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ASIA-MARKETS-UPDATE
Oil dips after rallying on US-Iran tensions, Asia markets retreat
HONG KONG, June 21, 2019 (BSS/AFP) – Oil prices ticked lower Friday
following the previous day’s surge fuelled by tensions between the United
States and Iran, while Asian equities turned negative as investors took their
foot off the pedal following a recent rally.
Fears of a conflict in the crude-rich Middle East ratcheted up Thursday
when Tehran said it had shot down a US “spy drone” that was violating its
airspace, which Washington denied.
US President Donald Trump described the move as a “big mistake”, adding:
“This country will not stand for it”.
The news — which comes a week after the US accused Iran of attacking two
tankers in the Gulf of Oman — sent oil prices soaring more than six percent
Thursday, while talk has increased of a military stand-off that could deal a
massive blow to supplies.
However, after an initial gain the commodity edged down slightly Friday as
traders took heart from comments from Trump later, saying he thought it “hard
to believe it was intentional”, adding “I think that it could have been
somebody who was loose and stupid that did it.”
The president’s mixed message left the world unsure what Washington’s next
move would be but observers said the cost of crude could continue to rise.
“If we meld supply risk fear, a powerfully bullish narrative, (the Federal
Reserve’s) willingness to execute a pro-cyclical rate cut juicing risk assets
and frame it with the potentially game-changing G20, you have the makings of
a solid base for oil to shoot even higher,” said Stephen Innes, managing
partner at Vanguard Markets.
The focus is also on next week’s planned meeting between Trump and his
Chinese counterpart Xi Jinping on the sidelines of the G20 in Japan next
week.
Trump’s tweet about “a very good telephone conversation” between the pair
this week fuelled a surge across global markets on hopes for a deal to end
their countries’ long-running trade war that has impacted the world economy.
However, Asia took a step back Friday, having been given an extra boost by
the Fed indicating it will begin to cut interest rates soon, and other
central banks erring towards softer monetary policies.
MORE/HR/1412
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Gold breaks $1,400 –
Hong Kong dipped 0.3 percent, while Tokyo ended one percent lower and
Sydney shed 0.6 percent. Seoul dropped 0.3 percent while Singapore was off
0.1 percent, with Manila, Mumbai and Jakarta also down.
But Shanghai gained 0.5 percent, Taipei added 0.4 percent, and Wellington
put on 0.4 percent.
In early trade London and Paris each rose 0.2 percent, while Frankfurt was
flat.
The recent rises were “built on the potential for monetary policy support
from the Federal Reserve on one side, and the easing of trade tensions on the
other”, Alex Dryden, global market strategist at JPMorgan Asset Management,
told Bloomberg TV.
However, he warned: “That is not the best basis for building an equity
market rally in a sustainable manner.”
The prospect of lower interest rates kept the dollar under pressure
against its major peers as well as most higher-yielding currencies including
the Chinese yuan, which is at levels not seen since mid-May.
A cheaper dollar and tensions in the Middle East have also ramped up
demand for gold — seen as a go-to asset in times of uncertainty and upheaval
— sending it above $1,400 an ounce for the first time since 2013.
“Gold jumped more than three percent on Thursday as the Fed left little
doubt that an interest rate (cut) is coming and with trade and political
tensions still at play the yellow metal was a clear choice for investors
looking for a safe haven,” said OANDA senior market analyst Alfonso Esparza.
– Key figures around 0720 GMT –
West Texas Intermediate: DOWN eight cents $56.99 per barrel
Brent North Sea oil: DOWN nine cents at $64.36 per barrel
Tokyo – Nikkei 225: DOWN 1.0 percent at 21,258.64 (close)
Hong Kong – Hang Seng: DOWN 0.3 percent at 28,452.17
Shanghai – Composite: UP 0.5 percent at 3,001.98 (close)
London – FTSE 100: UP 0.2 percent at 7,437.65
Euro/dollar: UP at $1.1292 from $1.1289 at 2130 GMT
Pound/dollar: UP at $1.2705 from $1.2702
Dollar/yen: DOWN at 107.20 yen from 107.27 yen
New York – Dow: UP 0.9 percent at 26,753.17 (close)
`BSS/AFP/HR/1415