Oil Prices Decline Despite Positive U.S.-China Trade News
Oil price fell on Monday in Asia even after the U.S. and China moved closer to a potential trade deal.
On Sunday, U.S. President Donald Trump announced on Twitter that he is delaying a hike in tariffs on Chinese goods, citing progress in the latest trade talks between the two sides. The President added that if progress continued, he and his Chinese counterpart Xi Jinping would seal a deal.
Trump’s tweet boosted Asian equities in morning trade, with Chinese stocks jumped about 4%. However, oil prices were little impacted by the news.
U.S. Crude Oil WTI Futures was down 0.4% to $57.05 by 11:03 PM ET (04:03 GMT). On Friday, WTI rose to its strongest level since Nov. 16 at $57.81 and gained about 3% for the week.
International Brent Oil Futures also slipped 0.4% to $57.05. It touched a more than three-month high of $67.73 on Friday and saw a gain of about 1.3% on the week.
Despite today’s fall, oil prices have rallied approximately 25% since the beginning of 2019. Hopes that the U.S. and China, the world’s two largest oil-consuming nations, would hammer out a trade agreement was cited as one of the major tailwinds for oil prices.
Meanwhile, oil prices were also boosted by efforts by global producers to cut supply.
In December, OPEC and a group of 10 producers outside the cartel, led by Russia, agreed to collectively cut production by a total of 1.2 million barrels per day (bpd) during the first six months of 2019.
Top exporter and OPEC’s de-facto leader Saudi Arabia recently pledged to cut even more production than the deal called for.
In other news, recent comments by Russell Hardy, Chief Executive Officer (CEO) of the world’s largest energy trader, Vitol Group, received some attention as he said “oil supply is going to be pretty tight until the third quarter.”
“The OPEC decision has meant there’s less available, the Iranian situation has meant there’s less available, and the Venezuelan situation now is adding to that,” Hardy told Bloomberg in an interview.
“There could be a question mark over market direction by the fourth quarter of this year.”
UK government mulls Brexit options, including possible delay, if deal fails
Britain’s government is considering different options, including possibly delaying Brexit, if parliament fails to approve Prime Minister Theresa May’s deal by March 12.
With only 32 days until Britain is due to leave the European Union, May’s decision to push back a vote on her deal has upped the ante with parliament, which is deeply split over how, or even whether, the country should leave the bloc.
Before a vote on Wednesday on May’s next steps, lawmakers are stepping up ways to try to prevent the prime minister from taking Britain out of the EU without a deal, a scenario many businesses say could damage the world’s fifth largest economy.
Several of their plans would involve extending Article 50, which triggered the two-year Brexit negotiating period, delaying Britain’s departure Brexit beyond March 29 – something May has said would only delay a decision.
The government is “considering what to do if parliament makes that decision (does not pass the deal)”, a UK official said when asked about a possible extension.
The Telegraph newspaper reported that May was considering a plan to delay Britain’s for up to two months.
Britain’s plan to leave the EU was thrown into crisis after parliament resoundingly rejected May’s deal last month with the biggest government defeat in modern British history.
That forced May to seek changes to her deal, which was agreed in November, but so far, her talks with the EU have yet to settle on a clear path that can win her the support of parliament, which is deeply divided over Brexit.
On Sunday, May said a so-called “meaningful vote” would not take place this week and instead would happen by March 12 – a move some lawmakers underlined that the prime minister had all but lost control of Brexit.
Stock Market News
S&P 500 Welcomes US-China Trade Talk Progress, Asia Stocks May Rise
- The US Dollar depreciated on Friday with an improvement in sentiment
- US-China seem to be inching closer towards a trade deal, S&P 500 rose
- APAC equities may follow Wall Street higher, Nikkei 225 eyes resistance
The US Dollar (DXY Index) generally weakened across the board on Friday amidst an improvement in sentiment. Although, losses were trimmed towards the end of the session. Both the S&P 500 and Euro Stoxx 50 closed about 0.6% and 0.3% to the upside. The cause of market optimism seemed to stem from welcoming news on the US-China trade war front.
After meeting with China’s Vice Premier Liu He, US President Donald Trump announced that there is a “good chance” that a trade deal will be made. It looks as though the deadline before the US imposes additional tariffs on China (March 1) has been extended.
