Oil price falls 1% on indecisive US-China trade talks, rising stocks

Irving Hamilton
January 14, 2019

But it gave few details on key issues at stake, including a scheduled US tariff increase on $200 billion worth of Chinese imports.

"If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular", said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

Global financial markets had surged on hope Washington and Beijing would avert an all-out trade war. Hong Kong's Hang Seng rose 0.6 percent to 26,667.27.

Heightened risk appetite boosted U.S. Treasury yields to the highest this year, while the U.S. dollar extended losses after minutes from a December 18-19 Federal Reserve policy meeting showed many Fed policymakers said the central bank could be patient on future rate hikes.

The Nasdaq composite rose 28.99 points, or 0.4 percent, to 6,986.07.

"China and the U.S. managing to agree on a positive deal would favour further risk-on sentiment within markets over the short-term". The talks come after President Donald Trump and Chinese leader Xi Jinping met and agreed to hold off on more tariffs for 90 days, on the sidelines of the G-20 summit in Argentina last month. "The return of risk appetite, in turn, has pressured the USA dollar lower", DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary. In late December, stocks rallied after Mastercard SpendingPulse said shoppers spent $850 billion between November 1 and Dec. 24, an increase of 5 percent from the same time a year earlier.

London-traded, the global oil benchmark, was down 0.2% at $61.53 after rising to $61.91 earlier, also the highest so far for this year. Slowing inflation is not a good sign, as it raises questions about the health of the world's second largest economy.

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Oil prices extended their rally to a ninth consecutive day. That helped Boeing climb 2.6 percent to $352.61 and General Electric jumped 5.2 percent to $8.94 while Deere rose 3.1 percent to $159.12.

Oil prices continued to rise during the week ending January 11, with the price of West Texas Intermediate (WTI) for February delivery increasing by 7.6 percent and Brent crude for March delivery increasing by 6.0 percent.

West Texas Intermediate crude closed at $52.36/bbl, completing a 23% recovery since hitting an 18-month low on Christmas Eve.

Brent oil started the week at $57.84 per barrel at 06.45 GMT on Monday while WTI registered at $48.73 a barrel. Prices fell for the first time in two weeks on Friday, retreating 2 percent to $60.48 a barrel.

The West Texas Intermediate for February delivery fell 1 US dollar to settle at 51.59 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery plunged 1.2 dollars to close at 60.48 dollars a barrel on the London ICE Futures Exchange.

CURRENCIES: The euro was up 0.3 percent at $1.1529 while the dollar fell 0.1 percent to 108.27 yen.

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