Natural gas hits a 4-year low. DE40 and JP225 indices break multi-year records

Thursday’s US economic reports were bearish for the dollar. On the bearish side, retail sales for January fell 0.8% m/m, which was weaker than expectations of 0.2% m/m and was the biggest decline in 10 months. In addition, manufacturing output for January unexpectedly declined by 0.5% m/m, weaker than expectations of no change. On the bullish side, weekly initial jobless claims unexpectedly fell by 8,000 to 212,000, indicating a stronger labor market than expectations of a rise to 220,000.

WTI crude oil futures settled at $77.5 per barrel on Friday, rising for the second week in a row, helped by geopolitical uncertainty in the Middle East and OPEC+ efforts to curb oil supplies. Oil prices also jumped more than 1% on Thursday as weaker-than-expected US retail sales data caused the dollar to decline. Meanwhile, the International Energy Agency warned in its monthly report that global oil demand is losing momentum, noting a sharp drop in demand in China. The IEA revised its 2024 global oil demand forecast to 1.22 million barrels per day from 1.24 million barrels per day.

The US natural gas futures fell to $1.59/MMBtu, the lowest level since June 2020, after the EIA reported less than expected gas in storage. According to government data, US utilities pulled 49 billion cubic feet of natural gas from storage, less than the market’s expectation of 67 billion cubic feet, as warmer-than-normal weather reduced heating demand. The report also showed that gas in storage was 15.9% above the seasonal norm.

Asian markets traded mixed on Thursday. Japan’s Nikkei 225 (JP225) was up 1.30% for the day, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) added 0.36%, and Australia’s ASX 200 (AU200) ended the day positive 1.23%.

On Friday, the Nikkei 225 Index jumped 1.8% to surpass 38,800, reaching its highest level in 34 years and coming close to the record highs reached during Japan’s economic bubble in the late 1980s. The Topix Index also rose 1.3 % to 2,625. The changes came a day after Japan lost its place as the world’s third-largest economy to Germany and entered a technical recession. The recession data reinforced expectations that the Bank of Japan will maintain its ultra-loose monetary policy.

Malaysia’s economy grew 3% year-on-year in Q4 2023, compared to initial and market estimates of 3.4%. Private consumption growth slowed (4.2% vs. 4.6% in Q3), and net trade contributed negatively to GDP as imports fell by 2.9% (vs. -11.1%) and exports fell much faster by 6.3% (vs. -12%). On the contrary, the growth of public expenditures (7.3% vs. 5.8%) and investments in fixed assets (6.4% vs. 5.1%) accelerated.