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Asian Energy Stocks Fall as OPEC Split Hits Oil

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Energy shares fell with the Russian ruble and oil after the world’s biggest crude producers failed to agree supply cuts at a meeting in Vienna. Gold held near a four-week high following the reopening of an FBI probe into Hillary Clinton.

A gauge of energy shares on the MSCI All Country World Index and crude both slipped to one-month lows after the Organization of Petroleum Exporting Countries ended two days of talks on Saturday without agreeing any individual quotas. The ruble led declines among the currencies of oil-exporting nations, while South Africa’s rand strengthened versus all of its major peers. Aluminum and zinc rallied to multi-year highs in Shanghai on optismism Chinese demand will hold up. Gold maintained the bulk of Friday’s gains after a survey pointed to cooling support for Clinton before next week’s U.S. presidential election.

Global equities have lost ground in October as mixed corporate earnings meld with investor anxiety ahead of the Nov. 8 vote in the U.S. and expectations the Federal Reserve will hike interest rates before the year is out. The S&P 500 Index slid 20 points in about 40 minutes on Friday amid news the Federal Bureau of Investigation was again looking into Clinton’s use of private e-mail while secretary of state, an issue that has dogged her campaign. The OPEC talks yielded little more than a promise that the world’s top oil producers would keep discussing ways to stabilize the market.

“Until the election, the general theme will be uncertainty, which will have implications not just on the stock market, but on the dollar and Treasuries,” said Chad Morganlander, a money manager in Florham Park, New Jersey at Stifel, Nicolaus & Co., which oversees about $180 billion. “The probability that was factored into the market and the global financial system was a Hillary Clinton victory – investors now need to square their books going into the election based on whatever new odds come out.”

Stocks

The Stoxx Europe 600 Index was down 0.2 percent as of 8:12 a.m. London time, with a gauge of energy stocks sliding the most among 19 industry groups. A measure of energy shares on the MSCI Asia Pacific Index slid 0.5 percent, also the worst performance.

AIA Group Ltd. shares slumped as much as 7.2 percent after China UnionPay Co. halted credit and debt card payments for most insurance policies in Hong Kong, making it harder to conduct transactions with Chinese visitors that accounted for about half of the company’s sales in the city. Nippon Yusen KK and Mitsui O.S.K. Lines Ltd. — Japan’s two largest shipping companies — surged more than 5 percent in Tokyo after they agreed to merge their container operations with those of third-ranked Kawasaki Kisen Kaisha Ltd., which added less than 1 percent.

Futures on the S&P 500 Index rose 0.3 percent, after earlier retreating as much as 0.4 percent. An ABC/Washington Post tracking survey released Sunday gave Clinton 46 percent support from likely voters, to Trump’s 45 percent. Clinton was ahead by 12 points a week earlier.

“The race remains very tight and markets are far too complacent about the end result,” said Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd., which manages about $21 billion. “If the polls tighten more, or the FBI investigation dominates the headlines, there could be a recalibration in market prices this week.”

Commodities

Crude oil fell 0.3 percent to $48.57 a barrel in New York. OPEC members ended talks on Friday without reaching a deal on country quotas, and discussions with major producers from outside the group on Saturday also concluded without any commitments. Oil has fluctuated near $50 amid uncertainty about whether OPEC can implement the first supply cuts in eight years at an official meeting in November.

“Talks over the weekend make it seem less likely there will be an agreement on production cuts,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has probably made a fair bit of the adjustment, but I wouldn’t be surprised to see oil fall further into the $47 range.”

Gold was little changed at about $1,275 an ounce after rallying 0.6 percent on Friday. The metal’s gains reflect "safe-haven buying after the FBI reopened its inquiry into Hillary Clinton’s use of a private e-mail server,” Australia & New Zealand Banking Group Ltd. analysts wrote in a note on Monday.

Aluminum and zinc extended gains in Shanghai as investors bet that strong domestic demand, surging coal prices and logistical issues will underpin prices. Aluminum rose to its highest since September 2014, having jumped by about 10 percent last week, and zinc climbed to levels last seen in March 2011.

Currencies

The Bloomberg Dollar Spot Index rose 0.1 percent, after retreating 0.3 percent from a seven-month high in the last session. It’s climbed more than 2 percent this month, set for the biggest gain since May.

While the Fed is seen leaving policy unchanged at a review this week, futures prices indicate a 69 percent chance of an interest-rate hike at its December meeting, up from 59 percent at the end of September. American data on Monday are forecast to show personal spending and income both increased in September, based on Bloomberg surveys of economists.

The rand strengthened 0.9 percent after the City Press newspaper reported that South African prosecutors may drop fraud charges against Finance Minister Pravin Gordhan, who has been a key driver of a campaign to maintain the nation’s investment-grade credit rating. The National Prosecuting Authority said Sunday there were no such plans.

South Korea’s won traded near a three-month low as President Park Geun-hye deals with an influence-peddling scandal that’s sparked calls by the ruling party for her to remove the prime minister. Prosecutors raided Park’s office over the weekend to investigate allegations her close friend Choi Soon-sil — a private citizen whom opposition lawmakers have linked to a religious cult — wielded influence on state affairs over an extended period.

China’s yuan strengthened 0.2 percent, paring its biggest monthly loss since May. It advanced from near a six-year low following Friday’s retreat in the dollar and as China’s clampdown on UnionPay payments for insurance products in Hong Kong provided support. The transactions have been used as a means of skirting capital controls to take funds out of the mainland.

Bonds

The yield on U.S. Treasuries due in a decade was little changed at 1.84 percent, after touching a five-month high of 1.88 percent on Friday. Sovereign debt in the world’s biggest economy has lost 1.2 percent on average this month, the worst performance since February 2015, a Bloomberg index shows.

The selloff in Treasuries may pause because the FBI’s investigation of Clinton could spur demand for the safest assets, said Hiroki Shimazu, an economist and strategist at the Japanese unit of MCP Asset Management in Tokyo.

China’s one-year interest-rate swaps rose five basis points to an 18-month high of 2.76 percent in Shanghai. The increase reflects speculation policy makers will seek to keep money rates high as they tackle asset bubbles and try to stem declines in the yuan.

Source: Bloomberg