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|14 May, 2018

Monday outlook: Asian shares rally on easing trade tensions

Asian shares were trading near two-month highs on Monday amid easing investor fears of a trade war

Global markets

Asian shares were trading near two-month highs on Monday amid easing investor fears of a trade war between the United States and China.

MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 0.4 percent, to near two-month highs.

Shares on Wall Street mostly edged higher on Friday.

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The Dow Jones Industrial Average rose 91.64 points, or 0.37 percent, to 24,831.17. The S&P 500 gained 4.65 points, or 0.17 percent, to 2,727.72 and the Nasdaq Composite dropped 2.09 points, or 0.03 percent, to 7,402.88.

Middle East markets

Stock markets in the Middle East were mixed on Sunday, as oil prices remained near high levels despite a drop at the end of last week.

Saudi Arabia’s stock market closed 1.4 percent higher with Al Rajhi Bank, the kingdom's second largest bank by assets and one of the main beneficiaries of a huge inflow of foreign money this year, climbing 1.5 percent.

MSCI will decide in June on whether to classify Saudi Arabia as an emerging market.

"The Saudi index has been off its highs over the past two weeks, so the smart money is recognising that as an opportunity and buying up blue-chips ahead of MSCI decision," Nishit Lakhotia, head of research at Securities & Investment Co (SICO) in Bahrain, told Reuters.

"The market is not really reflecting the fact oil prices are close to three and a half year highs, and is still exhibiting strength which can significantly reduce state deficits for 2018 and potentially slow reforms that might be hurting consumers."

Abu Dhabi’s index lost 0.3 percent as Union National Bank fell 4.1 percent after it reported a drop in first quarter net profit to 425.6 million dirhams ($116 million), slightly below forecasts of SICO Bahrain and EFG Hermes.

Dana Gas was the most heavily traded stock, up 3.9 percent after the company said it had struck a deal with creditors on restructuring $700 million of sukuk.

In Dubai, the index closed 0.4 percent up. National Central Cooling Company (Tabreed) was the biggest gainer, closing 4.1 percent higher. The company said in a statement late last week it was considering new markets and countries in which to expand its operations.

In Egypt, the index added 0.2 percent. Qalaa Holdings surged 8.9 percent. The company said last week it was seeking to increase ownership in Egyptian Refining Co.

Qatar’s index rose 0.8 percent, Kuwait’s index fell 0.2 percent, Bahrain’s index edged up 0.03 percent and Oman’s index added 0.1 percent.

Oil prices

Oil prices dropped again early on Monday on rising U.S. crude supply, as data showed U.S. crude producers added 10 rigs in the last week, but oil prices remained near high levels not seen for more than three years.

Brent crude futures were at $76.79 per barrel at 0229 GMT, down 33 cents, or 0.4 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $70.51 a barrel, down 19 cents, or 0.3 percent.

Currencies

The dollar fell 0.15 percent on Monday against a basket of major currencies on profit-taking.

The index hit more than a four-month high of 93.416 last Wednesday, as a rise in U.S. Treasury yields highlighted the wide interest rate gap between the U.S. and other countries.

“For the dollar to resume its rally, it needs the Fed to hike rates in June - that would be a bare minimum requirement. It also needs the 10-year Treasury yield to build a firm foothold above 3 percent,” Koji Fukaya, president at FPG Securities in Tokyo, told Reuters.

Precious metals

A weak dollar pushed gold prices higher on Monday as investors considered the prospects of slower interest rate hikes in the U.S.

Spot gold rose 0.3 percent to $1,321.20 per ounce at 0045 GMT, after marking the highest since April 26 at $1,325.96 in the previous session.

In other news… 

In Jordan, the Department of Statistics said on Sunday that inflation fell to 0.23 percent year-on-year in April compared to 0.43 percent in March.

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

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© ZAWYA 2018