· The yen gained broadly on Thursday as risk appetite ebbed in the broader markets and lifted the safe-haven Japanese currency, while the dollar held the bulk of its gains against other major currencies after rebounding from 11-week lows.
Equities in Asia slipped as risk sentiment deteriorated amid uncertainty towards the United States and China clinching a deal on the sidelines of the June 28-29 Group of 20 summit meeting in Japan.
The mood in the region’s stock markets was also subdued as Hong Kong shares plunged for second day following massive street protests.
The yen rose 0.2% to 108.270 yen per dollar, pulling back from an 11-day low of 108.800 brushed at the week’s start.
· The dollar index versus a basket of six major currencies was little changed at 96.919 after rising more than 0.3% overnight.
· The euro was a shade higher at $1.1294 after retreating 0.35% overnight, while the pound stood little changed at $1.2692 following a loss of 0.3% on Wednesday.
· Two of the world’s most influential economic leaders have warned that there are troubling developments arising from increased trade barriers and tariffs.
Mario Draghi, the president of the European Central Bank (ECB) and Christine Lagarde, the managing director of the International Monetary Fund (IMF) warned that the global trade dispute between the U.S. and China as well as a threatened dispute with Europe and other industrial nations could cause headwinds for all and could get worse.
Speaking at the 8th ECB conference focused on central, eastern and south-eastern European (CESEE) countries on Wednesday, the IMF’s Lagarde said “we meet at a moment when support for global cooperation and multilateral solutions is waning.”
“Global growth has been subdued for more than six years and the largest economies in the world are putting up, or threatening to put up, new trade barriers. And this might be the beginning of something else, which might affect us all in a more broad way, ” she said.
“These troubling developments will create headwinds for all, but certainly for the CESEE growth model, a model that has relied on openness and integration,” she warned.
· The race to succeed Theresa May as leader of the ruling Conservative Party and prime minister enters a new phase on Thursday with Tory members of parliament (MPs) set to have their first vote for their preferred candidate.
There are 10 candidates in the leadership contest and any of them that fails to get at least 17 votes when MPs vote in secret ballots, the first of which is Thursday with more rounds to follow, will be eliminated from the race. If all candidates receive at least 17 votes, the candidate with the fewest votes is eliminated.
When there are only two candidates left after this process of elimination, the wider Conservative Party membership in a run-off vote to elect one candidate as party leader and prime minister. The winner is expected to be announced on July 22.
As such, a lot of attention has been put on the favorite to win the leadership race Boris Johnson, the former foreign secretary and mayor of London. Launching his leadership campaign on Wednesday, he said he was “not aiming for a no-deal outcome” but said it was responsible to “prepare vigorously” for such an outcome. He said any more delay to Brexit would mean “defeat.”
· Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice Premier Liu He said on Thursday, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.
Liu’s comments came after a day after data showed China’s credit growth was weaker than expected in May, reinforcing market expectations that more monetary easing is needed. Factory activity contracted in May and imports fell the most in nearly three years, highlighting soft demand.
· China is expected to adjust money and credit supply in coming weeks, including cuts to interest rates or reserve ratio requirements, to counter “downside risks” if trade tensions escalate further, China Daily said, citing economists.
Stronger measures are required to maintain liquidity in the financial market and support infrastructure investment, the state-controlled newspaper said.
China’s broad money supply and new yuan loans grew more slowly than expected in May, official data on Wednesday showed, giving authorities room move on po
· President Vladimir Putin said in an interview published on Thursday that relations between Moscow and Washington were getting worse and worse, noting that the current U.S. administration had imposed dozens of sanctions on Russia.
“They (relations) are deteriorating, getting worse and worse,” Putin told the Mir TV channel.
Putin made his comments ahead of a G20 summit in Japan later this month at which he might meet U.S. President Donald Trump.
· Telegram founder Pavel Durov said a massive cyber-attack on his messaging service originated in China, raising questions about whether Beijing tried to disrupt a protest involving hundreds of thousands that erupted on the streets of Hong Kong.
The encrypted messaging app said it experienced a powerful distributed denial of service attack after “garbage requests” flooded its servers and disrupted legitimate communications. Most of those queries came from Chinese internet protocol addresses, founder Pavel Durov said in a subsequent Twitter post.
· Oil prices surged on Thursday after a unit of the United Kingdom’s Royal Navy said it was aware of an incident involving a tanker in the Gulf of Oman near the Iranian coast.
Reports of a tanker on fire in the Gulf of Oman followed the earlier sabotage attacks on vessels near the Fujairah emirate, one of the world’s largest bunkering hubs and located just outside the nearby Strait of Hormuz.
Brent crude futures were up $2, or 3.3%, at $61.97 a barrel by 0646 GMT.
U.S. West Texas Intermediate crude futures were up $1.41, or 2.7%, at $52.55 a barrel.
The United Kingdom Maritime Trade Operations, which is part of the UK Royal Navy, said on Thursday that it was aware of an incident in the Gulf of Oman, near the Iranian coast.
· Brent crude spiked 3% on Thursday morning on reports of tanker explosions in the Gulf of Oman.
United Kingdom Maritime Trade Operations, a division of the U.K. Royal Navy, said it is currently investigating what it has called an “incident” in the Gulf near the Iranian coastline.
Brent crude is currently trading at $61.77 a barrel.
· Two tankers were hit in suspected attacks in the Gulf of Oman and the crew have been evacuated, shipping sources said on Thursday, a month after a similar incident in which four tankers in the region were struck.
The area is near the Strait of Hormuz, a major strategic waterway through which a fifth of global oil consumption passes from Middle East producers.
· Global oil prices could fall to as low as $45 per barrel if tensions between the U.S. and China worsen, an investment strategist told CNBC Thursday.
Oil prices have been on a downward trend in recent weeks as investors become increasingly concerned about slowing demand. Appetite for oil is at risk of a further slump if the U.S. and China fail to the resolve trade differences, which will cause the global economy to weaken even more, said Rainer Michael Preiss, executive director at Taurus Wealth Advisors.
“I think a lot of market focus is on the G-20 meeting,” Preiss told CNBC’s “Capital Connection” on Thursday.
“If America and China couldn’t agree, and America raises tariffs again on Chinese imports, potentially this could slow down the economy meaningfully,” he added.
Reference: Reuters, CNBC, Bloomberg
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