Tag Archives: Economy

Oil back in positive territory ahead of U.S.-China trade deal

By Ron Bousso

LONDON (Reuters) – Global oil benchmark Brent crude rose to more than $64.50, recovering from four days of declines on easing Middle East tensions, as the United States and China prepared to sign a preliminary trade deal.

Brent crude gained 43 cents, or 0.7%, to $64.63 a barrel by 1507 GMT. U.S. West Texas Intermediate crude futures rose 11 cents, or 0.2%, to $58.20 a barrel.

The outlook for oil demand was supported by the expected signing of a Phase 1 U.S.-China trade deal on Wednesday, marking a major step in ending a dispute that has cut global growth and dented demand for oil.

China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.

The trade war between the world’s two biggest energy consumers had a tangible impact on global oil demand growth last year, said Tamas Varga, an analyst at broker PVM. Varga pointed to 2019 demand growth of 890,000 barrels per day (bpd), compared with initial forecasts of 1.5 million bpd.

“This year, however, the pace is expected to pick up again and average 1.25 million bpd … In the event of a trade deal upward revisions can be anticipated,” Varga said.

Regardless of trade wars, China’s crude oil imports in 2019 surged 9.5% from the previous year, setting a record for a 17th straight year as demand growth from new refineries propelled purchases by the world’s top importer, data showed.

However, gains were limited by easing concern over possible supply disruptions as a result of tensions in the Middle East.

The recent declines came as investors unwound bullish positions built after the killing of a senior Iranian general in a U.S. air strike on Jan. 2, which sent oil prices to a four-month high, said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.

“As geopolitical tensions take a back seat for now, we may see more of the same in the short term,” Tchilinguirian told the Reuters Global Oil Forum.

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, said his country will work for oil market stability at a time of heightened U.S.-Iranian tension.

He also said it was too early to talk about whether the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, would continue with production curbs that are due to expire in March.

Separately, U.S. crude oil inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration, an agency of the U.S. Department of Energy.

(Additional reporting By Jessica Jaganathan; Editing by Louise Heavens and David Goodman)

White House adviser says U.S.-China trade deal on track for January 15

White House adviser says U.S.-China trade deal on track for January 15
WASHINGTON (Reuters) – The Phase 1 U.S.-China trade deal is on track to be signed Jan. 15, White House economic adviser Larry Kudlow told Fox Business Network on Friday.

“It’s all on schedule,” he said.

The translation of the agreement “has worked out beautifully. It is virtually complete,” Kudlow added in an interview, adding that he had spoken to U.S. Trade Representative Robert Lighthizer on Thursday.

(Reporting by Susan Heavey; Editing by Chizu Nomiyama)

U.S. Senate panel advances North American trade deal, final vote timing uncertain

By David Lawder

WASHINGTON (Reuters) – The U.S. Senate Finance Committee overwhelmingly approved the U.S.-Mexico-Canada Agreement on Tuesday, moving the revamped North American trade deal a step closer to a final Senate vote in the coming days or weeks.

The committee advanced the USMCA implementing legislation by a 25-3 vote, drawing opposition from Republican senators Pat Toomey of Pennsylvania and Bill Cassidy of Louisiana and Democratic Senator Sheldon Whitehouse of Rhode Island.

The timing of a long-delayed final U.S. congressional vote to approve the trade pact remains uncertain, as Senate Majority Leader Mitch McConnell has said its consideration would likely have to wait until after a Senate trial over the impeachment of President Donald Trump.

The trade deal, first agreed in October 2018 and revised last month, aims to modernize and broaden the 26-year-old North American Free Trade Agreement (NAFTA).

Trump’s Senate trial is also in limbo, because House Democrats have not yet sent articles of impeachment approved in December to the Senate as the two parties argue over terms of the proceedings.

Senate Finance Committee Chairman Chuck Grassley earlier told CNBC http://bit.ly/36vNLSN television USMCA would “pass the Senate sometime within the next few days or at the most the end of this month.”

Following the Senate panel’s vote, Grassley said the timing was up to McConnell, but articles of impeachment would take precedence over USMCA. A vote could occur quickly as there was little other legislation to stand in its way, he added.

The Senate’s parliamentarian has directed other some other committees to consider the legislation, which could delay a floor vote slightly, but Grassley said those panels were expected to quickly approve the trade deal.

“The intent is for the leader to get them to move quickly,” Grassley added.

