December 01, 2021: Europe's benchmark oil contract Brent North Sea rebounded sharply Wednesday from Omicron-driven losses and before a key OPEC output meeting.
Brent crude jumped 5.0 percent to $72.70 per barrel, while New York's WTI crude was up 4.7 percent at $69.32.
AFP/APP
29360
January 17, 2022: Unilever Plc has held talks with banks about additional financing for a potential sweetened offer for GlaxoSmithKline Plc's consumer products division, Bloomberg reported on Sunday, citing people familiar with the matter.
Unilever and GSK did not immediately respond to Reuters' requests for comment.
The news came a day after GSK said it had rejected a 50-billion-pound ($68.37 billion) offer from Unilever for the consumer goods arm. GSK said it had received three bids from Unilever, the latest on Dec. 20.
Unilever could eventually sell some non-core assets from the GSK portfolio to buyers including private equity firms, which could help fund an acquisition, the Bloomberg report added.
Reuters
January 17, 2022: Malaysian palm oil futures extended losses for a second straight session on Monday after cargo surveyors' data showed exports during the first half of January tumbled.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 35 ringgit, or 0.71%, to 4,921 ringgit ($1,175.87) a tonne during early trade, its lowest since Jan 5.
Bursa Malaysia will be closed on Tuesday for the Thaipusam festival.
FUNDAMENTALS
* Exports from the world's second-largest palm oil producer during Jan. 1-15 fell between 32% and 45% from the same period in December, cargo surveyors said on Saturday.
* Malaysia kept its February export tax for crude palm oil at 8% but lowered the reference price to 4,907.14 ringgit ($1,172.55) from 5302.01 ringgit in January.
* Dalian's most-active soyoil contract rose 0.1%, while its palm oil contract slipped 0.2%. The Chicago Board of Trade were closed for a public holiday.
* Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
* Palm oil may drop to 4,865 ringgit per tonne, due to the completion of a five-wave cycle from 4,291 ringgit.
MARKET NEWS
* Asian share markets were choppy on Monday as a slew of Chinese economic data confirmed the deadening effect of coronavirus restrictions on consumer spending, prompting Beijing to again ease monetary policy.
Reuters
January 17, 2022: Asian share markets were choppy on Monday as a slew of Chinese economic data confirmed the deadening effect of coronavirus restrictions on consumer spending, prompting Beijing to again ease monetary policy.
A holiday in the United States made for thin trading, but that did not stop Treasury futures from sliding further and Brent crude hitting a three-year top of $86.71 a barrel.
Worryingly for the world's second-largest economy, retail sales rose only 1.7% year-on-year in December, missing forecasts for a 3.7% rise.
Industrial output did fare better and the economy as a whole grew little above forecasts at 4.0% in the fourth quarter.
China's central bank was also surprised by cutting some key lending rates by a sizable 10 basis points.
"The cut was larger than expected, suggesting that the authorities have become more preoccupied about weakness in the economy," said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.
"The latter (Omicron risks) will only start to be fully priced in the combined Jan-Feb data, as the most severe lockdowns started in late December."
The easing seemed to help China blue chips, which edged up 0.4% in the wake of the data.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2%, while Japan's Nikkei bounced 0.8% after losing 1.2% last week
Nasdaq futures slid another 0.4%, while S&P 500 futures lost 0.2%. EUROSTOXX 50 futures edged up 0.3% and FTSE futures were flat.
The main feature of the market recently has been a rotation into value stocks and away from growth, particularly technology. The S&P 500 information technology sector, which accounts for nearly 29% of the index, has shed 5.5% this year.
With valuations still high, earnings will have to be strong to stop further losses. Overall S&P 500 earnings are expected to climb 23.1% this season, according to Refinitiv IBES, while the tech sector is seen up by 15.6%.
Companies reporting this week include Goldman Sachs, BofA, Morgan Stanley and Netflix.
The market will be spared speeches from U.S. Federal Reserve officials this week ahead of their Jan. 25-26 policy meeting, but there have been more than enough hawkish comments to see the market almost fully price in the first-rate hike for March and rates of 1.0% by year-end.
