Asia energy firms dive along with oil, Trump-Kim hopes provide optimism

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ASIA-MARKETS-UPDATE

Asia energy firms dive along with oil, Trump-Kim hopes provide optimism

HONG KONG, May 28, 2018 (BSS/AFP) – Oil prices extended losses in Asia
Monday after Saudi Arabia and Russia signalled they could raise output, but
indications that Donald Trump’s summit with Kim Jong Un could be back on
supported equity markets.

Both main contracts tanked on Friday after Saudi oil minister Khaled al-
Faleh said his country could open the taps wider in the second half of the
year to insure against any supply shocks.

His Russian counterpart Alexander Novak said they had taked about a two-
year-old deal capping production, adding that OPEC and other members of the
pact would discuss raising limits next month.

The comments come as supply worries increase, with major producer
Venezuela hit by economic uncertainty, Iran facing painful export sanctions
and demand seen picking up.

On Friday Brent sank three percent and WTI fell four percent, and the two
contracts fell more than one percent further in Asia.

The losses come after crude earlier this month hit levels not seen since
November 2014, and led to sharp selling in Asian energy firms.

Sydney-listed Woodside Petroleum ended 3.5 percent down and Inpex dived
2.6 percent in Tokyo.

CNOOC lost 1.2 percent in Hong Kong, but Sinopec rebounded in the
afternoon and PetroChina surged more than five percent, boosted by news that
Chinese authorities had given firms freedom to raise and lower gas prices
based on supply and demand. PetroChina is the country’s biggest gas supplier.

Broader markets were mostly up on renewed hopes for the Trump-Kim summit
after the US president appeared Friday to do a U-turn 24 hours after
cancelling the meeting.

– Euro strengthens –

Markets fell in Asia Friday after Trump said he had pulled out of the June
12 gathering, citing “open hostility” from Pyongyang. However, a flurry of
diplomacy — led by South Korea, whose President Moon Jae-in met Kim Saturday
— has put it back on track.

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ASIA-MARKETS-UPDATE 2 LAST HONG KONG

And on Sunday Trump tweeted that a US team “has arrived in North Korea to
make arrangements for the summit”.

He added: “I truly believe North Korea has brilliant potential and will be
a great economic and financial Nation one day. Kim Jong Un agrees with me on
this. It will happen!”

Tokyo finished 0.1 percent higher, Hong Kong added 0.6 percent in the
afternoon and Singapore put on 0.4 percent, while Seoul rallied 0.7 percent.

Wellington, Jakarta and Taipei were also up but Sydney slipped 0.5 percent
and Shanghai closed 0.2 percent off.

On currency markets, the euro edged up despite political uncertainty in
Italy, with investors welcoming news that President Sergio Mattarella had
vetoed the nomination of fierce eurosceptic Paolo Savona as economy minister.

While the decision sparked the resignation of prime minister-elect
Giuseppe Conte and could lead to fresh elections, it was seen as a positive
move for the euro.

However, Ray Attrill, head of foreign-exchange strategy at National
Australia Bank in Sydney, said: “We may now be in for an extended period of
heightened uncertainty ahead of fresh elections — assuming that’s where
we’re headed.

“For now it’s more relief that Italy will not — for now at least — have
an avowed eurosceptic finance minister.”

The single currency’s gains are also being limited by the prospect of
upheaval in Spain, where Prime Minister Mariano Rajoy could face a no-
confidence vote after his party was found guilty of benefiting from illegal
funds in a massive graft trial.

In early European trade Paris rose 0.5 percent and Frankfurt was up 0.6
percent, while Milan rose 1.8 percent as traders welcomed Mattarella’s
decision.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 22,481.09 (close)

Hong Kong – Hang Seng: UP 0.6 percent at 30,784.43

Shanghai – Composite: DOWN 0.2 percent at 3,135.08 (close)

London – FTSE 100: Closed for a public holiday.

Euro/dollar: UP at $1.1711 from $1.1661 at 2100 GMT on Friday

Pound/dollar: UP at $1.3330 from $1.3312

Dollar/yen: DOWN at 109.45 yen from 109.55 yen

Oil – West Texas Intermediate: DOWN $1.28 at $66.60 per barrel

Oil – Brent North Sea: DOWN 91 cents at $75.53

New York – Dow: DOWN 0.2 percent at 24,753.09 (close)

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