Ambassador says U.S. unconvinced China willing to make fast progress on trade

The United States is not convinced China is willing to make sufficient progress on trade, the U.S. ambassador to China said on Friday, as the world’s two biggest economies remain locked in spiralling disputes.

U.S. President Donald Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6 to punish China for what the United States says are intellectual property abuses.

Speaking at the opening of a financial forum in Beijing, the U.S. ambassador, Terry Branstad, said there was still a chance to address issues such as non-tariff barriers, loss of intellectual property and forced technology transfers.

China unveiled on Thursday a long-anticipated easing of foreign investment curbs, including in the banking, agriculture, automotive and heavy industry sectors, as it moved to show it would fulfil pledges to open its markets further.

Branstad said there was “scepticism” in the United States that China would follow through on its pledges to truly open up in areas such as financial services.

A strengthened review process by the Committee on Foreign Investments in the United States, or CFIUS, an interagency panel that checks the national security implications of transactions, was likely, Branstad said, adding that he thought that was the right way to deal with investment issues.

Trump said on Wednesday he would use a strengthened CFIUS process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.

White House trade adviser Peter Navarro, a harsh China critic, has argued for China-specific restrictions using an emergency sanctions law, while Treasury Secretary Steven Mnuchin has favoured a more global approach.

Trade tensions build as Daimler warns on sales

Mercedes-Benz maker Daimler (DAIGn.DE) shocked investors on Thursday with a warning that trade tensions were hitting sales, while fears of a “tit-for-tat” trade war grew as Europe readied retaliatory tariffs against the United States.

Auto stocks sank to a nine-month low on European markets .SXAP after Daimler cut its 2018 profit forecast and said it was considering “possible strategic options” in light of the rising trade tensions between China and the United States.

The revised forecast sparked fears of earnings downgrades across the industry and followed a proposal by U.S. President Donald Trump to impose tariffs on imported vehicles, arguing that trade imbalances threatened U.S. national security.

Trump is separately promising to impose tariffs on up to $200 billion of Chinese goods, escalating a conflict that has already drawn retaliatory steps from nearly all corners of the world. China for its part has warned it will retaliate with levies on U.S. products, potentially including the Mercedes-Benz SUVs shipped to China from Alabama.

Daimler’s news comes a day after top central bank chiefs said a developing trade war between the world’s biggest economies was weighing on business confidence and could force central banks to downgrade their outlook.

Meeting in Portugal, the heads of the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Reserve Bank of Australia on Wednesday all took a gloomy view on the conflict, arguing the consequences are already evident.

Mario Draghi, head of the European Central Bank (ECB), said it was too early to assess the monetary policy impact of an escalation in trade tariffs between the United States and its partners but there was no reason for optimism.

U.S. asks some OPEC producers to pump more oil

The United States has unofficially asked Saudi Arabia and some other OPEC producers to raise oil output, three OPEC and industry sources said on Tuesday, although it has not requested a specific figure.

Earlier on Tuesday, Bloomberg reported that the U.S. government had asked them to increase oil production by about 1 million barrels a day (bpd). 

Global shares shrug off trade tensions as U.S. data reassures

Global shares rose on Monday as worries over a trade war between the United States and other major economies took a back seat, with investors focusing on an easing of political risks in Europe and strong U.S. jobs data.

The MSCI world equity index, which tracks shares in 47 countries, climbed 0.4 percent, while European stocks continued on their road to recovery with a 0.5 percent rise by 1107 GMT as tensions calmed in Italy and Spain.

Following a week in which Italian stocks hit their lowest since July, Italy’s anti-establishment parties formed a coalition government on Friday to end three months of political deadlock.

Italian bond yields fell. They soared last week on fears a snap election would be called that might effectively become a referendum on euro membership.

The spread on Spanish bond yields over benchmark German Bunds also narrowed after a new prime minister was sworn in Madrid, though Socialist Pedro Sanchez’s minority administration faces a tough baptism from a revived independence drive in Catalonia.

The euro traded at $1.1723, well clear of Tuesday’s 10-month low of $1.1506.

While the risk of political crisis receded in Europe, concerns over a possible global trade war rumbled on in the background.

Finance ministers of the closest U.S. allies vented their anger on Saturday over Washington’s imposition of metal import tariffs, setting the tone for a heated G7 summit next week in Quebec.

Stock futures creeps higher with trade talks in focus

Global Stock Markets

U.S. stock index futures rose slightly in choppy trading on Friday as oil prices climbed, while investors kept a close watch on Sino-U.S. trade talks.

China denied it had offered to cut its trade surplus with the United States by up to $200 billion, hours after it dropped an anti-dumping probe into U.S. sorghum imports, but added that talks were constructive.

