Oil prices won't top $100 in the next decade, OPEC predicts

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Crude will stay below the $100-a-barrel (bbl) level for at least the next 10 years, according to the Organization of Petroleum Exporting Countries (OPEC). Read More

Market buzz: China and Trump trade verbal blows, Tesco rises to 2014 levels
Friday 15 Jun 2018

(Sharecast News) - 1415: US industrial output dipped by 0.1% month-on-month in May, according to the Federal Reserve, falling shy of economists' forecasts for an increase of 0.3%. As aside, the yield on the benchmark 10-year US Treasury note is off by three basis points to 2.91%. Commenting on the data, Michael Pearce at Capital Economics wrote: "The strong survey evidence suggests that the drop in manufacturing output in May was a blip, but the tariffs imposed on Chinese imports, if reciprocated, could weigh on the factory sector later this year. "[...] That action covers just 1.1% of total US imports, so will not on its own have a major macroeconomic impact. But the real worry is that it heralds a new era of much greater protectionism, which will weigh on the factory sector and add to inflationary pressures. The softwood lumber, steel and aluminium tariffs already in place have pushed up costs for manufacturers, and have so far done little to boost output." 1330: The Empire State manufacturing sector index jumped from a reading of 20.1 for April to 25.0 in May (consensus: 18.8). 1309: President Trump says the US will pursue more tariffs if China retaliates, after announces a 25% tariff on $50bn of Chinese imports, including goods on China's 2025 plan. 1300: Today is the second day of the World Cup, with the first of the day's three games being an intriguing match-up between Egypt and Uruguay (on the BBC). Egypt's Liverpool hero Mohamed Salah a possibility to start just under three weeks after his injury in the Champions League final. Egypt manager Hector Cuper said: "I can almost assure you 100% he will play, save unforeseen circumstances at the very last minute. He could become the top goalscorer here and one of the greatest players." Dark horses Uruguay meanwhile, will be headed by one of the tournament's most terrifying strike partnerships, with PSG's Edinson Cavani and Barcelona's Luis Suarez sure to be leading the line. Defenders will be more worried about conceding than Suarez's fearsome teeth as the country's all-time top scorer has matured during his time at Barcelona. 1305 1243: "The most interesting week of the year lived up to its hype (for once)" says Mark McCormick, TD Securities' North American head of forex strategy, with market convictions and investor sentiment seemingly dropping by the minute. "The broad USD marked one of its best weeks in years and central banks showed they still know how to squash market volatility, though Trump and trade are resurfacing in the headlines. "The ECB's dual option exit structure caught many off guard. The policy ties the taper (and thus the EUR) to the data pulse in H2, creating path dependency around the end of easy money." Data momentum has improved, McCormick thinks, but he adds that the data has "further scope to disappoint in the short-run", so for now, tells clients that he likes short-vol EURUSD structures as we slide into the summer. "The rest of the G10 will have to digest potentially two more Fed hikes this year, renewed trade tensions with the US, tighter liquidity conditions and more macro stress. NAFTA hangs in the balance despite the 2026 World Cup. This is a mixed bag for the USD so we remain nimble but maintain core shorts in the form of CAD and USDJPY." 1217: The midday London market report sees stocks falling into the red, with jitters setting in as relations between the US and China escalated again. The FTSE 100 was down 0.8% to 7,707.61, having kicked off the session marginally higher, with sentiment undermined after China vowed to retaliate quickly following news that US President Trump has approved $50bn worth of tariffs on the import of goods from China. 1137: Shares in pub group Marston's are fizzing higher after Shore Capital said in a note that an all-share merger, especially with a comparable drinks business, "arguably provides the best solution to addressing the issues". The brokerage said it sees "significant value" in a tie-up with C&C, for example. "Such a tie-up could bring material synergy and cross-sell opportunities (c20-30m), addresses the cash and leverage issues, and create a standalone beer and distribution business with EBITDA of c200m (potentially worth the current combined market cap alone), providing strategic optionality." 