The finance committee’s vote indicates broad bipartisan support for USMCA, which includes new chapters covering digital trade, stronger intellectual property protections and new requirements for automakers to use more parts and materials sourced in the region and from high-wage areas, notably the United States and Canada.

Toomey, an ardent free trade Republican, objected to the new automotive content rules, saying they were “designed to raise the cost to American consumers of buying Mexican-made cars.”

“It’s the first time we are ever going to go backwards on a trade agreement,” Toomey said during the committee’s debate.

Cassidy complained that the agreement weakens NAFTA’s investor-state dispute settlement mechanism, which will deter big projects such as a gas pipeline from the United States to Mexico.

Whitehouse, an ardent environmentalist, said he objected to USMCA because the trade deal does not mandate any action to fight global warming and rising sea levels.

(Reporting by Kanishka Singh in Bengaluru; Editing by Andrew Heavens and Tom Brown)

Oil, safe havens surge as U.S. strikes kill Iranian commander

By Herbert Lash and Marc Jones

NEW YORK/LONDON (Reuters) – Oil prices surged as much as $3 a barrel as gold, the yen and safe-haven bonds all rallied on Friday after the U.S. killing of Iran’s top military commander in an air strike in Iraq ratcheted up tensions between Washington and Tehran.

Traders were spooked after the death of Major General Qassem Soleimani, head of the elite Quds Force who was also one of Iran’s most influential figures, and by Iranian Supreme Leader Ayatollah Ali Khamenei’s vow of revenge.

Mideast-focused oil markets saw the most dramatic moves, with Brent oil futures leaping as much 4.5% to $69.20 a barrel. That was the highest since the attacks on Saudi crude facilities in September, though the impact hit almost every asset class.

Europe’s broad STOXX 600 index fell as much as 1% and shares on Wall Street almost the same as New Year optimism, which had pushed equity markets to new records, evaporated.

The yen rose half a percent against the dollar to a two-month high, the Swiss franc hit its highest against the euro since September and gold prices  climbed to a four-month peak, racing past the key $1,550 an ounce level.

“Geopolitics has come back to the table, and this is something that could have major cross-asset implications,” said Salman Ahmed, Lombard Odier’s chief investment strategist.

“What is critical is how it pans out in the next few days,” Ahmed said. “Whether it turns into a theme depends on Iran’s reaction and then the U.S. response.”

Iran promised harsh revenge. Soleimani’s Quds Force and its paramilitary proxies, ranging from Lebanon’s Hizbollah to the PMF in Iraq, have ample means to mount a response.

In September, U.S. officials blamed Iran for attacking the oil installations of Saudi Aramco, the state energy giant and the world’s largest oil exporter. Iran has denied responsibility for the strikes and accused Washington of war-mongering.

The Trump administration then did not respond, beyond heated rhetoric and threats, and markets settled down within a week after Brent surged 14.6%, its biggest one-day percentage gain since at least 1988.

The U.S. government and others on Friday urged their citizens in the region either to return home or to stay away from potential targets and public gatherings.

U.S. Secretary of State Mike Pompeo said in a round of TV interviews that the United States remained committed to de-escalation with Iran but that it had needed to defend itself.

“He (Soleimani) was actively plotting in the region to take actions – a big action as he described it – that would have put dozens if not hundreds of American lives at risk. We know it was imminent,” Pompeo told CNN.

MSCI’s gauge of stocks across the globe shed 0.43%, while its emerging markets index lost 0.32%.

On Wall Street, the Dow Jones Industrial Average  fell 210.81 points, or 0.73%, to 28,657.99. The S&P 500  lost 18.86 points, or 0.58%, to 3,238.99 and the Nasdaq Composite <.IXIC> dropped 58.26 points, or 0.64%, to 9,033.93.

The global gauge and Wall Street indices set record closing highs on Thursday, extending the year-end rally in equities.

Brent  hit a peak of $69.50 a barrel, its highest since mid-September, though it later traded up $2.40 to $68.65.

West Texas Intermediate  crude  rose $2.20 to $63.38 a barrel, after earlier spiking to $64.09 a barrel, its highest since April 2019.

SCRAMBLE TO SAFETY

Yields on German Bunds and U.S. Treasuries – the world’s benchmark government bonds that are typically seen as the safest assets – fell sharply.

 

The 10-year Bund  yield fell 7 basis points to a two-week low of -0.299%, while Bund futures  were up 0.51 percent, at 172.13 euros.

