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Global shares linger at peaks ahead of Fed move

By Alun John

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Global shares linger at peaks ahead of Fed move
© Reuters. FILE PHOTO: A man wearing a face mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a novel coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song

By Alun John

HONG KONG (Reuters) – Global shares hovered at record highs while currency markets and U.S. Treasuries were steady on Wednesday, as investors looked to the expected winding down of pandemic-era monetary stimulus in the world’s largest economy.

The Federal Reserve is expected to announce the tapering of its $120 billion-a-month asset purchase programme in its policy statement at 1800 GMT. Ahead of the much anticipated meeting, Asian shares failed to follow a strong lead from Wall Street.

Markets are almost certain the Fed will taper but are looking to see if policymakers will give any hints about the possibility of interest rate hikes next year.

“While confidence remains that the Fed will begin its taper, there is scepticism around just how hawkish they will be on the rate hike front,” said analysts at Westpac in a morning note to clients.

Federal Reserve officials are trying to maintain a balance between raising rates to ensure inflation remains contained and giving the economy as much time as possible to restore the jobs lost since the pandemic.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.33% in early trading on Thursday. Japanese markets were closed for a public holiday.

“The shape of markets in our region may be driven more by what happens to Treasury and dollar markets overnight than what happens locally,” said Rob Carnell, ING’s Asia Pacific head of research, in a note.

The Australian benchmark share index was the biggest gainer, rising 1.3%. But those gains were outweighed by falls in Hong Kong’s off 1%, and South Korea’s down 1.2%, even as local fintech Kakao Pay Corp saw its shares double in value from their initial public offering price on their trading debut.

Chinese shares were steady after data showed service sector activity expanded in October.

On Tuesday, MSCI’s all-country world index, which tracks equity performance in 50 nations, closed at a record high, helped by all three major U.S. stock indexes hitting intraday peaks during the session, and a record finish from Europe’s index. [.N] ()

Strong earnings supported shares in both Europe and North America.

In contrast the Asian regional benchmark has been trending down since early this year, and is off more than 13% from its February peak, as it struggles to rebound from sweeping regulatory changes in China in the summer, which roiled sectors from property to technology.

Moves in currency markets were muted on Thursday. The dollar kept within sight of its recent highs against the yen and euro.

The dollar was steady on Wednesday, having dropped 1.2% against the dollar on Tuesday after more dovish remarks from the Reserve Bank of Australia, even as it abandoned its short-term yield target.

Also in central bank news, the Bank of England on Thursday could become the first of the world’s biggest central banks to raise rates after the coronavirus crisis.

U.S. benchmark 10-year Treasury yields were steady at 1.5540%, a little off last month’s recent top of 1.7%.

Oil prices fell on Wednesday as industry data pointed to a big build in oil stocks in the United States, the world’s largest oil consumer, and as pressure mounted on OPEC to increase supply. [O/R]

fell 1.2% to $83.74 a barrel while tumbled 1.5% to $82.65 a barrel.

slipped 0.2%. [GOL/]

Economy

Oil Prices Fall amid Protests in China

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Oil prices decline

Oil prices fell on Monday amid a general decline in investor appetite for risk amid information about the ongoing protests in China against vested restrictions.

The cost of January futures on Brent crude oil on London’s ICE Futures exchange was $81.31 per barrel on Monday, down $2.32 (2.77%) from the close of the previous session. At the close of trading on Friday, those contracts fell $1.71 per barrel to $83.63.

Oil prices decline – what’s going on in the market?

The price of WTI futures for January crude fell by $2.31 (3.03%) to $73.97 per barrel in electronic trading on the New York Mercantile Exchange (NYMEX). By closing of previous trades, the cost of these contracts decreased by $1.66 (2.1%) to $76.28 per barrel. Brent and WTI gained 4.6% and 4.8%, respectively, last week.

According to Bloomberg, protests were held in cities across the country, including the capital Beijing, as well as Shanghai, Xinjiang, and Wuhan, which was originally the epicenter of the COVID-19 spread.

That contributes to a stronger U.S. dollar, which reduces the attractiveness of investments in crude, and also raises the possibility of even more significant tightening of restrictions by Chinese authorities, the agency said.

“The outlook for the oil market remains unfavorable and the events of this weekend in China do not add to the positive,” notes Warren Patterson, who is in charge of commodities strategy at ING Groep NV in Singapore.

According to the forecast of analytical company Kpler, oil demand in China in the fourth quarter will decrease to 15.11 million barrels per day (bpd) compared to 15.82 million bpd a year earlier.

Earlier we reported that Russia will ban the sale of its oil to countries that have imposed a price ceiling.

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Economy

Oil Russia ban news: Russia will ban the sale of its oil to countries that have imposed a price ceiling

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oil Russia ban

Will Russia sell oil to Europe? The administration of President Vladimir Putin is preparing an order prohibiting Russian companies and any trader from buying Russian oil to sell raw materials to countries and companies that have imposed a price ceiling on Moscow. Bloomberg news agency wrote this, citing a report from sources.

“The Kremlin is preparing a presidential decree banning Russian companies and any traders buying national oil from selling it to anyone who participates in the price ceiling,” the publication wrote.

According to the newspaper’s interlocutors, this would prohibit any mention of the price ceiling in contracts for Russian crude, as well as transferring it to countries that have joined the price ceiling for the natural resource.

In the first half of September, the press service of the US Treasury Department said that the USA, together with its allies from G7 (Great Britain, Germany, Italy, Canada, France and Japan) and the European Union (EU) would impose a ban on marine transportation of Russian oil on December 5 and oil products – on February 5.

Earlier we reported that EU negotiations on limiting the prices of Russian oil reached a deadlock today.

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Economy

EU talks on restrictions on Russian crude oil prices today stalled

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russian crude oil price today

Negotiations between the European Union countries about the “ceiling” of Russian crude oil prices today reached an impasse; Bloomberg reported, according to its sources.

Representatives of the bloc cannot reach an agreement on the ceiling price of Russian oil. According to the agency, the proposed European Commission limit of $65-70 per barrel, Poland and the Baltic countries believe “too generous,” while Greece and Malta, which is actively engaged in transporting fuel, do not want the limit to fall below $ 70. Recall that the Russian response to the oil price cap was negative. The Russian government has officially said that it will only sell oil at market prices.

“We are looking for ways to make this solution work and we are trying to find a common ground to implement it in a perfectly pragmatic and efficient way, while avoiding that it may cause excessive inconvenience to the European Union,” said German Chancellor Olaf Scholz.

Earlier, we reported that the SEC fined Goldman Sachs $4 million for non-compliance with ESG fund principles.

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