Market Review 12-7

Market Review 12-7

Stock markets roiled as U.S. ups ante in trade conflict


By Shinichi Saoshiro


A sell-off in Chinese markets knocked Asian stocks on Wednesday as U.S. threats of tariffs on an additional $200 billion worth of Chinese goods pushed the world’s two biggest economies ever closer to a full-scale trade war.


Washington proposed the extra tariffs after efforts to negotiate a solution to the dispute failed to reach an agreement, senior administration officials said on Tuesday.


The United States had just imposed tariffs on $34 billion worth of Chinese goods on Friday, drawing immediate retaliatory duties from Beijing on U.S. imports in the first shots of a heated trade war. U.S. President Donald Trump had warned then that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports – roughly the total amount of U.S. imports from China last year.


Spreadbetters expected the Asian gloom to extend to European stocks, with Britain’s FTSE tipped to open down 0.45 percent, Germany’s DAX 0.6 percent and France’s CAC 0.5 percent.


S&P 500 and Dow futures were down 0.7 percent and 0.75 percent, respectively, pointing to a lower open for Wall Street later in the day.


The yen, often sought in times of political tensions and market turmoil, gained against a number of peers.


The dollar traded at 111.02 yen, pulled back from a near two-month peak of 111.355.


The euro fell 0.2 percent to 130.175 yen and the Australian dollar lost 0.7 percent to 82.24 yen.



Facebook Faces U.K. Fine Over Cambridge Analytica Inquiry


By Stephanie B


Facebook Inc. could be fined 500,000 pounds ($664,000) by the U.K.’s privacy regulator after the social-network giant failed to prevent key user data falling into the hands of a political consultancy that helped get President Donald Trump elected.


The U.K. Information Commissioner’s Office is threatening the company with the maximum penalty allowed, it said Wednesday when issuing its first findings in a probe that looked at some 30 organizations, including social-media platforms such as Facebook. The tech giant is accused of not properly protecting user data and not sharing how people’s data was harvested by others.


The revelations that data belonging to as many as 87 million Facebook users and their friends may have been misused is a “game changer” in the world of data protection, Denham said. Her office is leading the European investigations into how such an amount of data — most belonging to U.S. and U.K. residents, she says — could have ended up in the hands of a consulting firm that worked on Donald J. Trump’s U.S. presidential campaign.


Facebook will get a chance to respond to the proposed penalties before the ICO releases a final decision.



Oil Prices: Could Iran Push Crude Back Into the Triple Digits?


By Matthew DiLallo


Oil market conditions have changed dramatically over the past few months. The market has gone from having too much oil, to being in danger of not having enough to meet growing demand. This shift recently prompted OPEC to begin turning some of its pumps back on several months earlier than anticipated. However, that might not be enough given the number of supply problems within the industry, which could worsen as sanctions against Iran take effect later this year. Under a worst-case scenario, Iran could cause crude prices to skyrocket well into the triple digits, according to some analysts.


Supplies from Libya are falling after more political unrest caused the closing of several oil-exporting ports. Because of that, the head of the country’s national oil company said that “today, production is 527,000 BPD, tomorrow it will be lower, and after tomorrow it will be even lower, and every day it will keep falling.” That’s less than half the country’s production level before fighting broke out again earlier this year.


Civil unrest and economic turmoil in Venezuela have taken a toll on the country’s oil supplies. Production in that country has declined by 450,000 BPD, or 23%, over the last year, and could fall a further 500,000 BPD, according to analysts.


All these supply issues are coming at a time when new sanctions are about to hit Iran, which will force the country to reduce its oil exports. It’s unclear how much this will impact Iran’s oil supplies.


Most analysts believe the sanctions will remove 500,000 to 1 million BPD from the oil markets, which is manageable since other OPEC members have agreed to increase their output to compensate for this loss.


However, if all countries comply with the sanctions, it could remove from 2 million to 2.5 million BPD from the market. If that scenario comes to pass — which would completely shut Iranian oil out of the market — it could add $50 to the price of a barrel of oil, pushing it over $120, in the view of analysts at Bank of America Merrill Lynch. That’s because the industry can’t offset that lost supply even if Saudi Arabia pumps at full capacity.


Meanwhile, Iran has threatened to block the flow of oil out of the Persian Gulf by choking off the Strait of Hormuz if it’s shut off from the global oil market. That would disrupt the 17 million BPD that sail through the region, a significant chunk of the world’s oil supply — roughly 20% of global oil demand and 35% of the seaborne oil trade. That scenario would likely cause oil prices to go hyperbolic. According to analysts at Global FX, crude would quickly hit $160 a barrel if Iran closed this key oil choke point, while another analyst thought crude could touch $250 a barrel.


However, with the U.S. Navy stationed in the region to ensure the safe passage of oil tankers, any attempt by Iran to shut down the Strait of Hormuz would likely be short-lived. Still, crude could rocket into the triple digits until the situation calms down.



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