Benchmark 10-year Treasury notes rose 23/32 in price to yield 1.802%, from 1.882% late on Monday.

The dollar index fell 0.08%, with the euro up 0.06% to $1.1177. The Japanese yen  strengthened 0.59% versus the greenback at 107.94 per dollar.

The focus on geopolitics meant markets paid little attention to stronger-than-expected data from France, where inflation rose 1.6% year-on-year in December, beating analysts’ expectations for a 1.4% rise.

German inflation figures were also higher, although unemployment in Europe’s largest economy rose more than expected.

The U.S. manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to near an 11-year low and factory employment falling for a fifth straight month, the Institute for Supply Management said.

Investors also were looking forward to the minutes of the U.S. Federal Reserve’s Dec. 10-11 meeting due at 2 p.m. (1900 GMT).

(Reporting by Herbert Lash, additional reporting by Sujata Rao and Dhara Ranasinghe in London and Diptendu Lahiri in Bengaluru; Editing by Dan Grebler)

North Korea’s Kim to unveil ‘new path’ in New Year speech after U.S. misses deadline

By Hyonhee Shin

SEOUL (Reuters) – North Korean leader Kim Jong Un is set to make a closely watched New Year address on Wednesday which is likely to offer a glimpse of a “new path” he has vowed to take if the United States fails to meet his deadline to soften its stance over denuclearization.

The New Year address is expected to touch upon a wide range of issues from foreign affairs and military development to the economy and education.

In his 2019 speech, Kim said he might have to change course if Washington sticks to its pressure campaign and demands unilateral action, while stressing a “self-reliant” economy, a drive he has launched amid tightening sanctions.

The United States was on track to ignore a year-end deadline set by Kim, which Washington has downplayed as artificial, to show more flexibility to reopen talks aimed at dismantling North Korea’s nuclear and missile programs.

The upcoming speech is expected to be the culmination of an ongoing meeting of the ruling Workers’ Party’s 7th Central Committee, a key policy-making body, which Kim convened on Saturday. It was still under way on Tuesday, state media said.

Discussions at the gathering remain largely unknown, but official media KCNA said on Tuesday that Kim spent seven hours during a Monday session discussing state, economic and military building. On Sunday, he called for “positive and offensive measures” to ensure the country’s security.

“The Central Committee plenary meeting is meant to legitimize the process behind the policy decisions Kim Jong-un will announce in his New Year speech,” said Leif-Eric Easley, a professor at Ewha Womans University in Seoul.

“This meeting is to provide political justification for the economic and security policies Pyongyang will pursue in 2020.”

North Korea has provided few hints for what the “new path” may involve, but U.S. military commanders said Pyongyang next move could include the testing of an intercontinental ballistic missile (ICBM), which it has halted since 2017, alongside nuclear bomb tests.

U.S. national security adviser Robert O’Brien warned Washington would be “extraordinarily disappointed” if North Korea tests a long-range or nuclear missile, while Secretary of State Mike Pompeo said he hoped it would choose peace over confrontation.

“We still maintain our view that we can find a path forward to convince the leadership in North Korea that their best course of action is to create a better opportunity for their people by getting rid of their nuclear weapons. That’s our mission set,” Pompeo told Fox News on Monday.

The U.S. Air Force flew an RC-135 surveillance plane over South Korea on Monday and Tuesday, according to military flight tracker Aircraft Spots.

Despite mounting speculation over a potential military provocation, any restart of an ICBM test would risk a personal relationship with Trump, which Pyongyang has repeatedly touted while denouncing Pompeo and other aides, analysts say.

Cho Tae-yong, a former South Korean deputy national security advisor, said Kim had few options that can leave the Trump ties intact.

“In any case, North Korea would add a lot of caveats before and after testing to make sure they’re not intent on destroying the negotiating table and it was the Americans who betrayed them,” Cho told Reuters.

(Reporting by Hyonhee Shin; Editing by Michael Perry)

Record online sales give U.S. holiday shopping season a boost: report

(Reuters) – U.S. shoppers spent more online during this year’s holiday shopping season, a report by Mastercard Inc. showed on Wednesday, with e-commerce sales hitting a record high.

The holiday shopping season is a crucial period for retailers and can account for up to 40% of annual sales. But this year, Thanksgiving, which traditionally starts the U.S. holiday shopping period, was on Nov. 28, nearly a week later than last year’s Nov. 22, leaving retailers with six fewer days to drive sales between Thanksgiving and Christmas.

