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ASIA-MARKETS-UPDATE
Oil prices surge as Iranian tanker hit by double blast off Saudi
HONG KONG, Oct 11, 2019 (BSS/AFP) – Oil prices surged more than two
percent on Friday after an Iranian tanker was hit by suspected missile
strikes in Saudi Arabia, sparking fresh supply concerns in the already-tense
Gulf region.
The National Iranian Tanker Company, which owns the ship, said the hull of
the Sabiti suffered two separate explosions off the Saudi coast, adding they
were “probably caused by missile strikes”.
The news sent Brent surging 2.3 percent to $60.46 at one point, while West
Texas Intermediate jumped 2.1 percent to $54.69.
Both later eased back slightly but investors remain on edge as the
explosions come just weeks after two of Saudi Arabia’s biggest oil
installations were hit in blasts that briefly wiped out five percent of
global production, causing a record rise in prices.
They will also revive concerns about the security of the world’s crude
supplies as tensions in the tinderbox Gulf are already high, with Riyadh and
the United States accusing Iran of being behind last month’s attacks.
“The explosion points to potential geopolitical risks and that has once
again surprised the market to the upside,” Will Sungchil Yun, a commodities
analyst at HI Investment & Futures Corp., told Bloomberg News.
“It still remains to be seen whether prices will keep rising as investors
are putting their focus on (China-US) trade talks and the gains won’t last
long if the negotiations result in a no-deal.”
Crude had already been rising on signs of progress in the China-US trade
talks and after OPEC Secretary-General Mohammad Barkindo said the grouping of
the world’s giant producers would do what it could to avert another slump.
Asian equities were also enjoying strong buying thanks to hopes of
progress in the China-US trade talks, with Donald Trump saying they were
“going very well”.
Negotiators from the world’s top two economies kicked off much-anticipated
talks on resolving their long-running tariffs row on a positive footing,
easing worries that they might be cut short.
Without elaborating, Trump told reporters: “I will say I think it’s going
really well. We had a very, very good negotiation with China.”
Adding to the positive vibes was news that Trump would meet China’s top
trade envoy Liu He at the White House.
The developments allowed dealers to breathe a sigh of relief as tensions
between the two sides appeared to be growing after the US put new
restrictions on Chinese firms over human rights abuses and reports Beijing
had narrowed the issues it was willing to discuss.
“The fog of trade war is beginning to lift, giving way to an air of trade
optimism sweeping through global capital markets,” said Stephen Innes, Asia-
Pacific market strategist at AxiTrader.
“Investors are starting to believe there is light at the end of the…
tunnel as hope springs eternal.”
MORE/HR/1448
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
– Brexit optimism –
Asian markets were up across the board, with energy firms given a big
boost by the pick-up in oil prices.
Hong Kong led gains, jumping more than two percent, while Tokyo added more
than one percent, and Shanghai and Sydney each put on 0.9 percent.
Singapore and Seoul both gained 0.8 percent, with healthy gains also
recorded in Wellington, Manila, Mumbai and Jakarta.
In early trade London fell 0.3 percent but Paris rose 0.3 percent and
Frankfurt put on 0.9 percent.
Talks are expected to resume on Friday with hopes they can at least lead
to a delay in tariffs, due next week, being imposed on China.
“The prospect of US-China trade truce that results in the suspension of
further planned tariffs increases is rightly welcome news,” Rodrigo Catril at
National Australia Bank said.
“But as it is often the case, the devil will be in the detail,” he warned,
adding that if the optimism is to last “a meaningful de-escalation in
tensions is required”.
Markets are also getting some support from rare signs of progress in the
Brexit saga after British Prime Minister Boris Johnson and his Irish
counterpart Leo Varadkar said they could see a route towards striking a
possible divorce deal.
After hours of talks regarding the vexed question of Northern Ireland, the
two issued a joint statement that said: “Both continue to believe a deal is
in everybody’s interest. They agreed that they could see a pathway to a
possible deal.”
While Varadkar said there were still hurdles to overcome, the news did
provide some much-needed hope in the crisis after German Chancellor Angela
Merkel was reported to have said Brexit talks were “close to breaking down”.
The pound surged two percent against the dollar on Thursday and also
rallied on the euro, and in early Asian trade managed to hold its ground.
“The process has dragged on, and there have been a few bumps along the
way, but yesterday’s message was one of the more upbeat updates,” said David
Madden, market analyst at CMC Markets UK.
– Key figures around 0820 GMT –
Brent North Sea crude: UP $1.22 at $60.32 per barrel
West Texas Intermediate: UP $1.02 at $54.57 per barrel
Tokyo – Nikkei 225: UP 1.2 percent at 21,798.87 (close)
Hong Kong – Hang Seng: UP 2.3 percent at 26,308.44 (close)
Shanghai – Composite: UP 0.9 percent at 2,973.66 (close)
London – FTSE 100: DOWN 0.3 percent at 7,166.00
Pound/dollar: UP at $1.2457 from $1.2440 at 2100 GMT
Euro/pound: DOWN at 88.40 pence from 89.56 pence
Euro/dollar: UP at $1.1012 from $1.1006 at 2100 GMT
Dollar/yen: UP at 107.98 yen from 107.88 yen
New York – Dow: UP 0.6 percent at 26,496.67 (close)
BSS/AFP/HR/1450