|25 August, 2019

Sunday outlook: Stocks, oil prices and the dollar plunge on trade concerns

Shares on Wall Street plunged on escalating trade tensions between the United States and China

A screen shows the numbers after the closing bell as traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 14, 2019.

A screen shows the numbers after the closing bell as traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 14, 2019.

Reuters/Eduardo Munoz
  • Global markets drop sharply
  • Brent oil prices drop below $60 a barrel
  • Middle East markets close mixed
  • Dollar drops, gold gains

Global markets

Stock markets dropped on Friday on escalating trade tensions between the United States and China.

Earlier on Friday China’s Commerce Ministry said in a statement it would impose tariffs on about $75 billion in imports from the United States including some agricultural products, crude oil and small aircraft.

US President Donald Trump responded in a series of tweets, writing that “American companies are hereby ordered to immediately start looking for an alternative to China.”

The Dow Jones Industrial Average fell 623.34 points, or 2.37 percent, to 25,628.9, the S&P 500 lost 75.84 points, or 2.59 percent, to 2,847.11 and the Nasdaq Composite dropped 239.62 points, or 3 percent, to 7,751.77.

The pan-European STOXX 600 index turned sharply lower after Trump’s tweets, dropping 1 percent in the last half hour of trading to close down 0.78 percent, while MSCI’s gauge of stocks across the globe dropped 1.57 percent.

The tweets “certainly heightened concerns about trade and its drag on global growth,” Craig Bishop, lead strategist of the fixed income group at RBC Wealth Management at Minneapolis, told Reuters.

Oil prices

Oil prices also dropped on trade tensions.

Brent crude futures fell 58 cents, or 1%, to settle at $59.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.18, or 2.1%, to settle at $54.17 a barrel.

WTI lost 1.3 percent for the week, while Brent rose 1.2 percent during the week.

“We still view the U.S.-Chinese trade standoff as a major bearish consideration that will likely be requiring additional downward oil demand adjustments as this year proceeds,” Jim Ritterbusch, president of Ritterbusch and Associates told Reuters.

Middle East markets

In Saudi Arabia, the index fell 0.7 percent as Samba Financial Group lost 2.6 percent and National Commercial Bank slipped 0.8 percent.

Dubai’s index dropped 0.8 percent as Emaar Properties slid 2.5 percent, while Emirates NBD traded 1.3 percent lower.

Abu Dhabi’s index was flat, with First Abu Dhabi Bank gaining 0.3 percent.

Qatar's index rose 0.4 percent as market heavyweight Industries Qatar increased 1.4 percent.

Egypt's blue-chip index closed 0.2% down. Eastern Co fell 0.6 percent and Emaar Misr dropped 1.9 percent.

Bahrain’s index edged up 0.1 percent while Oman’s index rose 1.5 percent and Kuwait’s premier market index was flat.

Currencies

The dollar dropped following the escalation in trade tensions.

The dollar index .DXY, which measures the greenback against a basket of six major currencies fell 0.47 percent.

Precious metals

Gold prices surged on Friday as investors moved away from risky assets to safe havens.

Spot gold rose 1.9 percent at $1,526.60 an ounce by 1801 GMT.

U.S. gold futures settled up 1.9% to $1,537.60.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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