E-commerce sales this year made up 14.6% of total retail and rose 18.8% from the 2018 period, according to Mastercard’s data tracking retail sales from Nov. 1 through Christmas Eve.

Overall holiday retail sales, excluding autos, rose 3.4%.

“E-commerce sales hit a record high this year with more people doing their holiday shopping online,” said Steve Sadove, senior adviser for Mastercard.

“Due to a later than usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices,” Sadove said.

Retailers have invested heavily to provide same-day delivery, lockers for store pick-up and improve their online presence as they battle against retail giant Amazon.com Inc <AMZN.O> for market share.

U.S. President Donald Trump, whose support in the polls has been buoyed by strong economic data despite his impeachment by the House of Representatives, heralded the news in a tweet in all capital letters.

“2019 HOLIDAY RETAIL SALES WERE UP 3.4% FROM LAST YEAR, THE BIGGEST NUMBER IN U.S. HISTORY. CONGRATULATIONS AMERICA!,” Trump tweeted.

However, Mastercard spokesman William Tsang, citing 2018’s 5.1% growth in total sales, said this year’s holiday sales growth was not the biggest ever.

The White House had no immediate comment on the apparent discrepancy.

Despite slowing global growth, U.S. consumer spending is benefiting from wage growth and a strong labor market, retail consultants and analysts say.

The holiday season was challenging for retailers after Amazon expanded its free return policy to include products that were not previously eligible, giving consumers until January to return even small purchases bought on the website.

The National Retail Federation had forecast U.S. holiday retail sales over the two months to increase between 3.8% and 4.2%. That compares with an average annual increase of 3.7% over the past five years.

The SpendingPulse report tracks spending by combining sales activity in Mastercard’s payments network with estimates of cash and other payment forms but excludes automobile sales.

(Reporting by Nivedita Balu and Ismail Shakil in Bengaluru and Andrea Shalal in Washington; Editing by Dan Grebler)

‘There’s a deal:’ Mexico says USMCA trade pact to be signed Tuesday

MEXICO CITY (Reuters) – Canada, Mexico and the United States have reached an agreement on a new North American free trade deal and they will sign it on Tuesday, but the pact still needs the approval of U.S. and Canadian lawmakers, Mexico’s president said.

President Andres Manuel Lopez Obrador said the three countries had agreed on tweaks to labor, steel and aluminum provisions in the United States-Mexico-Canada Agreement (USMCA), after U.S. Democrats pressed for changes, particularly to strengthen enforcement of new Mexican labor laws.

U.S. Trade Representative Robert Lighthizer, Canadian Deputy Prime Minister Chrystia Freeland and U.S: White House adviser Jared Kushner will take part in the signing ceremony at 1200 (1300 ET), a senior Mexican official said on Twitter.”On our end, there is now a deal. We’re convinced that it’s a good deal for Mexico, just as it is for Canada and United States,” Lopez Obrador said, adding that the signing would happen in Mexico’s historic National Palace.

“In the case of the United States, there’s a deal from the government, but we need Congress to ratify it,” Lopez Obrador said.

U.S. House Speaker Nancy Pelosi, who will hold a news conference on Tuesday morning, has said the deal is close to being finalized.

(Reporting by Daina Beth Solomon and Abraham Gonzalez, Editing by Frank Jack Daniel)

China says hopes it can reach trade agreement with U.S. as soon as possible

China says hopes it can reach trade agreement with U.S. as soon as possible
BEIJING (Reuters) – China said on Monday that it hoped to make a trade deal with the United States as soon as possible, amid intense discussions before fresh U.S. tariffs on Chinese imports are due to kick in at the end of the week.

Beijing hopes it can reach a trade agreement with the United States that satisfies both sides, Assistant Commerce Minister Ren Hongbin told reporters on Monday.

“On the question of China-U.S. trade talks and negotiations, we wish that both sides can, on the foundation of equality and mutual respect, push forward negotiations, and in consideration of each others’ core interests, reach an agreement that satisfies all sides as soon as possible,” Ren said.

China and the United States are negotiating a so-called “phase one” deal aimed at de-escalating their prolonged trade dispute, but it is unclear whether such an agreement can be reached in the near term.

Washington’s next round of tariffs against Chinese goods are scheduled to take effect on Dec. 15.

