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U.S. crude futures eyeing $50 as U.S. stimulus hopes strengthen (nationthailand.com)

U.S. crude futures eyeing $50 as U.S. stimulus hopes strengthen

EconDec 19. 2020A cyclist wearing a protective face mask rides past oil storage silos at an oil and gas storage facility in Belgrade, Serbia, on April 28, 2020. MUST CREDIT: Bloomberg photo by Oliver Bunic. 

By Syndication Washington Post, Bloomberg · Andres Guerra Luz, Alex Longley

Oil continued its rally as U.S. lawmakers work to settle disputes over another round of fiscal stimulus that could help support demand as markets await a wider vaccine roll-out.

Futures rose as much as 1.4% in New York on Friday, heading toward toward $50 a barrel for the first time since February. The rally signals a sharp reversal in the market that saw prices fall below zero just eight moths ago after the pandemic wiped out demand.

Prices have gained support this week on signs of progress on a U.S. virus relief package, with Senate Majority Leader Mitch McConnell saying he’s “even more optimistic now” that an agreement is near. Recent progress in rolling out a covid-19 vaccine has also raised optimism, with the U.S. this week beginning to administer shots and the country’s Food and Drug Administration working quickly toward authorizing Moderna Inc.’s vaccine.

“Expectations of a stimulus deal, a slumping U.S. dollar and optimism surrounding the vaccine deployment are fueling a fiery recovery in energy markets, despite fears of a post-holiday surge in Covid-19 cases,” Bart Melek, head of global commodity strategy at TD Securities said in a note.

Yet, there are signs the market’s rally is due for a pause. Brent’s nearest timespread slumped back into a bearish contango on Thursday, a market structure where nearby futures trade at a discount to later ones. That comes as premiums for real-world barrels are easing. Meanwhile, additional U.S. fiscal stimulus still faces obstacles as several sticking points on the aid package delay an agreement.

“Stimulus will be good for demand, but it’s probably mostly priced into the market already,” said Michael Lynch, president of Strategic Energy & Economic Research. “We have a pretty good sense of what the stimulus package is going to look like.”

West Texas Intermediate for January delivery rose 59 cents to $48.95 a barrel at 10:33 a.m. New York time. Brent for February settlement gained 56 cents to $52.06 a barrel.

The spreading virus and lockdowns are weighing on demand, but the hit is much smaller than earlier in the year and is likely only a speed bump to rebalancing the market, according to a Goldman note. This will leave the oil market range-bound and choppy in coming weeks as vaccine enthusiasm is followed by headlines on tighten pandemic restrictions, the bank said.

Recent price gains may be a bit premature, with the demand recovery remaining bumpy, according to a note from UBS Group. A material increase in oil demand is unlikely before the second quarter of 2021, the bank said.

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‘Super Saturday’ set for record as delays drive rush (nationthailand.com)

‘Super Saturday’ set for record as delays drive rush

EconDec 19. 2020

By Syndication Washington Post, Bloomberg · Jordyn Holman

Black Friday and Cyber Monday get all the hype, but with millions of procrastinators who waited too long to even trust expedited delivery, Saturday will be the real record breaker.

U.S. retail sales on the last Saturday before Christmas — dubbed “Super Saturday” in some retail circles — are expected to reach an all-time high of $36.1 billion this year, a 5.5% increase from 2019 levels, according to research firm Customer Growth Partners. That outpaces the $29.7 billion in sales from Black Friday, traditionally considered the kickoff for the holiday season, and dwarfs Cyber Monday’s sales of $15.1 billion.

And unlike much of that earlier shopping, the vast majority — more than 70% — of Saturday’s transactions will take place in person. That expected rush into stores and curbside pick-up lines could give a much-needed boost to retailers who get better margins on in-store purchases.

For ailing retailers, like department stores and clothing chains, a bigger-than-expected final weekend could help in the recovery from the coronavirus pandemic that has sapped demand for apparel and accessories.

Super Saturday is always a big shopping day, overtaking Black Friday as the largest spending day of the season several years ago in the U.S. But a backlog in shipping — carriers like FedEx and UPS earlier this month temporarily restricted some packages it took from big retailers — and the giant snowstorm hitting the Northeast U.S. this week added another layer to delivery concerns. This means, with just a week until Christmas, consumers may have no other choice than returning to the stores that they’ve largely spurned this year.

Stores “actually have the product, so there’s no worry about last-minute shipping or disappointment on Christmas Day,” said Brian Field, senior director of global retail consulting at Sensormatic Solutions. “You could see more retail traffic than we have been seeing.”

