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Commodity World Roundup

30th June – 06th July – A sliding Rupee, an impending Trade War and other Commodity news

A sliding Rupee, an impending Trade War and other Commodity news

1. Saudi Arabia cuts pricing for most of its oil grades

July 06, 2018

Saudi Arabia cuts pricing for most of its oil grades as the world's biggest crude exporter is increasing production to assure buyers that there is sufficient supply following U.S. President Donald Trump's demands that OPEC does more to stabilize oil markets. Oil extended losses after state-owned oil company lowered august pricing for most crude grades in Asia and Europe and cut them all in the US. Frustrated by rising gasoline prices even after the Organization of Petroleum Exporting Countries agreed to raise output, President Trump has called for more action.

Source: Bloomberg

2. The impact of rising interest rates on equity valuations

July 06, 2018

Global central banks are in a tightening mode. Domestically as well, the Reserve Bank of India (RBI) raised the repo rate by 25 basis points in June after a hiatus of four-and-a-half years. And following the latest hikes in minimum support prices for most kharif crops, economists foresee another 25 basis point rate hike in August. A basis point is 0.01%. Despite unimpressive earnings growth, valuations of Indian equities have remained quite expensive in the past few years. As the charts alongside show, in the last four years, the Indian stock market's rally has been driven by multiples, i.e. Price-to-earnings—a stark contrast to the market cycle during 2003-08, where the rally was led by corporate earnings growth. This, say market analysts, was largely due to low-interest rates/cost of capital. But that environment is now changing.

Source: Livemint

3. Rupee continues to fall ; breaches 69-mark against USD

July 06, 2018

The domestic currency has slipped; dealers said the slide of the rupee is mostly due to demand for US currency and a lower opening in the domestic equity market, PTI reported. Investors also feared that with the US all set to impose tariffs on Chinese goods today, a full-scale global trade war could get triggered..

Source: Financial Express

4. Buy commodities as trade war concerns are overdone, says Goldman

July 05, 2018

Commodity bull Goldman Sachs Group Inc. has poured cold water on the notion that a trade war between the US and China represents a serious threat to raw materials, saying most of them aren't likely to be significantly impacted, and after recent declines, now is the time to buy. The Wall Street lender said the economic impact of sanctions between the US and China, including measures set to come into effect on Friday, is small, according to a report. It forecast a 10% return on commodities over 12 months as the dollar drops and reiterated a bullish call on crude oil.

Source: Livemint

5. Copper fell to a fresh nine-month low ahead of the implementation of trade tariffs

July 05, 2018

Copper hits a 9-month low amid trade tensions between U.S. and China ahead of the implementation of trade tariffs on goods from China and the United States which could dampen demand for the industrial metal. Benchmark copper on the LME slipped 0.5 percent to $6,456 per tonne by 1051 gmt, its weakest since September 2017.

Source: Business Standard

6. MCX plans currency derivatives foray

July 04, 2018

The Multi-Commodity Exchange of India (MCX), the country's largest commodity bourse in terms of market share, plans to enter the currency derivatives segment. The exchange has been mulling an entry in the currency arena for a while now and the idea has even been discussed among the board of directors who are not averse to the idea, said a person familiar with the matter.

Source: ET

7. RBI grants a license to the Bank Of China to set up a branch in India

July 04, 2018

The Reserve Bank of India has issued a license to the Bank of China to launch operations in India, people familiar with the matter said on Wednesday. Prime Minister Narendra Modi had made a commitment to Chinese president Xi Jinping to allow Bank of China to set up branches in India when they met on the sidelines of the Shanghai cooperation organization (SCO) summit in the Chinese city of Qingdao last month.

Source: Livemint

8. SC upholds RBI crypto ban

July 04, 2018

Banks and other RBI-regulated entities will not allow any transactions in crypto currencies. The Supreme Court on Tuesday refused to stay an RBI circular prohibiting banks and financial institutions from dealing in crypto currencies like bitcoin. The next hearing on the matter is slated for 20th July. What is important to note here is that the Supreme Court has asked RBI to consider the representations made by crypto exchanges in the matter. The exchanges have detailed to RBI how other jurisdictions have been dealing with the adoption of crypto currencies and how other related concerns can be addressed.

Source: Livemint

9. Saudi bonhomie may not help oil prices stay down in the long-term

July 02, 2018

US President Donald Trump's weekend of oil diplomacy offered mixed messages on supply, and conflicting responses from traders after prices fell even as analysts predicted any drop may be short-lived. Crude fell in New York late Sunday after President Trump’s tweet over the weekend suggested that Saudi Arabia had agreed to pump 2 million more barrels a day. But follow-up statements from the White House and the Saudi press agency were more ambiguous. They both said the two sides had talked, but neither statement cited a specific target.

Source: Business Standard