U.S. crude oil pared much of the losses but still ended lower for a second straight session on Tuesday, as investors turned to the more riskier equity assets with most major global stock markets strengthening.
Investors also weighed the upcoming Federal Open Market Committee meet next week, even as the dollar trended lower against some major currencies. The Federal Reserve meets on September 16-17 to decide whether to raise interest rates.
China’s Shanghai Composite Index jumped 2.9 percent, after a slew of support measures by Beijing. The measures included tax exemption on dividends and a move to introduce a market-wide circuit breaker system to stabilize the market also helped investors shrug off weak data underlying weakness in the world’s second-largest economy.
U.S. stocks also trended higher after markets in Europe and Asia ended in the green, with the Dow gaining 2 percent, the S&P 500 up 2.1 percent, and the Nasdaq jumped 2.3 percent. China’s import and export declined, although analysts believe Beijing may implement further measures to give the economy a lift.
With production outpacing demand due to OPEC’s refusing to cut production, crude oil has failed to sustain last week’s rally.
Light Sweet Crude Oil futures for October delivery, the most actively traded contract, dipped $0.11 or 0.2 percent, to settle at $45.94 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices for October delivery scaled a high of $46.41 a barrel intraday and a low of $44.14.
On Friday, crude oil dropped $0.70 or 1.5 percent, to settle at $46.05 a barrel, after some mixed U.S. jobs data raised concerns over its impact on energy demand and the possibility of a delay in the Federal Reserve plans on hiking interest rates.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.07 on Tuesday, down from its previous close of 96.13 in late North American trade on Friday. The dollar scaled a high of 96.24 intraday and a low of 95.73.
The euro trended higher against the dollar at $1.1181 on Tuesday, as compared to its previous close of $1.1172 in North American trade late Friday. The euro scaled a high of $1.1231 intraday and a low of $1.1154.
On the economic front, Chinese exports declined for the second straight month in August even after the devaluation of its currency and successive interest rate reductions. Imports also logged a double-digit decline, signaling some weak domestic demand.
China’s exports fell 5.5 percent year-on-year in August following the prior month’s 8.3 percent decrease. Economists had forecast a 6.6 percent drop. Imports slid 13.8 percent after easing 8.1 percent in July. Imports were expected to fall at a slower pace of 7.9 percent.
Consequently, China’s trade balance showed a surplus of $60.24 billion in August, well above the expected level of $48 billion.
Eurozone economy grew more than initially estimated in the second quarter as strong exports offset a decline in investment. Gross domestic product advanced 0.4 percent sequentially after rising 0.5 percent a quarter ago, Eurostat reported Tuesday. The first quarter growth was the fastest since the same quarter of 2011, when the economy expanded 0.9 percent.
German exports expanded more-than-expected to a record high in July, led by a weak euro, suggesting that it would again be the major growth engine in the third quarter.
German exports rose 2.4 percent month-on-month in July, which was the fastest growth since December 2014. Economists had forecast shipments to grow 1 percent reversing a 1.1 percent fall in June. Imports advanced by a faster-than-expected 2.2 percent in July after declining 0.8 percent in June. Imports were expected to grow 0.7 percent.
France’s trade deficit in July widened more-than-expected from the previous month as both exports and imports moderated, figures from the French Customs showed Tuesday. The trade deficit increased to EUR 3.299 billion from EUR 2.757 billion in June, which was the smallest since July 2009. Economists had forecast a shortfall of EUR 3.100 billion. A year ago, the deficit was EUR 5.557 billion.
The Organization for Economic Cooperation and Development on Tuesday said it expects growth to slow in China, the U.S. and the U.K. Most developing economies are also indicated to slowdown including South Africa, Russia and Brazil in the second quarter. But the OECD’s leading indicators show India will be an exception, with higher growth.
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