BANGKOK (AP) — World shares were mostly lower yesterday as investors kept a wary eye on tensions with Iran and on prospects for a resolution of the tariffs war between China and the United States (US).
Germany’s DAX dropped 0.7 per cent to 12,376.50 while the CAC 40 in Paris lost 0.5 per cent to 5,662.00. Britain’s FTSE 100 gave up 0.3 per cent to 7,323.15. Wall Street looked ready for a steady start, with the future contracts for both the Dow Jones Industrial average and the S&P 500 up 0.1 per cent.
China’s Fosun Tourism Group, owner of Club Med and the biggest shareholder in Thomas Cook, fell 4.2 per cent in Hong Kong after the 178-year-old British tour company filed for bankruptcy. Bookings for more than 600,000 global vacationers were cancelled yesterday as a result. Shanghai-based Fosun International dropped 1.5 per cent.
Britain’s Civil Aviation Authority said Thomas Cook’s four airlines would be grounded and its 21,000 employees in 16 countries, including 9,000 in the UK, will lose their jobs (See also Page 14).
Oil prices rose after US President Donald Trump, arriving in New York for the meeting of the United Nations (UN) General Assembly, said he intended to seek support for a coalition to confront Iran after the US blamed it for last week’s strike on a Saudi Arabian oil facility.
Iran’s president last Sunday urged Western powers to leave the security of the Persian Gulf to regional nations led by Tehran. Hassan Rouhani promised to propose a regional peace plan at this week’s UN meetings.
The US alleges Iran carried out the September 14 attack on Saudi Aramco’s largest oil processor, which caused oil prices to spike by the biggest percentage since the 1991 Persian Gulf War. Yemen’s Iranian-allied Houthi rebels have claimed the assault, which Saudi Arabia said was “unquestionably sponsored by Iran”.
Iran denies being responsible and has warned any retaliatory attack targetting it will result in an “all-out war”.
With all that percolating, US crude oil added 38 cents to USD58.47 a barrel in electronic trading on the New York Mercantile Exchange. Last Friday, it lost 10 cents to USD58.09 a barrel.
Brent crude, the international standard, picked up 31 cents to USD63.51 per barrel.
“Saudi Arabia is struggling to revive its oil production back to its previous level. Aramco’s executives are determined to do whatever it takes and this includes paying premium rates to workers and for the equipment for the repair work. The strength in the oil price is primarily due to the pessimism around Saudi oil production,” Naeem Aslam of ThinkMarkets said in a commentary.
In Asian trading, the Shanghai Composite index skidded 1.0 per cent to 2,977.08, while Hong Kong’s Hang Seng fell 0.8 per cent to 26,223.83 after yet another weekend of violent protests.
In South Korea, the Kospi was flat at 2,091.70, while the S&P ASX 200 in Sydney advanced 0.3 per cent to 6,749.70. Shares fell in Taiwan and in Southeast Asia.
India’s Sensex continued a rally that began last Friday with an announcement of fresh tax incentives for businesses. It climbed 3.0 per cent to 39,164.77 yesterday. Tokyo’s markets were closed for a holiday.
Wall Street ended last week with losses, snapping a three-week winning streak for the S&P 500 following reports that Chinese officials cancelled a planned trip to farms in Montana and Nebraska.
That sparked concern that trade talks due to resume next month might be in trouble after US and Chinese envoys met last week for preliminary discussions to lay the groundwork for later, more formal negotiations.
However, the two sides described the talks in Washington as “productive” and “constructive”, indicating further negotiations will go ahead in coming weeks.
In currency trading, the dollar weakened to JPY107.52 from JPY107.55 yen.
The euro slipped to USD1.0969 from USD1.1020.