|06 November, 2018

Tuesday outlook: Asian shares, oil prices slip

Asian shares dropped on Tuesday despite a rise on Wall Street overnight. Oil prices edged lower on demand concerns. More commentary on Middle East markets, currencies and precious metals

An investor observes stock market at an exchange hall on March 29, 2016 in Fuyang, Anhui Province of China.

An investor observes stock market at an exchange hall on March 29, 2016 in Fuyang, Anhui Province of China.

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  • Asian shares edge lower
  • Saudi Arabia’s index fell 0.6 percent
  • Oil prices retreat on demand concerns
  • Dollar, gold steady ahead of U.S. midterm elections

Global markets

Asian shares edged lower on Tuesday despite a rise on Wall Street overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent, dragged down by a drop in and Chinese shares and technology shares while Japan's Nikkei managed to gain 1.0 percent.

The S&P 500 gained 0.56 percent overnight on Wall Street.

United States President Donald Trump said last month his administration planned to produce a resolution calling for a 10 percent tax cut for middle-income households.

“Everyone still remembers strong equity rallies after Trump was elected two years ago. So initially stock markets will gain,” Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Reuters.

“But further tax cuts would boost already large fiscal deficits and push the 10-year U.S. Treasuries yield above its October high almost instantly. Given rises in U.S. bond yields triggered a correction in equities last month, any rally in stocks is unlikely to last long,” he added.

Middle East markets

Saudi Arabia’s index dropped 0.6 percent on Monday with National Medical Care falling 10 percent after the company reported a drop in quarterly net profit.

Al Rajhi Bank and Saudi Basic Industries Corp (SABIC) both fell by 0.5 percent.

Dubai’s index ended the day mainly flat as a rise in real estate shares was offset by a 1.5 percent drop in Emirates NBD’s shares.

Abu Dhabi’s index rose 1.1 percent, helped by a 1.6 percent rise in First Abu Dhabi Bank and a 7 percent surge in investment firm Waha Capital.

Qatar’s index booked a 1.2 percent gain, closing the day at its highest level since April 2017, aided by a 2.3 percent rise in Qatar National Bank and a 2.5 percent gain in Qatar Islamic Bank.

Egypt’s index added 0.5 percent, Kuwait’s index edged down 0.1 percent, Bahrain’s index edged up 0.1 percent and Oman’s index edged 0.2 percent lower.

Oil prices

Oil prices dropped on Tuesday on concerns over tightening demand as a result of an economic slowdown.

U.S. West Texas Intermediate (WTI) crude futures were at $62.93 a barrel at 0131 GMT, down 17 cents, or 0.3 percent, from their last settlement.

International Brent crude oil futures were down 21 cents, or 0.3 percent, at $72.96 a barrel.

Jameel Ahmad, head of market research at futures brokerage FXTM, told Reuters that the “sanctions on Iran have been...priced into the oil markets a long time ago”, and that he would “instead focus more heavily on the global demand outlook because of the ongoing external uncertainties weighing down on economic prospects.”

Currencies

The dollar steadied against its major rivals as investors were cautious ahead of U.S. midterm elections later in the day.

Precious metals

Gold prices were steady on Tuesday ahead of U.S. midterm elections.

On Monday, Spot gold was down 0.1 percent at $1,230.76 per ounce by 1830 GMT, trading in an $8 range. U.S. gold futures settled down $1, or 0.1 percent, at $1,232.30.

(Writing by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@thomsonreuters.com)


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