Oil up 2 percent on short covering, hope for producer action

Commodities

Oil rose about 2 percent on Friday, clinching its biggest weekly gains since April, after a short covering rally was triggered by comments from Saudi Arabia's oil minister in the previous session about possible action to help stabilize the market.

Crude pared some gains after data showed U.S. oil drillers added rigs for a seventh straight week, the longest recovery in the rig count in more than two years. They added 17 rigs, the biggest increase since December.

Brent crude futures settled 93 cents higher at $46.97 at barrel after touching $47.05, the highest in more than three weeks.

U.S. crude settled up $1 at $44.49 after touching its highest level since July 22 at $44.60 per barrel.

Both contracts notched weekly gains of about 6 percent, the biggest since late April.

On Thursday, crude surged nearly 5 percent after Saudi Arabia's energy minister said oil producers would discuss potential action to stabilize oil prices during a meeting next month in Algeria.

The news spurred short covering, traders and brokers said, even though the likelihood of any agreement remained slim.

"Although we regard such an agreement, let alone its implementation, as unrealistic, it is dampening fears of a continuation of the OPEC price war," Commerzbank (DE:CBKG) said in a note.

Oil prices have recovered since U.S. crude fell below $40 last week, but are still more than 12 percent below their last peak in June, as brimming storage tanks and production that exceeds consumption weighs on markets.

"Despite the recent bounce in prices, we continue to believe that the oil market remains in oversold territory," RBC Capital Markets analysts said in a research note.

"As such, the price path forward will likely remain choppy and non-linear since price moves can and will often be exacerbated in either direction."

Iran slashed its September official selling price for light crude to Asia by $1.30 a barrel, the latest sign that exporters are willing to accept discounts in return for market share.

Traders said a drop of 8.1 percent in China's oil output in July, to a five-year low of 16.72 million tonnes, also lifted prices because it would mean Asia's biggest economy has to import more crude.

"As both a consumer and a refiner of oil – the country's refineries processed 2.5 percent more crude oil than last year in July – China is thus contributing to the tightening of the oil market," Commerzbank said.

Source by Reuters

Dollar dips as retail sales data stokes growth concerns

Forex

The U.S. dollar weakened on Friday after U.S. retail sales were unexpectedly flat in July, while producer prices also fell in the same month, contrary to expectations, raising concerns about the strength of third-quarter economic growth.

Economists had forecast overall retail sales to rise 0.4 percent. The drop in producer prices, meanwhile, was the first since March and the largest since September 2015.

“The U.S. retail sales data in particular is causing the dollar to weaken,” said Nick Bennenbroek, head of currency strategy at Wells Fargo (NYSE:WFC) Securities in New York, adding that "producer prices are also signaling limited inflation."

A third report on Friday showed consumer sentiment stable in early August, though households' views on income softened a bit. A fourth report showed businesses made significant progress in June in reducing an inventory overhang that has weighed on economic growth since the second quarter of 2015.

The dollar fell 0.15 percent against a basket of six major currencies to 95.725, after falling as low as 95.254, the lowest in a week. The greenback also tumbled 0.77 percent against the yen to 101.19 yen and 0.20 percent against the euro to $1.1159.

The dollar had rallied last Friday on data showing employers added more jobs than expected in July, raising expectations the Federal Reserve will raise U.S. interest rates this year.

It gave up those gains this week, however, as investors see a rate hike in September as a long shot and with the Fed’s December meeting still far away.

The Fed will release minutes from its July meeting next Wednesday, with the focus then likely to turn to Chair Janet Yellen’s speech at the Fed’s Jackson Hole symposium on Aug. 26.

Antipodean currencies ended lower after briefly turning positive on the U.S. data. They fell overnight after data showed China’s economic activity slowed in July, with investment growing at its slowest pace since the turn of the century.

The weaker-than-expected Chinese data covered investment, lending, retail spending and factory output.

The Australian dollar fell 0.65 percent against the greenback to $0.7645. The New Zealand dollar dropped 0.18 percent to $0.7189.

The kiwi and Australian dollar were buoyed earlier this week by investors reaching for yields as European and Japanese bond yields offer, in many cases, negative returns.

Source by Reuters

U.S. business inventories rise marginally as sales jump

Economic Indicators

U.S. inventories rose moderately in June as sales recorded their biggest increase in nearly 3-1/2 years, suggesting businesses were making progress reducing an inventory overhang that has weighed on economic growth since last year.

