NEW YORK, July 20, 2019 (BSS/AFP) – Oil prices rallied and US stocks
tumbled Friday following news of a tanker attack in the Middle East as
investors considered the size of an expected Federal Reserve interest rate
cut later this month.
Wall Street stocks had been in positive territory through early afternoon,
but fell decisively after Iran’s Revolutionary Guards announced they had
confiscated a British tanker in the strategic Strait of Hormuz — a move that
prompted swift criticism from the United States and Britain.
Oil prices also rallied on the latest escalation of tensions in Iran,
lifting petroleum-linked equities in the US.
“Perhaps this will be the action that forces all parties to de-escalate
the situation and come to the negotiating table,” said a note from BMO
Capital Markets.
“As it stands, it appears two British flagged tankers have been seized and
the weekend news wires will be watched closely ahead of Monday’s open.”
In New York, the broad-based S&P 500 lost 0.6 percent, while the Dow ended
down 0.3 percent, lifted in part by Boeing.
The aerospace giant saw its share price surge 4.5 percent despite
announcing some $6.6 billion in new costs tied to the worldwide grounding of
the 737 MAX planes.
Analysts said while costs were higher than expected, Boeing reassured
investors in some respects, including its decision not to further cut
production of the MAX.
Earlier, European markets finished mixed.
– Big rate cut ahead? –
US stocks rallied Thursday following remarks from New York Federal Reserve
Bank President John Williams who said central banks should “act quickly” and
not shy from a “dramatic series of rate cuts” to address economic weakness.
The comments were interpreted as endorsing an interest rate cut later this
month, possibly a larger 50-basis point cut.
But the New York Fed clarified that the speech concerned decades of
research and was not about what the central bank may decide at its next
policy meeting July 30-31.
US President Donald Trump joined the fray, again flogging the Fed on
Twitter for raising rates, and demanding an immediate interest rate cut.
Later Friday, a Wall Street Journal report saying the Fed is targeting a
25-basis point interest rate cut — rather than a larger move some were
hoping for — helped push US stocks lower, analysts said.
The dollar also advanced against the euro and other currencies as the
already-low prospects for the bigger Fed interest rate cut dimmed further.
– Key figures around 2050 GMT –
New York – Dow: DOWN 0.3 percent at 27,154.20 (close)
New York – S&P 500: DOWN 0.6 percent at 2,976.61 (close)
New York – Nasdaq: DOWN 0.7 percent at 8,146.49 (close)
London – FTSE 100: UP 0.2 percent at 7,508.70 (close)
Frankfurt – DAX 30: UP 0.3 percent at 12,260.07 (close)
Paris – CAC 40: FLAT at 5,552.34 (close)
EURO STOXX 50: DOWN 0.1 percent at 3,480.18 (close)
Tokyo – Nikkei 225: UP 2.0 percent at 21,466.99 (close)
Hong Kong – Hang Seng: UP 1.1 percent at 28,765.40 (close)
Shanghai – Composite: UP 0.8 percent at 2,924.20 (close)
Euro/dollar: DOWN at $1.1216 from $1.1277 at 2100 GMT
Pound/dollar: DOWN at $1.2497 from $1.2549
Dollar/yen: UP at 107.72 yen from 107.30 yen
Brent North Sea crude: UP 0.9 percent at $62.47 per barrel
West Texas Intermediate: UP 0.6 percent at $55.63 per barrel