Article / 17 May 2017 at 7:00 GMT

Morning Markets: Risk retreats as oil slides lower

Editor / Saxo Bank
Denmark






Morning Markets



Watchlist

  • UK: Monthly unemployment figures (0830 GMT)
  • EU: Harmonised CPI (0900 GMT)
  • Poland: Interest-rate decision (0950 GMT)
  • South Africa: Retail sales (1100 GMT)
  • US: EIA weekly petroleum status report, incl. crude oil and gasoline stocks (1430 GMT)
  • Japan: GDP Report (2350 GMT) 

As quickly as it arrived, the market's latest bout of risk-on sentiment vanished as oil prices tumbled and Asian bourses followed Wall Street lower in a session that took the Hang Seng down 0.3% and the ASX 200 down 0.9%. The Nikkei shed 0.6% of its value in Wednesday's session.

The oil price slide came after API reported an 882,000 barrel build in crude inventories versus the 2.3 million barrel drawdown that was expected. Brent crude prices fell 0.8% on the news while WTI headed 1% lower. 

Today sees the UK release its latest labour market report in which investors expect a slight rise in joblessness and thus, perhaps, a brake on any hawkish plans the Bank of England may be contemplating in light of Tuesday's strong inflation print. 

The move towards risk-off sentiment saw the familiar safe-havens head higher with gold rising 0.5% and the JPY gaining ground versus a softer dollar.

Market signals

Asian session

  • Gold has made gains and USD has fallen on worries about White House turmoil
  • Asian equities retreated on rising risk-off sentiment
  • Japan's core machinery orders rose 1.4% in March on the previous month
  • The Nikkei 225 took a dive; it was down 0.53% to 19,813.87 at 0540 GMT
  • The Shanghai Composite was down 0.17% to 3,107.52 at 0538 GMT
  • The Hang Seng index was down 0.06% to 25,319.58 0541 GMT
  • Korea's Kospi Composite was down 0.23% to 2,289.95 at 9522 GMT
  • Australian consumer sentiment dropped for a second month in May, falling 1.1%
  • Australian wages are stuck at record lows; they rose by just 0.5% in the March quarter
  • Banks drove the S&P/ASX200 sharply lower; it closed down 1.11% at 5,785.40
  • S&P affirmed Australia's prized AAA rating, but raised fiscal repair concerns
  • NZ's producer prices rose 1.4% in the March quarter, while input prices rose 0.8%

Forex ahead

  • USD retreated against the yen; it was worth just ¥112.31 at 0655 GMT
  • AUD managed to hold above 0.74; it was worth 0.7428 at 0655 GMT
  • USDCAD slid lower on the correction seen in crude oil to 1.3594
  • GBPUSD sits at 1.2917 ahead of key joblessness report

From the Floor

A step too far? "The stronger euro is likely to pause the European equities rally," says Garnry

A House divided. "The disarray seen in Trump's white House is boosting metals," says Hansen

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
The jobless rate in the UK is expected to hold steady today at a low 4.7%, but the claimant count is on track to rise for a second month in April, says James Picerno.

Cartel watch

The May 25 Opec meeting will be closely watched, now that Kuwait has joined Saudi and Russian calls to extend crude output curbs, says the team at Saxo APAC sales trading.

Russian dividends
Paying dividends is a political matter in Russia, where state-controlled oil companies have invented many excuses for paying less than the required 50% of profits, writes Nadia Kazakova.

UK inflation up
The UK inflation jump was likely due to one-off factors, but there are signs the UK economy is outperforming consensus, and Thursday's retail sales release will be key, says Neil Staines.


Oil storage tanks

 The skittish oil markets await fresh oil inventories data from 
the US on Wednesday. Photo: Shutterstock

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