|09 January, 2019

Wednesday outlook: Global markets and oil prices add gains on trade optimism

Asian shares add gains again on Wednesday, following a surge overnight on Wall Street on hopes over a trade deal between the U.S. and China. Saudi Arabia's index edged higher on Tuesday, while stock markets in the UAE edged lower. More commentary on oil prices, currencies and precious metals

An investor sits in front of a board showing stock information at a brokerage office in Beijing, China, December 7, 2018.

An investor sits in front of a board showing stock information at a brokerage office in Beijing, China, December 7, 2018.

REUTERS/Thomas Peter
  • Asian shares track Wall Street higher on trade deal hopes
  • Middle East markets were mixed on Tuesday
  • Oil prices rise on trade deal hopes
  • Dollar rebounds, gold steadies

Global markets

Asian shares tracked early on Wednesday an overnight surge on Wall Street supported by hopes from markets participants for an easing in tensions between the United States and China.

The United States and China agreed to extend trade talks in Beijing for an unscheduled third day on Wednesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.5 percent to its highest level since December 14. Wall Street's S&P 500 gained nearly 1 percent on Tuesday.

The rally in equities accelerated on Friday, following comments by Jerome Powel, the Fed Chair.

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.

“Markets are scaling back some of their extreme nervousness after Powell effectively did some easing, with his words. But short-covering could run its course soon,” Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Reuters.

“Hopes on U.S.-China trade talks are helping. Some sort of deals are likely to increase Chinese imports of natural gas, soybeans and so on from the U.S. Yet, it should be hard to resolve more structural issues such as intellectual property rights,” he added.

Middle East markets

Stock markets in the Middle East ended the day mixed on Tuesday.

Saudi Arabia’s index edged up 0.1 percent, with Jabal Omar Development rising 2.5 percent and Banque Saudi Fransi hiking 2 percent. Nama Chemicals added 3.7 percent to end as the top gainer on the index.

Dubai's index fell 0.2 percent after rising for three straight sessions. Dubai's largest listed developer Emaar Properties dipped 1.3 percent, while its unit Emaar Development lost 2.8 percent.

Abu Dhabi’s index was down 0.2 percent, with Aldar Properties dropping 1.9 percent and Dana Gas sliding 1 percent.

Qatar's index fell 0.3 percent as Qatar Islamic Bank lost 1.7 percent and Qatar National Bank was down 1 percent.

The Egyptian blue-chip index EGX30 rose 0.5 percent, with Sidi Kerir Petrochemicals gaining 4.6 percent and El Sewedy Electric adding 5.6 percent.

Kuwait, Oman and Bahrain’s indices were mainly flat.

Oil prices

Oil prices rose on Wednesday as global markets surged on hopes that the U.S. and China will agree on a trade deal.

U.S. West Texas Intermediate (WTI) crude oil futures were at $50.29 per barrel as at 0131, up 51 cents, or 1 percent from their last settlement.

International Brent crude futures were up 42 cents, or 0.7 percent, at $59.14 per barrel.

“Crude continues to extend gains as early reports from Beijing regarding trade negotiations are fueling optimism around successful trade talks between the U.S. and China,” Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore, told Reuters.

“After a dreadful December for risk markets, Crude oil continues to catch a positive vibe,” he added.

Currencies

The dollar rebounded on Tuesday after drops in the previous sessions when 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, rose 0.3 percent.

Precious metals

Gold prices were mainly steady on Wednesday.

Spot gold was little changed at $1,285.62 by 0041 GMT.

U.S. gold futures were also steady at $1,286.70 per ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)
(gerard.aoun@refinitiv.com)

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