08 Sep

Trade relations between the US and China are escalating again. Natural gas rises as inventories fall

September 8, 2023

By JustMarkets 

As of Thursday’s stock market close, the Dow Jones Index (US30) increased by 0.17%, while the S&P 500 Index (US500) lost 0.32%. The NASDAQ Technology Index (US100) closed negative by 0.89% yesterday. The broader market was under pressure yesterday due to weakness in technology stocks. Apple (AAPL) stock prices fell again by more than 3% yesterday amid a Wall Street Journal report that China plans to extend its iPhone ban to government agencies and state-owned companies. Shares of Nvidia (NVDA) fell more than 2%, complementing Wednesday’s 2% drop after Research Affiliates said the stock is “a textbook story of a Big Market Delusion,” and with the stock trading at 110 times earnings, the stock is off the charts.

Stocks were also pressured by news that weekly US jobless claims unexpectedly fell to a 7-month low, indicating the strength of the labor market and could prompt the Fed to raise interest rates for longer.

Equity markets in Europe were mostly down on Thursday. Germany’s DAX (DE40) decreased by 0.14%, France’s CAC 40 (FR40) closed just above the open, Spain’s IBEX 35 (ES35) was 0.07% cheaper, and the UK’s FTSE 100 (UK100) closed positive by 0.21%.

Eurozone Q2 GDP was revised downward to 0.1% Q/Q and 0.5% Y/Y from the previously announced 0.3% Q/Q and 0.6% Y/Y. German industrial production for July fell by 0.8% m/m, weaker than expectations of 0.4% y/y. The Eurozone economy is showing resilience but with signs of an early slowdown.

Crude oil prices moved lower yesterday amid a stronger dollar and concerns over energy demand. The dollar index rose to a nearly 6-month high on Thursday, and global economic news was mostly weaker than expected, suggesting weaker energy demand.

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Natural gas prices bounced off a two-week low on Thursday and rose moderately on lower weekly supplies after EIA natural gas inventories rose by  33 bcf, below expectations of  41 bcf. As of September 5, European natural gas storage inventories were 92% full, well above the 5-year seasonal average of 82% for this time of year. The US natural gas inventories as of September 1 were 7.6% above the 5-year seasonal average. Gas was also boosted by news from Australia. Workers at an Australian LNG plant are threatening two weeks of 24-hour shutdowns at two major export plants starting September 14 unless an agreement is reached. Inspired Plc predicted that Asian LNG buyers are “likely to raise LNG import prices” to replace Australian volumes in the event of a workers’ strike. Australia is the world’s third-largest exporter of liquefied natural gas (LNG), accounting for 10% of global supply.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.75%, China’s FTSE China A50 (CHA50) fell by 1.22%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.34%, and Australia’s S&P/ASX 200 (AU200) ended Thursday negative by 1.19%. Most Asian stocks continued to decline on Friday as weak economic data from Japan added to concerns about slowing growth, while the prospect of higher US interest rates and deteriorating Sino-US relations weighed on technology stocks.

Japan’s Nikkei 225 index was the worst-performing index in Asia, down by 1%, after data showed Japan’s economy grew by 1.2% in the second quarter, less than the originally estimated 1.5%. The weak figures suggest that ongoing stimulus measures from the Bank of Japan may not be supporting growth as much as originally expected, which dampened investor sentiment toward local equities.

Asian tech stocks have been hit by calls from US lawmakers for a complete ban on technology exports to China after two companies, namely Huawei and Semiconductor Manufacturing International Corp, allegedly violated US trade restrictions. The move, coupled with Beijing’s recent restrictions on Apple, has heightened fears of deteriorating trade ties between the world’s largest economies, which could trigger a renewed trade war.

S&P 500 (F)(US500) 4,451.14 −14.34 (−0.32%)

Dow Jones (US30) 34,500.73 +57.54 (+0.17%)

DAX (DE40)  15,718.66 −22.71 (−0.14%)

FTSE 100 (UK100) 7,441.72 +15.58 (+0.21%)

USD Index  105.04 +0.18 (+0.17%)

Important events for today:
  • – Japan GDP (q/q) at 02:50 (GMT+3);
  • – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Barr Speaks (m/m) at 16:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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