Asian shares were steady on Monday as investors took stock of recent data suggesting global growth may be stabilizing, while oil prices spiked on a report the US is likely to ask all importers of Iranian oil to end their purchases or face sanctions.
Brent futures rallied to a five-month high, after the Washington Post said US Secretary of State Mike Pompeo will announce “that as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate.”
The potential disruption to Iranian supplies are expected to add to an already tight oil market.
“The US chief Iran hawks indeed have the President’s ear as (Secretary of State) Pompeo and (National Security Advisor) Bolton are singularly focused on bringing Iran’s economy to its knees,” said Stephen Innes, head of trading at SPI Asset Management.
“Predictably oil prices are rising,” he said.
Equities markets were subdued as investors awaited the resumption of trading in major centers from the Good Friday holiday, with MSCI’s broadest index of Asia-Pacific shares outside Japan little changed in early deals.
The index was within reach of a nine-month peak scaled on Thursday after Chinese economic data beat expectations and eased concerns about the health of the world economy.
The advance, however, slowed as many markets in Asia, Europe and North America shut down for Good Friday.
“Equities will be looking at further corporate earnings for immediate incentives. While strong economic indicators, particularly from China, have helped sentiment, they have not formed a strong trend,” said Soichiro Monji, senior strategist at Sumitomo Mitsui DS Asset Management in Tokyo.
“The US-China trade talks will have to end in one way or another for a trend to form.”
The Shanghai Composite Index slipped 0.3 per cent, South Korea’s KOSPI edged up 0.1 per cent and Japan’s Nikkei added 0.15 per cent.
In currencies, the dollar index against a basket of six major currencies was a touch lower at 97.377 .
The index was still within touching distance of a 1-1/2-month peak reached on Thursday after steady US retail sales data.
The euro was little changed at $1.1241 , having taken a hit late last week after purchasing managers’ index (PMI) releases showed weak manufacturing activity in Europe.
The dollar was steady at 111.96 yen .
The Australian dollar, sensitive to shifts in risk sentiment, inched down 0.2 per cent to $0.7141 .
The Canadian dollar, on the other hand, added 0.25 per cent to C$1.3363 thanks to a bounce in crude oil prices, according to Reuters news agency.
Brent crude rose roughly 1.7 per cent to $73.24 per barrel , highest since Nov. 7, 2018, underpinned by the Washington Post report.
US crude futures climbed to $65.12 per barrel, highest since Nov. 1, 2018.
The US reimposed sanctions in November on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. Washington is pressuring Iran to curtail its nuclear program and stop backing militant proxies across the Middle East.
Crude extended gains from last week, when a drop in crude exports from OPEC’s de facto leader, Saudi Arabia, and a draw in US drilling rigs and oil inventories supported prices.
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