Monday markets: Oil prices ease, rand strengthens, stocks higher as sentiment improves - IOL
Brent crude remains above $100 a barrel after easing off from last week's four-month highs.
Asian stock markets started the week on a positive footing, with sentiment boosted by easing oil prices, strong global demand for artificial intelligence technology and positive signals from US-China trade talks.
Oil prices extended Friday's declines after hopes emerged that Saudi Arabia could restore about half of its crude shipments within days following disruption to its East-West pipeline to the Red Sea.
Both major crude contracts, however, remained around $100 a barrel β significantly higher than pre-war levels β keeping pressure on central banks as they grapple with the inflationary impact of elevated energy costs.
On the South African fuel price front, data is currently pointing towards increases of up to R2.78 for petrol and R3.00 for diesel.
The rand is trading firmer across the board, changing hads at R16.24 to the US dollar, R18.63 to the Euro and R21.73 to the British pound on Monday morning. The local currency's strength is underpinned by the retreat in oil and steadier global risk appetite, says Citadel Global's managing director Bianca Botes.
Global demand for artificial intelligence technology and positive signals from US-China trade talks provided support for Asian equities on Monday morning.
US and Chinese economic officials met on Sunday for closely watched talks on trade and AI, ahead of a summit on Thursday between US President Donald Trump and Chinese President Xi Jinping in Washington, AFP reported.
US Treasury Secretary Scott Bessent said that, following lengthy conversations, the two countries had discussed setting up a channel to communicate about AI issues called the "US-China AI dialogue".
Chinese state media described the talks as "candid, in-depth and constructive".
Hong Kong's main index finished Monday's trading 1.2% higher, while shares in Shanghai rose 1%.Β South Korea's tech-heavy benchmark gained 1.7%.Β Tokyo was closed for a public holiday, while Sydney's main index finished flat.
The oil market remains a key focus for investors as the war between the United States and Iran shows little sign of ending soon.
At the talks between Trump and Xi, "the area with the most potential to move markets is probably any Chinese cooperation on Iran, given recent oil and bond market volatility", wrote Thomas Mathews of Capital Economics.
"Given China's apparent unwillingness to help so far, though, investors probably shouldn't hold out too much hope," he added.
Global stocks finished last week mixed as central banks moved to curb inflation, including the US Federal Reserve's decision on Wednesday to raise interest rates.
The Bank of Japan also raised interest rates on Friday to a three-decade high, but the yen sank against the dollar on fears that the pace of further hikes could be slower than expected.
The 25-basis-point increase to 1.25% was expected by markets following recent tightening by the European Central Bank and the US Federal Reserve, although the decision was not unanimous, passing by a 7-2 majority.
Higher oil prices have increased pressure on monetary authorities around the world by threatening to feed inflation and complicate the path for interest rates.
