OPEC and Ital­ian un­ease weigh on global stocks

Kuwait Times - - BUSINESS -

Un­cer­tainty over whether OPEC coun­tries will back an oil pro­duc­tion cut at their meet­ing this week, as in­tended, weighed on global stock mar­kets yes­ter­day. Wor­ries over next week’s con­sti­tu­tional ref­er­en­dum in Italy also kept in­vestors at bay.

In Europe, Ger­many’s DAX in­dex was down 0.7 per­cent to 10,630 while the CAC 40 in France fell 0.5 per­cent to 4,526. The FTSE 100 in­dex of lead­ing Bri­tish shares was 0.3 per­cent lower at 6,819. US stock mar­kets were poised for a lower open­ing with Dow fu­tures and the broader S&P 500 fu­tures down 0.2 per­cent. On Fri­day, the Dow and the S&P both hit fresh highs.

Major oil pro­duc­ers from the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries meet to­mor­row to dis­cuss out­put cuts to shore up prices, but Iran and Iraq have so far failed to agree to a re­duc­tion, rais­ing doubts over the Vi­enna meet­ing’s out­come. OPEC’s top pro­ducer, Saudi Ara­bia, has sug­gested it might be open to no out­put cut, de­part­ing from pre­vi­ous state­ments in a move an­a­lysts said makes an agree­ment less likely. The Saudis also pulled out of a meet­ing with Rus­sia and other large non-OPEC pro­duc­ers, leav­ing all de­ci­sions to the Vi­enna meet­ing. Oil prices have been ex­cep­tion­ally volatile amid the un­cer­tainty, fall­ing sharply in early Mon­day trad­ing be­fore re­cov­er­ing. The bench­mark New York rate was up 34 cents at $46.40 a bar­rel while Brent, the in­ter­na­tional stan­dard, was 54 cents higher at $48.79.

On Dec 4, Ital­ians vote on con­sti­tu­tional changes that would limit the power of the up­per house and make it eas­ier for gov­ern­ments to pass leg­is­la­tion. Prime Min­is­ter Mat­teo Renzi has said he will re­sign in case of a “no” re­sult. New elections, if held, could bring to power the Five Star Move­ment, which has said it wants to hold a ref­er­en­dum on euro mem­ber­ship.

“Eq­ui­ties have started the week on the back foot, with in­vestors con­cerned about Wed­nes­day’s OPEC meet­ing be­ing a waste of time and next Sun­day’s Ital­ian ref­er­en­dum hav­ing po­ten­tial to send shiv­ers through Europe’s bank­ing sec­tor,” said Mike van Dulken, Head of Re­search at Ac­cendo Mar­kets.

China’s yuan re­bounded from an eightyear low against the US dol­lar af­ter a cen­tral bank of­fi­cial said Bei­jing wants it to re­main sta­ble. The yuan’s ex­change rate is based on a bas­ket dom­i­nated by the Amer­i­can cur­rency and has been dragged up by the dol­lar’s rise while other de­vel­op­ing coun­try cur­ren­cies have weak­ened. Yes­ter­day, the mid­dle point of the nar­row band in which the yuan is al­lowed to fluc­tu­ate against the dol­lar rose by just over 0.1 per­cent to 6.9042 to the dol­lar. That came af­ter Yi Gang, a deputy cen­tral bank gov­er­nor, was quoted on the bank’s web­site as say­ing the yuan has “char­ac­ter­is­tics of a strong and sta­ble cur­rency” and was likely to “re­main rel­a­tively sta­ble at a rea­son­able and bal­anced level.”

The Shang­hai Com­pos­ite In­dex gained 0.5 per­cent to 3,277.00 and Hong Kong’s Hang Seng in­dex also ad­vanced 0.5 per­cent to 22,830.57. Tokyo’s Nikkei 225 gave up 0.1 per­cent to 18,356.89 and Syd­ney’s S&P-ASX 200 re­treated 0.8 per­cent to 5,464.40. Bench­marks in Manila and Jakarta also de­clined. Seoul’s Kospi added 0.2 per­cent to 1,978.13 and In­dia’s Sen­sex rose 0.1 per­cent to 26,343.54.

Most Asia mar­kets up

Hong Kong led a gain in most Asian mar­kets yes­ter­day af­ter of­fi­cials an­nounced the start of a long-awaited link-up with Shen­zhen, but the dol­lar re­treated against most of its peers af­ter its re­cent surge. Crude prices also saw fresh losses, af­ter both main con­tracts slumped around four per­cent on Fri­day ow­ing to dis­agree­ments over plans to cut out­put, with Iran and Iraq press­ing to be ex­cluded and Rus­sia sug­gest­ing it will only freeze out­put.

Of­fi­cials on Fri­day’s said the tie-up be­tween the Hong Kong and Shen­zhen mar­kets will start on De­cem­ber 5. The scheme will give Hong Kong traders ac­cess to the main­land’s se­cond stock ex­change, the world’s eighth largest with a mar­ket cap­i­tal­i­sa­tion of $3.3 tril­lion as of Septem­ber.

The tie-up fol­lows a sim­i­lar “stock con­nect” be­tween Shang­hai and Hong Kong launched two years ago, which gave for­eign­ers new ac­cess to Chi­nese com­pa­nies not quoted else­where, and en­abled main­lan­ders to trade in Hong Kong.

The city’s Hang Seng In­dex soared more than one per­cent in the af­ter­noon, though Shen­zhen slipped 0.1 per­cent by the close. Shang­hai ended up 0.5 per­cent.

Most other regional stock mar­kets were up, ex­tend­ing last week’s gains on bets Don­ald Trump’s spend­ing plans will ramp up growth in the US econ­omy. Seoul rose 0.2 per­cent, Sin­ga­pore added 0.8 per­cent and Welling­ton added 0.1 per­cent but Syd­ney dipped 0.8 per­cent. Tokyo shed 0.1 per­cent af­ter a seven-day win­ning run that took it to an 11-month high, with ex­porters hit by a slight re­cov­ery in the yen against the dol­lar. — Agen­cies

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