Asian shares and oil prices were under pressure on Tuesday after reports showed that Chinese manufacturing activity grew less than expected. The reports highlighted the failure of the Chinese government to stimulate the economy as much as expected despite aggressive efforts to pump money into the economy. China’s benchmark indexes, the Shanghai Composite and the Shenzhen Composite, both posted moderate gains on Tuesday, up 0.43 percent and 0.83 percent respectively. The remained of Asia’s benchmark indexes were trading lower as of 1:42 p.m. HK/SIN. South Korea’s Kospi was down 0.53 percent, Australia’s ASX 200 was 0.45 lower, and Hong Kong’s Hang Seng Index eased 0.48 percent.
Oil prices also struggled in mid-afternoon trade as traders worried that the slowdown would impact the demand. Also pressuring markets was U.S. President Donald Trump’s call for OPEC to increase production to boost supply following his calls to implement full sanctions against Iran, which are expected to take effect next week. According to reports by Bank of America Merrill Lynch, Iranian oil production will fall to 1.9 million barrels per day from 3.6 million barrels per day.” Other analysts have expected the country’s exports to fall below 1 million barrels per day.
U.S. exports surpassed 3 million barrels per day for the first time earlier this year after the country expanded its production in 2018 to over 12 million barrels per day. The effort has counteracted OPEC’s production cuts but won’t be sufficient to meet global demand once the sanctions take full effect. For this reason, Trump remains committed to increasing global supply in order to keep prices low, while OPEC aims to keep prices on the higher side by cutting production.
U.S. WTI was trading down 0.11 percent to $63.43 per barrel on Tuesday afternoon, and Brent crude futures were down 0.31 percent to $71.82 per barrel.