhile, will join MSCI's developed market index in May of next year. This marks a significant milestone for the country 13 years after being kicked out. The following are key developments that could impact the markets on Wednesday. Economic events: France: HCOB Manufacturing PMI in March Germany: HCOB - Manufacturing PMI for March United Kingdom: S&P Global Manufacturing Manufacturing PMI and BBA mortgage rate for March Euro zone: HCOB Manufacturing Final HCOB PMI for March and unemployment rate for February US: Retail sales in February, ISM manufacturing PMI in March, EIA weekly inventories Debt auctions: Germany: 7-year government debt
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South Korea and Indonesia sign agreements on minerals technology and finance during Prabowo's visit
The Blue House of the Seoul Presidency reported that South Korean President Lee Jae Myung held talks with Indonesian leader Prabowo?in Seoul on Wednesday?. They agreed to "expand their cooperation in critical minerals, technology, and clean energy". According to the schedule of the president, the leaders met following an official welcome at the Blue House. They then held a summit and witnessed the signing of several memoranda before lunch. As part of his visit to South Korea, the?Indonesian President is expected to also attend a business conference in Seoul on Wednesday evening. As the two countries transform their relationship into a strategic partnership, they also support projects in renewable energy. There were no agreements announced regarding defence cooperation, such as the joint project to develop South Korea’s KF-21 fighter aircraft. Last month, Korea Aerospace Industries said that it was in discussions with Indonesia about a possible sale of KF-21 jet fighters. However, no decision had been taken. Reports in the media said that Jakarta would consider buying an initial batch 16 aircraft. An official said that South Korea expects Indonesian to finish a payment for the joint development program by the end of this year. Blue House stated earlier that the two countries would also be expected to strengthen their cooperation in areas such as infrastructure, shipbuilding and nuclear power as well as new growth industries. It said that Lee will also award the highest South Korean civilian honour, Grand Order of Mugunghwa to Prabowo during his state visit. Reporting by Joyce Lee and Kyu-seok Kim, Editing by Ed Davies
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Rubio: Venezuela will need a transition phase and free elections
U.S. Secretary of State Marco Rubio said on Tuesday that a transition period will be needed in Venezuela, and that the country will need free and fair elections. He also added that patience is required until this point. Rubio stated in an interview with Fox News Channel’s “Hannity” show that there would have to be some sort of transitional phase. "There must be fair and free elections in Venezuela." "And that point must come." "We must be patient but we can't become complacent." In a deadly raid that was ordered in January by President Donald Trump, the U.S. Military seized Venezuelan president Nicolas Maduro. The United Nations human rights office said that the 'raid' was in violation of international law. Trump had said at the time that Washington would "run" Venezuela. Delcy Rodrguez, Maduro’s former vice president, took over the government and is now governing Venezuela under U.S. supervision. Trump, following U.S. actions in Venezuela has spoken of acting against Cuba to pressurize its leadership. Rubio stated in an interview on Tuesday that Cuba needs economic and political reforms, and that Washington will soon have more information about that country. Rubio said: "I think Cuba needs two things, political reforms and economic reforms. You?cannot fix the economy of Cuba if you do not change their?government system." After toppling Maduro early in January, the U.S. cut Venezuela's oil imports to Cuba and Trump?threatened? to impose punishing tariffs against any other country which?sent crude? to Cuba. Cuba's energy crises has led to blackouts in the 10 million-person country. The crisis, according to health officials, has led to an increase in mortality rates for cancer patients and children. Human rights experts claim that Trump's emphasis on Venezuelan oil and threats against Cuba echo an imperialist attitude.
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Iron ore prices boosted by positive China data and hopes for stimulus
Prices of iron ore futures rebounded Wednesday on the back of upbeat factory data, and expectations that China's top consumer could take a?stimulus measure to brighten demand prospects. As of 15:00 GMT, the most-traded contract of iron ore on China's Dalian Commodity Exchange climbed 0.62%, to 816 Yuan ($118.55), a metric tonne, after a 0.8% drop the previous day. By 0145 GMT, the benchmark May iron ore contract on Singapore Exchange was up 0.68% at $106.2 per ton. China's factory output grew at its fastest rate in a full year in March. This was a relief to an economy that is struggling with the global supply chain and volatile energy markets. China's central banks pledged to maintain a loose monetary policy on Tuesday, igniting hopes for the implementation of policies that will help boost domestic consumption and counter external shocks. Iron ore stock levels near record highs at port have limited the price potential. As heightened expectations of an end to the Iran war arose, coking coal and other steelmaking components suffered a?loss of 2.89 % and 1.1% respectively. This was due to the heightened hope of a rapid conclusion. Donald 'Trump stated that the United States would be able to end its military attack on Iran in two to three weeks and that Tehran didn't have to make a deal to bring down the conflict. The Shanghai Futures Exchange steel benchmarks were mixed. Hot-rolled coils fell 0.12%, while wire rod dropped 0.64%. Stainless steel rose 0.28%.
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Data shows that India's diesel exports to SE Asia reached a 7-year high due to the Iran war in March.
