Oil Eases After Five-Day Rally Amid Middle East Tensions and OPEC Demand Cut – APM Capital Market Report

Mark Pussard, Head of Risk, APM Capital

Commodities

Oil prices eased off a little on Tuesday after five straight winning sessions as supply risks posed by widening Middle Eastern conflict were tempered by demand concerns a day after OPEC cut its forecast for demand growth in 2024.

Benchmark Brent crude futures were down $1.32, or 1.6%, at $80.98 a barrel. U.S. West Texas Intermediate crude was down 2.14% to $78.35.

Gold prices steadied on Tuesday after a 3-day surge but remained close to record highs. Spot gold fell 0.4% to $2,460.78 an ounce, while gold futures expiring in December fell 0.1% to $2,501.45 an ounce. 

US market

U.S. indexes finished strongly higher on Tuesday and hit a near two-week high after softer producer prices data reinforced bets of an interest-rate cut by the Federal Reserve in September. The index climbed by 0.1% over the course of the month, according to Bureau of Labor Statistics data, and was flat when excluding volatile food and energy components.

The S&P 500 gained 90.04 points, or 1.68%, to end at 5,434.43 points, while the Nasdaq Composite gained 407.00 points, or 2.43%, to 17,187.61. The Dow Jones Industrial Average rose 408.63 points, or 1.04%, to 39,765.64.

Treasury yields eased in the bond market following the inflation data, as traders remain convinced the Fed’s meeting next month will bring the first cut to interest rates since the COVID crash of 2020.  The yield on the 10-year Treasury fell to 3.84%, from 3.91% late Monday.

European market

European stocks shrugged off a morning setback to close higher on Tuesday, as investors reacted to some positive economic data from the U.S. and Europe and looked ahead to crucial inflation readings from the U.S. and U.K., due later in the week.

The pan European Stoxx 600 climbed 0.52%. The U.K.’s FTSE 100 gained 0.3%, Germany’s DAX ended 0.48% up, and France’s CAC 40 advanced 0.35%, while Switzerland’s SMI closed with a gain of 0.46%.

Asian market

Asian stocks rose on Tuesday, led by Japanese shares on the back of a steady yen, with traders awaiting data including the U.S. inflation report to gauge the Federal Reserve’s policy outlook after volatile moves last week.

Japan’s Nikkei rose more than 2% in early trading following a holiday on Monday, a welcome relief after last week’s wild swings that began with a massive sell-off spurred by a rising yen and fears of a U.S. recession. 

MSCI’s broadest index of Asia-Pacific shares outside Japan was slightly higher at 556.19. Chinese stocks were little changed in early trading, while Hong Kong’s Hang Seng Index was also flat.

Forex

The US PPI data falling short of expectations caused a broad dollar sell-off against the majors on Tuesday. The dollar index, which measures the greenback against six major peers, lost 0.56 percent to 102.559.

EURUSD broke out its recent trading range and soared to 1.0992 U.S. dollars, up 0.56%. The British pound also joined the party with GBPUSD up to 1.2857 U.S. dollars, 0.73%.

The U.S. dollar bought 146.68 Japanese yen, lower than the 147.30 Japanese yen of the previous session. The U.S. dollar lost to 0.8640 Swiss francs from 0.8653 Swiss francs, and it decreased to 1.3712 Canadian dollars from 1.3735 Canadian dollars.

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Last Updated on 5 months by News Desk 1