Saudi Arabia and Allies Announce Additional June Oil Production Cuts
UNITED STATES
The S&P and NASDAQ remained in the green for a third successive day while the DOW closed lower in a mixed start to the week for US stocks. The DOW closed 0.44% lower while the NASDAQ rose 0.77% as the S&P managed to just close in the green at 0.01%. Yield on 10Y USTs closed higher at 0.7099%.
EUROPEAN UNION
The EU has suggested that trade talks with the UK should cover all aspects of trade with chief Brexit negotiator Michel Barnier particularly pointing at access to British fishing waters. The EU is of the opinion that Britain wants to fast track negotiations on such areas as access to the bloc’s aviation market and energy while leaving most other issues in the ‘slow lane’. The pound closed weaker at $1.2335 as did the euro at $1.0807.
ASIA
Asian stocks were mostly lower on Tuesday amid fresh outbreaks in Asia which weighed down hopes of fully reopening economies. The HANG SENG led the slide, down 1.63% in late trading while the ASX closed 1.07% lower as Australian firms remain pessimistic; national Australia Bank’s business conditions index slid further in April to -34 from March’s -22. The CSI was also lower at -0.11% as did the NIKKEI at -0.12%.
MENA
Saudi Arabia announced it would cut daily oil production by another 1 million barrels in a bid to spur a recovery in energy prices. The United Arab Emirates and Kuwait followed up with cuts of 100,000 and 80,000 barrels of daily production effective June as well. Brent went as high as 31.38 a barrel on the news before paring to close lower on the day at 29.46.
LATAM
Argentina extended the deadline for the $65 billion restructuring offer to bondholders to May 22 having failed to garner enough support by the initial 8 May deadline. The new deadline aligns with the due date for $500 million of delayed interest disbursements, and failure to agree a deal or pay the cash on the date would result in the country’s 9th default. Bonds were up on the extension with ARGENT 48s up over a point to trade in the high 27s.
RUSSIA
The Bank of Russia will consider a 100bps cut to rates at its next meeting according to Governor Elvira Nabiullina. This among other unspecified options will be on the table as the central bank tries to alleviate pressure on the economy amid an easing of pro-inflationary pressures according to the governor. The bank also pointed out that lower oil production may result in as much as 1% decline to the economy with overall GDP projected to decline 4-6% in 2020. The ruble closed slightly weaker at 73.6413 to the dollar while RUSSIA 30s were up, trading in the high 114s.
SSA
The Central Bank of Nigeria assured investors that they would be able to repatriate their funds should they wish amid a dollar squeeze in the country as oil prices fall. Following meetings with stakeholders over the weekend, Governor Godwin Emefiele said although there may be delays in meeting dollar obligations, all would be met amid an outcry from importers. The naira closed weaker at 388.16 to the dollar while NGERIA 30s were higher, trading in the mid 86s.