US Stocks Weaken, Oil Surges, as China and OPEC Defy Trump on Trade and Energy
Frankfurt (Sept 24) Global stocks weakened Monday, while oil prices surged to a four-month high, as investors reacted sharply-worded attacks on President Donald Trump's trade and energy policies from leaders of the world's second-largest economy and its biggest oil producing cartel.
OPEC got the ball rolling Sunday when it decided to make no changes to it output quotas at its weekend meeting in Algeria, with Saudi Arabia's energy minister insisting that the global oil market is "balanced and that he "doesn't influence prices", a clear reference to President Trump's Tweet last week demanding the cartel "get prices down now!".
Iran's oil minister called the OPEC decision, which lifted Brent crude futures past $80 a barrel, "the biggest insult to Washington's allies in the middle east" and suggested global producers were ready to deal with looming U.S. sanctions on the sale of Iranian crude, which take effect over the first week of November and are expected to take between 1.5 million and 2.0 million barrels of oil from the market each day.
Both Brent and WTI crude prices trader sharply higher in the overnight session following the OPEC meeting, with Brent contracts for November delivery rising $1.97 per barrel to $80.77, the highest since November 2014, and WTI futures for the same month gaining $1.51 to trade at $72.29 per barrel.
China followed suit late Sunday with a detailed report on the nature of tariffs and trade, just hours after levies on $260 billion worth of goods from both Washington and Beijing took effect Monday, and an accusation that the U.S. was using "bully" tactics to impose its economic will on the rest of the world.
China said the U.S. has "brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure," according to the government white paper quoted in the state-run Global Times.
A series of holidays in the Asia, which kept markets in China, Japan and South Korea closed for the session, limited trading on other benchmarks in the region and pushed the MSCI Asia ex-Japan index 1.06% lower heading into the final hours of dealing.
Early indications from U.S. equity futures suggest the bearish sentiment will bleed onto Wall Street Monday, with contracts tied to the Dow Jones Industrial Average suggesting an 55.5 point opening bell decline while those linked to the S&P 500 indicating an 6.2 point pullback for the broader benchmark. Nasdaq Composite futures were marked 38.5 points lower from their Friday close.
European stocks were also weaker at the start of trading in the final week of the third quarter, with the Stoxx 600 falling 0.29% to 383.18 points in the opening minutes, led to the downside by a 0.4% pullback for the DAX performance index and a 0.21% decline for the CAC-40.
Britain's FTSE 100 was marked 0.17% lower in the opening minutes of trading as the pound inched modestly higher against the dollar to change hands at 1.3010.
Sky Plc (SKYAY) shares were a notable early mover on the benchmark, rising 9% to trade at £17.24 each following Saturday's sealed-bidding auction which saw Comcast Corp. (CMCSA) top rivals Walt Disney Co. (DIS) and 21st Century Fox (FOXA) for the right to buy the outstanding shares of Europe's biggest pay-TV broadcaster in a deal that values the group at just under $40 billion.
Rangold Resources (GOLD) was also on the move, rising 6.1% to £52.24 after it agreed to an $18.3 billion all-share merger with Canada's Barrick Gold Corp (ABX) that will create a global mining giant that controls five of the world's ten biggest bullion deposits. Barrick shares were marked 3.9% higher in pre-market trading in New York at $10.88, a move which would trim its year-to-date decline to around 23%.
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked modestly higher from its Friday levels at 94.22 while benchmark 10-year bond yields were holding at 3.078% ahead of the Federal Reserve's two-day rate setting meeting which beings Tuesday in Washington.
The CME Group's FedWatch tool is pricing in a 94.8% chance of a rate hike Wednesday, a decision which would take the key rate to a range of 2% to 2.25%.
TheStreet
