Oil prices recorded additional losses on Thursday following the announcement by the Organization of the Petroleum Exporting Countries (OPEC) of a four-day delay in a crucial policy meeting. This unexpected move has triggered concerns of potential disruptions within the bloc.
The delay, now scheduled for November 30, led to a nearly five percent drop in oil prices on Wednesday, before a partial recovery. Reports suggest that the decision stemmed from resistance by Angola and Nigeria against lower production targets proposed by other members. Speculations are rife that Saudi Arabia was considering extending a one-million-barrel-a-day output cut into the new year.
Pierre Andurand of Andurand Capital Management emphasized that global supplies were more robust than anticipated, prompting the need for OPEC+ to reassess its output reduction strategy. He noted, “The Saudis will probably want the other countries to cut as well. It’s going to be a negotiation.”
Meanwhile, global equity markets experienced mixed results as two US reports tempered earlier optimism about future interest rates. Asian markets fluctuated, with Hong Kong rebounding in the afternoon after China signaled increased support for the property sector. This follows reports of a draft list of 50 firms eligible for additional monetary support, leading to significant gains for companies like Country Garden and Evergrande.
In other parts of Asia, markets in Shanghai, Seoul, Wellington, Mumbai, and Jakarta saw positive movements, while Sydney, Singapore, Taipei, Manila, and Bangkok faced declines. European markets, including London, Frankfurt, and Paris, started the day on a positive note.
The University of Michigan attributed the subdued market performance to a pickup in US consumers’ inflation expectations, now projected at 4.5 percent over the next year. Additionally, lower-than-forecast US jobless claims indicated ongoing stability in the labor market.
Although the Federal Reserve has signaled a data-driven approach to rate decisions, the recent data caused a stir among investors who had been optimistic about a potential end to the rate-hike cycle.
National Australia Bank’s Rodrigo Catril noted that Markets can be capricious sometimes, and at the present junction, investors are looking for clues confirming the Fed is done with its current tightening cycle.
“Markets can be capricious sometimes, and at the present junction, investors are looking for clues confirming the Fed is done with its current tightening cycle, thus evidence to the contrary can be unsettling.
“The latest US data triggered a (disproportionate) market reaction, US jobless claims and inflation expectations data did not support the story US inflation is easing against a weakening US labour market”, he said.
Despite short-term uncertainties, some analysts, like Audrey Goh of Standard Chartered Bank, maintain a positive outlook for equities. Goh stated, “If you look at inflation, that clearly has moderated, so that will allow the Fed to stand pat. Our expectation is that policy rates have peaked.”
As of 0810 GMT, key market figures include the following:
Hong Kong – Hang Seng Index: UP 1.0 percent at 17,910.84 (close)
Shanghai – Composite: UP 0.6 percent at 3,061.86 (close)
London – FTSE 100: UP 0.2 percent at 7,480.41
Tokyo – Nikkei 225: Closed for a holiday
West Texas Intermediate: DOWN 0.6 percent at $76.63 per barrel
Brent North Sea crude: DOWN 0.7 percent at $81.36 per barrel
Dollar/yen: DOWN at 149.10 yen from 149.59 yen on Wednesday
Euro/dollar: UP at $1.0914 from $1.0890
Pound/dollar: UP at $1.2516 from $1.2494
Euro/pound: UP at 87.20 pence from 87.13 pence
New York – DOW: UP 0.5 percent at 35,273.03 (close)