There was also talk the Fed will start trimming its balance sheet earlier than previously thought, draining some of the excess liquidity from world markets.
Yields on cash 10-year Treasuries climbed to their highest in a year at 1.8% last week, while the implied yield on futures jumped to 1.86% on Monday.
BEWARE THE BOJ
A Bank of Japan (BOJ) policy meeting this week will bear watching the given talk it will revise up its outlook for growth and inflation, while sources told Reuters policy makers were debating how soon they could start telegraphing an eventual interest rate hike.
While a move is unlikely this year, financial markets may be underestimating its readiness to gradually phase out its once-radical stimulus programme.
This was one reason the yen rallied, with the dollar slipping 1.2% last week. On Monday the dollar had regained some ground to 114.45 yen still well above major chart support at 112.52. [FRX/]
The euro was a shade lower at $1.1404 while rising bond yields helped the dollar index inch up to 95.258 and away from a 10-week trough of 94.626 hit on Friday.
"We continue to think that the greenback will strengthen again before long, as we expect strong cyclical price pressures in the U.S. to mean the Fed tightens by more and for longer than investors currently discount," argued Joseph Marlow, an economist at Capital Economics.
They see Fed rates topping 2.5% while the market has priced in a peak around 1.75-2.0%.
The risk of higher rates kept non-yielding gold restrained at $1,816 an ounce, while industrial and energy resources have benefited from resilient demand and limited supplies.
Oil prices have climbed for four weeks straight and such is demand that physical barrels of oil is changing hands at near-record high premiums.
Brent added another 48 cents to $86.54 a barrel and just pipped the 2021 top of $86.70. The 2018 peak is at $86.74, and a break would take it to heights last visited in 2014.
U.S. crude also firmed 75 cents to $84.57 per barrel.
Reuters
January 17, 2022: China's central bank on Monday unexpectedly cut the borrowing costs of its medium-term loans for the first time since April 2020, while some market analysts expect more policy easing this year to cushion an economic slowdown, Reuters reported today.
The People's Bank of China (PBOC) said it was lowering the interest rate on 700 billion yuan ($110.19 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95% in previous operations.
Thirty-four out of the 48 traders and analysts, or 70% of all participants, polled by Reuters last week predicted no change to the MLF rates in January, with the rest betting on a rate cut.
The world's second-largest economy has shown signs of slowing after a rapid rebound from the COVID-19 slump, with concerns about the financial health of property developers and the rapid spread of the Omicron coronavirus variant clouding the outlook.
"The PBOC's decision to ease early in January suggested that economic downward pressure intensified at end-2021 and room for improvements in the first quarter of this year is not huge," said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
Cheung expects that the PBOC could deliver more easing measures this year than previously expected by market analysts.
Such expectations were also reflected in the bond market, with China's 10-year treasury futures rising to their highest level since June 2020 and the yield on China's benchmark 10-year government bonds falling more than 2 basis points in early trade.
Market analysts said the size of the rate cut and the timing were a big surprise, and they believe further monetary stimulus could follow.
"The 1Y LPR signaled that another rate cut was coming," said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong.
"However, the 10-bps cut was larger than expected, suggesting that the authorities have become more preoccupied about weakness in the economy," he said, adding he also expects an additional 100 bps reduction to banks' reserve requirement ratio (RRR) this year.
With a 500-billion-yuan worth of MLF loans maturing on Monday, the operation resulted in a net injection of 200 billion yuans into the banking system.
The central bank also lowered the borrowing costs of seven-day reverse repurchase agreements, or repos, by the same margin to 2.10% from 2.20%, when it offered another 100-billion-yuan worth of reverse repos into the banking system. ($1 = 6.3524 Chinese yuan).
Reuters
January 16, 2022 (MLN): The highlights of the important economic and business events that took place during the last week are in order so as to become acquainted with the recent developments in Pakistan’s economic and public policy.
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