The Commerce Department said on Friday inventories increased 0.2 percent after a similar gain in May. Sales shot up 1.2 percent in June, the largest rise since February 2013, after rising 0.3 percent in May.

At June's sales pace, it would take 1.39 months for businesses to clear shelves. That was the fewest number of months since November 2015 and down from 1.40 months in May.

Economists had forecast inventories, a key component of gross domestic product, edging up 0.1 percent in June after a previously reported 0.2 percent gain in May.

Retail inventories increased 0.5 percent in June, as estimated last month in an advance report. Retail inventories excluding autos, which go into the calculation of GDP, rose 0.2 percent in June after a 0.3 percent gain in May.

An outright drop in inventory investment cut almost 1.2 percentage points from GDP growth in the second quarter, limiting the rise in output to an anemic 1.2 percent annual rate. Inventories have been a drag on GDP growth since the second quarter of 2015.

Source by Reuters

Dollar trims losses but remains broadly weaker

Forex

The dollar trimmed losses against the other major currencies on Friday, but remained under broad selling pressure as disappointing U.S. data dampened optimism over the strength of the economy and lowered expectations for a 2016 rate hike by the Federal Reserve.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to 90.4, from July’s reading of 90.0. Analysts had forecast a larger increase to 91.5.

The data came after the U.S. Commerce Department said retail sales were flat in July, compared expectations for a 0.4% rise.

Core retail sales, which exclude automobile sales, fell by 0.3% in July, compared to forecasts for an advance of 0.2%.

A separate report showed that U.S. producer prices fell by 0.4% last month, disappointing expectations for a 0.1% rise and after a 0.5% gain in June.

Year-over-year, producer prices decreased by 0.2%, confounding expectations for a gain of 0.2%.

EUR/USD gained 0.32% to 1.1173.

The euro found some support after Eurostat said that euro zone gross domestic productrose 0.3% in the second quarter, unchanged from the previous quarter and in line with consensus forecasts.

Year-on-year, GDP in the single currency bloc rose 1.6% in the second quarter, matching both the expansion in the first three months of the year and the forecast.

The data was released after Germany surprised markets earlier on Friday with growth of 0.4%, compared to the 0.2% increase expected.

A separate report showed that euro zone industrial production rose 0.6% in June, beating expectations for a 0.5% gain and after a 1.2% decline the previous month.

GBP/USD edged down 0.12% to 1.2940, close to the previous session’s one-month low of 1.2934.

USD/JPY retreated 0.89% to 101.04, while USD/CHF shed 0.22% to 0.9733.

The Australian dollar was fractionally lower, with AUD/USD down 0.08% at 0.7692, while NZD/USD rose 0.26% to 0.7229.

Statistics New Zealand earlier reported that retail sales increased by 2.3% in the second quarter, exceeding expectations for a 0.9% rise.

Core retail sales, which exclude automobiles and gas stations, rose 2.6% in the last quarter.

Elsewhere, USD/CAD slid 0.30% to trade at 1.2954.

Markets were also jittery on Friday after data showed that China’s industrial production rose by an annualized rate of 6.0% in July, compared to expectations for a 6.1% increase.

Another report showed that the country’s retail sales rose by an annualized rate of 10.2% last month, confounding expectations for a 10.5% increase.

The data added to concerns over a slowdown in the world’s second largest economy.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.32% at 95.59, off the one-and-a-half week low of 95.19 hit earlier in the day.

Source by Investing.com

Europe's biggest software maker SAP ditches annual reviews

Technology

Germany's SAP (DE:SAPG), maker of software used to grade the performance of millions of employees worldwide, is ditching its own annual performance reviews as too expensive, time-consuming and often demotivating.

Once championed by business leaders as the key to better productivity, annual appraisals are falling out of fashion with companies including IBM (N:IBM), Gap (N:GPS) and evenGeneral Electric (N:GE), whose long-time Chief Executive Jack Welch is credited with popularising the system.

SAP, which for the last two years has had an American CEO and employs almost a third of its staff in the United States, is one of the first major European companies to join the trend that began across the Atlantic.

The ritual of the annual performance review is widely disliked by employees.

SAP's human resources head for Germany, Wolfgang Fassnacht, said Europe's biggest software maker had found the annual review process, with its focus on separating over- from under-performers, was often counter-productive to the goal of constructive dialogue.

"Grading workers did not work. People are open to feedback, also to harsh criticism, until the moment you start giving scores. Then the shutters go down," he told Reuters.

