OIL JUMPS TO ONE-MONTH HIGH AS OPEC READY TO TALK TO PRODUCERS

Oil rose to a one-month high after OPEC said it’s ready to talk to other global producers to achieve ‘fair prices’ and the U.S. government reduced its crude output estimates.

The Organization of Petroleum Exporting Countries, responsible for about 40 percent of the world’s supply, is willing to talk, “but this has to be on a level playing field,” according to the OPEC Bulletin, the group’s monthly publication. The Energy Information Administration trimmed its U.S. production forecast by as much as 130,000 barrels a day for the first five months of the year as it switches to a new survey, the agency said on its website.

Futures dropped to a six-year low this month amid concern that slowing demand in the U.S. and China will leave the global market oversupplied. A measure of oil-price fluctuations rose to a five-month high.

“The market turned around on two pieces of news,” Phil Flynn, senior market analyst for Price Futures Group Inc. in Chicago, said by phone. "The EIA cut its U.S. output estimates and OPEC says its ready to talk to others about cutting output."

West Texas Intermediate for October delivery surged $2.75, or 6.1 percent, to $47.97 a barrel at 1:10 p.m. on the New York Mercantile Exchange. Futures reached $48.25, the highest since July 31. Prices slipped as much as $1.62 to $43.60 earlier. The contract is up 24 percent in three sessions since Aug. 26. Volume was 69 percent above the 100-day average.

European Benchmark

Brent for October settlement rose $2.91, or 5.8 percent, to $52.96 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $4.99 premium to WTI.

“The OPEC news is sending us higher,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone.

OPEC won’t agree to carry the burden alone in propping up oil prices by cutting supply; non-member nations would have to share the burden, according to the group’s publication. If demand forecasts are correct, "then it is just a case of riding out the storm" and waiting for the market to balance.

"The market is reading way too much into this," Mike Wittner, head of oil-market research at Societe Generale SA in New York, said by phone. "The OPEC Bulletin isn’t an important publication and this isn’t how they would make a key announcement."

Exceeding Targets

OPEC has been boosting supply as it seeks to force higher-cost producers to cut output. The group has exceeded its target of 30 million barrels a day for a year, data compiled by Bloomberg show.Saudi Arabia, OPEC’s top producer, pumped 10.57 million barrels a day in July, the most in monthly Bloomberg data going back to 1989.

"The non-Gulf members screamed in the fourth quarter of 2014 because of falling prices, were quiet in the second quarter because they rose, and are now at it again," Wittner said. "Until Saudi Arabia says something this is all meaningless. Why would the Saudis change their logic and waste all they have already done."

OPEC crude output increased this month as Iranian production climbed to the highest level in three years, a Bloomberg survey showed. The 12-member group bolstered output by 108,000 barrels to 32.316 million a day in August, according to the survey of oil companies, producers and analysts. 

source: Bloomberg

EURO-AREA INFLATION STAYS AT 0.2% AS ECB SEES DOWNSIDE RISKS

The euro area’s inflation rate held steady in August, highlighting the challenge facing European Central Bank policy makers as they seek to revive consumer-price growth.

Consumer prices rose an annual 0.2 percent, exceeding the median economist forecast for a reading of 0.1 percent. Core inflation held at 1 percent, the EU’s statistics office in Luxembourg said in a report on Monday.

The ECB has cut interest rates and is buying bonds to battle anemic inflation, which has been below the central bank’s goal of just under 2 percent for two years. With China’s economy cooling and oil prices falling, Executive Board member Peter Praet said last week the challenge is become tougher and that policy makers are ready to do more if needed.

The data provide “a modicum of relief for the ECB,” said Howard Archer, an economist at IHS Global Insight. “It still seems most probable that the euro zone will avoid renewed deflation and that consumer price inflation will trend gradually up from the final months of 2015.”

The euro rose 0.2 percent to $1.1213 at 11:48 a.m in Frankfurt. The single currency has climbed 2 percent in August, set for the best month since April.

Commodity Prices

To help reverse course and fulfill its mandate, the ECB is in the midst of quantitative easing program that it plans to run until September 2016.

The central bank’s Governing Council holds its next policy meeting on Thursday in Frankfurt, President Mario Draghi will give a press conference after the decision, when he will unveil new growth and inflation projections.