The world’s two biggest economies are seeking to bridge a divide on trade issues during the two-day talks in Washington that began on Thursday.

Oil prices continued their surge, with Brent crude LCOc1 on track for the sixth straight week of gains, boosted by strong demand, looming sanctions on Iran, plummeting Venezuelan production and Nigerian disruptions. [O/R]

At 7:19 a.m. ET, Dow e-minis 1YMc1 were up 58 points, or 0.23 percent. S&P 500 e-minis ESc1 were up 3 points, or 0.11 percent and Nasdaq 100 e-minis NQc1 were up 9.75 points, or 0.14 percent.

Investors have been fretting over rising interest rates, with the 10-year Treasury yield, the benchmark for global borrowing costs, holding above the key 3 percent level for the fourth day.

However, Bank of America Merrill Lynch said on Friday investors pumped $11.9 billion into global equities in the past week and also put money into bank loans, likely viewing the rise in U.S. bond yields as reflecting a robustly growing economy.

Among stocks, Applied Materials (AMAT.O) fell 4.9 percent after the chip gear maker’s disappointing forecast renewed concerns over slowing smartphone demand, while AMD (AMD.O) rose 2.6 percent after Cowen started coverage with an “outperform” rating.

Mattel shares gained 3.7 percent on a Wall Street Journal report that the company rejected Bratz dolls inventor Isaac Larian’s offer to merge his MGA Entertainment Inc with the Barbie doll maker.

Oil prices firm as Brent creeping close to $80 per barrel

Oil Stock Markets

Oil prices firmed on Thursday, with Brent crude creeping ever closer to $80 per barrel, a level it has not seen since November 2014, as supplies tighten while demand remains strong. 

Brent crude futures were at $79.32 per barrel at 0027 GMT, up 4 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $71.68 a barrel, up 19 cents, or 0.3 percent, from their last settlement.


U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.

ANZ said the falling U.S. inventories were “raising concerns of tight markets heading into the U.S. driving season,” during which demand typically rises.

Looking beyond seasonal changes, U.S. bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020, due to a steady increase in demand.

Not all pointed to a tighter market, however.

The International Energy Agency (IEA) said on Wednesday that it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.

The IEA said global oil demand would average 99.2 million bpd in 2018.

And although supplies currently only stand at 98 million bpd due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), the IEA said that “strong non-OPEC growth ... will grow by 1.87 million bpd in 2018.”

Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd.

That puts the United States within reach of top producer Russia, which pumps around 11 million bpd.
As a result of its surging production, U.S. crude is increasingly appearing on global markets as exports.

Commodity brokerage Marex Spectron said that the surge in U.S. supplies was a “strongly price-bearish development.”

It said the economic outlook was also “firmly bearish” as “short-term credit conditions have worsened which ... hasn’t been priced correctly by the market”.

The brokerage also said that U.S. energy intensity “continues to decrease which is never good news for the future consumption of oil”.

Stock Futures rise up; Verizon & Nvidia Flu swing up

Global Stock Markets

Stock futures shed early losses and edged up into narrow gains Friday, as the Dow industrials looked stretch its rally to an eighth day, while benchmarks in Europe and Asia were set to extend their nearly two-month advances.

Futures for the Dow Jone industrial average held 0.2% above fair value. Verizon (VZ) was the early strong suit among blue chips, up 1.6% after an upgrade from JP Morgan. Nasdaq 100 and S&P 500 futures traded with fractional gains. Security software developer Symantec (SYMC) fell hard to the bottom of both indexes.

Earnings from late Thursday provided a hub for premarket trading, with Nvidia (NVDA), The Trade Desk (TTD) and Symantec (SYMC) all posting significant moves.

On the Dow, Verizon swung to an early early lead after JPMorgan upgraded the stock to overweight, from neutral. Verizon shares spiked, then sold off hard at the end of April, news of a $26 billion merger between SpringS and T-Mobil U.S. (TMUS). Shares ended Thursday 13% below their April high.

Nvidia will be a name to watch Friday, dipping nearly 3% after its late-Thursday earnings report and threatening to dent the strong performance among chipmakers for the week.  The graphics chip pioneer crushed fiscal first-quarter earnings and revenue expectations,and gave scond-quarter revenue guidance above consensus views. The company offered no EPS guidance for Q2. At the close of regular trading, the stock was in a buy range above a flat-base buy point at 254.60. The chart also can be interpreted as a double-bottom base with a 239.35 entry. Premarket moves can often change abruptly at the start of regular trade.

