Oil jumped after a Saudi-led alliance cut diplomatic ties with Qatar, while the pound slipped after a terror attack in London. Stocks were mixed as investors weighed the prospects for global growth.
Crude climbed and Qatari stocks plunged as the political crisis in the Gulf escalated. Treasury yields remained near the lowest in seven months as Friday’s data on wage growth and hiring in the American labor market came in below forecasts. The peso rallied on signs the ruling PRI was ahead in the governor’s election for the key state of Mexico. Gold extended gains.
West Texas Intermediate crude advanced 0.8 percent to $48.02 a barrel as of 8:22 a.m. in London, after dropping 1.5 percent on Friday. Gold rose 0.2 percent to $1,281.69 an ounce, after gaining 1 percent Friday.
Investors turned their attention to geopolitics as Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said they will suspend air and sea travel to and from Qatar, with Saudi Arabia citing Qatar’s support of “terrorist groups aiming to destabilize the region.” Also looming over the markets was the latest terror incident at a popular London nightlife spot, as Britain’s battle with jihadists looked set to dominate the final three days of the nation’s election campaign.
The most recent US data is testing bets on improving global growth that’s helped drive the value of equities worldwide up by more than $10 trillion over the past year. The World Bank forecast a modest pickup in growth despite uncertainty about monetary policy and concern among bond traders that inflation is waning.
While Federal Reserve policy makers will remain silent this week amid its self-imposed blackout period ahead of next week’s rate decision, there’s plenty on the agenda for traders.
The Bloomberg Dollar Spot Index dropped 0.1 percent, adding to a 0.4 percent decline on Friday. The yen fell 0.1 percent to 110.49 per dollar. Japan’s currency climbed 0.9 percent Friday after the US data. The Mexican peso soared 1.2 percent, reversing an earlier drop of 0.8 percent.