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Old 08-30-2013
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Default Oil Slips as Syria Concerns Ease While Asian Stocks Rise

By Emma O’Brien & Adam Haigh - Aug 29, 2013 8:59 PM

Crude oil slid a second day and Asian stocks rose to pare a monthly decline as prospects of an imminent strike against Syria diminished. The dollar held gains against major peers while precious metals extended losses.

West Texas Intermediate crude fell 1.4 percent to $107.27 a barrel by 9:57 a.m. in Tokyo, reducing its weekly advance to 0.8 percent. The MSCI Asia Pacific Index gained 0.3 percent, trimming its August slump to 1.6 percent as shares from Japan to South Korea rallied. Standard & Poor’s 500 Index (SPX) futures added 0.1 percent. The Bloomberg U.S. Dollar Index was little changed near a four-week high, while Malaysia’s ringgit gained. Gold fell and silver pared its biggest monthly jump since 2011.

Concern conflict with Syria will disrupt Middle East oil supplies eased as U.K. Prime Minister David Cameron failed to gain parliamentary backing for military action. The tension has fueled losses in emerging-market assets already faltering amid slowing economies and speculation the U.S. will cut stimulus next month. While data today from inflation to jobs signaled Japan’s economy is recovering, Indian growth may have slowed in the second quarter, according to a Bloomberg survey.

“Historically, if you look at conflicts over the years you do tend to see the market fall by a small degree first, then in the following months it recovers,” Mark Lister, Wellington-based head of private wealth research at Craigs Investment Partners Ltd., said by phone. “On balance, I see more positives than negatives.”

WTI is retreating from a two-year high reached Aug. 28, the day after U.S. Secretary of State John Kerry said President Barack Obama holds Syria accountable for the “moral obscenity” of using chemical agents against civilians.
Gathering Evidence

Brent crude also dropped a second day, losing 1.1 percent to $113.92 a barrel and trimming its third straight weekly gain to 2.6 percent. Gasoline futures due next month declined a second day, slipping 1.2 percent, while contracts on natural gas climbed a fifth session, gaining 0.4 percent.

Britain released an assessment showing it “highly likely” the Syrian government was behind the mass killing of civilians with chemical weapons Aug. 21 near Damascus. Cameron, however, bowed to opposition demands to await a judgment by on-site United Nations inspectors. The U.S. is continuing to marshal evidence the regime was responsible for the attack.

The Bloomberg dollar gauge, which tracks the currency against 10 major peers including the yen, rallied 0.5 percent in New York to its highest close since Aug. 1 as reports showed the U.S. economy grew more than estimated in the second quarter, and jobless claims fell more than forecast last week. The Federal Reserve will reduce bond purchases next month, according to 65 percent of economists surveyed by Bloomberg Aug. 9-13.
‘Short-Term Risk’

“We’re back to focusing on economic data, specifically out of the U.S. and Europe, and the Fed tapering, as the market is coming around to believe the Syrian conflict poses only a short-term risk,” Manish Singh, who helps oversee $2 billion as head of investment at Crossbridge Capital in London, said yesterday. “I am of the opinion that tapering will happen in September, regardless of data.”

Australia’s dollar was little changed at 89.28 U.S. cents today, posting an August decline of 0.6 percent. The New Zealand dollar lost less than 0.1 percent to 77.67 U.S. cents, headed for a 0.5 percent drop in the week. The currency, known as the kiwi, has retreated 2.7 percent versus the greenback in August, the third monthly drop in four months.

The ringgit strengthened a second day, appreciating 0.4 percent to 3.2990 per dollar to erase its declines in the week. Malaysia’s currency is down 1.7 percent in August, a fourth month of weakness. The Thai baht added 0.3 percent to 32.07 per dollar, paring its monthly decline to 2.5 percent.
Kospi Gains

Japan’s Topix Index rose 0.2 percent today, reducing its August drop to 1.1 percent and its decline in the week to 2 percent. The Kospi Index (KOSPI) in Seoul rallied a second day, adding 0.3 percent to the highest level on a closing basis since Aug. 19. The Korean equity measure is down less than 0.1 percent this month. China is the only Asian emerging market to post gains in August, with the Shanghai Composite Index adding 5.2 percent.

Consumer-price growth in Japan accelerated to 0.7 percent from a year earlier in July, up from 0.2 percent in June and matching the median forecast in a Bloomberg survey. The unemployment rate fell to 3.8 percent from 3.9 percent. Factory production expanded 1.6 percent from a year earlier, below the 1.8 percent estimated by economists.

India’s economy is estimated to have expanded 4.6 percent in the second three months of the year, according to the median of 44 estimates. Gross domestic product rose 4.8 percent in the first quarter.
Rupee Forwards

The rupee is posting the biggest decline among emerging-market currencies this month, sliding 9.3 percent versus the dollar on concern over India’s record current-account deficit and economic outlook. The currency gained the most since 1986 yesterday after the central bank said it will provide foreign currency to state-owned oil buyers. One-month non-deliverable rupee forwards weakened 0.8 percent to 68.30 per dollar today.

The majority of major and emerging-market currencies have weakened against the dollar this month. Minutes of the Fed’s July meeting issued Aug. 21 showed policy makers supported cuts to the bond-buying program this year if the economy improves in line with its forecasts.

Yields on 10-year U.S. Treasuries rose one basis point, ot 0.01 percentage point, to 2.77 percent, after falling less than one basis point in New York. Rates have climbed 19 basis points in August, the most since June for a fourth month of gains.
Chinese Manufacturing

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. dropped 0.1 percent in New York, after rising 0.5 percent Aug. 28. Futures on Hong Kong’s Hang Seng Index added 0.3 percent in their most recent trading session, while contracts on the Hang Seng China Enterprises Index climbed 0.5 percent. The Hang Seng has lost 0.8 percent in August.

China releases its official manufacturing purchasing managers’ index Sept. 1, with economists polled by Bloomberg calling for an increase to 50.6 for August, from 50.3 in July. A reading of 50 is the threshold between expansion and contraction in the sector.

The MSCI Emerging Markets Index rose 0.1 percent in early trading, climbing for a second day and trimming its monthly loss to 2.8 percent. Most emerging Asian equity gauges fell this week, with Vietnam, the Philippines and Thailand each dropping more than 3 percent.
Mixed Metals

Indonesia and Brazil boosted benchmark interest rates this week in an effort to stem currency losses.

Gold dropped 0.1 percent to $1,406.25 an ounce, trimming its second straight monthly advance to 6.1 percent. Silver declined 0.2 percent, falling a third day. The precious metal has gained 20 percent in August, poised for its best month since April 2011.

Copper for three-month delivery on the London Metal Exchange rose 0.3 percent today, snapping a three-day decline, while zinc fell 0.3 percent.

To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

http://www.bloomberg.com/news/2013-0...oil-slips.html
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