Most of the chip stocks listed on the Philadelphia Semiconductor Index appeared unaffected by the Nvidia flu. About a third of the index traded lower in premarket action.  Advanced Micro Devices (AMD) slipped furthest, showing a 1.2% decline. The index gained 4.9% for the week through Thursday, and was leaning toward its first two-week advance since March.

Symantec collapsed 25% as analysts downgraded the stock following its fiscal Q4 report late Thursday. Weak guidance damaged an otherwise stronger-than-expected quarterly performance. Symantec shares had climbed 17% in a seven-week advance since March, attempting to build the right side of a seven-month consolidation.

The Trade Desk spiked 23% in premarket trade. The online advertising services platform reported late Thursday its first quarter earnings growth accelerated to 89%, growth of revenue accelerated to a 61% increase. Both numbers easily topped analyst targets. Management's raised Q2 and full-year revenue and earnings guidance were well above consensus hurdles.

The IPO's premarket action suggested it could open Friday with a breakaway gap, past a 61.03 buy point in a gnarled-looking cup base. It's best to read up on buying breakaway gaps before trying to jump in. And keep in mind that not all premarket moves carry over into regular trade.

IBD 50 stock Zebra (ZBRA) bucked up 2.5% in early action. The maker of thermal printers and components closed Thursday in a buy range, above a 148.81 buy point in a third-stage flat base.
Crude Oil Holds Above $71, May Consumer Sentiment Coming Up

Energy stocks were largely quiet as crude oil prices blipped modestly higher early Friday. U.S. benchmark West Texas Intermediate traded up 0.1%, holding well above $71 per barrel. Crude gained 0.3% Thursday, with WTI settling at $71.36 a barrel, up 2.4% so far for the week. Prices could feel some effect on Friday when Baker Hughes (BHGE) releases its weekly rig-count survey at 1 p.m. ET.

Gold Firms As Dollar Rally Pauses, Geopolitical Tensions Simmer

Gold edged higher on Thursday as the dollar paused for breath, holding near its 2018 peak, with investors focused on U.S. inflation data due later and simmering tensions between the United States and Iran.

The dollar slipped slightly from a 4-1/2 month peak hit as long-term U.S. Treasury yields held near the psychologically important 3 percent level. A strong dollar makes dollar-priced gold costlier for non-U.S. investors.

U.S. President Donald Trump on Tuesday withdrew the United States from an international nuclear accord with Iran, raising the risk of conlfict in the Middle East and increasing the appeal of safe-haven assets such as gold.


Turner added, however, that the dollar was the main driver for gold and he expects the precious metal to come under pressure in the near term, with the dollar extending its rally.

Spot gold rose by 0.2 percent to $1,315.28 an ounce by 0959 GMT. U.S. gold futures for June delivery were also up 0.2 percent at $1,315.50.

U.S. consumer prices data due at 1230 GMT is expected to show that annual core CPI inflation rose to its highest in more than a year in April, strengthening the case for the Federal Reserve to raise interest rates.

After reduced growth data in the euro zone and Britain in recent weeks, the Fed remains the only major central bank that appears to be on course for rate increases.

Elsewhere, North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russia.

After Trump’s announcement on the U.S. withdrawal from the Iran nuclear deal, Israel said on Thursday that it had attacked nearly all of Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

Spot gold looks neutral in a range of $1,302-$1,317 an ounce, said Reuters technical analyst Wang Tao.

In other precious metals, silver gained 0.6 percent to $16.59 an ounce after hitting a two-week high at $16.62 in the previous session.

Platinum rose 0.9 percent to $918.20 while palladium edged up by 0.1 percent to $975.72.

ASX set to start the week lower

The Australian share market is expected to open lower, after metals prices, and US and European stocks suffered falls in trading at the end of last week.

Wall Street: Wall Street's three major benchmarks slumped into the weekend even with mostly very solid corporate earnings so far this season, tracking at a 20 per cent year-over-year increase. 

ASX: The ASX is set to follow Wall Street lower. Futures are pointing to a 15-point drop at the open.It is a shortened trading week this week due to the Anzac Day public holiday.

Royal commission: The Hayne royal commission continues on today with AMP back in the spotlight. The company's share price was savaged last week, dropping around 20 per cent while open Friday, chief executive Craig Meller announced his resignation with immediate effect.

CPI: The surge in commodity prices has renewed the debate about the outlook for inflation and Australia's all-important consumer price index report for the first quarter, set to be released on Tuesday, is the key data point this week.

Commodities: Also likely to dent sentiment as the week begins is a retracing of recent advances in aluminium, copper, nickel and iron ore.

US: Reporting this week are Facebook, Alphabet, Amazon, Microsoft as well as Twitter. Apple, which saw its shares drop last week on concerns that global smartphone sales have perhaps peaked – according to the International Monetary Fund, reports on May 1. The iPhone maker's shares tumbled 7 per cent over the final three days of last week.