SAP is testing a new process, which includes more regular check-in talks, on about 8,000 of its workers and aims to implement it for all of its almost 80,000 workforce next year.

"The old system is too static," said Fassnacht. "It no longer reflects the dynamic circumstances we are operating in."

HOT TOPIC

SAP is a world leader in human-resources (HR) software and made a big bet on performance-management tools with the $3.4 billion acquisition of U.S. cloud-computing company successfactors.com in 2012.

It gets a lot of feedback from its customers, Fassnacht said, a factor that may have influenced its decision to ditch the dreaded annual review.

"I meet many HR managers at other companies. The topic is on everyone's mind at the moment," he said. "This is actually one of the hottest topics discussed in the HR area."

SAP is not putting itself out of business, however. It will continue to sell its performance assessment software and it announced in February it would also introduce software for continuous performance management of employees.

Although many companies are re-assessing the annual review, Sydney-based management consultancy Strategic Factors, a specialist in strategic planning and performance measurement, warned against ditching employee reviews wholesale.

"Regular check-ins are great, this ongoing conversation and coaching model, but we also need performance measurements. We need to be careful to not chuck out the baby with the bath water," said managing director Graham Kenny.

Audit and advisory firm PwC concluded in a report last year there was a general trend among companies of reforming performance reviews but that removing ratings was still perceived as a "more radical" change.

Source by Reuters

PokerStars' owner Amaya says Baazov stepped down, profit beats

Technology

Amaya Inc (TO:AYA) (O:AYA), owner of gambling websites PokerStars and Full Tilt, said Chief Executive David Baazov, who was charged with insider trading by Quebec's securities regulator, stepped down on Thursday.

Amaya, which reported a higher-than-expected quarterly profit as it added more customers, said it was continuing to review its strategic options.

The company said it was in talks with "a number of parties" and some of these talks have progressed.

Amaya said it had cut expenses in its London, Sydney and Dublin offices, and expects some job cuts this year.

The company said on Friday interim CEO Rafi Ashkenazi replaces Baazov.

Montreal-based Amaya said in March, soon after Baazov was charged, that he was taking an indefinite paid leave of absence.

The regulator brought charges against Baazov about two months after Amaya said it had received a non-binding proposal from him to take the company private.

A special committee of directors at Amaya will continue to "work with respect to the investigation of allegations" made by the regulator, the company said.

The charges followed an investigation into Baazov and other executives in 2014 for trading in Amaya's stock ahead of the company's $4.9 billion takeover of PokerStars-owner Rational Group.

Ashkenazi has been the CEO of Rational Group since November.

Baazov, who chaired Amaya's board until he went on leave, will not stand for re-election to the board, Amaya said on Friday.

Divyesh Gadhia, who was named interim chairman in March, has been made permanent, the company said.

Amaya's net earnings from continuing operations rose to $22.49 million, or 12 cents per share, in the second quarter ended June 30, from $6.38 million, or 3 cents per share, a year earlier.

Excluding items, Amaya earned 46 cents per share, beating analysts' average estimate of 35 cents, according to Thomson Reuters I/B/E/S.

Amaya's total revenue increased by 10.2 percent to $285.9 million, as it added nearly 2 million customers in the quarter. Revenue also beat analysts' average estimate of $272.9 million.

Customer registrations increased to about 103.5 million at the end of the quarter.

Amaya's Toronto-listed shares have risen about 41 percent since Baazov offered to take the company private.

Source by Reuters

U.S. retail sales were unchanged in July, missing expectations

Economic Indicators

Retail sales in the U.S. were flat in July with the core number registering an unexpected decline, raising concern about consumer spending being able to push economic growth at the beginning of the third quarter, official data showed on Friday.

In a report, the U.S. Commerce Department said that retail sales were flat from the prior month, compared to the forecast for a rise of 0.4%. June retail sales for increased 0.8%, whose figure was revised from an initial 0.6% gain.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.

Core retail sales, which exclude automobile sales, unexpectedly fell by a seasonally adjusted 0.3% in July, compared to forecasts for an advance of 0.2%. Core sales in June gained 0.9%, upwardly revised from an initial 0.7% gain

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.

Source by Investing.com

U.S. producer prices unexpectedly decline in July

Economic Indicators

Producer price inflation in the U.S. unexpectedly declined in July, while core prices also registered a surprise drop, official data showed on Friday.

In a report, the Commerce Department said that producer prices fell by a seasonally adjusted 0.4% last month, worse than the forecast for a 0.1% advance and after a 0.5% gain in June.

