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|08 August, 2018

Wednesday Outlook: Global markets rise, oil prices held steady

Asian shares rose early on Wednesday tracking a surge on Wall Street, while oil prices started the day mixed as sanctions against Iran took effect. More commentary on Middle East markets, currencies and precious metals

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 11, 2018.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 11, 2018.

REUTERS/Brendan McDermid
  • Global markets rise on strong second quarter earnings
  • Middle East stocks add gains tracking higher oil prices on Tuesday
  • Oil prices mixed after the introduction of sanctions against Iran
  • Dollar edged lower, gold prices steady

Global markets

Asian shares rose early on Wednesday tracking a surge on Wall Street, despite continuous trade tensions between the United States and China.

Shares on Wall Street rose on strong second quarter earnings. The S&P 500 rose 0.28 percent to 2,858, which is just 14 points, or about 0.5 percent, below its record high marked in January.

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Tesla jumped 11 percent after Chief Executive Elon Musk said he was considering taking the electric car maker private.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.22 percent while Japan’s Nikkei ticked up 0.05 percent.

“China’s apparent policy shift from structural reforms to short-term policy support appears to be starting to give some support to other major markets,” Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities, told Reuters.

“Yet the reason they have to do so is escalating trade tensions so you can’t expect much upside. On the other hand, a boost to the U.S. economy from tax cuts is peaking out soon. In coming months, the focus will be how markets will price in this peak out,” he added.

Middle East markets

Most Middle East Stock markets rose on Tuesday and Abu Dhabi’s exchange reached high levels, last seen in 2014.

Abu Dhabi’s index rose 0.6 percent as First Abu Dhabi Bank added 1.8 percent and Union National Bank rose 1.7 percent. Firmer oil prices boosted Dana Gas, which rose 0.9 percent.

Aldar Properties fell 2 percent after reporting a 28 percent decline in second-quarter profit, missing estimates.

The Saudi index rose 0.2 percent supported by a surge in oil prices and positive second quarter earnings from insurance companies.

Saudi Enaya Cooperative Co was the best performer on Tuesday, surging almost 10 percent.

Dubai’s index dropped 0.9 percent, as real estate shares weighed on the index. Damac Properties dropped 5.2 percent, and heavyweight Emaar Properties, retreated 1.1 percent.

Shuaa Capital has added 3.96 percent during Tuesday’s trading session after it reported a rise in second quarter net profit from 12.1 million dirhams ($3.29 million) to 14.6 million dirhams ($3.97 million).

Qatar’s index added 0.4 percent boosted by blue chip Industries Qatar, which rose 3.2 percent.

Egypt’s index rose 0.7 percent, Kuwait’s index added 0.4 percent, while Oman’s index gained 0.6 percent and Bahrain’s index dropped 0.3 percent.

Oil prices

Oil prices were mixed on Wednesday due to the introduction of sanctions against Iran and as the EIA on Tuesday slightly cut its 2018 expectation for average 2018 U.S. crude output to 10.69 million bpd, down from its previous estimate of 10.79 million bpd and 

Front-month U.S. West Texas Intermediate (WTI) crude futures were at $69.21 per barrel at 0012 GMT, up 4 cents from their last settlement.

Brent crude oil futures were at $74.63 per barrel, down two cents after a 90 cent gain in the previous session.

“Crude oil prices rose as the reality of U.S. sanctions on Iran weighed on sentiment. News from key buyers suggests the market is already adjusting to the new regime,” ANZ bank said in a note on Wednesday, according to a Reuters report.

Currencies

The U.S. dollar inched 0.1 percent lower against a basket of six major currencies.

“Market reaction to the headlines about the U.S.-China trade war is waning,” Masafumi Yamamoto, chief currency strategist at Mizuho Securities, told Reuters.

“If there are clear signs of a slowdown of the U.S. economy due to the tariffs imposed in July, then I think the market will begin to price in slower rate hikes or no rate hikes by the Federal Reserve.”

Precious metals

Gold prices held steady early on Wednesday on a weaker dollar.

Spot gold was unchanged at $1,210.91 an ounce at 0043 GMT, after rising 0.4 percent in the previous session.

U.S. gold futures were up 0.1 percent at $1219.4 an ounce.

Gain a deeper understanding of financial markets through Thomson Reuters Eikon.

(Writing by Gerard Aoun; Editing by Shane McGinley)
(gerard.aoun@thomsonreuters.com)

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