Rising oil and dovish Fed minutes support markets : 07.04.2016
US stock market advanced on Wednesday as rebounding oil boosted market sentiment. The dollar weakened after the release of the March FOMC meeting minutes. The records showed policy makers were reluctant to hike interest rates in April expressing concerns about downside risks for US economy from economic factors which led to global financial turmoil earlier this year and have not been resolved fully yet. The live dollar index shows the ICE US Dollar index edged down 0.1% to 94.463. The Dow Jones Industrial Average closed 0.6% higher at 17716.05. The S&P 500 rose 1.1% to 2066.66 led by health-care stocks, up 2.7%. Energy stocks ended 2.1% higher as oil advanced. The Nasdaq Composite index gained 1.6% led by biotech stocks. Shares of Baker Hughes and Halliburton jumped 8.8% and 5.9% respectively on news companies would fight the Justice Department’s lawsuit challenging their planned merger. Harley-Davidson Inc. stocks dropped 7% after ITG Investment Research cut its first-quarter unit sales outlook for the motorcycle maker on weakened sales trends evidence in March. Today at 14:30 CET Initial and Continuing Jobless Claims will be released in US. The tentative outlook is negative for the dollar. At 23:30 CET Federal Reserve Chair Janet Yellen will participate in a panel discussion in New York.
European stocks recovered from six week lows on Wednesday as advancing oil relieved global slowdown concerns and helped boost investor risk appetite. The euro edged higher against the dollar trading at $1.1406 late Wednesday compared with $1.1384 late Tuesday in New York. The Stoxx Europe 600 index ended 0.8% higher, helped by sizable gains in energy stocks: Tullow Oil rallied 2.8%, AMEC Foster Wheeler plc jumped 2.6%, Technip SA gained 2.5%. Germany’s DAX 30 gained 0.6% to 9624.51. France’s CAC 40 added 0.8% and UK’s FTSE 100 index rose 1.2%. Today at 13:30 CET ECB March meeting accounts will be published in euro-zone.
Nikkei gained 0.2% today despite continued yen strength which weighed on exporter stocks. Investors bought defensive stocks, which helped snap seven day losing streak. Chinese stocks are retreating today with Shanghai Composite Index down 1.3%. Investors are concerned the expiration of a three month ban on stock selling which came into effect on January 9 may mark the start of a new selling rout amid worries about signs of increased default risks.
Oil futures prices are rising today following a fall in US crude inventories reported on Wednesday. June Brent crude jumped 5.2% to $39.84 a barrel on London’s ICE Futures exchange after Energy Information Administration said US crude oil inventories fell by 4.9 million barrels last week. Besides unexpectedly big fall in crude stockpiles, prices were supported by refinery data indicating increased use of crude oil last week: refineries used over 16.4 million barrels a day on average, up 199000 barrels from a week earlier as they operated at 91.4% of capacity. Analysts point to increased refinery capacity utilization rates in last two weeks at above 90%, interpreting higher than usual capacity utilizations as a sign of anticipated stronger demand for gasoline in summer, which is additional bullish factor for oil.
Gold is recovering today after spot gold closed down 0.7% on Wednesday as stocks advanced supported by dovish minutes of Federal Reserve’s March meeting.