April 19, 2018, by Lorcan Roche Kelly
The turmoil in metal markets unleashed by U.S. sanctions on Oleg Deripaska’s United Co. Rusal has spread far beyond the aluminum price. While the latter has rallied more than 30 percent since the start of this month, concern over further actions from U.S. officials has seen nickel surge to a three-year high in recent days, helping to push Bloomberg’s commodity index to the highest level since 2015. Rusal, meanwhile, is in discussions with the Chinese on a deal that would allow it to buy and sell aluminum in the Asian country as it seeks to mitigate the fallout from sanctions, according to people familiar with the talks.
It’s not just metals that are on the up, with a barrel of West Texas Intermediate for May delivery trading above $69.00 a barrel this morning, and Brent at $74.13 by 5:50 a.m. Eastern Time. The rally in the latter benchmark is drawing closer to the $80 level that Saudi Arabia signaled last week it covets in order to finance the government’s policy agenda and to support the valuation of Aramco ahead of an initial public offering. Technical signals suggest that the current move higher in prices could persist to a level close to $82. Attention now turns to whether OPEC and its allies will indicate an extension of supply cuts at an April 20 meeting in Saudi Arabia.
Traders are getting nervous about a measure of Wall Street anxiety. Yesterday’s jump in the Cboe Volatility Index, also known as the VIX, saw futures settle well above the day’s range, causing investors to ask questions on the possible manipulation of the measure. Cboe Global Markets Inc. declined to comment on the move. Last month the CEO said that “if our regulatory team were to uncover any manipulation, it would be rooted out, swiftly and decisively. Period.”
Overnight, the MSCI Asia Pacific Index climbed 0.5 percent, while Japan’s Topix index closed little changed and Malaysia’s benchmark FTSE Bursa Malaysia KLCI Index ended the session at a record high. Trading was subdued in Europe, and the Stoxx 600 Index was broadly unchanged by 5:50 a.m. Miners were among the best performers. S&P 500 futures were slightly lower, the 10-year Treasury yield was at 2.891 percent and gold was flat.
It’s Thursday, so initial jobless claims data are due at 8:30 a.m., with expectations for a slight decrease to 230,000 from last week’s 233,000. Bank of New York Mellon Corp. and Blackstone Group are reporting earnings. More than a generation of Castro rule of Cuba ends today when Miguel Diaz-Canel takes over the presidency from Raul Castro.