European stock markets lose after record runs oil remains near $80
Date
5/19/2018 1:08:25 AM
(MENAFN- Gulf Times) Benchmark oil contract brent North Sea held near $80 yesterday, while Europe's main stock markets took a pause after record runs.
Brent went above $80 on Thursday for the first time in three-and-a-half years as a perfect storm of issues fuels concerns about supplies, with some forecasting it could break $100 at some point.
Around 1545 GMT yesterday, Brent stood at $79.30 per barrel, the same as Thursday's close.
Milan's shares index was the biggest faller among leading markets in Europe with Italy's banks in particular dragged down by the prospect of the country being led by a coalition of far-right and anti-establishment parties.
Top European stock markets had meanwhile been propelled to heights Thursday by weakness in the pound and euro, which boosted share prices of exporters.
London's FTSE 100 index closed at an all-time peak while the Paris CAC 40 ended at the highest level since 2007.
In trading yesterday, London and the two main eurozone markets, Paris and Frankfurt, fell slightly.
London's FTSE 100 lost 0.12% at 7,778.79 points, Frankfurt's DAX 30 was down 0.28% at 13,077.72 and Paris' CAC 40 was down 0.13% at 5,614.51 points at close yesterday.
Joshua Mahony, market analyst at IG trading group, noted that 'a distinct lack of major economic releases throughout the day shifted the focus onto 'geopolitical and economic factors, with rising bond yields and fears over a breakdown in US-Chinese trade talks proving a drag.
Brent and WTI, the other key oil contract, are up about one third from their 2018 lows seen in February, the upward pressure coming from US President Donald Trump's decision to withdraw from the Iran nuclear deal as well as economic uncertainty in key producer Venezuela and an output cap by Opec and Russia.
Higher oil prices are boosting expectations for fatter profits for global energy giants, while increasing expectations of higher inflation.
This in turn is cementing expectations of multiple interest rate hikes from the US Federal Reserve this year.
Key US 10-year bond yields are already at seven-year highs above 3%, with the prospect of paying more to borrow money sending the dollar higher.
Adding to market unease is a tariffs spat between the United States and China, which has raised concerns about a trade war between the world's two biggest economies.
President Xi Jinping's pointman on economic issues is in Washington holding talks with a top-level delegation led by Treasury Secretary Steven Mnuchin, with markets hoping the two sides can reach an agreement.
Wall Street trading was flat shortly after the open yesterday after US markets closed in the red on Thursday after Trump lashed out at European and Chinese trading partners and cast doubt on the chances of reaching a deal with Beijing.
Also keeping markets on edge is the future of a summit between Trump and North Korean leader Kim Jong-un after Pyongyang threatened to pull out over US demands that it get rid of its nuclear programme.
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