Shipping data shows that India's diesel exports into Southeast Asia soared in March to the highest level in over seven years. This was due to traders adjusting supply to cover their short positions, and refiners taking advantage of higher profits in Asia as a result of the U.S./Israeli war against Iran. The increase in exports may boost the spot sales margins of Indian refiners, who have bought large volumes Russian crude oil to replace Middle East supplies disrupted by war. According to Kpler, three trade sources and data from the analytics firm, Kpler, around 1 million metric tonnes (7.45 millions barrels) worth of diesel has been shipped on this route. Around half of these volumes are bound for Singapore. Kpler data revealed that Reliance Industries was responsible for 90% of this volume. Reliance Industries is the operator of the largest refining complex in the world. Reliance didn't immediately respond to an inquiry for comment. SUPPLY PIVOTS A FOLLOWING NARROW EASTWEST PRICE SPREADS After the Middle East conflict disrupted crude oil supplies to Asia, traders tapped India's supply of diesel for Southeast Asia and Australia. Refineries cut production?and countries such as China banned exports?of refined products. Analysts from FGE NexantECA stated that "Asian buyers who usually rely upon Chinese and Northeast Asia must look for alternative suppliers, with India's Reliance as one of the most likely candidates in the area." India is a pivotal supplier of oil on the global market, as it can choose to sell its refined products to Europe or Asia based on which is more profitable. Traders said that these shipments would help ease the supply?tightness in April. Analysts expect this trend to continue in the short term, despite India reinstating its export taxes on diesel. James Noel Beswick, analyst at Sparta Commodities, said that its arbitrage calculations indicated that the trade flow could continue until August. He added that "India seems?committed? to maintaining its?refineries? at full capacity. Washington's rather lenient stance towards both Russian and Iranian purchase has given them the means to achieve this." To ease global prices, the U.S. issued temporary waivers on the sale of Russian oil and Iranian oil at sea. The difference between Singapore paper Swaps on a Free on Board basis and ICE Gasoil 'futures' for the front month of April, which is the difference between Singapore swaps on a FREE on BOARD basis, and ICE futures of gasoil, was reduced to an average of $20 a ton during the week ending March 27. Most traders consider a discount less than $40 per ton as more favorable for them to switch cargoes eastwards instead of westwards.
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Sources say that China's smaller independent refining companies will reduce output due to rising oil prices
Analysts and traders said that Chinese independent smaller?refiners will 'cut crude processing rates' in April due to the'sharp rise in oil prices sanctioned by the United States and a still low fuel demand. Teapot refiners have benefited from low-cost Russian and Iranian crude in recent months. However, temporary U.S. waivers that allow the purchase of Russian or Iranian oil that is stranded on sea for 30 day has pushed prices sharply higher, as buyers rush to secure supplies, particularly Indian refiners. Sun Jianan, senior analyst at Energy Aspects, predicted that run?rates of teapot refineries would fall to 50% after recovering to 55% during February and March. Traders said that spot premiums for ESPO blend for April and May shipments jumped to $8 a barrel from a discount of $8 before the U.S. - Israeli 'war with Iran. The Iranian oil discount to China is now at or just below ICE Brent. It was more than $10 when the U.S.-Israeli war with Iran began on February 28, traders said. CRUDE PROCUREMENT DELETED With teapots delaying crude procurement plans due to the vanishing discounts and Brent crude futures, traders reported that there were few inquiries for cargoes expected in April and/or May. As Beijing limits fuel prices in spite of rising crude prices, independent refiners are expected to reduce output as they wait for clarity about the market outlook. The low-cost Shandong teapot inventories may last until the end of April, although refineries under capital pressure might be forced to reduce run rates sooner, Zhang Yuxin, an analyst for Horizon Insights, said in a report. Zhang stated that fuel demand has been weak due to high prices. The National Development and Reform Commission of China, China's central planner, increased the maximum retail prices for gasoline on 23 March by 1,160 yuan and 1,115 dollars per ton. This was the biggest increase in history, but it still lagged behind the rise of crude oil prices. (Reporting and editing by Florence Tan, Kate Mayberry, and Siyi Liu from Singapore)
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Sources say that China is set to extend the ban on fuel exports with minor exemptions.