The ECB currently forecasts that inflation will average 0.3 percent this year, improving to 1.5 percent in 2016.

Consumer prices are “driven by energy and that for the ECB is a double-edged sword,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “It’s good for real income, and we see the recovery in the euro area is driven by private consumption,” he said. “The bad part is that it drives inflation further away from the objective.”

A Bloomberg gauge that tracks returns from 22 raw materials plunged to the lowest level since 1999 last week on concern a glut in everything from oil to copper will be exacerbated as the Chinese economy grows at the slowest pace in more than two decades.

If those factors threaten its inflation goal, the ECB is ready to expand or extend QE, Praet said on Aug. 26.

“Developments in the world economy and in commodity markets have increased the downside risk of achieving the sustainable inflation path toward 2 percent,” he said.

source:Bloomberg

STOCKS EXTEND WORST MONTH SINCE 2012 AS FED, CHINA WOES COLLIDE

U.S. stock-index futures fell, commodities declined and the yen strengthened on renewed concern China’s efforts to prop up its markets will fail.

A gauge of global equities extended the biggest monthly slump in more than three years as sentiment toward China soured while Federal Reserve officials signaled they’re prepared to raise interest rates. The yen strengthened for the first time in five days and German bunds rose with U.S. Treasuries. Russia’s ruble slid as oil declined.

More than $5 trillion has been erased from the value of shares worldwide this month as China’s surprise devaluation of the yuan on Aug. 11 sparked concern the world’s second-biggest economy may be in worse shape than analysts had estimated. Bets on a September Fed rate increase climbed after Vice Chairman Stanley Fischer said on Friday there is “good reason” to believe inflation will accelerate.

“The markets are still digesting the China news and it seems that the uncertainty from China’s rollercoaster is not over yet,” saidGuillermo Hernandez Sampere, who helps manage the equivalent of $167 million as head of trading at MPPM EK in Eppstein, Germany. “Any panic created out of this high volatility keeps investors out of the market. There’s still no clear message” on when the Fed will raise rates, he said.

Standard & Poor’s 500 Index futures dropped 0.8 percent 6:35 a.m. in New York. The MSCI All-Country World Index slid 0.2 percent, heading for a 6.6 percent decline in August, the biggest such slump since May 2012. The Stoxx Europe 600 Index slipped 0.1 percent, with trading volumes 63 percent below the 30-day average as London markets were closed for a holiday. .

China’s stocks capped the biggest two-month slide since 2008 as bearish bets in the options market climbed. The Shanghai Composite Index sank 0.8 percent, taking its loss in August to 12 percent after a 14 percent drop in July. Hong Kong’s Hang Seng China Enterprises Index fell 0.1 percent, also down 12 percent in the month.

Stocks fell even as people familiar with the matter said China’s securities regulator asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks.

The cost of options contracts betting on declines in the China 50 exchange-traded fund has surged to the highest level versus bullish ones since they started trading in Shanghai six months ago.

Russia’s ruble slid 2.6 percent to 67.14 against the dollar, leaving it 8.1 percent weaker this month. A Bloomberg gauge of 20 emerging-market currencies dropped 3.5 percent in August, its fourth monthly decline. Malaysia’s ringgit was the worst performer, losing 8.7 percent in the month as a political scandal sapped investor confidence and a plunge in commodities prices dimmed the outlook for Malaysian shipments. The country’s markets were closed on Monday.

The yen rose against all of its 16 major peers, with the biggest gains coming versus Taiwan’s dollar and South Korea’s won. It appreciated 0.4 percent to 121.26 per dollar, while the euro added 0.2 percent to $1.1211. The Aussie weakened 0.6 percent, approaching a six-year low.

Treasuries rose in Asian trading, with the yield on 10-year notes falling two basis points to 2.17 percent. German bund yields declined two basis points to 0.72 percent.

The euro area’s inflation rate held steady in August, with consumer prices rising an annual 0.2 percent. While that’s more than the median analyst forecast for a 0.1 percent increase, it’s less than the European Central Bank’s goal of just under 2 percent. The ECB is set to give a policy decision on Thursday.