Year-over-year, the producer price index (PPI) unexpectedly decreased 0.2%, compared to expectations for a gain of 0.2% and following a rise of 0.3% in the preceding month.

The core producer price index, that excludes food and energy, dropped by 0.3% in July, worse than forecasts for a gain of 0.2% and following a rise of 0.4% a month earlier.

Core producer prices increased at an annualized rate of 0.7% last month, below expectations for 1.2% advance and after rising 1.3% in the preceding month.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. Furthermore, when producers pay more for goods, they are more likely to pass price increases on to the consumer, so PPI could be considered a leading indicator of inflation.

Source Investing.com

Tiny German bank breaks taboo by charging rich clients for deposits

Business

A small cooperative bank in the Bavarian Alps is breaking a German taboo by charging wealthy clients to deposit their money following the European Central Bank's shift to negative rates.

Raiffeisenbank Gmund on the idyllic Tegernsee lake, home of wealthy actors and sports stars, will apply a custody charge of 0.4 percent to sight deposit accounts over 100,000 euros ($111,500.00) from September, a board member told Reuters. Such accounts allow depositors to withdraw their money at any time.

Several German banks have passed on the ECB's negative deposit rate to large commercial customers such as companies and institutional investors, but applying the charge to retail customers has been seen as a step too far.

"We have written to all large depositors and recommended that they think things over. If you don't create an incentive to change things then things don't change," Josef Paul said.

Cooperative direct bank Skatbank has applied negative rates on deposits over 500,000 euros since 2014, while ecological lender GLS bank, also part of the cooperative system, is asking customers for a "solidarity contribution" to help offset negative interest rates.

LAST RESORT

The ECB has resorted to a negative deposit rate to try to encourage banks to lend to stimulate Europe's economy, which is still suffering from the after-effects of the financial crisis. Banks, meanwhile, are seeking to encourage depositors to shift their cash out deposit accounts into other financial products.

Germany's cooperative banking association BVR said it did not expect other deposit takers in its network to follow Raiffeisenbank Gmund's lead.

"We don't believe retail banking will see widespread application of negative rates in Germany, not least because of the intense competitive situation in the German banking market," the BVR said.

Even in Gmund, the lion's share of customers are not affected. Paul's cooperative bank wrote to less than 140 clients, who together hold 40 million euros in deposits, about the new charge, which has already proved effective.

"Some of the customers we informed have opted for alternative investments and others moved their money to other banks," Paul said, adding that a widening of the charge to less wealthy customers is not planned.

Raiffeisenbank Gmund is one of the country's smaller cooperative lenders, with six branches and total assets of just 145 million euros. It has a substantial overhang of deposits, only part of which it manages to recycle as loans.

Bavaria's GVB cooperative banking association, with 269 member banks, backed Gmund's position.

"The ECB's extreme monetary policy is creating considerable costs for all banks," a GVB spokesman said.

"As a last resort, they also have to look at a means to be reimbursed for the cost of deposits," he said.

($1 = 0.8969 euros)

Source by Reuters

Global stocks head for another week of gains after Wall Street triple high

Stock market

World stocks were headed for their fourth week of gains in five on Friday after a surge in oil prices helped propel Wall Street's three main indexes to co-ordinated record highs for the first time since 1999.

MSCI's 46-country 'All World' index hovered at a one-year top as Europe's main bourses ran out of momentum having briefly hit a post-Brexit vote high in opening deals.

It followed Wall Street's landmark close and 1 percent plus gains in Tokyo and China overnight after some disappointing data there bolstered expectations that Beijing will be looking at its stimulus options again.

China's fixed asset investment from January to July increased by 8.1 percent from a year earlier, the slowest rate in more than 16 years and below expectations for 8.8 percent.

July retail sales rose 10.2 percent, versus 10.6 percent the previous month and a forecast 10.5 percent. Industrial output slightly missed expectations as it came in at 6 percent, while new bank lending was also slower than estimated.

"You have got the triple highs in the U.S equity markets and that basically shows you that risk appetite remains buoyant," said Societe Generale (PA:SOGN) strategist Alvin Tan.

"The Chinese data didn't have much of a market impact at all, and that speaks of a global macro environment that is very pro risk."

Oil prices helped. They held onto the 4 percent gains made on Thursday after a Saudi oil minister hinted at possible joint action between producers to stabilize prices and the International Energy Agency said it expected oversupply to start easing soon. [O/R]

Global benchmark Brent crude (LCOc1) climbed 0.3 percent to $46.18, set to end the week 4.7 percent higher and U.S. crude at $43.89 a barrel was on track for a 5 percent weekly rise.

