Friday, April 3, 2020

Asia Times: Will crude oil prices be able to maintain its road to recovery after surging more than 20% on Thursday?

Tags
  • Dollar
  • Gold
  • Yen
  • Euro
  • Stocks
  • NonFarm Payrolls
  • Oil

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Market Recap: Will crude oil prices be able to maintain its road to recovery after surging more than 20% on Thursday?

Stocks in the US gained on Thursday, boosted mostly by equities in the energy sector after US President Donald Trump tweeted that he expected Saudi Arabia and Russia to cut their output by up to 15mn barrels. All major indices in the US closed Thursday higher, after an initial slump earlier in the trading session. Among the S&P500 sectors, the energy sector surged 9.08% on Thursday, much higher than the utilities sector that followed which only rose 3.15%.

Indexes Daily Change (%) Net Change Closing Price
Dow Jones +2.24% +469.93 21,413.44
S&P500 +2.28% +56.40 2,526.90
Nasdaq +1.72% +126.73 7,487.31
*Source: Bloomberg

Oil-related currencies led major currencies on Thursday as the OPEC+ meeting called by Saudi Arabia lifted optimism that the price war between the Kingdom and Russia could end in the near future. This allowed the dollar to gain against the euro as well as the US shale oil industry may be able to find some relief as oil prices start to climb up again, although the wading demand for energy products should still be a concern. Safe haven currencies were on the opposite end, losing against the dollar as risk aversion in the financial market eases.

Initial jobless claims in the US for the week ended March 20th spiked to 6.65mn, almost doubling the 3.28mn from the week before. Bloomberg's survey of economists had a median forecast of 3.7mn, with the highest estimate at 6.5mn. The dollar advanced as a result, pushing the Dollar Index to as high as 100.156 in the hour after the data was announced.

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Safe haven assets were mostly lower on Thursday as optimism for oil prices dominated the headlines. Gold was the exception, extending gains for the second day in a row to push past 1,600. The Japanese yen fell along with US Treasuries. Benchmark 10-year yields gained 1.4bps to 0.60% as a result.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +1.41% +22.48 1,613.99
Silver +3.77% +0.53 13.90
JPY -0.69% -0.74 107.91
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +1.9 0.23%
10-Year +1.4 0.60%
30-Year +2.0 1.24%
*Source: Bloomberg

Oil prices surged more than 20% on Thursday after Saudi Arabia said that it had called a meeting of OPEC+ members after Trump's request to discuss a fair agreement. The statement from the Kingdom suggests that it likely will only cut output if other members do the same. But crude oil prices reversed some of its gains from Thursday early into Friday's trading session after the Kremlin said that Russian President Vladimir Putin has not yet spoken to Saudi Arabia, casting doubt on Trump's tweet that the two nations will collectively reduce output by over 10mn barrels. WTI crude oil futures were 5.13% lower while Brent crude oil futures declined 1.14% as of 8.40am (GMT +8).

Oil Futures Daily Change (%) Net Change Closing Price
Brent Crude +21.02% +5.20 29.94
WTI Crude +24.67% +5.01 25.32
*Source: Bloomberg

Stocks in Asia were mostly positive on Friday morning. The Nikkei advanced as pressure on the Japanese yen eased on Thursday. The KOSPI inched higher as well. Futures tracking major indices in the US were lower however. Today, financial markets will likely be focused on developments in the energy market as well as March's employment report from the US Bureau of Labour Statistics.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei Index +1.10% +195.15 18,013.87 8:31:15 AM
KOSPI Index +0.27% +4.66 1,729.52 8:51:10 AM
ASX200 Index -0.27% -13.90 5,140.40 8:51:06 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -0.71% -152.00 21,121.00 8:41:28 AM
S&P500 Futures -0.67% -16.75 2,499.75 8:41:30 AM
Nasdaq Futures -0.55% -42.25 7,585.00 8:41:29 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • China Mar Services PMI (Caixin) (9.45am)
  • Germany Mar Services/Composite PMI (F) (3.55pm)
  • Eurozone Mar Services/Composite PMI (F) (4pm)
  • UK Mar Services/Composite PMI (F) (4.30pm)
  • US Mar Change in NonFarm Payrolls (8.30pm)
  • US Mar Non-Manufacturing PMI (ISM) (10pm)