Futures Fade As Chinese "Good News Is Bad News" For Fed, Oil Drops As Doha Concerns Emerge
By Tyler Durden
Good news is still bad news after all.
After last night’s China 6.7% GDP print which while the lowest since Q1 2009, was in line with expectations, coupled with beats in IP, Fixed Asset Investment and Retail Sales (on the back of $1 trillion in total financing in Q1)…
… the sentiment this morning is that China has turned the corner (if only for the time being). And that’s the problem, because while China was a good excuse for the Fed to interrupt its rate hike cycle as the biggest “global” threat, that is no longer the case if China has indeed resumed growing. As such Yellen no longer has a ready excuse to delay. This is precisely why futures are lower as of this moment, because suddenly the “scapegoat” narrative has evaporated.
The other key event that will set the market tone today is this Sunday’s OPEC meeting in Doha. As a result, crude prices have softened for a third day in a row in the wake of comments that the Iranian Oil Minister will not attend the meeting (however the OPEC governor will be present). This will undoubtedly have potential ramifications for negotiations this weekend as Iran are seen as a key player in striking a deal given their resistance to such a deal. Therefore, the absence of the Iranian oil minister could be seen as a negative for what is already set to be a difficult weekend of discussions.
“The worst outcome for them would be if the meeting happened and some really negative sentiment came out of it – a producer, particularly Iran, came out and said the deal is not on the table,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd., said in an interview with Bloomberg Television. “OPEC don’t want prices to go back down.”
Citi further soured the mood with a report that the Doha meeting is “is all about nothing, no matter what agreement might be forged,” and warns to expect a “sharp oil market sell-off” on Monday if there’s no accord, while a slower sell-off will occur if there’s a formal agreement with “no teeth.”
Elsewhere, European stocks little changed, with investors wary of potential disappointment from the talks. Europe halted a five-day advance. German bonds pared their first weekly drop in more than a month. South Korea’s won led gains in Asian currencies as a flood of Chinese data added to evidence that the world’s second-largest economy is stabilizing. Standard & Poor’s 500 Index futures slipped 0.2 percent, after equities ended little changed on Thursday amid gains in banks and declines in technology companies. Citigroup Inc. is scheduled to report quarterly earnings Friday.
In summary: the final session of the week sees the weekend’s Doha meeting take full focus as the energy complex guides price action through much of the morning. WTI and Brent both started the session at elevated level as many participants forecast some form of deal between OPEC and non OPEC nations in an attempt to freeze oil …read more
Source: Futures Fade As Chinese "Good News Is Bad News" For Fed, Oil Drops As Doha Concerns Emerge
