The COVID/Brexit cocktail: UK lost market share in U.S., Germany and China – report 

LONDON – The United Kingdom lost market share in the United States, Germany and China during the COVID-19 pandemic due to global trade chaos, Brexit and poor productivity, according to new research published on Monday.

The United Kingdom performed particularly badly due to a long-term stagnation in productivity growth, according to the report by Aston University’s Lloyd’s Banking Group Centre for Business Prosperity.

While all countries grappled with the tumult of COVID-19, the United Kingdom lost market share in its biggest export markets – the United States and Germany, the research showed.

“In some key export destinations – Germany, the UK and China – the UK seems to have suffered a sharper decline, experienced a slower recovery, and seen its global competitiveness dwindle,” the report said.

“The UK’s decline in exports to the U.S. appeared the sharpest in both absolute and relative terms and the most prolonged among the major European countries (except for France).”

Between 2017 and 2019, the UK increased total exports to Germany by 8.5% – less than the export growth achieved by Italy (12%), the Netherlands (14%) and Spain (20%), as well as the United States (24%).

Full coverage: REUTERS 

Texas power regulator rejects request to cut $16 billion in charges during freeze 

HOUSTON – Texas’ state power regulator on Friday unanimously vetoed a request to cut about $16 billion from state power charges during the final day of the state’s February cold snap, saying even a partial repricing could have unintended effects.

The Public Utility Commission deferred voting on a separate proposal to slice service fees that would have saved retail electric providers about $1.5 billion for power never provided. Both proposals were recommended by the state’s independent power market adviser.

Total electricity charges jumped by about $47 billion during a winter storm that knocked out nearly half of Texas power plants, hiking prices for gas and power that have roiled the state’s energy sector. Storm-related costs sent one company into bankruptcy and a dozen more face being unplugged from the state’s grid for non-payment.

“The PUC choose to ignore the recommendation of the economists hired by the state to advise regulators,” Brandon Young, chief executive of Payless Power, an electricity marketer, said in an interview. “As a result, $16 billion in costs are being passed to all electric providers -retail electric, municipal providers and cooperatives.”

The state’s grid operator had raised power prices to $9,000 per megawatt hour, to induce power plant operator to increase power or stay running for five days. However, that 450-times-the-usual price remained in place after the emergency passed, adding about $16 billion to the total.

State market adviser Carrie Bivens described that final day’s pricing as a mistake by grid operator Electric Reliability Council of Texas (ERCOT), recommending the PUC “correct ERCOT’s real time prices.”

Revising prices could hurt the companies that had hedged their power costs and result in greater uncertainty, said commissioners.

Full coverage: REUTERS 

WORLDWIDE: FINANCE / MAREKTS  

Dollar falls against commodity currencies but holds gains versus yen 

TOKYO – The dollar fell against the currencies of major commodity exporters on Monday as investors increased bets on countries that will benefit from rising prices for oil, metals, and other goods.

The dollar also fell slightly against the British pound and the euro, but held at multi-month highs against the yen and the Swiss franc because of rising Treasury yields.

Analysts said that sentiment for the dollar has improved because of positive economic data and progress in passing a $1.9 trillion stimulus package, but that the greenback would continue to struggle against commodity currencies amid strong expectations for a rebound in global trade.

“We are seeing a significant divergence in the dollar,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities.

“Commodity prices simply aren’t coming down, so there’s no way the dollar can rise against the Aussie and kiwi. However, the dollar will remain strong against the yen because yields are the main driver.”

The Australian dollar rose 0.3% to $0.7702, while the New Zealand dollar gained 0.18% to reach $0.7177. The antipodean currencies are both in demand because of their links to the global commodities trade.

The U.S. currency fell 0.38% against the Norwegian crown to 8.5283 and eased slightly to 1.2637 Canadian dollars as traders bought the currencies of oil exporters.

Full coverage: REUTERS 

Shares, dollar celebrate U.S. stimulus, oil at one-year top 

SYDNEY – Asian shares rallied on Monday while the dollar held near three-month peaks after the U.S. Senate passage of a $1.9 trillion stimulus bill and a surprisingly strong payrolls report augured well for a global economic rebound.

There was also upbeat news in Asia, as China’s exports surged 155% in February compared with a year earlier when much of the economy shut down to fight the coronavirus.

BofA analyst Athanasios Vamvakidis argued the potent mix of U.S. stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar, and a drag for bonds.

“Including the current proposed stimulus package and further upside from a second-half infrastructure bill, total U.S. fiscal support is six times greater than the EU recovery fund,” he said. “The Fed is also supportive with U.S. money supply growing two times faster than the Eurozone.”

The prospect of yet faster growth helped MSCI’s broadest index of Asia-Pacific shares outside Japan firm 0.4%. Japan’s Nikkei gained 1.2%, while S&P 500 futures rose 0.3%, after a sharp turnaround on Friday.

Equity investors took heart from U.S. data showing nonfarm payrolls surged by 379,000 jobs last month, while the jobless rate dipped to 6.2% in a positive sign for incomes, spending and corporate earnings.

U.S. Treasury Secretary Janet Yellen tried to counter inflation concerns by noting the true unemployment rate was nearer 10% and there was still plenty of slack in the labour market.

Full coverage: REUTERS 

Brent cracks $70 for first time since pandemic began after Saudi facilities attacked 

SINGAPORE – Brent crude futures jumped above $70 a barrel on Monday for the first time since the COVID-19 pandemic began, while U.S. crude touched its highest in more than two years, following reports of attacks on Saudi Arabian oil facilities.

Brent crude futures for May reached $71.16 a barrel in early Asian trade and were at $70.76 a barrel by 0036 GMT, up $1.40, or 2%. U.S. West Texas Intermediate (WTI) crude for April rose $1.32, or 2%, to $67.41. The front-month WTI price touched $67.86 a barrel earlier, the highest since October 2018.

“Oil prices have spiked higher this morning after Iran-backed Houthi rebels unleashed a coordinated attack on Saudi Arabia oil facilities and military bases,” Stephen Innes, chief global markets strategist at Axi said in a note.

Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports, in what Riyadh called a failed assault on global energy security.

Brent and WTI prices are up for the fourth consecutive session after OPEC and their allies decided to keep production cuts largely unchanged in April.

Despite fast-rising crude prices, Saudi Arabia’s oil minister has voiced doubts on demand recovery.

Still, the energy minister in the world’s third-largest crude importer, India, said higher prices could threaten the consumption led-recovery in some countries.

Full coverage: REUTERS