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Oil falls below $43/bbl on virus fears, still heads for weekly gain

LONDON (Reuters) – Oil fell below $43 a barrel on Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, although crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.

The United States reported more than 55,000 new coronavirus cases on Thursday, a new daily global record for the pandemic. The rise in cases suggested U.S. jobs growth, which jumped in June, could suffer a setback.

“If this trend continues, oil demand in the region is at risk,” said Louise Dickson of Rystad Energy.

Brent crude LCOc1 was down 38 cents, or 0.9%, at $42.76 a barrel by 12:03 p.m. EDT (1603 GMT), and U.S. West Texas Intermediate (WTI) crude CLc1 fell 44 cents, or 1.1%, to $40.21.

U.S. trade was thinned by the Independence Day holiday.

“The fragile U.S. economic rebound is at risk of being undone by the latest surge in new infections,” said Stephen Brennock of oil broker PVM.

Both benchmarks rose more than 2% on Thursday, buoyed by strong U.S. June jobs figures and a drop in U.S. crude inventories. [EIA/S] Brent is still on track for a weekly gain of 4%.

Signs of economic recovery, and a drop in supply after a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have helped Brent more than double from a 21-year low below $16 reached in April.

Boosting recovery hopes, a private survey showed on Friday that China’s services sector expanded at the fastest pace in over a decade in June.

OPEC oil production fell to its lowest in decades in June [OPEC/O] and Russian production has dropped to near its OPEC+ target.

The bankruptcy filing of U.S. shale pioneer Chesapeake Energy also supported prices by raising expectations production will decline, JBC Energy said in a report.

Gasoline demand will be closely watched as the United States heads into the July 4 holiday weekend.

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Oil falls below $43 on virus fears, still heads for weekly gain

SEOUL/LONDON (Reuters) – Oil fell below $43 a barrel on Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, although crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.

The United States reported more than 55,000 new coronavirus cases on Thursday, a new daily global record for the pandemic. The rise in cases suggested U.S. jobs growth, which jumped in June, could suffer a setback.

“If this trend continues, oil demand in the region is at risk,” said Louise Dickson of Rystad Energy.

Brent crude LCOc1 was down 54 cents, or 1.3%, at $42.60 a barrel by 1210 GMT, and U.S. West Texas Intermediate (WTI) crude CLc1 fell 53 cents, or 1.3%, to $40.12.

“The fragile U.S. economic rebound is at risk of being undone by the latest surge in new infections,” said Stephen Brennock of oil broker PVM.

Both benchmarks rose more than 2% on Thursday, buoyed by strong U.S. June jobs figures and a drop in U.S. crude inventories. [EIA/S] Brent is still on track for a weekly gain of more than 5%.

Signs of economic recovery, and a drop in supply after a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have helped Brent more than double from a 21-year low below $16 reached in April.

Boosting recovery hopes, a private survey showed on Friday that China’s services sector expanded at the fastest pace in over a decade in June.

OPEC oil production fell to its lowest in decades in June [OPEC/O] and Russian production has dropped to near its OPEC+ target.

The bankruptcy filing of U.S. shale pioneer Chesapeake Energy also supported prices by raising expectations production will decline, JBC Energy said in a report.

Gasoline demand will be closely watched as the United States heads into the July 4 holiday weekend.

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Daimler's Mercedes-Benz to streamline global production network

FRANKFURT (Reuters) – Daimler’s (DAIGn.DE) Mercedes-Benz is seeking to streamline global production, the German carmaker said on Friday, resulting in a restructuring charge of hundreds of millions of euros in the second quarter.

As part of that effort, it is exploring the sale of a car assembly plant in Hambach, France, it said.

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COVID recovery vs COVID reality

LONDON (Reuters) – World shares inched towards a four-month high on Friday and industrial bellwether metal copper was set for its longest weekly winning streak in nearly three years, as recovering global data kept nagging coronavirus nerves at bay.

