• Oil prices dip slightly on Monday over trade concerns
  • Saudi stocks outperform after Eid break
  • Dollar weaker after Fed chairman defends interest rate policy
  • Asian markets rally after Friday’s gains on Wall Street

 

Oil Prices

Oil prices dropped slightly on Monday on worries that a U.S.-China trade dispute could harm the global economic growth, although looming U.S. sanctions against Iran’s oil sector helped prevent further falls, Reuters said.

“Falling U.S. rig counts and last week’s decline in U.S. inventories are supporting oil prices amid a protracted U.S.-China trade war that could dampen global growth and weigh on oil demand,” Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, told Reuters.

Brent crude oil futures (LCOc1) traded at $75.75 per barrel at 0122 GMT, down 7 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 9 cents at $68.63 a barrel.

Kuwaiti oil minister Bakheet Al-Rashidi said last week that OPEC and other oil exporting producers are expected to agree on a mechanism to monitor their crude production before the end of the year. A committee set up by the Organization of Petroleum Exporting Countries and other non-OPEC exporters are expected to review their crude output at a meeting in Algeria in September.

“The production numbers of OPEC and (countries) outside OPEC will be reviewed at the meeting in Algeria, and before the end of the current year, there will be an agreement on a mechanism to monitor output next year,” Al-Rashidi told reporters last Wednesday.

Currencies

The United States dollar declined slightly in value on Monday following Federal Reserve Chairman Jerome Powell’s speech on Friday, in which he defended the U.S. central bank’s decision to raise interest rates by saying that a gradual approach to raising rates was best to protect the U.S. economy and job growth.

“The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one ... If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate,” Powell said in his speech on Friday.

The dollar index against a basket of six major currencies fell slightly by 0.1 percent to 95.075. The euro was up 0.2 percent at $1.1644. The Chinese yuan extended its rally in the international market to reach 6.8050 per dollar, its strongest level in a month.

Precious Metals

Gold prices inched up on Monday after marking their biggest one-day percentage gain in over a year in its last session.

Spot gold was up 0.1 percent at $1,206.57 an ounce as of 0105 GMT. It rose about 1.7 percent on Friday, in its biggest one-day percentage gain since May 17, 2017. U.S. gold futures were almost flat at $1,213 an ounce.

Global Markets

Asian shares rose early on Monday, taking support from gains made by Wall Street on Friday after Fed chairman Powell’s speech. Powell's comments helped to push the S&P500 index and Nasdaq Composite to record highs on Friday.

In early Asian trade on Monday, S&P500 E-mini futures touched a record high of 2,885, and were last 0.2 percent higher at 2,882.5. MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.1 percent, and Japan's Nikkei index increased by 0.6 percent.

"Powell's Jackson Hole speech essentially confirmed the need for further gradual rate hikes and stressed that higher interest rates have served the economy well. However, rate rises remain data-dependent, and other Fed officials reiterated that 'nothing is predetermined'," a research note from analysts at Australian banking group ANZ said, which was cited by Reuters in a report on Monday. "The Fed Chair's reiteration that rate rises would remain gradual gave the green light to ongoing falls in the USD and increases in equities on Friday," it continued.

Middle East Markets

Saudi Arabia's stock market outperformed other regional markets by a large margin on Sunday, the first day after a seven-day break for the Muslim festival of Eid Al Adha.

The Saudi stock index rose 1.4 percent. Shares in petrochemical makers traded strongly after the Brent oil price rebounded above $75.00 a barrel last week. The kingdom’s top petrochemical firm, Saudi Basic Industries, rose 1.8 percent and Saudi Kayan traded up 3.3 percent.

Other companies such as Arabian Shield Cooperative Insurance, which had been trading near 20-month lows, surged 2.5 percent on Sunday on news released by the company of a $27.9 million-contract with the state utility National Water Co to provide health insurance services to its employees for a year.

Dubai's index gained 0.4 percent, as the state’s leading bank Emirates NBD rebounded for the second straight trading session, trading up 2.0 percent.

In Abu Dhabi, the index added 0.5 percent after Abu Dhabi Commercial Bank jumped in the final minutes of trade to close 2.3 percent higher. United Arab Bank soared 13.2 percent, but trading volume was low.

Qatar's index rose in early trade but closed 0.03 percent down as real estate firm Ezdan, the most heavily traded stock, dropped 3.3 percent.

In other market-related news, Dubai-based courier firm Aramex signed an agreement with Al-Dawaa Medical Services in Saudi Arabia to launch hundreds of branches inside Al-Dawaa pharmacies in several cities in the kingdom.

Ras Al Khaimah-based pharmaceutical manufacturer Julphar signed an agreement with international medical technology company BD to supply disposable insulin pens in the UAE.

(Writing by Yasmine Saleh; Editing by Michael Fahy)

(yasmine.saleh@thomsonreuters.com)

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(Writing by Michael Fahy; Editing by Mily Chakrabarty)
(michael.fahy@thomsonreuters.com)

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