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|07 January, 2019

Monday outlook: Trade talks, strong U.S. jobs data, boost oil prices and global markets

Oil prices surged early on Monday on hope over an easing in trade tensions between the U.S. and China. Asian shares rose on strong U.S. jobs data and a rise on Wall Street at the end of last week. More commentary on Middle East markets, currencies and precious metals

Image used for illustrative purpose. China Stock Markets Remain Volatile Amid Economy Fears

Image used for illustrative purpose. China Stock Markets Remain Volatile Amid Economy Fears

Getty Images/Kevin Frayer
  • Oil prices rise before today’s trade talks meeting
  • Asian shares rise on strong U.S. jobs data
  • Most markets in the Middle East surged on Sunday
  • Dollar weakens on Fed comments
  • Gold prices drop on a recovery in risk appetite

Oil prices

Oil prices surged in early trading on Monday, as trade negotiations that will happen later in the day between delegates from the United States and China boosted investor sentiment, as market participants hope for an easing in tensions between the two biggest economies in the world.

Brent crude futures were at $57.77 per barrel at 0227 GMT, up 71 cents, or 1.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $48.65 per barrel, up 69 cents, or 1.4 percent.

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Supply cuts dominated by the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC Russia, have also boosted prices.

“OPEC’s new production cuts have taken effect from the start of the year and market surveys of OPEC output show that major producers got started early,” said Emirates NBD bank in a note released on Sunday, according to a Reuters report.

OPEC oil supply fell in December by 460,000 barrels per day (bpd), to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia.

Global markets

Asian shares rose on Monday, as strong U.S. jobs data and hopes over easing trade tensions between the U.S. and China boosted sentiment.

The U.S. payrolls report showed 312,000 net new jobs were created in December, while wages rose at a brisk annual pace of 3.2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent on Monday.

On Wall Street, the Dow ended Friday with gains of 3.29 percent, while the S&P 500 jumped 3.43 percent and the Nasdaq 4.26 percent.

Middle East markets

Most markets in the region rose on Sunday, following a surge in oil prices and global markets.

Saudi Arabia’s index added 1.3 percent as Al Rajhi, the kingdom's second-largest lender by assets, jumped 5.1 percent amid heavy trade after it announced plans to increase capital to 25 billion riyals ($6.7 billion) from 16.25 billion riyals through distributing 7 bonus shares for every 13 shares owned.

Dubai’s index edged 0.2 percent higher as Dubai Islamic Bank added 1.4 percent, Emirates NBD gained 0.6 percent and Developer DAMAC Properties rose 1.3 percent.

In Abu Dhabi, the index rose 0.1 percent with First Abu Dhabi Bank up 0.6 percent and Dana Gas gaining 1.7 percent.

The Qatari index was mainly flat at 10,352 points, with Qatar National Bank (QNB) closing 0.8 percent higher and Qatar Insurance Co. rising 1.4 percent. Conglomerate Industries Qatar closed down 0.6 percent and Commercial Bank dropped 1.2 percent.

Egypt’s blue-chip index EGX30 added 0.6 percent, Kuwait’s index gained 0.7 percent, while Oman’s index rose 0.6 percent and Bahrain’s index gained 0.4 percent.

Currencies

The dollar was weaker on Monday after analysts bet that the U.S. Federal Reserve would put its policy tightening on pause in 2019, following comments by Jerome Powel, the Fed Chair.

On Friday, Powell told the American Economic Association that the Fed is not on a preset path of interest rate hikes and that it will be sensitive to the downside risks the markets are pricing in.

The dollar index, which measures the greenback against a basket of six major currencies, stood at 96.12 early on Monday, down 0.07 percent.

Precious metals

Gold prices retreated early on Monday as global markets rose, following a recovery in risk appetite.

Spot gold had dropped about 0.1 percent to $1,284.05 per ounce by 0053 GMT.

U.S. gold futures were down about 0.1 percent at $1,285.10 per ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

Our Standards: The Thomson Reuters Trust Principles

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© ZAWYA 2019

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