Article / 06 September 2016 at 7:00 GMT

Morning Markets: Firmer oil lifts sentiment

Consulting editor / TradingFloor



  • Germany: Factory orders (0600 GMT)
  • US: Labor market conditions index (1400 GMT)
  • US: ISM non-manufacturing index (1400 GMT)

Despite wobbling off Monday's highs, oil prices are still showing resilience and bolstering sentiment broadly on Tuesday. Asian shares gained, reaching a one-year high.

Oil prices leapt on Monday, with Brent crude gaining as much as 5%, after Russia and Saudi Arabia agreed to discuss ways to stabilise the market. Some analysts said the statement from the two major oil producers was merely "lip service", and oil prices reversed some of their gains, but held above previous closing levels.

The Reserve Bank of Australia kept its cash rate unchanged at 1.50%, as expected, and said inflation remains low and Australia's terms of trade much lower than they had been in recent years after substantial declines in commodity prices, even though those prices are off lows. It was Governor Glenn Stevens last meeting as head of the RBA before Philip Lowe takes over.

Market signals

Asian session

  • UK retail sales fell 0.9% in August compared with the same month last year
  • Reserve Bank of Australia has held rates steady, as expected at 1.5%.
  • Australia's current account deficit increased by 4% to $15.5bn in the June quarter
  • New Zealand's average house price rose 14.6% in August from a year earlier
  • Crude traded above $45/barrel after top two producers pledged to stabilise markets
  • Asian stocks rose to a 1-year high and the USD maintained losses from last session
  • MSCI Asia Pacific Index rose 0.4 percent as of mid session trading
  • Nikkei 225 was up 0.15% at 0500 GMT
  • Hang Seng was up 0.27% at 0505 GMT, with Shanghai flat at 0.04%
  • Mumbai Sensex had shot up, rising by 0.97% at 0505 GMT
  • ASX/S&P 200 was down 20 points or 0.3*5 at 0531 GMT

Forex ahead

  • AUD had risen 0.5% by 0512 GMT, hitting 76.33 US cents
  • Aussie has advanced for a fifth day, its longest winning streak in six months
  • NZD had also risen, up 0.22% to 73.22 US cents at 0532 GMT

From the Floor

Oil gyrations. “Short sellers got caught out pretty badly after speculation mounted over a joint Russia/Saudi Arabia ‘big announcement',” says Hansen.

Bund yields up. “No sign of the markets backing down on the rate hike theme,” says Boye.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Germany's factory orders for July will be closely watched, with economists expecting a strong rebound, although the trend is still drifting lower, writes James Picerno.

Back on top
Asian equities markets enjoyed new highs this morning with both Japanese and South Korean indices rising strongly post the US jobs data, says Saxo's Singapore team

Hot air
Russia might think it can lean in on oil production freeze talks, but any plan to change quotas would almost immediately be compromised by its rigis infrastructure, says Nadia Kazakova


Oil is gyrating after a joint Saudi/Russia press conference failed to keep prices 
sharply elevated. Photo: iStock

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