New York Times
“Stocks Drop as Attacks in Spain Push Investors to Safe Havens.”
Stocks in the United States opened lower on Friday, following declines in Europe and Asia after terrorist attacks in Spain added to the issues concerning investors, spurring them to park their money in traditional safe havens.
Both the Standard & Poor’s 500-stock index and the Dow Jones industrial average were both down about 0.3 percent shortly after the opening bell. The main stock indexes in Britain, France and Germany were all lower by mid-afternoon in Europe, while Japan’s Nikkei closed down 1.2 percent and Hong Kong’s Hang Seng Index fell 1.1 percent.
The attacks in Barcelona and the seaside town of Cambrils, the worst to hit Spain in more than a decade, left at least 14 people dead, and they were the latest in a string of violent incidents to strike European cities in the past two years.
Investors on Friday moved their money into the relative safety of government bonds and gold, both of which tend to perform better in times of high tension. The yields on United States, British and German 10-year bonds, which move inversely to the price, were all lower. And gold gained 0.7 percent, to more than $1,300 an ounce.
Reuters
“TREASURIES -U.S. yields pare fall after U.S. consumer sentiment data.”
U.S. Treasury yields rebounded from their session lows on Friday as stronger-than-forecast data on U.S. consumer sentiment in early August from the University of Michigan revived some demand for stocks and reduced appetite for low-risk bonds.
At 10:11 am, the benchmark 10-year Treasury yield was 2.171 percent, down 2.4 basis points from late on Thursday. It reached 2.162 percent earlier Friday, which was the lowest since June 26, Reuters data showed.
Bloomberg
“Crude Market Shows Enduring Strength Beyond Usual Seasonal Peak.”
The market for physical barrels of crude from places as far apart as Oman and Colombia is strengthening beyond the traditional seasonal peak in demand, a positive indicator for global benchmark futures prices that remain stuck near $50.
Physical differentials — the price gap between individual grades of crude and widely traded markers like Brent or West Texas Intermediate — have strengthened over the last two weeks, according to data compiled by Bloomberg. That’s happening even for barrels due to be shipped in late September and October, typically a period of weaker demand due to seasonal refinery maintenance.
The relative prices of crudes such as Nigeria’s Forcados or Norway’s Ekofisk are rarely a topic of discussion outside the oil industry, but they are an important indicator. While hedge funds or other speculators tend to use futures or options contracts to make bets on the direction of prices in the coming months or years, physical differentials say more about the state of the global market right now. Narrowing discounts, or growing premiums, for particular grades of crude are a positive sign.
The North Sea oil market is being supported by traders booking shipments to rare destinations, including cargoes of Ekofisk crude to Chile, Brent to Uruguay and Forties to Thailand. The volume of oil being stored there in floating tankers — often a sign of oversupply — is falling.
Forcados, the largest Nigerian crude stream, was quoted at 84 cents over Brent, the highest premium since at least December 2015. In Latin America, Colombia’s Vasconia crude discount to WTI is $2.25 a barrel, the narrowest gap in four years.
Bloomberg
“China Codifies Crackdown on ‘Irrational’ Outbound Investment.”
China formally laid down new rules on overseas investments, making explicit its de facto campaign against «irrational” acquisitions of assets in industries ranging from real estate to hotels and entertainment.
The authorities set out three categories — banned, restricted and encouraged — outlawing investments in gambling and sex industries, while backing companies to support the nation’s ambitious «Belt and Road» initiative backed by President Xi Jinping, the State Council said in a statement Friday. Property, hotel, film, entertainment and sports investments will now be subject to restrictions, the statement said.
China has embarked on a drive to reduce leverage in financial markets and snuff out systemic risks ahead of a Communist Party leadership transition later this year, while remaining vigilant for accelerated capital outflows that threaten to weaken the nation’s currency. Some of the country’s most aggressive dealmakers — Anbang Insurance Group Co., Fosun International Ltd., Dalian Wanda Group Co. and HNA Group Co. — have already been the target of government pressure to scale back their foreign activities.
The People’s Bank of China imposed controls as the amount of money flowing out last year topped $816 billion, according to data compiled by Bloomberg, with Macau casinos considered a primary route used by private citizens and corrupt government officials alike. In the presence of controls, China’s capital account and foreign exchange reserves have stabilized this year.