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On September 8th, Pepperstones Chris Weston wrote that the departure of Japanese Prime Minister Shigeru Ishiba has shifted the focus to his successor and what this might mean for political stability. Markets will weigh the extent of additional fiscal measures and budgets under the new leadership. "The extent of fiscal stimulus will be crucial to controlling the rise in long-term Japanese government bonds," he said. These developments could be seen as further justification for delaying the Bank of Japans next 25 basis point rate hike until 2026. This expectation is already priced into the market, with swap traders anticipating only a 12 basis point rate hike by December. Weston noted this as another reason why few are currently willing to hold the yen. He expects yen weakness in Asian markets to become widespread.Some Hong Kong stocks with new consumption concepts fell, with Pop Mart (09992.HK) falling more than 6%, BRUCO (00325.HK) falling more than 3%, and Cha Baidao (02555.HK) following suit.The Hang Seng Index in Hong Kong opened at 25,440.01 points on Monday, September 8, up 22.03 points, or 0.09%. The Hang Seng Tech Index in Hong Kong opened at 5,693.99 points on Monday, up 6.54 points, or 0.11%. The CSI 300 Index opened at 9,059.22 points on Monday, up 2.0 points, or 0.02%. The H-share Index opened at 4,260.37 points on Monday, down 7.9 points, or 0.19%.Hang Seng Index futures opened down 0.10% at 25,374 points, 38 points below the spot price.Goldman Sachs said OPEC+s decision to begin phasing out its 1.65 million bpd production cuts likely primarily reflected still-low OECD commercial inventories.

Crude Oil Tests $95 as Recession Fears and a Surging Dollar Shake the Oil Rally's Foundation

Charlie Brooks

Jul 08, 2022 11:23


On Wednesday, U.S. crude futures slid $4 to test the $95 per barrel support as recession concerns and a strengthening dollar in expectation of further rate hikes by the Federal Reserve shook the roots of this year's oil boom. After topping $97 a barrel in the previous session, the benchmark for U.S. crude oil, West Texas Intermediate, fell by more than $9.


Brent, the benchmark for international crude oil, dropped below $100 for the first time since April 25. Tuesday, Brent lost nearly $11 after a $101 examination.


Overnight, the Dollar Index, which measures the U.S. dollar to six major international currencies, surpassed 107 for the first time since December 2002. The dollar has climbed significantly since November of last year in anticipation of aggressive rate hikes by the Federal Reserve, which have just now begun to materialize.


In June, a carefully watched barometer of the U.S. services sector fell to its lowest level in twenty months, but despite rising labor and other input costs, it held up better than expected.


Separately, the U.S. Department of Labor said that the labor market may be slowing. According to its monthly study, the number of job openings declined in May to 11.254 million, which is still an all-time high. The sum was around a quarter of a million more than projected, and the government revised its estimate from May to 11,681 million.


The data on job openings was issued before the more critical nonfarm payrolls report on Friday, which is anticipated to suggest a slower rate of employment growth in June compared to May. Economists anticipate that around 268,000 payrolls were added in June, compared to 390,000 in May, keeping the unemployment rate at 3.6% for the third straight month. The Federal Reserve considers a rate of unemployment of 4 percent or less to signify full employment.


In an assessment of the energy sector, Goldman Sachs analysts wrote, "While we believe that higher consumer prices are required to stabilize the oil market this summer, we recognize that significant and huge shocks continue to distort fundamentals."



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