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German businesses are optimistic about recovery in 2021 (nationthailand.com)

German businesses are optimistic about recovery in 2021

EconDec 19. 2020Shoppers in Mannheim, Germany. on Nov. 11, 2020. MUST CREDIT: Bloomberg photo by Peter Juelich. 

By Syndication Washington Post, Bloomberg · Carolynn Look

German businesses are hopeful that Europe’s largest economy will pick up in the first half of next year.

A gauge measuring expectations for the next six months rose to 92.8 in December from 91.8 the previous month, according to the Ifo institute. Companies were also more optimistic about the current situation, a sign that tough new coronavirus restrictions only affect certain sectors.

“Overall the German economy is showing resilience,” Ifo President Clemens Fuest said. Sentiment in manufacturing rose markedly, and confidence in the services sector recovered “somewhat.”

The survey was conducted Dec. 1-17, with a majority of responses received in the first two weeks of the month — before the country’s hard lockdown was officially announced.

Germany’s non-essential shops have been shut since Dec. 16 in an attempt to regain control over spiraling infections, adding to restrictions already in place for restaurants, bars and most recreational institutions. The curbs are in place until Jan. 10, though Chancellor Angela Merkel has already hinted they’re likely to be extended.

“The affected companies and people in the affected sectors have very big problems, and certainly some of them will have to give up,” Fuest said in a Bloomberg Radio interview. Yet the fallout will be limited and “will not completely drag down the economy.”

The nation had fared better than many of its neighbors so far, due to its relatively larger reliance on industry, which has been able to adjust to the pandemic. Economists have recently slashed forecasts for the fourth quarter though, predicting another slump.

Bundesbank President Jens Weidmann warned on Wednesday that the German economy may experience greater strains in the short term than his institution had anticipated in its latest projections. However, he said it’s plausible to assume that medical advancements will allow for a phasing out of restrictions from spring 2021 so a recovery can take hold.

Fuest said German companies indicated they expect the curbs to be lifted by July.

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Copper tops $8,000 as Goldman points to commodities super-cycle (nationthailand.com)

Copper tops $8,000 as Goldman points to commodities super-cycle

EconDec 19. 2020A worker wearing a protective face mask checks newly made copper cathode sheets at the Uralelectromed Copper Refinery in Verkhnyaya Pyshma, Russia, on July 30, 2020. MUST CREDIT: Bloomberg photo by Andrey Rudakov. 

By Syndication Washington Post, Bloomberg

Copper topped $8,000 a ton for the first time in more than seven years, with Goldman Sachs and BlackRock pointing to the start of a new long-term bull market as supply lags an expected demand boom.

The market is witnessing the sharpest rally in more than a decade, with China’s appetite for commodities and supply snags early on in the covid-19 pandemic lifting copper about 80% from its March lows.

Expectations for a deficit, the weaker dollar, and its role in green technology have also fueled gains. Some banks and investors are now drawing comparisons to the spike in the early 2000s, when a jump in Chinese orders ushered in the last super-cycle for commodities.

“You have all the tell-tale signs of a super-cycle,” Jeff Currie, head of commodities research at Goldman Sachs, told Bloomberg TV. He cited metals hitting multiyear highs, the weaker dollar, crude oil reaching $50, and rising global liquidity.

The surge in prices has been a boon for miners, with shares in copper-focused producers including Antofagasta and Freeport-McMoRan vaulting to multiyear highs recently. In addition, production costs have been falling, setting the stage for a blowout year for profitability.

Copper rose as much as 1.4% to $8,028 a ton, the highest price since 2013, and was at $7,999.50 by 12:50 p.m. on the London Metal Exchange. Most other metals also gained, with nickel rising 0.4%. Singapore iron ore futures pushed above $160 a ton, hitting the highest level since trading began in 2013.

Goldman pointed to the start of a positive feedback loop between commodities, the dollar and emerging-market growth that has driven past structural bull markets. At the center is strong, synchronized, policy-driven demand focused on wealth redistribution and renewables and, with commodity supply-side spending outside of renewables still at very low levels, this demand growth should keep markets tight for the foreseeable future, it said in a Dec. 17 note.

BlackRock expects copper to hit new all-time highs in the upswing of the cycle, Evy Hambro, the firm’s global head of thematic investing, told Bloomberg TV on Thursday.