Copper futures due in December slipped 1.2 percent on the Comex. The London Metal Exchange is closed Monday.

West Texas Intermediate crude dropped 2 percent to $44.36 a barrel. Oil fell below $40 a barrel this month, the lowest since February 2009, on concern slowing demand in the U.S. and China will leave the global market oversupplied.

source: Bloomberg

EMERGING STOCKS POISED FOR WORST MONTH IN 3 YEARS

Emerging-market stocks headed for their steepest monthly loss in more than three years, as Shanghai shares declined and Federal Reserve officials signaled they’re prepared to raise interest rates. Russia’s ruble halted two days of gains.

CRRC Corp., a Chinese train-equipment maker, slumped 5.9 percent in Hong Kong after its first-half earnings disappointed.Citic Securities Co. slid to a three-month low after the Xinhua News Agency reported its executives were detained on suspicion of insider trading. The Shanghai Composite Index extended losses in August to 12 percent. The ruble weakened 2.6 percent versus the dollar, while the South African rand slid to a record low. The won posted a fourth monthly drop after weak South Korean manufacturing data.

The MSCI Emerging Markets Index lost 0.3 percent to 817.63 at 9:13 a.m. in London, extending the retreat in August to 9.3 percent, its worst month since May 2012. Fed Vice ChairmanStanley Fischer kept the door open to an interest-rate increase next month, saying there is “good reason” to believe inflation will accelerate. Chinese stocks extended their monthly slide as traders weighed the level of state support.

“Uncertainty over the Fed’s interest-rate increase will continue to create volatility in the financial markets,” Rakpong Chaisuparakul, an investment strategist at KGI Securities (Thailand) Pcl, said by phone in Bangkok. “China’s weak economic recovery will hurt the growth of other developing countries.”

Financial markets in the Philippines and Malaysia were closed for a holiday.

The MSCI emerging-markets index trades at 10.7 times projected 12-month earnings, compared with a multiple of 15.3 for the MSCI World Index, according to data compiled by Bloomberg. Eight of 10 industry groups in the developing-nation gauge dropped, led by energy and utility companies.

China Shares

CRRC, which was formed by a merger of state-owned CSR Corp. and China CNR Corp. in May, declined for a second day after reporting net income on Friday that Barclays Pcl analyst Yang Song described as a disappointment. Hong Kong’s Hang Seng China Enterprises Index slipped 0.1 percent.

Citic Securities slumped 5 percent in Hong Kong after four executives at China’s largest brokerage, a journalist at business magazine Caijing and a staff member at the China Securities Regulatory Commission confessed to alleged stock-related crimes, Xinhua said.

The ruble fell for the first time in three days and the Micex Index climbed 0.2 percent, heading for a fifth day of gains. The rand lost 0.2 percent, set for a third day of declines, and the Turkish lira added 0.1 percent.

While the Fed’s Fischer was careful to announce that he wasn’t signaling an impending rate increase, his remarks suggested a move hasn’t been ruled out when the Federal Open Market Committee gathers in Washington Sept. 16-17.

“As long as we are in the waiting game and uncertainty is prolonged, emerging-market currencies will be unable to rally on a sustained basis,” Societe Generale SA analysts Jason Daw and Frances Cheung wrote in a report dated Monday.

The won slumped 0.8 percent on Monday, capping a fourth month of declines, its longest run of monthly losses since 2008. It weakened as industrial production in Asia’s fourth-largest economy fell 3.3 percent in July from a year earlier, official data showed Monday. The Kospi index added 0.2 percent.

The S&P BSE Sensex slid 0.2 percent in Mumbai. Official data due on Monday will probably show that India’s economy grew 7.4 percent in the quarter ended June 30, versus 7.5 percent in the preceding three months, according to the median of 27 analyst estimates in a Bloomberg survey.

Taiwan’s Taiex index jumped 1.9 percent, a fifth day of gains. Indonesia’s benchmark equity index climbed 1.3 percent, while the rupiah and India’s rupee fell at least 0.3 percent.

source: Bloomberg

RUBLE REBOUND BEATING WORLD HAS BONDHOLDERS WAITING TO SELL

The biggest recovery in emerging-market bonds and currencies has Russian investors poised to sell, even with oil prices bouncing back.

