North Korea denied U.S. sanctions were behind it removing nuclear arms, Iran wants lower oil prices and Asian stocks look set to start the week higher after a rally on Wall Street on Friday. Here are some of the things people in markets are talking about.
North Korea said U.S. sanctions aren’t the reason behind its willingness to remove nuclear weapons from the Korean Peninsula, accusing its adversary of trying to ramp up tensions ahead of a summit between the two countries. The U.S. is misleading the public by saying its sanctions are working, North Korea’s state-run news agency said on Sunday. The warnings are a reminder that it will seek to project an image of strength for domestic and overseas audiences when North Korean leader Kim Jong Un meets U.S. President Donald Trump. Trump said Friday that a date and place have been set for the summit. The U.S. president is set to meet South Korean President Moon Jae-in in Washington on May 22, in advance of the historic meeting.
Iran and Oil
Iran, faced with a possible restoration of U.S. sanctions, came out against higher oil prices, signaling a split with fellow OPEC member Saudi Arabia, which is showing a willingness to keep tightening crude markets. A “suitable price” for crude is $60 to $65 a barrel, Amir Hossein Zamaninia, deputy oil minister for international and commercial affairs, said in an interview Sunday in Tehran. Oil Minister Bijan Namdar Zanganeh said earlier in the day that Iran supports “reasonable” oil prices and is not an advocate of costlier crude. The Organization of Petroleum Exporting Countries will meet next month in Vienna. Meanwhile, Iran’s President Hassan Rouhani has warned the U.S. of ``historic regret’’ if it pulls out of the nuclear agreement.
Lingering trade war angst after the U.S. economic advisers left Beijing empty handed on trade issues may preoccupy investors this week. In Australia, the federal budget is due out Tuesday. Other key events coming up include Malaysia's election on Wednesday. That day also brings Japanese wages data and then later on U.S. PPI. Thursday will be highlighted by inflation releases in China and the U.S., plus central bank decisions in New Zealand, the Philippines, Malaysia and the U.K. The U.S. Treasury will offer $73 billion of 3-, 10-, and 30-year securities this week, $7 billion more than the equivalent round last quarter. How investors digest the offerings will help determine whether the selloff resumes.
Asia Futures Higher
Futures point to a higher open for Asian equities after U.S. stocks had their biggest advance in almost four weeks on Friday as the jobless rate hit an 18-year low and billionaire investor Warren Buffett boosted his stake in Apple Inc. The dollar mostly gained against its G-10 peers and hit a record high against Turkey's lira. Oil and gold both advanced as well.
Buffett’s Omaha Fest
Billionaire investor Warren Buffett skirted thorny issues in the political and social arena when he fronted thousands of investors at the weekend at the annual meeting of Berkshire Hathaway Inc. in Omaha, Nebraska. Shareholders asked the 87-year-old billionaire to weigh in on the Trump administration’s trade policies, guns and gender equality. Meanwhile, accounting-rule changes, which require Berkshire to report unrealized gains or losses in equity investments in net income, helped fuel a $1.14 billion loss in the first quarter. That was the company’s first net loss since 2009.
What we’ve been reading
This is what caught our eye over the last 24 hours.
And finally, here's what David's interested in this morning
Traders have been super quick to pull the sell trigger on the just slightest hint of bad news. That tells us everything about why equities have been unable to put together any momentum. And by the looks of things, we may be stuck in this rut into the summer months. We had Paul Kitney, Chief Asia Equity Strategist at Daiwa Capital Markets and Cliff Tan, East Asian Head of Global Markets Research at MUFG, on the shows late last week. Both have modest expectations for these next couple of weeks. Cliff doesn't think stocks will retest highs until the second half at the earliest. Paul is roughly working around the same time assumption of one to three months before markets switch back on. Looking at the current levels of major benchmarks, it would take at least two months before this market even resembles a serious breakout contender. And that's already assuming we somehow duplicate the rapid rate of change higher from early December to late January.
However, Paul did emphasize that this is nothing more than what's visible to the naked eye — an ongoing correction phase in a single asset class within a wider bull market. In short, there are no signs of cross-asset distress. That's good. Boring. But good.
You can follow Bloomberg TV anchor David Ingles on Twitter at @DavidInglesTV.
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