Natural gas prices rose to a 4-month high. China released mixed data

Overall, positive first-quarter earnings results are supporting the stock. First-quarter earnings are expected to grow 7.1% YoY, well above the pre-reporting season guidance of 3.8%.

WTI crude oil prices rose above $79 per barrel on Friday, helped by a recent decline in US crude inventories and growing optimism that the US Federal Reserve will cut interest rates this year. EIA data showed that US crude inventories fell by 2.508 million barrels last week, declining in the second week and beating estimates for a 1.362 million barrel decline. The April data also pointed to a slowdown in the US consumer inflation, reinforcing expectations of a Fed rate cut that could support economic growth and energy demand.

The US natural gas futures rose more than 3% to $2.5/MMBtu, the highest in four months after the EIA reported a smaller-than-expected increase in storage inventories. The US utilities added 70 billion cubic feet of gas to storage last week, below market expectations of a 76 billion cubic feet increase. However, the report also showed that the US gas inventories are 30.8% above the 5-year average. Weather prognoses point to a shift to warmer-than-normal temperatures through May 31, which will increase gas consumption by power generators to meet electricity demand for air conditioning.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.39%, China’s FTSE China A50 (CHA50) gained 0.77% for the day, Hong Kong’s Hang Seng (HK50) added 1.59% and Australia’s ASX 200 (AU200) was positive 1.65%.

The offshore yuan slid to around 7.23 per dollar as traders reacted to mixed economic data from China. The latest data showed that industrial production rose more than expected in April, while retail sales rose less. While government incentives aimed at boosting production have shown to be effective, initiatives aimed at consumer spending, such as trade-in programs and tax cuts, have lagged behind. Further worrying is that data shows a further decline in real estate investment between January and April, raising concerns about the effectiveness of China’s real estate bailout plan. Meanwhile, China’s finance ministry auctioned its first batch of special treasury bonds on Friday, marking the start of a long-awaited economic stimulus program.

Malaysia’s economy grew by 4.2% year-on-year in the first quarter of 2024, compared to initial and market estimates of 3.9%, and accelerated from the downwardly revised growth of 2.9% in the previous three-month period. This was the fastest economic growth in exactly one year, mainly due to positive contributions from almost all sectors.