The ruble’s 5.7 percent rally last week was surpassed only by Ukraine’s hryvnia while top gains for Russia’s bonds pared this month’s declines as five-year yields tumbled 51 basis points in three days to 11.88 percent.

“Pressure on the markets is only rising,” Andres Vallejo, who helps manage the equivalent of $2.6 billion at Kapital Asset Management in Moscow,

said by phone on Friday. He’s getting ready to short-sell local bonds known as OFZs if yields fall to 11.25 percent.

The investor skepticism underscores doubts the central bank has much more scope to reduce interest rates after 6 percentage points of cuts since January aimed at rescuing Russia from its worst recession since 2009.

“It’s unlikely that yields will fall below 11 percent,” Igor Kozak, the head of fixed-income asset management at TKB Investment Partners in St. Petersburg, said by e-mail. “Probably, this is just a temporary movement and soon we’ll see another wave of selloffs as oil resumes declines."

Russia’s OFZs have handed investors a loss of 9.6 percent in August, the most in Europe, the Middle East and Africa, according to the Bloomberg Emerging Market Local Sovereign Index. That’s the worst monthly result since January. Quarter-to-date the currency is still down 15 percent.

Ruble Reprieve

A reprieve last week produced the ruble’s first weekly gain in 10 as crude prices rallied from a six-year low. The ruble added 0.9 percent to 65.402 versus the dollar.

Brent crude surged on Friday to trade above $50 a barrel for the first time since Aug. 13. Oil and natural gas contribute about 50 percent of Russia’s budget revenue.

The bounce-back in oil encouraged Dmitri Barinov at Union Investment Privatfonds GmbH in Frankfurt to close bets OFZ bond prices will drop.

“We may have seen the short-term lows in oil and I expect some stabilization in commodity prices,” Barinov, who oversees $2.6 billion of assets, said by e-mail.

Rebound Fizzles

Now that the ruble’s rebound this year has fizzled, the central bank has little scope to cut interest rates further. But it’s theprospect of U.S. interest rates rising that’s the main threat, according to Konstantin Artemov, a money manager at Raiffeisen Capital in Moscow.

"Of larger importance in September will be not the Bank of Russia rates decision, but the Fed rates decision,” Artemov, who sees yields on ruble debt trading between 11 and 11.5 percent, said by e-mail. “A 25 basis-point increase may trigger another wave of capital outflows from emerging markets, including Russia. And the ruble and OFZs look vulnerable.”

source: Bloomberg

GOLD ISN'T THE SAFE HAVEN INVESTORS THOUGHT IT WOULD BE

Gold bulls piled into the metal in hopes that the turmoil sweeping financial markets would finally help revive prices. They were wrong.

Instead of a rally, futures in New York fell for four straight sessions even as global equities plunged to a two-year low. Rather than providing a refuge from the meltdown, gold’s volatility rose right along with a measure of equity turbulence, diminishing its appeal as a haven. As stocks started to recover, the metal kept falling because of reports that signaled gains for the U.S. economy.

It’s been a tough two years for investors in gold, which first fell into a bear market in April 2013. More than $52 billion has been wiped from the value of physical bullion funds since then. Money managers last week raised their net-long position to the highest since June just before futures capped the worst slump in a month. Stubbornly low inflation along with the prospect of tighter U.S. monetary policy has kept a lid on the metal, which doesn’t pay interest or offer returns, unlike competing assets.

“A good test for gold was the latest round of volatility, and gold did not do much, since it has become unattractive as a safe haven,” said Atul Lele, who helps oversee $5.1 billion as the chief investment officer at Nassau, Bahamas-based Deltec International Group.

Price Slump

Futures fell 2.2 percent last week to $1,134 an ounce on the Comex, the biggest drop since July 24. The MSCI All-Country World Index of equities rose 0.5 percent, while the Bloomberg Dollar Spot Index advanced 0.7 percent. The Bloomberg Commodity Index jumped 1.8 percent. Bullion for December delivery was little changed at $1,134.10 an ounce by 2:35 p.m. in Seoul.

