Kerry Craig, global market strategist at J.P. Morgan Asset Management told Reuters that the global sell-off could continue.
“Politicians may be willing to focus less on the market impact until things get more severe, making it doubtful there will be an early resolution to the current breakdown in negotiations simply based on market moves,” he said.
“Furthermore, as there isn’t a clear schedule for meetings between Chinese and U.S. negotiators, markets are likely to be more volatile.”
Oil prices edged higher on Monday on tightening supply fears, but gains were limited by trade tensions between the U.S. and China.
Brent crude futures were at $70.30 a barrel at 0318 GMT, up 7 cents, or 0.1%, from their last close. Brent ended the previous session down 0.6%.
U.S. West Texas Intermediate (WTI) crude futures were at $61.11 per barrel, up 7 cents, or 0.1%, from their previous settlement. WTI closed down 1% on Monday.
“This ramp-up in trade tensions, which I don’t really think people saw coming, is going to have an impact, a broad impact,” Phin Ziebell, senior economist at National Australia Bank told Reuters by phone. “You can’t avoid the impact on the oil market.”
Middle East markets
Dubai’s index dropped 4 percent on Monday with 26 of 37 stocks falling and none rising. The emirate's largest listed developer, Emaar Properties, lost 5.9%, and its biggest bank, Emirates NBD, closed 3.6% lower.
Abu Dhabi's index fell 3.3%, its biggest one-day drop since January, 2016. First Abu Dhabi Bank, the UAE's biggest bank, shed 3.1% and Emirates Telecommunications Group dropped 5.7%.
Saudi Arabia's index declined 3.6%, with Al Rajhi Bank dropping 4.6% and petrochemical group Saudi Basic Industries falling 5.1%.
Qatar's index lost 1.9% with 18 of its 20 stocks declining. Qatar National Bank dropped 2.8% while lender Masraf Al Rayan was down 3.1%.
Egypt's blue-chip index fell 1.5%, Kuwait’s index lost 1.4 percent while Bahrain’s index dropped 0.8 percent and Oman’s index fell 0.7 percent.
The dollar index, which measures the greenback against a basket of six major currencies, was slightly higher at 97.352.
Gold prices steadied on Tuesday.
Spot gold edged 0.1% higher to $1,301.40 per ounce at 0113 GMT. U.S. gold futures also inched 0.1% higher to $1,302.40 an ounce.
(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)
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