The Australian dollar was slightly lower, Bank of Queensland is down

The Australian dollar is unruffled by the release of the minutes of the latest Reserve Bank of Australia meeting this morning, with the Aussie dollar recently trading at US77.69¢ against the greenback, down 0.1 per cent.

In the minutes out today the RBA mentions the currency and notes that there have been "fairly modest movements in most major exchange rates over the previous month."

The Australian dollar was slightly lower over the month as commodity prices dipped and interest rates in the United States moved above Australian interest rates, the cental bank notes.

The RBA gave no sign that interest rates would move any time soon. While the next move in interest rates will likely to be up than down, "members also agreed that there was not a strong case for a near-term adjustment in monetary policy," the minutes revealed.

Bank of Queensland is down 2.3 per cent at $10.66 today, with the banking group one of the worst performers in the ASX 200.

The bank posted a slightly higher rise in first half cash profit driven by lower loan losses and lending growth in commercial loans, but the numbers missed market expectations.

The regional bank also said it would sell its St Andrew's Insurance division to Freedom Insurance Group for $65 million.

World shares hit a one-week high today: caution ahead of payrolls

Global Stock Markets

World shares hit a one-week high on Friday before easing a touch, as caution ahead of jobs data in the United States outweighed a potential breakthrough in nuclear tensions over the Korean peninsula. 

The MSCI All-Country World index, which tracks shares in 47 countries, was 0.1 percent higher and set for a weekly gain of almost 2 percent.

Gains came largely from stocks in Asia, which staged sharp rallies after U.S. President Donald Trump said he was prepared to meet North Korea’s Kim Jong Un, potentially marking a major breakthrough in nuclear tensions between the two countries.

Trump’s aides have been wary of North Korea’s diplomatic overtures because of its history of reneging on international commitments and the failure of efforts on disarmament by previous U.S. administrations.

Japan’s Nikkei rose 0.5 percent and South Korean stocks rose more than 1 percent. The dollar also rose against the safe-haven Japanese yen, which fell to its lowest in over a week.. 

The U.S. pressing ahead with tariffs on steel and aluminum imports on Thursday did not seem to rattle investors as much as proposals for them did last week, but caution over the release of U.S. jobs data later in the day was palpable in Europe, where shares opened slightly lower.

Upbeat jobs data last month fanned speculation about faster interest rate rises in the United States, causing a rout in the bond market and hammering world equities. The U.S. payrolls report is due at 1330 GMT.

The pan-European STOXX 600 was down 0.1 percent by 0815 GMT, with most sectors in the red except for defensive industries such as healthcare or utilities, which made limited gains. 

Germany’s DAX was down half a percent and France’s CAC 40 was down 0.2 percent. Britain’s FTSE 100 was up 0.1 percent. 

In currencies, the Japanese yen was the biggest mover, falling half a percent against the dollar to its lowest in over a week following the news on North Korea. 

The drop followed the Bank of Japan’s policy meeting, where it kept monetary policy unchanged and stuck to its upbeat view of the economy. The yen has gained 7 percent against the dollar since the start of the year on concerns that the outbreak of a trade war would derail a global growth recovery.

The dollar index, which measures the greenback against a basket of currencies was down 0.1 percent on the day.

The euro was flat. 

Rising protectionism was a risk cited overnight by European Central Bank President Mario Draghi following the central bank’s latest policy meeting. 

While the ECB did drop its easing bias as some expected, Draghi sounded in no rush to start unwinding stimulus. 

Crude oil futures rose. U.S. crude rose 0.4 percent to $60.38 per barrel, while Brent crude futures rose half 0.6 percent to $64.01 per barrel. 

Spot gold eased 0.2 percent to $1,319.16 per ounce, extending losses into a third session as demand for safe havens lessened.

Fed likely to continue raising rates: Kaplan

Global Stock Markets

The U.S. Federal Reserve is likely to continue removing policy accommodation gradually and could hike rates three times this year, Dallas Fed President Robert S. Kaplan told a business conference in Frankfurt on Thursday. 

Kaplan said recent market volatility in itself was not enough to change his base scenario, although he was “highly vigilant” about the turbulence and would study whether it has any effect on the real economy.

“At this point, I don’t see this market adjustment spilling over into financial conditions - but I’ll be watching carefully,” Kaplan, a non-voting member of the Fed’s policy committee, told reporters in Frankfurt. “My base case is the same.”

The Fed increased rates three times last year, with the last, 0.25 point move coming in December.
U.S. stocks have sold off sharply this month on worries that rising wage inflation could force the Fed to tighten policy more quickly. But markets have calmed down and recovered some ground in the last two days.

