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|10 January, 2019

Thursday outlook: Asian shares, oil prices edge lower after extended rally

Asian shares retreat on profit-taking, and MSCI's broadest index of Asia-Pacific shares outside Japan edges 0.2 percent lower. Saudi Arabia's index added 1 percent on Wednesday, supported by higher oil prices. More commentary on oil prices, currencies and precious metals

Image used for illustrative purpose. A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019.

Image used for illustrative purpose. A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019.

REUTERS/Brendan McDermid
  • Asian shares drop following an extended rally
  • Saudi Arabia’s index added 1 percent on Wednesday
  • Oil prices retreat on higher U.S. supply
  • Dollar and gold prices steady

Global markets

Asian shares retreated in early trading on Thursday after traders took profits on the gains made in previous sessions. Global markets have been supported this week by hopes for an easing in tensions between the United States and China.

Trade negotiations were under way during the week in Beijing between delegates from the U.S. and China. The two biggest economies in the world ended trade negotiations on Wednesday, saying that details will be released soon.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.2 percent, reversing course after briefly touching a near four-week high early in the session. Overnight on Wall Street, the S&P 500 rose 0.41 percent.

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“Dovish Fed minutes and positive developments out from the U.S.-China trade talks will likely keep the risk rally going although some market players may opt to book gains and to wait for fresh leads,” ING economists said in a note to clients, according to a Reuters report.

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.

Middle East markets

Saudi Arabia’s index rose 1 percent on Wednesday, boosted by a surge in oil prices during the week.

Market heavyweight Saudi Basic Industries added 1.5 percent and Al Rajhi Bank was up 1.4 percent.

Dubai’s index added 0.4 percent as Emaar Properties gained 2 percent and Dubai Investments rose 0.8 percent.

Abu Dhabi's index was up 0.5 percent, with the region's largest bank, First Abu Dhabi Bank, rising 0.8 percent, and Emirates Telecommunications edging up 0.4 percent.

Qatar's index was up 0.7 percent, lifted by gains in Qatar Islamic Bank and Industries Qatar, which rose 1.8 percent and 1.2 percent, respectively.

Egypt’s blue-chip index EGX30 edged down 0.3 percent, pressured by its biggest listed lender, Commercial International Bank, which slid 2.1 percent.

Kuwait’s index dropped 0.3 percent, while Bahrain’s index added 0.5 percent and Oman’s index was mainly flat.

Oil prices

Oil prices retreated early on Thursday after an extended rally, as higher U.S. supply weighed on prices.

The Energy Information Administration (EIA) said on Wednesday that the U.S. crude production remained at a record 11.7 million barrels per day (bpd) in the week ending January 4.

U.S. West Texas Intermediate (WTI) crude oil futures were at $51.75 per barrel at 0113 GMT, down 61 cents, or 1.2 percent, from their last settlement.

International Brent crude futures were down 1 percent, or 63 cents, at $60.81 per barrel.

Currencies

The dollar could not rebound on Thursday as analysts bet that the U.S. Federal Reserve would put its policy tightening on pause in 2019.

The dollar index, which measures the greenback against a basket of six major currencies, was mainly steady on Thursday after it dropped 0.7 percent in the previous session.

Precious metals

Gold prices mainly steadied in early trading on Thursday.

Spot gold was a tad lower at $1,292.46 per ounce at 0141 GMT, hovering near Friday’s peak of $1,298.42 - a level last seen in June.

U.S. gold futures rose 0.1 percent to $1,293.20 per ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

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