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On August 21st, KPMG UK Senior Economist Dennis Tartakov stated that UK government borrowing continues to veer off track. Net public sector borrowing in July was £1.8 billion, up from £1.1 billion in the same period last year. Since the start of the fiscal year in April, the gap between forecasts and actual borrowing has remained around £2.3 billion. "Normally, July sees strong personal income tax revenue, but thats not enough to put public sector borrowing levels back on track for the fiscal year," Tartakov said, adding that the Burnham governments promised cost-of-living bailout measures are likely to keep borrowing high in the near term. However, market demand for more debt is limited.On August 21, it was learned that Russian Deputy Foreign Minister Sergei Ryabkov stated in an interview that Russia is open to dialogue with the United States on the Ukraine issue, but will not compromise its principles. Ryabkov pointed out that the US has demonstrated a willingness to engage in constructive dialogue and understand Russias position. However, the more crucial issue at present is whether "Washington can influence the decisions of the Kyiv regime and its European backers, who are still fantasizing about inflicting a strategic defeat on Russia." Ryabkov stated that US Secretary of State Marco Rubio has indicated the need for new solutions, and Russia is willing to listen to these proposals. He emphasized that Russia is open to dialogue with the US, but this does not mean that Russia will abandon its principles.On August 21, it was reported that the Japanese government will allocate an additional 150 billion yen (approximately US$944 million) to support chip startup Rapidus, increasing spending in an effort to compete with companies like TSMC. According to a source familiar with the matter, Japans Ministry of Economy, Trade and Industry will seek more funding for the domestic chip foundry in the 2027 fiscal year budget. This government-backed joint venture, established in 2022, aims to manufacture cutting-edge 2-nanometer chips by 2027 and help Japan reduce its dependence on TSMC. Policymakers consider Rapiduss success and its technological independence in AI, robotics, and quantum computing crucial to national security.Bernstein raised its price target for NetEase (NTES.O) from $150 to $160.Southbound capital saw a significant net outflow of HK$7.63 billion today. In the Shanghai-Hong Kong Stock Connect, Alibaba-W and Xiaomi Group-W experienced net outflows of HK$1.118 billion and HK$590 million respectively; Pop Mart saw the largest net inflow at HK$209 million. In the Shenzhen-Hong Kong Stock Connect, Tencent Holdings and Meituan-W saw net outflows of HK$570 million and HK$341 million respectively; both saw the largest net inflow at HK$496 million.

WTI struggles to prolong its two-day uptrend below $78, as negative sentiment undermines expectations for China-led oil demand

Daniel Rogers

Mar 02, 2023 15:46

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Following a two-day uptrend that reached the greatest levels in a fortnight, the price of WTI crude oil fluctuates between $77.80 and $90 early Thursday.

 

The recent struggles of the black gold may be related to the contradictory signals encircling China and the Oil equities. However, negative sentiment and the resurgence of the US Dollar appear to be the quote's greatest obstacles to the upside.

 

In addition, higher-than-anticipated US inventories weigh on the energy benchmark. The weekly data from the US Energy Information Administration (EIA) indicates a 1.165M increase in Oil inventories, compared to the expected 0.45M increase and the previous level of 7.648M.

 

The willingness of US President Joseph Biden to continue pumping the markets with the Strategic Petroleum Reserve (SPR) and the absence of offers for Russian Oil also exert downward pressure on the price of WTI crude oil.

 

The latest New York Times (NYT) headlines suggest a potential rift between the United States and China at the important event. According to the news, "China is urging the start of peace talks, and some Group of 20 nations may support that notion when they meet in India, but U.S. officials contend Russia would not negotiate in good faith."

 

It should be noted, however, that the recent uptick in China activity data and optimistic remarks from the dragon nation's policymakers keep black gold purchasers optimistic. China's Minister of Human Resources recently stated, "China's employment will continue to increase this year and remains stable overall." On Wednesday, China's Finance Minister Liu He expressed a willingness to increase the country's fiscal expenditure while noting that the foundation of China's economic recovery remains fragile.

 

However, hawkish remarks from policymakers of the US Federal Reserve (Fed), the Bank of England (BoE), and the European Central Bank (ECB) highlighted the need for additional rate hikes to combat inflation issues, which exerted downward pressure on the price of oil.

 

In response to these events, 10-year US Treasury bond yields surpassed 4% for the first time since early November 2022, while 2-year yields ascended to their highest levels since June 2007 by flashing 4.91%. The increase in US Treasury bond yields reflects the market's concerns, which in turn have impacted on bulls on Wall Street, S&P 500 Futures, and WTI bulls recently. Consequently, S&P 500 Futures were down 0.5 percent as of press time despite the varied closing of Wall Street benchmarks.

 

Moving on, G20 updates could be combined with comments from central bankers and secondary US data to amuse Oil traders.


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