Oil Price dropping now after Energy traders drove oil prices up as the prospect of geopolitical instability in the Middle East stemming from a fresh conflict between Iran and Saudi Arabia reverberated on the first day of trading in the new year.
The dispute over Saudi Arabia's execution of a beloved cleric among Shiite Muslims was enough to fuel a big rally in crude oil.
Sunni-majority Saudi Arabia is cutting diplomatic and commercial ties to Iran after a flurry of protests over its execution of a cleric who was highly regarded among the Shiite majority population in Iran.
The price of a barrel of West Texas Intermediate crude rose 2.1% as of 10:04 a.m. to $37.81, while the price of Brent crude rose 3% to $38.40.
Any political disruptions in the Middle East are cause for a potential uptick in the price of oil, as traders weigh whether violence or political upheaval could hinder production.
DOW drop more than 450 & S&P below 2000 U.S. stocks plunge after China sell-off on fears of weak global growth
The Dow Jones industrial average fell about 400 points, or about 2.3%, in early trading. The Nasdaq and Standard & Poor's 500 indexes saw similar percentage declines.
Adding to the anxiety, a key private indicator of U.S. manufacturing fell in December for the sixth straight month.
7-percent slide in Chinese shares, sparked by weak economic data, rekindled worries over global growth on the first day of trading in 2016
crude prices retreated on worries that the weak Chinese data could portend slower global growth, which also hurt Wall Street and sent key indexes down more than 2 percent.
Emerging markets were especially hard-hit by the China data, with MSCI's index .MSCIEF tumbling 3.4 percent.
China's yuan currency CNH=D3CNY= hit its lowest in more than four years after the central bank lowered its guidance rate and factory activity contracted for a 10th straight month in December, at a sharper pace than in November.
Stocks in Europe tumbled, with Germany's DAX index .GDAXI closing down 4.28 percent and the pan-European FTSEurofirst 300 index .FTEU3 falling 2.53 percent at 1,401.16.
The selloff in China triggered a circuit-breaker that suspended equities trading nationwide for the first time and put at risk months of regulatory work to restore market stability.
There was a sharp depreciation in the yuan just ahead of the plunge in Chinese shares. China cut the yuan's value against the dollar, making it weaker than 6.5 for the first time in more than four-and-a-half years. There's speculation that the People's Bank of China has abandoned trying to hold the yuan up against the dollar, which means it's signalling that it won't step in to shore up the yuan. There are concerns that this indicates money is flowing out of China, and that the fall could get out of control. Some investors may be worried about what would happen if the yuan continues to weaken - and the fact that policy makers are allowing it to weaken shows they're concerned about the economy's outlook too.
China's stock market plunged 7 percent on Monday, triggering a market circuit breaker. The markets were down partly on concerns that a six-month ban on share sales by major shareholders would spark a sell-off when it expires on Jan. 8.
Asian markets continue tailspin amid oil glut, China concerns
Hong Kong’s Hang Seng Index fell below 19,000 for the first time since 2012.
Hong Kong stocks hit a 3½-year low and Japan’s Nikkei closed in bear market territory, as this year’s global selloff resumed in the region on Wednesday.
Investors are concerned about a weakening Hong Kong dollar, further declines in the oil market and a lack of major economic stimulus from Beijing, traders and analysts said.
The Hong Kong dollar fell to its weakest level since 2007—HK$7.8228 against the U.S. dollar—amid worries that China’s slowdown is hurting the city’s economy and markets.
Hong Kong authorities have repeatedly said they will maintain a three-decade old peg of the local dollar to the greenback. But traders continue to push the currency weaker, with expectation of future depreciation.
The Hong Kong dollar’s decline weighed on markets across the region.
Chinese stocks in Hong Kong, falling 4.2%, dragged down the Hang Seng Index HSI, -3.82% , which dropped 3.5% to 18946.4. The benchmark was below 19000 for the first time since July 2012.
The Nikkei Stock Average NIK, +1.12% closed down 3.7% at 16416.19, as the Japanese yen strengthened as much as 1.1%, at ¥116.4 U.S. dollar—its strongest level in a year. The yen—up 3% year-to-date—is making Japanese exporters less competitive.
The Nikkei is now off 21% from its recent closing high in June. A bear market is defined as a drop of at least 20% from a recent peak.
The South Korea’s Kospi SEU, +0.45% fell 2.3%. The Shanghai Composite Index SHCOMP, -1.03% was down 1%, having fallen into bear territory last week. Australia’s S&P/ASX 200 XJO, +1.24% finished down 1.3% to 4841.50, down 19% from its recent high in April.
Wednesday’s losses marked a new round in this year’s declines, with investors pushing up Hong Kong on their list of concerns. Depreciation of the Chinese yuan and volatility in Shanghai shares triggered the first round of global selling, beginning on the first trading day of this year.
Saudi Arabia’s Powerful Oil Minister Ali al-Naimi Is Fired Saudi Arabia fired long-serving oil minister Ali al-Naimi, dismissing one of the industry's most powerful figures as the country battles with weaker oil prices.
