Weekly Market Outlook

Five Things You Need to Know to Start Your Day

The dollar’s flagging along with most global stocks, while oil swings from bear to bull. Here are some of the things people in markets are talking about today.

Oil rebounds

Buoyed by data that show U.S. crude and fuel stockpiles are declining, oil has entered bull-market territory.  Although futures were little changed in New York, erasing an earlier gain of 1.1 percent, they were still poised for weekly increase of 8.5 percent, as both WTI and Brent benchmarks extended their gains past  20 percent over the past three weeks. While speculation OPEC is poised to agree a production freeze has fueled the rally, divisions between major powers over output targets remain ahead of next month’s meeting in Algiers. Saudi Arabia reported yesterday that it hiked its oil and refined-product exports to the highest level for June ever recorded at 8.83 million barrels a day, as the kingdom seeks to grow market share and address its budget deficit.

Dollar remains on course for a decline

The U.S. currency trimmed its losses this morning, rising against all 16 of its major counterparts, but that’s unlikely to be enough to stem its second weekly decline as markets continue to waver on whether the Federal Reserve will hike rates this year. Its losing streak against this year’s best-performing G10 currency, the yen, is even longer at a fourth consecutive week of losses: the Japanese currency traded at 100.07 to the greenback by 5:21 a.m. ET, near its strongest levels in almost three years. The next sturdy signal of the Fed’s intent is likely to arrive next week at the Jackson Hole monetary symposium on August 26.

Asian markets

Asian stocks are on course for the biggest weekly drop in a month. The MSCI Asia Pacific Index had dropped 0.3 percent to 140 as of 4:51 a.m. E.T., and is headed for a 0.7 percent decline this week, the biggest such loss since July 8. The gauge rallied 23 percent from a February low through Thursday, and touched a one-year high last week, as speculation that central banks will maintain loose monetary policy is fueled by lackluster data from the world’s biggest economies. Meanwhile signs of weak growth from smaller economies are also making headlines: Poland’s growth is lagging expectations, and ahead of tonight’s Fitch review Turkey’s deputy prime minister said the country’s unlikely to meet its expansion target this year.

Bank mergers

Bank of East Asia Ltd., the Hong Kong lender facing pressure from Paul Singer’s Elliott Management, reported a 38 percent drop in first-half profit amid a slowdown in China that caused loan impairments to surge. In Italy, troubled lender Banca Monte dei Paschi di Siena S.p.A. said Chief Executive Officer Fabrizio Viola acted “with complete propriety,” after media reports said he is under investigation for allegedly falsifying accounts. Meanwhile the rules that are meant to tackle ‘too big to fail’ may be having the opposite effect in the U.S., pushing mergers to a seven-year high.

Diamond in the rough

Bob Diamond’s buyout firm Atlas Mara Ltd. is trading at an all-time low of $3.10 in morning trading, extending the stock’s year-to-date decline past 40 percent. Fears are growing the slump in commodity prices could crimp revenues generated in the seven African countries in which it operates. An analyst at Renaissance Capital cut its target price on the stock on Thursday by almost one-third to $4.50, amid concerns its full-year profit could fall by almost a half. In Nigeria, where Atlas Mara has a 30 percent stake in Union Bank Nigeria PLC, the naira dropped to a record low against the dollar at 350 in morning today, as the economy struggles to fight of recession risks, dollar shortages and declining oil revenues.