Oil Talks Collapse and a Brazilian Vote to Impeach President Rousseff

April 18, 2016

Oil ministers from OPEC and Non-OPEC producers did not agree to freeze production at January levels.  Iran didn’t join the meeting, and Saudi Arabia refused to adopt any accord without Iranian participation.  Hopes for an agreement had previously lifted oil by more than 60% from a 12-year low of $26.05 on February 11 to over $42 a barrel on WTI last week.  After closing above $40 each day last week, West Texas Intermediate crude oil lost 2.5% today to $39.34.

The lower house of the Brazilian congress voted 367 to 187 in favor of impeaching President Rouseff, thus securing the 2/3rds majority required for approval.  The motion now goes to Brazil’s senate.

The Pacific Rim suffered three geological shocks.  Following earthquakes in Japan on Friday and Saturday, Ecuador was hit by an even more powerful quake on Sunday.

Reacting to the breakdown of oil output talks in Qatar, share prices in the Pacific Rim fell 1.4% in China, 3.4% in Japan, 0.9% in Hong Kong, and 0.4% in Taiwan and Australia.  But European bourses have been more resilient, with drops of 0.8% in Greece but just 0.4% in Spain, and 0.1% in France, Switzerland and Britain.  The German Dax and Italian equities edged 0.1% higher.

The yen was well bid initially, climbing to 107.84/USD, just 0.2 yen from last week’s high.  U.S. Treasury Secretary Jack Lew opined that recent yen movements have not been particularly disorderly, thus contradicting a view expressed lately by several Japanese officials.  Later the yen settled back to 108.35, up 0.3% on balance.  The dollar also lost 0.2% against the euro and Swiss franc and 0.3% versus the kiwi.  The ruble reacted adversely to the breakdown of oil talks, and so did Canada’s loonie, which fell 0.6% against its U.S. counterpart.

Ten-year sovereign debt yields are up a basis point in the U.K., unchanged in Japan, and down a basis point in Germany.

Comex gold is 0.4% firmer at $1,238.19 per troy ounce.

Consumer prices in New Zealand rose 0.2% on quarter and an as-expected 0.4% on year in the first quarter.  The four-quarter increase compares with 0.1% in 4Q15 and the first quarter of 2015, 1.5% in the first quarter of 2014, and 0.9% in the first quarter of 2013.

New motor vehicle sales in Australia advanced 2.2% in March and re-accelerated to 4.2% from a year earlier after 12-month increases of 2.5% in February and 5.2% in January.

Chinese property prices increased briskly on the whole but unevenly in March.  Such were 4.9% greater than in March 2015, rising from a 3.6% 12-month increase posted in February.  Prices rose on month in 62 of 70 cities and on year in 40 of 70 cities.

The British Rightmove house price index increased 1.3% for a second straight month in April.  The 12-month pace slowed marginally to 7.3% from a 7.6% increase in the year to March.

Singapore’s trade surplus widened to SGD 4.9 billion in March despite a large on-year decline in non-oil domestic exports.

In the year to March, producer prices fell 3.8% in Portugal, most in five months, and 4.5% in the Czech Republic.

Indian wholesale prices slid 0.85% in the year to March, led by a plunge of 8.3% in the fuel component.

The U.S. National Association of Home Builders monthly index will be reported today.  New York and Boston Fed Presidents Dudley and Rosengren will be speaking publicly today.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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