China has demanded that some of the existing U.S. tariffs imposed on about $375 billion worth of its exports be removed, in addition to cancellation of the Dec. 15 tariffs on some $156 billion of its remaining exports to the United States.

U.S. President Donald Trump has demanded that China commit to specific minimum purchases of U.S. agricultural products, among other concessions on intellectual property rights, currency and access to China’s financial services markets.

White House economic adviser Larry Kudlow said on Friday that the two sides had talked almost daily, but there were currently no plans for face-to-face talks or a signing ceremony between Trump and Chinese President Xi Jinping.

With less than a week to go before the deadline amid “intense” negotiations, Kudlow said Trump would make the final decision on the tariffs, which would hit Chinese-made cellphones, laptop computers, toys and clothing.

“We’ll have to see, but right now we’re moving along,” Trump said last week. “On December 15th, something could happen, but we are not discussing that yet. We are having very good discussions with China, however.”

(Reporting by Gabriel Crossley, writing by Se Young Lee and Ryan Woo; Editing by Himani Sarkar & Kim Coghill)

China maintains tariffs must be reduced for phase one trade deal with U.S.

China maintains tariffs must be reduced for phase one trade deal with U.S.
BEIJING (Reuters) – Tariffs must be cut if China and the United States are to reach an interim agreement on trade, the Chinese commerce ministry said on Thursday, sticking to its stance that some U.S. tariffs must be rolled back for a phase one deal.

“The Chinese side believes that if the two sides reach a phase one deal, tariffs should be lowered accordingly,” ministry spokesman Gao Feng told reporters, adding that both sides were maintaining close communication.

Completion of a phase one deal between the world’s two biggest economies had been initially expected in November, ahead of a new round of U.S. tariffs set to kick in on Dec. 15, covering about $156 billion of Chinese imports.

Trade delegations on both sides remained locked in discussions over “core issues of concern,” with rising bilateral tensions over non-trade issues such as the protests in Hong Kong and Beijing’s treatment of its Uighur Muslim minority clouding prospects for a near-term deal to end a trade war.

China warned on Wednesday that U.S. legislation calling for a tougher response to Beijing’s treatment of Uighurs in the western Chinese region of Xinjiang will affect bilateral cooperation.

But “there is no need to panic,” as talks did not stop, a Chinese source who advises Beijing on the trade talks told Reuters on Wednesday.

“Both leaders have talked about reaching a deal, and officials are now finishing the work,” said the source, who thought it unlikely China would retaliate against U.S. legislation by releasing its so-called “unreliable entities list” aimed at punishing firms deemed harmful to Chinese interests.

When asked if China would release the list this year, Gao said he had no further information to reveal at present.

Beijing may hold back from publishing the list until the trade situation with the United States is at its most tense, a Chinese government source told Reuters in October.

On Wednesday, Trump said trade talks with China were going “very well,” sounding more positive than his remarks the previous day that a deal might have to wait until after the 2020 U.S. presidential election.

On Nov. 7, Gao said China and the United States must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a phase one trade deal, but how much tariffs should be canceled could be negotiated.

On a telephone call last week, China’s lead trade negotiator Vice Premier Liu He discussed “core issues of concern” with U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.

Washington imposed additional 15% tariffs on about $125 billion worth of Chinese goods on Sept. 1, on top of the additional 25% tariffs levied on an earlier $250 billion list of industrial and consumer goods.

U.S. President Donald Trump and Lighthizer recognize that rolling back tariffs for a pact that fails to tackle core intellectual property and technology transfer issues will not be seen as a good deal for the United States, a person briefed on the matter told Reuters late last month.

(Reporting by Gabriel Crossley and Yawen Chen; Writing by Ryan Woo; Editing by Clarence Fernandez and Jacqueline Wong)

U.S.-China trade deal ‘stalled because of Hong Kong legislation’: Axios

(Reuters) – A trade deal between United States and China was now “stalled because of Hong Kong legislation”, news website Axios reported on Sunday, citing a source close to U.S. President Donald Trump’s negotiating team.

The deal was stalled also because time was needed to allow Chinese President Xi Jinping’s domestic politics to calm, the report added, citing the unnamed source.

China’s Foreign Ministry said on Thursday that legislation signed by Trump on Wednesday backing protesters in Hong Kong was a serious interference in Chinese affairs.

(Reporting by Rama Venkat in Bengaluru; Editing by Sam Holmes)