World Economy

World Shares Retreat

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2%.

World shares eased a notch and major currencies traded in tight ranges while oil jumped to its highest in over two years on Monday as Saudi Arabia’s crown prince cemented his power through a crackdown on corruption.

The news stirred concerns of Middle Eastern money pulling out of global financial markets. A weekend call by China’s central bank governor for tougher financial regulation also hit investor sentiment, Reuters reported.

Brent futures LCOc1 were up over half a percent at $62.49 a barrel. US crude CLc1 added half a percent to $55.91.

The MSCI world equity index, which tracks shares in 47 countries, was 0.1% lower. European shares turned flat after falling in early deals on weaker trading in Asia and earnings disappointments. The pan-European STOXX 600 was 0.1% lower. Saudi Arabia’s own stock market fell over 1.5%.

Shares in French hotel group Accor fell as much as 1.7% at the open, the biggest of the CAC 40 fallers, after its third biggest shareholder Prince Alwaleed bin Talal was arrested in the Saudi Arabian crackdown.

Prince Alwaleed, a nephew of the king and owner of investment firm Kingdom Holding, invests in firms such as Citigroup and Twitter. He was among 11 princes, four ministers and tens of former ministers detained, three senior officials told Reuters on Sunday.

“MbS’s (Mohammed bin Salman’s) accumulation of power runs the risk of prompting the kingdom to shift further away from consensus-based policymaking, ruffling more feathers within the royal family as well as those closely tied to it,” said Jason Tuvey, Middle East economist at Capital Economics.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2% to drift away from Friday’s top of 557.9, the highest since November 2007.

South Korea’s KOSPI, which hit a record high last week, skidded 0.6% early on before paring losses to 0.3%. Hong Kong’s Hang Seng Index fell 0.2%. The Hong Kong China Enterprises Index lost 0.9%. Japan’s Nikkei eked out a small gain to hover around a 21-year peak.

Meanwhile, the dollar was little changed after investors took profits on its best weekly performance this year, with wariness about the status of the US economy and tax reform plans setting the tone. It briefly popped to a eight-month high against the Japanese yen in Asian trades but, with last week’s US jobs data having been relatively underwhelming, London-based traders were a bit more cautious.

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