Dow dropped 240, decliners over advancers about 2-1 & NAZ finished up 40. The MLP index added 1 to the 285s & the REIT index fell 7+ to the 379s. Junk bond funds drifted lower & Treasuries continued to see heavy selling, taking yields sharply higher. Oil climbed higher in the 83s & gold finished up 22 to 2260 for another record (more on both below).
AMJ (Alerian MLP Index tracking fund)
Microsoft (MSFT), a Dow stock, will sell its chat & video app Teams separately from its Office
product globally, 6 months after
it unbundled the 2 products in Europe in a bid to avert a possible EU antitrust fine. The
European Commission has been investigating its tying of Office & Teams since a 2020 complaint by Salesforce (CRM), a Dow stock, -owned competing workspace
messaging app Slack. Teams,
which was added to Office 365 in 2017 for free, subsequently replaced
Skype for Business & became popular during the pandemic due in part to
its video conferencing. Rivals, however, said packaging the
products together gives MSFT an unfair advantage. The company
started selling the 2 products separately in the EU & Switzerland last year. “To ensure clarity for our customers, we are
extending the steps we took last year to unbundle Teams from M365 and
O365 in the European Economic Area and Switzerland to customers
globally,” a MSFT spokesperson said. “Doing so also addresses
feedback from the European Commission by providing multinational
companies more flexibility when they want to standardize their
purchasing across geographies.” MSFT said that
it was introducing a new lineup of commercial Microsoft 365 & Office
365 suites that do not include Teams in regions outside the EEA
(European Economic Area) & Switzerland, & also a new standalone
Teams offering for Enterprise customers in those regions. Starting Apr 1, customers can either continue with their current licensing deal, renew, update or switch to the new offers. MSFT stock rose 3.85.
Crude oil futures rose on the first day of 2nd-qtr trading amid reports that the Iranian consulate in Damascus, Syria, was hit by a missile strike. The West Texas Intermediate contract for May gained $1.28 (1.5%) to $84.45 a barrel & the Brent contract for Jun added 93¢ (1.1%), to $87.93 a barrel. Syrian & Iranian state media said that an Israeli missile strike hit the Iranian consulate in Damascus. A Lebanese security source said that a senior commander in the Iran’s Revolutionary Guard, Mohammad Reza Zahedi, was among the dead. “This news, if confirmed, is a clear escalation of conflict in the Middle East and is likely to continue to bolster near-term oil prices,” Leo Mariani, an analyst with Roth MKM, said. Geopolitical risk remains present in the market as Ukraine strikes Russian oil refineries, & Houthi militant attacks in the Red Sea have led to the diversion of crude deliveries around the Cape of Good Hope in southern Africa. Oil has also been grinding higher in 2024 on expectations of strong global demand as OPEC+ holds barrels off the market thru at least the 2nd qtr. US crude & Brent have booked & consecutive months of gains. WTI is up 17.8% for the year while Brent has risen 14.2%.
Oil prices rise amid reports Iranian consulate hit by missile strike in Damascus
The stunning collapse of the Francis Scott Key Bridge in Baltimore last week could pose a temporary economic threat to local & state economies, according to Moody's. In a new note, Moody's said that both Baltimore & Maryland
face potential fallout as wreckage from the bridge blocks a vital
shipping lane to one of the country's busiest ports. "The
collapse of the Francis Scott Key Bridge on March 26 will temporarily
disrupt the transportation, logistics and warehousing economy of the
City of Baltimore (Aa2 stable) and the State of Maryland (Aaa stable),"
the report said. "However, a successful resumption of port activity in
coming weeks, combined with substantial federal funding for an eventual
bridge replacement, will reduce risk of long-term damage." The
Port of Baltimore was the 17th largest in the country in terms of total
cargo tonnage in 2021 & a top mover of cars & light trucks. In 2023,
the port handled a record 52.3M tons of intl cargo
worth nearly $81B. The port is 1 of just 4 in the country that is equipped to handle larger cargo boats. "Replacing
the 47-year-old bridge, which carried US Interstate 695, will likely
require years of work, but the Port of Baltimore may resume operations
in coming weeks, if debris is rapidly removed," Moody's said. "As long
as the port is closed, diversion of automotive imports and other cargo
to other East Coast ports will erode Baltimore's advantage as the port
closest to the Midwest, to the detriment of terminal operators including
Ports America Chesapeake, LLC." Officials said that the Coast Guard is preparing to open a
temporary alternate channel for commercial essential vessels, part of a
phased approach to opening the main channel. Crews are also working to
remove the steel and& concrete at the site of the deadly collapse, which
occurred after a freighter struck the bridge. "This will mark an important first step along the road to reopening
the port of Baltimore," Capt David O'Connell, a commander for the Coast
Guard’s Maryland-National Capital region, said. "By opening this alternate route, we will support the flow of marine traffic into Baltimore." The
port, which is closed indefinitely pending investigation & the
removal of debris from the wreckage, is also a major employer in the
area. Moody's estimates that it has created roughly 20K direct jobs, about 1.4% of total employment in the Baltimore area & 0.7% of
total employment in the state. "While
local governments will not face any direct burden to pay for bridge
replacement, the city as well as Baltimore County will suffer from
consequences such as longer commuting times and increased highway
congestion," the report said.
Baltimore bridge collapse poses 'temporary risk' to local, state economies: Moody's
Gold prices pared gains as the dollar and$ & bond yields rose, after the bullion surged to a fresh record high on growing expectation that the Federal Reserve could deliver the first interest rate cut in Jun. Spot gold was up 0.3% at $2238 per ounce after hitting an all-time high of $2265 earlier in the session. US gold futures settled 0.9% higher at $2236. Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion. Growing rate cut expectations, safe-haven demand & central bank purchases amid geopolitical tensions have boosted gold by more than 8% this year. However, the $ rose 0.5% to a more than 4-month peak against rivals, making gold more expensive for other currency holders, while yields on 10-year Treasury notes also climbed.
Gold pares gains as higher US dollar, bond yields weigh
West Texas Intermediate (WTI) crude oil closed higher on positive demand signals from China & tight supply. WTI crude for May delivery closed up 54¢ to settle at $83.71 per barrel, while Jun Brent crude, the global benchmark, was last seen up 52¢ to 87.52. The rise comes on positive economic data from China, the #1 importer, as it reported manufacturing activity rose in Mar for the first time in 6 months, raising demand hopes as the country' real-estate sector remains mired in a debt crisis. The data comes while supply remains tight as OPEC+ continues 2.2M barrels per day of voluntary production cuts that are scheduled to remain in place until the end of Jun, while Russia indicated it will cut output amid Ukrainian attacks on its refineries. The attacks have reduced Russian refining capacity by 13%.
Oil Edges Down Despite Positive Economic Data From China
Dow began the day with selling. The bulls stayed away for the rest of the trading session keeping the Dow at the depressed levels for the rest of the day. The bridge story is getting more attention as more is learned about this damage to the economy. WTI has been trending sideways under $80 for a couple of years, but has broken out to the upside this year. That will make it more difficult to fight inflation. Nervous investors keep buying gold.
Dow Jones Industrials
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