The market rally fuelled by record U.S. jobs numbers had largely blown itself amid a spike in U.S. COVID cases, though the fastest expansion in China’s services sector in over a decade and more stimulus ensured optimism remained.

Chinese shares had charged to their highest level in five years [.SS], helping the pan-Asian indexes to 4-month peaks, so the sight of European markets stalling early on took some traders by surprise.

Currency and commodity markets also had a subdued feel after an otherwise strong week for confidence-sensitive stalwarts such oil, copper </MCU3=LX>, sterling and the Australian dollar, which all struggled on Friday.

“I think infection rates and fears of localised lockdowns have doused some of the enthusiasm,” said Societe Generale strategist Kit Jukes.

“We have three elements now; vaccine hopes, decent data in most places but also the return of infection rates which can make you nervous.”

Against a basket of currencies, the dollar rose slightly in early London trading. It was up less than 0.1% at 97.306 and still firmly on track for its biggest weekly fall since the first week of June.

The euro was down at $1.1226 and though it gained against the safe Swiss franc it fell versus the sometimes commodity-driven Norwegian crown.

S&P 500 futures were down 0.2% but volumes were lower than usual due to a U.S. markets holiday on Friday for Independence Day.

U.S. nonfarm payrolls surged by 4.8 million jobs in June, above the average forecast of 3 million jobs in June, thanks to rises in the hard-hit hospitality sectors.

But economists noted there were caveats to the upbeat headline figures.

The number of permanent job losers continued to rise, increasing by 588,000 to 2.9 million in June while the unemployment rate remains a chunky 7.6 percentage points above its February level. A Deutsche Bank analysis put the U.S. unemployment rate behind all its developed market peers barring Canada.

The recovery also faces more headwinds as a surge of new coronavirus infections prompts U.S. states to delay and in some cases reverse plans to let stores reopen and activities resume.

More than three dozen U.S. states saw increases in COVID-19 cases, with cases in Florida spiking above 10,000.

Nevertheless markets are largely overlooking the spikes, taking the view that overall the situation was still improving overall.

Ten-year German government bond yields are up 5 basis points this week and set for their biggest weekly rise in a month, though they nudged down on Friday to -0.44%. Riskier Italian yields fell to 1.26% as well though, which is their lowest since late March. [GVD/EUR]

Oil prices also eased after an otherwise solid week. Brent crude fell 0.65% to $42.86 a barrel while U.S. crude dropped 0.66% to $40.38 a barrel. Both were around $25 this time two months ago.

Copper prices were poised for a seventh consecutive weekly gain, their longest winning streak in nearly three years, despite a slight easing on the day after top supplier Chile had assured traders about supply.

Three-month LME copper was hovering at $6,040 a tonne, more than $1,500 up from lows it ploughed to in March. [/MET/L]

“The one issue that hangs over all the markets is will we see a surge in secondary infections that will trigger a second wave of national rather than regional shutdowns?” Malcolm Freeman, director of Kingdom Futures, wrote in a note.

(GRAPHIC: China recovery – here)

(GRAPHIC: COVID-19 in U.S. – here)

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Citi targets more growth in Saudi Arabia after adding over 20 bankers in two years

DUBAI (Reuters) – Citigroup (C.N) is planning to hire more bankers in Saudi Arabia for its direct custody business after adding more than 20 for onshore capital markets in the last two years, its Europe, Middle East and Africa head said.

The bank, which following a 13-year hiatus returned to Saudi Arabia in 2018 after being granted a capital markets licence, said last year it would also expand its direct custody and clearing services to the oil-rich kingdom.

David Livingstone told a conference on Thursday that while there was no set time-table for the lender to obtain a full banking licence in Saudi Arabia, the outlook for financial sector activity is positive.

“That is something we want to participate very strongly in,” he said. “Recently we secured our direct custody and services licence and we will be growing that business.”

