Markets buoyed by tech stocks, but Italy still a concern

Asian markets edged up in response to an improved performance on Wall Street

  

Global markets

Asian markets edged up in early trading on Wednesday in response to an improved performance on Wall Street, which was boosted by technology stocks.

MSCI's broadest index of Asian market shares outside Japan increased by 0.44 percent by 0347 GMT, while Japan's Nikkei 225 Index was up by 0.23 percent.

In the United States, the Nasdaq index had closed at a record high on Tuesday, rising 0.4 percent as Netflix gained 1.9 percent in value, while Amazon added 1.1 percent.

However, concerns over the political situation in Italy continue to linger, pushing fixed income investors towards the safety of U.S. treasury bonds. This led to an easing of U.S. bond yields, with the 10-year note trading at 2.929, down from 2.949 on Monday.

Italian government bond yields began rising again on Tuesday following four days of decline, after new prime minister Giusseppe Conte gave a parliamentary speech echoing many of the policy pledges made by its coalition's two main parties - the 5 Star Movement and the League – during their election campaigns, such as higher spending on welfare and more tax cuts.

“The Italian political situation will remain uncertain, and considering its potential impact on European Central Bank policy, market volatility could continue to be relatively high,” Yoshinori Shigemi, global market strategist at JPMorgan Asset Management, told Reuters.

Middle East markets

Stockmarkets in the Gulf finished the day on a positive note.

Qatar's index gained 2.1 percent as a result of higher valuations of blue-chip stocks whose weightings were recently raised in an index compiled by MSCI. Ooredoo Qatar closed up 7.3 percent, Qatar Insurance climbed by 6.2 percent and Qatar Gas Transport gained 5.7 percent.

Both Saudi's Tadawul index and the Abu Dhabi Securities Exchange closed 0.86 percent higher. In Saudi Arabia, electronics retailer Extra jumped in value by 6 percent, food group Savola increased by 5.7 percent and Riyad Bank gained 5.4 percent.

In Abu Dhabi, meanwhile, there was little change in the prices of the most active stocks, with Dana Gas remaining flat after it revealed an end to the year-long saga over its $700 million sukuk, with a large majority of noteholders voting in favour of a restructuring.

The top gainer was Commercial Bank International - the bank in which Qatar National Bank holds a 40 percent stake. It gained in value by almost 14 percent. However, shares in pharmaceuticals manufacturer Julphar dropped by almost 10 percent. The company announced on Sunday this week that its board had agreed to acquire an associate company, Planet Pharmacies, which had led to gains earlier in the week that were reversed yesterday.

The Dubai Financial Market gained 0.33 percent in value as blue-chip Emaar Properties continued its positive run, closing up 1.8 percent at 5.55 UAE dirhams ($1.50) per share.

All of the other Gulf markets finished higher, with the Bahrain market gaining 0.2 percent, and both the Kuwait and Oman indices finishing 0.1 percent higher. The Egyptian Exchange fell back by 2.3 percent, however, ahead of further impending subsidy cuts.

Commodities

Oil prices rebounded in trading early on Wednesday following a report by the American Petroleum Institute, which showed that crude oil stockpiles in the U.S. fell last week for the second week in a row. Prices had temporarily slumped on Tuesday as Reuters reported that the U.S. government had unofficially asked OPEC to raise its oil output levels.

Brent crude prices edged up to $75.52 per barrel by 0441 BST, having dropped to $73.81 per barrel in trading on Tuesday.

US West Texas Intermediate was up 18 cents, to $65.70 per barrel.

Spot gold prices were trading slightly higher at $1,297.49 per ounce as a result of declining U.S. bond yields and dollar rates.

Currencies

The dollar fell slightly in value against a basket of six major currencies to 93.8333. The euro, meanwhile, traded slightly higher on Wednesday at $.1724. It has recovered from a 10 month low of $1.1510 experienced last week at the height of recent concerns over Italian sovereign debt.

(Writing and editing by Michael Fahy)
(Michael.Fahy@thomsonreuters.com)

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