Kaplan said that any removal of stimulus would be done gradually and patiently, without pre-commitment to any particular rate path.

Rapid growth and low unemployment are the key arguments for policy tightening and Kaplan predicted that the jobless rate could dip below 4 percent this year, beyond what is considered full employment.

Overall growth is likely to peak this year and may slow somewhat next year and in 2020, he added.

California says will block crude oil from Trump offshore drilling plan

Oil Stock Markets

California will block the transportation through its state of petroleum from new offshore oil rigs, officials told Reuters on Wednesday, a move meant to hobble the Trump administration’s effort to vastly expand drilling in U.S. federal waters. 

California’s plan to deny pipeline permits for transporting oil from new leases off the Pacific Coast is the most forceful step yet by coastal states trying to halt the biggest proposed expansion in decades of federal oil and gas leasing.

Officials in Florida, North and South Carolina, Delaware and Washington, have also warned drilling could despoil beaches, harm wildlife and hurt lucrative tourism industries.

The commission sent a letter on Wednesday to the U.S. Interior Department’s Bureau of Ocean Energy Management (BOEM) urging the bureau’s program manager Kelly Hammerle to withdraw the draft proposal, saying the public did not have an adequate opportunity to provide input on the plan.

California has clashed repeatedly with President Donald Trump’s administration over a range of other issues since last year, from climate change to automobile efficiency standards to immigration.

The Interior Department last month announced its proposal to open nearly all U.S. offshore waters to oil and gas drilling, sparking protests from coastal states, environmentalists and the tourism industry.
Governors from nearly every U.S. coastal state except Alaska and Maine expressed opposition, and even Alaska’s governor requested sensitive areas be removed.

The proposal also comes amid low U.S. oil industry demand for new offshore leases, as drillers focus on cheaper and highly-productive wells onshore that have pushed U.S. production over 10 millions barrels per day for the first time since 1970.

Heather Swift, spokeswoman for Secretary of the Interior Ryan Zinke, said developing the five-year plan for offshore oil and gas leases is “a very open and public process.”

Trump has said more offshore drilling would boost the U.S. economy and national security by reducing reliance on imported oil.
Opponents of offshore drilling have complained that Congress has passed no new safety standards since BP Plc’s Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010. It took months to stop that leak, which became the largest oil spill in American history, despoiling the environment of Gulf Coast states and causing billions of dollars in economic damage.

Offshore drilling has been restricted in California since a 1969 oil spill off the coast of Santa Barbara. In 2015, another spill in Santa Barbara County sent as much as 2,400 barrels of oil (101,000 gallons or 382,000 liters) onto the coast and into the Pacific, leaving slicks that stretched over nine miles (14 km).

Major oil companies, like Chevron Corp (CVX.N), have long since abandoned their efforts in California’s offshore region, despite its estimated 250 million barrels of proven oil reserves, due in part to legislative and political hurdles and easier prospects elsewhere.

Chevron gave away the U.S. Geological Survey seismic data on offshore California and other parts of the U.S. West Coast for research use in 2005, deeming it no longer commercially useful.


A number of other states have asked the Interior Department to exempt them from the drilling plan. So far, Secretary Zinke has said he would exempt Florida, which borders the Eastern Gulf and the Southeastern Atlantic, to protect its tourism industry and he has promised to hold discussions with other states that have expressed concerns.


Environmentalists and some elected officials plan to protest the drilling plan at a public meeting on Thursday in Sacramento.

NZ dollar gains as CPTPP deal reached; growing US protectionism weighs on greenback

New Zealand Stock Markets

The New Zealand dollar gained as investors welcomed an agreement on the regional Asia-Pacific trade and investment pact, while growing US protectionism weighed on the greenback.

The kiwi dollar rose to 73.60 US cents as at 5pm in Wellington from 73.43 cents at 8am and 73.22 cents yesterday. The trade-weighted index gained to 75.43 from 75.21 yesterday.

The local currency got a boost from news negotiators finalised the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership - or CPTPP -  agreement in Tokyo on Tuesday with the 11 nations in the trade pact due to sign it in Chile on March 8.

That put it at odds with the US, where President Donald Trump announced new tariffs on some imported goods and stoking fears about the global trade environment, and adding to the greenback's negative outlook against a backdrop of low market volatility, higher global growth and increased appetite for risk.
 
ANZ Bank New Zealand senior economist Phil Borkin said "any signing of a free trade agreement is a positive," in particular after nerves yesterday when Trump raised tariffs on imports of washing machines and solar panels, raising fears about the White House's protectionist attitude.

