Monday April 18th

18-04-2016

Oil set to hit Wall Street

U.S. stocks looked set to open lower on Monday, with investor sentiment hit by the news that major oil-producing countries had failed to agree to a freeze on crude output. OPEC and non-OPEC oil-producing nations met on Sunday in Qatar to discuss a freeze. Hopes of a deal evaporated when Saudi Arabia said it would not freeze output unless Iran did. Iran was absent from the talks and had already said it was unwilling to freeze output. Global benchmark Brent was down $1.47, or 3.4 percent at $41.63, having earlier touched a session bottom of $40.10. Traders said an oil worker strike in Kuwait that cut the country's crude output by some 60 percent prevented Brent from tumbling below $40 per barrel. A cut in U.S. drilling down to 2009 levels had prevented steeper falls there. U.S. crude futures were down $1.60, or 4 percent, at $38.76 a barrel by 7:46 a.m. ET, after falling as low as $37.61 earlier in the day. "The post-Doha initial knee-jerk reaction lower is expected, but we expect prices to find support in the mid-$30/bbl range given an otherwise improving fundamental backdrop," Helima Croft, global head of commodity strategy at RBC Capital Markets, said in a report on Monday. Earnings season continued on Monday with quarterly results from Morgan Stanley. The financial giant posted better-than-expected earnings per share with revenue coming in roughly in line. PepsiCo also reported first-quarter results IBM and Netflix are scheduled to report after U.S. markets close. Housing market indicators will dominate this week's U.S. economic data, with the NAHB housing index out on Monday. Both Asian and European stock indexes traded lower early on Monday as a result of the "no-deal" from Qatar. Japan's Nikkei 225 led the sell-off in Asian markets, with the benchmark index closing down 572.08 points, or 3.4 percent, at 16,275.95. Chinese markets also lagged, with the Shanghai composite closing down 44.04 points, or 1.43 percent, at 3,034.06, and the Shenzhen composite finishing down 26.17 points, or 1.32 percent, at 1,952.40. Verizon's prospective bid for Yahoo received a boost after potential bidders including Time, Alphabet, Comcast and AT&T exited the race, The Wall Street Journal reported on Sunday. Gold rose on Monday as the dollar fell and European shares dipped following the failure by oil producers to agree an output freeze, which sent crude prices tumbling. Spot gold rose 0.3 percent to $1,237.71, rebounding after a 0.5 percent loss last week. The dollar was down 0.1 percent against a basket of major currencies, mostly due to a supported yen, also seen as a hedge in times of financial uncertainty. Assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 5.64 tonnes to 812.46 tonnes on Friday, the first increase in a week. Hedge funds and money managers raised their bullish bets on gold and silver in the week to April 12, U.S. Commodity Futures Trading Commission data showed on Friday.