Speculators more than tripled their net-bullish position to 44,271 futures and option contracts in the week ended Aug. 25, according to Commodity Futures Trading Commission data released three days later. Long holdings rose for a third straight week, the longest run since January.

The Federal Reserve will probably push ahead to raise interest rates this year even after China’s surprise yuan devaluation this month that triggered global growth concerns and a selloff in equities, RBC Capital Markets’ Stephen Walker said in an Aug. 23 report. Walker, the most-accurate gold forecaster last quarter inrankings compiled by Bloomberg, expects prices to remain weak in 2015 and cut his forecast for the second half of this year by 13 percent to $1,125.

Even as the U.S. economy has proven to be resilient, Fed policy makers will have to contend with a weaker global-growth scenario. The world equity rout has lowered expectations for a quick rate rise, with traders as of Friday pricing in a 38 percent chance that policy makers will tighten at their September meeting. That compares with 48 percent two weeks earlier. The metal climbed 70 percent from December 2008 to June 2011 as the U.S. central bank fanned inflation fears as it bought debt and held borrowing costs near zero in a bid to shore up growth.

‘Buyers Return’

"Gold will probably see some buyers return after investors realize there will probably be one rate hike this year, and that too, not a very big one," said Dan Denbow, a portfolio manager at the $820 million USAA Precious Metals & Minerals Fund in San Antonio.

Still, gold demand is waning. Holdings in exchange-traded funds backed by the metal have dropped 12 percent over the past year and on Aug. 11 shrunk to the smallest since 2009.

With U.S. inflation languishing below the Fed’s 2 percent target, there’s little interest in buying gold to hedge against rising consumer prices. A slump in crude oil, which has tumbled more than 50 percent over the past 12 months, has raised concerns that inflation will stay subdued.

“With global growth concerns reemerging, we are seeing fears of deflation everywhere, and gold cannot do well in that kind of scenario,” said Jim Russell, a Cincinnati-based portfolio manager at Bahl & Gaynor Inc., which has about $14 billion under management and advisement. “Lack of follow through in gold given the price action in other assets did strike me as a big surprise. As for now, we are staying away from gold.” 

source: Bloomberg

FED UP INVESTORS YANK CASH FROM ALMOST EVERYTHING JUST LIKE 2008

Since July, American households -- which account for almost all mutual fund investors -- have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse.

Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.

“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said in a phone interview. “It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.”

Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form. While retail investor sentiment isn’t the best predictor of market moves, their reluctance could have significance, Saporta said.

“It might suggest households are getting nervous about holding investments, and that could lead to some real economic implications including cutting back on spending,” she said. “Should the market turn lower again, it will be interesting to see if we have the traditional move back into bonds or if households move to cash.”

After an 11 percent plunge in the Standard & Poor’s 500 in the past week, investors are searching for signs of strength in the U.S. economy in the face of slowing growth abroad. The S&P 500 gained 2.4 percent Thursday as data showed gross domestic product rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg.

While the flows out of mutual funds suggest retail investors -- who held 89 percent of U.S. mutual fund assets last year, according to ICI -- may not have faith in financial markets, recent economic data show the average American is spending more. Sales at U.S. retailers rose 0.6 percent in July and the prior two months were revised up, according to Commerce Department data on Aug. 13

source: Bloomberg

OIL SURGES FOR A SECOND DAY AS SOME CALM RETURNS TO EQUITIES

Oil surged for a second day, poised for the best weekly gain in more than four years, while U.S. equities investors found some relative calm in a turbulent week as Federal Reserve officials meet at Jackson Hole.

The Standard & Poor’s 500 Index fell after the U.S. benchmark’s biggest two-day gain since the beginning of the bull market in 2009. Equities trading has been whipsawed by gains and losses this week as markets remain subject to sudden shifts in investor sentiment. Oil climbed more than 5 percent after a 10 percent rally on Thursday.

“The market just may be tired. We had an awful lot of actions,” Cam Albright, head of investment strategy at Wilmington Trust in Baltimore, said by phone. The firm oversees $76 billion. “There has been a lot of price action in both directions, perhaps traders just make a chance to catch their breath.”

Global equities lost as much as $8.4 trillion in value after China’s unexpected devaluation of the yuan on Aug. 11 spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown, damping demand for raw materials and spurring a selloff in developing economies.