Five industry sources familiar with the matter said that China will extend its ban on refined fuel exports until April. However, exemptions may be made for small volumes of fuel bound for countries in the area who have requested assistance. Three sources confirmed that discussions were underway for the shipment of limited quantities of diesel, jet-fuel and gasoline to Southeast Asian nations in April. Three sources stated that the permitted exports for April could reach up to?150,000 in metric tons. Two other sources suggested it could be as high as 300,000 tons. The sources declined to name themselves as they weren't authorised to speak to the media. Sources?said that Bangladesh, Myanmar Sri Lanka, Maldives, and Vietnam are among the countries that could receive Chinese fuel. Shipments would be handled by Chinese state oil companies Three sources stated that direct shipments into the countries would be handled by Chinese state-owned firms. The National Development and Reform Commission of China did not respond immediately to a faxed comment request. Earlier reports indicated that some countries, such as the Philippines and Bangladesh have requested fuel from China since the beginning of the Iran War. Beijing has said that it is willing to work with Southeast Asia to solve energy shortages. Beijing has banned the export of jet fuel, diesel and gasoline as of March 12. The ban was not announced publicly and did not include jet fuel exports used for international flight refuelling or bunkering. Two sources say that some exports of jet fuel and diesel from Hainan, south China's province, trickled out after March 12. The volumes cleared customs prior to the implementation of the ban. After March 12, tankers Stavanger Pearl, Auchentoshan, and Qian Chi were loaded with more than 600,000. barrels of diesel from Hainan. Ship-tracking data and trade sources revealed that the first shipment was bound for Mexico, and the two others for the Philippines. Reporting by Trixie YAP and Siyi Liu Editing Tony Munroe & Barbara Lewis
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Brent futures for the front-month extend gains following record monthly gain in March
Early Wednesday, oil prices rose, as Brent front-month contracts?extended a record rally in March, despite reports suggesting that the U.S., Iran, and other Middle East countries may be moving closer to a negotiated settlement of the 'war. Brent front-month contract for June delivery rose?66cents or 0.63% at $104.63 per barrel by 0010 GMT. According to LSEG, the front-month Brent contract for June?delivery hit a monthly record gain of 64%. U.S. West Texas Intermediate crude futures (WTI) for May increased by 96 cents, or 0.95%, to $102.34 a barrel. WTI futures in June rose by 46?cents, or 0.49%, to $93.62 a barrel. "Even though diplomatic channels are still active, and the U.S. Administration is making intermittent comments predicting a quick end to the war, the combination between limited tangible diplomatic advances, continuing maritime attacks, as well as explicit threats aimed at energy assets, keeps supply risks skewed upwards," LSEG analysts wrote in a recent note. Brent futures, June delivery, settled down by more than $3 on Tuesday after media reports that Iran's President was prepared to end the war. The President Donald Trump told reporters Tuesday that the U.S. military campaign could be over in two to three weeks, and that Iran does not have to reach a settlement to end the conflict. This was his most direct declaration to date that he wanted to bring an end to the month-long battle. Analysts say that even if the war ends, infrastructure damage will likely keep supplies tight. Trump also said he would end the war without reopening Strait of Hormuz. This is a major route that carries 20% of the global oil and LNG trade, according to the Wall Street Journal. A survey released on Tuesday showed that oil production by the Organization?of?the Petroleum?Exporting Counties (OPEC) fell 7.3 million barrels a day in March compared with the previous month. This shows the impact of forced export reductions due to the closure of Hormuz. According to a survey of economists, the blockage in the strait and disruptions to output have caused analysts to raise their forecasts for annual oil prices by a record-breaking amount between February and March. Brent crude is expected to average $82.85 per bar in 2026. This is about 30% more than the forecast made in February, which was $63.85, before the war. The increase of $19 represents the highest annual forecasts since 2005.
Markets jittery as oil prices rise over 1% amid Mideast unrest
Brent futures extended gains following a'record monthly % increase in March. Middle East volatility continued to keep markets jittery, despite reports suggesting that the U.S. and Israeli war against Iran could be coming to an end.
Brent front-month contract for June rose $1.40 or 1.4% to $105.37 a barrel at 0430 GMT. Brent logged a monthly gain record of 64% in march, according to LSEG's data dating back to June 1998.
The U.S. West Texas Intermediate (WTI), crude futures for the month of May increased by $1.59 or 1.6% to $102.97 per barrel.
Brent futures for June delivery recovered some of the losses they suffered on Tuesday when media reports unconfirmed that Iran's President was willing to end the conflict led prices down by more than $3.
Donald Trump told reporters that the U.S. military campaign could be ended within two or three weeks, and that Iran did not need to make a deal in order to end the conflict. This was his most direct statement yet about wanting to wind down the month-long battle.
Analysts say that even if the conflict ends, damage to infrastructure will likely keep supplies limited.
According to Phillip Nova's senior market analyst, Priyanka Sahdeva, the oil price will depend on the speed at which supply chains can normalize.
Even if the situation de-escalates, the flow will not resume immediately... shipping and insurance costs, tanker movements, it will take some time before things return to normal," Sachdeva stated, adding that actual damage to the oil infrastructure could only be assessed later.
Trump said he would end the war first before reopening Strait of Hormuz. This is a major route that carries 20% of the world's oil and natural gas.
"Even though diplomatic channels are still active, and the U.S. administration has made intermittent comments about a short end to the conflict, it is unlikely that this will be the case. "Even though diplomatic channels are still active?and intermittent comments from the?U.S.
A survey released on Tuesday showed that OPEC's oil production?dropped 7.3 millions barrels per day compared to the previous month. This shows the impact of the forced?export reductions due to the closure of?strait.
The Energy Information Administration reported on Tuesday that U.S. crude output in January fell?by the most in two-years' time following a severe snowstorm which knocked out production in large parts of the country.
(source: Reuters)