The division provides services from trading execution to clearing to institutional investor clients.

Citigroup was among the banks that advised Saudi Aramco (2222.SE) on the oil giant’s record $29.4 billion initial public offering last year and in April advised the Saudi government on a $7 billion three-tranche bond sale.

Asked whether Citigroup is more cautious about lending to Middle East producers given lower oil prices, he said “on balance, no”.

Brent crude LCOc1 is trading at around $42 a barrel, recovering from recent lows due to output cuts by oil producers, but is still down from over $60 a barrel at the start of the year, as the coronavirus pandemic crimped demand.

Livingstone said the low cost base of many Middle Eastern producers gave them greater ability to withstand “lower for longer” oil prices than those in some other parts of the world.

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Exclusive: JPMorgan drops terms 'master,' 'slave' from internal tech code and materials

NEW YORK (Reuters) – JPMorgan Chase & Co (JPM.N) is eliminating terms like “blacklist,” “master” and “slave” from its internal technology materials and code as it seeks to address racism within the company, said two sources with knowledge of the move.

The terms had appeared in some of the bank’s technology policies, standards and control procedures, as well in the programming code that runs some of its processes, one of the sources said.

Other companies like Twitter Inc (TWTR.K) and GitHub Inc adopted similar changes, prompted by the renewed spotlight on racism after the death of George Floyd, a Black man who died in police custody in Minneapolis in May. here

The phrases “master” and “slave” code or drive are used in some programming languages and computer hardware to describe one part of a device or process that controls another.

“Blacklist” is used to describe items that are automatically denied, like a list of websites forbidden by a company’s cybersecurity division. “Whitelist” means the opposite – a list of items automatically approved.

Floyd’s death has sparked a re-examination of words that might carry racial overtones. For example, some realtors are no longer using the term “master bedroom,” and Universal Music Group’s Republic Records stopped using the word “urban” to describe music genres and internal departments or roles.

JPMorgan appears to be the first in the financial sector to remove most references to these racially problematic phrases, and it comes after the bank has said it is taking other steps to promote Black professionals and anti-bias culture training for staff.

Columbia Business School programming professor Mattan Griffel said such terms have long been controversial and can be difficult to change.

The technology that underpins bank operations is often a spaghetti-like mess that results from merged companies, decades-old code and third-party systems, and any change can have cascading effects that are difficult to predict, Griffel said.

Changing these terms within the bank’s code could take millions of dollars and months of work, Griffel said.

“This is not a trivial” investment by the bank, Griffel said. “This kind of language and terminology is so entrenched. It has to (change) and now is as good a time as any.”

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UOB joins DBS to make second rate cut this year on flagship savings account

SINGAPORE (THE BUSINESS TIMES) – UOB has joined its Singapore banking peers in deepening cuts to interest rates tied to flagship savings accounts, reflecting the prolonged low-interest rate environment.

Singapore’s third-largest retail bank will from Aug 1 lower all rates on its UOB One account for account balances up to $75,000.

It notified customers this week, as did DBS on reducing rates on DBS’s Multiplier account.

The UOB One account offers customers tiered interest rates that are stepped up as customers grow their account balance as well as meet the minimum card spend and transact more with the bank. The bank tiers rates on its UOB One Account by attaching a higher rate per subsequent increment of $15,000 in the account balance.

For customers that meet the minimum card spend of $500 per month, interest payouts for account balances up to $75,000 will be slashed to 0.25 per cent per annum, compared with the prevailing rate of 0.5 per cent per annum.

Customers who meet the minimum card spend and credit their salary or make three GIRO debit transactions will see cuts on rates that are stepped up per $15,000-tier.

As an example, interest earned on the first $15,000 will be reduced to 0.75 per cent per annum from the current 1.25 per cent per annum. For customers in this category, interest earned on the next $15,000 will be cut to 0.85 per cent per annum, from the current 1.3 per cent per annum.