The S&P 500 fell 0.4 percent at 1:47 p.m. in New York, trading in the narrowest range in almost two weeks. The index’s 0.4 percent gain for the week masks a volatile period in which the S&P 500 plunged the most since 2011 to enter a correction, only to rally more than 6 percent over two days. The gauge is down 6 percent for the month, the most since October.

The Stoxx Europe 600 Index advanced 0.3 percent, after surging 3.5 percent on Thursday. The yield on 10-year Treasuries fell 1 basis point to 2.17 percent.

“We need to see a bit of consolidation given the recent rally,” saidGunther Westen, who helps oversee about $28 billion as head of asset allocation and fund management at Meriten Investment Management GmbH in Dusseldorf, Germany. “There’s still insecurity. The Fed is still looming over the markets.”

Fed officials gathered in Jackson Hole, Wyoming, are weighing when to begin raising interest rates for the first time since 2006. Markets rebounded after a report yesterday showed U.S. economic growth accelerated more than analysts forecast.

The Cleveland Fed’s Loretta Mester told Bloomberg Television Friday that “the economy can sustain an increase in interest rates.” St. Louis Fed President James Bullard said in a separate interview that market volatility shouldn’t affect the Fed’s forecast for the economy. Neither Bullard nor Mester expressed a preference for raising rates at a specific meeting.

Fed Vice Chairman Stanley Fischer, speaking on CNBC, said the central bank hadn’t decided on whether to raise its target at the next meeting.

Reports today showed Americans kept spending in July, and sentiment barely wavered this month as stocks plunged, keeping intact prospects that consumers will continue to drive growth. Purchases climbed 0.3 percent, the same as in June, according to Commerce Department figures. The University of Michigan consumer sentiment index fell to 91.9 in August from 93.1 the prior month.

Treasuries were poised for their biggest weekly decline since June, after the most volatile trading period in six months. While yields on the 10-year note were little changed today, they are up 14 basis points for the week.

The Chicago Board Options Exchange Volatility Index rose 6.4 percent to 27.78 Friday, rising for the first time in four sessions. The gauge jumped the most on record during intraday trading Monday.

Stock markets will be subject to higher volatility for weeks, according to a note Thursday from JPMorgan Chase & Co. derivatives strategist Marko Kolanovic. He cited quantitative traders whose funds are tuned to price trends and volatility.

Bigger moves are likely at the beginning and end of sessions as those investors seek to tweak holdings to take into account this month’s correction, Kolanovic said. Such institutions may need to sell $300 billion of stock, all told, he wrote.

“Capitulation has happened but we’re not done with all the volatility in equities,” Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, said by phone. “I think the worst is over, but are we out of the woods yet -- no -- we’re still going to have a lot of volatility.”

The Stoxx 600 has had moves of at least 1.7 percent for seven straight days, ending the week little changed. It’s fallen 8.4 percent this month, the most in four years.

While the Shanghai Composite Index jumped 4.8 percent, capping a 10 percent gain across two days, the Hang Seng China Enterprises Index dropped 1.1 percent in the final hour of trading in Hong Kong.

China intervened to shore up its volatile equity market late Thursday, according to people familiar with the matter, while a commentary in the official Xinhua News Agency said developed-nation monetary policies were to blame for global financial-market volatility.

Policy makers are said to be trying to end a stock rout before a Sept. 3 military parade that will celebrate the 70th anniversary of the World War II victory over Japan.

“China wants to save face as the parade approaches,” said Daniel Chan, a Hong Kong-based analyst at Brilliant & Bright Investment Consultancy Ltd.

Oil sustained a rebound above $40 a barrel amid signs of a strengthening economy in the U.S., the world’s biggest crude-consuming country. West Texas Intermediate rose 5.4 percent to $44.85 a barrel. Prices have climbed 11 percent this week, though are still down 16 percent for the year on concern a supply glut will persist.

source: Bloomberg

NSE-ASI EXTENDS UPTREND TO THE SECOND DAY

At the end of Friday's equity transactions on the floor of The Nigerian Stock Exchange, the major market barometer, the NSE-ASI gained additional 2.10% to extend uptrend to the second day in a row. It closed at 28,814.62 points. Similarly, Market Capitalization gained N201.94 billion, representing 2.10% growth to close at N9.82 trillion.

