|23 December, 2018

Sunday outlook: Global markets and oil prices closed the week lower

Stock markets across the world retreated on Friday, as trade tensions between the U.S. and China weighed on sentiment. Middle East markets closed lower on Thursday, following a drop in oil prices. More commentary on oil prices, currencies and precious metals.

A man stands in front of an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, October 25, 2018. Image used for illustrative purpose

A man stands in front of an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo, Japan, October 25, 2018. Image used for illustrative purpose

REUTERS/Kim Kyung-Hoon
  • Stocks drop on trade tensions
  • Middle East markets retreated on Thursday as oil dropped
  • Oil prices drop again on oversupply fears
  • Dollar strengthens, gold retreats

Global markets

Stock markets around the globe mostly traded lower on Friday as trade tensions between the United States and China weighed on investor sentiment.

Stocks dropped after Peter Navarro, trade adviser to the U.S. President Donald Trump, told Nikkei it would be “difficult” for the U.S. and China to reach a long-lasting trade agreement that would end the simmering trade war between the world’s two largest economies.

MSCI’s index of global equities fell 1.5 percent, dragged down by broad declines in Europe and Asia.

On Wall Street, the Dow Jones Industrial Average .DJI fell 414.23 points, or 1.81 percent, to 22,445.37, the S&P 500 .SPX lost 50.8 points, or 2.06 percent, to 2,416.62 and the Nasdaq Composite .IXIC dropped 195.41 points, or 2.99 percent, to 6,333.00.

“China is cooling and the euro zone is slowing down, and some of the economic indicators from the U.S. have been a bit soft recently, but yet the Fed hiked rates and suggested that two more interest rate hikes were lined up for 2019,” Michael Hewson, chief markets analyst at CMC Markets in London, told Reuters.

Middle East markets

Stock markets in the region dropped on Thursday, as oil prices retreated.

In Dubai, the index fell 1.4 percent. Dubai Islamic Bank decreased 2.5 percent, while DAMAC Properties and Union Properties, plunged 9.9 percent and 3.2 percent respectively.

Neighbouring Abu Dhabi’s index edged 0.1 percent lower.

Saudi Arabia's stock index dropped 1.4 percent as all 14 petrochemical stocks retreated in response to the drop of oil prices, with Saudi Basic Industries dipping 1.2 percent.

Qatar's index dropped 0.8 percent with Qatar National Bank and Islamic bank Masraf Al Rayan both shedding 1.9 percent.

Egypt's blue-chip index EGX30, added 0.5 percent with Commercial International Bank (COMI), the largest lender, gaining 2.7 percent.

Kuwait’s index dropped 1.1 percent, Bahrain and Oman’s indices were mainly flat.

Oil prices

Oil prices fell again on Friday on oversupply fears.

Brent crude fell 53 cents, or nearly 1 percent, to settle at $53.82 a barrel, after falling during the session to $52.79 a barrel, the weakest since September 2017.

U.S. light crude oil settled down 29 cents at $45.59 a barrel, after earlier touching a session low of $45.13 a barrel.

Both contracts fell more than 11 percent in the week. Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest decline for three years.

The price declines were exacerbated by thin trade and risk aversion ahead of the Christmas and New Year holidays, traders told Reuters.

Currencies

The dollar gained on Friday as equities dropped and investors saw the greenback as a safe haven.

The dollar index, which measures the greenback against a basket of six major currencies, rose 0.76 percent.

Precious metals

Gold prices dropped on a stronger dollar on Friday.

Spot gold fell 0.4 percent to $1,254.81 per ounce at 1904 GMT, after hitting its highest since June 26 of $1,266.40 on Thursday.

U.S. gold futures settled down 0.8 percent, at 1,258.10 per ounce.

(Reporting by Gerard Aoun; Editing by Shane McGinley)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2018

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