This means that the maximum interest earned on a balance of $30,000 will be $240 per annum, from Aug 1.

There will be no change to the qualifying criteria for bonus interest on the UOB One account. The interest rate of 0.05 per cent per annum for balances above $75,000 will also remain.

UOB said in a statement on its website: “Given the prolonged impact of the Covid-19 pandemic, countries around the world are anticipating economic contractions and central banks have kept their interest rates low to provide support to the economy. As a result, the low interest rate environment is expected to remain for some time.”

On Wednesday, Singapore’s largest bank DBS announced plans to cut rates on its flagship Multiplier account for the second time this year. Its latest changes will affect interest rates that are applied to account balances of up to the first $50,000 from Aug 1.

OCBC and Standard Chartered have also cut rates on their respective flagship savings accounts as at July 1. OCBC earlier made tweaks to its OCBC 360 account in May.

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Dollar in narrow range as U.S. virus cases grow

TOKYO (Reuters) – The dollar was hemmed into a narrow range on Friday, supported by safe-haven flows as a resurgence of the coronavirus in the United States discouraged some investors from taking on excessive risk.

The yuan was stable in offshore trade before data on China’s services sector, but investors may avoid taking big positions due to worries about diplomatic friction between Washington and Beijing over civil liberties in Hong Kong.

The U.S. economy added more jobs than expected in June, data showed on Thursday, but reaction in the currency market has been muted because another spike in coronavirus infections threatens to once again put the breaks of economic activity.

“New infections in the United States have been on an uptrend since June,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities.

“The market is leaning more toward buying the dollar, particularly against emerging market currencies, because the dollar is considered the safest asset around.”

Against the euro EUR=D3, the dollar was quoted at $1.2395 on Friday in Asia.

The dollar held steady at 0.9469 Swiss franc CHF=D3 on Friday after three straight days of gains.

The British pound GBP=D3 traded hands at $1.2471.

The dollar was little changed at 107.50 yen JPY=EBS.

A wave of coronavirus infections has prompted the halting of or back-pedalling on plans to reopen economic activity in several U.S. states after months of strict lockdowns.

Officials are also taking steps to curtail activity during the extended Independence Day holiday weekend starting on Friday.

Trading in currency markets on Friday may be subdued before the U.S. holiday, but analysts say sentiment favours more gains in the dollar as investors turn cautious.

Relations between the United States and China are also in focus.

The U.S. Senate unanimously approved legislation on Thursday to penalize banks doing business with Chinese officials who implement Beijing’s new national security law for Hong Kong, raising the chances of further friction between the world’s two- largest economies.

In the offshore market, the yuan CNH=D3 was little changed at 7.0732 per dollar.

The Australian dollar AUD=D3 held steady at $0.6917 on Friday before data expected to show a sharp rebound in retail sales in May.

Across the Tasman Sea, the New Zealand dollar NZD=D3 traded at $0.6509.

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Wall Street jumps on record payrolls surge

NEW YORK (Reuters) – Wall Street advanced on Thursday as investors headed into their long holiday weekend buoyed by a record payrolls jump, which provided assurance that the U.S. economic recovery was well under way.

All three major U.S. stock averages were more than 1% higher, with the S&P 500 set to post its fourth straight daily advance and the Nasdaq on course to reach a second straight all-time closing high.

Massive stimulus and hopes for a speedy economic rebound have returned the S&P 500 and the Nasdaq to about 7% and 12% below their record highs reached in February.

The indexes are all on track for solid weekly percentage gains.

The U.S. economy added 4.8 million jobs in June according to the Labor Department, 1.8 million more than analysts expected, setting a second consecutive record.

Massive rehiring sent the unemployment rate down to 11.1%.

“A lot of these numbers when you dig into the report – average weekly hours people are working, average hourly earnings … those things are just showing that we are getting back to work,” said Justin Hoogendoorn, head of Fixed Income Strategic Analytics at Piper Sandler in Chicago. “And that’s what’s going to allow the stock market to continue to perform well.”

