Oil rallies on Mideast tensions, stocks weighed by trade remarks

Oil prices rallied Monday after Iran warned the presence of us forces in the gulf was causing instability in the region, while equities were mixed as US President Donald Trump said he did not want a partial trade deal with China.

While a loosening of monetary policy by central banks is providing support to investors, they remain on edge following last week’s attack on Saudi oil facilities that was claimed by Huthi rebels in Yemen but blamed by the US on Iran.

Iran’s president Hassan Rouhani on Sunday hit out at a us move to increase troop numbers in Saudi Arabia, saying: “foreign forces can cause problems and insecurity for our people and for our region.”

He called on outside powers to “stay away” and added Tehran would present a peace plan to the United Nations within days.

Investors are concerned about a possible conflict in the oil-rich Middle East after last week’s attacks, which hammered Saudi Arabia’s biggest crude plant though both sides have said they do not want a war.

The US has ramped up sanctions on Tehran, targeting its central bank. Both main oil contracts saw prices rise more than 1% Monday and traders are keeping tabs on Riyadh’s progress in repairing the facilities.

Equity markets were struggling for traction with investors tracking comments from trump saying he wanted to strike a full trade deal with Beijing, knocking hopes for a piecemeal agreement between the economic superpowers.

He added that he did not see the need for an agreement before the 2020 presidential election. The remarks tempered recent optimism on the talks, though they came as china hailed progress in preparatory discussions ahead of a planned high-level meeting next month. 

Hong Kong fell 0.8% with China’s Fosun international losing 1.5% after British travel giant Thomas Cook in which it is the top shareholder collapsed. The 178-year-old firm went under after failing to secure £200 million ($250 million) from private investors to keep it afloat.

Shanghai shed one percent, while Singapore dropped 0.3 % with Taipei, Manila and Bangkok also lower, though there were gains in Seoul, Sydney, Wellington and Jakarta. Tokyo was closed for a holiday.

Mumbai rallied 3.3%, extending last week’s surge of more than five percent that was fuelled by the government’s decision to slash corporation tax by almost a third.

In early trade London dipped 0.1%, Frankfurt fell 0.7 % and Paris dropped 1%

On foreign exchanges the pound sank at the start of a crucial week for Britain with the Supreme Court to decide whether Prime Minister Boris Johnson acted legally in suspending parliament for an extended period as he pushes for brexit on October 31.

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