Oil price fall hits energy shares, dollar rises

Oil price fall hits energy shares, dollar rises

By Laila Kearney

NEW YORK (Reuters) - Growing expectations of increased oil supply hit crude prices on Friday, lifting the U.S. dollar and weighing on energy shares, while political upheaval in Europe and uncertainty over a U.S.-North Korea summit restrained equity markets.

Brent crude futures fell $2.35, or 3 percent, to settle at $76.44 a barrel after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014.

U.S. President Donald Trump on Friday signalled that a June 12 meeting with North Korean leader Kim Jong Un could still take place a day after he cancelled the planned historic summit.

That led to a dip in gold prices, but it did little to increase demand for risk assets, investors said.

"At this point investors are shrugging off Washington headlines because in most cases they won't affect the markets and Washington has a hard time following through what they say," said Arian Vojdani, investment strategist at MV Financial in Bethesda, Maryland.

Gold prices dropped slightly after Trump's latest North Korea comments, but remained above $1,300 per ounce.

Wall Street ended mostly down as oil prices dragged down energy stocks ahead of a holiday weekend in the United States, which typically leads to low volume.

The Dow Jones Industrial Average <.DJI> fell 59.15 points, or 0.24 percent, to 24,752.61, the S&P 500 <.SPX> lost 6.46 points, or 0.24 percent, to 2,721.3 and the Nasdaq Composite <.IXIC> added 9.43 points, or 0.13 percent, to 7,433.85.

The S&P energy index <.SPNY> slid 2.9 percent, while Chevron dropped 3.7 percent and Exxon Mobil fell 2.1 percent and were the biggest drags on the Dow.

The tech-heavy Nasdaq <.IXIC> was aided by chipmakers, led by a 2.6 percent jump in Broadcom .

U.S. Treasury yields fell to their lowest level in three weeks as concerns about Italy's new government and a leadership change in Spain boosted appetite for low-risk investments.

Italian Prime Minister-designate Giuseppe Conte began assembling his cabinet on Thursday, with party leaders pushing for an 81-year euroskeptic economist to be given the pivotal post of economy minister. Italy's president is opposing the appointee.

Political risk also reared its head in Spain, where a threat of no-confidence motions against Prime Minister Mariano Rajoy sent Spanish stocks and bond prices plunging.

The pan-European FTSEurofirst 300 index <.FTEU3> rose 0.05 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.29 percent.

While yields on German and U.S. bonds fell amid the uncertainty, there have been few signs of a wide-ranging sell-off in higher-risk assets - Wall Street's volatility index <.VIX> stayed near four-month lows.

"Market reaction to heightened political risk remains reasonably muted," Indosuez Wealth Management global head of economic research Marie Owens Thomsen said.

She cited the example of Turkey and Italy, where a stock and bond sell-off has not spilled much into other emerging economies or euro zone states.

However, worry about Italy kept the euro under pressure against the dollar.

The dollar index <.DXY> rose 0.48 percent, with the euro down 0.53 percent to $1.1657.

The dollar has rebounded after touching two-week lows versus a basket of currencies <.DXY> on Thursday, helped by gains against commodity-linked currencies, as oil prices fell.

Elsewhere, worries that investors could shift assets from emerging markets to higher-yielding U.S. bonds have been a major headwind for emerging markets this year. Turkey has been the worst hit.

(Reporting by Laila Kearney; Editing by Nick Zieminski, Chizu Nomiyama and Susan Thomas)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: May 26, 2018 03:05 AM

Also Watch

Rethinking pornography: Cyber Sexy author Richa Kaul Padte makes the case for decriminalising porn in India
  • Friday, July 27, 2018 First Day First Showsha — Reviewing Tom Cruise's Mission: Impossible - Fallout in 10 questions
  • Friday, July 27, 2018 It's a Wrap: Karwaan stars Dulquer Salmaan, Mithila Palkar in conversation with Parul Sharma
  • Friday, July 27, 2018 3 alternatives to WhatsApp | What The App
  • Friday, July 27, 2018 Manika Batra interview: Table Tennis star looks back at Commonwealth Games 2018 success, reveals her diet plan and more

Also See