Monday outlook: Stocks, oil prices drop on growing U.S. recession fears

Cautious remarks late last week by the U.S. Federal Reserve sent 10-year treasury yields to the lowest since early 2018, triggering concerns about a potential U.S. recession.

  
Image used for illustrative purpose only. Pumpjacks are seen at an oil field in Huaian, Jiangsu province, China November 11, 2017. Picture taken November 11, 2017.

Image used for illustrative purpose only. Pumpjacks are seen at an oil field in Huaian, Jiangsu province, China November 11, 2017. Picture taken November 11, 2017.

REUTERS/Stringer
  • Asian shares drop on U.S. recession fears
  • Oil prices follow stocks lower
  • Most Gulf stock markets retreat
  • Dollar drops, gold gains

Global markets

Asian shares retreated in early trading on Monday as growing fears about a recession in the United States weighed on investor sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.4 percent. Japan’s Nikkei tumbled 3.2 percent to the lowest in two weeks.

Cautious remarks late last week by the U.S. Federal Reserve sent 10-year treasury yields to the lowest since early 2018, triggering concerns about a potential U.S. recession.

“The bond market price action is an enormous blaring siren to anyone trying to be optimistic on stocks,” JPMorgan analysts said in a note to clients, according to a Reuters report.

“Growth, and bonds/yield curves, will be the only thing stocks should be focused on going forward and it’s very hard to envision any type of rally until economic confidence stabilizes and bonds reverse.”

Friday on Wall Street, the Dow slid 1.8 percent, the S&P 500 was off 1.9 percent and the Nasdaq dropped 2.5 percent.

Oil prices

Oil prices followed stocks lower early on Monday on fears over a U.S. recession.

Brent crude oil futures were at $66.52 per barrel at 0102 GMT, down 51 cents, or 0.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) futures were at $58.42 per barrel, down 63 cents, or 1.1 percent, from their last settlement.

Middle East markets

Most stock markets in the Gulf dropped on Sunday.

Saudi Arabia’s index dropped 0.7 percent, dragged lower by petrochemical and banking shares.

Saudi Basic Industries and Saudi Kayan closed 1.1 percent and 4.6 percent down respectively. National Commercial Bank retreated by 1.1 percent while Al Rajhi Bank eased by 0.4 percent and Riyad Bank lost 1.1 percent.

Dubai’s index fell 0.4 percent with Dubai Islamic Bank falling 1 percent and Emirates NBD losing 0.6 percent.

The Abu Dhabi index closed 0.6 percent down, with First Abu Dhabi Bank and Abu Dhabi Commercial Bank losing 0.9 percent and 0.7 percent respectively.

Qatar's index was off 0.6 percent as Qatar National Bank gave up 1 percent, Industries Qatar lost 0.8 percent and Commercial Bank fell by 1.9 percent.

Egypt’s blue-chip index EGX30 added 0.4 percent, helped by a 0.5 percent gain for manufacturer Eastern Company and a 1.5 percent rise for Commercial International Bank.

Kuwait’s premier market index rose 0.5 percent, Bahrain’s index dropped 0.3 percent and Oman’s index dropped 0.6 percent.

Currencies

The dollar dropped early on Monday.

The dollar index, which measures the greenback against a basket of six major currencies, slipped 0.2 percent to 96.314

Precious metals

Gold prices gained on Monday on a weaker dollar and as investors turned away from equities on fears of a U.S. recession.

Spot gold was up 0.1 percent at $1,314.21 per ounce as of 0128 GMT.

U.S. gold futures were up 0.2 percent at $1,314.40 an ounce.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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