Oil prices continued to rally on Tuesday as Iraqi forces move in on the oil-rich city of Kirkuk. Tensions between Kurdistan and Iraq escalated on Monday after the Kurds voted for independence last month. The region is one of the biggest oil exporters and investors fear the troubles may disturb oil production, thus stimulating demand.
Iraqi forces have taken over the oilfields operated by the state-owned North Oil Company.
The conflict has sent crude oil 0.27% higher, trading at $52.37 per barrel, while Brent oil is 0.3% higher, trading at $58.10 per barrel.
Gold dropped 0.47%, trading at its lowest point in a week. Meanwhile, copper declined for the first time this week, down 1%.
European bourses are trading mostly lower with the CAC 40 down 0.2% and the DAX 30 just marginally higher. The FTSE 100 has dipped 0.14%, while the FTSE MIB has dropped 0.25%.
The euro is 0.3% weaker against the greenback as investors await clarification on independence for Catalonia.
Disappointing economic data from the region added to the bearish bets. While inflation in the eurozone stayed the same, the Level of a diffusion in both Germany and the wider bloc missed expectations.
The pound declined after five days of gains as investors are concerned that Brexit talks may breakdown.
UK inflation came in at 3%, above the Bank of England’s target mark of 2%. The data may force central bankers to raise rates in November, this helped to cap losses on the pound.
The dollar is 0.1% higher against a basket of major currency pairs.
The next Federal Reserve chair is expected to be more hawkish, which has supported the dollar. John Taylor, a candidate for the US Federal Reserve chair who is said to have impressed Donald Trump, is in favour of higher interest rates.
US shares are trading down after a strong rally in yesterday’s trading session.
The S&P 500 is slightly lower, while the Nasdaq 100 is 0.05% weaker. The Dow Jones is level at $22901.
Energy companies were leading yesterday’s gains and investors are expecting robust earnings from these equities in Q3.
The Federal Budget Balance is to be released later today and the Fed member Harker is due to speak; both have the potential to switch market sentiment.
Additionally, earnings season continues with Morgan Stanley, Goldman Sachs Group Inc. due to release their earnings reports.