LM:Crude oil sinks on Iran deal as India leads Asian stock gains
Crude oil headed for the biggest drop in three weeks while India led gains in Asian stocks and currencies after Iran agreed to limit its nuclear program. The yen fell to its weakest since May.
Brent crude sank 2.6% to $108.15 a barrel by 3:37 pm in Tokyo as the S&P BSE Sensex Index rose 1.4% in India, which imports about 80% of its oil. Futures on the Standard & Poor’s 500 Index, which capped a seventh weekly gain Nov. 22, rose 0.3 % and the MSCI Asia Pacific Index added 0.3%. The yen dropped as much as 0.7% while Thailand’s currency slid amid protests in Bangkok.
Iran agreed on Sunday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, the first major crack in a decade-long deadlock. A report on Tuesday is projected to show U.S. pending home sales rebounded in October, after data last week showed job openings climbed to a five-year high in September. Bank of Japan Governor Haruhiko Kuroda said on Tuesday inflation is heading toward the 2% target after he initiated unprecedented monetary easing in April.
“The Iran deal is obviously positive and hopefully we can have lower geopolitical risk,” Norman Chan, the Hong Kong-based head of investment at Calibre Asset Management Ltd., said by phone on Tuesday. “It helps sentiment and growth assets such as stocks. We’re hoping to see oil prices drop to a new low.”
Brent fell from a six-week high and West Texas Intermediate oil dropped 1.4%.
Sales capped
Oil exports from Iran will be held at about 1 million barrels a day under sanctions that remain in force after the nation and six world powers came to an agreement in Geneva, according to the White House. The sanctions have cut Iranian crude sales by 60% since the start of 2012, depriving the country of more than $80 billion in revenue, U.S. President Barack Obama’s administration said in a statement.
“This certainly sets the table for lower prices in the future,” said Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania.
The end of a European Union ban on insuring tankers carrying Iranian crude will ease the process of importing the Persian Gulf state’s oil, according to Indian refiners. Shares of Indian Oil Corp. gained as much as 3.4%, Hindustan Petroleum Corp. climbed as much as 6.9 percent and Mangalore Refinery & Petrochemicals Ltd. gained as much as 10%.
Gold lost as much as 1.5% to $1,225.55 an ounce, the lowest since 8 July, following last week’s 3.6% decline, the steepest weekly slump since September. Silver slid 1.1% and reached the lowest price since 8 August
Yen drops, rupee gains
“There’s a risk-on sentiment in the market after the Iran deal,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides margin-trading services.
India’s rupee gained 0.6% to 62.5050 per dollar in Mumbai and touched 62.4650, the strongest level since Nov. 20.
The yen dropped to 101.92 per dollar, the weakest level since May. Japan’s statistics bureau will say the nation’s consumer prices excluding fresh food rose 0.9% last month from a year earlier, the strongest advance since 2008, according to the median estimate of economists surveyed by Bloomberg News before data due Nov. 29.
Japan’s economy is expected to grow above potential, BOJ head Kuroda said in Tokyo on Tuesday.
Thailand protests
Thailand’s baht fell to a 10-week low amid concern political tension will harm growth. The Thai baht depreciated 0.4% to 31.95 per U.S. dollar as anti-government groups pledged to spread their protest to military bases, government offices and television stations today after more than 100,000 people joined rallies to oust Prime Minister Yingluck Shinawhcatra.
Investors want to stay away from Thailand amid concern the protests will intensify or lead to violence again like last time, said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Bank Ltd. in Tokyo. Risk sentiment wasn’t strong to begin with due to the Fed’s tapering talk, and the political concern encouraged investors to take some money out from Thailand.
Australia’s dollar slid to 91.22 U.S. cents, the lowest since 6 September.
Minutes of the US Federal Reserve’s October meeting released 20 November showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated. US job openings climbed to a five-year high in September, according to data released on 22 November, with a report on Monday projected to show pending home sales rose 1.1% last month, following a 5.6% slump in September.
Copper Slides
Copper declined for the first time in four days on expectations for Fed tapering amid improving economic data. The contract for delivery in three months on the London Metal Exchange fell as much as 0.5% to $7,060 a metric ton. The metal touched $7,133.75 earlier, the highest level since Nov. 12.
Asian stocks rose, with the regional benchmark index rebounding from last week’s drop.
The Kospi Index in Seoul jumped 0.5%. Shares in Daelim Industrial Co., which had about 38% of its sales coming from the Middle East last quarter, climbed 1% while Samsung Engineering Co. surged 3.1%.
Defense-related shares rallied after China announced an air defense identification zone encompassing islands that are disputed with Japan.
Anhui Sun-Create Electronics Co., a radar maker, surged 10 percent, while China Aviation Optical-Electrical Technology Co. climbed 3.9% after the government imposed a protected air zone in the East China Sea. Those gains countered a drop by China Petroleum & Chemical Corp. which slumped 3 percent after a pipeline explosion in Qingdao killed 52 people
The Topix increased 0.9 % to 1,259.61, exceeding the highest closing level since May. Australia’s S&P/ASX 200 Index rose 0.3% today after the gauge slid 1.2% in the five days ended 22 November, its second weekly decline in November. Bloomberg