1100: Markets have taken a turn for the worse after China vowed to retaliate following news that US President Trump has approved $50bn worth of tariffs on the import of goods from China. Chinese Foreign Ministry spokesman Geng Shuang said: "If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights." 0922: Indivior shares are down almost 17% after its main revenue-generating product came under pressure overnight as rival Dr Reddy's Labs won regulatory approval to its generic version of the sublingual film and said it was ready to launch. Broker Numis says it understands that the FDA has now approved the generic films from Dr Reddy's and Mylan. Dr Reddy's confirms this and states the product will now be launched with an 'approved Risk Evaluation and Mitigation Strategy Program', which is around a year ahead of Numis's expectations. "Mylan had previously reached an agreement with Indivior to not launch until January 2023, but with Dr Reddy's launching we presume they would become unrestricted." With the Federal Appeal ongoing and the recent assertion of new patents, Dr Reddy's would be launching "at-risk" and therefore liable for substantial damages if the new patents are found to be valid and/or infringed, analysts said. Numis sees potential for Indivior's market share to fall to 40% in the current financial year and 20% in the 2019, leading to 22% and 28% downgrades to revenue and 38% and 52% downgrades to EPS. With Indivior possessing substantial cash and having launched its monthly Sublocade, for which Numis believes the cheaper generic versions of the daily film do not change the ultimate need, analysts suggested the share price fall was a "buying opportunity". 0858: Friday's London open market report finds stocks ticking up in early trade as investors digested the latest developments between the US and China, with Rolls-Royce and Tesco both higher on the back of well-received updates. Not long ago, the FTSE 100 was up 0.1% to 7,776.19. 0809: Rolls-Royce is the standout gainer on the FTSE 100 after saying it should exceed 1bn of free cash flow by 2020 following its announcement a day earlier that it was cutting 4,600 jobs. But Tesco shares, up 2% to above 255p, are back at levels last seen in 2014 - remember then? 0750: President Trump has approved $50bn worth of tariffs on the import of goods from China but traders have delivered a collective "meh". The approval followed a 90-minute meeting on Thursday of Senior White House officials, national-security officials and senior representatives of the Treasury, Commerce Department, and US Trade Representative's Office. A formal announcement is expected to be made later in the day by the US Trade Representatives, with a notification in the Federal Register in the coming week. Analyst Jasper Lawler of London Capital Group says: "The markets are relatively sanguine moving towards the announcement, suggesting that traders still do not believe that this will turn into a serious trade war or, alternatively, have had the story come around so many times over the past few weeks that they have simply moved on." 0742: Biggest company updates this morning is from Tesco, where UK and Irish sales slowed slightly in the first quarter but with acquisition Booker bedding down, group-wide growth accelerated slightly ahead of expectations. For the 13 weeks ended 26 May, UK like-for-like sales grew 2.1% and Ireland 3%, down slightly from 2.3% and 5.3% in the fourth quarter of last year, while Booker added 14.3% growth. Group LFLs growth of 1.8% was the tenth quarter of growth in a row, which is pretty good in the face of the continuing rise of the discounters. Building materials group CRH has received regulatory approval for its $3.5bn acquisition of Kansas-based cement manufacturer Ash Grove. Glencore confirmed it has settled a dispute between its Mutanda Mining and Kamoto Copper subsidiaries and companies affiliated with Israeli mining magnate Dan Gertler in Congo. 0701: The Asian session saw the Bank of Japan stand pat on rates, as expected. China's new home prices rose 0.8% month-on-month in May, after increasing 0.6% in April. In the BoJ press conference, Governor Kuroda admitted that inflation excluding fresh food has slowed on yen "strength", and cheaper accommodation prices, but said that the supply-demand gap conditions support the overall price environment. "His mention of accommodation prices points to a review of inflation data, which the BoJ claims are not reflective of underlying inflationary pressures," says Pantheon Macroeconomics. "He denied that another comprehensive review of monetary policy was needed, but he did say that the BoJ needs to deepen analysis on prices ahead of the outlook report for July. We see potential for surprises here."

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