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Sydney - Oil jumped after a Saudi-led alliance cut ties with Qatar, while Asian stocks were mixed as investors weighed the prospects for global growth. The pound slipped after a terror attack in London.
Crude climbed while Qatari stocks plunged as the political crisis in the Gulf escalated. US and Australian bond yields were near the lowest in seven months as Friday’s data on wage growth and hiring in the American labour market came in below forecasts.
The yen weakened after Friday’s gain. The peso reversed losses on signs the ruling PRI was ahead in the governor’s election for the key state of Mexico.
Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said they will suspend air and sea travel to and from Qatar, with Saudi Arabia citing Qatar’s support of “terrorist groups aiming to destabilise the region.”
Also looming over the markets was the latest terror incident at a popular London nightlife spot, as Britain’s battle with jihadists looked set to dominate the final three days of the nation’s election campaign.
The most recent US data is testing bets on improving global growth that’s helped drive the value of equities worldwide up by more than $10trn over the past year. The World Bank forecast a modest pickup in growth despite uncertainty about monetary policy and concern among bond traders that inflation is waning.
While Federal Reserve policy makers will remain silent this week amid its self-imposed blackout period ahead of next week’s rate decision, there’s plenty on the agenda for traders. The highlights include:
Former FBI Director James Comey will testify before Congress following his dismissal by Donald Trump. UK voters go to the polls on Thursday. Surveys of voters over the past few weeks have indicated a tightening race, increasing the chance that Prime Minister Theresa May might not get the increased majority she’s hoping for.
Policy decisions from central banks in India and Australia are due during the week, as well as data on Chinese trade and inflation, US factory orders, European industrial output figures and GDP reports for Australia, Japan and the eurozone.
Here are the main moves in markets:
Commodities
West Texas Intermediate crude advanced 1.1% to $48.20 a barrel as of 08:47, after dropping 1.5% on Friday. Gold was flat at $1 279.59 an ounce, after gaining 1% on Friday.
Currencies
The yen fell 0.2% to 110.58 per dollar. Japan’s currency climbed 0.9% on Friday after the US data, when the Bloomberg Dollar Spot Index lost 0.4%.
The pound fell 0.2% to $1.2867. The euro slipped 0.1% to $1.1267, remaining close to the seven-month high it reached after the jobs report. The Mexican peso rose 0.7%, reversing an earlier drop of 0.8 %.
President Enrique Pena Nieto’s party is narrowly ahead in the election for governor of Mexico’s largest state in an official quick count, throwing it a lifeline ahead of next year’s general vote. Follow more on the vote here.
The offshore yuan fell 0.1% and the onshore currency rose 0.1%. The PBOC set its yuan daily fixing at 6.7935 per dollar, raising the rate after setting it at the strongest level since November on Friday.
Bonds
The yield on 10-year Treasury notes rose less than one basis point to 2.17%, after dropping five basis points on Friday. The yield on Australian 10-year government bonds lost two basis point to 2.39%.
Stocks
Doha’s QE Index dropped 7.7%, the most since December 2014. Dubai’s DFM General Index fell 0.8% and Abu Dhabi’s ADX General Index slipped 0.3%. Japan’s Topix index fell 0.1%, paring an earlier drop of 0.6%.
The gauge closed on Friday at the highest since August 2015. Hong Kong’s Hang Seng fell 0.3%, while the Shanghai Composite Index slipped 0.5%.
Australia’s S&P/ASX 200 Index lost 0.6% as financial shares slumped. Emerging-market equities were higher, with Malaysia’s benchmark gaining 0.5% and Indonesia stocks climbing 0.2%. Taiwan’s Taiex increased 0.7%. Futures on the S&P 500 Index fell 0.1%. The benchmark index gained 0.4% on Friday. The Stoxx Europe 600 Index added 0.2% on Friday.
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