Friday, 19 August 2016

World stock markets climb on labor data, oil gains

World equity markets advanced on Thursday, helped by positive U.S. labor market data and comments from an influential Federal Reserve policymaker about strong hiring gains in recent months, while higher oil prices lifted energy sector stocks.

The U.S. dollar was near an eight-week low against major currencies in the wake of minutes from the Federal Reserve's July meeting published Wednesday showing policymakers were unlikely to raise interest rates soon.

Strong recent U.S. jobs growth and a long-awaited return of middle-wage employment were two positive signs for the U.S. labor market, New York Fed president William Dudley said Thursday. That reinforced his comments on Wednesday suggesting the Fed could raise interest rates in September, given better economic data since its last meeting in July.

Key indexes on Wall Street were little changed as oil-related gains were offset by a drop in tech stocks. Strong gains in shares of Wal-Mart provided the biggest boost to the Dow and the S&P 500; the stock rose as much as 3.1 percent to $75.19, a more than 14-month high, after the retailer posted a better-than-expected quarterly profit.

The Dow Jones industrial average .DJI fell 8.32 points, or 0.04 percent, to 18,565.62, the S&P 500 .SPX gained 1.75 points, or 0.08 percent, to 2,183.97 and the Nasdaq Composite .IXIC added 9.27 points, or 0.18 percent, to 5,237.93.

"Yesterday's minutes didn't hold any major surprises for investors," said Thomas Wilson, Managing Director of Wealth Advisory at Brinker Capital, in Berwyn, Pennsylvania.

"The market has been Fed-driven so far, it is going through a phase where it will pivot from the Fed to more emphasis on companies growing their revenues."

Energy stocks provided the biggest sector boost. Brent traded at $50.88 a barrel, up 2 percent on the day. U.S. light crude oil CLc1 was up about 3 percent at $48.21.

Brent crude prices rose to their highest since July 4 as the world's biggest producers prepared to discuss a possible freeze in production levels.

Members of the Organization of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum in Algeria on Sept. 26-28. However, analysts were doubtful on the prospects of an agreement.

Oil prices were also helped by a falling dollar .DXY, which slipped to its lowest against a basket of major currencies since June 24 as traders marked down the odds of an interest rate increase by the Fed.

"The market’s take on the FOMC minutes is to read them in a somewhat more dovish fashion on the view that the Fed seems too divided to raise rates anytime soon," said Alan Ruskin, global head of FX strategy at Deutsche Bank in New York.

Oil is priced in dollars, so oil becomes more valuable as the dollar's value falls.

U.S. Treasury yields slipped as fixed-income investors were also incredulous of the likelihood that the Fed would tighten monetary policy soon, despite Dudley's comments and the jobless claims data.

Benchmark 10-year Treasury notes rose 9/32 in price for a yield of 1.531 percent.

The pan-European STOXX 600 index , which had fallen in the last four sessions on a run of weak company earnings, was up 0.72 percent.

MSCI's All World index climbed 0.26 percent to head back toward a one-year high, lifted by a 0.47 percent rise in Asian shares, their biggest gain since Aug.

Japan's Nikkei .N225 bucked the trend though, dropping 1.5 percent after data showed exports from the country falling at their fastest pace since the financial crisis.

Reference: Sam Forgione

No comments:

Post a Comment