Mr. Naimi, who had been the kingdom's oil minister since 1995, has been a loud voice against lowering Saudi Arabia's production when prices fall, a departure from its past tactics.
Stronger dollar weighs on oil; Dow drops 1 percent The U.S. dollar rose to a more than two-week high against a basket of currencies on Friday following strong U.S. economic data, putting pressure on oil prices, which fell after three days of gains.
Wall Street closed lower, with the Dow down 1 percent, as oil's decline dragged on energy shares. [.N]
U.S. retail sales in April recorded their biggest increase in a year as Americans stepped up purchases of automobiles and other goods, suggesting the economy was regaining momentum.
But countering that optimism were tepid quarterly results from department store operators Nordstrom and J.C. Penney, following weak reports from other retailers earlier in the week.
The S&P consumer discretionary sector fell 1.1 percent and consumer staples shares dropped 1.2 percent.
"Certainly this week there were enough data points that caused some concern with investors regarding the health of the consumer and, ergo, the health of the overall economy," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
The Dow Jones industrial average fell 185.18 points, or 1.05 percent, to 17,535.32, the S&P 500 lost 17.5 points, or 0.85 percent, to 2,046.61 and the Nasdaq Composite dropped 19.66 points, or 0.41 percent, to 4,717.68.
The S&P and Dow inked their third straight weeks in the red, while the Nasdaq recorded a fourth straight negative week.
Oil hits six-month highs on supply outages, Goldman forecast Oil prices hit six-month highs on Monday on worries about supply outages in Nigeria and Venezuela and as long-time bear Goldman Sachs sounded more positive on the market, although a stockpile build at the U.S. storage hub for crude futures pared gains.
Word that Libya was resuming crude shipments from the port of Hariga after an agreement reached at talks in Vienna between rival oil officials also limited the market's advance. Exports from the port have been blocked since early this month.
Brent crude futures were up $1.22, or 2.5 percent, at $49.05 per barrel by 12:23 p.m. EDT (1623 GMT). It was just 53 cents short of reaching $50 a barrel at the session high.
U.S. crude's West Texas Intermediate (WTI) futures rose by $1.44, or 3 percent, to $47.65.
Crude futures have rallied for most of the past two weeks from a combination of non-OPEC supply outages, declining U.S. production and virtually frozen inflows of Canadian crude after wildfires in Alberta's oil sands region.
Nigeria's oil output has fallen to its lowest in decades after several acts of sabotage, industry officials and security experts said.
In the Americas, U.S. officials warned they were increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices, where crude production has also been falling due to power shortages.
The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another oil price crash to as low as $20 per barrel.
Gold prices rise as dollar, global stocks ease Paulson cuts gold bets; Soros rushes back in
May 17 Gold prices rose on Tuesday, reversing earlier losses after a weaker dollar and falling stock markets spurred safe-haven buying of the precious metal. Spot gold was trading 0.4 percent higher at $1,278.7 per ounce at 11:17 a.m. EDT (1517 GMT), while U.S. gold futures were also up 0.55 percent at $1,281.20. Profit-taking led to a drop in gold prices earlier in the session, as stock markets temporarily edged higher. European shares hit a two-week high, bolstered by a rally in mining stocks, but eased later in the session. The dollar slipped to trade 0.2 percent lower against a basket of six major currencies, giving a boost to gold. A weaker U.S. currency makes dollar-denominated gold cheaper for holders of other currencies. The U.S. government reported earlier on Tuesday that consumer prices recorded their biggest increase in more than three years in April as gasoline and rents rose, pointing to a steady inflation build-up that could give the Federal Reserve ammunition to raise interest rates later this year. Other U.S. data on Tuesday showed housing starts and industrial production rebounded strongly last month, suggesting the economy was regaining steam early in the second quarter. Long-dated yields fell, with the 10-year note reversing earlier gains and the 30-year bond falling to session lows after the data. Gold, which pays no interest, also rose after strength in the benchmark 10-year U.S. Treasury yield waned. "Everyone is really waiting to see whether the U.S. economy does pick up in Q2, as it often does, and the narrative over the Fed shifts again," Macquarie analyst Matthew Turner said. Gold has rallied 20 percent this year on speculation the Fed has slowed its expected pace of rate increases on concerns about the volatility of global markets.
China's yuan joins elite club of IMF reserve currencies China's yuan joins the International Monetary Fund's basket of reserve currencies on Saturday in a milestone for the government's campaign for recognition as a global economic power.
The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or "people's money", on the same day that the Communist Party celebrates the founding of the People's Republic of China in 1949.
"The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China's economic development and results of the reform and opening up of the financial sector," the People's Bank of China said in a statement.
China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.
The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing's often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.
Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November's election.
China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.
Some China watchers also fear that Beijing's commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.
U.S. Treasury Secretary Jack Lew said on Thursday the yuan was "quite a ways" from true global reserve currency status. The new IMF status recognizes the "enormous" change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said. "Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency," he said.
Capital Economics said inclusion of the currency in the IMF's SDR basket will have minimal impact on foreign demand for yuan assets, so "offers little support" for the currency.
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