Monday, February 29, 2016

Martkets fluctuate as oil conitinues to rise

Dow lost 26, advancers over decliners 4-3 & NAZ slid back a fraction.  The MLP index was fractionally higher to the 247s & the REIT index gained a fraction to the 311s.  Junk bond funds were mixed & Treasuries rose.  Oil went up to the 33s (see below) & gold was also in demand.

AMJ (Alerian MLP Index tracking fund)

CLJ16.NYM.....Crude Oil Apr 16...33.10 Up ...0.32 (1.0%)

GCH16.CMX...Gold Mar 16.....1,228.00 Up ....8.20 (0.7%)

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Chinese stocks fell, with the benchmark index approaching the lowest level since Nov 2014, as some investors were disappointed by a lack of specific measures to boost growth during the G-20 meetings in Shanghai.  The Shanghai Composite Index dropped 4.6% & has declined 24% this year, the worst performer among 93 global equity indexes, on concern capital outflows will accelerate & earnings deteriorate as the economic slowdown deepens.

The Shanghai Composite declined 2.9% to 2687.  The equity gauge fell 1.8% in Feb, extending the 23% plunge in Jan.  After the Mon close, China’s central bank cut lenders reserve-requirement ratios by 0.5 percentage points.  Increased volatility in stocks threatens to undo efforts to project an image of stability in the financial markets after months of turbulence reverberated across the world.  China is due to report its first gauge of economic strength for Feb tomorrow with the release of the Purchasers Manufacturing Index.  The measure probably remained unchanged at 49.4 from a month earlier.  Property prices in the richest cities are surging at the same time as margin traders unwind bullish bets on equities.

China Stocks Tumble Toward 15-Month Low as Stimulus Bets Unwind

The Institute for Supply Management-Chicago gauge of factory activity in the Midwest region fell to 47.6 in Feb from 55.6 the month prior.  The forecast was for  a smaller decline to a reading of 53.0.  Readings above 50 point to expansion, while those below indicate contraction.

Midwest Manufacturing Back in Contraction

Brent crude edged higher, adding to strong gains last week, on rising hopes that the market has bottomed out & as Saudi Arabia said it would work with other producers to limit oil market volatility.  Since Feb 11, the last time Brent was below $30, the crude benchmark has risen by 17%, though prices are still a fraction of the $115 of 20 months ago.  "The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action," the Saudi cabinet said.  Saudi Arabia & several fellow OPEC members agreed with non-OPEC Russia this month to freeze output at Jan levels in an attempt to prop up prices.  Russian pres Putin called a meeting with top managers of his country's leading oil producers tomorrow.  However, Iran remains the main obstacle to a global output freeze because it is determined to ramp up supply after the country emerges from intl sanctions in Jan.  On Mon Iran said it had increased exports steeply over the past month.  Exports climbed as high as 1.75M barrels per day, adding to an already oversupplied market.  US producers cut the number of rigs drilling for oil for a 10th week running, taking the rig count to its lowest since Dec 2009.

Oil Higher as Saudis Advocate Cooperation to Stabilize Market

Ahead of Feb data, which is coming out this week, stocks are not doing a lot.  Oil is strong on hopes for favorable word about limiting oil production.  That remains far away given different agendas from different producing countries.  US economic data keeps coming in uneven.

Dow Jones Industrials


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