• Oil rose Friday but future outlook appears negative
• Gulf stocks were mostly lower on the back of oil volatility
• Lower-than-expected earnings for Aldar Properties hit the Abu Dhabi market
• In Asia, Japan’s Nikkei fell to a one-month low
• Dollar surged, while the Turkish lira and sterling tumbled
• Turbulence failed to spur good news for gold


While oil prices rose slightly on Friday, the future outlook was not positive, with traders worried global trade disputes would slow economic growth. At the same time, the dollar surged on the back of currency fluctuations, especially in the United Kingdom and Turkey, but this did not lead to any good news for gold buyers.

Oil prices:

Crude oil prices were up 1 percent on Friday as United States sanctions against Iran looked set to tighten supply, but futures contracts posted a weekly decline as investors worried that global trade disputes could slow economic growth and hurt demand for energy.

Benchmark Brent crude oil LCOc1 settled 74 cents higher at $72.96 a barrel on Friday.

U.S. light crude CLc1 was 82 cents higher at $67.63 a barrel.

The International Energy Agency on Friday predicted turbulent times ahead for oil prices. “The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA said in a monthly report, according to Reuters.

“As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging.”

Middle East markets:

Gulf stocks were mostly lower on Thursday, as volatile oil prices hit petrochemical and energy firms in the Saudi market, while lower-than-expected earnings of property firm Aldar Properties weighed on the Abu Dhabi market.

Abu Dhabi slipped 1.1 percent, easing from a near four-year high on Wednesday. Aldar Properties dropped 2.5 percent after reporting a 28 percent fall in Q2 profit.

First Abu Dhabi Bank also fell 2.4 percent. FAB shares have gained nearly 37 percent this year, fuelled by strong earnings and a move to expand in the Saudi market.

In neighbouring Dubai, the index dropped almost 1 percent on selling in lender Emirates NBD which declined 2.9 percent. Contractor Arabtec also dropped 2.5 percent, after opening higher as it reported a 24 percent jump in quarterly profit.

Saudi stocks were down 0.4 percent, as sharp swings in oil prices hit sentiment. Refiner Petro Rabigh fell 2.4 percent, partly affected by a 26 percent fall in second-quarter profit. Among other losers, petrochemicals giant Saudi Basic Industries Corp ended 0.5 percent lower.

The Qatari index fell almost 0.8 percent, dragged down by Industries Qatar which fell 2.3 percent despite reporting a rise in first half profits.

Elsewhere, Kuwait fell 0.2 percent, Bahrain rose 0.3 percent, Oman was down 0.1 percent and Egypt rose 0.4 percent.


Global markets:

Japan was the focus of attention on Friday as the Nikkei fell to a one-month low, as semiconductor-related shares tumbled after Morgan Stanley downgraded its view on the U.S. chip sector, despite news that Japan reported better-than-expected economic growth.

The Nikkei share average ended 1.3 percent lower at 22,298.08, the lowest closing level since July 12. For the week, it dropped 1 percent.

All eyes will remain on Japan as its trade talks in Washington continue. Both sides failed to reach an agreement on Thursday.

“What is crucial for Japan is whether there will be an impact to its auto sector. Right now it’s hard to make an investment decision so we need to wait till next week to digest the outcome of the talks,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, told Reuters.

Currencies:

The dollar surged on Friday after an investor rush into safer assets on fears of a broader market contagion from a dramatic slide in the Turkish lira, while sterling slid to its lowest level since June 2017 over ongoing concerns over Brexit talks with the European Union.

The British currency dropped 0.8 percent to as low as $1.2723, roughly in line with the dollar’s large rise against a basket of major currencies.

“I’ve been short sterling because my sense is that we’ve got to go on our own. All these ‘Remainers’, they will feel it’s the end of the world when we have to go on our own, but that’s when you buy sterling back,” British hedge fund manager Crispin Odey, told Reuters, referring to supporters of staying in the EU, Britain’s biggest trading partner.

In Turkey, FX markets erupted on Friday as a 12 percent crash in Turkey’s lira triggered a global wave of turbulence. The Turkish currency tumbled after a government delegation returned from meeting U.S. officials in Washington with no apparent solution to a diplomatic rift that has opened up between them.

Precious Metals:

The currency and oil dramas don’t seem to have spurred any good news for gold, as prices held broadly steady in Asia on Friday after dipping the session before.

Spot gold was flat at $1,212.12 an ounce at 0321 GMT, having lost 0.1 percent on Thursday.

U.S. gold futures were steady at around $1,219.6 an ounce.

Gold prices, which can gain during uncertainty, have largely failed to benefit from rising geopolitical tensions this year, as investors have chosen the safety of the dollar over the precious metal.

 

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

(Writing by Shane McGinley; Editing by Mily Chakrabarty)
(shane.mcginley@thomsonreuters.com).

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