MARKET STATISTICS- August 28, 2015                                                      YTD: -16.85%
Cap (N)	9,818,340,332,230.10	One Day(ASI CHG)	2.10%
Index	28,814.62	One Week(ASI CHG)	-3.56%
Volume	372,176,008	One Month(ASI CHG)	-5.88%
Value (N)	4,266,703,634.00	Six Months(ASI CHG)	-4.28%
Deals	4,229	52 Weeks(ASI CHG)	-30.33%
Gainers	38	Losers	16
Un-Changed	50	Total	102

Total volume of shares transacted was 372.18 million valued at 4.27 billion in 4,229 deals.

Top in volume transacted was UBA with a total volume of 84.81 million shares valued at N267.98 million. Others are Zenith Bank, Skye Bank, FBNH and Access Bank respectively.  

Top on gainers' log was Oando with a gain of 10.16% to close at N10.19. Others include Dangote Sugar, Guinness Nigeria, Skye Bank and Vono Products respectively.

Top on losers' log was Nestle with a dip of 9.75% to close at N917.69. Others include UACN,  UPL, Cutix  and Etranzact respectively.

source: GTI Research

U.S. STOCKS RETREAT, EQUITIES POISED TO END TWO-DAY RELIEF RALLY

U.S. stocks fluctuated, with the Standard & Poor’s 500 Index on track for its worst month since May 2012, as equities continued to swing amid this week’s volatile trading and shifting investor sentiment.

Google Inc. fell 1.3 percent and Apple Inc. slipped to weigh on technology shares in the benchmark index. Wal-Mart Stores Inc. lost 1.8 percent amid a weaker consumer confidence reading. Energy companies advanced as oil added to yesterday’s best rally in six years. Chevron Corp. rose 3.3 percent, to bring its three-day climb to 14 percent. Freeport-McMoRan Inc. gained 2 percent after Carl Icahn took a stake in the copper producer.

The S&P 500 slid 0.1 percent to 1,985.43 at 11:05 a.m. in New York, after earlier falling as much as 0.5 percent before erasing its decline amid another bout of volatility. The Dow Jones Industrial Average slipped 41.33 points, or 0.3 percent, to 16,613.44. The Nasdaq Composite Index was little changed.

S&P 500 on track for its worst month since 2012

“We’re not done with all the volatility in equities,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “The Dow gave back a 300 point gain and then ended up more than 300 yesterday so it’s hard to say how today will be judged. I think the worst is over, but are we out of the woods yet? No -- we’re still going to have a lot of volatility.”

The Chicago Board Options Exchange Volatility Index rose 2.2 percent to 26.68 Friday, rising for the first time in four sessions. The measure of market turbulence known as the VIX fell 36 percent in the prior three days, after a record six-day jump sent the gauge to its highest level since October 2011.

The S&P 500 yesterday capped its best two-day rally since the beginning of the bull market in 2009, helped by data showing stronger-than-expected U.S. economic growth. The Dow had its strongest back-to-back advance since December 2008. Global equities had lost as much as $8.4 trillion in value after China’s unexpected devaluation of the yuan earlier this month spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown. The S&P 500 closed Thursday down 5.5 percent in August.

Data today showed consumer spending climbed in July as incomes grew, showing the biggest part of the U.S. economy was off to a good start to the quarter. The 0.3 percent advance matched the prior month’s gain, according to the Commerce Department. The median forecast in a Bloomberg survey of economists called for a 0.4 percent increase. Wages rose by the most this year, and the report showed inflation remained tame.

A separate report showed consumer confidence declined in August to a three-month low as recent stock-market turbulence weighed on Americans’ outlook for the U.S. economy in the coming year.

S&P 500 whipsawed by gains and losses this week

Inflation is the theme at an annual symposium in Jackson Hole, Wyoming this week where Federal Reserve officials and economists have also been discussing market fallout from China’s slowdown that has cast doubt on whether the Fed will raise rates next month. Traders are now pricing in a 30 percent chance the central bank will act in September, down from almost even odds before China’s surprise move to devalue its currency earlier this month.

