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Advancing oil boosts markets : 26.05.2016 by IFC Markets

US stocks rose on Wednesday led by advances in energy and materials shares. The dollar weakened as euro and Pound edged higher after positive economic reports in euro-zone and UK poll results suggesting the country will likely not leave the European Union following a referendum in June. The live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, slipped 0.07% to 95.368. The Dow Jones Industrial Average rose 0.8% to 17851.51. The S&P 500 advanced 0.7% to near one-month high of 2090.54. Nine of the ten major S&P sectors traded higher led by 1.51% gain in energy sector with oil prices edging toward $50 a barrel. Utilities was the only sector ending down 0.3%. Financial stocks extended recent gains with investors revising upward the likelihood of a rate hike in June after the release off bullish FOMC minutes last Wednesday and signs of improved economic growth: fed fund futures traders upgraded the probability of a rate hike to 38% from 34% percent last Wednesday. Investors shrugged off negative economic data indicating the trade deficit widened in April as growth in imports outpaced exports growth. The trading volume was about 6.9 billion shares on US exchanges, almost 6% below the daily average for the past 20 trading days.

Today at 14:30 CET Initial Jobless Claims and Continuing Claims will be released in US. At the same time April preliminary Durable Goods Orders will be published. The tentative outlook is positive. At 16:00 CET April Pending Home Sales will be released. The tentative outlook is negative. And at 16:30 CET Natural Gas Storage Change will be released by the Energy Information Agency. At 18:00 CET Federal Reserve Board Governor Jerome Powell speaks about economy at Peterson Institute.

European stocks rallied on Wednesday as a group of euro-zone finance ministers and the International Monetary Fund reached an agreement to unlock more bailout funds for Greece. The euro strengthened as the agreement removed the uncertainty about Greek repayments to IMF and European Central Bank in July. International creditors agreed to release 10.3 billion euros ($11.48 billion) in new loans noting that Greece has made the necessary progress on reforms. The ministers also agreed about potential debt relief for Greece. German DAX 30 stock index jumped 1.5% to 10205.21 after German Ifo business climate index came in better than expected at 107.7 instead of 106.8. France’s CAC 40 gained 1.1% and the UK’s FTSE 100 added 0.7%.Today at 10:30 CET the second estimate of Q1 GDP will be released in UK. The tentative outlook is neutral.

Asian stocks are edging higher today with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.2%. Nikkei closed 0.1% higher in a thin trade today pairing earlier gains as yen strengthened against the dollar. Shares of Takata Corporation rallied 21% on news US investment fund Kohlberg Kravis Roberts is interested in taking a 60% stake in the company. The air bag maker potentially faces billions of dollars in costs related to a massive global recall of its air bag inflators.

Oil futures prices are extending gains today with Brent breaching above $50 for the first time in nearly seven months. July Brent crude rose 2.3% settling at seven month high of $49.74 on Wednesday on London’s ICE Futures exchange. The Energy Information Administration reported yesterday US crude stockpiles fell 4.2 million barrels to total 537.1 million barrels last week. Oil prices have been rising recently on supply outages due to fighting in Libya, Nigeria and wildfires in Canada. However analysts note the market is still oversupplied and further price increase will induce expansion of US shale oil production thus increasing global supply and limiting further gains.

 

Source: http://www.ifcmarkets.com

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