OPEC disappointment hits oil, stocks; sterling down on UK vote jitters
SINGAPORE: Oil prices weakened on Friday, prompting a move away from riskier assets and depressing Asian stocks, after an OPEC agreement to extend cuts in crude production for a further nine months disappointed investors who had bet on bigger output cuts.
In the currency market, sterling fell 0.5 per cent to $1.288, its biggest one-day slide in over three weeks, after a YouGov poll showed Britain's opposition Labour Party had reduced the lead of Prime Minister May's Conservatives to five points, less than a fortnight before a national election.
Sterling had lost 0.3 per cent on Thursday following data that showed Britain's economy slowed more than previously thought in the first quarter of this year.
"The UK is now beginning to look like the sick man of Europe," said Kathleen Brooks, research director with City Index in London.
European stock markets look set for a muted start, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 and Germany's DAX to open flat and France's CAC 40 to be down 0.1 per cent.
Otherwise, oil's weakness was the standout feature of Friday's markets.
U.S. crude prices tumbled 0.6 per cent to $48.57 a barrel on Friday, after losing 4.8 per cent overnight, set to end the week 3.5 per cent lower.
Global benchmark Brent fell 0.5 per cent to $51.18, after slumping 4.6 per cent overnight. It is on track for a 4.5 per cent weekly loss.
The Organization of Petroleum Exporting Countries and some non-OPEC producers agreed at a meeting in Vienna on Thursday to extend supply cuts of 1.8 million barrels per day until the end of the first quarter of 2018.
Most investors had already factored in this outcome as Saudi Arabia and Russia earlier in May that a nine month extension was needed, but some had bet on the producers agreeing to bigger reductions in supplies.
"With Russia and Saudi announcing nine months (of extended cuts) a week before, this was already priced in, so the market wanted the "over-and-above" which didn't come - hence the sell-off," said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.
In currency trading, the dollar pulled back 0.3 per cent to 111.485 yen on Friday, but was set to end the week up 0.25 per cent.
The dollar index, which tracks the greenback against a basket of six major peers, was flat to stand poised for a 0.1 per cent gain for the week.
U.S. unemployment data that showed a tightening labour market was offset by a widening goods trade deficit in April and news of declining inventories, prompting analysts to pare their second-quarter economic growth estimates.
The euro retreated almost 0.1 per cent to $1.1202. MSCI's broadest index of Asia-Pacific shares outside Japan , which closed at a two-year high on Thursday, fell 0.2 per cent, shrinking its weekly gain to 1.45 per cent.
Japan's Nikkei lost 0.6 per cent, narrowing its weekly increase to 0.5 per cent.
Australia's benchmark fell 0.65 per cent, poised for a 0.4 per cent weekly rise.
China's CSI 300 slid 0.2 per cent, heading for a 2.2 per cent increase for the week. Hong Kong's Hang Seng was flat, on track for a weekly gain of 1.8 per cent.
Overnight on Wall Street, the S&P 500 and the Nasdaq closed at record highs after strong earnings reports from retailers.
The strong performance helped lift MSCI's global stocks index to a record close overnight, but they pulled back 0.1 per cent on Friday.
The weaker dollar and pullback in risk appetite was a boon for gold. Spot gold rose 0.2 per cent to $1,258.29 an ounce, poised for a 0.3 per cent gain for the week.
In the currency market, sterling fell 0.5 per cent to $1.288, its biggest one-day slide in over three weeks, after a YouGov poll showed Britain's opposition Labour Party had reduced the lead of Prime Minister May's Conservatives to five points, less than a fortnight before a national election.
Sterling had lost 0.3 per cent on Thursday following data that showed Britain's economy slowed more than previously thought in the first quarter of this year.
"The UK is now beginning to look like the sick man of Europe," said Kathleen Brooks, research director with City Index in London.
European stock markets look set for a muted start, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 and Germany's DAX to open flat and France's CAC 40 to be down 0.1 per cent.
Otherwise, oil's weakness was the standout feature of Friday's markets.
U.S. crude prices tumbled 0.6 per cent to $48.57 a barrel on Friday, after losing 4.8 per cent overnight, set to end the week 3.5 per cent lower.
Global benchmark Brent fell 0.5 per cent to $51.18, after slumping 4.6 per cent overnight. It is on track for a 4.5 per cent weekly loss.
The Organization of Petroleum Exporting Countries and some non-OPEC producers agreed at a meeting in Vienna on Thursday to extend supply cuts of 1.8 million barrels per day until the end of the first quarter of 2018.
Most investors had already factored in this outcome as Saudi Arabia and Russia earlier in May that a nine month extension was needed, but some had bet on the producers agreeing to bigger reductions in supplies.
"With Russia and Saudi announcing nine months (of extended cuts) a week before, this was already priced in, so the market wanted the "over-and-above" which didn't come - hence the sell-off," said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.
In currency trading, the dollar pulled back 0.3 per cent to 111.485 yen on Friday, but was set to end the week up 0.25 per cent.
The dollar index, which tracks the greenback against a basket of six major peers, was flat to stand poised for a 0.1 per cent gain for the week.
U.S. unemployment data that showed a tightening labour market was offset by a widening goods trade deficit in April and news of declining inventories, prompting analysts to pare their second-quarter economic growth estimates.
The euro retreated almost 0.1 per cent to $1.1202. MSCI's broadest index of Asia-Pacific shares outside Japan , which closed at a two-year high on Thursday, fell 0.2 per cent, shrinking its weekly gain to 1.45 per cent.
Japan's Nikkei lost 0.6 per cent, narrowing its weekly increase to 0.5 per cent.
Australia's benchmark fell 0.65 per cent, poised for a 0.4 per cent weekly rise.
China's CSI 300 slid 0.2 per cent, heading for a 2.2 per cent increase for the week. Hong Kong's Hang Seng was flat, on track for a weekly gain of 1.8 per cent.
Overnight on Wall Street, the S&P 500 and the Nasdaq closed at record highs after strong earnings reports from retailers.
The strong performance helped lift MSCI's global stocks index to a record close overnight, but they pulled back 0.1 per cent on Friday.
The weaker dollar and pullback in risk appetite was a boon for gold. Spot gold rose 0.2 per cent to $1,258.29 an ounce, poised for a 0.3 per cent gain for the week.