Looking ahead, Borkin said the biggest risk for the kiwi will be tomorrow's fourth-quarter inflation data. Economists expect the consumers price index rose 0.4 percent in the three months ended Dec. 31, for an annual increase of 1.9 percent, according to the median in a poll of 13 economists surveyed by Bloomberg.


The kiwi fell to 80.92  yen from 81.10 yen yesterday.

The local currency rose to 91.99 Australian cents from 91.66 cents yesterday and gained to 4.7026 Chinese yuan from 4.6842 yuan. It increased to 52.43 British pence from 52.36 pence yesterday and traded at 59.76 euro cents from 59.73 cents.

New Zealand's two-year swap rate fell 1 basis points to 2.22 percent while the 10-year swaps fell four basis points to 3.25 percent.

U.S. stock seen in holding pattern as investors look for fresh catalysts after tax bill

Global Stock Markets

U.S. stocks were set for another apathetic day of trade, with futures struggling for direction on Thursday as traders looked for fresh catalysts after the tax bill was approved.

Several economic indicators ahead, including weekly jobless claims and a revision to growth domestic product, could provide some inspiration for investors later.

What are indexes doing?
Futures for the Dow Jones Industrial Average YMH8, +0.13%  were up 16 points at 24,755, while those for the S&P 500 index ESH8, +0.21%  gained 3.4 points to 2,685. Futures for the Nasdaq-100 index NQH8, +0.07%  dropped 2.75 points to 6,486.20. The muted action mirrors the mood from Wednesday, when the S&P 500 SPX, -0.08%  and Dow average DJIA, -0.11%  both ended 0.1% lower and the Nasdaq Composite Index COMP, -0.04%  fell 0.04%. The Three benchmarks on Monday closed at all-time highs on signs the highly anticipated tax reform would get approved before Christmas.

What’s driving the market?
The House of Representatives on Wednesday passed the tax bill, which they voted on for the second time due to a technical irregularity before. The Senate approved the reform in the early hours of Wednesday, so all there’s left now is for President Donald Trump to sign the bill into law.


Among the bill’s many features, it includes a reduction in the corporate tax rate from 35% to 21%, which is expected to give U.S. companies a boost and speed up economic growth.

What’s on the economic docket?
Weekly jobless claims are due at 8:30 a.m. Eastern Time, with economists polled by MarketWatch forecasting 230,000 Americans filed for unemployment benefits last week. That would be up from 225,000 in the week before.
Also at 8:30 a.m. Eastern, revised GDP data for the third quarter come out, along with the Chicago Fed national activity index for November and the Philly Fed manufacturing index for December.
A report on leading indicators for November is slated for release at 10 a.m. Eastern.


Which stocks are in focus?
CarMax Inc. KMX, +0.91%  , Conagra Brands Inc. CAG, +0.42%  and Paychex Inc. PAYX, -0.09%  are slated to report earnings ahead of the bell. After the market closes, results from Nike Inc. NKE, -1.01%  are on deck.

Apple Inc. AAPL, -0.11%  shares were down 0.3%. The tech giant on Wednesday admitted it slows down older iPhones to prevent unexpected shutdowns.

Aeterna Zentaris Inc. AEZS, +63.18%  soared 89% ahead of the bell after the biotech firm late Wednesday said the U.S. Food and Drug Administration had approved the company’s Macrilen product for diagnosis of adult growth hormone deficiency.

What are other markets doing?

Asian stocks closed mixed, while European stocks SXXP, +0.08%  mostly traded lower.

Oil CLG8, -0.21%  and gold GCG8, -0.06% were also in the red, while the dollar index DXY, +0.08%  was flat around 93.307.

Bitcoin futures BTCF8, -0.97%  on the CME were down 2.4% at $16,625.

Gold slips from 2-wk high as dollar gains

Global Stock Markets

Spot gold resistance at 200-day moving avg around $1,269 -trader 

Spot gold was down about 0.1 percent at $1,265.02 an ounce as of 0816 GMT, after earlier hitting its best since Dec. 6 at $1,268.26.

U.S. gold futures fell 0.1 percent at $1,268.30 an ounce.

The dollar edged higher against the yen on Thursday, after comments by Bank of Japan Governor Haruhiko Kuroda reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy.

Earlier in the session, gold prices hit a two-week high, helped by seasonal demand and steady closes on the technical charts, a Hong Kong-based trader said.

The 200-day moving average around $1,269.50 is currently weighing upon any attempts higher (for gold), MKS PAMP trader Sam Laughlin said in a note.

A rise in U.S. bond yields from optimism after lawmakers in the United States approved the biggest overhaul of the country's tax code in 30 years, also offered support to the greenback.

