Business News, International, (Hong Kong), October 2:-Oil prices built on gains on Tuesday after another blistering rally but most markets were in retreat as traders brushed off a positive lead from Wall Street and the US-Mexico-Canada trade deal.
Crude has motored in recent weeks on concerns about supplies after sanctions are imposed on Iran next month, while OPEC’s decision not to ramp up output, upheaval in Venezuela, a strong dollar and a drop in oil rigs have also pushed prices higher.
“Right now, we’re just in a bull market for oil because of the prospects of a very tight market later on in the year,” John Kilduff, founding partner at New York-based hedge fund Again Capital LLC, told Bloomberg News.
Both main contracts jumped almost three percent on Monday and clocked up fresh gains in Asia, with observers and key players in the sector now eyeing USD 100 a barrel.
Kim Kwangrae, a commodities analyst at Samsung Futures, added: “The market’s very keen to figure out the size of the impact from the Iranian supply disruptions and whether Saudi Arabia and Russia are able to make up for the losses.
“At the same time, the US-Mexico-Canada Agreement is also improving the overall sentiment on oil.” New York traders sent the Dow and S&P 500 higher after the United States-Mexico-Canada Agreement (USMCA) was announced on Sunday to replace the North American Free Trade Agreement.
The deal drew an end to months of uncertainty after Donald Trump had threatened to tear up the decades-old NAFTA.
However, Asia was unable to follow suit. Hong Kong reopened after a long weekend to fall 2.5 percent, with data indicating a drop in Chinese manufacturing activity denting sentiment.
“It’s more than apparent Hong Kong investors are in no mood to join the revamped NAFTA festivities.” Sydney shed 0.8 per cent, Singapore fell 0.5 per cent and Seoul was off 1.3 per cent.
Wellington, Taipei, Jakarta and Manila were also well down.
But Tokyo edged up 0.1 per cent after the Nikkei on Monday saw its highest close in 27 years with the yen at its weakest since November.
Markets in China were closed for a holiday.
In forex trade the euro faced selling pressure on concerns about Italy’s finances after its populist government agreed a massive spending boost that blew out its budget, while eurozone finance ministers warned Rome to abide by fiscal rules.
High-yielding and emerging market currencies were mostly down as dealers looked for safer bets. The dollar broke 15,000 Indonesian rupiah for the first time since 1998 during the Asian financial crisis, while Mexico’s peso and the South African rand were more than one percent off against the greenback.
South Korea’s won, the Australian dollar and the Russian ruble were also sharply lower.
-(NAV, Inputs: Agencies)