Asian shares push higher ahead of Fed meeting

Wednesday, 29 October 2014 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Asian shares marked gains while the dollar held steady on Tuesday, as investors awaited the outcome of the US Federal Reserve’s two-day meeting that begins later in the session for clues to the direction of US interest rates. “We’re seeing some disjointed moves in Asia today, with a degree of consolidation the dominant theme,” IG market strategist Stan Shamu wrote in a note.

Tokyo Stock Exchange (TSE) staff members work at the bourse at TSE in Tokyo “Ahead of the European open, we’re calling the major bourses positive with a bit of a recovery after yesterday’s weakness,” he said, predicting London’s FTSE could open about 0.2 higher, while Germany’s DAX and France’s CAC could open up 0.3%. MSCI’s broadest index of Asia-Pacific shares outside Japan shrugged off early losses and a lackluster performance on Wall Street to rise about 0.4% as China and Hong Kong shares rebounded on hopes of more reforms to State-Owned Enterprises. The Shanghai Composite Index surged 1.7%. But Japan’s Nikkei stock average dropped 0.4% on concerns over corporate earnings after disappointing results from Canon Inc, despite upbeat economic data released before the market open. Japanese retail sales in September rose 2.3% from a year earlier, government data showed, suggesting consumer spending is gradually picking up. “Positive retail data is helping some retail stocks, but not strong enough to affect the whole market as investors are focused on the big overseas event now,” said Takuya Takahashi, a strategist at Daiwa Securities. The Fed is expected to announce the completion of its quantitative easing program and will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets. Data on Monday showed US services sector activity slowed in October to a six-month low, while manufacturing output in Texas decreased, providing more evidence that the Fed has reason to wait before raising US interest rates. The US dollar steadied after slipping overnight on expectations of more dovish comments from the Fed. The dollar index, which tracks the US unit against six major rivals, inched up about 0.1% to 85.544. The dollar was flat on the day against its Japanese counterpart at 107.82 yen, but remained below Monday’s nearly three-week high of 108.38. The greenback inched up slightly against the euro to $1.2702, which came under pressure in the previous session after Germany’s closely watched Ifo report of business sentiment came in at its lowest reading in almost two years in October, indicating that Europe’s largest economy faces challenges. US crude CLc1 for December was down about 0.4% at $80.72 per barrel after dropping as low as $79.44 on Monday, its lowest level since June 2012, after Goldman Sachs cut its price forecasts. Brent crude LCOc1 shed 0.6% to $85.34, as concerns about weak global demand and ample supply continued to loom over the market. Spot gold recouped earlier losses to rise 0.3% to $1,229.60, pulling away from two-week lows.

Brent falls towards $85 amid supply glut, lower price forecasts

Reuters: Brent crude extended its decline to a third day, dropping towards $85 a barrel on Tuesday, still under pressure from a Goldman Sachs report that slashed the investment bank’s oil price forecasts amid a global supply glut. Citing rising production and insufficient demand, Goldman Sachs on Sunday cut its forecast for Brent to $85 a barrel from $100 for the first quarter of 2015 and reduced its projection for U.S. crude to $75 from $90. Analysts from other major banks have also cut forecasts for 2014 and 2015 crude oil prices, citing global growth concerns, a strengthening dollar and ample supplies. “It will take time to mop up this excess supply,” said Tony Nunan, oil risk manager at Tokyo’s Mitsubishi Corp. “It will take either a major OPEC cut or it will take a slowdown in shale oil. And the wild card would be a major disruption in Libya or Iraq, which could happen still.” London Brent crude for December delivery was trading 63 cents lower at $85.20 a barrel by 0545 GMT, after dropping 30 cents by the close on Monday. U.S. crude for December delivery was down 38 cents at $80.62 a barrel. The West Texas Intermediate futures hit $79.44 on Monday, the lowest level since June 2012. The meeting of the Organization of the Petroleum Exporting Countries (OPEC) next month in Vienna is shaping up to be one of the most important in years, with Brent having lost more than $30 from a mid-June peak on the supply-demand imbalance.