Rising bond yields tend to boost the dollar and weigh on the appeal of non-interest bearing gold. Asian stocks, however, traded lower as cheer waned after the passage of the bill with investors remaining divided on its impact on the U.S. economy.

U.S. President Donald Trump on Wednesday threatened to cut off financial aid to countries that vote in favor of a draft United Nations resolution calling for the United States to withdraw its decision to recognize Jerusalem as Israel's capital.

Among other precious metals, spot silver was unchanged at $16.17 an ounce, having climbed to a two-week top of $16.26 in the previous session. Platinum was 0.5 percent lower at $913.50 an ounce,
after marking its best since Dec. 5 in the previous session.

Palladium gained 0.2 percent to $1,027.57.

Donald Trump's US tax cut: What it means for Australia

Australian Stock Markets

The pace just picked up, the sense of urgency heightened.

That's the message emanating from Canberra over the need for corporate tax cuts after the US House of Representatives finally pushed through Donald Trump's massive tax bill, his first major legislative victory.


Under the new law, federal corporate taxes in the US will be slashed from 35 per cent to just 21 per cent.

During this week's mid-year budget update, Treasurer Scott Morrison repeatedly hammered home the point that the US push made it an imperative that we follow suit.

Without tax cuts, he said, global corporations would be unlikely to invest here, which would hurt employment and wages.

On paper, it looks like a solid argument. The problem with that analysis is that it assumes all nations measure their statutory corporate tax rates in exactly the same way. They don't.
It also assumes companies base their investment decisions around the world solely on the statutory corporate tax rate.

And it draws a direct link between corporate taxes and wages, that cutting the statutory tax rate leads to higher wages. It may, but the link is weak.

Let's start with the first problem of measuring company taxes. The US charges companies 35 per cent tax. Right? Wrong. America actually charges far more, around 39.1 per cent.

That's because companies operating in the US have to pay state taxes as well. That doesn't happen here. So, if the US cuts its federal rate to 21 per cent, adding in those state taxes will bring its real statutory rate to around 25 per cent, narrowing what appeared to be a wide gap with Australia's 30 per cent.

There are other problems too. All countries offer tax concessions on a wide variety of things. Then there are differences in the way they treat depreciation — how quickly you can write down the value of an asset. Or where you source your finance.

When you factor tax concessions and accounting practices into the equation, our average corporate tax rate is just 17 per cent, making Australia one of the lowest corporate tax countries in the developed world. And if you look at the effective tax rate — the rate most companies use when deciding on whether to invest — our rate is just 10.4 per cent, way below America's even after the tax cut.

The biggest impact, therefore, from America's corporate tax cut is that a proportion of that money will be repatriated back to the US. How much is anyone's guess. Mr Trump, who is well known for hyperbole, is guessing $US5 trillion will be returned.
The Aussie company pays the ATO the full 30 per cent tax rate. The ATO then refunds local investors their share of the tax via what's known as franking credits.

So there are no benefits of a corporate tax cut to local investors, only to foreign corporations and investors.

Treasury reckons the proposed cut will boost GDP by 1.2 per cent, although that's over 20 years.
The Grattan Institute's John Daley and Brendan Coates rightly point out that just because you get a lift in economic activity, it doesn't necessarily make Australians richer, particularly when the tax benefits flow disproportionately to foreigners.

Given those foreigners would have financed their Australian investments offshore, a large slice of the profits also would leave the country.

Even Treasury concedes that our Gross National Income — the payback Australians receive from the corporate tax cut — will rise by just 0.6 per cent in the long term. That's not much. And we haven't even begun to consider the cost to the budget.

PRECIOUS-Gold edges higher as dollar wilts ahead of U.S. tax vote

Global Stock Markets

Gold rose on Tuesday as caution ahead of the passage of sweeping new tax legislation in the United States weighed on the dollar, with traders uncertain of its actual impact on economic growth. 

Moves in the metal were muted, however, with traders wary of taking new positions ahead of the holiday season. 

Gold is on track to post its narrowest trading range of any quarter in a decade in the last three months of the year. Spot gold was up 0.2 percent at $1,263.62 an ounce at 1030 GMT, while U.S. gold futures for February delivery were up 90 cents an ounce at $1,266.40. 

Last week the metal fell to a five-month low of $1,235.92 as the dollar hit its highest in a month ahead of a widely anticipated U.S interest rate hike from the Federal Reserve. 

With the Republicans' self-imposed Friday voting deadline looming, the U.S. Congress appeared all but certain to pass sweeping tax legislation after two Senate Republican holdouts agreed on Monday to support the tax overhaul backed by President Donald Trump. 