St. Louis Fed Bank President James Bullard said in a Bloomberg Television interview Friday that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn’t alter its forecast for the economy.

source:Bloomberg

FED'S BULLARD SAYS VOLATILITY WON'T CHANGE ECONOMIC OUTLOOK

St. Louis Federal Reserve President James Bullard said that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn’t alter its forecast for the economy.

“The key question for the committee is -- how much would you want to change the outlook based on the volatility that we’ve seen over the last 10 days, and I think the answer to that is going to be: not very much,” Bullard told Bloomberg Television in an interview Friday at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming.

“You’ve really got the same trajectory that the committee will be looking at that we were looking at before, so why would we change strategy, which was basically to lift off at some point,” said Bullard, who votes on the FOMC next year.

If market turmoil persists, though, that could affect the timing of the first rate increase, Bullard said later in off-camera remarks to reporters.

“The committee does not like to move when there’s volatility,” he said. “If we had the meeting this week, people would probably say let’s wait.”

October Meeting

He added, “but the meeting is not this week, it’s Sept. 16 and 17.” Bullard also said he would support scheduling a press conference following the Oct. 27-28 FOMC meeting if the committee doesn’t raise rates next month. That would make it easier for the Fed to explain a liftoff in October.

Fed officials are weighing when to begin raising interest rates for the first time since 2006. While the U.S. is growing at a solid clip, inflation is below the Fed’s target and the global outlook has been dimmed by a Chinese slowdown that is driving down commodity prices and spurring market turbulence.

Equities around the world have been whipsawed this week, indicating markets remain subject to sudden shifts in investor sentiment. Futures on the Standard & Poor’s 500 Index fell Friday after the U.S. stock benchmark’s biggest two-day gain since the beginning of the bull market in 2009. The yield on 10-year Treasuries was 2.14 percent at 9:01 a.m. in New York compared with 2.18 percent late Thursday.

“I actually think we’re OK on the inflation front,” Bullard said. “I’ve been arguing that we should get going, because interest rates -- it’s not that we’re a little bit below normal, we’re all the way down at zero, so you’ve got to think about: How is this going to play out over the next two to three years.”

Fed’s Mester

Bullard’s comments come after Cleveland Fed President Loretta Mester, who also votes on the FOMC next year, told the Wall Street Journal that market turmoil had not so far altered her view that the U.S. economy “is solid and it could support an increase in interest rates.”

Market volatility and the slowdown in China have prompted many investors and economists who expected a September rate hike to push back their projections.

William C. Dudley, president of the New York Fed, said on Wednesday that “the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.” He also said that the case for liftoff next month could improve as more information comes in about markets and international developments, and that he continues to hope to lift rates this year.

Delay Liftoff

Minneapolis Fed President Narayana Kocherlakota said Friday that policy makers should hold off tightening for the rest of this year to underscore their determination to bring inflation up to their 2 percent target.

Moving sooner would lead investors to conclude “the Fed doesn’t think it can hit 2 percent,” Kocherlakota said in an interview on CNBC. He is not an FOMC voter in 2015 and has announced his plans to leave the Minneapolis Fed at the end of the year.

Bullard will move into one of the four rotating voting seats next year reserved for regional Fed presidents on the FOMC, along with Mester, Boston’s Eric Rosengren and Kansas City’s Esther George.

Their views during the 2016 policy debate could help to determine how quickly interest rate increases proceed. If the Fed doesn’t raise rates this year, they could also directly influence the timing of liftoff.

George said she’s waiting to see how market volatility shapes up before the September meeting before reassessing her view that an interest rate hike is overdue, speaking on Bloomberg Television in an interview aired Thursday.

Solid Growth

The economy grew more than previously estimated in the second quarter, a report Thursday showed. Gross domestic product rose at a 3.7 percent annualized rate, up from the 2.3 percent the Commerce Department reported last month. Job gains have averaged 211,000 so far this year, and economists expect a 220,000 gain when August data is reported on Sept. 4.

Inflation, meanwhile, continues to run below the committee’s 2 percent objective. The Fed’s preferred indicator climbed just 0.3 percent in June, and hasn’t reached 2 percent in more than 3 years.

source: Bloomberg