At the time of this writing, S&P 500 futures pared their losses and closed higher. But, there was also a rebound in front-end US government bond yields as USD trimmed its losses. It seems that an improving external environment bodes well for hawkish Fed monetary policy expectations, opening the door to gains in the Greenback. By the end of the day, the pro-risk Australian and New Zealand Dollar were generally higher.
As we begin the new week, economic event risk during Monday’s Asia Pacific trading session I notably lacking. This places the focus on risk trends. As such, we may see APAC equities echoing the gains seen on Wall Street. Despite bearish technical warning signs, the ASX 200 continues to make upside progress amidst increasing RBA rate cut bets.
NIKKEI 225 TECHNICAL ANALYSIS
Japan’s Nikkei 225 continues to make upside progress after climbing above the falling resistance line from October. If market mood continues improving, we may see the index track closer the near-term resistance at 21851.30. Meanwhile, support appears to be at 21035.90.
Huawei’s new foldable phone will top both Apple and Samsung in price, costing around $2600
- Huawei unveiled the Mate X foldable 5G smartphone on Sunday at Mobile World Congress
- Huawei’s phone heats up the competition with Samsung, which unveiled the Galaxy Fold last week
- The price of the Mate X will start at 2299 euros, roughly $2600
Huawei launched a foldable smartphone on Sunday, striking back at Samsung just days after it launched the first consumer-ready foldable device.
Huawei launched the Mate X at an event at Mobile World Congress in Barcelona. The Chinese tech giant said the phone will start at a whopping price of 2299 euros (approximately $2600), and will be available in the middle of 2019. That price tops the high end of Samsung’s Galaxy Fold, which will sell for an eye-popping $1980, as well as Apple’s premium iPhones.
American officials have warned against using Huawei devices out of fear they will enable Chinese spying, charges the company denies. Meanwhile, Huawei has found itself stuck in the middle of tensions between the U.S. and China in the race to roll out 5G networks.
The Huawei Mate X is a 5G device that can fold into a slim 6.6-inch smartphone and unfold into an 8-inch tablet. Huawei’s launch sets up a battle with Samsung, which unveiled its Galaxy Fold last week, as the world’s biggest smartphone makers try to pump innovation into a stalling smartphone market.
Unlike Samsung’s device, Huawei’s Mate X features slightly curved screens that fold backward so that, when closed, there are screens on both sides of the phone. The design makes Huawei’s device slimmer than Samsung’s when it’s folded.
Crypto Tumble as Market Cap Loses $12 Billion
Top cryptocurrencies saw their values suddenly tumble on Monday in Asia, recording double-digit losses after they seemingly picked up momentum last week. Market capitalisation shed $12 billion over the weekend.
Bitcoin lost 9.23% to $3,819.5 by 12:21 AM ET (5:21 GMT).
Ethereum plunged 17.44% to $139.79, XRP dived 12.15% to $0.30308, and Litecoin dropped 17.08% to $44.911.
The crypto market cap dropped sharply from $141 billion last Saturday to $129 billion on Monday.
But the market tumble has not deterred Japanese corporations from tapping into the crypto space. On Monday, Japanese financial giant Mizuho was said to be launching its new digital token J-Coin to offer cashless transactions.
The firm is now reportedly working with around 60 financial partners to launch the digital token that will link existing bank accounts to new J-Coin wallets. Users will be able to make payments with their smartphones.
Japanese news outlet Nikkei Asian Review said the platform is to launch on Friday.
While Japan is keen to spearhead its crypto development, Korean regulators are still looking for cues from the U.S. about whether it plans to take further actions to regulate crypto assets.
Speaking to The Korea Herald on condition of anonymity last week, an official of Korea Exchange said the bourse will see if U.S. regulators will greenlight Bitcoin exchange-traded funds (ETFs).
“The U.S. has been the front-runner on the cryptocurrency market and related derivatives, and there are strong voices supporting the launch of Bitcoin ETFs within the market — which is why we are observing the progress and response of the U.S. [SEC]’s decision on Bitcoin ETFs,” the official said.
The Korean bourse is looking into the feasibility of a Bitcoin index. The official was quoted saying that such ETFs “would eventually concern investor protection issues.”
In other news, Russian financial outlet Rambler reported that the Russian State Duma is going to review and adopt new crypto regulations next month. The country ’s former Energy Minister Igor Yusufov also proposed an oil-backed digital token.
“Perhaps the oil-backed cryptocurrency will be the pioneering project that will create a reliable structure for the cryptographic market as a whole,” Yusufov told Rambler.
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