Yen Surges as Oil Price War Adds to Global Worries: Markets Wrap
The yen surged with renewed vigor to start the trading week as coronavirus worries lingered and Saudi Arabia kicked off a price war for oil, adding more uncertainty to the already fragile global economy.
Japan’s yen was up more than 1% against the greenback in early trading, while the Aussie retreated along with Canada’s dollar and the Norwegian krone. Equities in the Middle East tumbled on Sunday as Saudi Arabia slashed the price of its crude after producers failed to agree on supply cuts. Stocks in Asia were set for a soft start.
“Buckle up as oil prices will surely topple,” said Stephen Innes, Bangkok-based chief market strategist at Axicorp Ltd. “But the question is by how much, as the shock-and-awe Saudi strategy will propel oil markets into a period of radical uncertainty.”
Global markets are on course for another rocky week with sentiment battered as the virus continues to spread and cause more disruption to economies. The oil-price war comes just as U.S. stocks fell back into a correction and Treasury yields chalked up fresh all-time lows.
Meantime, expectations are growing for a recession in some major economies. Pacific Investment Management Co.’s Joachim Fels said the U.S. and Europe face the “distinct possibility” of a technical recession in the first half of this year as the virus hammers demand and drives money into safe haven assets.
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These are the main moves in markets:
- The S&P 500 Index fell 1.7% on Friday.
- Futures on Japan’s Nikkei 225 declined 1.5% on Friday.
- Hang Seng futures lost 1.3%.
- Futures on Australia’s S&P/ASX 200 Index retreated 1.5%.
- The yen rose 1.1% to 104.23 per dollar.
- The euro bought $1.1341, up 0.5%.
- The Aussie fell 0.3% to 66.17 U.S. cents.
- The yield on 10-year Treasuries dropped 15 basis points on Friday to 0.76%.
- West Texas Intermediate crude tumbled 10% to $41.28 a barrel.
- Gold added 0.1% to $1,673.83 an ounce.
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