World markets react to the attacks on Saudi Arabian oil facilities with a spike in crude prices. Meanwhile, GM workers head out on strike, and British PM Boris Johnson meets EU Commission President Juncker in an attempt to resolve the Brexit deadlock. Here's what you need to know in financial markets on Monday, 16th September.
1. An Oil Shock
President Donald Trump said he would authorize releases of crude from the U.S. Strategic Petroleum Reserve to keep the oil market well supplied after drone strikes knocked out over half of Saudi Arabia’s oil processing capacity at the weekend.
Trump also said he had “informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.”
Oil prices spiked to their highest since May over the weekend as the attacks not only halted 6% of the world’s oil supply but also raised the specter of war between the U.S. and Iran.
The U.S. benchmark WTI futures contract was at $59.42 a barrel, up 8.4% from late Friday but down from a high of over $61 a barrel over the weekend. The international benchmark Brent was at $65.58 a barrel.
2. Chinese economy under pressure
The latest economic data out of China continued to show an economy under increasing stress from not just the trade war but decades of over-investment and debt-driven growth.
Industrial production grew at the slowest rate since 2002 in August, while growth in retail sales and fixed asset investments also fell short of expectations.
3. Stocks set for lower open
U.S. stock markets are set to open lower in the wake of the news out of the Middle East.
Sectors likely to be in the spotlight Monday include oil and gas, which can look forward to windfall gains.
4. UAW strike hits GM
Nearly 50,000 General Motors workers went on strike Monday in search of higher pay and investment commitments, the biggest industrial action to hit the company since 2007.
Workers shut down 33 manufacturing locations and 22 parts components distribution centers across the U.S. It isn’t clear how long the walkout will last.
5. Johnson to meet Juncker amid Brexit deadlock
The Pound is consolidating just below the six-week highs that it posted.
U.K. Prime Minister Boris Johnson will meet today with outgoing European Commission President Jean-Claude Juncker over how to bridge the differences between the two sides.
Neither side has much room for political maneuver, and a major breakthrough is seen as unlikely.