BusinessTop Stories

Oil prices rise on Gulf tensions

Wall Street jumps as heavy earnings week kicks off

LONDON: Oil prices rose yesterday after Iran seized a British tanker in the Gulf, fuelling concern about supplies and a possible conflict in the crude-rich Middle East. The news provided support for the oil market but gains were capped by stubborn demand jitters linked to the weak global economic outlook.

Britain repeated its demand that Iran release the Stena Impero, which the Islamic Revolutionary Guard Corps seized on Friday in the strategic Strait of Hormuz.

“Traders are clearly a little on edge due to the importance of the passage for global oil supplies,” remarked Craig Erlam at the Oanda brokerage. “Oil prices haven’t risen too much yet but if the situation deteriorates further, we should possibly brace for higher prices,” he added. In Libya meanwhile, authorities said that output at the Al-Sharara oil field had resumed, ending a three-day suspension owing to “sabotage” of a pipeline. The suspension had added to upward pressure on crude prices. In afternoon deals, London Brent oil had gained 1.1 percent and New York crude was up by 0.9 percent. Higher oil prices underpinned the share prices of energy companies, which in turn, helped guide most European stocks indices to higher ground.

Meanwhile, Wall Street stocks rose early yesterday at the start of a heavy week of earnings that includes major technology and industrial companies. This week’s earnings calendar Amazon, Google parent Alphabet, Boeing, McDonald’s and American Airlines. This is the second of three weeks during which most of the S&P 500 report second-quarter results.

Last week’s earnings reports, dominated by banks, were better than expected, said CFRA Research’s Sam Stovall. Analysts have lifted their estimates for the second quarter but cut their outlook for the third quarter. “Yet to be determined is whether the (earnings) recession has been postponed or cancelled,” said Stovall. About 10 minutes into trading, the Dow Jones Industrial Average was up less than 0.1 percent at 27,159.04. The broad-based S&P 500 rose 0.2 percent to 2,982.20, while the tech-rich Nasdaq Composite Index jumped 0.5 percent to 8,183.89.

Asian stocks slide
However, Asian equities retreated earlier in the day on dimming hopes for a deep interest rate cut by the Federal Reserve, though all the firms on a new tech-focused board in China rallied on its opening day. Traders took a step back after last week’s gains as the New York Federal Reserve tempered comments from its president, John Williams, who had suggested the central bank could cut borrowing costs by 50 basis points at its policy meeting this month.

“Stocks (in Asia) are on the back foot as the market pares expectations for how deep the Fed will cut rates,” said Neil Wilson, chief market analyst at London-based trading website “Expectations for a 50 (point) cut are diminished and the market is now looking to the European Central Bank this week to see how dovish they go.”
Bets that the Fed will only reduce rates by 25 points provided support to the dollar against most high-yielding, riskier currencies. — AFP

Back to top button