Oil turns higher, pushes world stock markets up
NEW YORK, February 26, 2016
Global equity markets got a boost from an upturn in crude oil as the market focused on an upcoming meeting of major oil producers that investors hope could stabilise volatile petroleum markets.
US stock indexes were also buoyed by robust data on durable goods orders that pointed to a recovery in the struggling manufacturing sector.
The Dow Jones industrial average rose 212.37 points, or 1.29 per cent, to 16,697.36, the S&P 500 gained 21.93 points, or 1.14 per cent, to 1,951.73 and the Nasdaq Composite added 39.60 points, or 0.87 per cent, to 4,582.21.
Crude oil futures rose more than two per cent after Venezuela reaffirmed an oil producers meeting in mid-March that would include Saudi Arabia, Russia and Qatar. Prior to the announcement, oil was down as much as three per cent.
The sharp turn was more of "an emotional move, people thinking they're going to miss the boat," said Michael Matousek, head trader at US Global Investors Inc in San Antonio, about the gains in oil.
"People are trying to stay one step ahead, thinking they know what the decision of Opec will be."
US crude futures settled up 92 cents, or 2.9 per cent, at $33.07 a barrel.
Brent crude futures finished up 88 cents, or 2.6 per cent, at $35.29 a barrel, hitting a three-week high.
European equity markets rose Thursday, rebounding from this week's losses that had been spurred by fears of Britain exiting the European Union.
Europe's FTSEurofirst 300, which has lost almost four per cent since Tuesday, was up two per cent as risk appetite returned.
Equity markets and oil prices have moved in sync this year so far, but analysts say they expect the two to decouple in the not-too-distant future.
MSCI's gauge of global stock markets was up 1.1 per cent.
Markets' appetite for risk pushed traders out of safe-haven currencies like the Japanese yen, which fell 0.6 per cent against the dollar.
Britain's sterling rose 0.3 per cent to $1.3970, taking a breath from a five per cent fall since early this month on fears that a public vote on June 23 could see Britain become the first country to quit the 28-member European Union.
The dollar struggled to make much headway overall due to doubts over whether the Fed will raise rates at all this year. The euro edged up 0.15 per cent to $1.1027. The dollar index, which measures the greenback against six major currencies was flat on the day.
Oil's recovery Thursday did help increase US bond market's gauges on traders' inflation expectations to their highest levels in nearly four weeks.
Federal Reserve policymakers have been concerned about the erosion in inflation expectations which could impair efforts to boost domestic price growth to their two per cent goal.
The yield premiums on regular US Treasuries over Treasury Inflation Protected Securities, known as inflation breakeven rates, have risen from their lowest levels since early 2009 in recent days with the rebound in oil prices. - Reuters