China’s relative success at containing the pandemic and optimism about global economic growth next year as vaccines are rolled out is fueling gains across industrial commodities from iron ore to oil. It’s been a remarkable turnaround for copper, which fell more than 50% from a record high in 2011, trading below $5,000 a ton during a slump in 2015-16 and again earlier this year.

Copper also benefits from more specific factors that make it attractive to long-term investors. While many expect oil prices to rebound in the short term as the world begins returning to normal, there’s more doubt about its long-term outlook as the energy transition gathers pace. Copper, on the other hand, is likely to benefit from the shift because of its use in electrical wiring.

In the near term, copper is getting a boost from tight supplies and strong demand. Top consumer China churned out a record volume last month, pointing to resilient consumption as the country emerges from the pandemic. Among signs of tightness, stockpiles tracked by top exchanges including the LME have slumped to a six-year low.

There’s also a brighter outlook for consumption outside China. U.S. lawmakers are pressing to finalize a spending deal, and the Federal Reserve this week strengthened its commitment to supporting the world’s largest economy.

Still, copper’s surge may be at risk of cooling. Citigroup warned earlier this month that the metal was “too hot to handle” following a recent rally, and that prices may retrace if gains aren’t supported by the physical market.

“Investors are probably already currently pricing in the broader, deeper and strong 2021 economic recovery,” Fitch Solutions said in a note. “This increases the risk that prices could struggle to hold such gains later in 2021.”

On the technical side, LME copper’s 14-day relative-strength index was at 77 on Friday and has largely remained in overbought territory for three weeks, even as prices continued to rise.

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SET dips 0.1% after week of rises (nationthailand.com)

SET dips 0.1% after week of rises

EconDec 18. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,482.38 on Friday, down 1.51 points or 0.1 per cent. Total transactions amounted to Bt117.09 billion with an index high of 1,489.78 and a low of 1,475.01.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fluctuate between 1,475 and 1,495 points amid hope of a US $900-billion stimulus package and foreign fund inflows in line with the baht’s appreciation.

“However, investors should beware of volatility due to the FTSE rebalance and the SET’s tight valuation,” he said.

The 10 stocks with the highest trade value today were PTT, BANPU, CPALL, KBANK, CPF, AOT, SCC, ADVANC, BBL and BAM.

As of 4.30pm, the price of oil rose by US$0.04 or 0.08 per cent to $48.40 per barrel, while gold dropped by $5.20 or 0.28 per cent, to $1,885.20 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 26,763.39, down 43.28 points or 0.16 per cent.

China’s Shang Hai SE Composite Index closed at 3,394.90, down 9.98 points or 0.29 per cent, while Shenzhen SE Component Index closed at 13,854.12, down 35.75 points or 0.26 per cent.

Hong Kong’s Hang Seng Index closed at 26,498.60, down 179.78 points or 0.67 per cent.

South Korea’s KOSPI Index closed at 2,772.18, up 1.75 points or 0.063 per cent.

Taiwan’s TAIEX Index closed at 14,249.96, down 8.97 points or 0.063 per cent.

Singapore’s Straits Times Index closed at 2,852.18, down 5.84 points or 0.20 per cent.

Vietnam’s Ho Chi Minh Stock Index closed at 1,067.46, up 15.69 points or 1.49 per cent.

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Stronger baht will help push SET up by 3-4%, says analyst (nationthailand.com)

Stronger baht will help push SET up by 3-4%, says analyst

EconDec 18. 2020

By The Nation

The appreciation of the baht will help push the Stock Exchange of Thailand (SET) Index up by 3 to 4 per cent as foreign investors are making profits from speculating on the exchange rate, an analyst at Asia Plus Securities said on Friday.

He said the baht is likely to strengthen further due to US move to place Thailand on its monitoring list for currency manipulation, resulting in foreign investors speculating on the foreign exchange rate in Thai stock market.

The baht opened at 29.79 to the US dollar on Friday, strengthening from 29.84 at close on Thursday, the strongest in seven years.

“Funds are expected to flow from the bond market to the stock market as Thailand’s one-year bond yield dropped to 0.42 per cent, lower than policy interest at 0.5 per cent,” he said.

According to statistics in the past, he said funds often flow into the stock market when the baht strengthens, resulting in a boost in the stock index.

“Every Bt10 billion fund that flows into the stock market is likely to push the index up by 3-4 per cent,” he said.

He has advised investors to buy large-cap stocks that benefit from foreign fund flows such as PTT, Advanced Info Service, including stocks that benefit from the strengthening of the baht, such as Thaifoods Group.