Asian markets mixed following 2% jump in oil prices
Asian markets were mixed in Tuesday trade, following the bounce in oil prices after the energy ministers of Russia and Saudi Arabia announced output cuts should be extended till March 2018 and as investors largely shrugged off U.S. political news on President Donald Trump.
U.S. West Texas Intermediate crude jumped more than three percent during the session yesterday following the news. Saudi Arabia and Russia are the world’s top two oil producers.
U.S. crude gained 0.45 percent to trade at $49.07 a barrel while Brent crude added 0.39 percent to trade at $52.02.
“An extension of OPEC and Russia’s oil production cuts for another nine months should put a floor under the oil price in the mid-$40 range as the market inches gradually towards balance,” CMC Markets Chief Market Analyst Ric Spooner said in a Tuesday morning note.
“While the threat of increased shale oil production may mean that the markets also struggles to achieve traction above the mid-$50 range … the likely limitation to downside risk will serve as a confidence booster for the oil and gas producers.”
The Nikkei 225 gained 0.03 percent. It traded at its highest levels since December 2015 earlier in the session. In an exclusive interview with CNBC, Japanese Prime Minister Shinzo Abe said that his country would continue pushing for a trans-Pacific trade deal, but he hoped the U.S. would rejoin the pact.
The Kospi reversed earlier gains to trade lower by 0.03 percent. Australia’s S&P/ASX 200 rose 0.08 percent.
Greater Chinese markets were in the red. The benchmark Hang Seng Index was down 0.28 percent. The Shanghai Composite fell 0.51 percent and the Shenzhen Composite shed 0.011 percent.
Meanwhile, Moody’s downgraded the corporate rating of Singapore-listed Noble Group. The reasons for the downgrade was Noble’s “weak operating cashflow and large debt maturities over the next twelve months,” Moody’s Senior Analyst Gloria Tsuen said in a note.
Noble Group shares gained 6.78 percent after slumping more than 20 percent last week.
Meanwhile, shares of airline Cathay Pacific sank 2.78 percent following reports the company would be cutting jobs as soon as this Friday. The company had earlier said it would be carrying out lay-offs due to competition in the market.
The airline told in a CNBC in a statement that “(t)here will be changes” that Cathay would address publicly “in due course.” Cathay Pacific also added that its new management structure would be “leaner, faster and better.”
Investors were also mulling the potential economic policy impact of a Washington Post report that Trump divulged highly classified information during his meeting with Russian officials last week.
Officials told the Post that the information was sensitive and that its exposure endangered the relationship with an ally. This ally, officials told the Post, “has access to the inner workings of the Islamic State.” The White House later denied the report.
The dollar index, which measures the dollar against a basket of foreign currencies, sank to trade at 98.808. It had traded at levels around the 99 handle last week.
This was due to strength in the euro, which rose for a fourth consecutive session to trade at $1.0986. The greenback gained against the yen for a second straight session, last trading at 113.46.
Meanwhile, the Aussie strengthened against the dollar to trade at $0.7411. The Aussie had touched a near four-month low last week due to weaker commodity prices. The New Zealand dollar also climbed against the dollar, last trading at $0.6889.
Prices of other commodities, including copper and aluminium, tracked the moves in oil, National Australia Bank Currency Strategist Rodrigo Catril said in note, adding that this “helped commodity-linked currencies outperform.” He added that the Kiwi and Aussie had given up some gains as oil prices eased overnight.
The Aussie dollar was mostly unaffected by minutes of the Reserve Bank of Australia’s (RBA) May meeting, which were released earlier in the morning. The RBA said it had concerns about the labor market but was certain that core inflation would improve by 2018, according to Reuters.
A deluge of data from Europe is also expected during the European trading day, with the U.K. reporting CPI and PPI figures and Europe releasing Q1 GDP data at 4:30 pm and 5:00 pm respectively.
Over in the U.S., equities rose more than 0.4 percent across the board, with energy stocks contributing to the gains. The S&P 500 finished the session 0.48 percent higher while gains in tech and cybersecurity stocks caused the Nasdaq to rise 0.46 percent.
Source: CNBC