Even with May and June’s consecutive record payroll gains, the labor market has still recovered only a fraction of the 22 million jobs lost in the March-April plunge.

The recovery of the U.S. economy, now in its sixth month of recession, could stall as new cases of COVID-19 hit record levels and several states hit hardest by the resurgence halted or reversed plans to reopen their economies.

On Thursday, Florida reported a record-shattering 10,000 new cases of the disease, worse than any European country reported at the peak of their outbreaks.

In the coming weeks, market participants will train their focus on second-quarter reporting season. In aggregate, analysts now expect S&P earnings to have dropped by 43.1% as companies grappled with plunging demand and disrupted supply chains.

The Dow Jones Industrial Average rose 298.31 points, or 1.16%, to 26,033.28, the S&P 500 gained 36.36 points, or 1.17%, to 3,152.22 and the Nasdaq Composite added 120.31 points, or 1.18%, to 10,274.94.

All 11 major sectors in the S&P 500 were trading in the black, with energy shares enjoying the largest percentage gain.

Microsoft Corp provided the biggest boost to the S&P 500 and the Nasdaq, and in June retained its top spot as the most globally invested stock, according to data from trading platform eToro.

Airlines, battered by pandemic-related travel restrictions, gained altitude. The S&P 1500 Airlines index was up 1.2%

Tesla Inc jumped 7.8% after the electric car maker’s second-quarter vehicle deliveries beat Wall Street estimates.

Advancing issues outnumbered declining ones on the NYSE by a 2.98-to-1 ratio; on Nasdaq, a 1.68-to-1 ratio favored advancers.

The S&P 500 posted 35 new 52-week highs and no new lows; the Nasdaq Composite recorded 115 new highs and 10 new lows.

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Cyclical rally, U.S. jobs data drive European stocks to one-week high

(Reuters) – European shares closed at a one-week high on Thursday as hopes of a COVID-19 vaccine and a better-than-expected rebound in U.S. hiring overshadowed concerns about surging coronavirus infections.

The pan-European STOXX 600 rose 2%, easing slightly from highs hit after data showed the U.S. economy created a record 4.8 million jobs in June as more restaurants and bars resumed operations.

Banks .SX7P were the top gainers in Europe, jumping 4.3% to mark their best day since June 5, while other cyclical sectors such automakers .SXAP, chemicals .SX4P and insurance companies .SXIP gained between 2.5% and 3.4%.

Equity markets started the second half of the year on a positive note earlier this week, as a COVID-19 vaccine developed by German biotech firm BioNTech (BNTX.O) and U.S. giant Pfizer (PFE.N) was found to be well-tolerated in early stage human trials, while business surveys showed a slump in global manufacturing eased in June.

“The market response is likely to be positive, but inevitably tinged with growing concerns that the recovery is already losing steam,” said Seema Shah, chief strategist at Principal Global Investors.

“With the closings having been reversed or paused across 40% of the U.S., July’s job report may paint a much weaker story.”

Raising risks of fresh lockdowns, new U.S. cases of COVID-19 jumped nearly 50,000 on Wednesday, according to a Reuters tally, marking the biggest one-day rise since the start of the pandemic.

Further adding to concerns, Britain and the European Union failed to make progress in talks on post-Brexit relations this week due to major differences, officials said.

Among individual movers, Associated British Foods (ABF.L) gained 4.1% after saying trading in its Primark fashion stores that reopened after the lockdown has been “reassuring and encouraging”.

Scandal-hit Wirecard (WDIG.DE) slumped 35.4% after police and public prosecutors raided its headquarters in Munich and four properties in Germany and Austria.

Dutch construction company BAM Groep (BAMN.AS) dropped 11.6% as it warned of a “significant” loss in the first half of the year.

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