Hurricane Dorian is Upgraded Buoying Energy Shares

Hurricane Dorian is Upgraded Buoying Energy Shares

30 Aug 2019

Crude oil along with natural gas prices are on the rise as investors braced for the impact of Hurricane Dorian. The hurricane is closing in on the Bahamas and is currently rated a category 2, storm with sustainable winds of 85-miles an hour. The storm is expected to increase in strength and could hit the east coast of Florida as a category 4, storm. The hurricane is expected to move over Florida and enter the Gulf of Mexico. Twenty-six counties in Florida are now under a state of emergency. While its unlikely that Dorian will hit any energy installations it appears many companies are evacuating.

Pending Home Sales Fall

Homes that are scheduled to go to contract, which is a signa of future home sales, declined in July. The National Association of Realtors reported that its pending home sales index fell 2.5% to 105.6 in July. The index has slipped 0.3% from a year ago. With trade tensions and fears of a possible recession intensifying, a robust job market hasn’t been enough to strengthen sales. Sales have also been hampered by the lack of available homes on the market, which has contributed to home prices climbing faster than incomes. The long-standing shortage of sales listings and persistently high prices have blunted the benefits of lower mortgage rates nearing all-time lows.

A deluge of data was released in Japan and nearly all of it was better than expected. The July jobs data dipped to 2.2% while industrial production rose 1.3%, which compared with 0.3% figure which was expected.  Construction orders surged nearly 27%, which was also much better than expected.  After stronger than expected growth in Q1 and Q2, Japan's economy appears off to a good start in Q3. 

Consumer Spending in Japan was Lackluster

There was some disappointment which reflected poorly on consumer spending. Retail sales, missed expectations coming in at 2.3% for the month compared to the median forecast which was for a 0.9% decline. This followed an unchanged reading in June. Separately, the BOJ announced a 50 billion decline in the 5-10 year JGBs that it buys to stimulate the Japanese economy. 

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