Oil soars after attacks on Saudi Arabia, weak Chinese statistics

SYDNEY (Reuters) – Oil prices hit a four-month high on Monday after attacks on crude oil facilities in Saudi Arabia sparked fears over supply, as Asian stocks increased their losses as the gloomy economic data from China undermined investors' appetite for riskier assets.

The European and US stock market should follow, with Eurostoxx 50 futures down 0.7%, while German DAX futures will fall by 0.9% and those of the French CAC 40 by 0.5%.

In contrast, futures on the FTSE in London rose 0.3%.

Wall Street also signaled weakness, with the E-Mini futures for the S & P 500 down 0.4%.

Brent crude futures jumped nearly 20% at some point in the day and US futures contracts by almost 16%, both reaching their highest level since May. But prices reached their peak after US President Donald Trump authorized the use of the country's emergency stocks to ensure a stable supply.

At approximately 6:40 am GMT, Brent futures were up 10 percent at $ 66.31 per barrel, while US light crude increased 9 percent to $ 59.82.

Trump also said the US was "stuck" for a potential response to strikes on Saudi facilities, which have blocked 5% of global production, after a senior official said his administration said Iran was to blame.

This exacerbated fears over tensions in the Middle East and the worsening of relations between Iran and the United States, fueling safe haven assets, with gold reaching US $ 1,503.4 billion. # 39; ounce.

"The biggest problem is knowing what high-end markets will incorporate to reflect the risk of future attacks," said Kerry Craig, global markets strategist at JP Morgan Asset Management.

"In the very short term, we could also see a recovery in the shelters," he added.

"Central banks will likely look at the inflationary impact of rising oil prices, but the increased geopolitical risk in an already fragile environment will not go unnoticed."

MSCI's broader Asia-Pacific equities index outside Japan retreated 0.4% after data showed China's industrial production growth had unexpectedly fallen, reaching its fastest pace low in 17 and a half years in August.

China's statistics office said the country was facing increasing pressure from external uncertainties.

China's first-order index fell 0.5%, while Hong Kong's Hang Seng lost about 1%, despite expectations, Beijing will soon announce more support measures.

Liquidity was relatively thin as Japanese markets were closed for a holiday.

BONDS AND CURRENCIES

On the foreign exchange market, Saudi news pushed the yen up 0.2% to $ 107.83 per dollar while stimulating oil-exporting currencies such as the Canadian dollar, up 0.4 %.

"If risk appetite collapses due to fears of worsening tensions in the Middle East as a result of possible retaliation … of the attacks, some emerging markets could to face double pressure, "said Mitul Kotecha, Senior Emerging Markets Strategist based in Singapore. TD Securities.

He noted that the Indian rupee, the Indonesian rupiah and the Philippine peso were the Asian currencies most sensitive to oil shocks, given their economy's dependence on crude oil imports.

The euro has moved little since a three-week high, while the pound has fallen from a two-month high of $ 1.247 on Friday. That left the greenback down 0.1% to 98.126 against a basket of six major currencies.

The Australian dollar, a major risk indicator, fell 0.3% against the yen, posting gains of nine consecutive days. The kiwi dollar slipped to a lows in a week on the yen.

"An immediate question this (attack) poses for the bond markets is whether a further rise in the anticipated inflation component of bond yields – which has historically proven to be sensitive to oil prices – will give a new momentum in the bond market, "said NAB Analyst Ray Attrill.

"Or will shelter considerations dominate to reduce returns?"

10-year US Treasury bond futures increased by 0.3%.

In the spot market, two- and 10-year Treasury bond prices rose, ending a five-day bond sale and lowering yields relative to their highs (1-1 / 2). 2 months).

Investors are also awaiting the outcome of the US Federal Reserve's general policy meeting scheduled for Wednesday, during which it is widely expected that interest rates will be relaxed and its future political trajectory announced.

"Markets will see the Fed as a key pillar of support, and attention will be increasingly focused on global markets as the week progresses," said Craig of JPMorgan.