A dive in oil prices sent stock markets lower on Monday after producers meeting in Qatar failed to agree on a plan to curb global supply, quashing the more optimistic tone which prevailed for much of the past week. Japan's Nikkei index led the way, tumbling more than 3 percent after a devastating earthquake in the southwest of the country, with signs from a summit in Washington that other Group of 20 governments oppose intervention against the strength of the yen also playing a role. Europe's major exchanges all fell by more than half a percent on opening .FTEU3, while markets in Hong Kong .HSI and Shanghai .CSI300 .SSEC lost around 1 percent. Oil prices were down 4 percent on the day, with U.S. crude falling back below $40 for the first time in a week. Some 18 oil-exporting nations, including OPEC members, had gathered in Doha, the capital of Qatar, over the weekend in an attempt to agree to stabilise output at January levels until October 2016. The pact fell apart after Saudi Arabia demanded that Iran join in. "The short-term impact on prices is clear to see this morning, while longer term it’s hard to see supply slowing much this year," said Joe Rundle, Head of Trading at ETX Capital in London. "In the end it proved just too much for the Saudis to cut a deal with Iran." The plunge in crude oil prices took a large slice out of commodity currencies, pushing the dollar almost 1 percent higher against its Canadian counterpart to C$1.2926. The yen, traditionally a target for capital in times of global stress, hit a 3-year high against the euro . It rose half a percent against the dollar but was still well short of highs of 107.63 yen per dollar hit a week ago. The 7.3 magnitude quake struck early on Saturday and was centred in Japan's Kumamoto prefecture, an important manufacturing hub. Shares of Sony Corp fell almost 7 percent after the electronics giant said its image sensors plant in Kumamoto would remain suspended. Toyota Motor Corp tumbled 4.8 percent after suspending production at plants across Japan due to disruptions to its supply chain.  "Many are waiting for the dust to settle as it is not yet possible to quantify the damage in its entirety," said Martin King, co-managing director at Tyton Capital Advisors. One big exception to the rule was Brazil, where stock markets are expected to react euphorically to a vote to impeach President Dilma Rousseff that looked set to force her from office after 13 years of leftist Workers Party rule. Brazil's stocks and currency have been among the world's best-performing assets in recent weeks on growing bets that Rousseff would be removed from office, allowing her successor to adopt more market-friendly policies. "Brazilian assets will most likely react positively to news of Rouseff's impeachment," analysts from retail broker Swissquote said in a note. "But we expect the overall risk-off sentiment to cap the potential gains." (Source: reuters.com)

Funds Are Betting the Gravity-Defying Gold Rally Isn't Over Yet

When it comes to gold, hedge funds are betting that what goes up will continue to go up. Even after bullion’s best start to a year since at least 1975, investors are positioning themselves for more gains. Money managers increased their wagers on a price rally to the highest since 2012, taking their optimism to a level last seen before a three-year bear market started. The metal has jumped 17 percent this year. Federal Reserve officials are cautious about raising U.S. interest rates amid persistent risks facing the global outlook. Investors are snapping up bullion as the shaky economy picture spurs haven demand, while low borrowing costs keep the metal competitive against interest-bearing assets. “There’s a lot of fundamental uncertainty out there, and of course gold has long-term stability,” said John Crumb, the chief strategy officer who helps oversee $1.7 billion at investment firm GoldMoney in Vancouver. “The upside is still greater than the downside.” The net-long position in gold futures and options jumped 13 percent to 184,218 contracts in the week ended April 12, according to Commodity Futures Trading Commission data released three days later. That’s the highest since October 2012. Holdings have almost doubled from two months ago, even as the rally stalled since mid-March. Futures prices rose 0.2 percent to $1,237.10 an ounce on Monday after dropping 0.7 percent last week.  (Source: bloomberg.com)

After gorging itself for decades on petrodollars, the Nigerian state has been forced by tumbling oil prices to turn to a new source of cash: the taxman. With crude holding sway as the main source of state revenue, tax enforcement was lax and people showed little interest in what those in power did with the funds, Clement Nwankwo, the executive director of Abuja-based Policy and Legal Advocacy Centre, said in an interview. Now the government of Africa’s biggest oil producer is unable to fund its budget and is counting on ramped up borrowing and taxes to fill the gap. President Muhammadu Buhari, who came to power last May, has outlined a record budget of 6.1 trillion naira ($30.6 billion) for 2016 to spend the country out of the current economic slowdown. Higher taxes and improved efficiency in collection are among the cornerstones of the plan. That may carry a political price.  (Source: bloomberg.com)