Global Stocks Rise as Oil Prices Plateau
January 07 2020 - 7:57AM
Dow Jones News
By Anna Isaac
Global stocks edged higher as investors expressed relief that
oil prices stopped rising following heightened tensions in the
Middle East Tuesday.
Futures tied to the Dow Jones Industrial Average were flat.
European and Asian indexes posted gains. The pan-continental
Stoxx Europe 600 rose 0.4%, joined by similar climbs in other
regional gauges. The Japanese index, the Nikkei 225, closed up 1.6%
and China's Shanghai Composite was up 0.7%.
In U.S. premarket trading, energy company Apache Corp.'s shares
rose 12.9% after it reported what it termed a significant oil
discovery offshore Suriname.
The Pentagon said Monday it plans to send B-52 bombers and
additional troops to the Middle East following the targeted killing
of Iranian Maj. Gen. Qassem Soleimani in Iraq last week.
Brent crude, the global benchmark for oil prices, dropped 1%
Tuesday to $68.24 a barrel after a sharp rally Monday.
There was a muted response to the Middle East tensions because
potential discontent in the region had been a backdrop for markets
for some time, said James Athey, senior investment manager at
Aberdeen Standard Investments. The dynamics of oil supply have also
changed, because the Organization of the Petroleum Exporting
Countries is less powerful than it was.
"U.S. production is now so large, that it means it's much more
difficult for OPEC to flex its muscles over global oil supply," Mr.
Athey said. "It would take a huge disruption of supply for a long
period of time. You'd likely have to see a very broad increase of
tensions across the entire Middle East."
Looser monetary policy from the U.S. Federal Reserve also
dampened volatility across markets, he said. "The Fed has also
drugged the market into submission. The market doesn't need to
price risks properly because the Fed has underwritten risk in
markets."
In individual stocks, Danish jewelry seller Pandora A/S climbed
6.5%, adding to gains Monday when it revealed full-year sales
figures that included the holiday sales period. Shares in car maker
Aston Martin Lagonda dropped 10.5% after it issued a profit
warning.
The Chinese yuan reached its strongest level against the dollar
since August after the People's Bank of China released figures
showing foreign exchange reserves rose to a six-month high at the
end of December to $3.108 trillion. A dollar bought 6.9414
yuan.
Later Tuesday, the U.S. Commerce Department is expected to
release November trade figures. The data may offer signs of how
heavily global trade tensions have weighed on commercial activity.
Economists surveyed by The Wall Street Journal estimated there
would be a trade deficit of $43.6 billion in November, compared
with $47.2 billion in the previous month.
Write to Anna Isaac at anna.isaac@wsj.com
(END) Dow Jones Newswires
January 07, 2020 07:42 ET (12:42 GMT)
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