World stocks steadied after their biggest jump in almost six months, fuelled by U.S. tax cut hopes.

That rally fed into what was already one of the strongest and longest global bull runs on record. 

The dollar eased against the euro, however, as investors took a cautious view over how much tax reforms, if passed, would boost the U.S. economy. 

Even as the Congress moved closer to the tax reform, outgoing Federal Reserve Chair Janet Yellen last week gave a more sobering assessment of its impact, saying a short-term bump was likely, but a longer-term boost was not. 

Holdings of the world's largest gold-backed exchange-traded fund, New York-based SPDR Gold Shares , fell 7.1 tonnes on Monday, their largest one-day outflow since late July. That has cut its inflow for the year to just 15 tonnes. 

Among other precious metals, silver was down 0.2 percent at $16.10 an ounce. 

Platinum was up 0.3 percent at $909.50 an ounce, having climbed back above $900 for the first time in nearly two weeks on Monday. The metal has rallied nearly $30 an ounce in the last two trading sessions. Palladium was little changed at $1,017.40 an ounce.

USD/CAD off highs, back around 1.2830

Global Stock Markets

USD/CAD focused on US data, Yellen

The pair is up for the fifth session in a row today, trading just below fresh 4-week tops in the 1.2860 region recorded earlier in the session. Furthermore, spot has gained around 2 big figures since November’s low in the 1.2665/60 band.

The bearish note around crude oil prices keeps weighing on the Canadian Dollar so far today, with the barrel of West Texas Intermediate retreating to fresh lows in the mid-$57.00s although recovering some ground soon afterwards.

As usual, US-CA yield spread differentials continue to rule the sentiment around the pair, with spreads of the 2-year reference navigating multi-month tops for the time being.

Later in the NA session, Chair J.Yellen will testify before the Joint Economic Committee of Congress on the US economic outlook. In addition, NY Fed W.Dudley (permanent voter, centrist) and San Francisco Fed J.Williams (2018 voter, centrist) are also scheduled to speak, while the second revision of the US Q3 GDP will be the salient event seconded by October’s pending home sales and the Fed’s Beige Book.

USD/CAD significant levels
As of writing the pair is gaining 0.04% at 1.2823 facing the initial hurdle at 1.2849 (high Nov.28) seconded by 1.2918 (high Oct.27) and finally 1.2927 (50% Fibo of the 2017 drop). On the other hand, a breach of 1.2765 (10-day sma) would open the door to 1.2671 (low Nov.24) and then 1.2601 (55-day sma).

Pressured for profit, oil majors bet big on shale technology

Global Stock Markets

For the last decade, smaller oil companies have led the way in shale technology, slashing costs by as much as half with breakthroughs such as horizontal drilling and hydraulic fracking that turned the United States into the world’s fastest-growing energy exporter.

Now, oil majors that were slow to seize on shale are seeking further efficiencies by adapting technologies for highly automated offshore operations to shale and pursuing advances in digitalization that have reshaped industries from auto manufacturing to retail.

The technological push comes amid worries that U.S. shale gains are slowing as investors press for higher financial returns. Many investors want producers to restrain spending and focus on generating higher returns, not volume, prompting some to pull back on drilling.

Production at a majority of publicly traded shale producers rose just 1.3 percent over the first three quarters this year, according to Morgan Stanley

Chevron Corpis using drones equipped with thermal imaging to detect leaks in oil tanks and pipelines across its shale fields, avoiding traditional ground inspections and lengthy shutdowns.

Ryan Lance, chief executive of ConocoPhillips  - the largest U.S. independent oil and gas producer - sees ample opportunity to boost both profits and output. Conoco also oversees remote drilling operations in a similar way to Shell. 

Shell, in an initiative called “iShale,” has marshaled technology from a dozen oilfield suppliers, including devices from subsea specialist TechnipFMC Plc  that separate fracking sand from oil and well-control software from Emerson Electric Co , to bring more automation and data analysis to shale operations.

Oil firms currently spend about $5.9 million to drill a new shale well, according to consultancy Rystad Energy. Shell expects to chop that cost to less than $4 million apiece by the end of the decade.  

 Anadarko Petroleum Statoiland others are using DNA sequencing to pinpoint high potential areas, collecting DNA from microbes in oil to search for the same DNA in rock samples. 

ConocoPhillips next year will start using magnetic resonance imaging (MRI) to analyze Permian rock samples and find the best drilling locations, a technique the company first developed for its Alaskan offshore operations.

EOG Resources Inc last year began using a detailed analysis of the oil quality of its fields. The analysis, designed by Houston start-up Premier Oilfield Laboratories, helps to speed decisions on fracking locations and avoid less productive sites.