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World share markets cautious as news on Saudi oil plant yet to come

India TV News 2019-09-17 16:50:31

World shares were mixed on Tuesday and oil prices eased back pending updates on restoring output at a Saudi Aramco oil processing plant damaged by an attack over the weekend.

Chinese benchmarks led declines in Asia after the credit ratings agency Moody's downgraded Hong Kong, citing its recent political turmoil.

Germany's DAX lost 0.2% to 12,358.45 while the CAC 40 in Paris added 0.1% to 5,606.73. The FTSE 100 in Britain climbed 0.2% to 7,339.26. On Wall Street, the future contracts for the Dow Jones Industrial Average and the S&P 500 both lost 0.1%.

The U.S. and international benchmarks for crude fell back slightly after vaulting more than 14% overnight after an attack on Saudi Arabia's largest oil processing plant.

The weekend attack on Saudi Arabia's biggest crude processing facility halted production of 5.7 million barrels of crude a day, more than half of the country's global daily exports and more than 5% of the world's daily crude oil production.

The attack raised worries about the risk of more disruptions in the supply of oil at a time when the global economic outlook is clouded by uncertainty.

Crude prices jumped 14% on Monday, comparable to a 14.5% jump on Aug. 6, 1990, following Iraq's invasion of Kuwait.

On Tuesday, benchmark U.S. crude oil was trading 54 cents lower at $62.36 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, it soared $8.05 to settle at $62.90 a barrel. Brent crude oil, the international standard, declined 17 cents to $68.85 per barrel. It jumped $8.80 to close at $69.02 a barrel in London.

In Asia, shares were mixed.

Japan's Nikkei 225 index recovered from early losses to edge 0.1% higher, closing at 22,001.32. South Korea's Kospi was flat at 2,062.33 and the S&P ASX/200 in Sydney added 0.3% to 6,695.30.

Chinese benchmarks skidded after the credit ratings agency Moody's downgraded Hong Kong, citing the city's recent political turmoil.

The Shanghai Composite index shed 1.7% to 2,978.12 and Hong Kong's Hang Seng slipped 1.2% to 26,790.24.

Moody's said in a statement that the protests and their handling showed weaknesses in Hong Kong's institutions. The turmoil was "damaging its attractiveness as a trade and financial hub," it said.

Hong Kong's beleaguered chief executive, Carrie Lam, said the downgrade was "disappointing."

Elsewhere in Asia, India's Sensex fell 1.7% to 36,478.74. Shares also lost ground in Taiwan and Singapore but rose in Indonesia and Thailand.

The spike in oil prices boosted oil producers but weighed on shares in airlines, whose operations can be hurt by any rise in the price of fuel.

China Eastern Airlines' shares dropped 2.6%, ANA Holdings lost 1.5% and Cathay Pacific Airways shed 2.1%.

Concern over higher oil prices in a region heavily dependent on imports from the Middle East is understandable, Mizuho Bank said in a commentary.

"Higher oil imports will weigh on trade balances. For countries that are running trade deficits, such as Indonesia and Philippines, this will widen their deficit and subsequently exert downward pressure on the currency. A weakened currency will then push up oil import bill further," it said.

However, it added that there is still no cause for excess concern.

The oil price gyrations have somewhat overshadowed this week's headline event, the Federal Reserve's meeting on interest rates. Investors are confident the central bank will cut short-term rates by a quarter of a percentage point to a range of 1.75% to 2%. It would be the second such cut in two months, as the Fed tries to protect the economy from a global slowdown and the effects of the U.S.-China trade war.

In currency trading, the dollar rose to 108.19 Japanese yen from 108.15 yen on Monday. The euro gained to $1.1013 from $1.1001.

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