2 July 2019, Swissquote – Crude oil price made a muted move higher Monday on expectations that some of the world's largest producers would extend production cuts into next year and U.S.-China trade talks could get back on track.
Crude futures rose as much as 3% in early trading following reports that the Organization of the Petroleum Exporting Countries had agreed to maintain the output curtailments that have buoyed prices this year against trade disputes and global growth concerns. Much of oil's gains were lost over the course of the day, as traders awaited official word from OPEC, which is meeting this week in Vienna along with other countries, including Russia.
Oil buyers have lately had to weigh tensions in the Middle East with surging U.S. production and forecasts for weaker demand around the world. U.S. crude for August delivery settled up 1.1% to $59.09 a barrel. Brent crude, the global price gauge, gained 0.5% to settle at $65.06 a barrel. The difference between the two prices is the smallest it has been since August as U.S. crude exports hit record highs. OPEC announced after market hours that its production cuts would last nine months. The move signals that the cartel and its partners are concerned about the possibility of weaker demand well into next year.
Swiss stocks market
The SMI closed up 0.7 percent to 9,970 points Monday, after scaling 10,000 points more than once, on news of new trade talks in the US-China trade dispute. Since Monday, Swiss stocks cannot be traded on EU markets in reaction to the EU Commission decision to no longer recognize Swiss exchange equivalence.
The ban had little effect on prices on Monday. Traders said investors could simply redirect transactions, but the long-term effects are as yet unknown. A slight increase in trading volume was seen in Swiss stocks. Bank stocks Credit Suisse climbed 1.5 percent and UBS 1.1 percent, likely on investor hopes the banks could garner greater trading volume with the new rules on trading Swiss stocks.
Pharma heavyweights Novartis gained 1.2 percent, Roche 1.6 percent, and Lonza 1.4 percent. The slight easing in the US-China trade dispute helped cyclical stocks. ABB rose 1.8 percent and Lafargeholcim 0.9 percent. Swiss Life slid 0.5 percent after analysts downgraded it to "neutral" from "buy.
European stocks market outlook
The Stoxx Europe 600 gained 0.8% as investors took heart from an easing in trade tensions between the U.S. and China. The DAX rose 1.0% and the CAC-40 finished 0.5% higher after Asian markets mostly made strong advances following Washington's moves to re-start trade talks with Beijing. "Sharp gains throughout Asia certainly provided European markets with a guide, while the S&P 500 futures point towards a record high open this afternoon," says Joshua Mahony at spread-betting firm IG. The Italian government is cutting its 2019 budget deficit target in an effort to forestall disciplinary action by the European Union, Reuters reported Monday, citing "a government source." The country's budget deficit target will drop to 2.04% from an earlier goal of 2.4%, the report said.
ArcelorMittal (MT.FR) said Monday that it has completed the sale of several steelmaking assets to London's Liberty House Group, part of the divestment package agreed to with the EU to gain approval for its takeover of Italian steelmaker Ilva SpA. The total net consideration for the assets payable to ArcelorMittal is 740 million euros ($841.1 million), the Luxembourg-based steelmaker said.
US indices soar after US and China reached a trade truce
U.S. stocks headed toward fresh records intraday after a thaw in trade relations between the U.S. and China sparked a rally in shares of chip makers. But as the day progressed, the market's momentum petered out, pulling the Dow Jones Industrial Average away from the October record that it briefly topped. To many investors, the weekend's developments had helped them put aside some but not all of their fears.
The U.S. and China had managed to avoid what many had described as a worst-case scenario-a collapse of trade talks and a fresh round of tariffs. But frictions around commerce between the world's two largest economies are likely to be long-lasting, investors said, meaning stocks will likely run into further waves of volatility in the coming months. Investors are still unsure whether the talks will affect the Federal Reserve, which has signaled it may cut interest rates in the coming months if the economy weakens further.
A series of reports Monday showed that in June, U.S. factory activity lost some momentum, the U.K. manufacturing sector had its weakest month in more than six years and Chinese manufacturing activity contracted for the first time in four months. The S&P 500 gained 0.6%, on track to post its sixth record close of the year, while the Nasdaq Composite added 0.9% and edged closer to its closing high hit in May.
The Dow industrials rose 103 points, or 0.4%, to 26702. Shares of technology firms, many of whom have been seen as vulnerable to tariffs, soared, with Apple, Amazon.com, Netflix and Advanced Micro Devices rising more than 1% apiece.
Asia stocks market
Asian markets were mixed Tuesday with details of trade talks still scarce. While Hong Kong is back with premiums after a holiday-related pause, investors on the other stock exchanges are largely exercising restraint.
US government Bonds slips
U.S. government bond prices slipped, with the yield on the benchmark 10-year U.S. Treasury note rising to 2.029% from 2% on Friday as investors shift into riskier assets.
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