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GLOBAL MARKETS-Oil races to near 6-month highs on Iran sanctions, stocks rise

Published 23/04/2019, 05:04 pm
© Reuters.  GLOBAL MARKETS-Oil races to near 6-month highs on Iran sanctions, stocks rise
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* Oil surges; U.S. to end Iran export sanction waivers

* European stocks expected to follow Asia, open higher

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Noah Sin and Tomo Uetake

HONG KONG/TOKYO, April 23 (Reuters) - World oil prices jumped to near 6-month highs on Tuesday as the United States tightened sanctions on Iran, sending shares of energy companies higher and boosting currencies of several major crude producers.

Brent crude oil futures LCOc1 rose 0.7 percent to $74.57 per barrel by 0630 GMT, their highest since November, after

Washington said it was ending all sanctions waivers for countries buying Iranian oil. O/R light crude CLc1 rose 0.8 percent to $66.10.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent, as gains in oil and gas producers offset losses in airlines and other transport sectors facing higher fuel costs. Japan's Nikkei .N225 closed up 0.2 percent.

European markets looked set to track Asia's rise, with London's FTSE futures FFIc1 up 0.4 percent and German DAX futures FDXc1 higher by 0.2 percent.

The United States on Monday demanded all buyers of Iranian oil stop purchases by May 1 or face sanctions, a move to choke off Tehran's oil revenues.

The White House said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was "adequately supplied," but traders had already been worried about tight supplies.

Oil prices are "not so high that it crushes manufacturing by putting energy price inputs up, but it is producing a nice boost to oil producing nations," said Robert Carnell, Singapore-based chief economist and head of research for Asia Pacific at ING.

Carnell sees Brent crude's sweetspot at between $65 and $75 per barrel. "Above this, you may see some negative impact."

EQUITIES STEADY

In China, major benchmarks .SSEC flitted in and out of negative territory amid concerns that Beijing will slow the pace of further policy easing after unexpectedly strong first-quarter economic data last week. blue-chip stocks .CSI300 have surged over 30 percent so far this year on expectations of more stimulus and hopes Beijing and Washington will reach an agreement to end their nine-month long trade dispute.

"We've had a fantastic run in Chinese equities year-to-date, some profit taking is completely normal. I don't think China is changing its policy that quickly," said Stefan Hofer, chief investment strategist at LGT Bank Asia in Hong Kong.

On Wall Street, stocks hovered near break-even on Monday as the benchmark S&P 500 index .SPX was about 1 percent away from its record high hit in September, while the S&P energy index .SPNY jumped on higher oil prices. .N

Despite recent gains in oil prices, many investors still expect inflation to be well-contained in major economies including the United States, allowing the Federal Reserve to keep dovish stance.

The world's largest economy reported worse-than-expected fall in home sales on Monday, as rising demand continued to be frustrated by a lack of properties. data "is pointing to the Fed being as accommodative as possible, which, for Asian investors, is good news," said Jim McCafferty, Hong Kong-based head of equity research, Asia ex-Japan, at Nomura.

OIL BOOST

In the currency market, the dollar index .DXY , which measures the greenback against six major currencies, eased 0.2 percent overnight and last traded steady at 97.384. The index hit a two-week high of 97.485 on Thursday, before the start of Good Friday and the Easter weekend.

Against the Japanese yen, the dollar was 0.04 percent weaker at 111.88 yen JPY= , while the euro was slightly softer by 0.06 percent against the greenback at 1.1248 EUR= .

With the jump in the oil, one of Canada's major exports, the loonie rose 0.4 percent against its U.S. counterpart overnight and last traded at C$1.3369 CAD=D3 .

On Monday, the Russian ruble RUB= hit its highest level against the euro in more than a year, and a one month-peak versus the dollar, also driven by the jump in oil.

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