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Markets Update: OPEC, Saudi Arabia Cut Oil Production Further as RBA Rates Loom, CN Property Support Unclear
Today's important market events:
[GBP] Composite PMI/Services PMI (May) - 10:30 CEST
[USD] Services PMI (May) - 15:45 CEST
[USD] ISM Non-Manufacturing PMI (May) - 16:00 CEST
Global Markets Roundup: 05 June 2023
Asia-Pacific stocks were mostly higher on Monday, tracking gains on Wall Street on Friday and supported by strong Chinese economic data.
The Caixin China Services Purchasing Managers' Index (PMI) rose to 55.1 in May, its highest level since February 2020, while the Composite PMI rose to 54.1, its highest level since October 2021.
Saudi Arabia announced that it would cut an additional 1 million barrels per day (bpd) of oil output in July, while other OPEC+ producers agreed to extend earlier output cuts through to the end of 2024.
Saudi Energy Minister Prince Abdulaziz bin Salman said that the kingdom would "keep the markets in suspense" on whether the additional voluntary cut for July would be extended.
European equity futures were pointing to a softer open on Monday, with the Euro Stoxx 50 down 0.2%. The US dollar index (DXY) was holding above the 104 mark, while the euro (EUR/USD) was oscillating around 1.07 and the Japanese yen (USD/JPY) had reclaimed 140.
The US dollar index (DXY) traded steadily above the 104.00 level on Monday, taking a breather following Friday's gains. The stronger-than-expected US non-farm payrolls (NFP) data boosted rate hike expectations beyond June and July. Weekend newsflow was light, with the Fed in a blackout period and President Biden signing the debt ceiling bill.
The euro (EUR/USD) lacked firm direction and instead oscillated around the 1.0700 level. The British pound (GBP/USD) was subdued after last week's failure to sustain the 1.2500 level. The Japanese yen (USD/JPY) reclaimed the 140.00 handle owing to widening yield differentials. The Australian dollar (AUD/USD) and New Zealand dollar (NZD/USD) were choppy with early losses stemmed by the encouraging Chinese Caixin PMI data. The People's Bank of China (PBoC) set the USD/CNY mid-point at 7.0904, slightly weaker than the market expectation of 7.0918.
FIXED INCOME
10-year US Treasury futures were subdued on Monday after the post-NFP bear-flattening. The move had little impact on implied rate pricing for June and July, but lifted the view on rates for year-end. Bund futures remained pressured and extended on Friday's declines after the lack of fresh European economic data. 10-year Japanese government bond (JGB) futures retreated amid spillover selling from global peers and the absence of additional Bank of Japan (BoJ) purchases.
COMMODITIES Crude oil futures surged at the reopen following news of Saudi Arabia's additional 1 million barrels per day (bpd) output cut in July. However, the gains were pared amid recent dollar strength, lingering global demand concerns, and with Saudi Arabia going it alone on the additional cuts as others instead extended their prior cuts to end-2024. Saudi Arabia announced that it would cut an additional 1 million bpd of oil output for July, bringing its total output to 9 million bpd.
All other OPEC+ producers agreed to extend earlier output cuts through to the end of 2024. OPEC+ agreed to a new output target of 40.4 million bpd from 2024, with the output target for 2024 lowered by 1.4 million bpd. Russia, Angola, and Nigeria are to see significant production cuts in 2024. The next OPEC+ meeting is to take place on November 26th.
Saudi Arabia's Energy Minister said that the extra voluntary cut is a precautionary measure and that they are not targeting prices. He also said that they will keep the markets in suspense on whether the additional voluntary cut for July will be extended and will review the extra voluntary cuts every month.
The UAE's Energy Minister said that there are some discrepancies in Russian production numbers, but that they don't want politics involved in how they look at Russian production numbers.
Russian Deputy PM Novak said that OPEC+ agrees total oil output cuts of 3.66 million bpd and that the oil market is more or less balanced. He added that they are seeing oil demand rising and that they have the possibility of tweaking decisions. He also said that they will take decisions so that the oil market is stable and that Russia is fulfilling its obligations in full.
White House officials said that they will continue to work with all fuel producers to ensure energy markets support US economic growth.
Spot gold was lacklustre in the aftermath of the post-NFP selling pressure and prodded last Friday's lows.
Copper futures were subdued after recent dollar-related headwinds but with losses stemmed by support at the USD 3.70/lb level and amid the mostly constructive risk tone.
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Looking ahead, key economic data releases on Monday include Swiss inflation, final Eurozone Services and Composite PMIs, and US ISM Services PMI. There will also be speeches from ECB President Christine Lagarde, ECB Executive Board member Isabel Schnabel, and Federal Reserve Bank of Cleveland President Loretta Mester.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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