Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Oil surges after strike on Saudi facility, Middle East tensions mount, and China growth slows again. Here are some of the things people in markets are talking about today.
Record rise
Brent crude futures posted their biggest-ever jump when trading opened in the wake of the weekend’s attack on a Saudi Arabian oil facility that has removed 5% of global supplies. The estimated 5.7 million barrels a day of lost production is the single biggest disruption on record, surpassing the 1979 hit to Iranian output from the Islamic Revolution as well as the loss of Kuwait and Iraq supplies during the 1990 Gulf War. All eyes are now on how quickly the country can restore supplies, with people familiar saying significant volumes could come back on stream within days, while it could take weeks to restore full capacity. President Donald Trump authorized the release of oil from the U.S. emergency reserve, declaring on Twitter that there is “plenty of oil.”
Blaming Iran
While Houthi rebels in Yemen claimed responsibility for the attack, and threatened further strikes, U.S. Secretary of State Mike Pompeo laid the blame squarely on Iran saying there’s no evidence the strikes were carried out from Yemen. President Trump said the U.S. is “locked and loaded” but added that he’s awaiting word from Saudi Arabia on how to proceed. Should Iran be deemed the culprit, the administration will be caught between having a tough response and rushing into a conflict that has the potential to spiral out of control.
Worsening
There was more evidence of a slowdown in China’s economy with industrial output rising 4.4% in August, the lowest level in a single month since 2002, while retail sales also came in below expectations. Policy makers are ramping up support for the flagging economy, while still holding back on using all tools at their disposal. With output already weakened by the on-going trade war with the U.S., the last thing China needs right now is an oil shock.
Markets drop
Overnight the MSCI Asia Pacific ex-Japan Index slipped 0.2% with financial firms leading losses in the region as risk appetite waned in the wake of the attack on Saudi Arabia. Japan was closed for a holiday. In Europe, the Stoxx 600 Index was 0.6% lower at 5:45 a.m. Eastern Time, with the oil and gas sub-index soaring 3%, while airline stocks were among the hardest hit by rising oil prices. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 1.829% and gold was higher.
Coming up…
It is a quiet day on the data front, with September Empire Manufacturing at 8:30 a.m. the only data-point of any note. Turkish President Recep Tayyip Erdogan is meeting Russian President Vladimir Putin and Iran’s President Hassan Rouhani in Ankara today, where the weekend attacks are sure to be discussed. British Prime Minister Boris Johnson is in Luxembourg to meet with European Commission President Jean-Claude Juncker, with a breakthrough not expected on Brexit negotiations. Workers at General Motors Co. begin their first strike in 12 years.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: Why the dominant U.S. dollar refuses to go away.
- OxyContin maker Purdue Pharma files for bankruptcy to wipe out 2,000 lawsuits.
- StanChart couldn’t tell regulators how some clients got rich.
- What’s behind the world’s biggest climate victory? Capitalism.
- Apple takes on EU’s Vestager in record $14 billion tax battle.
- Your company should let you work from anywhere.
- Newly discovered comet is likely interstellar visitor.
To contact the editor responsible for this story: Cecile Gutscher at cgutscher@bloomberg.net, Sid Verma
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