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Energy firms rise with oil prices but Asia markets sink again
HONG KONG, June 27, 2018 (BSS/AFP) – Energy firms rallied on Wednesday
after a surge in oil prices but Asian markets struggled to maintain early
momentum and extended their recent losses as trade war fears torment
investors.
Both main crude contracts piled higher after the State Department warned
US allies they would be hit with sanctions if they did not halt Iran oil
purchases by November 4.
Analysts said that while the announcement was not unexpected, the mere
confirmation of the fact was enough to push investors into buying mode.
The commodity has enjoyed a healthy run since the weekend, when OPEC and
Russia agreed to a moderate lift in their 18-month-old output ceiling.
Unrest in producer Libya was also providing support.
The higher oil prices — Brent added more than two percent and WTI more
than three percent Tuesday — lifted energy firms. CNOOC soared more than
four percent in Hong Kong while PetroChina added 1.6 percent. Woodside
Petroleum in Sydney added 1.4 percent, while Tokyo-listed Inpex climbed 1.5
percent and JXTG soared more than six percent.
However, trade tensions continue to loom large, with investors on edge
awaiting the next developments.
Tokyo ended 0.3 percent lower. Hong Kong lost more than one percent in the
afternoon and Shanghai closed 1.1 percent down, with the mainland Chinese
market now in a correction — down 20 percent from its recent highs.
Seoul edged 0.4 percent down, while Singapore shed 0.1 percent and Sydney
was marginally lower. Taipei and Mumbai fell but Wellington, Manila, Bangkok
and Jakarta were up.
Stephen Innes, head of Asia-Pacific trading at OANDA, said Donald Trump’s
attack on Harley-Davidson indicated he is not ready to back down on his
hardline protectionist America first agenda.
– ‘No one is safe’ –
The president on Tuesday hit out at the motorbike maker after it said it
was planning to shift some manufacturing overseas because of European Union
tariffs put in place as retaliation for US duties.
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ASIA-MARKETS-UPDATE 2 LAST HONG KONG
He said the bikes should “never” be built outside the United States, and
tweeted: “Harley must know that they won’t be able to sell back into US
without paying a big tax!”
In a commentary, Innes said: “The only thing I can think of that is more
iconic Americana than apple pie is Harley-Davidson.
“So, after the president’s recent Twitter tirade directed at the iconic
motorcycle manufacturer, it cements the view that, friend or foe, no one is
safe from the wrath of the US administration’s America First trade policy.”
He added that, while the US economy remains in rude health, which should
provide equities support, “investors are caught between a hammer and anvil on
escalating trade wars”.
On currency markets, the trade uncertainty is pushing the dollar up
against most high-yielding units owing to its safe haven status, though it
weakened against the yen, euro and pound.
The Chinese yuan also fell and is coming under increasing pressure owing
to concerns about the impact of a trade war on the world’s number two
economy, which is also showing signs of weakness.
The People’s Bank of China at the weekend lowered lenders’ reserve
requirements in a bid to free up cash but while it was welcomed it added to
the yuan’s weakness and fuelled a sense of unease in the economic outlook.
Markets are keeping an eye on US durable goods orders later Wednesday
“with some interest here in whether the concerns being flagged by various Fed
officials about trade worries leading to deferred investment and hiring
decisions are showing up in orders,” Ray Attrill, head of forex strategy at
National Australia Bank, said.
In early trade London rose 0.3 percent, Paris was flat and Frankfurt edged
up 0.1 percent.
– Key figures around 0720 GMT –
Tokyo – Nikkei 225: DOWN 0.3 percent at 22,271.77 (close)
Hong Kong – Hang Seng: DOWN 0.1 percent at 28,847.66
Shanghai – Composite: DOWN 1.1 percent at 2,813.18 (close)
London – FTSE 100: UP 0.3 percent at 7,557.50
Euro/dollar: UP at $1.1660 from $1.1600 at 2100 GMT
Pound/dollar: UP at $1.3225 from $1.3200
Dollar/yen: DOWN at 109.87 yen from 110.08 yen
Oil – West Texas Intermediate: UP 31 cents at $70.84
Oil – Brent Crude: UP 33 cents at $76.64 per barrel
New York – Dow Jones: UP 0.1 percent at 24,283.11 (close)
BSS/AFP/HR/1340