"We are going to have a ministerial meeting of IEF (International Energy Forum) in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market," Saudi Energy Minister Khalid al-Falih had said.

DATA DUMP

Back in Europe, there was reassuring news from the bloc's largest economy Germany, where economic growth slowed less than expected in the second quarter thanks to solid exports and state and consumer spending.

Global markets will also sift through a slew of U.S. data, notably retail sales, due later in the session for latest cues about the world's largest economy and whether it is robust enough to withstand further monetary tightening.

U.S. retail sales are expected to show a 0.4 percent monthly increase in July, according to the median estimate of 64 economists polled by Reuters.

In currencies, the dollar rose after San Francisco Federal Reserve President John Williams told the Washington Post that the U.S. central bank should raise rates this year because of improving labor market conditions and the likelihood that inflation is heading higher.

The greenback was steady at 102.025 yen after gaining 0.7 percent on Thursday, and is heading for a 0.25 percent weekly rise. The euro was also flat at $1.11420 after losing 0.3 percent overnight. 

The dollar index, which tracks the greenback against a basket of six major peers, rose 0.06 percent to 95.913, but was on track for a loss of 0.3 percent for the week.

The New Zealand dollar slipped 0.2 percent after surging on Thursday to its highest in more than a year after its central bank cut interest rates by 25 basis points to 2.0 percent.

The Australian dollar dipped 0.2 percent , sapped by the data from China, the big buyer of its commodities, although it too was within touching distance of a year-high.

The rise in risk appetite weighed slightly on safe-haven gold . The precious metal inched up 0.1 percent to $1,339.86 an ounce after losing 0.6 percent overnight.

Euro zone bond yields also edged back from record lows as the rise in oil prices eased nagging deflation concerns and follow Williams' Federal Reserve rate hike comments.

"Since we had that drop to a record low in July, German bond yields have been pretty stable and oil prices will have a role in where we go from here," RBC's chief European macro strategist Peter Schaffrik said.

Source by Reuters

Forex - EUR/USD edges higher after positive E.Z. data

Forex

The euro edged higher against the U.S. dollar on Friday, after euro zone economic growth data came out in line with expectations and industrial production data was higher than anticipated.

EUR/USD hit 1.1159 during European morning trade, the session high; the pair subsequently consolidated at 1.1150, up 0.12%.

The pair was likely to find support at 1.1066, the low of August 9 and resistance at 1.1194, Thursday’s high.

Eurostat said that euro zone gross domestic product rose 0.3% in the second quarter, unchanged from the previous quarter and in line with consensus forecasts.

Year-on-year, GDP in the single currency bloc rose 1.6% in the second quarter, matching both the expansion in the first three months of the year and the forecast.

The data was released after Germany surprised markets earlier on Friday with growth of 0.4% in the second quarter, compared to the 0.2% increase expected.

A separate report showed that euro zone industrial production rose 0.6% in June, beating expectations for a 0.5% gain and after a 1.2% decline the previous month.

Investors were looking ahead to U.S. retail sales and consumer sentiment reports due later Friday for further hints on the timing of the Federal Reserve’s next rate hike.

The euro was also higher against the pound, with EUR/GBP adding 0.17% to 0.8613.

Source by Investing.com

Euro zone Q2 GDP rises 0.3%, in line with forecasts

Economy

Gross domestic product (GDP) in the euro zone rose as expected in the second quarter, according to preliminary official data released on Friday.

In a report, Eurostat said that GDP rose a seasonally adjusted 0.3%, compared to growth of the same amount in the preceding quarter and bang in line with consensus forecasts.

Year-on-year, GDP in the single currency bloc rose 1.6% in the second quarter, matching both the expansion in the first three months of the year and the forecast.

The euro zone data was released after Germany, the engine of its economy, surprised earlier on Friday with growth of 0.4%, compared to the 0.2% increase expected.

Immediately after the release, EUR/USD was trading at 1.1151, compared to 1.1156 ahead of the report, while EUR/GBP was at 0.8609 from 0.8611 earlier.

Meanwhile, European stock markets were trading mixed. The Euro Stoxx 50 dropped 0.07%, Germany's DAX fell 0.35%, France’s CAC 40 lost 0.15%, while London’s FTSE 100 rose 0.12%.

Source by Investing.com