Investing.com | May 22, 2017 10:05AM ET
by Pinchas Cohenh3 The Big News/h3
Oil almost reached $51 a barrel yesterday at 22:02 EDT – its highest level in a month - after Saudi Arabia said an agreement had been reached to extend the deal on production cuts.
Oil wasn't the only gainer today. Asian stock exchanges, except for the Shanghai Composite, and the European and US futures markets are all in the green, as the yen, gold and bonds are being sold on easing volatility.
h3 /h3 h3 World Events/h3The gods of oil—aka OPEC and NOPEC—drive today’s market. Once again, we see the rise in oil tied to the power bestowed by traders into the hands of the oil producing countries as their leader, Saudi Arabia’s energy minister, said all participants in last November’s deal agreed to extend cuts not by the mere six months originally proposed but by a whopping nine months in total. Energy and raw-materials posted the biggest gains on the MSCI Asia Pacific.
On the other end of Asia, North Korea conducted another ballistic missile test on Sunday, yet the South Korean won surged, and the pound declined last night, after the UK threatened to exit Brexit negotiations, but pared most of its losses since.
In our Week Ahead post yesterday, we suggested that a successful trip by US President Donald Trump may divert investors’ attention away from political risk, and that appears to be the case right now, as global equities are closing in on record highs, after US companies signed multi-billion dollar deals in the defense, energy and infrastructure industries with the Saudis.
However, even as investors ride up prices, political risk remains. Jason Chaffetz, the Republican chairman of the House Oversight and Government Reform Committee said he’ll talk to fired FBI chief James Comey today and will be pursuing records of the President’s meetings with Comey.
Meanwhile, in Brazil, President Michel Temer is being overwhelmed by allegations of corruption and a cover-up after the country’s influential bar association voted in favor of his impeachment. This political scandal spurred the biggest selloff on Brazil's benchmark Bovespa stock index since the 2008 financial crisis. The benchmark index is down 8.8%, and trading had been halted for an hour after a 10% drop triggered a circuit-breaker mechanism.
h3 /h3 h3 Today's Key Events/h3Currencies
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