|16 May, 2019

Thursday outlook: Asian shares retreat as U.S. hits Huawei with sanctions

MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.2%

Image used for illustrative purpose. Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 4, 2019.

Image used for illustrative purpose. Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 4, 2019.

REUTERS/Brendan McDermid
  • Asian and Wall Street stocks move sideways
  • Oil prices gain on tightening supply fears
  • Saudi Arabia’s index adds 1.3 percent
  • Dollar dips, gold remains unchanged

Global markets

Asian shares dropped in early trading on Thursday after the United States hit China’s Huawei with sanctions.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.2%, hovering not far off its lowest since late January.

On Wednesday, Wall Street shares extended a rebound, with the S&P 500 gaining 0.58% and the MSCI’s broadest gauge of world stocks bouncing back from a two-month low hit on Tuesday.

“There has been an increasing disconnect between Asian markets and U.S. markets over the last six months,” Nick Twidale, chief operating officer at Rakuten Securities Australia in Sydney, told Reuters.

“U.S. markets were buoyed on President Trump possibly pulling back on auto tariffs on both Europe and Japan, but really Asian markets have latched on the fact that he’s not letting up in the trade war against China,” he added.

Oil prices

Oil prices rose on Thursday, despite an unexpected rise in U.S. inventories, as tensions in the Middle East triggered fears over supply disruptions.

The Energy Information Administration (EIA) said that U.S. crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast.

Brent crude futures were at $72.16 a barrel at 0349 GMT, up 39 cents, or 0.5%, from their last close. Brent closed up 0.7% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were at $62.41 per barrel, up 39 cents, or 0.6%, from their previous settlement. WTI closed up 0.4% in the last session.

Middle East markets

Saudi Arabia's index increased 1.3% on Wednesday, with Al Rajhi Bank gaining 2.1% and Alinma Bank rising 2.6%, while National Commercial Bank was up 0.9%.

In Dubai, the index closed 1.1% lower with real estate firm Emaar Properties dropping 2.3%. Arabtec Holding plunged 7%, after reporting a drop in its first-quarter profit.

The Abu Dhabi index fell 0.5%, led by a 0.6% fall in First Abu Dhabi Bank (FAB).

Qatar's blue chip index added 0.7% with Mesaieed Petrochemical soaring 9.5%, to reach its highest in nearly four years.

Kuwait’s premier market index edged 0.2 percent higher, Bahrain’s index was flat and Oman’s index was flat.

Currencies

Against the yen, the dollar dipped to 109.49 early on Thursday, while the euro rose 0.1% to $1.1208.

Precious metals

Gold prices were mainly unchanged.

Spot gold was steady at $1,295.84 per ounce at 0103 GMT.

U.S. gold futures edged 0.1% lower to $1,296.90 an ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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