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GLOBAL MARKETS-Oil surges after Gulf tanker attacks, stocks claw higher

Published 13/06/2019, 13:43
Updated 13/06/2019, 13:43
GLOBAL MARKETS-Oil surges after Gulf tanker attacks, stocks claw higher

GLOBAL MARKETS-Oil surges after Gulf tanker attacks, stocks claw higher

(Recasts ahead of U.S. trading)
* Oil prices leap 3% after tanker attacks in Gulf of Oman
* European shares claw higher after early wobble
* Oil firms, telecoms boost moves
* HK shares down for second day after big street protests
* Bond yields plunge; Japan at 3-year low, Australia at
record
* Yen stays strong in the currency markets
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Marc Jones
LONDON, June 13 (Reuters) - Suspected attacks on two tankers
off the coast of Iran saw oil markets erupt out of their recent
slump on Thursday and kept traders gobbling up ultra-safe
government bonds, gold and the Japanese yen.
Brent surged as much 4% LCOc1 after reports of the attacks
added to already heightened tensions between Iran and the United
States. The area is near the Strait of Hormuz through which a
fifth of global oil consumption passes from Middle East
producers. The crude spike helped Europe's oil producers .SXPP
.SXEP pull stock markets there higher and lift Wall Street
futures. There were also some stellar gains in the telecoms
sector .SXKP as Germany dished out new 5G mobile network
licences to some new entrants. .EU .N
"Whenever you have an incident in the Arabian Gulf a little
bit of nervousness always starts to kick in about that
particular artery getting clogged up," CMC Markets senior
analyst Michael Hewson said.
Given that oil was at five-month lows on Wednesday, people
were taking precautions in case it might escalate into something
more serious, he added.
"But personally I think it will be much like in the past,
where you get a spike higher (in oil) but ultimately it doesn't
change the underlying supply and demand dynamics."
Wall Street oil majors like Exxon Mobil XOM.N and Chevron
CVX.N were pointing 1% higher while S&P and Dow e-minis ESc1
1YMc1 were up 0.4% and Nasdaq futures NQc1 climbed 0.6%.
But Asia had been a different story.
Hong Kong's Hang Seng .HSI dropped sharply again overnight
as public tensions continued there about a bill which would
allow extradition to China.
Doubts were growing too about any improvement in what U.S.
President Donald Trump called "testy" trade relations with China
before this month's G20 summit while some market anxiety emerged
that Federal Reserve rate cut speculation may be overdone.
Investors will be looking to what Fed policymakers say after
their next policy meeting on June 18-19, with Fed Funds rate
futures 0#FF: pricing in a 25-basis-point rate cut for the
subsequent policy review on July 30-31.
That is completely at odds with the Fed's projection three
months ago, when policymakers saw gradual rate hikes in coming
years.
"The U.S. real economy has not worsened that much. But given
market expectations, the Fed will have no choice but to cut
rates," said Kozo Koide, chief economist at Asset Management
One.
RATE EXPECTATIONS
With bonds in demand again, the 10-year U.S. Treasury yield
dipped to 2.113 percent US10YT=RR , near Friday's 2.053
percent, its lowest level since September 2017, while in Europe,
German borrowing costs sank back towards all-time lows.
GVD/EUR
Bond yields fell in Asia. Long-dated Japanese government
bond yields hit their lowest levels since August 2016, with the
20-year yield JP20YTN=JBTC down 2.5 basis points at 0.220
percent, before rising on a weak 30-year bond auction.
In Australia, long known for its high-yield currency, rates
fell to record lows, with three-year yield now slipping below 1
percent AU3YT=RR after jobs data pointed to another interest
rate cut in July to follow one last week. In the currency market, the yen gained 0.2% to 108.32 to the
dollar JPY= as risk sentiment soured while the Australian
dollar dropped 0.3% to $0.6907. AUD=D4
The euro stood little changed at $1.1293 EUR= , having
taken a hit on Wednesday after Trump said he was considering
sanctions over Russia's Nord Stream 2 natural gas pipeline
project and warned Germany against depending on Russia for
energy. The pound stayed subdued too a day after British lawmakers
defeated an attempt led by the opposition Labour Party to try to
block a no-deal Brexit by seizing control of the parliamentary
agenda from the government. Sterling fetched $1.2680 GBP=D4 , not far from this week's
low of $1.2653.
"The risk aversion and falling stock markets are supporting
the yen as usual," said Bart Wakabayashi, Tokyo branch manager
for State Street Bank and Trust. "The Australian dollar's
underperformance is also a booster for the yen."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Fed Funds rate projections https://tmsnrt.rs/2XgZ7Jj
Position of evacuated tankers in Gulf of Oman https://tmsnrt.rs/2X6nIQF
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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